# UNITED STATES
                                         SECURITIES AND EXCHANGE COMMISSION
                                               Washington, D.C. 20549

# FORM 10-Q

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

# OR

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

`For the transition period from            to            .`

# Commission File Number 1-10272

# ARCHSTONE COMMUNITIES TRUST

# (Exact name of registrant as specified in its charter)

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


         7670 South Chester Street                                                                      80112
           Englewood, Colorado                                                                       (Zip Code)
  (Address of principal executive offices)`

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

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

Indicate by check mark  whether the  registrant  (1) has filed all reports  required to be filed by Section
13 or 15(d) of the  Securities  Exchange Act of 1934 during the preceding 12 months (or for such shorter period that
the registrant was required to file such reports), and (2) has been subject to such filing for the past 90 days.

`Yes   X     No`

At August 8, 2001, there were approximately 121,380,000 of the Registrant's Common Shares outstanding.

# Table of Contents

`Page
     Item                                                 Description                                            Number
PART I

             1.   Financial Statements
                  Condensed Balance Sheets - June 30, 2001 (unaudited) and December 31, 2000..................     3
                  Condensed Statements of Earnings - Three and six months ended June 30, 2001 and 2000
                     (unaudited)..............................................................................     4
                  Condensed Statement of Shareholders' Equity - Six  months ended June 30, 2001
                     (unaudited)..............................................................................     5
                  Condensed Statements of Cash Flows - Six months ended June 30, 2001 and 2000
                     (unaudited)..............................................................................     6
                  Notes to Condensed 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..................................     26
PART II

             4.   Submission of Matters to a Vote of Security Holders.........................................     28
             6.   Exhibits and Reports on Form 8-K............................................................     28`

# PART I - CONDENSED FINANCIAL INFORMATION

# Item 1. Financial Statements

# Archstone Communities Trust

# Condensed Balance Sheets

# (In thousands, except share data)

`June 30,     December 31,
                                         ASSETS                                            2001            2000   
                                                                                        (unaudited)
Real estate ........................................................................... $ 4,349,595    $ 5,058,910
Less accumulated depreciation .........................................................     361,358        375,672
                                                                                          3,988,237      4,683,238
Investments in and advances to unconsolidated real estate entities ....................     212,649        226,020
     Net investments ..................................................................   4,200,886      4,909,258
Cash and cash equivalents .............................................................      89,162          9,077
Restricted cash in tax-deferred exchange escrow .......................................     260,935          3,274
Other assets ..........................................................................      99,608         94,522
     Total assets ..................................................................... $ 4,650,591    $ 5,016,131
                                                                                        ===========    ===========
                          LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
   Unsecured credit facilities ........................................................ $         -    $   193,719
   Long-Term Unsecured Debt ...........................................................   1,390,219      1,401,262
   Mortgages payable ..................................................................     831,653        875,804
   Dividends payable ..................................................................           -         50,330
   Accounts payable ...................................................................      19,946         24,029
   Accrued expenses ...................................................................      76,514         86,334
   Other liabilities ..................................................................      44,204         39,710
     Total liabilities ................................................................   2,362,536      2,671,188
Minority interest:
   Perpetual preferred units ..........................................................      73,180         73,187
   Convertible operating partnership units ............................................      20,150         20,150
     Total minority interest ..........................................................      93,330         93,337
Shareholders' equity
   Series A Convertible Preferred Shares (3,206,635 shares in 2001 and 3,306,035 shares
     in 2000, liquidation preference of $25 per share) ................................      80,166         82,651
   Series B Preferred Shares (4,186,800 shares in 2000, liquidation preference of $25
     per share) .......................................................................           -        104,670
   Series C Preferred Shares (1,989,200 shares in 2001 and 2000, liquidation preference
     of $25 per share) ................................................................      49,730         49,730
   Series D Preferred Shares (1,992,200 shares in 2001 and 2000, liquidation preference
     of $25 per share) ................................................................      49,805         49,805
   Common Shares (121,245,978 shares in 2001 and 122,838,167 shares in 2000) ..........     121,246        122,838
   Additional paid-in capital .........................................................   1,917,067      1,949,270
   Other comprehensive income .........................................................         662          2,817
   Employee share purchase notes ......................................................      (6,650)        (6,764)
   Distributions in excess of net earnings ............................................     (17,301)      (103,411)
     Total shareholders' equity .......................................................   2,194,725      2,251,606
     Total liabilities and shareholders' equity ....................................... $ 4,650,591    $ 5,016,131
                                                                                        ===========    ===========`

# Archstone Communities Trust

# Condensed Statements of Earnings

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

`Three Months Ended    Six Months Ended
                                                                               June 30,             June 30,    
                                                                           2001      2000       2001       2000 
Revenues:
     Rental revenue ..................................................  $ 156,244 $ 175,072  $ 327,342 $ 343,536
     Income from unconsolidated real estate entities .................        778     2,314      1,211     1,201
     Other income ....................................................      3,757     7,427      7,282    17,092
                                                                          160,779   184,813    335,835   361,829
Expenses:
     Rental expenses .................................................     35,973    42,202     75,297    80,656
     Real estate taxes ...............................................     13,329    15,533     28,798    30,776
     Depreciation on real estate investments .........................     29,142    36,696     61,495    73,221
     Interest expense ................................................     32,430    37,325     67,076    71,527
     General and administrative expenses .............................      6,128     5,466     11,806    11,751
     Provision for possible loss on investments ......................        500       400      9,909     3,153
     Other expenses ..................................................        455       309      1,032       666
                                                                          117,957   137,931    255,413   271,750

Earnings from operations .............................................     42,822    46,882     80,422    90,079
     Less: minority interest - perpetual preferred units .............      1,567     1,567      3,134     2,781
           minority interest - convertible operating partnership units        389       366        778       596
     Plus: gains on dispositions of depreciated real estate, net .....     35,470    41,869     70,521    46,001
Net earnings .........................................................     76,336    86,818    147,031   132,703
     Less: Preferred Share dividends .................................      4,904     6,370     11,211    12,801
Net earnings attributable to Common Shares - Basic ...................  $  71,432 $  80,448  $ 135,820 $ 119,902
                                                                        ========= =========  ========= =========

Weighted average Common Shares outstanding - Basic ...................    120,984   139,232    121,569   139,152
Weighted average Common Shares outstanding - Diluted .................    126,724   145,138    127,306   144,910

Net earnings per Common Share:
     Basic ...........................................................  $    0.59 $    0.58  $    1.12 $    0.86
                                                                        ========= =========  ========= =========
     Diluted .........................................................  $    0.58 $    0.57  $    1.10 $    0.86
                                                                        ========= =========  ========= =========
Distributions paid per Common Share ..................................  $   0.410 $   0.385  $   0.820 $   0.770
                                                                        ========= =========  ========= =========`

# Archstone Communities Trust

# Condensed Statement of Shareholders' Equity

# Six Months Ended June 30, 2001

# (In thousands)
                                                    (Unaudited)

`Series A
                                       Convertible      Series B       Series C       Series D        Common
                                        Preferred      Preferred      Preferred      Preferred       Shares at
                                        Shares (1)      Shares(1)      Shares(1)      Shares(1)      Par Value   

Balances at December 31, 2000.......  $       82,651  $     104,670  $      49,730  $      49,805  $     122,838
 Comprehensive income:
  Net Earnings......................               -              -              -              -              -
  Preferred Share dividends paid....               -              -              -              -              -
  Other comprehensive income
     (loss):
   Recognition of previously
    unrealized gains on
    available-for-sale securities...               -              -              -              -              -
   Unrealized holding loss on
    available-for-sale securities...               -              -              -              -              -
   Change in intrinsic value of
    cash flow hedges................               -              -              -              -              -
  Comprehensive income attributable
   to Common Shares.................
 Common Share distributions.........               -              -              -              -              -
 Repurchase of shares...............               -              -              -              -         (2,265)
 Conversion of Series A Preferred
   Shares into Common Shares........          (2,485)             -              -              -            134
 Redemption of shares...............               -       (104,670)             -              -              -
 Other, net.........................               -              -              -              -            539
Balances at June 30, 2001...........  $       80,166  $           -  $      49,730  $      49,805  $     121,246
                                      ==============  =============  =============  =============  =============

                                                                      Employee     Distributions
                                       Additional       Other           Share        in Excess
                                         Paid-in     Comprehensive    Purchase        of Net
                                         Capital        Income          Notes        Earnings         Total    
Balances at December 31, 2000.......  $   1,949,270  $       2,817  $      (6,764) $    (103,411) $   2,251,606
 Comprehensive income:
  Net Earnings......................              -              -              -        147,031        147,031
  Preferred Share dividends paid....              -              -              -        (11,211)       (11,211)
  Other comprehensive income
     (loss):
   Recognition of previously
    unrealized gains on
    available-for-sale securities...              -         (2,394)             -              -         (2,394)
   Unrealized holding loss on
    available-for-sale securities...              -           (243)             -              -           (243)
   Change in intrinsic value of
    cash flow hedges................              -            482              -              -            482
  Comprehensive income attributable
   to Common Shares.................                                                                    133,665
 Common Share distributions.........              -              -              -        (49,520)       (49,520)
 Repurchase of shares...............        (47,735)             -              -              -        (50,000)
 Conversion of Series A Preferred
   Shares into Common Shares........          2,351              -              -              -              -
 Redemption of shares...............              -              -              -              -       (104,670)
 Other, net.........................         13,181              -            114           (190)        13,644
Balances at June 30, 2001...........  $   1,917,067  $         662  $      (6,650) $     (17,301) $   2,194,725
                                      =============  =============  =============  =============  =============`

|(1) | Each series of preferred shares is stated at the amount of the aggregate liquidation preference.
|--- | ------------------------------------------------------------------------------------------------

# Archstone Communities Trust

# Condensed Statements of Cash Flows

# (In thousands)
                                                    (Unaudited)

`Six Months Ended
                                                                                                   June 30,       
                                                                                               2001         2000  
Operating activities:
   Net earnings ...........................................................................  $ 147,031   $ 132,703
   Adjustments to reconcile net earnings to net cash flow provided by operating activities:
     Depreciation and amortization ........................................................     65,110      74,920
     Gains on dispositions of depreciated real estate, net ................................    (70,521)    (46,001)
     Provision for possible loss on investments ...........................................      9,909       3,153
     Minority interest ....................................................................      3,912       3,377
   Change in accounts payable, accrued expenses and other liabilities .....................     (5,343)      3,171
   Other, net .............................................................................     (9,793)     (5,614)
     Net cash flow provided by operating activities .......................................    140,305     165,709
Investing activities:
   Real estate investments ................................................................   (127,410)   (358,160)
   Change in investments in and advances to unconsolidated real estate entities, net ......     18,774      (3,078)
   Proceeds from dispositions, net of closing costs .......................................    806,615     298,225
   Change in tax-deferred exchange escrow .................................................   (257,661)     (2,632)
   Principal repayments on mortgage notes receivable ......................................        101      39,829
   Other, net .............................................................................     (7,468)     (1,979)
     Net cash flow provided by (used in) investing activities .............................    432,951     (27,795)
Financing activities:
   Proceeds from secured debt .............................................................          -     156,528
   Payments on Long-Term Unsecured Debt ...................................................    (12,500)          -
   Principal prepayment of mortgages payable ..............................................    (28,808)    (16,629)
   Regularly scheduled principal payments on mortgages payable ............................     (2,301)     (2,454)
   Payments on unsecured credit facilities, net ...........................................   (193,719)   (187,328)
   Repurchase of Common and Preferred Shares ..............................................    (50,000)       (773)
   Redemption of Series B Preferred Shares ................................................   (104,670)          -
   Proceeds from issuance of Preferred Shares and perpetual preferred units ...............          -      31,224
   Cash dividends paid on Common Shares ...................................................    (99,844)   (107,262)
   Cash dividends paid on Preferred Shares ................................................    (11,211)    (12,801)
   Cash dividends paid to minority interests ..............................................     (3,912)     (3,377)
   Proceeds from dividend reinvestment and repayment of share purchase loans, net .........     10,606       9,706
   Other, net .............................................................................      3,188        (526)
     Net cash flow used in financing activities ...........................................   (493,171)   (133,692)
Net change in cash and cash equivalents ...................................................     80,085       4,222
Cash and cash equivalents at beginning of period ..........................................      9,077      10,072
Cash and cash equivalents at end of period ................................................  $  89,162   $  14,294
                                                                                             =========   =========
Significant non-cash investing and financing activities:
   Assumption of mortgages payable upon acquisition of apartment communities...............  $       -   $  40,674
   Transfer of mortgage payable and operating liabilities to joint ventures upon
     disposition of apartment communities..................................................  $  17,321   $       -
   Issuance of convertible operating partnership units in exchange for development site....  $       -   $   6,843
   Series A Convertible Preferred Shares converted to Common Shares........................  $   2,485   $   4,492`

# Archstone Communities Trust

# Notes to Condensed Financial Statements

# June 30, 2001 and 2000
                                                    (Unaudited)

## (1)         General

The  condensed  financial  statements  of Archstone  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,  these interim  financial  statements  should be read in  conjunction  with the
financial statements and notes included in Archstone's 2000 Annual Report on Form 10-K ("2000 Form 10-K").

In the opinion of management,  the  accompanying  unaudited  financial  statements  contain all adjustments
necessary  for a  fair  presentation  of  Archstone's  financial  statements  for  the  interim  periods  presented.
Significant  adjustments  of a  non-recurring  nature are discussed in the  following  footnote  disclosures,  where
applicable.  The  results of  operations  for the three and six month  periods  ended June 30, 2001 and 2000 are not
necessarily indicative of the results to be expected for the entire year.

The accounts of Archstone and its controlled  subsidiaries are  consolidated in the accompanying  condensed
financial   statements.   All  significant   intercompany   accounts  and  transactions   have  been  eliminated  in
consolidation.  We use the equity  method to account for  investments  when we do not control,  but have the ability
to exercise  significant  influence  over the  operating and  financial  policies of the  investee.  For an investee
accounted  for under the equity  method,  our share of net earnings or losses of the investee is reflected in income
as earned and dividends are credited against the investment as received.

Certain 2000 amounts have been reclassified to conform to the 2001 presentation.

The  preparation of financial  statements in conformity with accounting  principles  generally  accepted in
the United States of America  ("GAAP")  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.

In June 2001 the  Financial  Accounting  Standards  Board  issued  SFAS No.  141,  "Business  Combinations"
(effective  July 1, 2001) and SFAS No. 142,  "Goodwill  and Other  Intangible  Assets"  (effective  for Archstone on
January 1, 2002). SFAS No. 141 prohibits  pooling-of-interest  accounting for  acquisitions.  SFAS No. 142 specifies
that  goodwill  and some  intangible  assets will no longer be  amortized  but  instead  will be subject to periodic
impairment  testing.  We expect to apply these new  pronouncements in connection with the closing of our merger with
Smith  Residential  discussed  in Note 9. We do not  anticipate  that the  impact to  Archstone  will be  materially
different than the accounting treatment that would have been applied under the prior accounting rules.

# Archstone Communities Trust

# Notes to Condensed Financial Statements - (Continued)

Following is a reconciliation of basic earnings per share ("EPS") to diluted EPS for the periods
indicated (in thousands):

`Three Months Ended     Six Months Ended
                                                                              June 30,              June 30,     
                                                                          2001       2000      2001        2000 
   Reconciliation of numerator between basic and diluted net earnings per Common Share (1):

Net earnings attributable to Common Shares - Basic ...................  $ 71,432   $ 80,448  $135,820   $119,902
   Dividends on Series A Preferred Shares ............................     1,773      1,851     3,563      3,748
   Minority interest - convertible operating partnership units .......       389        366       778        596
Net earnings attributable to Common Shares - Diluted .................  $ 73,594   $ 82,665  $140,161   $124,246
                                                                        ========   ========  ========   ========
   Reconciliation of denominator between basic and diluted net earnings per Common Share (1):

Weighted average number of Common Shares outstanding - Basic .........   120,984    139,232   121,569    139,152
   Assumed conversion of Series A Preferred Shares into Common Shares.     4,339      4,812     4,360      4,878
   Assumed conversion of convertible operating partnership units .....       949        949       949        802
   Assumed exercise of options .......................................       452        145       428         78
Weighted average number of Common Shares outstanding - Diluted .......   126,724    145,138   127,306    144,910
                                                                        ========   ========  ========   ========`

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

## (2)     Real Estate

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

`June 30,           December 31,
                                                              2001                 2000         
                                                      Investment    Units   Investment    Units  
Apartment Communities:
   Operating communities...........................   $ 3,939,471   50,145 $ 4,651,275    62,509
   Communities under construction (1)..............       311,230    3,440     298,519     4,107
   Development communities In Planning (1):
     Owned.........................................        70,052    1,646      75,662     1,902
     Under control (2).............................             -    1,583           -     2,167
      Total development communities In Planning....        70,052    3,229      75,662     4,069
        Total apartment communities................     4,320,753   56,814   5,025,456    70,685
                                                                  ========             =========
Other real estate assets...........................         5,972               10,584
Hotel asset........................................        22,870               22,870
        Total real estate..........................   $ 4,349,595          $ 5,058,910
                                                      ===========          ===========`

|(1) | Unit information is based on management's estimates and has not been audited or reviewed by our
         independent auditors.
|--- | ------------------------------------------------------------------------------------------------------------------------------

|(2) | Archstone's  investment as of June 30, 2001 and December 31, 2000 for  developments  Under Control was $6.8
         million and $5.9  million,  respectively  and is reflected  on the "Other  assets"  caption of  Archstone's
         Balance Sheets.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

# Archstone Communities Trust

# Notes to Condensed Financial Statements - (Continued)

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

`Balance at January 1, 2001 ...............................    $ 5,058,910
           Apartment communities:
             Acquisition-related expenditures ....................          4,995
             Redevelopment expenditures ..........................          8,953
             Recurring capital expenditures ......................          4,821
             Development expenditures, excluding land acquisitions         87,624
             Acquisition and improvement of land for development .         16,613
             Dispositions ........................................       (825,709)
             Provision for possible loss on investments ..........         (2,000)                                                         -----------
              Net apartment community activity ...................      4,354,207
           Other:
             Change in other real estate assets ..................         (4,612)
        Balance at June 30, 2001 .................................    $ 4,349,595
                                                                      ===========`

At June 30, 2001, we had unfunded  contractual  commitments  related to real estate  investment  activities
aggregating approximately $199.9 million of which $195.5 million related to communities under construction.

We were committed to the sale of three  apartment  communities  and certain other real estate assets having
an aggregate  carrying value of $33.3 million as of June 30, 2001.  Each  property's  carrying value is less than or
equal to its  estimated  fair market value,  net of estimated  costs to sell.  The  property-level  earnings,  after
mortgage  interest and  depreciation,  from these  communities at June 30, 2001,  which are included in our earnings
from operations for the six months ended June 30, 2001 and 2000 were $1.2 million and $0.9 million, respectively.

During the six months  ended June 30,  2001,  we  concluded  that the full  recovery of certain real estate
assets held for sale was  doubtful.  As a result,  a provision  for  possible  loss of $2.0  million was recorded to
reduce these assets to their estimated fair value.

## (3)     Investments in and Advances to Unconsolidated Real Estate Entities

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

`June 30,       December 31,
                         Investment in and Advances to:                     2001            2000     
          Ameriton Properties Incorporated (1)........................  $     195,532  $      209,347
          Apartment community joint ventures..........................         17,117          16,673
               Total..................................................  $     212,649  $      226,020
                                                                        =============  ==============`

|(1) | Ameriton Properties  Incorporated  ("Ameriton") engages in the opportunistic  acquisition,  development and
         eventual  disposition of apartment  communities with a shorter-term  investment  horizon. In June 2001, the
         voting  stock of Ameriton  was  acquired by a newly formed  entity  controlled  by an executive  officer of
         Archstone for approximately $5.8 million.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

# Archstone Communities Trust

# Notes to Condensed Financial Statements - (Continued)

Following is a summary of the more  significant  joint  ventures  formed during 2001.  This  information is
presented  as of the  formation  date.  The joint  ventures  were  formed  through  the  contribution  of  apartment
communities located in 16 non-core markets throughout the United States (dollar amounts in millions):

`2001        
               Month of venture formation....................................    May (1)       March
               Number of apartment communities in the ventures...............          15           12
               Aggregate fair value of apartment communities.................  $    339.5   $    310.0
               Aggregate net book value of apartment communities.............  $    301.4   $    268.5
               Aggregate  amount of  mortgages  obtained  or  assumed  by the
                  venture....................................................  $    237.0   $    217.3
               Gain recognized...............................................  $     12.9   $     17.4
               Gain deferred.................................................  $     27.3   $     23.8
               Cash contributions by investor partner........................  $     82.0   $     71.3
               Cash   distributions   to  Archstone  upon   contribution   of
                  operating communities......................................  $    297.5   $    267.4
               Archstone ownership percentage................................         25%          25%
               Investor partner ownership percentage.........................         75%          75%`

|(1) | Reflects  the  formation  of two joint  ventures.  One of the joint  ventures  formed in May  includes  two
         operating  communities  sold to the joint  venture by Ameriton or its affiliates.  The fair value and net book value  related
         to these  communities  were $40.9 and $33.9 million,  respectively.  No gain was recognized by Archstone on
         these two transactions.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

For  financial  reporting  purposes,  we  accounted  for  the  transactions  as a  partial  disposition  of
communities.  As a result of our  continuing  economic  interest in the joint  ventures  formed in 2001, we deferred
gains as outlined  above and reduced the carrying  value of our  investment on the date of formation to $0. Gains on
these  transactions  have  effectively  been recorded  using the cost recovery  method of  accounting.  The ventures
formed in 2001 have a  ten-year  life with  flexible  liquidation  terms to  ensure an  orderly  disposition  of the
communities  based on prevailing  market  conditions.  Cash  distributions  to the joint  venture  partners are paid
either monthly or quarterly as defined  within each joint venture  agreement.  The venture  partners have no ongoing
capital  commitments  and no obligation to repay cash  distributions.  We receive  management  fees for managing the
ventures and communities.

## (4)         Borrowings

We have a $580 million unsecured  revolving credit facility  provided by a group of financial  institutions
led by The Chase Manhattan Bank. The $580 million  facility  matures in December 2003 and has a one-year  extension,
exercisable  at our option.  The  facility  bears  interest  at the greater of prime or the federal  funds rate plus
0.50%,  or at our  option,  LIBOR plus  0.65%.  The  spread  over LIBOR can vary from LIBOR plus 0.50% to LIBOR plus
1.25% based upon the rating of our  Long-Term  Unsecured  Debt.  Under a  competitive  bid option  contained  in the
credit  agreement,  we may be able to  borrow  up to $290  million  at a lower  interest  rate  spread  over  LIBOR,
depending on market  conditions.  Under the agreement,  we pay a facility fee of 0.15% of the commitment,  which can
vary from 0.125% to 0.200% based upon the rating of our Long-Term  Unsecured  Debt.  Archstone paid facility fees on
unsecured  credit  facilities  of $0.9 million and $1.1 million  during the six months ended June 30, 2001 and 2000,
respectively.

# Archstone Communities Trust

# Notes to Condensed Financial Statements - (Continued)

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

`June 30,     December 31,
                                                                                2001            2000     
Total unsecured revolving credit facility................................   $     580,000  $     580,000
Borrowings outstanding at end of period..................................               -        150,000
Weighted average daily borrowings........................................          62,017        305,016
Maximum borrowings outstanding during the period.........................   $     250,000  $     618,000
Weighted average daily nominal interest rate.............................           6.71%          7.01%
Weighted average daily effective interest rate...........................          10.39%          7.45%`

We also have a short-term  unsecured  borrowing agreement with The Chase Manhattan Bank, which provides for
maximum  borrowings of $100 million.  The agreement  bears  interest at an overnight  rate that ranged from 4.75% to
7.31%  during the six months ended June 30,  2001.  At June 30, 2001 and  December  31, 2000,  there were $0 million
and $43.7 million of borrowings outstanding under this agreement, respectively.

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

`Effective      Balance at       Balance at      Average
                                         Coupon        Interest       June 30,       December 31,    Remaining
             Type of Debt               Rate (1)       Rate (2)         2001            2000        Life (Years)

Long-term unsecured senior notes(3).      7.49%         7.68%      $     1,312,892  $    1,325,547           6.5
Unsecured tax-exempt bonds..........      3.92%         4.27%               77,327          75,715           6.9
     Total/average..................      7.29%         7.49%      $     1,390,219  $    1,401,262           6.5
                                      =============  ============  ===============  ==============  ============`

|(1) | Represents a fixed rate for the long-term unsecured notes and a variable rate for the unsecured
         tax-exempt bonds.
|--- | --------------------------------------------------------------------------------------------------------------------------

|(2) | Includes the effect of interest rate hedges,  loan cost  amortization  and other ongoing fees and expenses,
         where applicable.
|--- | --------------------------------------------------------------------------------------------------------------------------------------

|(3) | The reduction in long-term  unsecured  senior notes during the period  resulted from a scheduled  repayment
         of $12.5 million made in February, 2001.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------

The $1.3 billion of long-term  unsecured  senior notes  generally have  semi-annual  interest  payments and
either  amortizing  annual principal  payments or balloon payments due at maturity.  The unsecured  tax-exempt bonds
require  semi-annual  payments and are due upon maturity in 2008 (see - Scheduled  Debt  Maturities).  The notes are
redeemable at our option,  in whole or in part,  and the  unsecured  tax-exempt  bonds are  redeemable at our option
upon sale of the related  property.  The redemption  price is generally equal to the sum of the principal  amount of
the notes being redeemed plus accrued interest through the redemption date plus a standard  make-whole  premium,  if
any.

# Archstone Communities Trust

# Notes to Condensed Financial Statements - (Continued)

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

`Principal Balance at     
                                              Effective Interest     June 30,     December 31,
              Type of Mortgage                     Rate (1)            2001           2000     

Fannie Mae secured debt (2).................         6.96%         $    406,775  $      406,989
Conventional fixed rate.....................         7.77%              179,392         200,694
Tax-exempt fixed rate.......................         7.51%               13,138          17,676
Tax-exempt floating rate....................         4.27%              208,575         226,325
Other.......................................         5.65%               23,773          24,120
     Total/average mortgage debt............         6.43%         $    831,653  $      875,804
                                              ===================  ============  ==============`

|(1) | Includes the effect of interest rate hedges,  credit  enhancement fees, other  bond-related  costs and loan
         cost amortization, where applicable as of June 30, 2001.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Represents  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  Archstone has 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  during the six months ended June 30, 2001  consisted of the following (in
thousands):

`Balance at January 1, 2001..............................................   $    875,804
              Regularly scheduled principal amortization.........................         (2,301)
              Prepayments, final maturities and other............................        (41,850)
         Balance at June 30, 2001................................................   $    831,653
                                                                                    ============`

Approximate  principal payments due during each of the next five calendar years and thereafter,  as of June
30, 2001 are as follows (in thousands):

`Mortgages Payable     
                                                               Regularly
                                                 Long-Term     Scheduled     Final
                                                 Unsecured     Principal   Maturities
                                                   Debt      Amortization  and Other         Total    
2001 (July through December).................  $     57,357  $       2,242 $         60  $      59,659
2002.........................................        97,810          4,910           60        102,780
2003.........................................       171,560          5,169       14,801        191,530
2004.........................................        51,560          6,284       36,406         94,250
2005.........................................       251,560          5,608       27,976        285,144
Thereafter...................................       760,372        100,537      627,600      1,488,509
     Total...................................  $  1,390,219  $     124,750 $    706,903  $   2,221,872
                                               ============  ============= ============  =============`

The average annual principal payments due from 2006 to 2020 are $97.4 million per year.

The $580 million unsecured credit facility matures in December 2003 and has a one-year extension option.

# Archstone Communities Trust

# Notes to Condensed Financial Statements - (Continued)

Archstone's  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 at June 30, 2001.

For the six months  ended June 30,  2001 and 2000,  the total  interest  paid on all  outstanding  debt was
$75.0 million and $81.4 million,  respectively.  We capitalize  interest incurred during the construction  period as
part of the cost of  apartment  communities  under  development.  Interest  capitalized  during the six months ended
June 31, 2001 and 2000 was $10.2 million and $13.0 million, respectively.

Amortization  of loan costs  included in interest  expense for the six months  ended June 30, 2001 and 2000
was $3.1 million and $2.4 million, respectively.

See  Note 7  contained  in Item 1 of this  Form  10-Q  for a  summary  of  derivative  instruments  used in
connection with our debt instruments.

## (5)         Minority Interest

At various dates,  consolidated  subsidiaries of Archstone have issued perpetual preferred units to limited
partnerships  in exchange for cash. All perpetual  preferred  units issued to date have a liquidation  preference of
$25 per unit and are paid a fixed  cumulative  quarterly  distribution  each  quarter.  We have the option to redeem
the units at par on dates ranging from 2004 to 2005.  Unless  redeemed,  the units are convertible  into a specified
series of Archstone  non-convertible  perpetual  preferred  shares after  certain  dates.  Following is a summary of
outstanding perpetual preferred units as of June 30, 2001:

`Annual           Convertible
                                                                Total        Distribution       into Perpetual
                           Effective                         Liquidation        Rate          Preferred Shares
     Series              Issuance Date            Units       Preference      (Per unit)         on or After     

Archstone Communities Limited Partnership:

    Series E       August 13, 1999...........      520,000  $    13 million  $      2.0938  August 13, 2009
    Series E       November 19, 1999.........      400,000       10 million         2.0938  November 19, 2009
    Series E       February 4, 2000..........      680,000       17 million         2.0938  February 4, 2010
                                                 1,600,000  $    40 million  $      2.0938
Archstone Communities Limited Partnership II:

    Series F       September 27, 1999........      800,000  $    20 million  $      2.0313  September 27, 2009
    Series G       March 3, 2000.............      600,000       15 million         2.1563  March 3, 2010
                                                 1,400,000  $    35 million         2.0849
                       Total ................    3,000,000  $    75 million  $      2.0896
                                               ===========  ===============  =============`

As of June 30, 2001 and 2000, there were  approximately  949,000  convertible  operating  partnership units
("OP  Units")  outstanding  that had been  issued in  exchange  for real  estate  by  consolidated  subsidiaries  of
Archstone.  The units are convertible  into Common Shares on a one-for-one  basis and are entitled to  distributions
in amounts equal to those distributed on Common Shares.

# Archstone Communities Trust

# Notes to Condensed Financial Statements - (Continued)

All of the units are  reflected  as  minority  interest  in the  accompanying  Balance  Sheets.  The income
allocated to these minority interests,  which is generally equal to the amount of unit  distributions,  is reflected
as minority  interest expense in the accompanying  Statements of Earnings.  We do not recognize gains related to the
issuance of partnership interests.

The following table summarizes  Archstone's  ownership  percentage in each limited  partnership  before and
after the issuance of partnership units during the periods covered by these financial statements:

`Archstone Equity as a
                                                                              Percentage of Total
                                                                             Partnership Equity   
         Partnership             Description of Unit      Transaction        Before        After
            Name               Issuance During Period        Date         Transaction   Transaction

ACL(1)......................  680,000 Preferred Units      02/04/00          78.0%         77.0%
ACL(1)......................  350,590 OP Units             03/16/00          77.0%         76.0%
ACL II(2)...................  600,000 Preferred Units      03/03/00          78.0%         60.0%`

|(1) | "ACL" refers to Archstone Communities Limited Partnership
|--- | ---------------------------------------------------------

|(2) | "ACL II" refers to Archstone Communities Limited Partnership II
|--- | ---------------------------------------------------------------

## (6)         Shareholders' Equity and Distribution to Shareholders

The following table  summarizes the quarterly cash dividends paid per share on Common and Preferred  Shares
during the three months ended March 31 and June 30, 2001 and the annualized dividend we expect to pay for 2001:

`Quarterly       Annualized
                                                              Cash Dividend    Cash Dividend
                                                                Per Share        Per Share   
             Common Shares.................................    $        0.41    $        1.64
             Series A Convertible Preferred Shares(1)......    $        0.55    $        2.21
             Series B Preferred Shares(1)(2)...............    $        0.56              N/A
             Series C Preferred Shares(1)..................    $        0.54    $        2.16
             Series D Preferred Shares(1)..................    $        0.55    $        2.19`

|(1) | The liquidation preference on all preferred series is $25 per share.
|--- | --------------------------------------------------------------------

|(2) | All of the  outstanding  Series B  Cumulative  Redeemable  Preferred  Shares of  Beneficial  Interest  were
         redeemed  on May 7,  2001.  The cash  dividend  paid for the  period  from April 1, 2001 to May 7, 2001 was
         $0.23125 per share.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

On July 17, 2001,  Archstone's  Board of Trustees  declared the third  quarter  2001 cash  distribution  of
$0.41 per Common Share,  payable on August 30, 2001,  to  shareholders  of record on August 16, 2001.  This dividend
marks the company's 103rd consecutive quarter of common dividends declared.

# Archstone Communities Trust

# Notes to Condensed Financial Statements - (Continued)

## (7)         Financial Instruments and Hedging Activities

At June 30, 2001 and December  31,  2000,  the fair values of cash and cash  equivalents,  restricted  cash
held in a tax-deferred  exchange  escrow,  receivables  and accounts  payable  approximated  their  carrying  values
because of the short-term  nature of these  instruments.  The estimated fair values of other  financial  instruments
subject  to  fair  value   disclosures  were  determined  based  on  available  market   information  and  valuation
methodologies  believed  to be  appropriate  for  these  purposes.  Considerable  judgment  and  a  high  degree  of
subjectivity  are involved in developing  these  estimates and,  therefore,  are not  necessarily  indicative of the
actual  amounts  that  we  could  realize  upon  disposition.  Following  is a  table  summarizing  these  financial
instruments (in thousands):

`Balance at                    Balance at
                                                        June 30, 2001              December 31, 2000     
                                                   Carrying     Estimated      Carrying      Estimated
                                                    Amounts     Fair Value      Amounts      Fair Value  
Stock investments..............................  $      5,291  $      5,291  $      16,182  $      16,182
Borrowings:
     Unsecured credit facilities...............  $          -  $          -  $     193,719  $     193,719
     Long-Term Unsecured Debt..................     1,390,219     1,399,844      1,401,262      1,392,216
     Mortgages payable.........................       831,653       839,568        875,804        892,733
Interest rate contracts:
     Interest rate swaps.......................  $      4,505  $      4,505  $           -  $       6,599
     Interest rate caps........................            72            72            715            559`

The amounts  labeled  "stock  investments"  in the table above include both  investments  in private equity
securities and  publicly-traded  equity securities for which there is a readily  determinable fair market value. The
publicly-traded  equity  securities  are classified as "available  for sale  securities"  and carried at fair value,
with  unrealized  gains  and  losses  reported  as  a  separate  component  of  shareholders'  equity.  The  private
investments,  for which we do not have the ability to exercise  significant  influence,  are  accounted for at cost.
Declines in the value of public and private  investments  that management  determines are other than temporary,  are
recorded  as a  provision  for  possible  loss on  investments.  Our  evaluation  of the  carrying  value  of  these
investments is primarily based upon a regular review of market valuations (if available),  each company's  operating
performance  and  assumptions  underlying  cash  flow  forecasts.  In  addition,  management  considers  events  and
circumstances that may signal the impairment of an investment.  As a result of this evaluation  process,  management
concluded  that the decline in value of its  investments  in private  technology  companies was other than temporary
and recorded a charge to provision  for possible  loss on  investments  during the six months ended June 30, 2001 of
$7.9 million.

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.  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.

To determine the fair values of derivative  and other  financial  instruments,  we use a variety of methods
and  assumptions  that are based on market  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.

# Archstone Communities Trust

# Notes to Condensed Financial Statements - (Continued)

We adopted SFAS No.  133/138, Accounting  for  Derivative  Instruments  and Hedging  Activities on January 1,
2001. This new accounting  standard requires  companies to carry all derivative  instruments on the balance sheet at
fair value.  The  accounting  for  changes in the fair value of a  derivative  instrument  depends on whether it has
been  designated  and qualifies as part of a hedging  relationship  and, if so, on the reason for holding it. We use
only qualifying hedges that are designated  specifically to reduce borrowing costs.  This is typically  accomplished
using interest rate swaps, interest rate caps or by locking in rates on anticipated debt issuances.

For  financial  reporting  purposes,  the  accounting  will  vary  depending  on the type of hedge  and its
effectiveness.  With  respect to a fair value  hedge,  both  changes  in the fair  value of the  derivative  hedging
instrument  and changes in the fair value of the hedged item will be recorded  in earnings  each  reporting  period.
These amounts should completely offset with no resulting  earnings impact,  except for the portion of the hedge that
proves  to be  ineffective,  if any.  In the  case of a cash  flow  hedge,  changes  in fair  value  related  to the
effective  portion of the hedge are  accumulated in other  comprehensive  income and  subsequently  reclassified  to
earnings  during the period  that the  hedged  item  impacts  earnings.  Any  portion of the cash flow hedge that is
ineffective  at  offsetting  cash flows will be recognized in earnings  immediately.  For example,  the reduction in
fair value on a cash flow  hedge,  such as an  interest  rate cap,  relating  to the  passage of time is recorded in
earnings each period.

Upon  adoption of SFAS No.  133/138,  on January 1, 2001 we recorded a net  transition  unrealized  loss of
approximately  $205,000 in other expense,  related to the cumulative  effect of an accounting  change.  In addition,
for the six months  ended June 30,  2001 we  recorded a $438,000  charge to other  expense  related to the change in
time  value of our  interest  rate  caps.  During  this six month  period we  recorded  a net  benefit of $51,000 to
interest  expense  relating  to an  interest  rate  swap  designated  as a cash flow  hedge  that was more than 100%
effective  at  offsetting  interest  rates on the  underlying  hedged  debt.  Based on current  interest  rates,  we
anticipate  that over the next twelve months we will record interest  expense of  approximately  $245,000  resulting
from the  reclassification  of a portion of the  $482,000  unrealized  loss  relating to cash flow hedges  currently
recorded in other  comprehensive  income.  The combination of this expense with the lower interest expense we expect
to pay on the  underlying  floating rate debt will result in overall  interest  expense  equal to the  contractually
fixed amount  resulting  from the fixed rate swaps.  As a matter of policy,  we pursue  hedging  strategies  that we
expect will result in the lowest  overall  borrowing  costs and least degree of earnings  volatility  possible under
the new accounting standard.

The  following  table  summarizes  the  notional  value,  carrying  value and  estimated  fair value of our
derivative  financial  instruments,  as of June 30, 2001 (in  thousands).  The notional value provides an indication
of the extent of our  involvement  in these  instruments  at that time,  but does not represent  exposure to credit,
interest rate or market risks.

`Carrying and
                                                    Notional        Maturity      Estimated Fair
                                                     Amount       Date Range         Value     
         Cash flow hedges:
            Interest rate caps.................  $     152,958     2002-2005     $           72
            Interest rate swaps................        205,000     2001-2006                533
              Total cash flow hedges...........  $     357,958     2001-2006     $          605
         Fair value hedges:
            Interest rate swaps................  $     104,005     2006-2008     $        2,477
            Total rate of return swaps.........         69,756     2004-2007              1,495
              Total fair value hedges..........  $     173,761     2004-2008     $        3,972
                 Total hedges..................  $     531,719     2001-2008     $        4,577
                                                 =============  ===============  ==============`

# Archstone Communities Trust

# Notes to Condensed Financial Statements - (Continued)

## (8)         Segment Data

We define each of our apartment  communities as individual  operating  segments.  We have  determined  that
all of our apartment  communities  have similar  economic  characteristics  and also meet the other  criteria  which
permit the apartment  communities to be aggregated into one reportable  segment.  We rely primarily on Net Operating
Income (rental revenues less rental expenses and real estate taxes,  excluding  depreciation) for purposes of making
decisions about allocating resources and assessing segment performance.

Following are reconciliations of the reportable  segment's:  (i) revenues to consolidated revenues and (ii)
Net Operating Income to consolidated earnings from operations (in thousands):

`Three Months Ended         Six Months Ended
                                                                June 30,                  June 30,      
                                                           2001         2000          2001        2000  
Reportable apartment communities segment revenues.....   $ 155,274   $ 173,962     $ 325,364   $ 341,693
Other non-reportable operating segment revenues (1)...       5,505      10,851        10,471      20,136
     Total segment and consolidated revenues..........   $ 160,779   $ 184,813     $ 335,835   $ 361,829
                                                         =========   =========     =========   =========

                                                           Three Months Ended        Six Months Ended
                                                                June 30,                  June 30,      
                                                           2001         2000         2001         2000  
Reportable    apartment    communities   segment   Net
     Operating Income..................................  $ 106,052   $ 116,230     $ 221,445   $ 230,266
Other  non-reportable  operating  segment Net Operating
     Income ...........................................        890       1,107         1,802       1,838
     Total segment Net Operating Income ...............    106,942     117,337       223,247     232,104

Reconciling items:
     Income from unconsolidated real estate entities ..        778       2,314         1,211       1,201
     Other income .....................................      3,757       7,427         7,282      17,092
     Depreciation on real estate investments ..........    (29,142)    (36,696)      (61,495)    (73,221)
     Interest expense .................................    (32,430)    (37,325)      (67,076)    (71,527)
     General and administrative expenses ..............     (6,128)     (5,466)      (11,806)    (11,751)
     Other expenses ...................................       (955)       (709)      (10,941)     (3,819)
Consolidated earnings from operations .................  $  42,822   $  46,882     $  80,422   $  90,079
                                                         =========   =========     =========   =========`

|(1) | The six months  ended June 30, 2001 are  primarily  comprised  of interest  income,  rental  revenue from a
         hotel,  net gains from the sale of technology  investments and other income.  The six months ended June 30,
         2000 primarily  include  interest income on the Homestead  mortgage  notes,  which were sold during 2000, a
         gain from the sale of Spectrum Apartment Locators, rental revenue from a hotel and other income.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Archstone  does not derive any of its  consolidated  revenues from foreign  countries and does not have any
major customers that individually account for 10% or more of its consolidated revenues.

## (9)         Proposed Merger Transaction

On May 4, 2001, we announced an agreement to merge with Charles E. Smith Residential  Realty,  Inc. ("Smith
Residential"),  a publicly-traded real estate investment trust that primarily develops,  acquires,  owns, leases and
manages high-rise apartment  communities in the greater  Washington,  D.C.  metropolitan area,  Chicago,  Boston and
Southeast  Florida.  Pursuant to a series of merger  transactions,  Archstone will be  reorganized  into an umbrella
partnership  real estate  investment  trust,  or "UPREIT"  structure with Archstone,  to be renamed  Archstone-Smith
Operating  Trust,  becoming a subsidiary of  Archstone-Smith  Trust.  The total market value of the  transaction  is
approximately $3.6 billion.

# Archstone Communities Trust

# Notes to Condensed Financial Statements - (Concluded)

In accordance  with the terms of the agreement,  each  outstanding  Smith  Residential  common share (NYSE:
SRW) will be converted  into the right to receive  1.975  Archstone  common  shares and each  outstanding  preferred
share of Smith  Residential  will be converted into the right to receive a corresponding  series of preferred shares
of  Archstone.  Additionally,  common  limited  partners  of  Charles  E.  Smith  Residential  Realty  L.P.  ("Smith
Partnership"),  an  operating  partnership  in which Smith  Residential  holds an interest  and is the sole  general
partner,  will  receive  1.975  common  units  of  Archstone-Smith  Operating  Trust  for each  limited  partnership
interest.  Archstone-Smith and  Archstone-Smith  Operating Trust will be the surviving entities resulting from these
transactions.  The  Archstone-Smith  Trust  dividend  immediately  after  the  merger  is  expected  to remain at an
annualized level of $1.64 per share in 2001.

The  transaction,  which is  structured  to qualify as a tax-free  merger,  is subject to the approval of a
majority  of  Archstone's  outstanding  common  shares,  two-thirds  of  the  outstanding  common  shares  of  Smith
Residential  and a  majority  in  percentage  interest  of the  holders of limited  partnership  interests  of Smith
Partnership  (other  than  limited  partnership  interests  owned by Smith  Residential).  The  transaction  is also
subject to the  receipt of  approval  from the  Securities  and  Exchange  Commission  and other  customary  closing
conditions.  We filed amended  registration  statements  for  Archstone-Smith  Trust and  Archstone-Smith  Operating
Trust with the Securities and Exchange  Commission  relating to the transaction in August 2001.  These  registration
statements  have not yet been declared  effective by the  Securities  and Exchange  Commission.  The  transaction is
expected to be completed in October 2001.

## (10)        Subsequent Event

As a result of the proposed  merger,  Smith  Residential  abandoned  its plans to raise  additional  equity
capital  to fund  operations.  In  order to avoid  encumbering  additional  Smith  Partnership  assets  and to avoid
incurring  third  party  financing  fees,  on  July  27,  2001,  Archstone  funded  a $100  million  loan  to  Smith
Partnership.  Under the terms of the loan agreement,  Smith  Partnership  will pay a minimum  interest rate equal to
the LIBOR rate plus 100 basis points until 60 days after the  termination  of the merger  agreement,  if applicable,
and  thereafter  will pay  interest  at  LIBOR  plus 200  basis  points.  The loan  matures  on the  earlier  of the
completion  of the merger or 180 days after the merger  agreement  is  terminated.  The loan is  unsecured,  but may
become  secured  by  specified  properties  having an  estimated  fair  market  value in excess of $150  million  at
Archstone's  option upon an event of default.  The loan may be prepaid by Smith  Partnership  at anytime in whole or
in part.

# INDEPENDENT ACCOUNTANTS' REVIEW REPORT

The Board of Trustees and Shareholders
of Archstone Communities Trust:

We have reviewed the accompanying  condensed balance sheet of Archstone  Communities Trust (the "Trust") as
of June 30, 2001,  and the related  condensed  statements of earnings for the three and six month periods ended June
30, 2001 and 2000,  the  condensed  statement of  shareholders'  equity for the six month period ended June 30, 2001
and the  condensed  statements  of cash  flows  for the six  month  periods  ended  June 30,  2001 and  2000.  These
condensed financial statements are the responsibility of the Trust's management.

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

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

We have previously  audited,  in accordance with auditing standards generally accepted in the United States
of America,  the balance  sheet of the Trust as of December  31,  2000,  and the  related  statements  of  earnings,
shareholders'  equity,  and cash flows for the year then  ended  (not  presented  herein);  and in our report  dated
January 30, 2001,  except as to Note 16, which is as of February 28, 2001,  we expressed an  unqualified  opinion on
those financial  statements.  In our opinion, the information set forth in the accompanying  condensed balance sheet
as of December 31, 2000 is fairly stated, in all material  respects,  in relation to the balance sheet from which it
has been derived.

Chicago, Illinois
July 25, 2001, except as to Note 10,
which is as of July 27, 2001

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

The following  information  should be read in conjunction  with  Archstone's  2000 Form 10-K as well as the
financial statements and notes included in Item 1 of this report.

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's  2000 Form 10-K
"Item 1.  Business"  for a more  complete  discussion  of risk  factors  that  could  impact  our  future  financial
performance.

On May 4, 2001, we announced an agreement to merge with Smith  Residential,  a publicly-traded  real estate
investment trust that primarily  develops,  acquires,  owns, leases and manages high-rise  apartment  communities in
the greater Washington,  D.C.  metropolitan area, Chicago,  Boston and Southeast Florida.  The combined company will
operate under the name  Archstone-Smith  Trust. Each outstanding Smith Residential  common share (NYSE: SRW) will be
converted into the right to receive 1.975  Archstone  common  shares.  This exchange ratio is not subject to change.
The merger is  structured  as a tax-free  transaction  and is expected to be completed in October  2001,  subject to
shareholder and Securities and Exchange  Commission  approval.  The following  Management's  Discussion and Analysis
of  Financial  Condition  and  Results of  Operations  does not give  effect to the  merger.  Please  reference  the
registration  statements  on Form S-4  filed  for  Archstone-Smith  Trust and  Archstone-Smith  Operating  Trust for
financial and other information on the expected impact of the merger.

## Results of Operations

Our basic net earnings  attributable  to Common  Shares  decreased  $9.0 million  (11.2%)  during the three
months ended June 30, 2001 as compared to the same period in 2000.  This  decrease was primarily  attributable  to a
$10.2 million  reduction in apartment  community Net Operating Income (due primarily to a reduction in the number of
operating  properties  as a result  of  significant  disposition  activity),  a $6.4  million  decrease  in gains on
disposition of depreciated real estate and a $5.9 million  reduction in interest income from our Homestead  mortgage
notes as a result of the sale of those notes during 2000.  These  factors  were  partially  offset by a $7.6 million
reduction in depreciation  expense and a $4.9 million  reduction in interest  expense  resulting  primarily from the
significant disposition activity.

Our basic net earnings  attributable  to Common  Shares  increased  $15.9  million  (13.3%)  during the six
months ended June 30, 2001 as compared to the same period in 2000.  This  increase was primarily  attributable  to a
$24.5  million  increase  in gains  on  disposition  of  depreciated  real  estate,  an $11.7  million  reduction  in
depreciation  expense and a $4.5 million reduction in interest expense.  These factors were influenced  primarily by
significant  disposition  activity.  Partially offsetting these increases were an $11.9 million reduction in interest
income from the  Homestead  mortgage  notes which were sold during 2000, an $8.8 million  reduction in Net  Operating
Income resulting  primarily from dispositions and a $6.8 million increase in provisions for loss relating  primarily
to technology investment write-offs.

At June 30,  2001,  investments  in  apartment  communities  comprised  over 99% of our total  real  estate
portfolio.  The following  table  summarizes  overall  performance of our apartment  communities for each period (in
thousands, except for units and percentages):

`Three Months Ended          Six Months Ended
                                                                         June 30,                   June 30,       
                                                                    2001         2000         2001         2000    
Rental revenues............................................      $   155,274  $   173,962  $   325,364  $   341,693
Property operating expenses................................           49,222       57,732      103,919      111,427
Net Operating Income.......................................      $   106,052  $   116,230  $   221,445  $   230,266
                                                                 ===========  ===========  ===========  ===========
Operating margin (Net Operating Income/rental revenues)....            68.3%        66.8%        68.1%        67.4%
                                                                 ===========  ===========  ===========  ===========
Average occupancy during period............................            95.7%        96.0%        95.6%        95.7%
Average number of operating units..........................           52,524       67,715       56,768       67,875`

The following table reflects revenue,  expense and Net Operating Income growth for Same-Store  communities,
meaning the group of apartment  communities  that were fully operating  during the six months ended June 30 for each
respective comparison period:

`Same-Store          Same-Store         Same-Store Net         Number
                                         Revenue             Expense            Operating               of
                                         Growth              Growth           Income Growth       Operating Units   

     2001........................         7.14%               4.96%               8.17%                40,751
     2000........................         6.09%               3.78%               7.25%                45,130`

Net  Operating  Income from our total  portfolio  has decreased for the three and six months ended June 30,
2001 compared to the same periods in 2000  primarily as a result of  significant  disposition  activity  during 2000
and 2001. The execution of our capital  redeployment  program  continues to improve  operating margins as capital is
redeployed into protected  markets,  which  typically  achieve higher and more  consistent  revenue  growth.  Rising
insurance  costs  have  partially  offset  these  margin  improvements  as a result  of  higher  premiums  and claim
estimates.  Upon renewal of our insurance  policies in July 2001, we  experienced  an increase of  approximately  $5
million in annual premiums due to tightening insurance markets,  particularly with respect to earthquake  insurance,
which will impact  earnings over the next four  quarters.  We believe the broader real estate market is likely to be
impacted in a similar manner.

Income  from  unconsolidated  real  estate  entities  was lower for the three  months  ended  June 30,  2001 as
compared to the same period in 2000  primarily  as a result of a $2.1 million  reduction in our share of  Ameriton's
earnings.  Ameriton's  investment  strategy  is to  opportunistically  acquire,  reposition  and  develop  apartment
communities  for sale to third  parties.  The lower  income from  Ameriton  was  partially  offset by a $0.6 million
increase in our share of earnings from investments in apartment-related joint ventures in 2001.

Income from  unconsolidated  real  estate  entities  for the six months  ended June 30, 2001 as compared to the
same period in 2000 was essentially  the same.  This resulted from a $0.7 million  increase in our share of earnings
from  apartment-related  joint ventures with a  corresponding  offset  resulting from a lower share of earnings from
Ameriton.  See Note 3 contained  in Item 1 for  additional  information  on income from  unconsolidated  real estate
entities.

Lower other  income for the three and six months  ended June 30,  2001 as  compared to the same  periods in
2000 was primarily  attributable  to a $5.9 million and $11.9 million  reduction,  respectively,  in interest income
related to the Homestead mortgage notes, which we no longer own.

The $7.6 million and the $11.7  million  decreases in  depreciation  expense for the three and six months ended
June 30, 2001 as compared to 2000 resulted  primarily from the net disposition of operating  communities during 2000
and 2001.

Net interest expense  decreased $4.9 million and $4.5 million,  respectively,  for the three and six months
ended June 30, 2001 as compared to the same periods in 2000.  The net decreases  resulted  from an overall  decrease
in gross  interest  expense  partially  offset by lower  capitalized  interest.  The  respective  decreases in gross
interest  expense of $6.5 and $7.3 million for the three and six month  periods was  attributable  to lower  average
borrowings  outstanding  on our unsecured  credit  facilities  and fewer  mortgage  notes during 2001 as a result of
community  dispositions.  These  decreases  in gross  interest  were  partially  offset by  respective  decreases in
capitalized  interest  of $1.6 and $2.8  million  for the  three  and six  month  periods  due to  lower  levels  of
communities undergoing active construction.

The  increase in general and  administrative  expenses for the three months ended June 30, 2001 as compared
to the same period in 2000 relates primarily to higher long-term incentive plan and  payroll-related  expenses which
were partially offset by lower travel-related costs.

General and administrative expenses for the year ended June 30, 2001 as compared to the same period in
2000 has remained relatively flat.  Higher long-term incentive plan expenses and professional fees have been
offset primarily by lower severance and travel-related costs.

During the six months ended June 30, 2001,  provisions  for possible  loss on  investments  increased  $6.8
million  as  compared  to the same  period  in 2000.  The  increase  is  primarily  attributable  to a $7.9  million
write-off  related to private  technology  investments  in 2001.  In addition,  during the six months ended June 30,
2001, we concluded that full recovery of a real estate  investment held for sale, and  subsequently  sold during the
second  quarter of 2001,  was doubtful.  As a result,  a provision for possible loss of $2.0 million was recorded to
reduce the asset to its  estimated  fair value.  We recorded a $2.8  million  provision  for loss in 2000 related to
the  conversion  feature on the Homestead  mortgage  notes,  which were sold during the third  quarter of 2000.  See
Note 7 contained in Item 1 of this Form 10-Q for a more detailed discussion of our technology investments.

During the six months  ended June 30, 2001 we  disposed  of 41  apartment  communities  and certain  other real
estate assets  representing  gross proceeds of $922.9  million,  including  $650.0 million related to joint ventures
formed with an  institutional  investor in March 2001 and May 2001.  Two of the operating  communities  representing
$40.9 million in gross  proceeds were sold to the real estate joint venture by affiliates.  No gain was  recognized by
Archstone  on these  two  transactions.  See  Note 3  contained  in Item 1 of this  Form  10-Q  for a more  detailed
discussion  of our joint  venture  activity.  During the six months ended June 30, 2000, we disposed of 18 apartment
communities  and certain other assets  representing  gross  proceeds of $339.1  million,  including  $101.1  million
related to a joint  venture  formed in June with the First Islamic Bank,  E.C., a  corporation  organized  under the
laws of the State of Bahrain.  Aggregate  net gains of $70.5  million and $46.0  million  were  recorded for the six
months  ended  June 30,  2001 and  2000,  respectively.  Our  total  disposition  target  for 2001 is  approximately
$1.0-$1.2 billion.

## Liquidity and Capital Resources

We are committed to maintaining a strong balance sheet and preserving our financial  flexibility,  which we
believe enhances our ability to capitalize on attractive  investment  opportunities,  as they become  available.  We
believe  Archstone's  liquidity and financial position are sufficient to meet all of our cash flow needs during 2001
and the  foreseeable  future.  See  Archstone's  Statements of Cash Flows for a summary of operating,  investing and
financing activities for the six months ended June 30, 2001 and 2000.

Net cash flow provided by operating  activities  decreased by $25.4 million,  or 15.3%,  for the six months
ended June 30,  2001 as  compared to the same period of 2000.  This  decrease is  primarily  due to a high volume of
dispositions  during 2000 and 2001 and to lower interest  income  resulting from the sale of the Homestead  mortgage
notes in July  2000.  See  Results of  Operations  for a more  complete  discussion  of the  factors  impacting  our
operating performance.

For the six months  ended June 30,  2001,  real estate  investments  of $127.4  million,  the  repayment of
$193.7 million of unsecured credit  facilities,  the repurchase of $50.0 million in Common Shares, the redemption of
$104.7 million of Series B Preferred  Shares and the $257.7 million  increase in our  tax-deferred  exchange  escrow
were financed  primarily with cash flow from  operations and  disposition  proceeds,  including  proceeds from joint
venture  transactions.  During the  remainder  of 2001,  we expect to fund  acquisitions,  development  activity and
costs  associated with the proposed  merger with Smith  Residential  with the use of available  cash,  including the
cash held in our  tax-deferred  exchange  escrow,  with proceeds from future  dispositions and with borrowings under
unsecured credit  facilities,  if necessary.  Real estate  investments of $358.2 million during the six months ended
June 30, 2000 were financed  primarily with cash flow from  operations,  disposition  proceeds  (including  proceeds
from joint venture  transactions),  cash held in our  tax-deferred  exchange  escrow and borrowings  under unsecured
credit  facilities.  These  unsecured  credit  facilities  were reduced  $187.3  million during the period using net
proceeds from secured debt financing,  mortgage notes  receivable  paydowns and the issuance of perpetual  preferred
limited partnership units.

Other  significant  financing  activity included the payment of $115.0 million and $123.4 million in Common
Share,  Preferred  Share and minority  interest  dividends/distributions  for the six months ended June 30, 2001 and
2000,  respectively.  In addition,  we prepaid  mortgages due to community  dispositions  of $28.8 million and $16.6
million during the six months ended June 30, 2001 and 2000, respectively.

Our most  significant  non-cash  investing  and financing  activities  during the six months ended June 30,
2001 and 2000 included:  (i) the  assumption of mortgages  payable upon the purchase of apartment  communities;  and
(ii) the related transfer of a mortgage  liability and operating  liabilities in exchange for an ownership  interest
in joint ventures.

Our  long-term  debt is  structured  to create a relatively  level  principal  maturity  schedule,  without
significant  repayment  obligations in any year, to mitigate future  liquidity  issues and  refinancing  risk. As of
June 30, 2001, we have  approximately  $59.7 million of long-term debt maturing during the remainder of 2001, $102.8
million  maturing  during 2002 and $191.5 million  maturing during 2003. See Note 4 contained in Item 1 of this Form
10-Q for more information on scheduled debt maturities.

We currently have $680 million in total borrowing capacity under our unsecured credit  facilities,  with no
balance  outstanding  as of  August  8,  2001.  Archstone's  Long-Term  Unsecured  Debt and  mortgages  payable  had
effective  interest  rates of 7.49% and 6.43%,  respectively,  as of June 30,  2001.  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 at June 30, 2001.

Based on  anticipated  distribution  levels for 2001 and the number of shares and units  outstanding  as of
June 30, 2001 and without  consideration  for the effects of the closing of the transaction with Smith  Residential,
we  anticipate  that we will pay the  following  dividends/distributions  during the next 12 months  (in  thousands,
except per share amounts):

`Per Share      Total  
Common Share distributions......................................................     $     1.64   $  198,843
Series A Convertible Preferred Share dividends..................................           2.21        7,083
Series C Preferred Share dividends..............................................           2.16        4,289
Series D Preferred Share dividends..............................................           2.19        4,358
Series E perpetual preferred limited partnership unit distributions(1)..........           2.09        3,350
Series F perpetual preferred limited partnership unit distributions(1)..........           2.03        1,625
Series G perpetual preferred limited partnership unit distributions(1)..........           2.16        1,294
Other distributions on minority interests(1)....................................           1.64        1,556
     Total dividend/distribution requirements...................................                  $  222,398
                                                                                                  ==========`

|(1) | See Note 5 contained in Item 1 for information on the perpetual  preferred  limited  partnership  units and
         other minority interests.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------

Following  is a  summary  of  unfunded  planned  investments  as  of  June  30,  2001  (dollar  amounts  in
thousands).  The amounts labeled  "Discretionary"  represent future investments that we plan to make, although there
is not a contractual  commitment to do so. The amounts labeled  "Committed"  represent the  approximate  amount that
we are contractually committed to fund for communities under construction.

`Planned Investments      
                                                                      Units      Discretionary     Committed   
Communities under construction.................................          3,440   $            -  $      195,548
Communities In Planning and owned..............................          1,646          200,611               -
Communities In Planning and Under Control......................          1,583          268,215               -
Operating community acquisitions under contract................          1,709          200,188               -
     Total.....................................................          8,378   $      669,014  $      195,548
                                                                    ==========  ===============  ==============`

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

We anticipate  completion of most of the communities that are currently under  construction and the planned
operating  community  improvements  during  the  remainder  of 2001 and 2002 and  expect  to start  construction  on
approximately  $150-$200 million, based on Total Expected Investment,  of communities that are currently In Planning
during the remainder of 2001. We would expect to fund the costs of these  development  projects over a  two-to-three
year period following the date  construction  commences.  We expect to complete the acquisition of operating  communities
under  contract by the end of 2001. No assurances  can be given that  communities  Archstone  does 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.

As a result of the proposed merger,  Smith  Residential  abandoned their plans to raise  additional  equity
capital  to fund  operations.  In  order to avoid  encumbering  additional  Smith  Partnership  assets  and to avoid
incurring  third  party  financing  fees,  on  July  27,  2001,  Archstone  funded  a $100  million  loan  to  Smith
Partnership.  See Note 9 contained in Item1 of this Form 10-Q for additional information.

We  anticipate  financing  our  planned  investment,  operating  needs and the  expenses  to be incurred in
connection  with the  transaction  with Smith  Residential  primarily  with cash on hand,  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.   Consistent  with  Archstone's  performance  in  2000,  we
anticipate  that net cash  flow  from  operating  activities  during  2001 will be  sufficient  to fund  anticipated
dividend/distribution  requirements and scheduled debt principal  payments.  To fund planned investment  activities,
we had $680 million in available  capacity on Archstone's  unsecured credit facilities at August 8, 2001. During the
six months  ended June 30,  2001 we disposed  of 41  apartment  communities  and  certain  other real estate  assets
representing  gross proceeds of $922.9 million,  including joint venture  transactions.  The disposition  target for
2001 is approximately $1.0-$1.2 billion.

We  currently  have  $577.2  million  in  shelf-registered  securities,  which can be issued in the form of
Long-Term  Unsecured  Debt,  Preferred  Shares or Common  Shares on an  as-needed  basis,  subject to our ability to
effect offerings on satisfactory terms based on prevailing market conditions.

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

Our  involvement  with  derivative  financial  instruments is limited and we do not use them for trading or
other speculative  purposes.  We occasionally  utilize interest rate swaps and caps as interest rate hedges to lower
our overall  borrowing  costs.  See Note 7 contained in Item 1 of this Form 10-Q for more  information on derivative
financial instruments currently in use.

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

We have both public and private  investments in the equity  securities of technology  and other  companies.
The  publicly-traded  equity securities are classified as "available for sale securities" and carried at fair value,
with  unrealized  gains  and  losses  reported  as  a  separate  component  of  shareholders'  equity.  The  private
investments,  for which we do not have the ability to exercise  significant  influence,  are  accounted for at cost.
Declines in the value of public and private  investments  that management  determines are other than temporary,  are
recorded  as a  provision  for  possible  loss on  investments.  Our  evaluation  of the  carrying  value  of  these
investments is primarily based upon a regular review of market valuations (if available),  each company's  operating
performance  and  assumptions  underlying  cash  flow  forecasts.  In  addition,  management  considers  events  and
circumstances that may signal the impairment of an investment.  As a result of this evaluation  process,  management
concluded  that the decline in value of its  investments  in private  technology  companies was other than temporary
and recorded a charge to provision  for possible  loss on  investments  during the six months ended June 30, 2001 of
$7.9 million.  After giving effect to this valuation  adjustment,  as of June 30, 2001 Archstone had remaining stock
investments  with an  aggregate  carrying and  estimated  fair value of $5.3  million,  of which $3.8 million was in
technology companies.

The broader technology sector,  including the sectors in which some of our investees operate,  is currently
suffering from a decreased  supply of capital and depressed  market  valuation.  The inability of these companies to
raise capital at a  satisfactory  price in the near term could impair their ability to fund  immediate  obligations,
including working capital  requirements,  and could result in the failure of those companies.  In the event that our
remaining  stock  investments  are  deemed to be  partially  or fully  impaired,  the  resulting  write-down  of our
investment  would have a negative  impact on our net  earnings  and could  adversely  affect the price of our Common
Shares.

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.  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.

To determine the fair values of derivative  and other  financial  instruments,  we use a variety of methods
and  assumptions  that are based on market  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.

The  following  table  summarizes  the  notional  value,  carrying  value and  estimated  fair value of our
derivative  financial  instruments,  as of June 30, 2001 (in  thousands).  The notional value provides an indication
of the extent of our  involvement  in these  instruments  at that time,  but does not represent  exposure to credit,
interest rate or market risks.

`Carrying and
                                                    Notional       Maturity      Estimated Fair
                                                     Amount       Date Range         Value     
         Cash flow hedges:
            Interest rate caps.................  $     152,958     2002-2005     $           72
            Interest rate swaps................        205,000     2001-2006                533
              Total cash flow hedges...........  $     357,958     2001-2006     $          605
         Fair value hedges:
            Interest rate swaps................  $     104,005     2006-2008     $        2,477
            Total rate of return swaps.........         69,756     2004-2007              1,495
              Total fair value hedges..........  $     173,761     2004-2008     $        3,972
                 Total hedges..................  $     531,719     2001-2008     $        4,577
                                                 =============  ===============  ==============`

The table below  provides  information  about  Archstone's  liabilities  that are  sensitive  to changes in
interest  rates as of June 30, 2001.  As the table  incorporates  only those  exposures  that existed as of June 30,
2001,  it does not  consider  those  exposures  or positions  which could arise after that date.  Moreover,  because
there  were no firm  commitments  to  actually  sell  these  instruments  at fair  value  as of June 30,  2001,  the
information  presented  herein is merely an estimate  and has limited  predictive  value.  As a result,  Archstone's
ultimate  realized  gain or loss, if any, will depend on the  exposures  that arise during future  periods,  hedging
strategies,  prevailing  interest rates and other market factors existing at the time. The debt  classification  and
interest rates shown below give effect to interest rate caps and swaps, where applicable (in thousands):

`Expected Maturity/Principal Repayment Schedule at    
                                         June 30,                   December 31,                   
                                                                                                                 Estimated
                                                                                                       Total       Fair
                                           2001     2002      2003     2004      2005    Thereafter   Balance     Value (1)
Interest rate sensitive liabilities:
  Long-Term Unsecured Debt:
    Fixed rate.......................... $ 57,357 $ 97,810 $ 171,560 $ 51,560 $ 251,560 $   683,045 $ 1,312,892 $ 1,320,904
      Average nominal interest rate (2).    7.50%    7.54%     7.59%    7.62%     7.57%       7.50%           -           -
    Variable rate (3)................... $      - $      - $       - $      - $       - $    77,327 $    77,327 $    78,940
      Average nominal interest rate (2).        -        -         -        -         -       3.92%           -           -
  Mortgages payable:
    Fixed rate debt (4)................. $  1,849 $  3,853 $  18,760 $  4,206 $  32,164 $   443,795 $   504,627 $   512,542
      Average nominal interest rate (2).    7.22%    7.22%     7.21%    7.21%     7.21%       7.20%           -           -
    Variable rate debt.................. $    453 $  1,117 $   1,210 $ 38,484 $   1,421 $   284,341 $   327,026 $   327,026
      Average nominal interest rate (2).    5.23%    5.23%     5.23%    5.28%     5.33%       5.33%           -           -`

|(1) | The  estimated  fair value for each of the  liabilities  listed was  calculated by  discounting  the actual
         principal  payment stream at prevailing  interest rates (obtained from third party financial  institutions)
         currently available on debt instruments with similar terms and features.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Reflects the weighted  average  nominal  interest rate on the liabilities  outstanding  during each period,
         giving  effect to principal  payments and final  maturities  during each period,  if any. The nominal rates
         for variable rate  mortgages  payable have been held  constant  during each period  presented  based on the
         actual  variable  rates at June 30, 2001.  The weighted  average  effective  interest rate on the Long-Term
         Unsecured  Debt and  mortgages  payable  was  7.49%  and  6.43%,  respectively,  as of June 30,  2001.  The
         unsecured credit facilities had no outstanding balance.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Represents unsecured tax-exempt bonds.
|--- | --------------------------------------

|(4) | The fixed rate mortgages payable balance includes $286.0 million of Fannie Mae secured debt.
|--- | --------------------------------------------------------------------------------------------

# PART II - OTHER INFORMATION

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

At the annual shareholders' meeting held May 9, 2001, shareholders re-elected the following individuals
to serve on the Board:

`Shares Voted
                                                                      Against, Including
                                                Shares Voted in        Abstentions and
                       Name                          Favor                Non-votes
           -------------------------------      ---------------       ------------------
           Ned S. Holmes..................        105,391,098              772,911
           R. Scot Sellers................        105,385,787              778,222
           John M. Richman................        105,350,411              813,598`

Additionally,  at the annual meeting the shareholders  voted to amend  Archstone's  Declaration of Trust to
remove the exemption for Security  Capital from the Ownership  Limit, due to Security Capital having sold all of the
Common Shares it owned.  At the annual meeting  100,517,889  shares voted in favor of the amendment;  215,845 shares
voted against; 211,496 shares were recorded as abstentions and 19,577,639 shares were recorded as broker non-votes.

The shareholders also voted to approve the Archstone Communities Trust 2001 Employee Stock Purchase Plan
(the "ESPP"), which was recommended by the Board for the purpose of providing a method for eligible employees of
Archstone and its participating subsidiaries to acquire an interest in Archstone through the purchase of Common
Shares from Archstone at a discount from fair market value.  At the annual meeting 88,279,886 shares voted in
favor of the ESPP; 12,434,878 shares voted against; 230,465 shares were recorded as abstentions and 19,577,640
shares were recorded as broker non-votes.

The shareholders also voted to approve an amendment to the 1996 Share Option Plan for Outside Trustees
(the "Outside Trustees Plan"), to increase by 200,000 the number of Common Shares issued and reserved for issuance
under the Outside Trustees Plan.  At the annual meeting, 87,358,340 shares voted in favor of the amendment;
13,222,585 shares voted against; 364,305 shares were recorded as abstentions and 19,577,639 shares were recorded
as broker non-votes.

## Item 6.       Exhibits and Reports on Form 8-K

`(a) Exhibits:

       2.1   Amended and Restated Agreement and Plan of Merger, dated as of May 3, 2001, by and among Archstone
             Communities  Trust, New Garden Residential Trust,  Charles E. Smith Residential  Realty,  Inc. and
             Charles  E.  Smith  Residential  Realty,  L.P.  (incorporated  by  reference  to  Annex  A to  the
             prospectus  contained in the  Archstone-Smith  Trust Registration  Statement on Form S-4 (File No.
             333-63734))

       3.1   Form of Amended and Restated Declaration of Trust of Archstone-Smith Trust (incorporated by reference to
             Exhibit  2.1(d) to  Archstone  Communities  Trust's  Current  Report  on Form 8-K  filed  with the
             Securities and Exchange Commission on June 19, 2001)

       3.2   Form of Amended and Restated Bylaws of Archstone-Smith Trust (incorporated by reference to Exhibit 2.1(e)
             to  Archstone  Communities  Trust's  Current  Report on Form 8-K  filed  with the  Securities  and
             Exchange Commission on June 19, 2001)

       3.3   Form of Amended and Restated Declaration of Trust of Archstone-Smith Operating  Trust (incorporated by
             reference to Exhibit  2.1(b) to Archstone  Communities  Trust's  Current  Report on Form 8-K filed
             with Securities and Exchange Commission on June 19, 2001)

       3.4   Form of Amended and Restated Bylaws of Archstone-Smith Operating Trust (incorporated by reference to
             Exhibit  2.1(c) to  Archstone  Communities  Trust's  Current  Report  on Form 8-K  filed  with the
             Securities and Exchange Commission on June 19, 2001)`

`4.1   Form  of Archstone-Smith Trust common share of  beneficial ownership share  certificate
             (incorporated by reference to Exhibit 3.3 to the prospectus contained in the Archstone-Smith
             Trust Registration Statement on Form S-4 (File No. 333-63734))

       4.2   Form of Archstone-Smith Trust share certificate for Series A Preferred Shares (incorporated by reference
             to Exhibit 3.4 to the prospectus contained in the  Archstone-Smith  Trust Registration  Statement
             on Form S-4 (File No. 333-63734))

       4.3   Form of Archstone-Smith Trust share certificate for Series C Preferred Shares (incorporated by
             reference to Exhibit 3.5 to the prospectus contained in the  Archstone-Smith Trust Registration
             Statement on Form S-4 (File No. 333-63734))

       4.4   Form of Archstone-Smith Trust share certificate for Series D Preferred Shares (incorporated by reference
             to Exhibit 3.6 to the prospectus contained in the Archstone-Smith Trust Registration Statement
             on Form S-4 (File No. 333-63734))

       4.5   Form of Archstone-Smith Trust share certificate for Series H Preferred Shares (incorporated by reference
             to Exhibit 3.7 to the prospectus contained in the Archstone-Smith Trust Registration Statement
             on Form S-4 (File No. 333-63734))

       4.6   Form of Archstone-Smith Trust share certificate for Series I Preferred Shares (incorporated by reference
             to Exhibit 3.8 to the prospectus contained in the  Archstone-Smith Trust Registration Statement
             on Form S-4 (File No. 333-63734))

       4.7   Form of Archstone-Smith Trust share certificate for Series J Preferred Shares (incorporated by reference
             to Exhibit 3.9 to the prospectus contained in the Archstone-Smith Trust Registration Statement
             on Form S-4 (File No. 333-63734))

       4.8   Form of Archstone-Smith Trust share certificate for Series K Preferred Shares (incorporated by reference
             to Exhibit 3.10 to the prospectus contained in the Archstone-Smith Trust Registration Statement
             on Form S-4 (File No. 333-63734))

       4.9   Form of Archstone-Smith Trust share certificate for Series L Preferred Shares (incorporated by reference
             to Exhibit 3.11 to the prospectus contained in the Archstone-Smith  Trust Registration Statement
             on Form S-4 (File No. 333-63734))

       4.10  Form of Archstone-Smith Trust share certificate for Series A Preferred Shares (incorporated by reference
             to Exhibit 3.12 to the prospectus contained in the Archstone-Smith Trust Registration Statement
             on Form S-4 (File No. 333-63734))

       10.16 Purchase and Sale Agreement, dated as of February  15,  2001,  between Archstone and Security Capital
             (incorporated by eference to Exhibit  99.1 to Archstone's Current Report on Form 8-K dated
             February 16, 2001)

       10.17 Amendment No. 3, dated February 15, 2001, to Third Amended and Restated Investor Agreement by
             and  between Archstone and  Security  Capital (incorporated  by reference to Exhibit 99.2 to
             Archstone's Current Report on Form 8-K dated February 16, 2001)

       12.1  Computation of Earnings to Fixed Charges

       12.2  Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Share Dividends

       15.1  Letter from KPMG LLP dated August 14, 2001 regarding unaudited financial information

       99.1  Current Development Activity`

`(b) Reports on Form 8-K: The  following  report on Form 8-K was filed during the quarter of the period  covered
       by this report.

       Archstone  filed a Current Report on Form 8-K,  dated June 19, 2001,  under Items 5 and 7, Other Events and
       Financial Statements and Exhibits, respectively.`

# 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.

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




                                     BY:            /S/ WILLIAM KELL
                                            -------------------------------------------
                                                           William Kell
                                                 Senior Vice President and Controller
                                                     (Principal Accounting Officer)`

Date: August 14, 2001