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                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549
                                 --------------

                                    FORM 10-K
                        FOR ANNUAL AND TRANSITION REPORTS
                     PURSUANT TO SECTIONS 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934
(Mark one)
    X       ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
            SECURITIES EXCHANGE ACT OF 1934
            For the fiscal year ended December 31, 1999

                                       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 1-9360

                           ASSET INVESTORS CORPORATION
             (Exact Name of Registrant as Specified in Its Charter)

                 Delaware                                    84-1500244
     (State or Other Jurisdiction of                      (I.R.S. Employer
      Incorporation or Organization)                    Identification No.)

   3410 South Galena Street, Suite 210                         80231
             Denver, Colorado                                (Zip Code)
 (Address of Principal Executive Offices)

       Registrant's telephone number, including area code: (303) 614-9400

           Securities registered pursuant to section 12(b) of the Act:

    Title of Each Class                Name of Each Exchange on Which Registered
       Common Stock,                         New York Stock Exchange, Inc.
  par value $.01 per share

        Securities registered pursuant to Section 12(g) of the Act: None

Indicate  by check  mark  whether  the  registrant:  (1) has filed  all  reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days. Yes X No __

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]

As of March 17, 2000, 5,632,569 shares of common stock were outstanding, and the
aggregate market value of the shares (based upon the closing price of the common
stock on that date as  reported  on the New York Stock  Exchange,  Inc.) held by
non-affiliates was approximately $59,000,000.

                       DOCUMENTS INCORPORATED BY REFERENCE

Portions of the proxy  statement  for the  Registrant's  2000 Annual  Meeting of
Stockholders are incorporated by reference into Part III of this Annual Report.

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<PAGE>



                           ASSET INVESTORS CORPORATION

                                Table of Contents
                           Annual Report on Form 10-K
                   For the Fiscal Year Ended December 31, 1999


Item                                                                        Page

                                     PART I
1.   Business................................................................  1
          Company Background.................................................  1
          Proposed Merger with Commercial Assets.............................  2
          Industry Background................................................  2
          Financial Information about Industry Segments......................  3
          Growth and Operating Strategies....................................  3
          Competition........................................................  6
          Taxation of the Company............................................  6
          Regulations........................................................  7
          Insurance..........................................................  8
          Capital Resources..................................................  8
          Restrictions on and Redemptions of Common Stock....................  8
          Employees..........................................................  9
2.   Properties..............................................................  9
3.   Legal Proceedings....................................................... 11
4.   Submission of Matters to a Vote of Security Holders..................... 12

                                     PART II

5.   Market For Registrant's Common Equity and Related Stockholder Matters... 12
6.   Selected Financial Data................................................. 13
7.   Management's Discussion and Analysis of Financial Condition and
       Results of Operations................................................. 14
          Results of Operations.............................................. 14
          Liquidity and Capital Resources.................................... 18
          Funds From Operations.............................................. 20
          Year 2000 Compliance............................................... 22
7a.  Quantitative and Qualitative Disclosures About Market Risk.............. 22
8.   Financial Statements and Supplementary Data............................. 23
9.   Changes in and Disagreements with Accountants on Accounting and
       Financial Disclosure.................................................. 23

                                    PART III

10.  Directors and Executive Officers of the Registrant...................... 24
11.  Executive Compensation.................................................. 27
12.  Security Ownership of Certain Beneficial Owners and Management.......... 32
13.  Certain Relationships and Related Transactions.......................... 33

                                     PART IV

14.  Exhibits, Financial Statement Schedules, and Reports on Form 8-K........ 35

                                      (i)
<PAGE>

                                     PART I


Introduction

The Private  Securities  Litigation  Reform Act of 1995 provides a "safe harbor"
for  forward-looking  statements in certain  circumstances.  Certain information
included in this report,  our Annual Report to Stockholders and our filings with
the  Securities  and Exchange  Commission  under the  Securities Act of 1933, as
amended,  and the  Securities  Exchange  Act of  1934,  as  amended,  as well as
information  communicated  orally or in  writing  between  the dates of such SEC
filings,  constitute  "forward-looking  statements"  within  the  meaning of the
Private  Securities  Litigation  Reform Act of 1995. Such statements may include
projections of our cash flow,  dividends and anticipated  returns on real estate
investments.  Such  forward-looking  statements involve known and unknown risks,
uncertainties  and other factors that may cause our actual results,  performance
or achievements to be materially different from any future results,  performance
or achievements  expressed or implied by the  forward-looking  statements.  Such
factors  include:  general  economic  and  business  conditions;  interest  rate
changes;  financing and refinancing  risks; risks inherent in owning real estate
or  debt  secured  by  real  estate;   future  development  rate  of  homesites;
competition;  the  availability  of real estate  assets at prices which meet our
investment  criteria;  our  ability to reduce  expense  levels,  implement  rent
increases, use leverage and other risks set forth in our SEC filings.

In this  report,  the words "the  Company,"  "we," "our" and "us" refer to Asset
Investors Corporation, a Delaware corporation, our predecessor,  Asset Investors
Corporation, a Maryland corporation and, where appropriate, our subsidiaries.

Item 1.  Business.

Company Background

We have been a Delaware corporation since May 25, 1999. Prior to this, we were a
Maryland  corporation that was formed in 1986. We have elected to be treated for
United States federal income tax purposes as a real estate  investment  trust or
"REIT." We are a self-administered  and self-managed  company in the business of
owning, acquiring,  developing and managing manufactured home communities. As of
December 31, 1999, we held interests as owner,  ground lessee or mortgage lender
(including  participating mortgages) in 22 manufactured home communities and two
recreational vehicle parks with a total of 4,520 developed homesites (sites with
homes in place), 2,510 undeveloped homesites and 180 recreational vehicle sites.
In addition, we manage 16 communities for affiliates and third-party owners. Our
shares of common stock are listed on the New York Stock Exchange  ("NYSE") under
the symbol "AIC."

We  primarily  conduct our  business  through  our  subsidiary  Asset  Investors
Operating  Partnership  and where  appropriate  its other  subsidiary  companies
(which we collectively  refer to as the Operating  Partnership).  As of December
31, 1999, we owned 85% of the Operating  Partnership.  The Operating Partnership
also owns 27% of the common stock of Commercial Assets,  Inc., a publicly-traded
REIT that is listed on the  American  Stock  Exchange  under the  symbol  "CAX."
Commercial Assets is also engaged in the ownership,  acquisition and development
of  manufactured  home  communities.  In  addition  to  acquiring  and  managing
manufactured  home  communities  for our own  account,  we  also  perform  these
services  for  Commercial  Assets,  for  which we are paid a  management  fee by
Commercial Assets.

                                     - 1 -
<PAGE>

Our principal executive offices are located at 3410 S. Galena Street, Suite 210,
Denver, Colorado 80231 and our telephone number is (303) 614-9400.

Proposed Merger with Commercial Assets

In August 1999, we agreed to merge with  Commercial  Assets.  We agreed to issue
0.4075  shares of our common stock for each share of  Commercial  Assets  common
stock. Alternatively,  Commercial Assets stockholders may elect to receive $5.75
per share in cash for up to 3,549,868  shares of Commercial  Assets common stock
with any remaining  shares of Commercial  Assets common stock  receiving  0.4075
shares of our common  stock.  The merger  requires the approval by a majority of
our outstanding  shares of common stock and two-thirds of the outstanding shares
of  Commercial  Assets  common stock.  We own 27% of the  outstanding  shares of
Commercial  Assets common stock and have agreed to vote these shares in favor of
the merger.  Commercial  Assets'  officers  and  directors  and our officers and
directors have agreed to elect to receive Asset  Investors  common stock for all
shares of  Commercial  Assets  common  stock  that they  own.  The  stockholders
meetings to vote on the merger are expected to occur  during the second  quarter
of 2000.

Industry Background

A manufactured home community is a residential subdivision designed and improved
with sites for the placement of manufactured homes and related  improvements and
amenities.  Manufactured  homes  are  detached,  single-family  homes  which are
produced  off-site by manufacturers and installed on sites within the community.
Manufactured  homes are  available  in a variety  of  designs  and floor  plans,
offering many amenities and custom options.

Modern   manufactured  home  communities  are  similar  to  typical  residential
subdivisions containing centralized entrances,  paved streets, curbs and gutters
and  parkways.  The  communities  frequently  provide  a  clubhouse  for  social
activities and recreation and other  amenities,  which may include golf courses,
swimming  pools,  shuffleboard  courts and  laundry  facilities.  Utilities  are
provided by or arranged for by the owner of the community. Community lifestyles,
primarily  promoted  by  resident  managers,  include a wide  variety  of social
activities  that promote a sense of  neighborhood.  The  communities  provide an
attractive and affordable  housing  alternative for retirees,  empty nesters and
start-up or single-parent families.  Manufactured home communities are primarily
characterized  as "all  age"  communities  and  "adult"  communities.  In  adult
communities,  as least 80% of the tenants  must be at least 55 years old, and in
all age communities there is no age restriction on tenants.

The owner of a home in our communities leases from us the site on which the home
is located. Typically, the leases are on a month-to-month or year-to-year basis,
renewable upon the consent of both parties or, in some instances, as provided by
statute. In some circumstances,  we offer a 99-year lease to tenants in order to
enable the tenant to have some benefits of an owner of real property,  including
creditor  protection  laws  in  some  states.  These  leases  can be  cancelled,
depending on state law, for  non-payment of rent,  violation of community  rules
and regulations or other specified  defaults.  Generally,  rental rate increases
are made on an annual  basis.  The size of these rental rate  increases  depends
upon the policies that are in place at each community.  Rental  increases may be
based on fixed dollar amounts,  percentage  amounts,  inflation indexes, or they
may  depend  entirely  on  local  market  conditions.  We own  interests  in the
underlying land, utility connections,  streets, lighting, driveways, common area
amenities and other capital  improvements and are responsible for enforcement of
community  guidelines and  maintenance.  Each homeowner  within the manufactured
home  communities  is  responsible  for the  maintenance  of his or her home and
leased site, including lawn care in some communities.

                                     - 2 -
<PAGE>

The ownership of manufactured home communities, once fully occupied, tends to be
a stable,  predictable asset class. The cost and effort involved in relocating a
home to another  manufactured home community  generally  encourages the owner of
the home to resell it within the community.

Financial Information about Industry Segments

We operate in one industry segment, the ownership and management of real estate.
See the  consolidated  financial  statements  including their notes in Item 8 of
this report on Form 10-K.

Growth and Operating Strategies

We measure our economic  profitability  based on Funds From Operations  ("FFO"),
less an  annual  capital  replacement  reserve  of at  least  $50 per  developed
homesite.  This reserve is  management's  estimate  based on its  experience  in
owning,  operating and managing  manufactured home communities.  We believe that
the  presentation  of FFO, when considered with the financial data determined in
accordance  with generally  accepted  accounting  principles,  provides a useful
measure of our performance. However, FFO does not represent cash flow and is not
necessarily  indicative of cash flow or liquidity available to us, nor should it
be  considered  as an  alternative  to net income as an  indicator  of operating
performance.  The Board of Governors of the National  Association of Real Estate
Investment  Trusts  (also  known as NAREIT)  defines  FFO as net income  (loss),
computed in accordance with generally accepted accounting principles,  excluding
gains and losses from debt restructuring and sales of property, plus real estate
related  depreciation  and  amortization  (excluding  amortization  of financing
costs),  and  after  adjustments  for  unconsolidated   partnerships  and  joint
ventures.  We calculate FFO  beginning  with the NAREIT  definition  and include
adjustments for:

   o  the minority interest in the Operating  Partnership owned by persons other
      than us,
   o  costs we incurred in order to become self-managed,
   o  amortization of property and investment management contracts, and
   o  nonrecurring income, net.

We believe that the  presentation  of FFO provides  investors with  measurements
which help facilitate an understanding of our ability to make required  dividend
payments,  capital  expenditures  and principal  payments on our debt. Since FFO
excludes  unusual and  nonrecurring  expenses as well as depreciation  and other
real estate related expenses,  FFO may be materially  different from net income.
Therefore,  FFO should not be considered as an  alternative to net income or net
cash flows from operating activities, as calculated in accordance with generally
accepted accounting principles, as an indication of our operating performance or
liquidity.

FFO is not  necessarily  indicative  of cash  available  to fund our cash needs,
including  our  ability  to  make  distributions.  We use FFO in  measuring  our
operating  performance  because  we  believe  that the  items  that  result in a
difference  between  FFO and net  income do not  impact  the  ongoing  operating
performance  of a real estate  company.  Also, we believe that other real estate
companies,  analysts and investors  utilize FFO in analyzing the results of real
estate companies.  Our basis of computing FFO is not necessarily comparable with
that of other REITs.

Our primary objective is to maximize  stockholder value by increasing the amount
and  predictability  of FFO on a per share  basis,  less a reserve  for  capital
replacements. We seek to achieve this objective primarily by:

                                     - 3 -
<PAGE>

   o  improving net operating income from our existing portfolio of manufactured
      home communities;
   o  acquiring  additional  communities  at values that are  accretive on a per
      share basis;
   o  earning  increased  management  fees as Commercial  Assets invests in more
      manufactured home communities; and
   o  as  Commercial  Assets' FFO  increases,  our share of their FFO  similarly
      increases.

Company Policies

Management  has  adopted  specific  policies  to  accomplish  our  objective  of
increasing the amount and predictability of our FFO on a per share basis, less a
reserve for capital replacements. These policies include:

   o  selectively  acquiring  manufactured  home communities that have potential
      long-term   appreciation  of  value  through,  among  other  things,  rent
      increases, expense efficiencies and in-park homesite development;
   o  developing  and  maintaining  resident  satisfaction  and a reputation for
      quality  communities  through maintenance of the physical condition of our
      communities and providing activities that improve the community lifestyle;
   o  improving  the  profitability  of  our  communities   through   aggressive
      management of occupancy, community development and maintenance and expense
      controls;
   o  using debt leverage to increase our financial returns;
   o  reducing  our  exposure  to  interest  rate   fluctuations   by  utilizing
      long-term, fixed-rate, fully-amortizing debt to pay off higher cost, short
      term debt;
   o  ensuring  the  continued  maintenance  of our  communities  by providing a
      minimum $50 per homesite per year for capital replacements;
   o  seeking to reduce our  exposure  to  downturns  in  regional  real  estate
      markets by diversifying  our portfolio of communities  since currently 71%
      of our properties are in Florida and 17% are in Arizona; and;
   o  recruiting and retaining capable community management personnel.

Future Acquisitions

Our acquisition of interests in manufactured  home communities takes many forms.
In many cases we acquire  fee title to the  community.  When a  community  has a
significant  number of  unleased  homesites,  we seek a stable  return  from the
community  during the  development  and  lease-up  phase  while also  seeking to
participate in future increased  earnings after development is completed and the
sites are leased. We seek to accomplish this goal by making loans to development
companies in return for  participating  mortgages that are  non-recourse  to the
borrowers and secured by the property.  In general, our participating  mortgages
earn  interest  at fixed  rates and, in  addition,  participate  in a profits or
revenues from the community.  This profit participation right generally entitles
us to 50% of the net income and cash flow generated by the community.

We believe that acquisition  opportunities for manufactured home communities are
attractive at this time because of:

   o  the increasing  acceptability  of and demand for  manufactured  homes,  as
      shown by the growth in the number of  individuals  living in  manufactured
      homes; and
   o  the  continued   constraints  on  development  of  new  manufactured  home
      communities.

                                     - 4 -
<PAGE>

We are actively seeking to acquire additional  communities on our own behalf and
on behalf of Commercial  Assets,  and we are currently engaged in various stages
of negotiations relating to the possible acquisition of a number of communities.
The acquisition of interests in additional  communities could also result in our
becoming  increasingly  leveraged  as we incur  debt in  connection  with  these
transactions.

When evaluating potential acquisitions, we consider such factors as:

   o  the location and type of property;
   o  the value of the homes located on the leased land;
   o  the  improvements,  such  as  golf  courses  and  swimming  pools,  at the
      property;
   o  the current and  projected  cash flow of the  property  and our ability to
      increase cash flow;
   o  the potential for capital appreciation of the property;
   o  the terms of tenant leases, including the potential for rent increases;
   o  the tax and regulatory  environment of the community in which the property
      is located;
   o  the potential for expansion of the physical layout of the property and the
      number of sites;
   o  the occupancy and demand by residents for  properties of a similar type in
      the vicinity;
   o  the credit of the residents in a community;
   o  the prospects for liquidity through sale,  financing or refinancing of the
      property;
   o  the competition from existing manufactured home communities;
   o  the potential for the construction of new communities in the area; and
   o  the replacement cost of the property.

In order to allocate investments between us and Commercial Assets, the companies
have agreed that Commercial  Assets will invest at least $50 million of its cash
resources in the acquisition of communities before we invest any further cash in
the  acquisition  of  communities.   Thereafter,   the  companies  will  make  a
determination  with respect to each  acquisition on a case-by-case  basis. As of
December 31,  1999,  Commercial  Assets had invested $70 million in  communities
(including participating mortgages and real estate joint ventures). Accordingly,
the companies are determining acquisitions on a case-by-case basis.

Fees and Earnings from Commercial Assets

We manage  Commercial  Assets and own 27% of  Commercial  Assets'  common stock.
Under the terms of our management  agreement with Commercial  Assets, we receive
the following fees:

   o  Acquisition  Fees  equal to 0.5% of the cost of each  real  estate-related
      asset acquired by Commercial Assets;
   o  Base Fees equal to 1% per year of the net book value of Commercial Assets'
      real estate-related assets;
   o  Incentive Fees equal to 20% of the amount by which Commercial Assets' FFO,
      less an annual capital  replacement  reserve of at least $50 per developed
      homesite,  exceeds (a) Commercial Assets' average net worth, multiplied by
      (b) 1% over the ten year United States Treasury rate.

In the third quarter of 1998,  Commercial  Assets entered the manufactured  home
community   business  and  began  acquiring   interests  in  manufactured   home
communities  identified  by us. As of December 31, 1999,  Commercial  Assets had
acquired  interests  in 12  communities  at a  cost  of $70  million  (including
participating mortgages and real estate joint ventures).  Commercial Assets paid
us  $565,000  in Base Fees and  $205,000  in  Acquisition  Fees  during 1999 and


                                     - 5 -
<PAGE>

$87,000 in Base Fees and $124,000 in Acquisition Fees in 1998. No Incentive Fees
were paid by Commercial Assets during 1999 or 1998.

The management agreement has a term of one-year,  subject to annual renewal. The
management  agreement was amended for 1999 to provide that  Incentive  Fees were
based upon Commercial Assets' FFO, less an annual capital replacement reserve of
at least $50 per  developed  homesite,  instead  of its REIT  income.  Both your
management  and  Commercial  Assets  believe  that  this  amendment  causes  our
Incentive  Fees  to be  tied  more  closely  to the  economic  profitability  of
Commercial  Assets as Commercial  Assets is now engaged in the manufactured home
community business.  Commercial Assets has renewed the management  agreement for
2000 with the same terms as those used in 1999.  If our merger  with  Commercial
Assets is approved then the management agreement will terminate.

Expansion of Existing Communities

We will seek to  increase  the number of  homesites  and the amount of  earnings
generated from our existing  portfolio of manufactured home communities  through
marketing campaigns aimed at increasing  occupancy.  We will also seek expansion
through future acquisitions and expansion of the number of sites available to be
leased to residents if justified  by local market  conditions  and  permitted by
zoning and other  applicable laws. As of December 31, 1999, we held interests in
11 communities with approximately 2,510 undeveloped homesites.

Competition

There are numerous housing  alternatives that compete with our manufactured home
communities in attracting  residents.  Our properties compete for residents with
other  manufactured  home communities,  multifamily  rental  apartments,  single
family homes and  condominiums.  The number of competitors in a particular  area
could have a material  effect on our ability to attract and  maintain  residents
and on the rents we are able to charge for homesites.  In acquiring  assets,  we
compete  with  other  REITs,  pension  funds,  insurance  companies,  and  other
investors,  many of  which  have  greater  financial  resources  than we do.  In
addition,  Commercial  Assets is also  involved in acquiring  manufactured  home
communities.

Taxation of the Company

We have elected to be taxed as a REIT under the  Internal  Revenue Code of 1986,
as amended (the  "Code"),  and we intend to operate in a manner which will allow
us to avail ourselves of the beneficial tax provisions applicable to REIT's. Our
qualification as a REIT depends on our ability to meet the various  requirements
imposed  by the  Code,  such as  specifications  relating  to  actual  operating
results,  distribution levels and diversity of stock ownership. In addition, our
ability to qualify as a REIT  depends in part upon the actions of third  parties
over which we have no control,  or only limited  influence.  For  instance,  our
qualification  depends upon the conduct of certain entities with which we have a
direct or indirect relationship,  in our capacity as a lender, lessor, or holder
of  non-controlling  equity  interests.  Our  qualification  also  depends  upon
Commercial Assets' continued qualification as a REIT.

If we  qualify  for  taxation  as a REIT,  we will  generally  not be subject to
Federal corporate income tax on our net income that is currently  distributed to
stockholders.  This treatment substantially eliminates the "double taxation" (at
the corporate and stockholder  levels) that generally results from investment in
a  corporation.  If we fail to qualify as a REIT in any taxable year, we will be
subject to Federal income tax at regular  corporate  rates on our taxable income
(including any applicable alternative minimum tax). We have a net operating loss
("NOL")  carryover  of  approximately  $95  million  which may,  subject to some


                                     - 6 -
<PAGE>

restrictions and limitations, be used to offset taxable income in the event that
we fail to qualify as a REIT. Additionally, even if we qualify as a REIT, we may
be subject to certain  state and local  income and other  taxes,  and to Federal
income and excise taxes on our undistributed income.

If in any taxable year we fail to qualify as a REIT and as a result, incur a tax
liability,  we might need to borrow funds or liquidate  certain  investments  in
order to pay the applicable tax. In this situation, we would not be compelled to
make distributions as required for entities claiming REIT status under the Code.
Moreover,  unless  we  would be  entitled  to  relief  under  certain  statutory
provisions,  we  would be  disqualified  from  treatment  as a REIT for the four
taxable years following the year during which qualification is lost. Although we
currently  intend to operate in a manner  designed  to qualify as a REIT,  it is
possible that future economic,  market,  legal, tax or other  considerations may
cause us to fail to qualify as a REIT,  or may cause the Board of  Directors  to
revoke the REIT election.

We and our  stockholders  may be subject to state or local  taxation  in various
state  or local  jurisdictions,  including  those  in which we or they  transact
business or reside. The state and local tax treatment  conferred upon us and our
stockholders may not conform to the Federal income tax treatment.

Regulations

General

Manufactured home communities,  like other housing alternatives,  are subject to
various laws,  ordinances and  regulations,  including  regulations  relating to
recreational  facilities  such as swimming  pools,  clubhouses  and other common
areas.  We believe that we have obtained the necessary  permits and approvals to
operate each of our properties in conformity with these laws.

Americans with Disabilities Act

Our current  properties and any newly acquired  communities must comply with the
Americans with  Disabilities  Act (the "ADA").  The ADA generally  requires that
public  facilities,  such as clubhouses,  swimming pools and recreation areas be
made accessible to people with disabilities. Many of our communities have public
facilities.  In  order  to  comply  with  the ADA  requirements,  we  have  made
improvements  at our  communities in order to remove  barriers to access.  If we
should ever fail to comply with ADA regulations we could be fined or we could be
forced to pay damages to private litigants.  We have made those changes required
by the ADA which we believe are appropriate,  and we believe that our properties
are in compliance with the  requirements of the ADA. We believe that any further
costs  related  to ADA  compliance  can be  recovered  by  cash  flow  from  the
individual  properties  without causing any material adverse effect.  If ongoing
changes involve a greater  expenditure than we currently  anticipate,  or if the
changes must be made on a more accelerated basis than we anticipate, our ability
to make expected distributions could be adversely affected.

Rent Control Legislation

State and local  laws,  principally  in  Florida,  might  limit our  ability  to
increase  rents on some of our  properties,  and  thereby,  limit our ability to
recover increases in operating  expenses and the costs of capital  improvements.
Enactment  of  rent  control  laws  has  been  considered  from  time to time in
jurisdictions in which we operate. We presently expect to maintain  manufactured
home  communities  and may purchase  additional  properties  in markets that are
either subject to rent control laws or in which such legislation may be enacted.

                                     - 7 -
<PAGE>

Insurance

We believe that our properties are covered by adequate fire,  flood and property
insurance  policies.  It is our  policy to  purchase  insurance  policies  which
contain commercially  reasonable deductibles and limits from reputable insurers.
We also believe that we have obtained adequate title insurance policies insuring
fee title to properties we have acquired.

Capital Resources

We have  used  our  available  cash  balances,  our FFO  and our  long-term  and
short-term  financing  arrangements  to provide  working  capital to support our
operations,  to pay dividends and to acquire assets. Future acquisitions will be
financed by the most  appropriate  sources of  capital,  perhaps  including  our
available cash balances; undistributed FFO; long-term, secured debt; short-term,
secured  debt;  or the  issuance  of  additional  equity  securities,  including
interests in the Operating Partnership. This flexibility allows us to offer more
choices of  "acquisition  currency" to potential  sellers of  manufactured  home
communities  including the ability to defer some or all of the tax  consequences
of a sale.  We believe that this  flexibility  may offer sellers an incentive to
enter into transactions with us on favorable terms.

Without  further  stockholder  approval,  we  are  authorized  to  issue  up  to
50,000,000  shares of common stock.  As of March 17, 2000,  5,632,569  shares of
common stock were  outstanding.  The Board of Directors is  authorized  to issue
additional  classes of stock  (including  preferred  stock) without  stockholder
approval.  Depending  upon  the  terms  set  by  the  Board  of  Directors,  the
authorization  and  issuance  of  preferred  stock or other new classes of stock
could adversely  affect  existing  stockholders.  Future  offerings of stock may
result in the reduction of the net tangible book value per outstanding share and
a reduction  in the market  price of the stock.  We are unable to  estimate  the
amount,  timing or nature of such future  offerings as any such  offerings  will
depend on general market  conditions or other factors.  As of March 17, 2000, we
have not authorized or issued additional classes of stock.

Restrictions on and Redemptions of Common Stock

To  qualify  to be  taxed  as a REIT,  we must  comply  with  certain  ownership
limitations  with  respect to shares of our common  stock.  Our  Certificate  of
Incorporation provides that shares of common stock generally may not be owned by
a person if the  ownership  of shares by such  person  would  exceed 9.8% of our
outstanding shares or would result in the imposition of a tax on us.

Our Certificate of Incorporation empowers the Board of Directors, at its option,
to redeem  shares of common  stock or to restrict  transfers of shares to comply
with the requirements  described above. The redemption price we would pay if the
Board of  Directors  exercises  this option to redeem  shares  would be the fair
market value of the common stock as  reflected in the latest  quotations  on the
New York Stock Exchange.  Our Certificate of Incorporation also provides that if
anyone acquires shares of our common stock in a manner or in a volume that would
result in our  disqualification  as a REIT under the Code,  that  acquisition is
deemed void to the fullest extent  permitted under the law and the acquirer will
be  deemed  never to have  had an  interest  in the  shares.  Furthermore,  if a
transaction  is determined to be void or invalid,  the acquirer may be deemed to
have acted as agent on our behalf in acquiring  such shares and may be deemed to
hold such shares on our behalf.

                                     - 8 -
<PAGE>

Each stockholder is required, upon demand, to disclose to the Board of Directors
in writing any information with respect to the direct and indirect  ownership of
shares of our common stock as the Board of Directors  deems necessary or prudent
in order to protect our tax status.

Employees

Our employees perform various acquisition and management  functions.  Brandywine
Financial  Services  Corporation and its affiliates  provide our properties with
employees that perform property management,  maintenance and sales services. Mr.
Bruce Moore was the founder and Chief Executive  Officer of Brandywine  prior to
becoming our President and Chief Operating Officer in February 1998. In addition
to our  11  employees,  approximately  260  Brandywine  employees  devote  their
full-time attention to our communities. We reimburse Brandywine for the costs of
these employees. None of these employees are represented by a union, and we have
never  experienced  a work  stoppage.  We believe that we maintain  satisfactory
relations  with our employees.  As of January 1, 2000, we acquired  Brandywine's
interests in the companies which provide  property  management,  maintenance and
sales services to our properties.  Accordingly,  we now have  approximately  270
employees.

Item 2.  Properties.

The  manufactured  home  communities  in which we have  interests  are primarily
located  in  Florida  and  Arizona  and  are  concentrated  in  or  around  four
metropolitan  areas.  We hold interests in these  communities  as owner,  ground
lessee or mortgage lender  (including  participating  mortgages).  The following
table  sets  forth  the  states  in which  the  communities  in which we held an
interest on December 31, 1999 are located:

<TABLE>
<CAPTION>

                                                                               Number of Sites
                                                         ------------------------------------------------------------
                                          Number of                                                   Recreational
                                         Communities          Developed           Undeveloped           Vehicles
                                       -----------------    ---------------     ----------------     ----------------
<S>                                            <C>               <C>                  <C>
Florida                                        17                3,606                2,401                  --
Arizona                                         4                  800                  108                 122
New Jersey                                      1                   90                   --                  --
Pennsylvania                                    1                   28                   --                  --
California                                      1                   --                   --                  65
                                              ---               ------               ------                ----
   Total                                       24                4,524                2,509                 187
                                              ===               ======               ======                ====

</TABLE>





                                     - 9 -
<PAGE>




The following table sets forth  information as of January 1, 2000 regarding each
manufactured home community in which we held an interest and those  manufactured
home communities which we manage for others:
<TABLE>
<CAPTION>
                                                                     Average
                                             Developed               Monthly     RV     Undeveloped     Year(s)
  Community                   Location       Homesites  Occupancy(1)   Rent     Sites    Homesites     Developed
-------------------------------------------------------------------------------------------------------------------
  Owned Communities
<S>                     <C>                       <C>       <C>        <C>     <C>         <C>      <C>
  Blue Heron Pines (3)  Punta Gorda, FL           133       98%        $250      --        311      1983/1999
  Blue Star             Apache Junction, AZ        31       94          227     122         --          1955
  Brentwood (3)         Hudson, FL                 75       89          202      --        148          1984
  Brentwood West        Mesa, AZ                  350       99          306      --         --       1972/1987
  Cardinal Court        Largo, FL                 138       96          264      --         --       1959/1965
  Caribbean Cove        Orlando, FL               259       99          283      --         27          1984
  Forest View           Homosassa, FL             191      100          235      --        120 (3)   1987/1997
  Gulfstream Harbor     Orlando, FL               381       99          326      --        172          1980
  Gulfstream Harbor II  Orlando, FL               289      100          318      --         19          1988
  Lost Dutchman         Apache Junction, AZ       152      100          246      --        108     1971/1979/1999
  Marina Dunes          Marina, CA                 --       --           --      65         --          1979
  Mullica Woods         Egg Harbor City, NJ        90      100          462      --         --          1985
  Park Royale           Pinellas Park, FL         258       93          351      --         51 (3)      1971
  Pinewood              St. Petersburg, FL        220       96          289      --         --          1976
  Pleasant Living       Riverview, FL             245      100          278      --         --          1979
  Salem Farm            Bensalem, PA               28      100          415      --         --          1988
  Savanna Club (3)      Port St. Lucie, FL         65      100          147      --      1,281          1999
  Serendipity           Ft. Myers, FL             338       98          277      --         --       1971/1974
  Stonebrook            Homosassa, FL             124       99          249      --         94 (3)   1987/1997
  Sun Lake (3)          Grand Island, FL          245       94          258      --        178          1980
  Sun Valley            Tarpon Springs, FL        261      100          340      --         --          1972
  Sun Valley            Apache Junction, AZ       267       99          247      --         --          1984
  Westwind I (2)        Dunedin, FL               195       97          338      --         --          1970
  Westwind II (2)       Dunedin, FL               189      100          342      --         --          1972
                                            -------------------------------------------------------
  Total Communities                             4,524       98%        $294     187      2,509
                                            =======================================================

  Communities Managed for Commercial Assets
  Cannery Village       Newport Beach, CA          --       --%        $ --      --         30
  Casa Encanta          Mesa, AZ                  106       97          345      --         --
  Cypress Greens        Lakeland, FL               88       98          188      --         19
  Desert Harbor         Apache Junction, AZ       103      100          203      --        104
  Fiesta Village        Mesa, AZ                  170       94          274      --        206
  La Casa Blanca        Apache Junction, AZ       198      100          150      --         --
  Lakeshore Villas      Tampa, FL                 290       96          323      --         --
  Rancho Mirage         Apache Junction, AZ       312      100          174      --         --
  Riverside             Ruskin, FL                223       99          397      --        767
  Royal Palm            Haines City, FL           233       98          216      --        217
  Savanna Club          Port St. Lucie, FL         20      100          154      --         23
  Southern Palms        Mesa, AZ                   36      100          208      26         --
  Sunlake               Grand Island, FL           --       --           --      --          5
  White Sands           Apache Junction, AZ        57       96          208      12         --
                                            -------------------------------------------------------
      Subtotal                                  1,836       98          250      38      1,371
                                            -------------------------------------------------------
Communities Managed for Others                    588       98          224      --         83
                                            -------------------------------------------------------
Total Communities                               2,424       98%        $243      38      1,454
                                            =======================================================
<FN>

1   Excludes recreational vehicle sites, which are leased on a seasonal basis.
2   We are the ground lessee of these communities.
3   At December 31, 1999, we held notes receivable secured by mortgages on these
    communities  and sites.  We acquired these  communities and sites in January
    2000.
</FN>
</TABLE>




                                     - 10 -
<PAGE>




Owned  Properties.   At  December  31,  1999,  we  owned  18  manufactured  home
communities and two recreational  vehicle parks containing  approximately  3,990
developed  homesites  and  180  recreational  vehicle  sites.  These  properties
contain,  on average,  220 homesites,  with the largest property  containing 380
homesites.  These  properties  offer  residents a range of amenities,  including
swimming pools, clubhouses and tennis courts.

At  December  31,  1999,  15 of these  properties  are  encumbered  by  mortgage
indebtedness totaling $53,994,000.  These properties represent approximately 87%
of our developed homesites. The 15 properties securing our mortgage indebtedness
have a  combined  net  book  value of  $96,184,000  and the  indebtedness  has a
weighted  average  interest rate of 7.4% and a weighted  average maturity of 9.2
years. As of December 31, 1999, 95% of our outstanding debt was long-term and 5%
was short-term  debt. See the financial  statements  included  elsewhere in this
report on Form 10-K for additional information about our indebtedness.

Properties  Involving  Participating  Mortgages.  At December 31, 1999,  we held
$22,475,000  in a  participating  mortgage  involving  seven  manufactured  home
communities  containing 535 developed homesites and 2,183 undeveloped homesites.
The participating mortgage bears interest ranging from 10% to 13% and matures in
2018.  Through  2002,  interest  is  payable  based on the net cash  flow of the
secured properties.  As additional compensation,  we receive 50% of both (a) any
profits and net cash flows from the properties in excess of the stated  interest
rate and (b) any net sales  proceeds from the properties in excess of the amount
of the mortgage. The mortgage may be prepaid at any time; however, our 50% share
of profits and net cash flows continues until the properties are sold. Effective
January 1, 2000,  we purchased  six of the  properties  securing the mortgage in
exchange for the cancellation of $24,851,000 of the  participating  mortgage and
other loans,  the payment of  $765,000,  the issuance of 44,572 units of limited
partnership  interests in our Operating  Partnership  valued at $496,000 and the
assumption of $10,704,000 of third-party debt.

Item 3.  Legal Proceedings.

In September 1999,  four Commercial  Assets  stockholders,  individually  and as
purported  representatives of all Commercial Assets stockholders,  except us and
our  affiliates,  filed three  purported  class action  lawsuits in the Court of
Chancery in the State of Delaware against  Commercial Assets, the members of the
board of directors and specified  officers of us and  Commercial  Assets.  These
lawsuits  alleged that the  defendants  breached their  fiduciary  duties to the
Commercial  Assets  stockholders  in  connection  with our proposed  merger with
Commercial Assets on the terms then proposed and the recent  reincorporation  of
Commercial  Assets from Maryland to Delaware.  In October 1999,  the  plaintiffs
filed an amended  complaint.  In November 1999,  the Court of Chancery  approved
consolidation of these lawsuits as a single lawsuit.

In March 2000, the parties entered into a settlement  agreement which will amend
the merger agreement in the following respects:

   o  Commercial  Assets  stockholders,  other  than  us and  the  officers  and
      directors of Asset Investors and Commercial  Assets,  may elect to receive
      $5.75 per share in cash, subject to proration,  for up to 3,549,868 shares
      of  Commercial  Assets  common stock as opposed to 0.4075  shares of Asset
      Investors common stock; and
   o  the percentage of votes of the Commercial Assets common stock necessary to
      approve the merger was increased from a simple majority to two-thirds.

                                     - 11 -
<PAGE>

The settlement agreement is subject to the approval of the Court of Chancery. If
approved by the Court of Chancery,  the  settlement  agreement  will release the
defendants from further liability relating to the merger.

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

No  matters  were  submitted  to a vote of our  stockholders  during  the fourth
quarter of 1999.

                                     PART II

Item 5.  Market for Registrant's Common Equity and Related Stockholder Matters.

Our common stock is listed on the NYSE under the symbol  "AIC." The high and low
closing  sales  prices of the  shares of common  stock as  reported  on the NYSE
Composite Tape and certain dividend  information for the periods  indicated were
as follows:

<TABLE>
<CAPTION>

                                                   High                        Low                       Dividends
                                             ---------------               -------------               -------------
1999
<S>                                           <C>                           <C>                          <C>
    First Quarter                             $   15-1/16                   $       12                   $  .25
    Second Quarter                                15-5/16                      12-1/16                      .25
    Third Quarter                                14-15/16                       12-1/2                      .25
    Fourth Quarter                                13-5/16                     10-11/16                      .25

1998
    First Quarter                             $    20-7/8                   $       16                   $   --
    Second Quarter                                19-5/16                       15-7/8                      .25
    Third Quarter                                 17-5/16                      13-5/16                      .25
    Fourth Quarter                               14-15/16                       12-1/8                      .25

</TABLE>

As of March  17,  2000,  5,632,569  shares  of  common  stock  were  issued  and
outstanding  and were held by 2,198  stockholders  of record.  We estimate there
were an additional  10,000 beneficial owners on that date whose shares were held
by banks, brokers or other nominees.

We, as a REIT, are required to distribute  annually to stockholders at least 95%
of our  "REIT  taxable  income,"  which,  as  defined  by the Code and  Treasury
regulations,  is generally equivalent to net taxable ordinary income. We measure
economic  profitability  and intend to pay regular dividends to our stockholders
based on FFO, less an annual  reserve for capital  replacements  of at least $50
per  developed  homesite,  during the  relevant  period.  The future  payment of
dividends, however, will be at the discretion of the Board of Directors and will
depend  on  numerous  factors  including,   our  financial  condition,   capital
requirements,  the annual distribution  requirements under the provisions of the
Code applicable to REITs, and such other factors as the Board of Directors deems
relevant.

On April 20, 1999,  11,500  shares of common stock were issued to  non-executive
directors  in  lieu  of  annual  director  fees as a  private  placement  of our
securities. The $13-1/16 per share value was equal to the closing stock price on
April 20, 1999.

                                     - 12 -
<PAGE>

Item 6.  Selected Financial Data.

Our selected  financial data set forth below has been derived from and should be
read in conjunction with our audited consolidated financial statements including
their notes.  Financial  data as of December 31, 1999 and 1998,  and for each of
the three years in the period ended December 31, 1999, is included  elsewhere in
this report on Form 10-K.

Operating and Balance Sheet Data (in thousands, except per share data):
<TABLE>
<CAPTION>

                                                                          Year Ended December 31,
                                                       --------------------------------------------------------------
                                                         1999         1998         1997         1996         1995
                                                      -----------  -----------   ----------   ----------   ----------
RENTAL PROPERTY OPERATIONS
<S>                                                   <C>          <C>           <C>          <C>          <C>
Rental and other property revenues                    $ 14,987     $ 10,479      $  3,104     $     --     $     --
Interest on participating mortgages                      2,976        3,174            --           --           --
Equity in earnings of rental property joint ventures        --           --           466           --           --
Property operating expenses                             (5,262)      (4,039)       (1,398)          --           --
Depreciation                                            (3,870)      (2,685)         (693)          --           --
                                                      -----------  -----------   ----------   ----------   ----------
                                                         8,831        6,929         1,479           --           --
                                                      -----------  -----------   ----------   ----------   ----------
SERVICE OPERATIONS
Property management income, net                            207          156            69           --           --
Commercial Assets  management fees                         564          155            --           --           --
Amortization of management contracts                    (2,757)      (2,894)         (744)          --           --
                                                      -----------  -----------   ----------   ----------   ----------
                                                        (1,986)      (2,583)         (675)          --           --
                                                      -----------  -----------   ----------   ----------   ----------

Equity in earnings of Commercial Assets                    872          975         3,663        1,875        1,742
General and administrative expenses                     (1,530)      (1,393)       (1,612)      (2,938)      (2,875)
Interest and other income                                  241          871         1,808          136          630
Interest expense                                        (3,846)      (2,485)         (368)         (88)         (63)
Non-agency MBS bonds revenues                               65           50         2,966       11,513        8,499
Income tax benefit                                         400           --            --           --           --
Loss from early extinguishment of debt                     (75)          --            --           --           --
Reincorporation expenses                                  (120)          --            --           --           --
Costs incurred to acquire management contract               --       (2,092)       (6,553)          --           --
Earnings from liquidating operations                        --           --            --           --        6,507
Elimination of dividend equivalent rights                   --           --            --         (825)          --
Gain on sale of bonds                                                    --         6,484           --           --
                                                      -----------  -----------   ----------   ----------   ----------

INCOME BEFORE MINORITY INTEREST IN OPERATING
   PARTNERSHIP                                           2,852          272         7,192        9,673       14,440
Minority interest in Operating Partnership                (446)         (60)           62           --           --
                                                      -----------  -----------   ----------   ----------   ----------

NET INCOME                                            $  2,406     $    212      $  7,254     $  9,673     $ 14,440
                                                      ===========  ===========   ==========   ==========   ==========
Per Share Amounts:
   Basic earnings                                     $   0.43     $   0.04      $   1.44     $  1.97      $   2.97
   Diluted earnings                                   $   0.43     $   0.04      $   1.43     $  1.95      $   2.96
   Dividends                                          $   1.00     $   0.75      $   1.45     $  1.85      $   1.70

Weighted-average common shares outstanding               5,538        5,094         5,022        4,919        4,856
Weighted-average common shares and common share
   equivalents outstanding                               5,544        5,113         5,061        4,966        4,883

</TABLE>

                                     - 13 -
<PAGE>

<TABLE>
<CAPTION>

                                                                              December 31,
                                                  ---------------------------------------------------------------------
                                                     1999           1998           1997          1996          1995
                                                  -----------    ------------    ----------    ----------    ----------

<S>                                                <C>            <C>            <C>           <C>           <C>
Real estate, before accumulated depreciation       $115,993       $101,941       $ 41,419      $     --      $     --
Investments in participating mortgages and
   joint ventures                                    22,475         27,604         25,415            --            --
Investment in Commercial Assets                      19,486         20,706         20,866        19,361        19,225
Total assets                                        159,093        158,226        119,161        90,344        79,653
Secured long-term notes payable                      53,994         40,506         10,677            --            --
Secured short-term financing                          2,610         10,500             --            --            --
Minority interest in Operating Partnership           15,236         25,649         22,362            --            --
Stockholders' equity                                 83,852         78,636         83,515        86,365        78,759

</TABLE>

Item 7.  Management's Discussion and Analysis of Financial Condition and Results
         of Operations.

                          RESULTS OF OPERATIONS FOR THE
                  YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997

The following  discussion and analysis of consolidated results of operations and
financial  condition  should  be  read  in  conjunction  with  our  consolidated
financial  statements  included elsewhere in this report. In 1997, we decided to
change our business from the ownership of high-risk,  residential collateralized
mortgage-backed  securities  to  the  ownership,  acquisition,  development  and
management of manufactured  home  communities.  This decision helped us to avoid
the  volatility  incurred  by other  owners of these  securities  following  the
capital market crisis in the third quarter of 1998. Since May 1997, we have been
focused on the investment of our capital in the acquisition of manufactured home
communities.  We have also been focused on the investment of Commercial  Assets'
capital in the acquisition of manufactured  home communities  since August 1998.
As of December 31, 1999,  Commercial Assets has not yet  substantially  invested
its capital in manufactured home communities.

Inflation

We do not believe that changes in inflation rates would have a material  adverse
effect on our business. In fact, we believe that inflation may positively impact
our business,  in light of the fact that manufactured home communities represent
a more  affordable  housing  choice  for many  people  than  other  alternatives
available,  increased  inflation  rates may allow us to demand  increased  rents
without losing tenants.

Comparison of 1999 to 1998

Rental Property Operations

Rental and other property revenues from our owned properties totaled $14,987,000
in 1999 compared to $10,479,000  in 1998, an increase of  $4,508,000,  or 43.0%.
The increase consisted of:

<TABLE>
<CAPTION>

                                                          1999             1998
                                                      -------------    -------------
                                                             (in thousands)
         <S>                                            <C>              <C>
         1998 acquisitions                               $  7,079         $  3,477
         1999 acquisitions                                    542               --
         "Same store" properties                            7,366            7,002
                                                      -------------    -------------
               Total                                     $ 14,987         $ 10,479
                                                      =============    =============
</TABLE>


                                     - 14 -
<PAGE>

Property operating expenses from our owned properties totaled $5,262,000 in 1999
compared  to  $4,039,000  in 1998,  an  increase of  $1,223,000,  or 30.3%.  The
increase consisted of:

<TABLE>
<CAPTION>
                                                          1999             1998
                                                      -------------    -------------
                                                              (in thousands)
<S>                                                      <C>              <C>
         1998 acquisitions                               $  2,028         $    941
         1999 acquisitions                                     98               --
         "Same store" properties                            3,136            3,098
                                                      -------------    -------------
               Total                                     $  5,262         $  4,039
                                                      =============    =============
</TABLE>

We refer to  properties  which we owned  throughout  both 1998 and 1999 as "same
store" properties.

Interest  income on  participating  mortgages was $2,976,000 in 1999 compared to
$3,174,000 in 1998. The $198,000 decrease was primarily due to a decrease in the
amount invested in these mortgages during 1999.

Depreciation expense increased from $2,685,000 in 1998 to $3,870,000 in 1999 due
to acquisitions of manufactured home communities during 1998 and 1999.

Service Operations

During 1999,  we earned  $207,000 in property  management  income as compared to
$156,000  during 1998.  The $51,000  increase is primarily due to an increase in
the number of properties that we manage for Commercial Assets.

Fee revenue from managing Commercial Assets was $564,000 in 1999 and $155,000 in
1998.  The  $409,000  increase  is  due to  Commercial  Assets'  investments  in
communities beginning in August 1998. We do not earn fees on cash and short-term
investments held by Commercial  Assets which is what Commercial Assets primarily
held in 1998.

Amortization  of management  contracts  decreased  from  $2,894,000  for 1998 to
$2,757,000 for 1999 due to our  acquisition in February 1998 of two  communities
which we previously managed.

Equity in Earnings of Commercial Assets

Income from our 27%  interest in  Commercial  Assets was  $872,000  for 1999 and
$975,000  for 1998.  Commercial  Assets  reported to us that its 1999 net income
decreased by $917,000  from 1998  primarily due to: (1)  $1,229,000  increase in
depreciation on acquired manufactured home communities, (2) $559,000 increase in
management  fees paid to us and (3)  $500,000 of  nonrecurring  expenses in 1998
related to its decision to not invest in marinas;  partially  offset by $120,000
of nonrecurring expenses in 1999 related to its reincorporation.  Due to our 27%
interest in  Commercial  Assets,  however,  during 1999 and 1998,  $205,000  and
$56,000,  respectively,  of the management fees paid by Commercial  Assets to us
have  been  reported  by us as  equity  in  earnings  of  Commercial  Assets  in
accordance with generally accepted accounting principles.

                                     - 15 -
<PAGE>

General and Administrative Expenses

Our general and  administrative  expenses were $1,530,000 in 1999 and $1,393,000
in 1998.  The $137,000  increase is primarily  due to increases in the number of
personnel.

Interest and Other Income

Interest  and other  income  was  $241,000  in 1999 and  $871,000  in 1998.  The
$630,000  decrease  occurred  primarily  because  prior to June 1998, we had $20
million in cash which we had invested in manufactured  home  communities by June
30, 1998.

Interest Expense

Interest  expense was  $3,846,000  during 1999 and  $2,485,000  during 1998. The
$1,361,000 increase is primarily due to borrowings used to acquire  manufactured
home communities after June 1998.

Income Tax Benefit

A subsidiary  recorded a loss for income tax purposes in 1999.  As a result,  it
can carry back the tax loss for a refund of income taxes paid by the  subsidiary
in 1997.

Loss from Early Extinguishment of Debt

In 1999,  we prepaid a $2.2 million  note payable and paid a $75,000  prepayment
penalty.

Reincorporation Expenses

In  1999,  we  incurred  $120,000  of  nonrecurring   expenses  related  to  our
reincorporation in Delaware.

Cost Incurred to Acquire Management Contract

In 1998, we issued  120,000 OP Units to our former  manager  because we achieved
certain  returns from our  investments  in  manufactured  home  communities.  We
expensed in 1998 the $2,092,000  value assigned to the OP Units. We did not have
these costs in 1999.

Comparison of 1998 to 1997

Rental Property

Income from rental  properties  totaled  $6,929,000  during 1998 and  $1,479,000
during  1997.  The  $5,450,000  increase  between  1997  and 1998 was due to our
acquisition  of  communities  during  those  years.  Our  first  acquisition  of
manufactured home communities occurred in May 1997, and as of December 31, 1997,
we had invested $69 million in 19  communities.  During 1998, we had invested an
additional $60 million in seven communities.

Service Operations

During 1998, we earned  $156,000 in property  management  income versus  $69,000
during 1997.  Property  management  income increased by $87,000 because property
management  contracts  were  not  acquired  until  May  1997.   Amortization  of


                                     - 16 -
<PAGE>

management  contracts  increased from $744,000 in 1997 to $2,894,000 in 1998 due
to our  acquisition  of  property  management  contracts  in May  1997  and  our
acquisition  of the  Commercial  Assets  management  agreement in November 1997.
Similarly,  fee revenue from managing Commercial Assets was $155,000 in 1998 and
$0 in 1997.

Equity in Earnings of Commercial Assets

Income from our 27% interest in Commercial Assets for 1998 was $975,000 compared
to $3,663,000  for 1997.  Prior to November  1997,  Commercial  Assets  received
income  from a  portfolio  of  collateralized  mortgage  backed  securities.  It
resecuritized  its  portfolio  in November  1997 and  temporarily  invested  the
proceeds in short-term  investments while considering  alternative  investments.
Commercial  Assets  announced  that it intended to invest in  manufactured  home
communities  in the third  quarter of 1998,  and as of December 31, 1998, it had
invested $23 million in communities.  Commercial  Assets reported to us that the
$10,265,000 decrease in Commercial Assets' net income during 1998 as compared to
1997 was due to: (1) a $3,954,000  decrease as a result of lower  yields  during
1998 on short-term  investments and interests in manufactured  home  communities
compared to yields on collateralized mortgage backed securities during 1997, (2)
a $5,786,000  nonrecurring gain on the sale of the bonds recognized in 1997, and
(3)  a  non-recurring   $500,000   expense  in  1998  related  to  the  cost  of
investigating marina investments.

Non-agency MBS Bonds

In March 1997, we sold our portfolio of unrated credit support debt interests in
non-conforming  residential mortgage loan  securitizations  known as "non-agency
MBS bonds" in order to reduce risk  associated  with this type of investment and
to maximize  long-term,  risk-adjusted  returns to  stockholders.  Consequently,
income from  non-agency  MBS bonds  decreased to $50,000 for 1998  compared with
$2,966,000 for 1997. Revenues from non-agency MBS bonds subsequent to March 1997
represent income from a residual interest retained from the sale.

General and Administrative Expenses

Our general and  administrative  expenses were  $1,393,000  for 1998 compared to
$1,612,000 for 1997. Expenses decreased in 1998 by $219,000 primarily because of
(1)  $570,000  of  management  fees to our former  manager  during  1997 and (2)
$100,000 of nonrecurring  costs in 1997 related to our reverse stock split.  The
cost decrease was partially offset by $500,000 in personnel and related expenses
incurred in 1998 as a result of our becoming  self-administered and self-managed
in November 1997.

Interest and Other Income

Interest and other income for 1998 was $871,000 compared to $1,808,000 for 1997.
The $937,000 decrease occurred because the proceeds we received in 1997 from the
sale of our non-agency MBS bonds were temporarily  invested until they were used
to  acquire   manufactured  home   communities.   By  June  1998,  we  had  used
substantially all of the proceeds to acquire communities.

Interest Expense

Interest  expense  increased  in 1998 by  $2,117,000  as compared to 1997 due to
borrowings  used to  acquire  manufactured  home  communities  as  follows:  (1)
$479,000 on  approximately  $11 million of debt assumed in  connection  with the
1997  acquisitions  of four  manufactured  home  communities,  (2) $1,288,000 on


                                     - 17 -
<PAGE>

approximately   $40  million   borrowed  in  mid-1998  in  connection  with  the
acquisition of four  additional  communities  and (3) $382,000 of amortized loan
costs related to the 1998 borrowings.

Costs Incurred to Acquire Management Contract

During 1998, we achieved  annualized  returns before  depreciation on certain of
our real estate investments in excess of 9% for a period of six months. Pursuant
to the November 1997 acquisition of our management  contract,  we issued 120,000
OP  Units  to the  former  manager  and  recognized  a  $2,092,000  expense  for
additional  consideration paid to the former manager. During 1997, we recognized
$6,553,000 of expense related to the purchase of our management contract.

Gain on Sale of Bonds

In connection  with the 1997  resecuritization  of our  non-agency  MBS bonds, a
$7,359,000  gain was  recognized,  reduced by both  $1,472,000 of incentive fees
paid to our former manager related to the gain and an additional fee of $600,000
incurred  in  exchange  for the former  manager  agreeing  to continue as a loss
mitigation  advisor on the non-agency MBS bonds. In addition,  during the fourth
quarter of 1997,  we entered  into a  transaction  for the sale of  interests in
other  bonds  that had no  carrying  value  on our  books.  As a result  of this
transaction,  a gain of  $1,197,000  was  recognized in 1997. We had no gains in
1998.

NOL and Capital Loss Carryovers

At  December  31,  1999,   our  NOL   carryover  for  income  tax  purposes  was
approximately $95,000,000 and our capital loss carryover for income tax purposes
was approximately  $20,000,000.  Subject to some limitations,  the NOL carryover
may be used to offset  all or a portion  of our REIT  taxable  income,  and as a
result,  to reduce the amount of income that we must  distribute to stockholders
to maintain  our status as a REIT.  The NOL  carryover  is  scheduled  to expire
between 2007 and 2009 and the capital  loss  carryover is scheduled to expire in
2000 and 2001.

Dividend Distributions

During 1999, we  distributed  $6,591,000  ($1.00 per share) to holders of common
stock and OP Units  compared  to 1998  distributions  of  $4,916,000  ($0.75 per
share) and 1997  distributions  of  $7,749,000  ($1.45 per share).  Sixty-eighty
percent of 1999  dividends,  eighty percent of 1998  dividends and  seventy-five
percent  of 1997  dividends  constituted  return of  capital  distributions  for
federal  income tax  purposes  and are not  taxable to the  stockholders  to the
extent of their tax basis in their stock.

                         LIQUIDITY AND CAPITAL RESOURCES

As of December  31, 1999,  we had cash and cash  equivalents  of  $570,000.  Our
principal   activities  that  demand  liquidity  include  our  normal  operating
activities, payments of principal and interest on outstanding debt, acquisitions
of  or  additional   investments  in   properties,   payments  of  dividends  to
stockholders  and  distributions  made  to  limited  partners  in the  Operating
Partnership.

Our net cash  provided  by  operating  activities  was  $5,764,000  during  1999
compared to  $6,841,000  during 1998.  The  $1,077,000  decrease was primarily a
result of a $1.6 million increase in other assets and a $0.6 million increase in
accrued interest on participating mortgages;  partially offset by a $1.3 million
increase in income  before  depreciation,  amortization,  minority  interest and
non-cash costs incurred to acquire management contracts.

                                     - 18 -
<PAGE>

In 1999, the net cash used in investing activities was $5,410,000, compared with
$58,897,000  in 1998. In 1998, we purchased  $57,832,000  of  manufactured  home
communities.  During 1999, we used only $858,000 to purchase  manufactured  home
communities; however, we invested $5,500,000 in participating mortgages.

Net cash used by financing  activities was $1,210,000 in 1999 compared with 1998
in which $31,680,000 was provided by financing activities.  In 1998, we borrowed
funds in connection with our acquisition of manufactured  home  communities.  In
1999, we did not have significant acquisitions of manufactured home communities.
Rather,  we borrowed $11 million of long-term  debt to refinance  short-term and
long-term debt and fund $5.5 million of investments in participating  mortgages.
Also in 1999,  we paid  dividends  and  distributions  of $1.00 per share and OP
Unit. In 1998, we paid $0.75 per share and OP Unit.

We have a line of credit with a bank which matures in September  2000.  The line
of credit is secured by 1,015,674 shares of our Commercial  Assets common stock.
Advances  under this line of credit bear  interest at the 30-day LIBOR rate plus
1.75%. The line of credit is limited to the lesser of (1) $5,000,000, (2) 65% of
the  product of the  trading  price of  Commercial  Assets  common  stock  times
1,015,674 or (3) 65% of the purchase price of certain  unpledged real estate. As
of December 31, 1999, the limit was $3,053,000 and $2,610,000 was outstanding on
this line of credit.

As of December 31, 1999,  88% of our real estate and 65% of our total assets was
encumbered by debt. We had total outstanding  indebtedness of $56.6 million, all
of which was  secured  by various  manufactured  home  communities  or shares of
Commercial  Assets common stock. Of our indebtedness,  $54.0 million,  or 95.4%,
was secured  long-term  notes  payable and $2.6  million,  or 4.6%,  was secured
short-term  financing.  As of December  31,  1999,  $6.1  million of the secured
long-term  notes  payable  and all of the  secured  short-term  financing  bears
interest at variable  rates based on the 30-day London  Interbank  Offered Rate.
The  weighted-average  interest rate on our secured  long-term notes payable was
7.4% at December 31, 1999.  The  weighted-average  interest  rate on our secured
short-term  financing was 7.6% at December 31, 1999. Our secured long-term notes
payable had a weighted average maturity of 9.2 years at December 31, 1999.

We expect to meet our long-term  liquidity  requirements  in excess of 12 months
through long-term, secured borrowings, the issuance of OP Units and other equity
securities and cash generated by operations.

Proposed Merger with Commercial  Assets. In August 1999, we agreed to merge with
Commercial Assets. We agreed to issue 0.4075 shares of our common stock for each
share of  Commercial  Assets  common  stock.  Alternatively,  Commercial  Assets
stockholders  may elect to receive  $5.75 per share in cash for up to  3,549,868
shares of Commercial Assets common stock with any remaining shares of Commercial
Assets common stock  receiving  0.4075 shares of our common stock.  Based on the
7,606,903  shares of  Commercial  Assets common stock not already held by us, we
will issue approximately  3,100,000 shares of our common stock if all Commercial
Assets  stockholders  elect to receive shares of our common stock in the merger.
If Commercial Assets  stockholders  elect to receive the maximum amount of cash,
then we will issue  approximately  1,653,000  shares of our common stock and pay
$20,412,000 cash to Commercial Assets stockholders in the merger.

The merger  must be  approved  by a majority  of the  outstanding  shares of our
common stock and  two-thirds  of the  outstanding  shares of  Commercial  Assets
common stock. We own 27% of the outstanding  shares of Commercial  Assets common


                                     - 19 -
<PAGE>

stock  and  have  agreed  to vote  these  shares  in favor  of the  merger.  The
stockholders  meetings to vote on the merger are expected to occur in the second
quarter of 2000.

At December 31, 1999, we had an investment in Commercial  Assets with a recorded
amount of  $19,486,000.  Based on the $13.625 share price of our common stock on
August 31,  1999 (the last  trading  day before the public  announcement  of the
merger),  our summary pro forma  balance  sheet at December  31, 1999 would have
been as  follows  under the two  alternatives  available  to  Commercial  Assets
stockholders.  The column  titled "All  Shares"  assumes all  Commercial  Assets
stockholders  elect to receive  shares of our common  stock.  The column  titled
"Shares and Cash" assumes  Commercial Assets  stockholders  elect to receive the
maximum amount of cash. All amounts are in thousands.

<TABLE>
<CAPTION>

                                                                                             Pro Forma
                                                                  Asset            -----------------------------
                                                                Investors               All             Shares
                                                                Historical             Shares          and Cash
                                                                ----------             ------          --------
  Real estate, net (including participating mortgages and
<S>                                                              <C>                 <C>              <C>
      joint ventures)                                            $  131,220          $   190,670      $   190,670
  Cash and short-term investments                                       570               14,736            4,424
  Investment in Commercial Assets                                    19,486                   --               --
  Other assets                                                        7,817               13,780           13,780
                                                                 ----------          -----------      -----------
  Total assets                                                   $  159,093          $   219,186      $   208,874
                                                                 ==========          ===========      ===========

  Secured notes payable                                          $   56,604          $    77,046      $    87,146
  Other liabilities                                                   3,401                5,148            5,148
  Minority interest in Operating Partnership                         15,236               15,759           15,759
  Stockholders' equity                                               83,852              121,233          100,821
                                                                 ----------          -----------      -----------
  Total liabilities and stockholders' equity                     $  159,093          $   219,186      $   208,874
                                                                 ==========          ===========      ===========
</TABLE>

The source of the funds to be paid to Commercial  Assets  stockholders who elect
to receive  cash in the merger (up to a maximum of  $20,412,000)  is  Commercial
Assets' $17.2 million of cash and  short-term  investments  at December 31, 1999
and $10.1 million in additional  non-recourse,  secured  long-term notes payable
borrowed by Commercial Assets in January 2000.  Additional pro forma information
at December 31, 1999 would be as follows:
<TABLE>
<CAPTION>
                                                                                             Pro Forma
                                                                  Asset            -----------------------------
                                                                Investors               All             Shares
                                                                Historical             Shares          and Cash
                                                                ----------             ------          --------
                                                                          (dollar amounts in thousands)
<S>                                                              <C>              <C>               <C>
Debt to equity ratio                                              0.57:1.00         0.56:1.00          0.75:1.00
Secured long-term notes payable                                  $   53,994       $    74,436        $    84,536
Secured short-term financing                                     $    2,610       $     2,610        $     2,610
Long-term debt as a percent of total debt                                95%               97%                97%
Fixed rate debt                                                  $   47,923       $    68,365        $    78,465
Variable rate debt                                               $    8,681       $     8,681        $     8,681
Fixed rate debt as a percent of total debt                               85%               89%                90%

</TABLE>


                              FUNDS FROM OPERATIONS

We measure  our  economic  profitability  based on FFO,  less an annual  capital
replacement reserve of at least $50 per developed homesite.  We believe that the
presentation  of FFO,  when  considered  with the financial  data  determined in


                                     - 20 -
<PAGE>

accordance  with generally  accepted  accounting  principles,  provides a useful
measure of our performance. However, FFO does not represent cash flow and is not
necessarily  indicative of cash flow or liquidity available to us, nor should it
be  considered  as an  alternative  to net income as an  indicator  of operating
performance.  The Board of Governors of NAREIT defines FFO as net income (loss),
computed in accordance with generally accepted accounting principles,  excluding
gains and losses from debt restructuring and sales of property, plus real estate
related  depreciation  and  amortization  (excluding  amortization  of financing
costs),  and  after  adjustments  for  unconsolidated   partnerships  and  joint
ventures.  We calculate FFO  beginning  with the NAREIT  definition  and include
adjustments for:

   o  the minority interest in the Operating  Partnership owned by persons other
      than us,
   o  costs we incurred in order to become self-managed,
   o  amortization of property and investment management contracts, and
   o  nonrecurring income, net.

We believe that the  presentation  of FFO provides  investors with  measurements
which help facilitate an understanding of our ability to make required  dividend
payments,  capital  expenditures  and principal  payments on our debt. Since FFO
excludes  unusual and  nonrecurring  expenses as well as depreciation  and other
real estate related expenses,  FFO may be materially  different from net income.
Therefore,  FFO should not be considered as an  alternative to net income or net
cash flows from operating activities, as calculated in accordance with generally
accepted accounting principles, as an indication of our operating performance or
liquidity.

FFO is not  necessarily  indicative  of cash  available  to fund our cash needs,
including  our  ability  to  make  distributions.  We use FFO in  measuring  our
operating  performance  because  we  believe  that the  items  that  result in a
difference  between  FFO and net  income do not  impact  the  ongoing  operating
performance  of a real  estate  company.  Also,  we believe  other  real  estate
companies,  analysts and investors  utilize FFO in analyzing the results of real
estate companies.  Our basis of computing FFO is not necessarily comparable with
that of other REITs.

For 1999, 1998 and 1997, our FFO was as follows (in thousands):

<TABLE>
<CAPTION>

                                                                  1999                 1998                 1997
                                                               ----------           ----------           ----------
<S>                                                             <C>                  <C>                  <C>
  Income before minority interest in Operating Partnership      $  2,852             $    272             $  7,192
  Real estate depreciation, including joint ventures               3,870                2,685                  848
  Amortization of management contracts                             2,757                2,894                  744
  Costs incurred to acquire management contract                       --                2,092                6,553
  Nonrecurring income, net                                           (63)                  --                   --
  Equity in Commercial Assets' adjustments for FFO                   340                  146               (1,546)
  Gain on sale of bonds                                               --                   --               (6,484)
                                                                --------             --------             --------
  Funds From Operations (FFO)                                   $  9,756             $  8,089             $  7,307
                                                                ========             ========             ========

  Weighted average common shares and OP Units outstanding          6,565                6,540                5,254
                                                                ========             ========             ========
</TABLE>

                                     - 21 -
<PAGE>

For 1999, 1998 and 1997, our net cash flows were as follows (in thousands):
<TABLE>
<CAPTION>

                                                                  1999                 1998                1997
                                                               -----------          ----------          ----------
<S>                                                            <C>                  <C>                <C>
  Cash provided by operating activities                        $   5,764            $   6,841          $    3,931
  Cash provided by (used in) investing activities                 (5,410)             (58,897)             27,479
  Cash provided by (used in) financing activities                 (1,210)              31,680             (10,025)

</TABLE>

                              YEAR 2000 COMPLIANCE

Year 2000  issues  have arisen  because  many  existing  computer  programs  and
chip-based  embedded technology systems use only the last two digits to refer to
a year,  and  therefore do not  properly  recognize a year that begins with "20"
instead of the familiar "19". If not corrected, many computer applications could
fail or create erroneous results.  The following disclosure provides information
regarding the current status of our Year 2000 compliance program.

Our  hardware and  software  systems are  currently  Year 2000  compliant.  Upon
failure of any system,  data included in critical  software  (such as rent-rolls
and  certain  record-keeping   systems)  could  be  transferred  to  alternative
commercially  available  software at a  reasonable  cost and within a reasonable
time period. Consequently,  we would be able to continue our business operations
without any material interruption or material effect on our business, results of
operations  or  financial  condition.  We have not  experienced  any  Year  2000
problems through March 17, 2000.

Disruptions in the economy generally  resulting from Year 2000 issues could also
materially adversely affect us. Moreover,  because a large number of our tenants
may be dependent on social  security  payments to pay their rents,  a failure of
the  Social  Security  Administration  to cause  their  systems  to be Year 2000
compliant may result in a material adverse effect on our operations.  The Social
Security  Administration  has  announced  that they will have their systems Year
2000  compliant  before  January 1, 2000. We have received oral  representations
from our third party vendors  indicating that they are  substantially  Year 2000
compliant.  We have not  experienced  any Year 2000  problems  through March 17,
2000.

We believe that the cost of  modification  or  replacement of our less essential
accounting and reporting  software and hardware that is not currently  compliant
with Year 2000  requirements,  if any,  will not be  material  to our  financial
position or results of operations.

Item 7A.  Quantitative and Qualitative Disclosures About Market Risk

Our  principal  exposure to market risk is through our various debt  instruments
and borrowings.  The following is a list of these debt instruments and borrowing
arrangements.

We have $37.8 million of fixed rate,  fully  amortizing,  non-recourse,  secured
long-term  notes  payable.  We do not  have  significant  exposure  to  changing
interest  rates on these  notes as the  rates  are fixed and the notes are fully
amortizing.

We have $7.6  million  of fixed  rate,  non-recourse,  secured  long-term  notes
payable that mature in October 2000. The rates on these notes range from 7.5% to
8.25% with a weighted  average rate of 7.7%.  We intend to  refinance  the notes
during  2000 with  long-term,  fully  amortizing,  fixed rate  debt.  Therefore,
changes in interest  rates would affect the cost of funds borrowed in the future
to refinance the existing debt. If the interest rate on the refinanced  debt was
1.0% greater than the weighted average rate on the existing debt, our annual net


                                     - 22 -
<PAGE>

income and cash flows  would  decrease by $76,000 due to an increase in interest
expense on these notes, based on the outstanding  balances at December 31, 1999.
We believe that the effect,  if any, of near-term  changes in interest  rates on
our financial  position,  results of operations or cash flows for 2000 would not
be material as the existing debt is fixed rate through September 2000.

We have a $2.5 million fixed rate, partially amortizing,  non-recourse,  secured
long-term  note payable that matures in April 2009.  We do not have  significant
exposure to changes in interest  rates since the interest  rate is fixed and the
balance due at maturity is $2 million.

We have a $6.1 million of recourse,  secured  long-term  note payable that bears
interest at the 30-day London  Interbank  Offered Rate  ("LIBOR")  plus 2.5%. If
LIBOR  increased  immediately  by 1%, our annual net income and cash flows would
decrease by $61,000 due to an increase in interest expense on this note payable,
based on the outstanding balance at December 31, 1999.

We have a recourse,  secured  line of credit  that bears  interest at LIBOR plus
1.75%.  As of December 31, 1999, the  outstanding  balance was $2.6 million.  If
LIBOR  increased  immediately  by 1%,  then our annual net income and cash flows
would decrease by $26,000 due to an increase in interest expense on this line of
credit, based on the outstanding balance at December 31, 1999.

Item 8.  Financial Statements and Supplementary Data.

The  report of  independent  auditors,  consolidated  financial  statements  and
schedules listed in the accompanying  index are filed as part of this report and
incorporated  herein by reference.  See "Index to Financial  Statements" on page
F-1.

Item 9.  Changes in and Disagreements with Accountants on Accounting and
         Financial Disclosure.

We have had no changes in nor any disagreements with our accountants relating to
accounting or financial disclosure.





                                     - 23 -
<PAGE>



                                    PART III

Item 10.  Directors and Executive Officers of the Registrant.

Information  with respect to our directors and executive  officers appears below
and was furnished in part by each such person.

Each of our  executive  officers  serves for a term of one year and until his or
her successor is elected and  qualified or until his or her earlier  resignation
or removal by the Board of Directors. Each of our directors serves for a term of
three years.  There are no family  relationships  among any of our directors and
executive officers.

<TABLE>
<CAPTION>

          Name           Age     First Elected              Position(s) Held with the Company
---------------------------------------------------------------------------------------------------------------
<S>                       <C> <C>                 <C>
Terry Considine           52  September 1996      Chairman of the Board of Directors (Class II)
                                                  and Chief Executive Officer
Thomas L. Rhodes          60  September 1996      Vice Chairman of the Board of Directors (Class III)
Bruce E. Moore            57  February 1998       Director (Class I), President and Chief Operating Officer
Bruce D. Benson           61  October 1996        Independent Director (Class II) and Chairman of the
                                                  Compensation Committee
Elliot H. Kline           59  September 1988      Independent Director (Class III), Member of the Compensation
                                                  Committee and Chairman of the Audit Committee
Richard L. Robinson       70  January 1990        Independent  Director (Class I) and Member of the Audit and
                                                  Compensation Committees
Tim Schultz               51  July 1994           Independent  Director (Class I) and Member of the Audit and
                                                  Compensation Committees
William J. White          61  December 1996       Independent  Director (Class II) and Member of the Audit and
                                                  Compensation Committees
Robert G. Blatz           38  February 1999       Executive Vice President-Operations
Joseph W. Gaynor          54  January 2000        Vice President-Development
David M. Becker           40  December 1997       Chief Financial Officer, Treasurer and Secretary

</TABLE>

Terry  Considine  has been our  Chairman  of the  Board of  Directors  and Chief
Executive  Officer  since April 1998.  From  September  1996 to April 1998,  Mr.
Considine served as Co-Chairman of the Board of Directors and Co-Chief Executive
Officer of the Company.  Mr.  Considine  also serves as Chairman of the Board of
Directors and Chief Executive Officer of Commercial Assets,  Inc. ("CAX"). He is
the sole owner of Considine Investment Co. and has also been the Chairman of the
Board of  Directors  and Chief  Executive  Officer of Apartment  Investment  and
Management Company

Thomas L.  Rhodes has been our Vice  Chairman of the Board of  Directors  of the
Company since April 1998.  From  September 1996 to April 1998, Mr. Rhodes served
as Co-Chairman of the Board of Directors and Co-Chief  Executive  Officer of the
Company.  Mr.  Rhodes also serves as Vice  Chairman of the Board of Directors of
CAX. Mr.  Rhodes has also been a Director of AIMCO since July 1994.  Mr.  Rhodes
has served as the President  and a Director of National  Review  magazine  since
1992. From 1976 to 1992, he held various  positions at Goldman,  Sachs & Co. and
was  elected a General  Partner in 1986.  He  currently  serves as a Director of
Delphi Financial Group, Inc. and its subsidiaries,  Delphi International,  Ltd.,
Oracle  Reinsurance  and The Lynde and Harry Bradley  Foundation.  Mr. Rhodes is
Trustee of The Heritage Foundation.

                                     - 24 -
<PAGE>

Bruce E.  Moore was  appointed  our  President  and Chief  Operating  Officer in
February  1998.  He also  serves as  President  and Chief  Operating  Officer of
Commercial  Assets. Mr. Moore is the founder and was the Chief Executive Officer
of Brandywine Financial Services Corporation and its affiliates  ("Brandywine"),
a private real estate firm  specializing  in various  aspects of the real estate
industry,  including  asset  management,   consulting,   development,   property
management,   brokerage  and  capital  formation.   He  is  a  certified  public
accountant, holds a Masters in Accounting and a Bachelor of Science in Economics
from the  Wharton  School of the  University  of  Pennsylvania.  Mr.  Moore is a
director and past president of the Media Youth Center, and a past advisory-board
member for the  Department of Recreation and  Intercollegiate  Athletics for the
University of Pennsylvania.  In addition,  Mr. Moore is a member of the National
Association of Real Estate Investment  Trusts and the  International  Council of
Shopping Centers.

Robert G. Blatz has functioned as our Executive  Vice  President  since February
1999 and was appointed to this position in September  1999. From June 1998 until
joining  the  Company  he served  as a Senior  Associate  for  Coopers & Lybrand
(predecessor  to  PricewaterhouseCoopers)  as a consultant  for  management  and
financial  systems.  From  May  1993 to June  1998,  he was  with  the  Heritage
Foundation,  a public policy  organization,  most recently as its Vice President
and Chief Financial Officer.  From May 1983 to May 1993, he served as an officer
in the United States Army, in a variety of positions and assignments.  Mr. Blatz
received a BS from the United States Military Academy and an MBA from The George
Washington University.

Joseph W. Gaynor joined the Company as Vice  President of Development in January
2000.  From January 1986 through  December  1999,  Mr.  Gaynor served as General
Counsel to Brandywine Corporation and its affiliates  ("Brandywine"),  a private
real estate firm  specializing in various  aspects of the real estate  industry,
including development and property management of retail centers and manufactured
home  communities.  In 1995,  Mr. Gaynor became the President of an affiliate of
Brandywine  in  charge  of new  development.  In May  1997,  Mr.  Gaynor  became
President of Community  Acquisition  and Development  Corporation,  the managing
member of several limited liability  companies which owned,  leased and operated
manufactured  home communities in which either the Company or Commercial  Assets
had interests in. Prior to 1995, Mr. Gaynor was a senior partner in the law firm
of Gaynor,  Decker & Young,  P.A. and  specialized in the  development of retail
shopping centers, hotels, marinas and manufactured home communities.  Mr. Gaynor
received his B.S.  with honors from  Rutgers  University,  earned his J.D.  from
Stetson  University  College of Law and was admitted to the Florida Bar in 1971.
He is a past Chairman of St.  Petersburg  Downtown  Redevelopment  Committee and
Port  Authority,  a past Chairman of the Board of Operation PAR, Inc.  (Parental
Awareness and Responsibility), a past Chairman of the Tampa Bay Area Partnership
for a Drug Free Florida,  and a past Chairman of the Pinellas  Partnership for a
Drug-Fee Workplace.

David M. Becker has  functioned as our Chief  Financial  Officer,  Treasurer and
Secretary  since  December 1997 and was appointed to such  positions in February
1998.  Since  December  1997,  Mr.  Becker  has also  served as Chief  Financial
Officer,  Secretary and Treasurer of Commercial Assets and was appointed to such
positions in April 1998.  From September 1995 until joining the Company,  he was
both the Chief Financial Officer of Westfield Development Company, Inc. and Vice
President-Finance  of The  Frederick  Ross Co.,  related  companies  involved in
commercial real estate development, brokerage and management. Prior to September
1995,  he held  various  executive  positions  with  CONCORD  Services,  Inc., a
privately-held  company  involved in  multiple  businesses,  including  trading,
manufacturing  and  finance.  CONCORD  Services,  Inc.  declared  bankruptcy  in
February 1995. In addition,  Mr. Becker was Chief Financial  Officer and General
Counsel of Ramtron  International  Corporation,  a  publicly-held  semiconductor


                                     - 25 -
<PAGE>

manufacturer,  from October 1989 until July 1994.  Mr. Becker is an attorney and
certified public accountant.  He received a B.A. from the University of Northern
Iowa and a J.D. from the University of Denver.

Bruce D. Benson has served as a Director  of the  Company and CAX since  October
1996 and  previously  served as a Director of the  Company  from  February  1992
through  November  1993. In February 1998, Mr. Benson became the Chairman of the
Company's compensation  committee.  For the past 32 years, he has been President
and owner of Benson  Mineral  Group,  Inc.,  a domestic  oil and gas  production
company  located in  Denver,  Colorado.  He is also  Chairman,  Chief  Executive
Officer  and  President  of  United  States  Exploration,  Inc.,  an oil and gas
exploration company listed on the American Stock Exchange. He serves on numerous
Boards  of  Trustees  and  Boards  of  Directors,   including  Chairman,  Denver
Zoological Foundation;  Past Chairman and Past President, Boy Scouts of America,
Denver  Area  Council;  Trustee  and Past  President  of the Board of  Trustees,
Berkshire  School,  Sheffield,   Massachusetts;  Past  Trustee,  Smith  College,
Northampton,   Massachusetts;  Past  Chairman,  Colorado  Commission  on  Higher
Education;  and  past  member,  Board  of  Directors,   University  of  Colorado
Foundation; and Chairman of the Total Learning Environmental Capital Campaign of
the  University  of Colorado.  In 1994,  he was the  Republican  nominee for the
Governor of Colorado.

Elliot H. Kline has served as a Director of the Company since September 1988, as
a member of its  compensation  committee since February 1998, as a member of its
audit committee since December 1988 and as Chairman of the audit committee since
November 1990. Dr. Kline has served as  Executive-in-Residence  at Arizona State
University-West  since  August  1993.  Dr.  Kline  served as President of In The
Interim   Management   Consulting,   a  firm   specializing   in  consulting  to
universities,  from 1989 to 1993. Dr. Kline served as the Dean of the College of
Business  Administration  at the  University of Denver from 1987 to 1989; as the
Dean and a Professor of the School of Business and Public  Administration at the
University  of the  Pacific  from  1977  to  1987;  and as the  Director  and an
Associate  Professor of the Institute of Public  Affairs and  Administration  at
Drake University from 1970 to 1977.

Richard L.  Robinson has served as a Director of the Company since January 1990,
as a member  of its audit  committee  since  August  1993 and as a member of its
compensation  committee since February 1998. Mr. Robinson has served as Chairman
of the Board of Directors and Chief Executive Officer of Robinson Dairy, Inc., a
Denver-based  institutional dairy products  manufacturer and distributor,  since
1975 and prior thereto served in various  executive  positions with that company
for 20 years.  Mr. Robinson also serves as a Director of US  Exploration.  He is
active in numerous civic and charitable  organizations,  is past Chairman of the
Greater  Denver  Chamber of Commerce and a past  President of the State Board of
Agriculture, the governing body for the Colorado State University System.

Tim  Schultz  has served as Director of the Company and as a member of its audit
committee  since July 1994. In February 1998, Mr. Schultz became a member of the
Company's compensation  committee. He is President and Executive Director of the
Boettcher Foundation,  a Colorado  not-for-profit,  charitable corporation,  and
from August 1994 until  November 1995, he was Chairman and President of Colorado
Open Lands, a Colorado not-for-profit corporation.  From 1990 until August 1994,
he   was    employed   by   the   law   firm   of   Arnold   &   Porter   as   a
Consultant-Corporate/Government  Relations  with  responsibilities  ranging from
serving as  Chairman  of a large land trust to  representing  clients'  needs in
connection with state and local government  issues.  From May 1987 to July 1990,
Mr. Schultz served as Executive Director of the State of Colorado  Department of
Local Affairs and from November 1983 to May 1987, as Commissioner of Agriculture
for the  State  of  Colorado  Department  of  Agriculture,  both  cabinet  level
positions.  From 1987 to 1991,  he served as Chairman of the  Colorado  Economic
Development Commission.

                                     - 26 -
<PAGE>

William J. White has served as  Director  of the Company and member of its audit
committee since December 1996, and became a member of its compensation committee
in  February  1998.  Mr.  White has served as  Chairman  of Bigelow  and Co., an
investment-banking   firm  located  in  Denver,  Colorado  that  specializes  in
municipal and corporate  finance,  since 1995. From 1992 through 1995, Mr. White
was President and owner of First Denver  Financial  Corporation  and in 1991 and
1992,  was President of  Affiliated  Capital  Markets,  a division of Affiliated
National Bank. Prior to these positions,  Mr. White served in various  positions
culminating  as Chairman of Kirchner  Moore and Company,  an  investment-banking
firm.  Mr. White  serves on the Board of  Directors  of Guaranty  Bank and Trust
Company.

There  are no  arrangements  or  understandings  pursuant  to  which  any of our
directors or executive  officers were selected as directors or officers.  Except
as  described  above,  none of our  directors or  executive  officers  have been
involved in any legal  proceedings  during the past five years that are material
to an evaluation of the ability or integrity of such persons.

Compliance With Section 16(a) of the Exchange

Our executive  officers and directors,  and persons who own more than 10% of the
Company's common stock,  are required under the Securities  Exchange Act of 1934
to file reports of  ownership  and changes in  ownership  of  securities  of the
Company  with the  Securities  and  Exchange  Commission  and the New York Stock
Exchange,  Inc.  Copies of those  reports  also must be  furnished  to us. Based
solely upon a review of the copies of reports  furnished  to us, we believe that
for the year ended December 31, 1999, all filing requirements were timely met by
our executive officers, directors and beneficial owners of more than ten percent
of our stock  except as follows:  Mr. Blatz was late filing his report on Form 3
relating to ownership of equity interests.  Mr. White was late filing one report
on Form 4 relating to a change in beneficial ownership.

11.  Executive Compensation.

In 1999, none of Messrs. Considine, Rhodes or Moore received any compensation in
his capacity as Chief Executive  Officer,  Vice Chairman and President and Chief
Operating  Officer,  respectively.  Mr. Blatz received total salary and bonus in
1999 of $101,000 as the Executive Vice President-Operations. Mr. Becker received
total  salary  and bonus in 1999 of  $150,000  as the Chief  Financial  Officer,
Treasurer and Secretary.

In their capacity as executive officers, each of Messrs. Moore, Blatz and Becker
received  options  to  acquire  shares  of our  common  stock.  Neither  Messrs.
Considine  nor  Rhodes,  each  of  whom  is a  stockholder  of the  Company  and
Commercial  Assets,  was at any time on or prior to December  31,  1999  granted
options to acquire  shares of our common  stock other than in his capacity as an
executive officer.  Mr. Moore, a stockholder in the Company, was not at any time
on or prior to December 31, 1999 granted options to acquire shares of our common
stock other than in his capacity as an executive officer.

The following  table sets forth, in summary form, the  compensation  paid by the
Company to each individual who served as its Chief Executive Officer,  President
and two  executive  officers of the Company  during 1999 whose  salary  exceeded
$100,000 (the "Named Executive Officers"):


                                     - 27 -
<PAGE>

                           SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>

                                                                                                     Long Term
                                                                     Annual Compensation            Compensation
                                                                                                       Awards
                                                                     ---------------------      ---------------------
                                                                                                     Securities
                                                                                                     Underlying
Name and Principal Positions                           Year               Salary ($)                Options (#)
---------------------------------------------      -------------     ---------------------      ---------------------
<S>                                                    <C>                <C>                          <C>
Terry Considine                                        1999                   -                              -
Chief Executive Officer                                1998                   -                        300,000
                                                       1997                   -                              -

Bruce E. Moore                                         1999                   -                         25,000
President and Chief Operating Officer                  1998                   -                        250,000
                                                       1997                   -                              -

Robert G. Blatz                                        1999                101,000                      80,000
Executive Vice President - Operations                  1998                   -                              -
                                                       1997                   -                              -

David M. Becker                                        1999                150,000                      10,000
Chief Financial Officer                                1998                150,000                      40,000
                                                       1997                   -                              -

</TABLE>

The  following  tables set forth  certain  information  regarding  stock options
granted to the Named Executive Officers during 1999:

                        OPTION GRANTS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>

                                              Individual Grants                              Potential Realizable
                        ---------------------------------------------------------------        Value at Assumed
                           Number of        % of Total                                       Annual Rates of Stock
                           Securities     Options Granted                                   Price Appreciation for
                           Underlying       Granted to                                           Option Term
                            Options        Employees in       Exercise       Expiration    --------------------------
         Name              Granted(#)     Fiscal Year (%)  Price ($/sh)(3)      Date          5% ($)       10% ($)
         ----              ----------     ---------------  ---------------      ----          ------       -------
<S>                         <C>                <C>            <C>              <C>            <C>         <C>
Terry Considine                 --               --%               --               --             --        --
Bruce E. Moore              25,000 (1)         21.7%          15.0625          1/18/09        237,000       600,000
Robert G. Blatz             80,000 (2)         69.6%          13.4375          9/12/09        676,000     1,713,000
David M. Becker             10,000 (1)          8.7%          15.0625          1/18/09         95,000       240,000
----------
<FN>

(1)   During  1999,  each  of  Messrs.   Moore  and  Becker   received   options
      constituting nonqualified stock options to purchase shares of common stock
      under the 1998  Stock  Incentive  Plan.  Their  options  are  subject to a
      five-year  vesting  period  such  that no  options  vest  until  the third
      anniversary after the date of grant.  Sixty percent of the options vest on
      the third anniversary and an additional 20% vest on each of the fourth and
      fifth anniversaries.
(2)   During 1999, Mr. Blatz received options  constituting  nonqualified  stock
      options to  purchase  40,000  shares of common  stock under the 1998 Stock
      Incentive  Plan.  Options are subject to a four-year  vesting  period such
      that 25% of such  options  vest on each of the first  three  anniversaries
      after the  respective  date of grant.  Options  for an  additional  40,000
      shares  vested on the date of grant and Asset  Investors  lent $538,000 to
      Mr. Blatz which he used to exercise these options. The loan bears interest
      at 7.5% and matures September 12, 2009.
(3)   The exercise  price is equal to the fair market  value of the common stock
      on the date of grant.
</FN>
</TABLE>

                                     - 28 -
<PAGE>

                 AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
                        AND FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>

                                                                                                    Value of
                                                                  Number of Securities            Unexercised In-
                                                                 Underlying Unexercised             the-Money
                                                                    Options at Fiscal            Options at Fiscal
                                Shares            Value               Year-end (#)                 Year-end ($)
                               Acquired         Realized              Exercisable/                 Exercisable/
          Name             On Exercise (#)       ($)(1)               Unexercisable             Unexercisable (2)
          ----             ---------------       ------               -------------            -----------------
<S>                             <C>                <C>               <C>                               <C>
Terry Considine                   --               --                100,000/200,000                   0/0
Thomas L. Rhodes                  --               --                 33,334/66,666                    0/0
Bruce E. Moore                    --               --                83,334/191,666                    0/0
Robert G. Blatz                 40,000             --                   0/40,000                       0/0
David M. Becker                   --               --                20,000/30,000                     0/0
----------
<FN>

(1)    Represents  the  product of (A) the  difference  between  (i) the closing
       price of the common stock on the NYSE on the  exercise  date and (ii) the
       option  exercise price and (B) the number of securities  underlying  such
       options.
(2)    The  value  of   unexercised   in-the-money   options  is  calculated  by
       multiplying  (A) the number of securities  underlying such options by (B)
       the  difference  between  (i) the  closing  price of the common  stock at
       December 31, 1999 and (ii) the option exercise price.

</FN>
</TABLE>

Director Compensation

During 1999,  each of our  non-employee  directors  received 2,300 shares of our
common stock, plus an additional $300 for each meeting of the Board of Directors
or committee  thereof  attended.  In addition,  all directors are reimbursed for
expenses  related  to  their  attendance  at Board of  Directors  and  committee
meetings.

Under the existing  1998 Stock  Incentive  Plan,  on the date of the 1999 annual
stockholders  meeting,  all of our non-employee  directors received an automatic
grant of options to acquire 2,800 shares of the  Company's  common stock with an
exercise price equal to the closing price of the Company's  common stock on such
date. Such options were immediately exercisable and have a term of 10 years.

Under the 1998 Stock  Incentive  Plan,  all of our  non-employee  directors will
automatically  receive  annual grants of  market-price  options to acquire 2,800
shares of the  Company's  common  stock on the date of each annual  stockholders
meeting.  These options will be  immediately  exercisable  upon grant and have a
term of ten years.

Compensation Committee Interlocks and Insider Participation

During 1999, Messrs.  Benson, Kline,  Robinson,  Schultz and White served on the
compensation committee.  Mr. Considine served as Chairman of the Board and Chief
Executive Officer of the Company and Commercial Assets, and Mr. Rhodes served as
Vice Chairman of the Board of the Company and Commercial  Assets.  Mr. Considine
is Chairman of the Board and Chief Executive Officer of Apartment Investment and
Management Company ("AIMCO") and Mr. Rhodes serves on the compensation committee
of AIMCO.

                                     - 29 -
<PAGE>

Compensation Committee Report on Executive Compensation

The five directors who are not members of management constitute the compensation
committee. The compensation committee:

   o  determines the  compensation of the Chief  Executive  Officer and the Vice
      Chairman;
   o  reviews and approves the compensation of other corporate  officers holding
      executive positions;
   o  reviews the general compensation and benefit practices of the Company; and
   o  administers our compensation and stock incentive plans.

The compensation committee considers various factors including:

   o  recruitment, motivation and retention of our management team;
   o  alignment of management financial rewards with stockholder  objectives for
      total return (dividend income plus share price appreciation); and
   o  reasonability in  consideration of all the facts,  including total return,
      the size and  complexity  of the Company and the  practices  of other real
      estate investment trusts.

Compensation   of  senior   management   is  comprised  of  Base   Compensation,
Discretionary  Compensation  and  Incentive  Compensation.  The  policy  of  the
compensation  committee is to set Base  Compensation at or below the median paid
by comparable companies to executive officers with comparable  responsibilities,
to utilize  Discretionary  Compensation,  generally  cash and not more than Base
Compensation,  to reward specific achievements,  and to make the chief financial
reward  Incentive  Compensation  which  is  tied  directly  to the  creation  of
stockholder value.

BASE COMPENSATION.  The compensation committee determined 1999 Base Compensation
for the Chief  Executive  Officer and the Vice  Chairman,  reviewed and approved
1999 Base Compensation for other senior management based upon the recommendation
of the Chief  Executive  Officer and Vice Chairman and considered such 1999 Base
Compensation  reasonable.  Base Compensation for the Chief Executive Officer and
Vice Chairman for 1998-2000  consists of options to purchase 300,000 and 100,000
shares, respectively, of the Company's common stock at $19.375 per share.

DISCRETIONARY  COMPENSATION.  For 1999, the compensation  committee  considered,
among other things:

   o  the  achievement  of the 1999  objective for per share Adjusted Funds From
      Operations;
   o  our growth in size and complexity during 1999;
   o  the number and size of 1999  acquisitions  by Commercial  Assets and their
      financings;
   o  the achievement of a proposed merger agreement with Commercial Assets; and
   o  our total return for 1999 as compared to the Morgan Stanley REIT Index.

No Discretionary Compensation was awarded to senior management.

INCENTIVE COMPENSATION.  The compensation committee bases Incentive Compensation
primarily by reference to "Excess  Value Added,"  calculated  as the amount,  if
any, by which our total  return  exceeds  total  returns  achieved by other real
estate  investment  trusts (as measured by Morgan Stanley REIT Index) multiplied
by the  weighted  average  market  value of our stock  and OP Units  outstanding
during the measurement period.

                                     - 30 -
<PAGE>

In 1999,  our total return was a negative 6% which was less than the negative 5%
Total  Return of the Morgan  Stanley  REIT  Index.  The  compensation  committee
awarded no Incentive  Compensation in 1999 to either the Chief Executive Officer
or Vice Chairman and approved no awards to other senior management.

CHIEF EXECUTIVE  OFFICER AND VICE CHAIRMAN.  In determining the compensation for
the Chief  Executive  Officer  and Vice  Chairman,  the  compensation  committee
considered, among other things, our 1999 financial performance:

   o  Total Return for 1999 of a negative 6%;
   o  investment  of $47  million  by  Commercial  Assets in  manufactured  home
      communities in 1999;
   o  agreement to merge with Commercial Assets; and
   o  increase in leasing of previously  unleased  homesites  from 44 in 1998 to
      147 in 1999.

EQUITY TRANSACTIONS IN SUPPORT OF COMPENSATION OBJECTIVES

The  compensation  committee  has  determined  that we are  well  served  by the
alignment of interest that occurs when senior  management has the same financial
interests  as do other  stockholders.  To  promote  this end,  the  compensation
committee and the Board of Directors have:

   o  structured  Board  annual  compensation  to be paid in stock  options  and
      annual director's fees paid in stock with meeting fees paid in cash;
   o  structured Base Compensation of Chief Executive Officer, Vice Chairman and
      President  for  1998-2000  entirely in options to acquire stock at 100% of
      then current value; and
   o  granted to other  senior  management  options to acquire  stock at 100% of
      then current value which are fully vested only after three or five years.

Date:  March 14, 2000                            BRUCE D. BENSON (Chairman)
                                                 ELLIOT H. KLINE
                                                 RICHARD L. ROBINSON
                                                 TIM SCHULTZ
                                                 WILLIAM J. WHITE





                                     - 31 -
<PAGE>




Item 12.  Security Ownership of Certain Beneficial Owners and Management.

The table below sets forth,  as of March 17,  2000,  the number of shares of our
common  stock  beneficially  owned  by  (1)  each  person  known  by  us to be a
beneficial  owner  of  more  than 5% of our  common  stock;  (2) all  directors,
individually,   and  each  executive   officer  that  holds  our  common  stock,
individually;  and (3) all of our directors  and executive  officers as a group,
which information was furnished in part by each such person.
<TABLE>
<CAPTION>

                                                                      Amount and
                                                                       Nature of
                                                                      Beneficial             Percent of
                  Name of Beneficial Owner (1)                         Ownership               Class (2)
                  ----------------------------                       ------------            ---------
<S>                                                                      <C>                   <C>
Terry Considine (3)                                                      753,903               12.3%
Thomas L. Rhodes (4)                                                     289,190               4.9%
Bruce E. Moore (5)                                                       229,813               3.9%
Bruce D. Benson (6)                                                      148,492               2.6%
Elliot H. Kline (7)                                                       52,318               *
Richard L. Robinson (8)                                                   55,502               1.0%
Tim Schultz (9)                                                           32,536               *
William J. White (10)                                                     18,500               *
Robert G. Blatz                                                           40,000               *
Joseph W. Gaynor (11)                                                      8,414               *
David M. Becker (12)                                                      28,110               *
The Wilder Corporation of Delaware (13)                                  601,891               10.6%
All directors and executive officers as a group (11 persons)           1,656,778               24.5%
-----------
<FN>

*      Denotes  ownership  of  less  than 1% of the  outstanding  shares  of the
       Company's common stock.
(1)    Includes, where applicable,  shares owned by such person's minor children
       and  spouse  and  by  other  related  individuals  and  entities.  Unless
       otherwise indicated,  such person has sole voting and investment power as
       to the shares  listed  and such  person's  address  is 3410 South  Galena
       Street,  Suite 210,  Denver,  Colorado  80231.  Excludes units of limited
       partnership of Asset Investors  Operating  Partnership  ("OP Units") that
       are not redeemable within 60 days.
(2)    All shares  which a person had the right to acquire  within 60 days after
       March 17, 2000 were deemed to be outstanding for the purpose of computing
       the  "Percent  of Class"  owned by such  person but were not deemed to be
       outstanding  for the purpose of computing the "Percent of Class" owned by
       any other person. At March 17,2000, 5,632,569 shares were outstanding.
(3)    Includes  178,354 shares held by Titahotwo Ltd. and Titahothree  Ltd., in
       which Mr. Considine serves as a general partner. Includes 226,919 options
       exercisable and 266,130 OP Units redeemable within 60 days.
(4)    Includes  78,022  options  exercisable  and  168,037 OP Units  redeemable
       within 60 days.
(5)    Includes 8,721 shares held by Brandywine Real Estate Management  Services
       Corporation,  an entity  in which  Mr.  Moore  owns a 50%  interest,  and
       166,667  options  exercisable  and 25,355 OP Units  redeemable  within 60
       days.
(6)    Includes 30,823 options exercisable and 75,160 OP Units redeemable within
       60 days.
(7)    Includes 17,600 options exercisable within 60 days.
(8)    Includes 17,600 options exercisable within 60 days.
(9)    Includes 17,600 options exercisable within 60 days.
(10)   Includes 12,100 options exercisable within 60 days.
(11)   Includes  2,600  shares held by the Joseph  William  Gaynor  Family Trust
       dated  10-28-83 of which Mr.  Gaynor is the sole  trustee.
(12)   Includes 20,000 options exercisable within 60 days.
(13)   Includes 56,960 OP Units redeemable within 60 days.

</FN>
</TABLE>

                                     - 32 -
<PAGE>

Item 13.  Certain Relationships and Related Transactions.

Transactions  involving  former  manager.  Prior to  November  1997,  our  daily
activities were performed by Financial Asset Management LLC ("FAM"), pursuant to
a management  agreement (the "AIC Management  Agreement").  FAM provided similar
services  to  Commercial  Assets  pursuant  to a  separate  agreement  (the "CAX
Management  Agreement," and collectively with the AIC Management Agreement,  the
"Management  Agreements").  Messrs.  Considine,  Rhodes and Benson are principal
owners of FAM.

In November  1997,  our  stockholders  approved the purchase of FAM's assets and
operations,  including the Management Agreements, in exchange for (i) 676,696 OP
Units and (ii) the issuance of up to 240,000  additional  OP Units if we achieve
certain  performance goals. In 1998, FAM distributed the 676,696 OP Units to its
owners.  Messrs.  Considine,  Rhodes and Benson received 204,286,  138,458,  and
63,839 OP Units, respectively, from this distribution.

In August 1998, we issued 120,000 of the above described 240,000 OP Units to FAM
as a result of the  achievements of investment and return goals. FAM distributed
these OP Units and Messrs. Considine, Rhodes and Benson received 36,227, 29,433,
and 11,321 OP Units, respectively, from this distribution.

If the average  share  price of our common  stock  exceeded  $20.00 for a 90-day
period  prior  to June  17,  1999,  then we were  required  to  issue to FAM the
remaining  120,000 OP Units  described  above.  The  average  share price of our
common  stock did not  exceed  $20.00  for the  required  time  period  and this
obligation to issue OP Units has expired.

Transactions  involving  Messrs.  Moore and Gaynor.  During  1999,  two property
management companies (collectively, "AIC Property Management") received property
management and accounting  fees of $672,000 from  communities in which we own an
interest  and  $172,000  from  communities  in which  Commercial  Assets owns an
interest.  We own  50% of  AIC  Property  Management  and  Community  Management
Investors  Corporation ("CMIC") owns 50% of AIC Property  Management.  Mr. Moore
owns 35% and Mr. Gaynor owns 20% of CMIC.  In order for AIC Property  Management
to provide  the above  services,  AIC  Property  Management  utilized  staff and
resources  of  Brandywine  Financial  Services  Corporation  and its  affiliates
("Brandywine").  Mr. Moore is the founder and was the Chief Executive Officer of
Brandywine  prior  to his  appointment  as our  President  and  Chief  Operating
Officer.  Effective  January 1, 2000,  we  purchased  CMIC's 50% interest in AIC
Property  Management  for a $2,120,000  promissory  note that matures  March 31,
2000. The note bears interest at 8.5%.

Brandywine  Commercial Services Corporation  ("Services Corp."), an affiliate of
Brandywine, provides maintenance services to both our communities and Commercial
Assets communities.  Mr. Moore owned 50% of Services Corp. during 1999. Services
Corp.  received  fees of  $1,725,000  from our  communities  and  $658,000  from
Commercial  Assets  communities for maintenance  services  provided during 1999.
Effective  January 1, 2000,  we purchased  100% of Services  Corp.'s  assets and
operations  for  $30,000  and the  assumption  of  leases on  equipment  used by
Services Corp.

                                     - 33 -
<PAGE>

Brandywine Home Sales Corporation  ("Sales Corp."),  an affiliate of Brandywine,
provides real estate  brokerage  services in both our communities and Commercial
Assets communities.  Sales Corp. receives commissions from us, Commercial Assets
or the homeowner  depending on the  circumstances.  Mr. Moore owned 50% of Sales
Corp.  during  1999.  Sales  Corp.  received  sales  commissions  during 1999 as
follows:

           From our communities                                  $ 45,000
           From Commercial Assets communities                    $ 46,000
           From homeowners                                       $293,000

Effective January 1, 2000, we purchased 100% of Sales Corp.'s activities and its
inventory of homes located at our  communities  for (a) $100,000  cash,  (b) the
assumption of $487,000 in the  third-party  debt,  and (c) the  cancellation  of
$64,000 in loans from us.

Effective  January  1, 2000,  we  purchased  four  communities  and  undeveloped
homesites at three other  communities from entities in which Mr. Gaynor owns 31%
(the "CADC Properties"). During 1999, we held participating mortgages secured by
the CADC properties.  The purchase price for the CADC Properties was $36,816,000
and was paid as follows:

   o  Issuance of 44,572 OP Units at an assigned value of $496,000,
   o  Cancellation   of   $24,851,000  in  loans  from  us  involving  the  CADC
      Properties,
   o  Assumption of $10,704,000 in third-party debt, and
   o  $765,000 cash.

Other  Transactions.  Asset Investors Equity,  Inc. ("AIE") and AIC Manufactured
Housing Corp.  ("AICMHC" and collectively with AIE, the "Service  Subsidiaries")
engage in  activities  and receive  fees that would not  otherwise  be permitted
under the tax rules  governing  REITs. In order to allow us to maintain our REIT
status for federal income tax purposes,  Messrs.  Considine and Rhodes, directly
or indirectly, equally own some or all of the outstanding voting common stock of
the Service Subsidiaries.  We own all of the outstanding non-voting common stock
of each of the Service Subsidiaries.

Messrs. Considine and Rhodes acquired all of the outstanding voting common stock
of AICMHC in 1997 for $27,000.  This  represents 5% of the  outstanding  capital
stock of AICMHC. We acquired the remaining 95%, in the form of non-voting common
stock, for $509,485.  Messrs. Considine and Rhodes each acquired their shares of
AICMHC's  voting common stock in exchange for a $13,500  promissory note bearing
7% interest.  Messrs.  Considine and Rhodes have paid interest  through December
31, 1999 and paid $5,000 in interest during 1999.

Messrs. Considine and Rhodes owned 70% of the outstanding voting common stock of
AIE through June 1999. This represented 3.5% of the outstanding capital stock of
AIE. AICMHC owned the remaining  outstanding shares of voting common stock which
represented  1.5% of the outstanding  capital stock of AIE. We own the remaining
95% of AIE's capital stock in the form of non-voting common stock. In June 1999,
Messrs.  Considine  and Rhodes sold all of their shares of AIE's  voting  common
stock to AICMHC in exchange for AICMHC's assumption of the outstanding  balances
on their  promissory notes to AIE totaling  $168,000.  The promissory notes were
originally  issued in connection with Messrs.  Considine's and Rhodes's purchase
of AIE voting common stock. All  distributions  by AIE to Messrs.  Considine and
Rhodes  prior  to the June  1999  sale  were  used by them to pay  interest  and
principal on these notes.

                                     - 34 -
<PAGE>

We lease a  recreational  vehicle park which we would not otherwise be permitted
to operate under the tax rules governing REITs to AIC RV Management  Corp. ("AIC
RV  Management"),  an entity  that is owned  equally  by Messrs.  Considine  and
Rhodes. During 1999, AIC RV Management paid aggregate lease payments of $366,000
to us. As of December 31, 1999,  AIC RV Management  has $80,000 in loans from us
which bear interest at a rate of 10% per annum.

                                     PART IV

Item 14.  Exhibits, Financial Statement Schedules, and Reports on Form 8-K.

(a)(1)   The financial statements listed in the Index to Financial Statements on
         Page F-1 of this report are filed as part of this report.

(a)(2)   The  financial  statement  schedules  listed in the Index to  Financial
         Statements on Page F-1 of this report are filed as part of this report.
         All other  schedules  are omitted  since they are not  applicable,  not
         required,  or the  information  required  to be set  forth  therein  is
         included in the financial statements, or in notes thereto.

(a)(3)   The Exhibit Index is included on page 36 of this report.

(b)      Reports on Form 8-K for the quarter ended December 31, 1999:

         No current  reports on Form 8-K were  filed by the  Company  during the
         fourth quarter of 1999.






                                     - 35 -
<PAGE>




                          INDEX TO FINANCIAL STATEMENTS


ASSET INVESTORS CORPORATION                                                 Page

Financial Statements:

         Report of Independent Auditors....................................  F-2
         Consolidated Balance Sheets as of December 31, 1999 and 1998......  F-3
         Consolidated Statements of Income for the years ended
           December 31, 1999, 1998 and 1997................................  F-4
         Consolidated Statements of Stockholders' Equity for the years
           ended December 31, 1999, 1998 and 1997..........................  F-5
         Consolidated Statements of Cash Flows for the years ended
           December 31, 1999, 1998 and 1997................................  F-6
         Notes to Consolidated Financial Statements........................  F-7

Financial Statement Schedules:

         Schedule III -- Real Estate and Accumulated Depreciation.......... F-22

         Schedule IV -- Mortgage Loans on Real Estate...................... F-24


COMMERCIAL ASSETS, INC. (a significant unconsolidated subsidiary of the Company)

Financial Statements:

         Report of Independent Auditors.................................... F-26
         Consolidated Balance Sheets as of December 31, 1999 and 1998...... F-27
         Consolidated Statements of Income for the years ended
             December 31, 1999, 1998 and 1997.............................. F-28
         Consolidated Statements of Stockholders' Equity for the
             years ended December 31, 1999, 1998 and 1997.................. F-29
         Consolidated Statements of Cash Flows for the
             years ended December 31, 1999, 1998 and 1997.................. F-30
         Notes to Consolidated Financial Statements........................ F-37

Financial Statement Schedules:

         Schedule III -- Real Estate and Accumulated Depreciation.......... F-44

         Schedule IV -- Mortgage Loans on Real Estate...................... F-46





                                     F - 1
<PAGE>




                         REPORT OF INDEPENDENT AUDITORS



Board of Directors and Stockholders
Asset Investors Corporation


         We have audited the accompanying  consolidated  balance sheets of Asset
Investors Corporation and subsidiaries as of December 31, 1999 and 1998, and the
related consolidated  statements of income,  stockholders' equity and cash flows
for each of the three years in the period ended  December  31, 1999.  Our audits
also  included the  consolidated  financial  statement  schedules  listed in the
accompanying   index.   These   financial   statements  and  schedules  are  the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these financial statements and schedules based on our audits.

         We conducted our audits in accordance with auditing standards generally
accepted in the United States.  Those standards require that we plan and perform
the audit to obtain reasonable  assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.  An
audit also includes  assessing the accounting  principles  used and  significant
estimates  made by  management,  as well as  evaluating  the  overall  financial
statement  presentation.  We believe that our audits provide a reasonable  basis
for our opinion.

         In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
Asset Investors  Corporation and  subsidiaries as of December 31, 1999 and 1998,
and the  consolidated  results of their operations and their cash flows for each
of the three years in the period  ended  December  31, 1999 in  conformity  with
accounting  principles  generally  accepted in the United  States.  Also, in our
opinion, the related financial statement schedules,  when considered in relation
to the  basic  consolidated  financial  statements  taken as a  whole,  presents
fairly, in all material respects the information set forth therein.




                                                            /s/Ernst & Young LLP

Denver,  Colorado
January 21, 2000,  except for
  Note I, as to which the date
  is March 7, 2000






                                     F - 2
<PAGE>




                  ASSET INVESTORS CORPORATION AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                      (in thousands, except per share data)

<TABLE>
<CAPTION>

                                                                                             December 31,
                                                                                             ------------
                                                                                      1999                  1998
                                                                                      ----                  ----
ASSETS
<S>                                                                                 <C>                   <C>
Real estate, net of accumulated depreciation of $7,248 and $3,378                   $  108,745            $   98,563
Investments in participating mortgages                                                  22,475                27,604
Cash and cash equivalents                                                                  570                 1,426
Investment in Commercial Assets                                                         19,486                20,706
Other assets, net                                                                        7,817                 9,927
                                                                                    ----------            ----------
       Total Assets                                                                 $  159,093            $  158,226
                                                                                    ==========            ==========

LIABILITIES
Secured long-term notes payable                                                     $   53,994            $   40,506
Secured short-term financing                                                             2,610                10,500
Accounts payable and accrued liabilities                                                 3,401                 2,935
                                                                                    ----------            ----------
                                                                                        60,005                53,941
                                                                                    ----------            ----------

COMMITMENTS AND CONTINGENCIES                                                               --                    --

MINORITY INTEREST IN OPERATING PARTNERSHIP                                              15,236                25,649

STOCKHOLDERS' EQUITY
Preferred stock, par value $.01 per share, 15,000 and 0 shares
   authorized, respectively; no shares issued or outstanding                                --                    --
Common stock, par value $.01 per share, 35,000 shares authorized;
   5,633 and 5,016 shares issued, 5,603 and 5,016 shares
   outstanding, respectively                                                                56                    50
Additional paid-in capital                                                             239,381               229,948
Notes receivable on common stock purchases                                                (588)                   --
Dividends in excess of accumulated earnings                                           (154,547)             (151,362)
Treasury stock, 30 and 0 shares at cost                                                   (450)                   --
                                                                                    ----------            ----------
                                                                                        83,852                78,636
                                                                                    ----------            ----------
       Total Liabilities and Stockholders' Equity                                   $  159,093            $  158,226
                                                                                    ==========            ==========

</TABLE>

                 See Notes to Consolidated Financial Statements.





                                     F - 3
<PAGE>




                  ASSET INVESTORS CORPORATION AND SUBSIDIARIES
                        CONSOLIDATED STATEMENTS OF INCOME
                      (in thousands, except per share data)
<TABLE>
<CAPTION>

                                                                          For the Years Ended December 31,
                                                                          --------------------------------
                                                                        1999             1998             1997
                                                                        ----             ----             ----
   RENTAL PROPERTY OPERATIONS
<S>                                                                  <C>              <C>              <C>
   Rental and other property revenues                                $  14,987        $  10,479        $   3,104
   Interest on participating mortgages                                   2,976            3,174               --
   Equity in earnings of real estate joint ventures                         --               --              466
   Property operating expenses                                          (5,262)          (4,039)          (1,398)
   Depreciation                                                         (3,870)          (2,685)            (693)
                                                                     ---------        ---------        ---------
   Income from rental property operations                                8,831            6,929            1,479
                                                                     ---------        ---------        ---------

   SERVICE OPERATIONS
   Property management income, net                                         207              156               69
   Commercial Assets management fees                                       564              155               --
   Amortization of management contracts                                 (2,757)          (2,894)            (744)
                                                                     ---------        ---------        ---------
   Loss from service operations                                         (1,986)          (2,583)            (675)
                                                                     ---------        ---------        ---------

   Equity in earnings of Commercial Assets                                 872              975            3,663
   General and administrative expenses                                  (1,530)          (1,393)          (1,612)
   Interest and other income                                               241              871            1,808
   Non-agency MBS bonds revenues                                            65               50            2,966
   Interest expense                                                     (3,846)          (2,485)            (368)
   Costs incurred to acquire management contract                            --           (2,092)          (6,553)
   Income tax benefit                                                      400               --               --
   Reincorporation expenses                                               (120)              --               --
   Loss from early extinguishment of debt                                  (75)              --               --
   Gain on sale of bonds                                                    --               --            6,484
                                                                     ---------        ---------        ---------

   Income before minority interest                                       2,852              272            7,192
   Minority interest in Operating Partnership                             (446)             (60)              62
                                                                     ---------        ---------        ---------

   Net income                                                        $   2,406        $     212        $   7,254
                                                                     =========        =========        =========

   Basic earnings per share                                          $    0.43        $    0.04        $    1.44
                                                                     =========        =========        =========
   Diluted earnings per share                                        $    0.43        $    0.04        $    1.43
                                                                     =========        =========        =========

   Weighted average common shares outstanding                            5,538            5,094            5,022
   Weighted average common shares and common share equivalents
     outstanding                                                         5,544            5,113            5,061

   Dividends paid per share                                          $    1.00        $    0.75        $    1.45
                                                                     =========        =========        =========

</TABLE>




                                     F - 4
<PAGE>




                  ASSET INVESTORS CORPORATION AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
              FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
                                 (in thousands)
<TABLE>
<CAPTION>

                                                                        Notes     Dividends In           Accumulated
                                        Common Stock    Additional  Receivable on  Excess of                 Other        Total
                                    -------------------  Paid-In    Common Stock  Accumulated  Treasury  Comprehensive Stockholders'
                                    Shares(a) Amount(a) Earnings(a)   Purchases    Earnings      Stock      Income        Equity
                                    --------- --------- -----------   ---------    --------      ------     ------        ------

<S>                                    <C>       <C>       <C>         <C>       <C>            <C>          <C>         <C>
BALANCES - DECEMBER 31, 1996           5,016    $ 50     $ 228,951    $    --    $  (147,729)   $    --      $ 5,093     $ 86,365

  Comprehensive Income
     Net income                          --       --            --         --          7,254         --           --        7,254
     Reversal of unrealized holding
       gains upon restructuring
       of bonds                          --       --            --         --             --         --       (5,093)      (5,093)
                                    -------     ----     ---------    -------    -----------    -------      -------     --------
          Comprehensive Income           --       --            --         --          7,254         --       (5,093)       2,161
                                    -------     ----     ---------    -------    -----------    -------      -------     --------
  Issuance of Common Stock               92        1         2,270         --             --         --           --        2,271
  Dividends                              --       --            --         --         (7,282)        --           --       (7,282)
                                    -------     ----     ---------    -------    -----------    -------      -------     --------
BALANCES - DECEMBER 31, 1997          5,108       51       231,221         --       (147,757)        --           --       83,515

  Issuance of Common Stock               29       --           434         --             --         --           --          434
  Repurchase of Common Stock           (121)      (1)       (1,707)        --             --         --           --       (1,708)
  Net income                             --       --            --         --            212         --           --          212
  Dividends                              --       --            --         --         (3,817)        --           --       (3,817)
                                    -------     ----     ---------    -------    -----------    -------      -------     --------
BALANCES - DECEMBER 31, 1998          5,016       50       229,948         --       (151,362)        --           --       78,636

  Net proceeds from issuance of
    Common Stock                        617        6         9,433       (588)            --         --           --        8,851
  Purchases of treasury stock            --       --            --         --             --       (450)          --         (450)
  Net income                             --       --            --         --          2,406         --           --        2,406
  Dividends                              --       --            --         --         (5,591)        --           --       (5,591)
                                    -------     ----     ---------    -------    -----------    -------      -------     --------
BALANCES - DECEMBER 31, 1999          5,633     $ 56     $ 239,381    $  (588)   $  (154,547)   $  (450)     $    --     $ 83,852
                                    =======     ====     =========    =======    ===========    =======      =======     ========
<FN>

(a)  Amounts  have been  restated  to  reflect  the  impact of the  one-for-five
     reverse stock split,  which was approved by the Company's  stockholders  in
     November 1997.
</FN>
</TABLE>

                See Notes to Consolidated Financial Statements.


                                     F - 5
<PAGE>




                  ASSET INVESTORS CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (in thousands)

<TABLE>
<CAPTION>

                                                                              For the Years Ended December 31,
                                                                              --------------------------------
                                                                          1999             1998             1997
                                                                          ----             ----             ----
CASH FLOWS FROM OPERATING ACTIVITIES
<S>                                                                     <C>             <C>             <C>
   Net income                                                           $   2,406       $     212       $   7,254
   Adjustments to reconcile net income to net cash flows provided
     by operating activities:
     Depreciation and amortization                                          6,792           5,962           1,437
     Minority interest in Operating Partnership                               446              60             (62)
     Equity in earnings of Commercial Assets                                 (666)           (917)         (3,663)
     Costs incurred to acquire management contract                             --           2,073           6,105
     Accrued interest on participating mortgages                           (1,179)           (566)             --
     Amortization of non-agency MBS bonds                                      --              --             469
     Equity in earnings of real estate joint ventures                          --              --            (466)
     Increase in other assets                                              (1,732)            (83)           (647)
     Increase (decrease) in accounts payable and accrued liabilities         (303)            100             (12)
     Gain on sale of assets                                                    --              --          (6,484)
                                                                          -------         -------         -------
       Net cash provided by operating activities                            5,764           6,841           3,931
                                                                          -------         -------         -------
CASH FLOWS FROM INVESTING ACTIVITIES
   Purchases of real estate                                                  (858)        (57,832)        (31,502)
   Investments in participating mortgages, net                             (5,500)         (1,611)             --
   Investments in and advances to real estate joint ventures                   --              --         (14,842)
   Capital replacements and improvements                                     (488)           (531)            (55)
   Dividends from Commercial Assets                                         1,436           1,077           3,065
   Principal collections and indemnifications on non-agency MBS
     bonds                                                                     --              --             547
   Distributions from real estate joint ventures                               --              --             459
   Proceeds from the sale of assets                                            --              --          69,807
                                                                         --------         -------         -------
     Net cash provided by (used in) investing activities                   (5,410)        (58,897)         27,479
                                                                         --------         -------         -------
CASH FLOWS FROM FINANCING ACTIVITIES
   Payment of Common Stock dividends                                       (5,591)         (3,817)         (7,282)
   Payment of distributions to minority interest in Operating
     Partnership                                                           (1,000)         (1,099)           (467)
   Proceeds from secured short-term financing                                  --          10,500              --
   Principal paydowns on secured short-term financing                      (1,690)             --          (3,000)
   Proceeds from secured long-term notes payable borrowings                10,925          30,280              --
   Collections of notes receivable                                            134              --              --
   Payment of loan costs, including costs from interest rate hedges          (385)         (2,060)             --
   Principal paydowns on secured long-term notes payable                   (3,637)           (451)           (196)
   Repurchase of Common Stock                                                  --          (1,708)             --
   Proceeds from the issuance of Common Stock                                 104              35             920
   Stock issuance costs                                                       (70)             --              --
                                                                         --------         -------         -------
     Net cash provided by (used in) financing activities                   (1,210)         31,680         (10,025)
                                                                         --------         -------         -------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                         (856)        (20,376)         21,385
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR                              1,426          21,802             417
                                                                        ---------         -------         -------
CASH AND CASH EQUIVALENTS AT END OF YEAR                                $     570         $ 1,426         $21,802
                                                                        =========         =======         =======

</TABLE>

                See Notes to Consolidated Financial Statements.

                                     F - 6
<PAGE>


                  ASSET INVESTORS CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


A.       The Company

Asset Investors  Corporation  ("AIC" and,  together with its  subsidiaries,  the
"Company") is a Delaware  corporation that owns and operates  manufactured  home
communities  and has  elected  to be taxed  as a real  estate  investment  trust
("REIT").  Prior to May 25, 1999, AIC was a Maryland corporation.  Effective May
25, 1999, AIC's stockholders  approved its  reincorporation  in Delaware.  AIC's
Common Stock,  par value $.01 per share ("Common  Stock"),  is listed on the New
York Stock Exchange under the symbol "AIC." In May 1997, AIC contributed its net
assets  to  Asset  Investors   Operating   Partnership,   L.P.  (the  "Operating
Partnership") in exchange for the sole general partner interest in the Operating
Partnership  and  substantially  all  of  the  Operating  Partnership's  initial
capital. AIC owns 85% of the Operating  Partnership as of December 31, 1999. The
Company  also  owns  27%  of  the  common  stock  of  Commercial  Assets,   Inc.
("Commercial  Assets") and the non-voting stock of both AIC Manufactured Housing
Corp. ("AICMHC") and Asset Investors Equity, Inc. ("AIE").  Commercial Assets is
a  publicly-traded  REIT  (American  Stock  Exchange,  Inc.:  CAX) formed by the
Company in August 1993.  AICMHC owns  interests in  manufactured  home community
management contracts and AIE manages Commercial Assets.

Prior to 1997,  the Company owned debt  interests in  residential  mortgage loan
securitizations   collateralized   by   pools  of   non-conforming   (non-agency
guaranteed)  single-family  mortgage loans ("non-agency MBS bonds"). In February
1997, the Company decided to resecuritize  the Company's asset base and redeploy
its assets in an attempt to both  reduce  risks  associated  with the  Company's
non-agency  MBS  bonds  and  maximize   long-term,   risk-adjusted   returns  to
stockholders.  In 1997, the Company received  $67,671,000 cash proceeds from the
resecuritization  of the non-agency MBS bonds and has invested these proceeds in
manufactured home communities.

Prior to  November  1997,  the  Company and  Commercial  Assets were  managed by
Financial  Asset  Management  LLC  ("FAM").  An  investor  group  led  by  Terry
Considine,  Thomas L. Rhodes and Bruce D. Benson acquired FAM in September 1996.
Mr.  Considine is the Chairman and Chief  Executive  Officer of both the Company
and Commercial  Assets. Mr. Rhodes is Vice Chairman and Mr. Benson is a director
of both the Company and  Commercial  Assets.  In November  1997,  the  Company's
stockholders  approved the  acquisition  of the assets and  operations of FAM in
order to become a  self-managed  and  self-administered  REIT.  The  $11,692,000
purchase  price was paid by issuing  676,700  limited  partnership  units of the
Operating  Partnership  ("OP Units") plus up to 240,000  additional  OP Units if
certain performance goals,  including  investment and share price targets,  were
achieved by the Company within a specified time period. During the third quarter
of 1998, the Company  achieved the first set of  performance  goals by realizing
annualized  returns  before  depreciation  in  excess  of 9% on its real  estate
investments  for a period of six months.  As a result of achieving  these goals,
the Company issued 120,000 OP Units and expensed  $2,092,000 as additional  cost
of acquiring the management  contract.  The issuance of the remaining 120,000 OP
Units was contingent upon the Company having a 90-day average per share price in
excess of $20.00 by June 1999.  The  Company's  average share price did not meet
this requirement and the Company's commitment to issue these additional OP Units
has expired.

                                     F - 7
<PAGE>

B.       Summary of Significant Accounting Policies

Principles of Consolidation

The consolidated  financial  statements include the accounts of the Company, the
Operating Partnership and all majority owned subsidiaries. The minority interest
in the Operating Partnership represents the OP Units which are redeemable at the
option of the  holder.  When a holder  elects to  redeem OP Units,  the  Company
determines  whether  such OP Units will be redeemed for cash or shares of Common
Stock.  The  holders  of OP  Units  receive  the  same  amount  per OP  Unit  in
distributions  as the  holders  of Common  Stock  receive  in  dividends.  As of
December  31,  1999,  1,000,000  OP  Units  were  outstanding.  All  significant
intercompany  balances and transactions  have been eliminated in  consolidation.
The  Company's  investment  in  Commercial  Assets is recorded  under the equity
method.

Rental Properties and Depreciation

Rental  properties are recorded at cost less  accumulated  depreciation,  unless
considered  impaired.  If events or  circumstances  indicate  that the  carrying
amount of a property may be impaired, the Company will make an assessment of its
recoverability  by  estimating  the future  undiscounted  cash flows,  excluding
interest charges, of the property.  If the carrying amount exceeds the aggregate
future cash flows,  the Company would recognize an impairment loss to the extent
the carrying  amount exceeds the fair value of the property.  As of December 31,
1999,  management  believes that no impairments exist based on periodic reviews.
No impairment losses were recognized for 1999, 1998 and 1997.

Depreciation is computed using the straight line method over an estimated useful
life of 25  years  for land  improvements  and  buildings  and  five  years  for
furniture and other equipment.  Significant renovations and improvements,  which
improve or extend the useful life of the asset,  are capitalized and depreciated
over the remaining  estimated life. In addition,  the Company capitalizes direct
and indirect  costs  (including  interest,  taxes and other costs) in connection
with the  development  of  additional  homesites  within its  manufactured  home
communities.  Maintenance,  repairs  and  minor  improvements  are  expensed  as
incurred.

Investments in Participating Mortgages

The Company has loans  secured by real estate which provide for an interest rate
return plus up to 50% of net  profits,  cash flows and sales  proceeds  from the
secured real estate.  The Company  accounts for these  investments as loans when
(a) the Company  does not have an interest  in the  borrower  and either (b) the
borrower has a substantial  equity  investment in the real estate  collateral or
(c) the  Company  has  recourse  to other  substantial  tangible  assets  of the
borrower.  As  such,  the  Company  records  interest  income  based on the rate
provided  for in the loan and records its share of any net profits or gains from
the sale of the underlying real estate when realized.  If the above requirements
are not met,  then the loan is  accounted  for as an equity  investment  in real
estate under the equity method of accounting.

Amortization

Included in other assets is the cost related to the  acquisition  of  management
contracts, which is being amortized over a period of three years.

                                     F - 8
<PAGE>

Revenue Recognition

The Company derives its income from the rental of homesites.  The leases entered
into by residents  for the rental of the site are generally for terms not longer
than one year and the rental revenues  associated with the leases are recognized
when earned and due from residents.  Property  management  revenues for services
provided to communities not owned by the Company are recognized when earned.

Interest on participating  mortgages is recorded based upon outstanding balances
and interest  rates per the terms of the  mortgages.  In  addition,  the Company
evaluates the  collectibility  of any unpaid  interest and provides  reserves as
necessary.  As of  December  31,  1999 and 1998,  the  reserve  for  uncollected
interest on the participating mortgages was $0 and $149,000, respectively.

Deferred Financing Costs

Fees and costs incurred in obtaining  financing are capitalized.  Such costs are
amortized  over the terms of the  related  loan  agreements  and are  charged to
interest expense.

Interest Rate Lock Agreements

Interest  rate lock  agreements  related to planned  refinancings  of identified
variable rate  indebtedness are accounted for as anticipatory  hedges.  Upon the
refinancing  of  such  indebtedness,  any  gain  or  loss  associated  with  the
termination of the interest rate lock agreement is deferred and recognized  over
the life of the refinanced indebtedness.

Income Taxes

AIC has elected to be taxed as a REIT as defined under the Internal Revenue Code
of 1986,  as amended  (the  "Code").  In order for AIC to qualify as a REIT,  at
least  95% of its  gross  income in any year  must be  derived  from  qualifying
sources. The activities of AICMHC and AIE are not qualifying sources.

As a REIT,  AIC  generally  will not be subject to federal  income  taxes at the
corporate level if it distributes at least 95% of its REIT taxable income to its
stockholders.  REITs are also  subject to a number of other  organizational  and
operational requirements. If AIC fails to qualify as a REIT in any taxable year,
its taxable  income will be subject to federal  income tax at regular  corporate
rates (including any applicable  alternative minimum tax). Even if AIC qualifies
as a REIT,  it may be  subject to certain  state and local  income  taxes and to
federal income and excise taxes on its undistributed income.

At  December  31,  1999,   AIC's  net  operating  loss  ("NOL")   carryover  was
approximately  $95,000,000  and its capital  loss  carryover  was  approximately
$20,000,000.  The NOL  carryover may be used to offset all or a portion of AIC's
REIT income,  and as a result,  to reduce the amount that AIC must distribute to
stockholders to maintain its status as a REIT. The NOL carryover is scheduled to
expire  between 2007 and 2009,  and the capital  loss  carryover is scheduled to
expire in 2000 and 2001.

Earnings Per Share

Basic earnings per share are based upon the weighted-average number of shares of
Common Stock  outstanding  during each year.  Diluted earnings per share reflect
the effect of dilutive,  unexercised  stock options of 6,000,  19,000 and 39,000
for 1999,  1998 and 1997,  respectively.  Stock  options  and shares  issued for
non-recourse notes receivable of 339,000, 108,000 and 0 for 1999, 1998 and 1997,
respectively, have been excluded from diluted earnings per share as their effect
would be anti-dilutive.  In November 1997, the Company's stockholders approved a


                                     F - 9
<PAGE>

one-for-five  reverse split of the Common  Stock.  Accordingly,  all  historical
weighted-average  share and per share  amounts have been restated to reflect the
reverse stock split.

Capitalized Interest

Interest is capitalized on development  projects  during periods of construction
or development.  During 1999, 1998 and 1997,  capitalized  interest was $94,000,
$32,000 and $0, respectively.

Treasury Stock

The Company owns 27% of Commercial Assets' common stock. During 1999, Commercial
Assets purchased 114,000 shares of the Company's Common Stock. Consequently, the
Company has an interest in 30,000  shares of its Common  Stock and has  recorded
this as treasury stock.

Statements of Cash Flows

For purposes of reporting cash flows,  cash  maintained in bank accounts,  money
market funds and  highly-liquid  investments  with an initial  maturity of three
months or less are considered to be cash and cash equivalents.  The Company made
interest  payments of  $3,631,000,  $1,975,000  and $349,000 for 1999,  1998 and
1997, respectively.

Non-cash operating,  investing and financing  activities for 1999, 1998 and 1997
were as follows (in thousands):

<TABLE>
<CAPTION>
                                                                          1999              1998              1997
                                                                          ----              ----              ----
Issuance of Common Stock for:
<S>                                                                    <C>               <C>               <C>
     Conversion of OP Units                                            $  8,668          $     --          $     --
     Services                                                               150               120               101
     Notes receivable                                                       588               278                --
Investments in participating mortgages:
     For other assets                                                       165                --                --
     By issuance of OP Units                                                 --                17                --
Real estate acquired:
     By cancellation of participating mortgages and assumption of
        payables                                                         12,734                --                --
     From earn-out agreements                                                --                52                --
     For issuance of OP Units                                                --             2,145            10,922
     By issuance of Common Stock                                             --                --             1,250
     By assumption of secured notes payable                                  --                --            10,873
Receivables from minority interest in subsidiaries                           --               319                --
Purchase of minority interest in subsidiaries by cancellation of
  receivables                                                               351                --                --

Reclassification of investment in Commercial Assets to treasury
  stock                                                                     450                --                --
Short-term financing extended to long-term debt                           6,200                --                --
Unrealized holding gains and losses on debit securities                      --                --             5,093
Acquisition of former manager by issuance of OP Units                        --                --            11,692

</TABLE>


                                     F - 10
<PAGE>

Use of Estimates

The  preparation  of the  financial  statements in  conformity  with  accounting
principles  generally accepted in the United States requires  management to make
estimates  and  assumptions  that affect the amounts  reported in the  financial
statements and accompanying notes.
Actual results could differ from those estimates.

Reclassifications

Certain  reclassifications  have  been  made in the 1998  and 1997  consolidated
financial statements to conform to the classifications used in the current year.
Such  reclassifications  have no material  effect on the  amounts as  originally
presented.

Non-agency MBS Bonds

The Company's  non-agency  MBS bonds were acquired at a significant  discount to
par  value.  The  amortized  cost of the  non-agency  MBS bonds was equal to the
outstanding  principal  amount net of  unamortized  discount and  allowances for
credit losses. Earnings from non-agency MBS bonds were recognized based upon the
relationship  of cash flows  received  during the period and estimates of future
cash flows to be received over the life of the bonds. The Company classified its
non-agency  MBS  bonds  as  available-for-sale,  carried  at fair  value  in the
financial statements.  Unrealized holding gains on available-for-sale securities
were excluded from earnings and reported as a net amount in stockholders' equity
until realized.

C.       Proposed Merger with Commercial Assets

The Company and Commercial  Assets have agreed to merge,  subject to approval by
both (a) a majority of the Company's  outstanding  shares and (b)  two-thirds of
the outstanding  shares of Commercial Assets. The Company has agreed to vote its
shares of  Commercial  Assets  common stock in favor of the merger.  The Company
owns  approximately  27% of the outstanding  shares of Commercial  Assets common
stock.  The  Company  will  issue  0.4075  shares of its  Common  Stock for each
outstanding share of Commercial Assets common stock.  Alternatively,  Commercial
Assets  stockholders  may  elect to  receive  $5.75  per share in cash for up to
3,549,868 shares of Commercial  Assets common stock with any remaining shares of
Commercial  Assets common stock receiving  0.4075 shares of the Company's Common
Stock.  Commercial  Assets' and the Company's officers and directors have agreed
to elect to  receive  shares of the  Company's  Common  Stock for all  shares of
Commercial  Assets common stock that they own. The stockholder  meetings to vote
on the merger are expected to occur in the second quarter of 2000.

D.       Real Estate

Real estate at December 31, 1999 and 1998 is as follows (in thousands):

                                                        1999             1998
                                                     -----------      ----------
Land                                                 $   13,260       $  11,226
Land improvements and buildings                         102,291          90,268
Furniture and other equipment                               442             447
                                                     ----------       ---------
                                                        115,993         101,941
Less accumulated depreciation                            (7,248)         (3,378)
                                                     ----------       ---------
Real estate, net                                     $  108,745       $  98,563
                                                     ==========       =========

                                     F - 11
<PAGE>

Land  improvements and buildings  consist  primarily of  infrastructure,  roads,
landscaping, clubhouses, maintenance buildings and common amenities.

During 1999, the Company  purchased two  manufactured  home  communities and one
recreational  vehicle  park  with  450  developed  homesites,   100  undeveloped
homesites and 120 recreational  vehicle sites.  Total investment was $13,592,000
consisting  of  $11,973,000  by the  cancellation  of  participating  mortgages,
$858,000 cash and $761,000 of assumed  liabilities and other costs. During 1998,
the Company acquired seven  manufactured  home  communities  with  approximately
1,730  developed  sites and 230  undeveloped  homesites.  Total  investment  was
$59,977,000 consisting of $57,832,000 cash and $2,145,000 of OP Units.

E.       Investments in Participating Mortgages

As of December  31,  1997,  the Company had  non-recourse  notes  receivable  of
$15,872,000  from joint  ventures in which the Company owned a 50% joint venture
interest.  Effective  January 1, 1998,  the  Company  sold its  interest  in the
various joint ventures to the other venturer and  consolidated the various notes
into a single note secured by a number of  manufactured  home  communities.  The
note bears 10%  interest  and  matures in 20 years.  In  addition,  the  Company
receives  additional  interest  up to 50% of the  borrower's  profit  from  such
communities.  As  of  December  31,  1999,  the  outstanding  balance  of  these
participating mortgages was $22,475,000.  In January 2000, the Company purchased
the  manufactured  home  communities  by  canceling  the  mortgages  and  paying
additional consideration. See Note T.

The following  table presents  unaudited  summary  financial  information of the
borrower  with  respect to the above  participating  mortgage  as of and for the
years ended December 31, 1999 and 1998 (in thousands):
<TABLE>
<CAPTION>

                                                                  1999                 1998
                                                               -----------          ----------
                                                                         (unaudited)
<S>                                                            <C>                  <C>
Rental and other property revenues                             $     1,757          $    1,783
Property operation expenses                                         (1,200)             (1,018)
Depreciation                                                          (373)               (419)
                                                               -----------          ----------
Income from rental property operations                                 184                 346
                                                               -----------          ----------

Net loss                                                            (2,096)             (1,069)

Real estate, net of accumulated depreciation                        24,708              20,421
Total assets                                                        33,873              26,921
Secured notes payable                                               31,466              26,757
Partners' deficit                                                   (2,729)             (1,334)
Total liabilities and partners' deficit                             33,873              26,921
</TABLE>

In  addition,  the  Company  had  non-recourse  mortgage  loans  secured  by two
manufactured home communities and one recreational  vehicle park in Arizona. The
mortgage loans bore interest rates ranging from 10% to 15%. The Company received
additional interest of 3% of gross revenues, increasing to 11% of gross revenues
in the event of a  refinancing  of the debt on the  communities,  and 50% of net
proceeds from a sale or  refinancing  of the  communities.  In August 1999,  the
Company purchased the manufactured home communities and the recreational vehicle
park in exchange  for the payment of  $858,000,  the  cancellation  of the three
loans with a carrying amount of $11,973,000 and $761,000 of assumed  liabilities
and other costs.

                                     F - 12
<PAGE>

During 1999 and 1998, the Company had earnings of $2,976,000 and $3,174,000 from
the participating mortgages.

F.       Investment in Commercial Assets

On December 31, 1999 and 1998, the Company owned 2,761,126 shares (approximately
27%) of the common stock of  Commercial  Assets.  In November  1997,  Commercial
Assets sold or resecuritized  its entire  portfolio of commercial  mortgage loan
securitizations  of  multi-family  real estate  ("CMBS  bonds") and  temporarily
invested the proceeds  until it  determined  which type of real estate assets to
invest in. During the third quarter of 1998,  Commercial  Assets began investing
in   manufactured   home   communities,   and  through  1999,  it  had  invested
approximately $70,000,000 for interests in 12 communities, including investments
in both participating mortgages and real estate joint ventures.

Summarized financial  information of Commercial Assets as reported by Commercial
Assets is (in thousands):

<TABLE>
<CAPTION>

Balance Sheets                                                              December 31,
                                                                 ----------------------------------
                                                                    1999                   1998
                                                                 -----------            -----------
<S>                                                              <C>                    <C>
Cash and cash equivalents                                        $     4,664            $     3,292
Short-term investments                                                12,502                 45,066
Real estate, net (including joint ventures)                           66,205                 13,908
Investments in participating mortgages                                 2,148                  9,328
Investment in Asset Investors                                          1,396                     --
Other assets                                                          10,168                  6,640
                                                                 -----------            -----------
Total assets                                                     $    97,083            $    78,234
                                                                 ===========            ===========

Secured long-term notes payable                                  $    20,442            $        --
Other liabilities                                                      1,945                    980
Minority interest in subsidiaries                                        615                     --
Stockholders' equity                                                  74,081                 77,254
                                                                 -----------            -----------
Total liabilities and stockholders' equity                       $    97,083            $    78,234
                                                                 ===========            ===========

</TABLE>


<TABLE>
<CAPTION>


Statements of Income                                                 Year Ended December 31,
                                                           -------------------------------------------
                                                             1999              1998             1997
                                                           -------           -------          --------
<S>                                                       <C>               <C>              <C>
Rental and other property revenues                        $  2,538          $     --         $      --
Income from participating mortgages and leases               1,971               587                --
Property operating expenses                                 (1,114)               --                --
Depreciation                                                (1,279)              (50)               --
                                                          --------          --------         ---------
Income from rental property operations                       2,116               537                --
                                                          --------          --------         ---------
Interest and other income                                    1,913             3,874               945
CMBS bonds revenue                                             154               161             9,172
Equity in earnings of Asset Investors                           23                --                --
General and administrative expenses                           (519)             (420)             (519)
Related-party management fees                                 (565)              (87)           (1,678)
Interest expense                                              (273)               --                --
Related-party acquisition fees                                (205)             (124)               --
Reincorporation expenses                                      (120)               --                --
Costs related to previously considered investments              --              (500)               --
Gain on sale of bonds                                           --                --             5,786
                                                          --------          --------         ---------
Net income                                                $  2,524          $  3,441         $  13,706
                                                          ========          ========         =========
</TABLE>


                                     F - 13
<PAGE>

G.       Secured Long-Term Notes Payable

The following table summarizes the Company's secured long-term notes payable (in
thousands):

<TABLE>
<CAPTION>

                                                                                                 December 31,
                                                                                         -----------------------------
                                                                                             1999            1998
                                                                                         -------------    ------------
Fixed rate, ranging from 7.1% to 7.5%, fully amortizing, non-recourse notes maturing
<S>                                                                                        <C>              <C>
    at various dates from December 2018 through June 2019                                  $  37,790        $  30,280
Fixed rate, ranging from 7.5% to 8.3%, partially amortizing, non-recourse notes
    maturing at October 2000                                                                   7,605           10,226
8.1% fixed rate partially amortizing, non-recourse note maturing at April 2009                 2,528               --
Floating rate equal to LIBOR plus 2.5% (8.3% at December 31, 1999), partially
    amortizing, recourse note maturing at April 2001                                           6,071               --
                                                                                           ---------        ---------
                                                                                           $  53,994        $  40,506
                                                                                           =========        =========
</TABLE>


In 1998, the Company  entered into an interest rate lock agreement in connection
with expected debt financing.  The agreement had an aggregate  notional value of
$32,200,000,  fixed  the  interest  rate on the  expected  debt at 6.8%  and was
settled in September 1998. The Company  realized a loss on the hedge of $802,000
which was deferred and is being  amortized  over the terms of the related  notes
payable as a charge to interest expense.

During 1999, the Company  repaid a $2,230,000  long-term note payable and paid a
prepayment  penalty  of  $75,000.  The  penalty is  recorded  as loss from early
extinguishment of debt in the consolidated statements of income.

Real estate assets which secure the long-term notes payable had a net book value
of  $96,184,000 at December 31, 1999. The Company had $16,000 in escrow for real
estate taxes on the long-term notes payable at December 31, 1999.

Scheduled  principal  payments after December 31, 1999 for the secured long-term
notes payable are (in thousands):

                   2000                            $   8,990
                   2001                                6,895
                   2002                                1,212
                   2003                                1,295
                   2004                                1,383
                   Thereafter                         34,219
                                                   ---------
                                                   $  53,994
                                                   =========

H.       Secured Short-Term Financing

The Company has a  revolving  line of credit with a bank that bears  interest at
the 30-day London  Interbank  Offered Rate ("LIBOR") plus 1.75% per annum (7.58%
at December 31, 1999).  The line of credit is secured by 1,015,674 shares of the
common stock of  Commercial  Assets held by the Company and matures in September
2000. The line of credit is limited to the lesser of (1) $5,000,000,  (2) 65% of
the  product of the  trading  price of  Commercial  Assets  common  stock  times
1,015,674 or (3) 65% of the purchase price of certain  unpledged real estate. As
of December 31, 1999, the limit was $3,053,000 and $2,610,000 was outstanding on
this line of credit.

                                     F - 14
<PAGE>

I.       Commitments and Contingencies

In connection  with a participating  mortgage on a manufactured  home community,
the Company  entered into an earn-out  agreement  with respect to 142 unoccupied
homesites.   The  Company  advances  an  additional   $17,000  pursuant  to  the
participating  mortgage for each newly occupied  homesite  either in the form of
cash or 946 OP Units, as determined by the borrower. At December 31, 1999, there
were 113 unoccupied  homesites subject to the earnout.  The Company advanced the
following in cash and OP Units for newly occupied homesites (in thousands):

                                          Year Ended December 31,
                                 -------------------------------------------
                                    1999             1998            1997
                                 -----------      ----------      ----------
      Cash                         $  265           $ 116           $  --
      OP Units                         --              17              17
                                   ------           -----           -----
                                   $  265           $ 133           $  17
                                   ======           =====           =====

In connection  with the  acquisition  of the assets and operations of its former
manager  in  November  1997,  the  Company  entered  in an  agreement  to  issue
additional OP Units upon the  achievement  of certain  performance  goals by the
Company.  Per the terms of the  agreement,  the Company was required to issue an
additional 120,000 OP Units if the Company's average stock price exceeded $20.00
per share for any 90-day period prior to June 17, 1999. The $20.00 average stock
price was not achieved and the commitment to issue additional OP Units expired.

At December 31, 1999, there were 2,510 undeveloped homesites in properties which
the Company has an interest in. In connection  with efforts to lease such sites,
a sales  corporation  markets  an  inventory  of homes  located  in the  various
properties to potential tenants.  The Company's  President owns 50% of the sales
corporation.  A portion of the cost of this home  inventory  was financed by the
sales  corporation  with a line  of  credit  guaranteed  by the  Company.  As of
December 31, 1999,  $5,459,000  was  outstanding  under the line of credit.  The
terms of the line of credit require monthly  payments of interest and payment of
principal  upon sale of the  inventory.  If the inventory is not sold within one
year,  monthly  payments of principal are also  required.  In January 2000,  the
Company acquired the assets and operations of the sales corporation. See Note T.

In September 1999,  four Commercial  Assets  stockholders,  individually  and as
purported  representatives of all Commercial Assets  stockholders,  except Asset
Investors and its  affiliates,  filed three  purported  class action lawsuits in
Delaware against  Commercial  Assets,  the members of the board of directors and
certain  officers of the Company and Commercial  Assets.  These lawsuits alleged
that the defendants  breached their  fiduciary  duties to the Commercial  Assets
stockholders  in  connection  with the proposed  merger of Asset  Investors  and
Commercial Assets and Commercial Assets' recent  reincorporation in Delaware. In
November 1999, these lawsuits were consolidated into a single lawsuit.  On March
7, 2000, the parties entered into a settlement agreement, subject to the court's
approval, which amended the merger agreement as follows:

  o      Commercial  Assets  stockholders,  other than Asset  Investors  and the
         officers and directors of Asset  Investors and Commercial  Assets,  may
         elect to receive $5.75 per share in cash for up to 3,549,868  shares of
         Commercial  Assets  common stock with any  remaining  shares  receiving
         0.4075 shares of the Company's Common Stock; and
  o      the  percentage  of votes of  Commercial  Assets common stock needed to
         approve the merger was increased from a majority to two-thirds.

                                     F - 15
<PAGE>

J.       Operating Segments

Investments in manufactured home communities constitute substantially all of the
Company's  portfolio,  and as  such,  management  of the  Company  assesses  the
performance of the Company as one operating segment.

K.       Fair Value of Financial Instruments

The following  methods and  assumptions  were used to estimate the fair value of
each  type of  financial  instrument.  The  estimates  of fair  value  have been
determined  by the Company  using  available  market  information  and valuation
methodologies.

o     Cash and cash equivalents,  accounts payable and accrued liabilities,  and
      secured short-term financing - the carrying amounts approximate fair value
      because of the short maturity of these instruments.
o     Investment in Commercial Assets - the fair value was determined based upon
      the closing price of Commercial  Assets common stock on the American Stock
      Exchange, Inc. as of the end of each year.
o     Secured  long-term  notes payable - based upon borrowing  rates  currently
      available to the Company,  the carrying value of secured  long-term  notes
      payable approximates their fair value.

The carrying  values and fair values of the  Company's  investment in Commercial
Assets at December 31, 1999 and 1998 are as follows (in thousands):

<TABLE>
<CAPTION>

                                                           1999                                  1998
                                            ---------------------------------     --------------------------------
                                              Carrying Value       Fair Value      Carrying Value      Fair Value
                                              --------------       ----------      --------------      -----------
<S>                                             <C>                 <C>               <C>                <C>
Investment in Commercial Assets                 $ 19,486            $ 12,770          $ 20,706           $ 16,739
                                                ========            ========          ========           ========

</TABLE>

L.       Common Stock and Dividends

The Company paid dividends to stockholders  and  distributions  to holders of OP
Units as follows (in thousands):
<TABLE>
<CAPTION>

                                                                                Year Ended December 31,
                                                                                -----------------------
                                                                        1999             1998              1997
                                                                        ----             ----              ----
<S>                                                                   <C>              <C>               <C>
Dividends                                                             $  5,591         $  3,817          $  7,282
Distributions                                                            1,000            1,099               467
                                                                      --------         --------          --------
  Total                                                               $  6,591         $  4,916          $  7,749
                                                                      ========         ========          ========

Percentage  of  dividends  constituting  return of  capital  for
   income tax purposes                                                      68%              80%               75%
</TABLE>

The Company's  Certificate  of  Incorporation  permits the Board of Directors to
issue  classes  of  preferred  and  common  stock  without  further  stockholder
approval.  As of December  31,  1999,  the Company has not issued any classes of
stock other than Common Stock.

M.       Non-agency MBS Bonds

In March 1997, the Company  resecuritized its portfolio of retained interests in
prior  securitizations  that  are  in  the  form  of  non-agency  MBS  bonds  by
transferring  them to a trust in which it retained  the  residual  interest  and
having the trust sell non-recourse debt securities representing senior interests
in the trust's  assets.  The Company  realized net proceeds of  $67,671,000  and


                                     F - 16
<PAGE>

recorded a net gain of $5,287,000 from the sale. The Company's retained residual
interest in the trust  represents  the  first-loss  class of the portfolio  and,
accordingly,  no carrying  value was assigned to it because it was not practical
to estimate its fair value given the high risk and  unpredictable  nature of the
future cash flow expected to be attributed to the retained  residual  interests.
During  1997,  the Company  recognized  $2,966,000  of interest  income from the
non-agency MBS bonds of which $966,000 was from the retained residual  interest.
As of  December  31, 1998 and 1997,  the  Company did not believe  that it would
receive any  incremental,  material  cash flows.  Given that  circumstance,  the
Company estimated the fair value of its retained  residual  interests at zero at
those subsequent reporting dates.  Consistent with those estimates,  the Company
has not received  any material  cash flows from the  resecuritized  assets.  The
trustee has notified the Company  that its retained  residual  interest has been
eliminated  because of the extent of allocated realized losses on the underlying
assets of the trust (non-agency MBS bonds). Therefore, the value of the retained
residual interest was determined to be zero at December 31, 1999.

N.       Income Tax Benefit

In connection with the Company's  resecuritization  of its former bond portfolio
in 1997, a  consolidated  corporate  subsidiary  incurred  income taxes from the
resecuritization.  These taxes were  netted  against the gain from sale in 1997.
The  subsidiary  recorded a loss for tax purposes  during 1999 and can carryback
the tax loss for a refund of taxes  incurred in 1997.  Accordingly,  the Company
has recorded an income tax benefit of $400,000 in 1999.

O.       Stock Option Plan

The Company has a Stock Incentive Plan (the "Stock Plan") for the issuance of up
to 3,000,000  qualified  and  non-qualified  stock  options and shares of Common
Stock to its directors,  officers, employees and consultants. As of December 31,
1999 and 1998, 902,000 and 833,000,  respectively,  related to outstanding stock
options.  The exercise  price for stock options may not be less than 100% of the
fair  market  value of the  shares of Common  Stock at the date of grant.  Stock
options  granted  through  December 31, 1997 have 5-year terms and stock options
granted  after 1997 have  10-year  terms.  All  outstanding  stock  options  are
non-qualified stock options.

Presented below is a summary of the changes in stock options for the three years
ended December 31, 1999.

<TABLE>
<CAPTION>

                                                                    Weighted Average
                                                                     Exercise Price               Shares
                                                                     --------------              ---------
<S>                                                                      <C>                      <C>
Outstanding-December 31, 1996                                            $  12.86                 207,000

     Granted                                                                18.12                  21,000
     Exercised                                                              14.93                 (62,000)
     Expired                                                                16.67                 (14,000)
                                                                         --------                --------
Outstanding-December 31, 1997                                               14.44                 152,000

     Granted                                                                19.31                 704,000
     Exercised                                                              13.85                 (23,000)
                                                                         --------                --------
Outstanding-December 31, 1998                                               18.57                 833,000
                                                                         --------                --------

     Granted                                                                14.02                 129,000
     Exercised                                                              11.43                 (60,000)
                                                                         --------                --------
Outstanding-December 31, 1999                                            $  18.40                 902,000
                                                                         ========                ========
</TABLE>

As of December  31,  1999,  outstanding  options  have the  following  ranges of
exercise prices and weighted average remaining lives:


                                     F - 17
<PAGE>

<TABLE>
<CAPTION>

                                                            Ranges of Exercise Prices
                                             -----------------------------------------------------
                                             $11.87 to $13.44   $14.75 to $16.87  $18.12 to $19.37      All Ranges
                                             ----------------   ----------------  ----------------      ----------
Outstanding stock options:
<S>                                               <C>                <C>                <C>               <C>
    Number of options                             58,000             133,000            711,000           902,000
    Weighted average exercise price               $12.94              $15.76             $19.34            $18.40
    Weighted average remaining life             6.75 years         5.02 years        8.05 years         7.52 years
Exercisable stock options:
    Number of options                             19,000              98,000            257,000           374,000
    Weighted average exercise price               $11.87              $16.00             $19.29            $18.06
    Weighted average remaining life             0.37 years         3.58 years        7.75 years         6.29 years

</TABLE>

Options  granted  to date vest over  various  periods  up to five  years.  As of
December 31, 1999, 1998 and 1997, 374,000, 151,000 and 138,000, respectively, of
the  outstanding  options were  exercisable.  As of December 31, 1999,  1998 and
1997, the weighted  average  exercise  price of exercisable  options was $18.06,
$14.95 and $14.16, respectively.

The Company has elected to follow  Accounting  Principles  Board Opinion No. 25,
"Accounting for Stock Issued to Employees" (APB 25) and related  Interpretations
in accounting for its employee stock options  rather than the  alternative  fair
value  accounting  provided for under SFAS No. 123,  "Accounting for Stock-Based
Compensation."  Under  APB 25,  because  the  exercise  price  of the  Company's
employee stock options  equals the market price of the  underlying  stock on the
date of grant, no compensation expense is recognized.

Pro forma information regarding net income and earnings per share is required by
SFAS 123,  and has been  determined  as if the  Company  had  accounted  for its
employee stock options under the fair value method of that  Statement.  The fair
value  for  these   options  was  estimated  at  the  date  of  grant  using  an
option-pricing model with the following weighted average assumptions:

<TABLE>
<CAPTION>

                                                                          1999              1998             1997
                                                                     -------------     -------------    -------------
<S>                                                                        <C>               <C>              <C>
Range of risk free interest rates                                     6.0% to 6.5%      5.7% to 6.0%     5.8% to 6.0%
Expected dividend yield                                                    7.4%              6.3%             7.9%
Volatility factor of the expected market price of the Company's
    common stock                                                          0.309             0.309             0.309
Weighted average expected life of options                              10.0 years         10.0 years        4.5 years

</TABLE>

Option  valuation  models  require  the input of highly  subjective  assumptions
including  the expected  stock price  volatility.  Because the  Company's  stock
options  have  characteristics  significantly  different  from  those of  traded
options,  and because changes in the subjective input assumptions can materially
affect the fair value estimate,  in management's opinion, the existing models do
not  necessarily  provide a  reliable  single  measure  of the fair value of its
employee stock options.

During 1999, 1998 and 1997, the estimated weighted-average grant-date fair value
of options granted was $2.08 per option,  $3.59 per option and $2.76 per option,
respectively.  The  Company  assumed  lives of five to ten years  and  risk-free
interest  rates equal to the Five- or Ten-Year U.S.  Treasury  rates on the date
the options were granted  depending  on option term.  In addition,  the expected


                                     F - 18
<PAGE>

stock price  volatility and dividends rates were estimated based upon historical
experience over the three years ended December 31, 1999.

For purposes of pro forma  disclosures,  the estimated fair value of the options
is amortized to expense over the options'  vesting  period.  The  Company's  pro
forma information follows (in thousands except for per share data):

<TABLE>
<CAPTION>

                                                                              1999            1998            1997
                                                                          ------------    ------------    -----------
<S>                                                                         <C>             <C>             <C>
Pro forma net income                                                        $1,506          $  147          $7,203
Pro forma earnings per share:
    Basic                                                                   $ 0.27          $ 0.03          $ 1.43
    Diluted                                                                 $ 0.27          $ 0.03          $ 1.43

</TABLE>

P.       Savings Plan

The Company  has a 401(k)  defined-contribution  employee  savings  plan,  which
provides  substantially  all employees the  opportunity to accumulate  funds for
retirement.  The  Company  may,  at  its  discretion,  match  a  portion  of the
contributions  from participating  employees.  During 1999 and 1998, the Company
matched  $19,000  and  $17,000,  respectively,  of employee  contributions.  The
Company did not match any portion of employee contributions during 1997.

Q.       Recent Accounting Developments

In June 1998,  the  Financial  Accounting  Standards  Board issued  Statement of
Financial  Accounting  Standards No. 133. Accounting for Derivative  Instruments
and Hedging Activities  ("Statement 133").  Statement 133 requires recording all
derivative  instruments  as  assets  or  liabilities,  measured  at fair  value.
Statement 133 is effective  beginning after 2000. The Company has elected not to
early adopt the  provisions  of  Statement  133 as of December 31, 1999 and when
Statement  133 is adopted,  the Company does not expect  Statement 133 to have a
significant impact on its financial position and results of operations.

R.       Other Matters

Prior to November  1997,  FAM (the former  manager)  provided all  personnel and
related overhead  necessary to conduct the Company's  activities in exchange for
various  fees  provided  for in a  management  agreement  (the  "AIC  Management
Agreement").  In November 1997, the Company's stockholders approved the purchase
of FAM's assets and  operations for  $11,692,000 in connection  with the Company
becoming a self-managed and  self-administered  REIT. The initial purchase price
and related costs were allocated  $6,553,000 to the AIC Management Agreement and
$5,936,000  to a  management  agreement  pursuant to which the  Company  manages
Commercial Assets (the "Commercial  Assets Management  Agreement").  The Company
expensed  the amount  allocated to the AIC  Management  Agreement in 1997 and is
amortizing the cost of the  Commercial  Assets  Management  Agreement over three
years.  In  addition  to  the  initial  purchase  price,  FAM  received  120,000
additional  OP Units in August 1998 because the Company had  annualized  returns
before  depreciation in excess of 9% on certain of its real estate  investments.
These OP Units were valued at $2,073,000 and were expensed in 1998.

                                     F - 19
<PAGE>

During 1999 and 1998, the Company earned the following management fees under the
Commercial Assets Management Agreement (net of elimination for the Company's 27%
ownership of Commercial Assets) (in thousands):
                                                     1999            1998
                                                  -----------     -----------
      Base fees                                     $  414          $   64
      Acquisition fees                                 150              91
      Incentive fees                                    --              --
                                                    ------          ------
                                                    $  564          $  155
                                                    ======          ======

As of December 31, 1999, the net book value of the Commercial  Assets Management
Agreement was $1,764,000 and is included in other assets.

S.       Selected Quarterly Financial Data (Unaudited)

Presented  below  is  selected  quarterly  financial  data for 1999 and 1998 (in
thousands, except per share data).
<TABLE>
<CAPTION>

                                                                            Three Months Ended
                                                ---------------------------------------------------------------------
1999                                                December 31,     September 30,        June 30,          March 31,
----------------------------------------------- ----------------- ---------------- ----------------- ----------------
<S>                                                  <C>                <C>              <C>               <C>
Income from rental property operations               $    2,272         $   2,186        $   2,244         $   2,129
Net income                                                  584               593              687               542
Basic and diluted earnings per share                       0.10              0.11             0.12              0.10

Weighted average common shares outstanding                5,572             5,559            5,567             5,453
Weighted average common shares and common
   shares equivalents outstanding                         5,573             5,563            5,573             5,464

                                                                            Three Months Ended
                                                ---------------------------------------------------------------------
1998                                              December 31,     September 30,          June 30,         March 31,
----------------------------------------------- ----------------- ---------------- ----------------- ----------------
Income from rental property operations               $    2,023         $   1,995        $   1,570         $   1,341
Net income (loss)                                           408            (1,368)             627               545
Basic and diluted earnings (loss) per share                0.08             (0.27)            0.12              0.11

Weighted average common shares outstanding                5,030             5,123            5,115             5,109
Weighted average common shares and common
   shares equivalents outstanding                         5,041             5,123            5,142             5,143
</TABLE>


                                     F - 20
<PAGE>

T.       Subsequent Events

In January 2000, the Company  purchased for  $36,816,000  the four  manufactured
home communities and the undeveloped homesites at three additional  manufactured
home  communities  which  secured  the  Company's  participating  mortgage.  The
purchase price was paid as follows:

                                                                (in thousands)
          Cancellation of participating mortgages and loans       $  24,851
          Assumption of debt                                         10,704
          Issuance of 44,572 OP Units                                   496
          Cash                                                          765
                                                                  ---------
                                                                  $  36,816
                                                                  =========

In January 2000,  the Company  purchased for $2,120,000 the 50% interest that it
did not  already  own in the  property  management  companies  that  manage  the
Company's and Commercial Assets'  properties.  Mr. Bruce E. Moore, the Company's
President  and  Chief  Operating  Officer,  owned  a  17.5%  interest  in  these
companies.

In January  2000,  the Company  purchased  for  $657,000  the assets,  primarily
manufactured  home inventory,  and activities of a real estate brokerage company
that  provides  brokerage  services  at the  Company's  and  Commercial  Assets'
properties.  Mr. Moore,  the Company's  President and Chief  Operating  Officer,
owned 50% of this company.  The purchase price was equal to the historical  cost
of the inventory held by this company.

In January  2000,  the Company  purchased  for $30,000 the assets of the company
which  provides  maintenance  services to the Company's and  Commercial  Assets'
properties.  Mr. Moore,  the Company's  President and Chief  Operating  Officer,
owned 50% of this company.




                                     F - 21
<PAGE>


                           ASSET INVESTORS CORPORATION
                                  SCHEDULE III
                    REAL ESTATE AND ACCUMULATED DEPRECIATION
                                December 31, 1999
                         (In Thousands Except Site Data)

<TABLE>
<CAPTION>

                                                                                                     December 31, 1999
                                                                                    ------------------------------------------------
                                                                           Cost                                     Total
                                                                         Capital-                                    Cost
                                                           Initial Cost    ized        Total Cost                   Net of
                                                        ---------------- Subsequ- ----------------------  Accumu-  Accumu-
                                                 Number       Buildings    uent         Buildings          lated    lated
                 Date                     Year     of           and         to             and            Depreci- Depreci- Encum-
 Property Name Acquired  Location      Developed Sites Land Improvements Acquis. Land Improvements Total   ation    ation  brances
 -----------------------------------------------------------------------------------------------------------------------------------
<S>            <C>  <C>                 <C>        <C> <C>     <C>      <C>     <C>    <C>      <C>      <C>     <C>       <C>
Blue Star      1999 Apache Junction, AZ   1955     153 $   453 $  1,029 $   -- $   453 $  1,029 $ 1,482   $   15 $   1,467 $     662
Brentwood West 1998 Mesa, AZ           1972/1987   350   1,050   12,768    139   1,050   12,907  13,957      811    13,146     7,214
Caribbean Cove 1998 Orlando, FL           1984     286     858    7,952    234     858    8,186   9,044      476     8,568     4,963
Cardinal Court 1997 Largo, FL          1959/1965   138     414    1,829      1     414    1,830   2,244      214     2,030        --
Forest View    1997 Homosassa, FL      1987/1997   180     927    1,950    144     927    2,094   3,021      231     2,790     1,924
Gulfstream     1998 Orlando, FL           1980     553   1,740   11,793     34   1,740   11,827  13,567      686    12,881     7,461
Gulfstream II  1998 Orlando, FL           1988     308     924    9,183     31     924    9,214  10,138      535     9,603     5,563
Lost Dutchman  1999 Apache Junction, AZ 1971/1979/
                                          1999     260     777    4,885     34     777    4,919   5,696       74     5,622     2,537
Marina Dunes   1997 Marina, CA            1979      65     195    3,572      5     195    3,577   3,772      320     3,452        --
Mullica Woods  1998 Egg Harbor City, NJ   1985      90     270    3,399     66     270    3,465   3,735      252     3,483     2,528
Park Royale    1997 Pinellas Park, FL     1971     258     927    5,221      2     927    5,223   6,150      571     5,579     2,059
Pinewood       1997 St. Petersburg, FL    1976     220     660    4,534     52     660    4,586   5,246      394     4,852     2,618
Pleasant Living1997 Riverview, FL         1979     245     726    5,079    155     726    5,234   5,960      450     5,510     2,928
Salem Farm     1998 Bensalem, PA          1988      28      84    1,307     --      84    1,307   1,391       96     1,295        --
Serendipity    1998 Ft. Myers, FL      1971/1974   338   1,014    7,635     91   1,014    7,726   8,740      488     8,252     4,767
Stonebrook     1997 Homosassa, FL      1987/1997   118     654    1,483     17     654    1,500   2,154      178     1,976     1,233
Sun Valley     1999 Apache Junction, AZ   1984     267     804    5,644     --     804    5,644   6,448       85     6,363     2,872
Sun Valley     1997 Tarpon Springs, FL    1972     261     783    5,957     --     783    5,957   6,740      648     6,092     4,665
Westwind I     1997 Dunedin, FL           1970     195      --    3,226     31      --    3,257   3,257      363     2,894        --
Westwind II    1997 Dunedin, FL           1972     189      --    3,210     41      --    3,251   3,251      361     2,890        --
                                                ------------------------------------------------------------------------------------
           Total                                 4,502 $13,260 $101,656 $1,077 $13,260 $102,733 $115,993  $7,248  $108,745   $53,994
                                                ====================================================================================

</TABLE>

                                     F - 22
<PAGE>

                           ASSET INVESTORS CORPORATION
                                  SCHEDULE III
                    REAL ESTATE AND ACCUMULATED DEPRECIATION
              For the Years Ended December 31, 1999, 1998 and 1997
                                 (in thousands)

<TABLE>
<CAPTION>

                                                                             1999              1998             1997
                                                                           --------          --------         ------
Real Estate
<S>                                                                       <C>               <C>              <C>
    Balance at beginning of year                                          $  101,941        $   41,419       $      --
    Additions during the year:
       Real estate acquisitions                                               13,592            59,977          41,347
       Additions                                                                 487               583              72
       Dispositions                                                              (27)              (38)             --
                                                                          ----------        ----------       ---------
    Balance at end of year                                                $  115,993        $  101,941       $  41,419
                                                                          ==========        ==========       =========


Accumulated Depreciation
    Balance at beginning of year                                          $   (3,378)       $     (693)      $      --
    Additions during the year:
       Depreciation                                                           (3,870)           (2,685)           (693)
       Dispositions                                                               --                --              --
                                                                          ----------        ----------       ---------
    Balance at end of year                                                $   (7,248)       $   (3,378)      $    (693)
                                                                          ==========        ==========       =========
</TABLE>



                                     F - 23
<PAGE>


                           ASSET INVESTORS CORPORATION
                                   SCHEDULE IV
                          MORTGAGE LOANS ON REAL ESTATE
                                December 31, 1999
                                 (in thousands)


<TABLE>
<CAPTION>

                                                                                                           Principal
                                                                                                           Amount of
                                                                                                             Loans
                                                                                                           Subject to
                                        Final     Periodic               Face Amount       Carrying        Deliquent
                        Interest      Maturity    Payment     Prior       Amount of        Amount of      Principal or
    Description           Rate          Date       Terms      Liens       Mortgages        Mortgages        Interest
---------------------  ------------  ----------  ----------  ---------  --------------  ---------------  ---------------
<S>                        <C>          <C>           <C>    <C>           <C>           <C>              <C>
CADC (1)                   10%          2/2018        (1)    $2,607        $ 21,312      $    22,475      $         --
                                                             =========  ==============  ===============  ===============
<FN>

(1)  The loan is secured by  Brentwood,  Blue Heron Pines,  Savanna Club and Sun
     Lake communities and the undeveloped  sites in Forest View, Park Royale and
     Stonebrook  communities.  Interest  is paid  from any cash  flows  from the
     properties.

</FN>
</TABLE>



                                     F - 24
<PAGE>


                           ASSET INVESTORS CORPORATION
                                   SCHEDULE IV
                          MORTGAGE LOANS ON REAL ESTATE
              For the Years Ended December 31, 1999, 1998 and 1997
                                 (in thousands)


<TABLE>
<CAPTION>
                                                                             1999              1998             1997
                                                                           --------          --------         ------

<S>                                                                       <C>               <C>              <C>
    Balance at beginning of period                                        $   27,604        $       --       $      --

    Additions during period:
       Investments in participating mortgages                                  6,295             5,072              --
       Accrued interest                                                        2,842             3,204              --
       Restructure of investment in and notes receivable from real
          estate joint ventures                                                   --            25,415              --
    Deductions during period:
       Collections of principal                                                 (630)           (3,450)             --
       Collections of interest                                                (1,784)           (2,458)             --
       Amortization of loan costs                                                (28)              (30)             --
       Reserve for uncollected interest                                          149              (149)             --
       Cancellation of debt in connection with purchase of property          (11,973)               --              --
                                                                          ----------        ----------       ---------

    Balance at close of period                                            $   22,475        $   27,604       $      --
                                                                          ==========        ==========       =========


</TABLE>



                                     F - 25
<PAGE>

                         REPORT OF INDEPENDENT AUDITORS



Board of Directors and Stockholders
Commercial Assets, Inc.


We have  audited the  accompanying  consolidated  balance  sheets of  Commercial
Assets,  Inc. and subsidiaries as of December 31, 1999 and 1998, and the related
consolidated statements of income,  stockholders' equity and cash flows for each
of the three  years in the period  ended  December  31,  1999.  Our audits  also
included  the  consolidated   financial   statement   schedules  listed  in  the
accompanying   index.   These   financial   statements  and  schedules  are  the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these financial statements and schedules based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable  assurance about whether the financial  statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting  the amounts and  disclosures in the financial  statements.  An audit
also includes assessing the accounting principles used and significant estimates
made by  management,  as well as  evaluating  the  overall  financial  statement
presentation.  We believe  that our audits  provide a  reasonable  basis for our
opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly,  in all  material  respects,  the  consolidated  financial  position  of
Commercial  Assets,  Inc. and subsidiaries as of December 31, 1999 and 1998, and
the  consolidated  results of their  operations and their cash flows for each of
the three  years in the  period  ended  December  31,  1999 in  conformity  with
accounting  principles  generally  accepted in the United  States.  Also, in our
opinion, the related financial statement schedules,  when considered in relation
to the basic consolidated financial statements taken as a whole, presents fairly
in all material respects the information set forth therein.



                                                            /s/ERNST & YOUNG LLP
Denver, Colorado
January 21, 2000, except for
  Note O, as to which the date
  is March 7, 2000





                                     F - 26
<PAGE>




                    COMMERCIAL ASSETS, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS

                      (In thousands, except per share data)
<TABLE>
<CAPTION>

                                                                                                 December 31,
                                                                                                 ------------
                                                                                           1999               1998
                                                                                           ----               ----
ASSETS
<S>                                                                                      <C>                <C>
Real estate, net of accumulated depreciation of $1,329 and $50                           $   64,273         $   12,628
Investments in participating mortgages                                                        2,148              9,328
Investment in real estate joint ventures                                                      1,932              1,280
Short-term investments                                                                       12,502             45,066
Cash and cash equivalents                                                                     4,664              3,292
Investment in and note receivable from Westrec                                                3,563              4,011
Investment in Asset Investors                                                                 1,396                 --
CMBS bonds                                                                                    1,753              1,739
Other assets, net                                                                             4,852                890
                                                                                         ----------         ----------
      Total Assets                                                                       $   97,083         $   78,234
                                                                                         ==========         ==========

LIABILITIES
Secured long-term notes payable                                                          $   20,442         $       --
Accounts payable and accrued liabilities                                                      1,747                872
Related-party management fees payable                                                           198                108
                                                                                         ----------         ----------
                                                                                             22,387                980
                                                                                         ----------         ----------

COMMITMENTS AND CONTINGENCIES                                                                    --                 --

MINORITY INTEREST IN CONSOLIDATED SUBSIDIARIES                                                  615                 --

STOCKHOLDERS' EQUITY
Preferred stock, par value $.01 per share, 25,000 shares authorized; no shares
   issued or outstanding                                                                         --                 --
Common stock, par value $.01 per share, 75,000 shares authorized; 10,393 and
   10,364 shares issued; and 10,320 and 10,364 shares outstanding, respectively                 104                104
Additional paid-in capital                                                                   77,018             76,874
Retained earnings (dividends in excess of accumulated earnings)                              (2,600)               276
Treasury stock, 73 and 0 shares at cost                                                        (441)                --
                                                                                         ----------         ----------
                                                                                             74,081             77,254
                                                                                         ----------         ----------
      Total Liabilities and Stockholders' Equity                                         $   97,083         $   78,234
                                                                                         ==========         ==========

</TABLE>


                 See Notes to Consolidated Financial Statements.

                                     F -27
<PAGE>




                    COMMERCIAL ASSETS, INC. AND SUBSIDIARIES

                        CONSOLIDATED STATEMENTS OF INCOME

                      (In thousands, except per share data)

<TABLE>
<CAPTION>

                                                                                         Year Ended December 31,
                                                                                         -----------------------
                                                                                  1999           1998            1997
                                                                                  ----           ----            ----
Rental property operations
<S>                                                                             <C>            <C>             <C>
Rental and other property revenues                                              $   2,538      $      --       $    --
Income from participating mortgages and leases                                      1,971            587            --
Property operating expenses                                                        (1,114)            --            --
Depreciation                                                                       (1,279)           (50)           --
                                                                                ---------      ---------      --------
Income from rental property operations                                              2,116            537            --
                                                                                ---------      ---------      --------

Interest and other income                                                           1,913          3,874           945
CMBS bonds revenue                                                                    154            161         9,172
Equity in earnings of Asset Investors                                                  23             --            --
General and administrative expenses                                                  (519)          (420)         (519)
Related-party management fees                                                        (565)           (87)       (1,678)
Interest expense                                                                     (273)            --            --
Related-party acquisition fees                                                       (205)          (124)           --
Reincorporation expenses                                                             (120)            --            --
Costs related to abandonment of potential marina investments                           --           (500)           --
Gain on sale of bonds                                                                  --             --         5,786
                                                                                ---------      ---------      --------

Net income                                                                      $   2,524      $   3,441      $ 13,706
                                                                                =========      =========      ========

Basic and diluted earnings per share                                            $     .24      $     .33      $   1.32
                                                                                =========      =========      ========

Weighted average common shares outstanding                                         10,342         10,357        10,332

Weighted average common shares and common share equivalents outstanding            10,342         10,372        10,371

Dividends paid per share:
   Regular dividends                                                            $     .52       $    .39      $    .68
   Special dividends                                                                   --             --           .26
   Capital gain dividends                                                              --             --           .17
                                                                                ---------      ---------      --------
                                                                                $     .52       $    .39      $   1.11
                                                                                =========      =========      =========

</TABLE>



                 See Notes to Consolidated Financial Statements.

                                     F -28
<PAGE>




                    COMMERCIAL ASSETS, INC. AND SUBSIDIARIES

                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

              For the Years Ended December 31, 1999, 1998 and 1997

                                 (In thousands)
<TABLE>
<CAPTION>
                                                                                Retained
                                                                                Earnings
                                                                              (Dividends In             Accumulated
                                                  Common Stock     Additional   Excess of                  Other         Total
                                         -------------------------   Paid-In   Accumulated   Treasury  Comprehensive  Stockholders'
                                           Shares        Amount      Capital    Earnings)     Stock       Income        Equity
                                         ----------    ----------- -----------   --------      ------      ------        ------

<S>                                         <C>         <C>        <C>           <C>        <C>          <C>            <C>
BALANCES - DECEMBER 31, 1996                10,316      $  103     $  76,559     $ (1,354)  $    --      $(3,389)       $  71,919

Comprehensive Income
    Net income                                  --          --            --       13,706        --           --           13,706
    Reversal of unrealized holding
      losses upon restructuring of
      bonds                                     --          --            --           --        --        3,389            3,389
                                           -------      ------     ---------     --------   -------      -------        ---------
       Comprehensive Income                     --          --            --       13,706        --        3,389           17,095
                                           -------      ------     ---------     --------   -------      -------        ---------
Issuance of common stock                        26           1           165           --        --           --              166
Dividends                                       --          --            --      (11,475)       --           --          (11,475)
                                           -------      ------     ---------      -------   -------      -------        ---------
BALANCES - DECEMBER 31, 1997                10,342         104        76,724          877        --           --           77,705

Issuance of common stock                        22          --           150           --        --           --              150
Net income                                      --          --            --        3,441        --           --            3,441
Dividends                                       --          --            --       (4,042)       --           --           (4,042)
                                           -------      ------     ---------     --------   -------      -------        ---------
BALANCES - DECEMBER 31, 1998                10,364         104        76,874          276        --           --           77,254

Issuance of common stock                        29          --           144           --        --           --              144
Purchase of treasury stock                      --          --            --           --      (441)          --             (441)
Net income                                      --          --            --        2,524        --           --            2,524
Dividends                                       --          --            --       (5,400)       --           --           (5,400)
                                           -------      ------     ---------     --------   -------      -------        ---------
BALANCES - DECEMBER 31, 1999                10,393      $  104     $  77,018     $ (2,600)  $  (441)     $    --        $  74,081
                                           =======      ======     =========     ========   =======      =======        =========

</TABLE>


                 See Notes to Consolidated Financial Statements.

                                     F -29
<PAGE>


                    COMMERCIAL ASSETS, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In thousands)
<TABLE>
<CAPTION>

                                                                                               Year Ended December 31,
                                                                                               -----------------------
                                                                                         1999          1998           1997
                                                                                         ----          ----           ----
CASH FLOWS FROM OPERATING ACTIVITIES
<S>                                                                                   <C>           <C>            <C>
Net income                                                                            $  2,524      $  3,441       $ 13,706
Adjustments to reconcile net income to net cash flows from operating activities:
   Depreciation and amortization                                                         1,289            50             --
   Amortization of premium on short-term investments                                        91           274             --
   Amortization of discount on secured long-term notes payable                             158            --             --
   Amortization of discounts on CMBS bonds                                                  --            --         (2,381)
   Accrued income on participating mortgages                                              (418)         (443)            --
   Accrued income on CMBS bonds                                                            (92)           --             --
   Equity in earnings of real estate joint ventures                                         (9)           --             --
   Equity in earnings of Asset Investors                                                   (23)           --             --
   Gain on sale of bonds                                                                    --            --         (5,786)
   Increase in accounts payable and accrued liabilities                                    286           537            216
   (Increase) decrease in other assets                                                  (1,135)          323         (1,327)
                                                                                      --------      --------       --------
     Net cash provided by operating activities                                           2,671         4,182          4,428
                                                                                      --------      --------       --------

CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of real estate                                                               (34,292)      (12,671)            --
Purchases of Asset Investors' common stock                                              (1,433)           --             --
Collections on short-term investments                                                   10,059        30,313             --
Notes receivable advances                                                               (1,339)         (477)            --
Proceeds from sale of short-term investments                                            22,411        16,085             --
Acquisitions of short-term investments                                                      --       (91,946)            --
Investments in participating mortgages, net                                             (1,380)       (8,959)            --
Investment in real estate joint ventures                                                  (648)       (1,280)            --
Capital replacements and improvements                                                   (1,178)           (7)            --
Investment in Westrec                                                                       --        (2,301)            --
Collections on note receivable from Westrec                                                448            --             --
Dividends from real estate joint ventures                                                    5            --             --
Dividends from Asset Investors                                                              60            --             --
Proceeds from sale of bonds                                                                 --            --         77,693
Acquisition of CMBS bonds                                                                   --            --         (4,801)
Collections on CMBS bonds                                                                   78           242             --
                                                                                      --------      --------       --------
     Net cash provided by (used in) investing activities                                (7,209)      (71,001)        72,892
                                                                                      --------      ---------      --------

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from secured long-term notes payable                                           12,600            --             --
Dividends paid                                                                          (5,400)       (4,042)       (11,475)
Payment of loan costs                                                                     (541)           --             --
Purchase of treasury stock                                                                (441)           --             --
Principal paydowns on secured short-term financing                                        (214)           --             --
Principle paydowns on secured long-term notes payable                                      (94)           --             --
Proceeds from issuance of Common Stock                                                      --            --             31
                                                                                      --------      --------       --------
     Net cash provided by (used in) financing activities                                 5,910        (4,042)       (11,444)
                                                                                      --------      --------       --------

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                     1,372       (70,861)        65,876
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                                         3,292        74,153          8,277
                                                                                      --------      --------       --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD                                            $  4,664      $  3,292       $ 74,153
                                                                                      ========      ========       ========

</TABLE>


                 See Notes to Consolidated Financial Statements.

                                     F - 30
<PAGE>

                    COMMERCIAL ASSETS, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



A.       Organization

Commercial  Assets,  Inc.  ("CAX"  and,  together  with  its  subsidiaries,  the
"Company") is a Delaware  corporation  that has interests in  manufactured  home
communities  and has  elected  to be taxed  as a real  estate  investment  trust
("REIT").  Prior to June 10,  1999,  the  Company  was a  Maryland  corporation.
Effective June 10, 1999, the Company's stockholders approved its reincorporation
in Delaware. The Company's common stock, par value $.01, (the "Common Stock") is
listed on the American Stock Exchange under the symbol "CAX."

Prior to 1998,  the Company owned  subordinate  classes of  Commercial  Mortgage
Backed  Securities ("CMBS bonds").  In November 1997, the Company  resecuritized
its  subordinate  CMBS bond  portfolio.  This resulted in the Company  receiving
$77,693,000  cash and  retaining a residual  interest in an owner trust  arising
from the resecuritization.  In the third quarter of 1998, the Company decided to
invest in manufactured home communities and as of December 31, 1999 has invested
approximately  $70  million  in  12  manufactured  home  communities  (including
investments  in  participating  mortgages and real estate joint  ventures)  with
1,840 developed homesites and 1,370 undeveloped homesites.

The  Company's  daily  operations  are  performed  by a manager  pursuant  to an
agreement   currently  in  effect   through   December  2000  ("the   Management
Agreement"). Since November 1997, Asset Investors Corporation (together with its
subsidiaries,  "Asset Investors") has been the manager. Asset Investors owns 27%
of the Company's  Common Stock.  No change was made to the Management  Agreement
during 1998. For 1999, the Incentive Fee was amended to provide that it is based
on Funds From Operations, less an annual capital replacement reserve of at least
$50 per developed  homesite,  instead of the Company's REIT income.  In general,
FFO is net income plus  depreciation,  amortization and real estate  acquisition
fees. The  Management  Agreement has been extended to December 31, 2000 with the
same terms as 1999  except  that the  Management  Agreement  will  automatically
terminate if the Company merges with Asset Investors.  The Management  Agreement
is subject to the approval of a majority of the Company's  independent directors
and can be  terminated  by either party,  without  cause,  with 60 days' notice.
Since  the  Company  has no  employees,  officers  of Asset  Investors  are also
officers of the Company.

B.       Proposed Merger with Asset Investors

The Company and Asset Investors have agreed to merge, subject to the approval by
both (a) a majority of Asset Investors' outstanding shares and (b) two-thirds of
the Company's  outstanding shares. Asset Investors owns approximately 27% of the
Company's outstanding shares and has agreed to vote these shares in favor of the
merger.  Asset  Investors  will issue 0.4075 shares of its common stock for each
outstanding  share of the Company's Common Stock.  Alternatively,  the Company's
stockholders  may elect to receive  $5.75 per share in cash for up to  3,549,868
shares of the Company's  Common Stock with any remaining shares receiving 0.4075
shares of Asset  Investors  common stock.  Asset  Investors and the officers and
directors  of Asset  Investors  and the Company  have agreed to elect to receive
shares of Asset  Investors  common stock for all shares of the Company's  Common
Stock that they own.  The  stockholder  meetings  are  expected  to occur in the
second quarter of 2000.

                                     F - 31
<PAGE>

C.       Summary of Significant Accounting Policies

Principles of Consolidation

The consolidated  financial  statements  include the accounts of the Company and
its  majority-owned  subsidiaries.  All  significant  intercompany  balances and
transactions have been eliminated in consolidation.  The Company's investment in
Asset Investors is recorded under the equity method.

Real Estate and Depreciation

Rental  properties are recorded at cost less  accumulated  depreciation,  unless
considered  impaired.  If events or  circumstances  indicate  that the  carrying
amount of a property may be impaired, the Company will make an assessment of its
recoverability  by  estimating  the future  undiscounted  cash flows,  excluding
interest charges, of the property.  If the carrying amount exceeds the aggregate
future cash flows,  the Company would recognize an impairment loss to the extent
the carrying  amount exceeds the fair value of the property.  As of December 31,
1999,  management  believes  that no  impairment  losses exist based on periodic
reviews. No impairment losses were recognized in 1999 or 1998.

Depreciation is computed using the straight line method over an estimated useful
life of 25 years for land  improvements and buildings.  Significant  renovations
and  improvements,  which  improve or extend the useful  life of the asset,  are
capitalized and  depreciated  over the remaining  estimated  life.  Maintenance,
repairs and minor improvements are expensed as incurred.

Investments in Participating Mortgages

The Company has loans  secured by real estate which provide for an interest rate
return plus up to 50% of net  profits,  cash flows and sales  proceeds  from the
underlying real estate. The Company accounts for these investments as loans when
(a) the Company  does not have an interest  in the  borrower  and either (b) the
borrower has a substantial  equity  investment in the real estate  collateral or
(c) the  Company  has  recourse  to other  substantial  tangible  assets  of the
borrower.  As  such,  the  Company  records  interest  income  based on the rate
provided  for in the loan and records its share of any net profits or gains from
the sale of the underlying real estate when realized.  If the above requirements
are not met,  then the loan is  accounted  for as an equity  investment  in real
estate under the equity method of accounting.

Investments in Real Estate Joint Ventures

Investments  in real estate joint ventures in which the Company does not control
the joint  venture's  activities  are  accounted  for under the equity method of
accounting.

Investment in and Note Receivable from Westrec

The Company  classifies  its investment in and note  receivable  from Westrec as
available-for-sale  and carries  this at estimated  fair value in the  financial
statements.  The Company  believes that the contractual  amounts provided for in
the note  receivable  and the  agreement  under  which the  Company can sell its
shares of Westrec common stock approximates fair value at December 31, 1999.

Revenue Recognition

The Company derives its income from the rental of homesites.  The leases entered
into by residents  for the rental of the site are generally for terms not longer
than one year and the associated  rental revenues are recognized when earned and
due from residents.

                                     F - 32
<PAGE>

Interest on participating  mortgages is recorded based upon outstanding balances
and interest  rates per the terms of the  mortgages.  In  addition,  the Company
evaluates the  collectibility  of any unpaid  interest and provides  reserves as
necessary. As of December 31, 1999, there is no reserve for uncollected interest
on the participating mortgages.  Rent on ground leases is recognized when earned
and due from lessee.

Deferred Financing Costs

Fees and costs incurred in obtaining financing are capitalized.  These costs are
amortized  over  the  terms of the  related  loan and are  charged  to  interest
expense.

Capitalized Interest

Interest is capitalized on development  projects  during periods of construction
or development.  During 1999,  capitalized  interest was $417,000.  There was no
capitalized interest in 1998 or 1997.

CMBS Bonds

Earnings from CMBS bonds was comprised of coupon  interest and the  amortization
of the purchase  discount.  Amortization of the purchase discount was recognized
by the interest method using a constant effective yield and assumed an estimated
rate of future  prepayments,  defaults and credit  losses which was adjusted for
actual experience. The allowance for credit losses was equal to the undiscounted
total of future estimated  credit losses.  In the event the Company adjusted the
estimate of future credit losses,  such adjustments would be included in current
period earnings.

The Company classifies its CMBS bonds as  available-for-sale.  Accordingly,  the
CMBS bonds are  carried at fair value in the  financial  statements.  Unrealized
holding  gains and losses on  available-for-sale  securities  are excluded  from
earnings and reported as a net amount in stockholders' equity until realized. If
the fair value of a CMBS bond declines  below its  amortized  cost basis and the
decline is considered to be "other than temporary," the amount of the write-down
would  be  included  in the  Company's  income.  The  decline  in fair  value is
considered  to be other than  temporary  if the cost basis  exceeds  the related
projected cash flow from the CMBS bond discounted at a risk-free rate of return.

Fair Value of Financial Instruments

The fair value of the  Company's  financial  instruments  generally  approximate
their carrying basis or amortized cost.

Income Taxes

The  Company  intends to operate in a manner  that will permit it to qualify for
the income tax treatment  accorded to a REIT. If it so qualifies,  the Company's
net income, with certain limited  exceptions,  will not be subject to federal or
state income tax at the corporate level. Accordingly, no provision for taxes has
been made in the financial statements.

In order to maintain its status as a REIT, the Company is required,  among other
things,  to  distribute  annually to its  stockholders  at least 95% of its REIT
income and to meet certain asset, income and stock ownership tests.

Ninety percent of dividends paid in 1999 represented  ordinary taxable income to
stockholders  and 10%  represented  a return of capital for income tax  purposes
(unaudited).  Regular and special  dividends  paid in 1998 and 1997  represented


                                     F - 33
<PAGE>

ordinary  taxable  income to the  stockholders  (unaudited).  In  addition,  the
Company paid a capital gains dividend of $.17 per share in 1997 (unaudited).

Earnings Per Share

Basic  earnings  per  share  for  1999,   1998  and  1997  are  based  upon  the
weighted-average  number of shares of Common Stock outstanding  during each such
year.  Diluted  earnings per share  reflect the effect of dilutive,  unexercised
stock  options of 0,  15,000 and  39,000 in 1999,  1998 and 1997,  respectively.
Stock  options  of  62,000,   43,000  and  28,000  for  1999,   1998  and  1997,
respectively, have been excluded from diluted earnings per share as their effect
would be anti-dilutive.

Treasury Stock

Treasury stock is recorded at cost. In addition,  the Company  purchased 114,000
shares of Asset  Investors'  common stock during 1999.  Because Asset  Investors
owns 27% of the  Company's  Common  Stock,  the  Company  is  deemed  to have an
interest in 48,000  shares of the  Company's  Common Stock and has also recorded
this as treasury stock.

Statements of Cash Flows

For purposes of reporting cash flows,  cash  maintained in bank accounts,  money
market funds and  highly-liquid  investments  are considered to be cash and cash
equivalents. The Company paid $565,000 in interest during 1999. The Company paid
no interest in 1998 or 1997.

Non-cash operating,  investing and financing  activities for 1999, 1998 and 1997
were as follows (in thousands):

<TABLE>
<CAPTION>

                                                                            1999            1998            1997
                                                                          --------        --------       ---------
<S>                                                                       <C>              <C>            <C>
Accrued initial capital expenditures on real estate purchases             $   400          $   --         $    --
Issuance of Common Stock for services                                         144             150             135
Escrow of long-term debt proceeds                                             300              --              --
Acquisitions of real estate by:
    Issuance of note payable                                                4,519              --              --
    Assumption of debt and minority interest in subsidiaries                4,068              --              --
    Cancellation of participating mortgages                                 8,978              --              --
Principal collections on CMBS bonds transferred to restricted cash             --              --           6,227
Unrealized holding gains and losses on CMBS bonds                              --              --           3,389

</TABLE>

Use of Estimates

The  preparation  of the  financial  statements in  conformity  with  accounting
principles  generally accepted in the United States requires  management to make
estimates  and  assumptions  that affect the amounts  reported in the  financial
statements  and  accompanying  notes.  Actual  results  could  differ from those
estimates.

Reclassifications

Certain  reclassifications  have  been  made in the 1998  and 1997  consolidated
financial  statements  to conform to the  classifications  currently  used.  The
effect of such reclassifications on amounts previously reported is immaterial.

                                     F - 34
<PAGE>

D.       Short-term Investments

The Company has  short-term  investments  consisting  of  mortgage-backed  bonds
guaranteed  by Federal  Home Loan  Mortgage  Corporation  and  Federal  National
Mortgage  Association.  These investments are classified as  available-for-sale,
and the fair market value at December 31, 1999  approximates  the carrying value
of  $12,502,000.  During  1999 and 1998,  the Company  had no  unrealized  gains
(losses) on these  investments.  The Company had  $22,411,000 and $16,085,000 in
proceeds  from  the  sale  of  short-term  investments  during  1999  and  1998,
respectively,  and  realized  no gains  (losses)  from such  sales.  The Company
determined its basis in these sold investments using the specific identification
method. At December 31, 1999, these investments had the following maturities:

                        Amount              Maturity
                  -------------------    ---------------
                      $3,395,000              2000
                      $9,107,000              2003

E.       Investments in Manufactured Home Communities

During 1999,  the Company  acquired eight  manufactured  home  communities  with
approximately  1,450  developed  homesites and 500  undeveloped  homesites.  The
Company had  participating  mortgages on three of these communities in 1998. The
total investment was $52,257,000  consisting of $34,292,000 cash,  $8,587,000 of
assumed debt,  $8,978,000 by canceling  participating  mortgages and $400,000 of
estimated   initial  capital   expenditures.   During  1998,  the  Company  paid
$12,671,000 to acquire two manufactured home communities with  approximately 310
developed  homesites  and  790  undeveloped  homesites.  These  investments  are
recorded as real estate.

The Company made $8,959,000 of  participating  mortgages in 1998 involving three
manufactured  home  communities  and adjacent land involving  approximately  310
developed homesites and 210 undeveloped homesites.  These non-recourse mortgages
were  secured  by  the  three  manufactured  home  communities,  adjacent  land,
commercial real estate,  two additional  manufactured  home  communities and one
recreational  vehicle  park.  These  investments  are recorded as  participating
mortgages.  In 1999,  the Company  cancelled  these  participating  mortgages in
connection  with the purchase of these  manufactured  home  communities  and the
adjoining land.

The following  unaudited  pro-forma  information has been prepared  assuming the
acquisition  of the  manufactured  home  communities  had been  completed at the
beginning of the periods  presented.  The  unaudited  pro-forma  information  is
presented for informational  purposes only and is not necessarily  indicative of
what would have occurred if the  restructurings  and the  acquisitions  had been
completed  as of those dates.  In addition,  the  pro-forma  information  is not
intended to be a projection of future results.

The unaudited,  pro-forma results of operations for 1999 and 1998 are as follows
(in thousands, except per share data):

                                                1999                 1998
                                              --------             --------
Revenues                                      $  6,927             $  5,775
                                              ========             ========

Net income                                    $  1,252             $    391
                                              ========             ========

Basic and diluted earnings per share          $    .12             $    .04
                                              ========             ========

The Company is actively seeking to acquire additional  communities and currently
is engaged in negotiations  relating to the possible  acquisition of a number of
communities.   At  any  time,  these  negotiations  are  at  various  stages  of


                                     F - 35
<PAGE>

completion,   which  may  include  outstanding   contracts  to  acquire  certain
manufactured  home  communities,  subject  to  satisfactory  completion  of  the
Company's due diligence review.

F.       Real Estate

Real estate at December 31, 1999 and 1998, is as follows (in thousands):
<TABLE>
<CAPTION>
                                                                                           1999              1998
                                                                                        ----------        ----------
<S>                                                                                     <C>               <C>
Land                                                                                    $   15,290        $    3,798
Land improvements and buildings                                                             50,312             8,880
                                                                                        ----------        ----------
                                                                                            65,602            12,678
Less accumulated depreciation                                                               (1,329)              (50)
                                                                                        ----------        ----------

Investment in real estate, net                                                          $   64,273        $   12,628
                                                                                        ==========        ==========
</TABLE>

Land  improvements and buildings  consist  primarily of  infrastructure,  roads,
landscaping, clubhouses, maintenance buildings and common amenities.

Two  manufactured  home communities have been leased to a third party. The first
lease involves a community acquired by the Company at a cost of $1.4 million and
is for a term of 50 years.  The Company  receives  initial annual lease payments
equal to 9% of its cost. The annual lease payments increase by 4% per annum over
the prior year's lease payments until the annual lease payment equals 13% of the
Company's cost. In addition,  the Company receives  additional rent equal to 50%
of the lessee's net cash flow from the  property.  In the event of a sale of the
property,  the Company  receives  all  proceeds  until it has realized its total
purchase price of the property plus a 13% per annum rate of return.  The Company
then  receives 50% of any sales  proceeds in excess of such amount.  The Company
terminated  the lease on January 1, 2000 by  canceling  $187,000 in loans to the
lessee.

The other leased  community  involves two phases and has been leased to the same
third party for 50 years.  Annual lease  payments on the first phase during 1999
was  $890,000 and  increases in later years by 4% per annum.  There are no lease
payments on the second phase until the sites are  developed,  at which time, the
annual  lease  payments on the second phase will be equal to 10% times the costs
incurred in developing this phase.  In addition,  the lessee pays to the Company
additional rent equal to 50% of the lessee's net cash flow from the property. In
the event of a sale, the Company receives 50% of any sales proceeds in excess of
the  Company's  cost.  The  Company  terminated  the lease on January 1, 2000 by
canceling $186,000 in loans to the lessee.

G.       Investments in Participating Mortgages

During 1998, the Company made investments in participating  mortgages secured by
three  manufactured home communities and adjoining land. The non-recourse  notes
accrued  interest  at 15% per annum and paid  interest  at 9% per annum  through
August 1999,  with the pay rate  increasing 1% each year thereafter to a maximum
of 12% per annum.  The loans were  scheduled  to mature in September  2007.  The
Company  also  received  additional  interest of 50% of the net profits and cash
flows from the  properties.  In August  1999,  the Company  purchased  the three
communities  and  adjoining  land by canceling the  participating  mortgages and
releasing additional collateral pledged on the mortgages.

                                     F - 36
<PAGE>

The following  table provides  unaudited  summary  financial  information of the
borrower  with  respect to these  participating  mortgages  for the period  from
August 1998 (date of  participating  mortgages) to December 31, 1998 and January
1999 to August 1999 (date the Company acquired the properties):
<TABLE>
<CAPTION>

                                                                           January 1999 to         August 1998 to
                                                                             August 1999            December 1998
                                                                         --------------------    --------------------
                                                                                       (in thousands)
                                                                                         (unaudited)
<S>                                                                            <C>                     <C>
Rental and other property revenues                                             $   828                 $   458
Property operating expenses                                                       (369)                   (234)
Depreciation expense                                                               (52)                    (31)
                                                                               -------                 -------
Income from rental property operations                                             407                     193
                                                                               -------                 -------

Net loss                                                                          (384)                   (108)
</TABLE>

The  Company  also  has  investments  in  participating   mortgages  secured  by
individual homes and homesites within two manufactured home  communities.  These
mortgages  accrue  interest at 10% and pay interest from the cash flows from the
homes and homesites.  The Company also receives additional interest equal to 50%
of the net profits and cash flows from the homes and homesites.

As of December 31, 1999, the Company had investments in participating  mortgages
of  $2,148,000.  During 1999 and 1998,  the  Company had income of $920,000  and
$451,000, respectively, from participating mortgages.

H.       Investments in Real Estate Joint Ventures

The  Company  has  a  $1,304,000  investment  in a  joint  venture  involving  a
manufactured  home  community.  The Company  receives a priority return from the
venture  until the Company has received an amount  equal to 9% times  $1,250,000
for 1999. The Company's  subsequent  annual priority return increases by 5% over
the prior year's amount.  The other venturer then receives a similar  percentage
return on its $300,000  investment in the venture.  In the event the property is
sold,  the Company  receives all proceeds  until it has received its  investment
plus 20% per annum.  The other  venturer then receives all proceeds until it has
received its investment  plus 20% per annum.  Any excess sales proceeds are then
shared  equally.  The  Company  did not record any income  from this real estate
joint venture in 1999 or 1998 as the property is under development.

In November 1999, the Company invested  $624,000 in a joint venture  involving a
manufactured home community.  The Company receives a priority annual return from
the venture equal to 9% times $690,000  through 2000.  After 2000, the Company's
priority return increases by 4% annually.  Thereafter,  the Company receives 20%
of any  profits  and cash flows of the  venture in excess of the above  priority
returns.  During 1999,  the Company  recorded  $10,000 in income from this joint
venture.

I.       Investment in Asset Investors

During 1999,  the Company  purchased  114,000 shares  (approximately  2%) of the
common stock of Asset  Investors.  The Company has recorded  its  investment  in
Asset  Investors  under the equity method  because Asset  Investors  manages the
Company and owns  approximately  27% of the Company's Common Stock. In 1999, the
Company recorded $23,000 in equity in earnings of Asset Investors.

                                     F - 37
<PAGE>

J.       CMBS Bonds

In November 1997, the Company  resecuritized its portfolio of retained interests
in prior  securitizations  that are in the form of CMBS  bonds.  Nine bonds were
sold, one bond was redeemed and the remaining two CMBS bonds were  resecuritized
by transferring the bonds and related restricted cash to an owner trust in which
the Company retained a residual interest. In a private placement, the trust then
sold debt securities  representing  senior interests in the trust's assets.  The
Company  recorded the  resecuritization  of its portfolio as a sale. The Company
received  $77,693,000  in cash proceeds and recorded a $5,786,000  gain from the
sale.  The Company  determined  its basis in the CMBS bonds  using the  specific
identification  method.  The  Company  paid  $426,000 in  incentive  fees to its
manager in connection  with the sale.  These  incentive fees were netted against
the gain.

The estimated  fair value of the residual  interest  retained by the Company was
$2,000,000.  During 1999 and 1998, the Company  received  $141,000 and $403,000,
respectively,  of which  $78,000 and $242,000,  respectively,  was recorded as a
reduction in the net book value of the retained residual interest.  The net book
value at December 31, 1999 was $1,753,000  which  approximates  fair value.  The
Company had no unrealized  gains (losses) on its CMBS bonds at December 31, 1999
and 1998.  The maturity  dates of the CMBS bonds range from 2001 to 2004 and the
Company had no sales of CMBS bonds during 1999 or 1998.

In 1997,  three  mortgages  underlying  one of the  Company's  CMBS  bonds  were
prepaid.  As a result of the  prepayment,  the  Company  recognized  $482,000 of
income  from a  prepayment  penalty  received  and  $2,305,000  of  income  from
accelerated discount amortization.

K.       Investment in and Note Receivable from Westrec

Prior  to  deciding  to  acquire  manufactured  home  communities,  the  Company
evaluated  acquiring interests in marinas and, in connection with this, acquired
a 12% interest in Westrec Marina  Management Inc.  ("Westrec") for approximately
$2,500,000  and made a loan to an affiliate of Westrec.  In the third quarter of
1998, the Company decided to invest in manufactured home communities  instead of
marinas.  The Company has recorded its  investment in and note  receivable  from
Westrec at the sum of the amount for which the Company can re-sell its  interest
in Westrec plus the  outstanding  balance of the note  receivable.  In 1998, the
Company expensed $500,000 for due diligence,  legal, and other costs incurred in
connection with investigating investments in marinas.

L.       Secured Long-Term Notes Payable

The following table summarizes the Company's secured long-term notes payable (in
thousands):
<TABLE>
<CAPTION>

                                                                                               December 31,
                                                                                      -------------------------------
                                                                                          1999              1998
                                                                                      -------------      ------------
Fixed rate, ranging from 6.70% to 7.77%, fully-amortizing, non-recourse notes
<S>                                                                                       <C>             <C>
   maturing at various dates in 2019                                                      $ 12,815        $      --
7.67% fixed rate, partially-amortizing, non-recourse note maturing in 2007                   2,950               --
Recourse, fully-amortizing note discounted at 7.00%, maturing in 2002                        4,677               --
                                                                                          --------        ---------
                                                                                          $ 20,442        $      --
                                                                                          ========        =========
</TABLE>

Real estate assets which secure the long-term notes payable had a net book value
of $35,326,000 at December 31, 1999. The Company had $522,000 in escrow for real
estate taxes and property improvements at December 31, 1999.

                                     F - 38
<PAGE>

Scheduled  principal  payments after December 31, 1999 for the secured long-term
notes payable are (in thousands):

                          2000                        $   1,218
                          2001                            2,098
                          2002                            2,453
                          2003                              419
                          2004                              449
                          Thereafter                     13,805
                                                      ---------
                                                      $  20,442
                                                      =========

M.       Stock Option Plan

The Company has a Stock Incentive Plan for the issuance of  non-qualified  stock
options to its  directors and officers,  employees and  consultants  which as of
December  31,  1999,  permitted  the issuance of up to an aggregate of 3,000,000
shares of Common  Stock,  of which  331,000 and 454,000  related to  outstanding
stock options as of December 31, 1999 and 1998, respectively. The exercise price
for stock  options  may not be less than  100% of the fair  market  value of the
shares of Common Stock at the date of the grant.  The stock options have various
terms ranging up to 10 years.

Presented below is a summary of the changes in stock options for the three years
ended December 31, 1999. As of December 31, 1999, the  outstanding  options have
exercise   prices   ranging   from   $5.625  to  $6.625  and  have  a  remaining
weighted-average life of 3.0 years.
                                                                        Weighted
                                                                        Average
                                                 Exercise Price         Shares
                                                 --------------         ------
Outstanding - December 31, 1996                      $ 6.80             648,000
     Granted                                           6.30              87,000
     Forfeited                                         7.30             (13,000)
     Exercised                                         6.12              (5,000)
                                                     ------          ----------
Outstanding - December 31, 1997                        6.74             717,000
     Granted                                           6.62              38,000
     Forfeited                                         7.50            (290,000)
     Expired                                           7.25             (11,000)
                                                     ------          ----------
Outstanding - December 31, 1998                        6.23             454,000
     Granted                                           6.50              38,000
     Expired                                           6.32            (161,000)
                                                     ------          ----------
Outstanding - December 31, 1999                      $ 6.22             331,000
                                                     ======          ==========

Options  granted  to date vest  over  various  periods  up to two  years.  As of
December 31, 1999, 1998 and 1997, 331,000, 445,000 and 660,000, respectively, of
the outstanding options were exercisable and the weighted average exercise price
of exercisable options was $6.22, $6.22 and $6.78, respectively.

The Company has elected to follow  Accounting  Principles  Board Opinion No. 25,
"Accounting for Stock Issued to Employees" (APB 25) and related  Interpretations
in accounting for its employee stock options  rather than the  alternative  fair
value  accounting  provided for under SFAS No. 123,  "Accounting for Stock-Based
Compensation."  Under  APB 25,  because  the  exercise  price  of the  Company's
employee stock options  equals the market price of the  underlying  stock on the
date of grant, no compensation expense is recognized.

Pro forma information regarding net income and earnings per share is required by
SFAS No. 123, and has been  determined  as if the Company had  accounted for its
employee stock options under the fair value method of that  Statement.  The fair


                                     F - 39
<PAGE>

value  for  these   options  was  estimated  at  the  date  of  grant  using  an
option-pricing model with the following weighted average assumptions:

<TABLE>
<CAPTION>

                                                             1999                   1998                  1997
                                                     -------------------    -------------------    ------------------
<S>                                                     <C>                    <C>                   <C>
Range of risk free interest rates                       5.3% to 6.5%           5.8% to 6.1%          5.7% to 6.8%
Expected dividend yield                                    9.8%                   8.3%                  10.0%
Volatility factor of the expected market price of
    the Company's common stock                             0.200                  0.200                  0.200
Weighted average expected life of options                10.0 years             10.0 years             5.0 years

</TABLE>

Option  valuation  models  require  the input of highly  subjective  assumptions
including  the expected  stock price  volatility.  Because the  Company's  stock
options  have  characteristics  significantly  different  from  those of  traded
options,  and because changes in the subjective input assumptions can materially
affect the fair value estimate,  in management's opinion, the existing models do
not  necessarily  provide a  reliable  single  measure  of the fair value of its
employee stock options.

During 1999,  1998 and 1997,  the estimated  weighted-average,  grant-date  fair
value of options  granted  was $.26,  $.41 and $.47,  respectively.  The Company
assumed  lives of five to ten years and  risk-free  interest  rates equal to the
Five- or  Ten-Year  U.S.  Treasury  rate on the date the  options  were  granted
depending on option term. In addition,  the expected stock price  volatility and
dividend growth rates were estimated based upon historical averages over the two
years ended  December 31, 1999,  adjusted for changes  based upon the  Company's
investment in manufactured home community assets.

For purposes of pro forma  disclosures,  the estimated fair value of the options
is amortized to expense over the options'  vesting  period.  The  Company's  pro
forma information follows (in thousands except for per share data):

<TABLE>
<CAPTION>

                                                                       1999              1998             1997
                                                                   -----------       -----------      ------------
<S>                                                                  <C>               <C>              <C>
Pro forma net income                                                 $ 2,514           $3,426           $ 13,664
Pro forma basic earnings per share                                   $  0.24           $ 0.33           $   1.32
Pro forma diluted earnings per share                                 $  0.24           $ 0.33           $   1.31
</TABLE>

N.       Management Fees

The Company operates under a management agreement, pursuant to which the manager
advises the Company on its business and oversees its daily  operations,  subject
to the supervision of the Company's Board of Directors. Asset Investors has been
the manager since  November 1997.  The  Management  Agreement  provides that the
manager receives a "Base Fee," an "Acquisition  Fee" and an "Incentive Fee." The
Base  Fee is  payable  quarterly  in an  amount  equal  to 1% per  annum  of the
Company's average net book value of real estate-related  assets. The Acquisition
Fee equals 0.5% of the cost of each real estate-related asset acquired. For 1997
and 1998, the Incentive Fee equals 20% of the amount by which the Company's REIT
taxable  income  exceeds the amount  calculated  by  multiplying  the  Company's
"average  net worth" by the  "Ten-Year  United  States  Treasury  rate" plus 1%.
During 1999, the Incentive Fee was amended to provide that this fee was based on
the Company's Funds From Operations,  less an annual capital replacement reserve
of at least $50 per  developed  homesite,  instead of REIT  income.  In general,
Funds From Operations is equal to net income plus depreciation, amortization and
acquisition  fees. In 1997, the manager also received  "Administrative  Fees" on
each CMBS bond  outstanding.  Administrative  Fees were terminated in connection
with the November 1997 restructuring of the CMBS bond portfolio.  The Management
Agreement has been extended through December 31, 2000. The terms are the same as
provided for in 1999.

                                     F - 40
<PAGE>

Fees paid to the manager during 1999, 1998 and 1997 were (in thousands):
<TABLE>
<CAPTION>

                                          1999               1998               1997
                                     ---------------    ---------------     --------------
<S>                                      <C>                <C>                <C>
Base Fees                                $  565             $   87             $    598
Acquisition Fees                            205                124                   23
Incentive Fees                               --                 --                1,024
Administrative Fees                          --                 --                   56
                                         ------             ------             --------
                                         $  770             $  211             $  1,701
                                         ======             ======             ========
</TABLE>

Acquisition  Fees  incurred  in 1997  were  capitalized  as part of the  cost of
acquiring CMBS bonds. In addition,  the Company  incurred  $426,000 of Incentive
Fees in 1997  relating  to the  gain on the  restructuring  of the  CMBS  bonds.
Acquisition  Fees incurred in 1999 and 1998 were expensed because such fees were
paid to Asset Investors, owner of 27% of the Company's Common Stock.

O.       Commitments and Contingencies

In connection with the acquisition of a manufactured home community, the Company
entered into an earn-out agreement with respect to 154 unoccupied homesites. The
Company will pay $17,000 to the former owner for each newly  occupied  homesite.
During  1999 and 1998,  the  Company  paid  $17,000  and $0,  respectively,  for
homesites that became occupied.

The Company has agreed to acquire from time-to-time  homesites subject to ground
leases.  The purchase  price for each  homesite will be equal to the base annual
rent provided for in the ground lease divided by 9%. The Company is not required
to acquire  these  homesites  in groups of less than 10. The  maximum  number of
homesites  the  Company   might   purchase  is   approximately   500  for  total
consideration of approximately  $20 million.  The Company purchased no homesites
during 1999 or 1998.

The Company has agreed to invest up to an  additional  $680,000 in a real estate
joint  venture in four  equal,  annual  installments  of $170,000  beginning  in
November 2000.

In connection  with the  acquisition of a property,  the Company entered into an
earn-out  agreement  whereby it will pay the former owner an amount equal to the
increase  in the  property's  net  operating  income  divided  by 9.5% until the
Company pays a total of $2,160,000. No amount was paid during 1999.

In September  1999,  four of the  Company's  stockholders,  individually  and as
purported representatives of the Company's stockholders,  except Asset Investors
and its  affiliates,  filed three  purported  class action  lawsuits in Delaware
against the Company,  the members of the board of directors and certain officers
of Asset Investors and the Company.  These lawsuits  alleged that the defendants
breached their fiduciary duties to the Company's stockholders in connection with
the Company's  proposed  merger with Asset  Investors  and the Company's  recent
reincorporation in Delaware.  In November 1999, these lawsuits were consolidated
into a single  lawsuit.  On March 7, 2000, the parties entered into a settlement
agreement,  subject to the court's approval which,  amended the merger agreement
as follows:

o    the Company's stockholders, other than Asset Investors and the officers and
     directors of Asset Investors and the Company, may elect to receive $5.75 in
     cash per share for up to  3,549,868  shares of the  Company's  Common Stock
     with any  remaining  shares to  receive  0.4075  shares of Asset  Investors
     common stock; and
o    the percentage of votes of the Company's Common Stock needed to approve the
     merger was increased from a majority to two-thirds.

P.       Operating Segments

Investments in manufactured home communities constitute substantially all of the
Company's investments. Management assesses the performance of the Company as one
operating segment.

                                     F - 41
<PAGE>

Q.       Fair Value of Financial Instruments

The following  methods and  assumptions  were used to estimate the fair value of
each  type of  financial  instrument.  The  estimates  of fair  value  have been
determined  by the Company  using  available  market  information  and valuation
methodologies.

o    Cash and cash equivalents,  accounts payable and accrued  liabilities,  and
     secured short-term  financing - the carrying amounts approximate fair value
     because of the short maturity of these instruments.
o    Investment in Asset  Investors - the fair value was  determined  based upon
     the closing  price of Asset  Investors  common  stock on the New York Stock
     Exchange, Inc. as of the end of 1999.
o    Secured  long-term  notes payable - based upon  borrowing  rates  currently
     available to the Company, the carrying value of its secured long-term notes
     payable approximates their fair value.

The  carrying  values  and fair  values  of the  Company's  investment  in Asset
Investors at December 31, 1999 is as follows (in thousands):

                                                                 1999
                                                ------------------------------
                                                Carrying Value      Fair Value
                                                --------------      ----------
     Investment in Asset Investors              $ 1,396,000        $ 1,270,000
                                                ===========        ===========

R.       Other Matters

The  Company's  Charter  authorizes  the Board of Directors to issue  25,000,000
shares,  par value $.01 per share, of preferred stock. The Board of Directors is
authorized  to fix the  terms of the  preferred  stock,  including  preferences,
powers and rights (including voting rights) senior to the Common Stock. To date,
the Company has not issued any shares of preferred stock.

S.       Selected Quarterly Financial Data (unaudited)

Presented  below  is  selected  quarterly  financial  data for the  years  ended
December 31, 1999 and 1998 (in thousands, except per share data).

<TABLE>
<CAPTION>

                                                                          Three Months Ended,
                                                    -----------------------------------------------------------------
 1999                                                 December 31,     September 30,      June 30,         March 31,
--------------------------------------------------- -------------- ----------------- --------------- ----------------

<S>                                                     <C>            <C>              <C>              <C>
Rental and other property revenues                      $ 1,156        $    945         $    437         $     --
Income from participating mortgages and leases              326             455              603              587
Property operating expenses                                (512)           (428)            (174)              --
Depreciation                                               (493)           (465)            (232)             (89)
                                                        -------        --------          -------         --------
Income from rental property operations                      477             507              634              498
                                                      ---------        --------          -------         --------

Interest and other income                                   343             349              520              701
General and administrative expenses                        (115)           (131)            (140)            (133)
Related-party management fees                              (190)           (181)            (114)             (80)
Interest expense                                           (154)            (61)             (58)              --
Related-party acquisition fees                               (8)             (3)            (152)             (42)
Net income                                                  400             408              734              982

Basic and diluted earnings per share                        .04             .04              .07              .09

Weighted average common shares outstanding               10,320          10,325           10,362           10,364
Weighted average common shares and common share
   equivalents outstanding                               10,320          10,325           10,362           10,365

                                     F - 42
<PAGE>

                                                                          Three Months Ended,
                                                    -----------------------------------------------------------------
1998                                                 December 31,     September 30,      June 30,         March 31,
--------------------------------------------------- -------------- ----------------- --------------- ----------------
Income from participating mortgages and leases          $   436        $    151         $     --         $     --
Depreciation                                                (46)             (4)              --               --
                                                        -------        --------          -------         --------
Income from rental property operations                      390             147               --               --
                                                        -------        --------          -------         --------

Interest and other income                                   767           1,012            1,042            1,053
General and administrative expenses                        (117)           (129)             (88)             (86)
Related-party management fees                               (47)            (23)             (12)              (5)
Related-party acquisition fees                              (63)            (61)              --               --
Costs related to abandonment of potential marina
   investments                                               --            (500)              --               --
Net income                                                  967             486              986            1,002

Basic and diluted earnings per share                        .09             .05              .09              .10

Weighted average common shares outstanding               10,364          10,364           10,359           10,342
Weighted average common shares and common share
   equivalents outstanding                               10,366          10,373           10,387           10,378

</TABLE>

T.       Recent Accounting Developments

In June 1998,  the  Financial  Accounting  Standards  Board issued  Statement of
Financial  Accounting  Standards No. 133. Accounting for Derivative  Instruments
and Hedging Activities  ("Statement 133").  Statement 133 requires recording all
derivative  instruments  as  assets  or  liabilities,  measured  at fair  value.
Statement 133 is effective  beginning after 2000. The Company has elected not to
early adopt the  provisions  of  Statement  133 as of December 31, 1999 and when
Statement  133 is adopted,  the Company does not expect  Statement 133 to have a
significant impact on its financial position and results of operations.






                                     F - 43
<PAGE>







                             COMMERCIAL ASSETS, INC.
                                  SCHEDULE III
                    REAL ESTATE AND ACCUMULATED DEPRECIATION
                                December 31, 1999
                         (In Thousands Except Site Data)


<TABLE>
<CAPTION>

                                                                                                    December 31, 1999
                                                                                      ----------------------------------------------
                                                                             Cost                                    Total
                                                                           Capital-                                   Cost
                                                             Initial Cost    ized       Total Cost                   Net of
                                                          ---------------- Subsequ- ---------------------  Accumu-  Accumu-
                                                   Number       Buildings    uent         Buildings          lated    lated
                   Date                     Year     of           and         to             and            Depreci- Depreci- Encum-
 Property Name   Acquired  Location      Developed Sites Land Improvements Acquis.  Land Improvements Total  ation    ation  brances
 ---------------------------------------------------------------------------------------------------------------------------------
<S>                <C>    <C>              <C>    <C>   <C>    <C>        <C>      <C>    <C>        <C>    <C>     <C>       <C>
Casa Encanta       1999   Mesa, AZ         1970    106  $  315 $ 1,152   $    --  $  315  $ 1,152 $ 1,467   $  17  $  1,450  $    --
Cypress Greens     1998   Lakeland, FL     1986    107     240   1,129        28     240    1,157   1,397      60     1,337       --
Desert Harbor      1999   Apache Junction, 1997    207     621   6,169       700   1,058    6,432   7,490     124     7,366    4,677
                          AZ
Fiesta Development 1999   Mesa, AZ           --    206   4,804      --       136   4,804      136   4,940      --     4,940       --
Fiesta Village     1999   Mesa, AZ         1962    170     498   4,029        --     498    4,029   4,527      61     4,466    2,950
La Casa Blanca     1999   Apache Junction, 1993    198     594   6,698        91     594    6,789   7,383     133     7,250       --
                          AZ
La Casa Mini       1999   Apache Junction,   --     --     495     175        --     495      175     670       1       669       --
  Storage                 AZ
Lakeshore Utilities1999   Tampa, FL          --     --      50     100        --      50      100     150       3       147       --
Lakeshore Villas   1999   Tampa, FL        1972    290     870   6,990       293     870    7,283   8,153     219     7,934    5,041
Marina Dunes       1999   Marina, CA         --     --     306      --        13     306       13     319      --       319       --
Rancho Mirage      1999   Apache Junction, 1994    312     930  10,879       108     930   10,987  11,917     290    11,627       --
                          AZ
Riverside          1998   Ruskin, FL       1984    990   3,558   7,744       122   3,558    7,866  11,424     344    11,080    5,478
Royal Palm         1999   Haines City, FL  1971    450   1,383   3,027       131   1,383    3,158   4,541      61     4,480    2,296
Southern Palms     1999   Mesa, AZ         1961     36     189   1,035        --     189    1,035   1,224      16     1,208       --
                                                 -----------------------------------------------------------------------------------
              Total                              3,072 $14,853 $49,127   $ 1,622 $15,290  $50,312 $65,602  $1,329   $64,273  $20,442
                                                 ===================================================================================
</TABLE>




                                     F - 44
<PAGE>




                             COMMERCIAL ASSETS, INC.
                                  SCHEDULE III
                    REAL ESTATE AND ACCUMULATED DEPRECIATION
              For the Years Ended December 31, 1999, 1998 and 1997
                                 (in thousands)

<TABLE>
<CAPTION>

                                                                                     Year Ended December 31,
                                                                                     -----------------------
                                                                             1999              1998             1997
                                                                             ----              ----             ----
Real Estate
<S>                                                                       <C>               <C>              <C>
    Balance at beginning of year                                          $   12,678        $       --       $      --
    Additions during the year:
       Real estate acquisitions                                               51,309            12,671              --
       Additions                                                               1,615                 7              --
    Dispositions                                                                  --                --              --
                                                                          ----------        ----------       ---------
    Balance at end of year                                                $   65,602        $   12,678       $      --
                                                                          ==========        ==========       =========


Accumulated Depreciation
    Balance at beginning of year                                          $      (50)       $       --       $      --
    Additions during the year:
       Depreciation                                                           (1,279)              (50)             --
    Dispositions                                                                  --                --              --
                                                                          ----------        ----------       ---------
    Balance at end of year                                                $   (1,329)       $      (50)      $      --
                                                                          ==========        ==========       =========


</TABLE>



                                     F - 45
<PAGE>




                                               COMMERCIAL ASSETS, INC.
                                                     SCHEDULE IV
                                            MORTGAGE LOANS ON REAL ESTATE
                                                  December 31, 1999
                                                    (in thousands)


<TABLE>
<CAPTION>

                                                                                                           Principal
                                                                                                           Amount of
                                                                                                             Loans
                                                                                                          Subject to
                                      Final       Periodic                  Face          Carrying        Delinquent
                        Interest     Maturity     Payment     Prior      Amount of        Amount of      Principal or
    Description           Rate         Date        Terms      Liens      Mortgages        Mortgages        Interest
---------------------  ------------  ----------  ----------  ---------  --------------  ---------------  ---------------
<S>                        <C>          <C>           <C>     <C>         <C>             <C>                <C>
Savanna Club               10%          9/2018        (1)     $   --      $   1,896       $    1,913         $      --
Sun Lake                   10%          9/2018        (1)         --            222              235                --
                                                             ---------  --------------  ---------------  ---------------
                                                              $   --      $   2,118       $    2,148         $      --
<FN>
                                                             =========  ==============  ===============  ===============

(1)      Interest is paid from any cash flows from the property.

</FN>
</TABLE>



                                     F - 46
<PAGE>




                             COMMERCIAL ASSETS, INC.
                                   SCHEDULE IV
                          MORTGAGE LOANS ON REAL ESTATE
              For the Years Ended December 31, 1999, 1998 and 1997
                                 (in thousands)


<TABLE>
<CAPTION>


                                                                                      Year Ended December 31,
                                                                                      -----------------------
                                                                              1999             1998             1997
                                                                              ----             ----             ----

<S>                                                                        <C>              <C>              <C>
    Balance at beginning of period                                         $    9,328       $       --       $      --

    Additions during period:
       Investments in participating mortgages                                   1,866            8,913              --
       Accrued interest                                                           925              371              --
       Loan costs                                                                  --               70              --
    Deductions during period:
       Collections of principal                                                  (486)             (20)             --
       Collections of interest                                                   (503)              (2)             --
       Amortization of loan costs                                                  (4)              (4)             --
       Cancellation of debt in connection with purchase of property            (8,978)              --              --
                                                                           ----------       ----------       ---------

    Balance at close of period                                             $    2,148       $    9,328       $      --
                                                                           ==========       ==========       =========

</TABLE>




                                     F - 47
<PAGE>




                                          EXHIBIT INDEX


Exhibit No.                                Description

      2.1         Agreement  and Plan of  Merger,  dated as of March  15,  1999,
                  between Asset Investors  Corporation,  a Maryland  corporation
                  and  Asset  Investors  Corporation,   a  Delaware  corporation
                  (incorporated  herein  by  reference  to  Exhibit  2.1  to the
                  Registrant's  Current  Report on Form 8-K, dated May 26, 1999,
                  Commission File No. 1-9360, filed on May 26, 1999).

      2.2         Agreement and Plan of Merger,  dated as of August 31, 1999, by
                  and  between  the  Registrant  and  Commercial  Assets,   Inc.
                  (incorporated  herein  by  reference  to  Exhibit  2.1  to the
                  Current  Report on Form 8-K dated August 31, 1999,  Commission
                  File No. 1-9360, filed on September 3, 1999).

      2.3         Form of Mobile Home Park Purchase and Sale Agreement  dated as
                  of  May  13,  1997,   entered  into  in  connection  with  the
                  acquisition of six manufactured home communities (incorporated
                  herein by  reference  to Exhibit 2.1 to the Current  Report on
                  Form 8-K dated May 14, 1997, Commission File No.
                  1-9360, filed on May 28, 1997).

     2.1(a)       Royal Palm Joint Venture  Agreement  dated as of May 13, 1997,
                  by and between  Royal Palm  Village,  LLC and Asset  Investors
                  Operating Partnership, LP (incorporated herein by reference to
                  Exhibit 2.1(a) to the Current Report on Form 8-K dated May 14,
                  1997, Commission File No. 1-9360, filed on May 28, 1997).

     2.1(b)       Form of Assignment  and Assumption  Agreement  dated as of May
                  13, 1997,  entered into in connection  with the acquisition of
                  Prime-Forest  Partners  (incorporated  herein by  reference to
                  Exhibit 2.1(b) to the Current Report on Form 8-K dated May 14,
                  1997, Commission File No. 1-9360, filed on May 28, 1997).

      2.2         Promissory  Note dated as of July 30, 1997, by and between the
                  Registrant and Lost Dutchman Parks, LLC  (incorporated  herein
                  by reference to Exhibit 2.2 to the Current  Report on Form 8-K
                  dated July 30,  1997,  Commission  File No.  1-9360,  filed on
                  August 12, 1997).

     2.2(a)       Combination  Deed of  Trust,  Assignment  of  Rents,  Security
                  Agreement and Fixture Financing Statement dated as of July 30,
                  1997, by and between the Registrant  and Lost Dutchman  Parks,
                  LLC (incorporated herein by reference to Exhibit 2.2(a) to the
                  Current  Report on Form 8-K dated  July 30,  1997,  Commission
                  File No. 1-9360, filed on August 12, 1997).

     2.2(b)       Assumption  Agreement and Note  Modification  dated as of July
                  30,  1997,  by and between the  Registrant  and Lost  Dutchman
                  Parks, LLC (incorporated herein by reference to Exhibit 2.2(b)
                  to the  Current  Report  on Form  8-K  dated  July  30,  1997,
                  Commission File No. 1-9360, filed on August 12, 1997).

     2.2(c)       Commitment  Letter dated as of July 10,  1997,  by and between
                  the  Registrant  and Lost Dutchman  Parks,  LLC  (incorporated
                  herein by reference to Exhibit 2.2(c) to the Current Report on


                                     - 36 -
<PAGE>

                  Form 8-K dated  July 30,  1997,  Commission  File No.  1-9360,
                  filed on August 12, 1997).

      2.3         Form of Joint  Venture  Agreement  dated as of  September  30,
                  1997, between Asset Investors Operating Partnership,  L.P. and
                  Community    Acquisition    and    Development     Corporation
                  (incorporated  herein  by  reference  to  Exhibit  2.3  to the
                  Current Report on Form 8-K dated October 30, 1997,  Commission
                  File No. 1-9360, filed on November 13, 1997).

     2.3(a)       Earn-Out  Agreement dated October 30, 1997,  between Community
                  Casa del Mar Joint Venture, Wilder Corporation of Delaware and
                  AIC Community Management  Partnership  (incorporated herein by
                  reference to Exhibit  2.3(a) to the Current Report on Form 8-K
                  dated October 30, 1997, Commission File No.
                  1-9360, filed on November 13, 1997).

     2.3(b)       Form of Agreement of Sale dated as of August 22, 1997, between
                  Community  Acquisition and Development  Partnership and Wilder
                  Corporation of Delaware  (incorporated  herein by reference to
                  Exhibit 2.3(b) to the Current Report on Form 8-K dated October
                  30, 1997, Commission File No.
                  1-9360, filed on November 13, 1997).

      2.4         Contribution  Agreement dated as of February 27, 1998, between
                  Asset   Investors   Operating   Partnership,   L.P.  and  Roth
                  Associates of New Jersey  (incorporated herein by reference to
                  Exhibit 2.4 to the Current  Report on Form 8-K dated  February
                  27,  1998,  Commission  File No.  1-9360,  filed on March  13,
                  1998).

     2.4(a)       Contribution  Agreement dated as of February 27, 1998, between
                  Asset  Investors  Operating  Partnership,  L.P. and Salem Farm
                  Mobile Home Park,  Inc.  (incorporated  herein by reference to
                  Exhibit  2.4(a)  to the  Current  Report  on  Form  8-K  dated
                  February 27, 1998, Commission File No.
                  1-9360, filed on March 13, 1998).

      2.5         Agreement  of  Sale  dated  as  of  April  13,  1998,  between
                  Community    Acquisition   Joint   Venture   and   Serendipity
                  Properties, Inc., (incorporated herein by reference to Exhibit
                  2.5 to the  Registrant's  Current Report on Form 8-K dated May
                  29, 1998, Commission File No. 1-9360, filed on June 12, 1998).

     2.5(a)       Assignment  of  Agreement  of Sale  dated as of May 20,  1998,
                  between   Community   Acquisition   Joint  Venture  and  Asset
                  Investors Operating Partnership,  L.P. (incorporated herein by
                  reference to Exhibit 2.5(a) to the Registrant's Current Report
                  on Form 8-K dated May 29, 1998,  Commission  File No.  1-9360,
                  filed on June 12, 1998).

      2.6         Purchase Agreement with Escrow Instructions, as amended, dated
                  as of April 14, 1998 between Brentwood West Partners,  LLP and
                  Parkbridge  Capital  Group,  Inc.   (incorporated   herein  by
                  reference to Exhibit 2.6 to the Registrant's Current Report on
                  Form 8-K dated May 29, 1998, Commission File No. 1-9360, filed
                  on June 12, 1998).

     2.6(a)       Conditional Assignment of Contract dated as of April 17, 1998,
                  between   Parkbridge   Capital   Group,   Inc.  and  Community


                                     - 37 -
<PAGE>

                  Acquisition Development  Corporation.  (incorporated herein by
                  reference to Exhibit 2.6(a) to the Registrant's Current Report
                  on Form 8-K dated May 29, 1998,  Commission  File No.  1-9360,
                  filed on June 12, 1998).

     2.6(b)       Assignment  of  Agreement  of Sale  dated as of June 1,  1998,
                  between   Community   Acquisition   Joint  Venture  and  Asset
                  Investors Operating Partnership,  L.P. (incorporated herein by
                  reference to Exhibit 2.6(b) to the Registrant's Current Report
                  on Form 8-K dated May 29, 1998,  Commission  File No.  1-9360,
                  filed on June 12, 1998).

      2.7         Agreement of Sale dated as of May 13, 1998, between HFIC, INC.
                  and  Gulfstream  Harbor,  Inc. and  Gulfstream  Harbor II Inc.
                  (incorporated  herein  by  reference  to  Exhibit  2.7  to the
                  Registrant's  Current  Report on Form 8-K dated July 16, 1998,
                  Commission File No. 1-9360, filed on July 30, 1998).

     2.7(a)       Assignment  of  Agreement  of Sale dated as of July 15,  1998,
                  between HFIC,  INC. and AIOP  Gulfstream  Harbor,  LLC.,  AIOP
                  Gulfstream Outlot I, L.L.C., AIOP Gulfstream Outlot II, L.L.C.
                  and AIOP Gulfstream Outlot III, L.L.C. (incorporated herein by
                  reference to Exhibit 2.7(a) to the Registrant's Current Report
                  on Form 8-K dated July 16, 1998,  Commission  File No. 1-9360,
                  filed on July 30, 1998).

      2.8         Contribution  Agreement dated effective as of January 1, 2000,
                  by and among Asset Investors Operating Partnership, L.P., CADC
                  Holding  L.L.C.  and  Community  Acquisition  and  Development
                  Corporation  (incorporated  herein by reference to Exhibit 2.8
                  to the  Registrant's  Current Report on Form 8-K dated January
                  31, 2000,  Commission  File No. 1-9360,  filed on February 15,
                  2000).

      2.8(a)      Purchase and Sale Agreement  dated  effective as of January 1,
                  2000, by and between Asset  Investors  Operating  Partnership,
                  L.P. and Community  Acquisition  and  Development  Corporation
                  (incorporated  herein by  reference  to Exhibit  2.8(a) to the
                  Registrant's  Current  Report  on Form 8-K dated  January  31,
                  2000, Commission File No. 1-9360, filed on February 15, 2000).

    2.8(b)        Purchase and Sale Agreement  dated  effective as of January 1,
                  2000,  by and between  Prime  Forest  Partners  and  Community
                  Acquisition and Development  Corporation  (incorporated herein
                  by reference  to Exhibit  2.8(b) to the  Registrant's  Current
                  Report on Form 8-K dated January 31, 2000, Commission File No.
                  1-9360, filed on February 15, 2000).

    2.8(c)        Purchase and Sale Agreement  dated  effective as of January 1,
                  2000, by and between Asset  Investors  Operating  Partnership,
                  L.P. and Community  Acquisition  and  Development  Corporation
                  (incorporated  herein by  reference  to Exhibit  2.8(c) to the
                  Registrant's  Current  Report  on Form 8-K dated  January  31,
                  2000, Commission File No. 1-9360, filed on February 15, 2000).

    2.8(d)        Asset  Purchase  Agreement  dated  effective  as of January 1,
                  2000,  by  and  between  AIC  Homesales  Corp.  and  Community
                  Acquisition and Development  Corporation  (incorporated herein
                  by reference  to Exhibit  2.8(d) to the  Registrant's  Current
                  Report on Form 8-K dated January 31, 2000, Commission File No.
                  1-9360, filed on February 15, 2000).

      3.1         Amended and Restated  Certificate  of  Incorporation  of Asset
                  Investors  Corporation  (incorporated  herein by  reference to
                  Exhibit 3.1 to the  Registrant's  Current  Report on Form 8-K,
                  dated May 26, 1999,  Commission File No. 1-9360,  filed on May
                  26, 1999).

      3.2         Amended and Restated  By-laws of Asset  Investors  Corporation
                  (incorporated  herein  by  reference  to  Exhibit  3.2  to the


                                     - 38 -
<PAGE>

                  Registrant's  Current  Report on Form 8-K, dated May 26, 1999,
                  Commission File No. 1-9360, filed on May 26, 1999).

     10.1*        Form of  Indemnification  Agreement between the Registrant and
                  each  Director  of  the  Registrant  (incorporated  herein  by
                  reference  to  Appendix  A  to  the  Proxy  Statement  of  the
                  Registrant, Commission File No. 1-9360, dated May 18, 1987).

     10.2*        1998  Stock  Incentive  Plan of the  Registrant  (incorporated
                  herein by reference to Exhibit 10.3 to the Quarterly Report on
                  Form 10-Q of the  Registrant  for the  quarter  ended June 30,
                  1998, Commission File No. 1-9360, filed on August 14, 1998).

      10.4        Trust  Agreement  dated  as  of  March  26,  1997,  among  the
                  Registrant,  as depositor,  Asset Investors  Secured Financing
                  Corporation  and Wilmington  Trust  Company,  as Owner Trustee
                  (incorporated  herein by reference  to Exhibit  10.5(a) to the
                  Quarterly  Report  on  Form  10-Q  of the  Registrant  for the
                  quarter  ended March 31,  1997,  Commission  File No.  1-9360,
                  filed on May 14, 1997).

    10.4(a)       Pooled  Certificate  Transfer Agreement between the Registrant
                  and Asset Investors Secured Financing  Corporation dated as of
                  March 26, 1997  (incorporated  herein by  reference to Exhibit
                  10.5(b) to the Quarterly Report on Form 10-Q of the Registrant
                  for the quarter  ended  March 31,  1997,  Commission  File No.
                  1-9360, filed on May 14, 1997).

    10.4(b)       Indenture,  dated as of March  27,  1997,  between  Structured
                  Mortgage  Trust 1997-1 and State Street Bank and Trust Company
                  (incorporated  herein by reference  to Exhibit  10.5(c) to the
                  Quarterly  Report  on  Form  10-Q  of the  Registrant  for the
                  quarter  ended March 31,  1997,  Commission  File No.  1-9360,
                  filed on May 14, 1997).

    10.4(c)       Note  Purchase  Agreement,  dated as of March 26, 1997,  among
                  Structured  Mortgage  Trust 1997-1,  Asset  Investors  Secured
                  Financing   Corporation   and  Bear,   Stearns   &  Co.   Inc.
                  (incorporated  herein by reference  to Exhibit  10.5(d) to the
                  Quarterly  Report  on  Form  10-Q  of the  Registrant  for the
                  quarter  ended March 31,  1997,  Commission  File No.  1-9360,
                  filed on May 14, 1997).

    10.4(d)       Trust Certificate  issued to Asset Investors Secured Financing
                  Corporation   evidencing   its  ownership  of  the  Structured
                  Mortgage  Trust  1997-1  (incorporated  herein by reference to
                  Exhibit  10.5(e) to the  Quarterly  Report on Form 10-Q of the
                  Registrant  for the quarter  ended March 31, 1997,  Commission
                  File No. 1-9360, filed on May 14, 1997).

      10.5        Asset  Contribution  Agreement  dated as of  September 8, 1997
                  between the Registrant, Asset Investors Operating Partnership,
                  L.P., and Financial Asset Management, LLC (incorporated herein
                  by reference to Exhibit 10.6 to the  Quarterly  Report on Form
                  10-Q of the  Registrant  for the quarter  ended  September 30,
                  1997, Commission File No. 1-9360, filed on November 12, 1997).

      10.6        Loan  Agreement  dated as of July 16, 1998,  by and among AIOP
                  Brentwood West, L.L.C.; AIOP Lost Dutchman Notes, L.L.C.; AIOP
                  Mullica,   L.L.C.;   AIOP  Gulfstream  Harbor,   L.L.C.;  AIOP
                  Gulfstream  Outlot  I,  L.L.C.;  AIOP  Gulfstream  Outlot  II,
                  L.L.C.;   AIOP  Gulfstream   Outlot  III,  L.L.C.;   and  AIOP
                  Serendipity,  L.L.C.,  and Salomon  Brothers  Realty Corp. and
                  LaSalle  National  Bank  (incorporated  herein by reference to
                  Exhibit 10.7 to the  Registrant's  Current  Report on Form 8-K


                                     - 39 -
<PAGE>

                  dated July 16, 1998, Commission File No. 1-9360, filed on July
                  30, 1998).

    10.6(a)       Promissory  Note dated as of July 16, 1998,  between AIOP Lost
                  Dutchman  Notes,  L.L.C.;  AIOP Brentwood West,  L.L.C.;  AIOP
                  Mullica,   L.L.C.;   AIOP  Gulfstream  Harbor,   L.L.C.;  AIOP
                  Gulfstream  Outlot  I,  L.L.C.;  AIOP  Gulfstream  Outlot  II,
                  L.L.C.;   AIOP  Gulfstream   Outlot  III,  L.L.C.;   and  AIOP
                  Serendipity,   L.L.C.,   and  Salomon  Brothers  Realty  Corp.
                  (incorporated  herein by reference  to Exhibit  10.7(a) to the
                  Registrant's  Current  Report on Form 8-K dated July 16, 1998,
                  Commission File No.
                  1-9360, filed on July 30, 1998).

    10.6(b)       Pledge  Agreement and Limited  Recourse  Guaranty  dated as of
                  July 16,  1998 by and among the  Registrant,  Asset  Investors
                  Operating Partnership,  L.P. and Salomon Brothers Realty Corp.
                  (incorporated  herein by reference  to Exhibit  10.7(b) to the
                  Registrant's  Current  Report on Form 8-K dated July 16, 1998,
                  Commission File No. 1-9360, filed on July 30, 1998).

      10.7        Credit  Agreement dated as of September 1, 1998,  between U.S.
                  Bank  National   Association  and  Asset  Investors  Operating
                  Partnership,  L.P. and the Registrant  (incorporated herein by
                  reference to Exhibit 10.7 to the Annual Report on Form 10-K of
                  the  Registrant  for the fiscal year ended  December 31, 1998,
                  Commission File No. 1-9360, filed on March 24, 1999).

    10.7(a)       Promissory  Note dated as of September  1, 1998,  between U.S.
                  Bank  National   Association  and  Asset  Investors  Operating
                  Partnership,  L.P. and the Registrant  (incorporated herein by
                  reference to Exhibit 10.7 to the Annual Report on Form 10-K of
                  the  Registrant  for the fiscal year ended  December 31, 1998,
                  Commission File No. 1-9360, filed on March 24, 1999).

      10.8        Loan  Agreement  dated  December  1, 1998,  between  AIOP Lost
                  Dutchman Notes, L.L.C., Asset Investors Operating Partnership,
                  L.P.,  the  Registrant  and  U.S.  Bank  National  Association
                  (incorporated  herein  by  reference  to  Exhibit  10.8 to the
                  Annual  Report on Form 10-K of the  Registrant  for the fiscal
                  year ended  December 31,  1998,  Commission  File No.  1-9360,
                  filed on March 24, 1999).

    10.8(a)       Promissory  Note dated  December 30,  1998,  between AIOP Lost
                  Dutchman Notes, L.L.C., Asset Investors Operating Partnership,
                  L.P.,  the  Registrant  and  U.S.  Bank  National  Association
                  (incorporated  herein by reference  to Exhibit  10.8(a) to the
                  Annual  Report on Form 10-K of the  Registrant  for the fiscal
                  year ended  December 31,  1998,  Commission  File No.  1-9360,
                  filed on March 24, 1999).

      10.9        Form of Promissory Note to General Electric Capital  Assurance
                  Company  entered  into in  connection  with the  financing  of
                  manufactured   home   communities   (incorporated   herein  by
                  reference to Exhibit 10.9 to the Annual Report on Form 10-K of
                  the  Registrant  for the fiscal year ended  December 31, 1998,
                  Commission File No. 1-9360, filed on March 24, 1999).

    10.9(a)       Schedule  of  Promissory  Notes to  General  Electric  Capital
                  Assurance   Company   entered  into  in  connection  with  the
                  financing of eight manufactured home communities.

     10.10        Amended and  Restated  Loan  Agreement  dated as of January 1,
                  1998, by and between  Community  Acquisition  and  Development
                  Corporation,  Community Casa del Mar Joint Venture,  Community
                  Sunlake Joint  Venture,  Community  Brentwood  Joint  Venture,
                  Community  Savanna Club Joint  Venture,  Community  Blue Heron


                                     - 40 -
<PAGE>

                  Pines Corporation,  Community Sunlake  Corporation,  Community
                  Brentwood  Corporation,  Community  Savanna Club  Corporation,
                  Royal  Palm  Village,   LLC  and  Asset  Investors   Operating
                  Partnership, L.P. (incorporated herein by reference to Exhibit
                  10.10 to the Annual Report on Form 10-K of the  Registrant for
                  the fiscal year ended December 31, 1998,  Commission  File No.
                  1-9360, filed on March 24, 1999).

    10.10(a)      Revolving  Credit  Promissory Note dated as of January 1, 1998
                  between  Community  Acquisition and  Development  Corporation,
                  Community Casa del Mar Joint Venture,  Community Sunlake Joint
                  Venture,  Community Brentwood Joint Venture, Community Savanna
                  Club Joint Venture,  Community  Blue Heron Pines  Corporation,
                  Community    Sunlake    Corporation,    Community    Brentwood
                  Corporation,  Community Savanna Club  Corporation,  Royal Palm
                  Village, LLC and Asset Investors Operating  Partnership,  L.P.
                  (incorporated  herein by reference to Exhibit  10.10(a) to the
                  Annual  Report on Form 10-K of the  Registrant  for the fiscal
                  year ended  December 31,  1998,  Commission  File No.  1-9360,
                  filed on March 24, 1999).

    10.11*        Secured  Promissory  Note  dated  September  13, 1999  between
                  Robert G.  Blatz and Asset  Investors  Operating  Partnership,
                  L.P.

     10.12        Acquisition Agreement,  dated effective as of January 1, 2000,
                  by and among  AIC  Community  Management  Holding  Corp.,  AIC
                  Management  Holdings,  LLC and Community  Management Investors
                  Corporation  (incorporated herein by reference to Exhibit 10.0
                  to the  Registrant's  Current Report on Form 8-K dated January
                  19, 2000,  Commission  File No.  1-9360,  filed on January 31,
                  2000).

    10.12(a)      Promissory  Note,  dated  January  1,  2000,  by and among AIC
                  Community Management Holding,  LLC, Manufactured Housing Corp.
                  and Community Management Investors  Corporation  (incorporated
                  herein by  reference  to Exhibit  10.1(a) to the  Registrant's
                  Current Report on Form 8-K dated January 19, 2000,  Commission
                  File No. 1-9360, filed on January 31, 2000).

      21.1        List of Subsidiaries

      23.1        Consent of Independent Auditors - Ernst & Young LLP.

      27.1        Financial Data Schedule.

*    Management contract or compensatory plan or arrangement.




                                     - 41 -
<PAGE>




                                   SIGNATURES

Pursuant to the  requirements of Section 13 or 15(d) 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.

                                       ASSET INVESTORS CORPORATION
                                       (Registrant)

Date:  March 28, 2000                  By  /s/Terry Considine
                                           ------------------------------------
                                           Terry Considine
                                           Chairman and Chief Executive Officer

Date: March 28, 2000                   By  /s/Thomas L. Rhodes
                                           ------------------------------------
                                           Thomas L. Rhodes
                                           Vice Chairman

Date: March 28, 2000                   By  /s/Bruce E. Moore
                                           ------ -----------------------------
                                           Bruce E. Moore
                                           President and Chief Operating Officer

Date: March 28, 2000                   By  /s/David M. Becker
                                           ------------------------------------
                                           David M. Becker
                                           Chief Financial Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following  persons on behalf of the  Registrant and
in the capacities and on the dates indicated.

              Name                       Capacity                 Date

 /s/Terry Considine                      Director                 March 28, 2000
-----------------------------
    Terry Considine


 /s/Thomas L. Rhodes                     Director                 March 28, 2000
-----------------------------
    Thomas L. Rhodes


 /s/Bruce D. Benson                      Director                 March 25, 2000
-----------------------------
    Bruce D. Benson


 /s/Bruce E. Moore                       Director                 March 28, 2000
-----------------------------
    Bruce E. Moore


 /s/Elliot H. Kline                      Director                 March 26, 2000
-----------------------------
    Elliot H. Kline


 /s/Richard L. Robinson                  Director                 March 24, 2000
-----------------------------
    Richard L. Robinson

 /s/Tim Schultz                          Director                 March 28, 2000
-----------------------------
    Tim Schultz


 /s/William J. White                     Director                 March 26, 2000
-----------------------------
    William J. White



                                     - 42 -
<PAGE>