e10vk
Table of Contents

 
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
 
     
(Mark One)    
þ
  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
    For the fiscal year ended December 31, 2006
or
o
  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
    For the transition period from          to
 
Commission File Number 1-13232
Apartment Investment and Management Company
(Exact name of registrant as specified in its charter)
 
     
Maryland   84-1259577
(State or other jurisdiction of
incorporation or organization)
  (I.R.S. Employer
Identification No.)
4582 South Ulster Street Parkway, Suite 1100
Denver, Colorado
(Address of principal executive offices)
  80237
(Zip Code)
 
Registrant’s telephone number, including area code: (303) 757-8101
 
Securities Registered Pursuant to Section 12(b) of the Act:
 
     
Title of Each Class
 
Name of Each Exchange on Which Registered
 
Class A Common Stock   New York Stock Exchange
Class G Cumulative Preferred Stock   New York Stock Exchange
Class T Cumulative Preferred Stock   New York Stock Exchange
Class U Cumulative Preferred Stock   New York Stock Exchange
Class V Cumulative Preferred Stock   New York Stock Exchange
Class Y Cumulative Preferred Stock   New York Stock Exchange
 
Securities Registered Pursuant to Section 12(g) of the Act: none
 
 
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined by Rule 405 of the Securities Act.  Yes þ     No o
 
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.  Yes o     No þ
 
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 þ     No o
 
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.  o
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer þ     Accelerated filer o     Non-accelerated filer o
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).  Yes o     No þ
 
The aggregate market value of the voting and non-voting common stock held by non-affiliates of the registrant, was approximately $4.1 billion as of June 30, 2006. As of February 23, 2007, there were 97,577,459 shares of Class A Common Stock outstanding.
 
 
 
 
DOCUMENTS INCORPORATED BY REFERENCE
 
Portions of the registrant’s definitive proxy statement to be issued in conjunction with the registrant’s annual meeting of stockholders to be held April 30, 2007 are incorporated by reference into Part III of this Annual Report.
 


 

 
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
 
TABLE OF CONTENTS
 
ANNUAL REPORT ON FORM 10-K
For the Fiscal Year Ended December 31, 2006
 
                 
Item
      Page
 
1.
  Business   2
1A.
  Risk Factors   9
1B.
  Unresolved Staff Comments   15
2.
  Properties   16
3.
  Legal Proceedings   17
4.
  Submission of Matters to a Vote of Security Holders   17
 
5.
  Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities  
18
6.
  Selected Financial Data   21
7.
  Management’s Discussion and Analysis of Financial Condition and Results of Operations   23
7A.
  Quantitative and Qualitative Disclosures About Market Risk   39
8.
  Financial Statements and Supplementary Data   40
9.
  Changes in and Disagreements With Accountants on Accounting and Financial Disclosure   40
9A.
  Controls and Procedures   41
9B.
  Other Information   43
 
10.
  Directors, Executive Officers and Corporate Governance   43
11.
  Executive Compensation   43
12.
  Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters  
44
13.
  Certain Relationships and Related Transactions, and Director Independence   44
14.
  Principal Accountant Fees and Services   44
 
15.
  Exhibits and Financial Statement Schedules   45
 Fourth Amended and Restated Agreement of Limited Partnership
 List of Subsidiaries
 Consent of Independent Registered Public Accounting Firm
 Certification of CEO Pursuant to Section 302
 Certification of CFO Pursuant to Section 302
 Certification of CEO Pursuant to Section 906
 Certification of CFO Pursuant to Section 906
 Agreement re: Disclosure of Long-Term Debt Instruments


1


Table of Contents

FORWARD-LOOKING STATEMENTS
 
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 contains or may contain information that is forward-looking, including, without limitation, statements regarding the effect of acquisitions and redevelopments, our future financial performance, including our ability to maintain current or meet projected occupancy, rent levels and same store results, and the effect of government regulations. Actual results may differ materially from those described in the forward-looking statements and will be affected by a variety of risks and factors that are beyond our control including, without limitation: natural disasters such as hurricanes; national and local economic conditions; the general level of interest rates; energy costs; the terms of governmental regulations that affect us and interpretations of those regulations; the competitive environment in which we operate; financing risks, including the risk that our cash flows from operations may be insufficient to meet required payments of principal and interest; real estate risks, including variations of real estate values and the general economic climate in local markets and competition for residents in such markets; acquisition and development risks, including failure of such acquisitions to perform in accordance with projections; the timing of acquisitions and dispositions; litigation, including costs associated with prosecuting or defending claims and any adverse outcomes; and possible environmental liabilities, including costs, fines or penalties that may be incurred due to necessary remediation of contamination of properties presently owned or previously owned by us. In addition, our current and continuing qualification as a real estate investment trust involves the application of highly technical and complex provisions of the Internal Revenue Code and depends on our ability to meet the various requirements imposed by the Internal Revenue Code, through actual operating results, distribution levels and diversity of stock ownership. Readers should carefully review our financial statements and the notes thereto, as well as the section entitled “Risk Factors” described in Item 1A of this Annual Report and the other documents we file from time to time with the Securities and Exchange Commission.
 
PART I
 
Item 1.   Business
 
The Company
 
Apartment Investment and Management Company, or Aimco, is a Maryland corporation incorporated on January 10, 1994. We are a self-administered and self-managed real estate investment trust, or REIT, engaged in the acquisition, ownership, management and redevelopment of apartment properties. As of December 31, 2006, we owned or managed a real estate portfolio of 1,256 apartment properties containing 216,413 apartment units located in 46 states, the District of Columbia and Puerto Rico. Based on apartment unit data compiled by the National Multi Housing Council, as of January 1, 2006, we were the largest owner of apartment properties in the United States. Our portfolio includes garden style, mid-rise and high-rise properties.
 
We own an equity interest in, and consolidate the majority of, the properties in our owned real estate portfolio. These properties represent the consolidated real estate holdings in our financial statements, which we refer to as consolidated properties. In addition, we have an equity interest in, but do not consolidate for financial statement purposes, certain properties that are accounted for under the equity method. These properties represent our investment in unconsolidated real estate partnerships in our financial statements, which we refer to as unconsolidated properties. Additionally, we manage (both property and asset) but do not own an equity interest in other properties, although in certain cases we may indirectly own generally less than one percent of the operations of such


2


Table of Contents

properties through a partnership syndication or other fund. Our equity holdings and managed properties are as follows as of December 31, 2006:
 
                 
    Total Portfolio  
    Properties     Units  
 
Consolidated properties
    703       162,432  
Unconsolidated properties
    102       11,791  
Property management for third parties
    41       3,573  
Asset management for third parties
    410       38,617  
                 
Total
    1,256       216,413  
                 
 
Through our wholly-owned subsidiaries, AIMCO-GP, Inc. and AIMCO-LP, Inc., we own a majority of the ownership interests in AIMCO Properties, L.P., which we refer to as the Aimco Operating Partnership. As of December 31, 2006, we held approximately a 90% interest in the common partnership units and equivalents of the Aimco Operating Partnership. We conduct substantially all of our business and own substantially all of our assets through the Aimco Operating Partnership. Interests in the Aimco Operating Partnership that are held by limited partners other than Aimco are referred to as “OP Units.” OP Units include common OP Units, partnership preferred units, or preferred OP Units, and high performance partnership units, or High Performance Units. Generally after a holding period of twelve months, holders of common OP Units may redeem such units for cash or, at the Aimco Operating Partnership’s option, Aimco Class A Common Stock, which we refer to as Common Stock. At December 31, 2006, we had 96,820,252 shares of our Common Stock outstanding and the Aimco Operating Partnership had 10,135,562 common OP Units and equivalents outstanding for a combined total of 106,955,814 shares of Common Stock and OP Units outstanding (excluding preferred OP Units).
 
Since our initial public offering in July 1994, we have completed numerous transactions, expanding our portfolio of owned or managed properties from 132 properties with 29,343 apartment units to 1,256 properties with 216,413 apartment units as of December 31, 2006. These transactions have included purchases of properties and interests in entities that own or manage properties, as well as corporate mergers.
 
Except as the context otherwise requires, “we,” “our,” “us” and the “Company” refer to Aimco, the Aimco Operating Partnership and their consolidated entities, collectively. As used herein, and except where the context otherwise requires, “partnership” refers to a limited partnership or a limited liability company and “partner” refers to a limited partner in a limited partnership or a member in a limited liability company.
 
Available Information
 
Our Annual Report on Form 10-K, our Quarterly Reports on Form 10-Q, our Current Reports on Form 8-K and any amendments to any of those reports that we file with the Securities and Exchange Commission are available free of charge as soon as reasonably practicable through our website at www.aimco.com. The information contained on our website is not incorporated into this Annual Report. Our Common Stock is listed on the New York Stock Exchange under the symbol “AIV.” In 2006, our chief executive officer submitted his annual corporate governance listing standards certification to the New York Stock Exchange, which certification was unqualified.
 
Financial Information About Industry Segments
 
We operate in two reportable segments: real estate (owning and operating apartments) and investment management business (providing property management and other services relating to the apartment business to third parties and affiliates). For further information on these segments, see Note 16 of the consolidated financial statements in Item 8, and Management’s Discussion and Analysis in Item 7.
 
Business Overview
 
Our principal objective is to increase long-term stockholder value, which we believe results from increasing asset values, increasing operating cash flows and long-term, predictable Funds From Operations, or FFO (as defined by the National Association of Real Estate Investment Trusts), less capital spending for replacements. For a


3


Table of Contents

description of the meaning of FFO and its use and limitations as an operating measure, see the discussion titled “Funds From Operations” in Item 7.
 
We strive to meet our objectives by focusing on property operations, generation of fees, portfolio management, reinvestment in properties, increasing land values through entitlements, managing our cost of capital by using leverage that is largely long-term, non-recourse and property specific, and managing our general and administrative costs through increasing productivity.
 
Property Operations
 
We divide property operations into two business components: conventional and affordable. Our conventional operations, which are market-rate apartments with rents paid by the resident, include 469 properties with 135,289 units. Aimco Capital conducts our affordable operations of 336 properties with 38,934 units, which typically are apartments with rents frequently subsidized or paid by a government agency.
 
Our property operations are characterized by diversification of product, location and price point. We operate a broad range of property types, from suburban garden-style to urban high-rise properties in 46 states, the District of Columbia and Puerto Rico at a broad range of average monthly rental rates, with most between $500 and $1,100 per month, and reaching as high as $6,500 per month at some of our premier properties. This geographic diversification insulates us, to some degree, from inevitable downturns in any one market.
 
Conventional
 
Our conventional operations are organized into four divisions, each of which is supervised by a Division Vice President, or DVP, and are further sub-divided into 17 regional operating centers, or ROCs. As changes in our portfolio occur, we reevaluate this structure. A Regional Vice President, or RVP, supervises each ROC. The ROCs are generally smaller business units with specialized operational, financial and human resource leadership. We seek to improve the operating results from our property operations by, among other methods, combining centralized financial control and uniform operating procedures with localized property management decision-making and market knowledge. To manage our nationwide portfolio more efficiently and to increase the benefits from our local management expertise, we have given direct responsibility for operations to the RVP with oversight from extensive regular reviews with senior management. To enable the RVPs to focus on sales and service, as well as improve financial control and budgeting, we have dedicated a regional financial officer to support each RVP. In addition, our construction services group handles all work on site beyond routine maintenance, thus reducing the need for RVPs to spend time on oversight of construction projects. We continue to improve our corporate-level oversight of conventional property operations by developing better systems, standardizing business goals, operational measurements and internal reporting, and enhancing financial controls over field operations. Our objectives are to focus on the areas discussed below:
 
  •  Customer Service.  Our operating culture is to be focused on our customers. Our goal is to provide our residents with consistent service in clean, safe and attractive communities. We evaluate our performance through a customer satisfaction tracking system. In addition, we emphasize the quality of our on-site employees through recruiting, training and retention programs, which we believe contributes to improved customer service and leads to increased occupancy rates and enhanced performance.
 
  •  Resident Selection and Retention.  In apartment properties, neighbors are a part of the product, together with the location of the property and the physical quality of the apartment units. Part of our conventional operations strategy is to focus on resident acquisition and retention — attracting and retaining credit-worthy residents who are good neighbors. We have structured goals and coaching for all of our sales personnel, a tracking system for inquiries and a standardized renewal communication program. We have standardized residential financial stability requirements and have policies and monitoring practices to maintain our resident quality. We believe that the costs exceed the benefits when higher occupancy results from lowering of financial stability standards.
 
  •  Revenue Increases.  We increase rents where feasible and seek to improve occupancy rates. We are also focused on the automation of on-site operations, as we believe that timely and accurate collection of property


4


Table of Contents

  performance and resident profile data will enable us to maximize revenue through better property management and leasing decisions. We have standardized policies for new and renewal pricing with timely data and analyses by floor-plan, thereby enabling us to maximize our ability to modify pricing, even in challenging sub-markets.
 
  •  Controlling Expenses.  Cost controls are accomplished by local focus at the ROC level and by taking advantage of economies of scale at the corporate level. As a result of the size of our portfolio and our regional concentrations of properties, we have the ability to spread over a large property base fixed costs for general and administrative expenditures and certain operating functions, such as purchasing, insurance and information technology. We expanded our local vendor consolidation program and implemented an electronic procurement system to provide better ongoing control over purchasing decisions and to take advantage of volume discounts. We also are implementing initiatives to retain our current residents and reduce the time and costs associated with resident turnover. Additionally, we have focused on energy management and centralized media programs to control expenses.
 
  •  Ancillary Services.  We believe that our ownership and management of properties provide us with unique access to a customer base that allows us to provide additional services and thereby increase occupancy and rents, while also generating incremental revenue. We currently provide cable television, telephone services, appliance rental, and carport, garage and storage space rental at certain properties.
 
Aimco Capital
 
We are among the largest owners and operators of affordable properties in the United States. Aimco Capital was organized to focus on our affordable housing properties, the operations of which are most often subsidized or financed by the United States Department of Housing and Urban Development, or HUD, state housing agencies or tax credit financing, and is led by a management team dedicated to this sector. Aimco Capital operates our affordable properties through three ROCs. Affordable properties tend to have stable rents and occupancy due to government subsidies and thus are much less affected by market circumstances.
 
Aimco Capital also generates activity fees from transactions related to affordable holdings (including tax credit redevelopments, syndications, dispositions and refinancings), and asset management income from the financial management of our owned and operated affordable portfolio as well as two other large portfolios for which we provide asset management services only.
 
Portfolio Management
 
Conventional
 
We view our conventional property portfolio in terms of “core” and “non-core” properties. Core properties are those properties that are located in markets where population and employment growth are expected to exceed national trends and where we believe there is potential for long-term growth at higher rates of return. Our core operations are focused in 27 markets, located primarily in coastal states as well as the Rocky Mountain region and Chicago. We plan to exit certain Texas and Midwest markets where the average four-year growth rate is projected to be below the average of the remainder of the core portfolio. At December 31, 2006, we had 270 conventional core properties, which generally we intend to hold and improve over the long-term. Within our core portfolio, the largest single market (Washington, D.C.) contributed approximately 10%, and the five largest markets (Washington, D.C., Southern California, New England, Philadelphia and Miami-Fort Lauderdale) together contributed approximately 38%, to income before depreciation and interest expense, or net operating income. At December 31, 2006, we had 199 conventional non-core properties, which we generally intend to hold for investment for the intermediate term. Non-core properties are those properties located within the 26 markets we intend to exit or in less favored locations within the 27 markets that comprise our core portfolio. We exited six markets in 2006. During 2007, we expect to exit an additional eight markets and over the next several years we expect to exit the remaining markets in which we hold our non-core properties.
 
Portfolio management includes expanding our core portfolio through acquisitions of properties located in markets where our core portfolio is concentrated. We specifically seek investments in a variety of asset qualities and


5


Table of Contents

types at a purchase price below replacement cost. Currently, we acquire properties and property interests primarily in three ways:
 
  •  the direct acquisition of a property or portfolio of properties;
 
  •  acquisition of a portfolio of properties through a purchase from, or a merger or business combination with, an entity that owns or controls the property or portfolio being acquired; and
 
  •  the purchase from third parties, subject to our fiduciary duties, of additional interests in partnerships where we own a general partnership interest.
 
In 2006, we completed direct acquisitions of nine conventional core properties, containing approximately 1,700 residential units for an aggregate purchase price of approximately $177 million (including transaction costs). These properties are located in California, Florida and North Carolina. In addition, we originated approximately $100 million in loans secured by 87 properties with 1,597 residential units and 42 commercial spaces in the West Harlem District of New York City. In conjunction with this loan agreement, we obtained an option to purchase some or all of the properties during the next ten years. We also acquired additional interests in 48 partnerships for approximately $18 million (including transaction costs).
 
Portfolio management also includes dispositions of properties located within markets we intend to exit, properties in less favored locations within the 27 markets that comprise our core portfolio or properties that do not meet our long-term investment criteria. Additionally, from time to time, we may dispose of certain core properties that are consistent with our long-term investment strategy but offer attractive returns, such as in sales to buyers who intend to convert the properties to condominiums. The sales of core and non-core properties partially fund our acquisitions and capital improvements on our existing properties. In 2006, we sold 63 non-core properties and two core properties generating net cash proceeds to us, after repayment of existing debt, payment of transaction costs and distributions to limited partners, of $505 million.
 
Aimco Capital
 
The portfolio management strategy for Aimco Capital is similar to that of our Conventional portfolio. Aimco Capital seeks to dispose of properties that are inconsistent with our long-term investment strategy and Aimco Capital’s operations. During 2006, we sold 23 non-core properties from within the Aimco Capital portfolio, generating net cash proceeds to us, after repayment of existing debt, payment of transaction costs and distributions to limited partners, of $19.5 million. At December 31, 2006 within the Aimco Capital portfolio, we had 237 consolidated properties, a majority of which are non-core properties that we generally intend to hold for investment for the intermediate term. During 2007, we intend to sell approximately the same number of Aimco Capital properties as we sold in 2006.
 
Entitlements
 
We have the opportunity to improve land values by seeking new entitlements for many properties. Entitlements provide us the opportunity to enhance the value of our existing portfolio by obtaining local governmental approvals to increase density and add dwelling or residential units to a site. Also, we seek to add incremental value through redevelopment of existing units and excess land sales. We achieved new entitlements on five projects, with approximately 2,000 units, in 2006. We currently have approximately 20 entitlement projects underway or under review. These properties are typically well located and in many cases were built 30 or more years ago.
 
Reinvestment in Properties
 
We believe that the physical condition and amenities of our apartment properties are important factors in our ability to maintain and increase rental rates. In 2006, we spent $76.6 million, or $535 per owned apartment unit, for Capital Replacements, which represent the share of expenditures that are deemed to replace the consumed portion of acquired capital assets. Additionally, we spent $99.2 million for Capital Improvements, which are non-redevelopment capital expenditures that are made to enhance the value, profitability or useful life of an asset from its original purchase condition.


6


Table of Contents

 
In addition to maintenance and improvements of our properties, we focus on the redevelopment of certain properties each year. We believe redevelopment of certain properties in superior locations provides advantages over ground-up development, enabling us to generate rents comparable to new properties with relatively lower financial risk, in less time and with reduced delays associated with governmental permits and authorizations. We undertake two types of redevelopment projects: major projects, where a substantial number of all available units are vacated for significant renovations to the property; and moderate projects, where there is significant renovation, such as exteriors, common areas or unit improvements, typically done upon lease expirations without the need to vacate units on any wholesale or substantial basis. We have a specialized Redevelopment and Construction Services Group, which includes engineers, architects and construction managers, to oversee these projects. As of December 31, 2006, we had 54 projects at various stages of redevelopment. Of the 54 projects, 45 are conventional properties one major project and 44 moderate projects) and nine are affordable properties. During 2006, redevelopment expenditures totaled $258.6 million, of which our share totaled $230.8 million, and we completed three projects as well as interior upgrades or new construction on approximately 2,300 conventional units. Total redevelopment expenditures for our 45 active conventional projects will be approximately $493 million, of which approximately $296 million remains to be spent. Total redevelopment expenditures for our nine affordable redevelopments will be approximately $68 million, of which approximately $30 million remains to be spent, most of which will be funded by third-party tax credit equity and tax-exempt debt. In 2007, we plan to invest between $275 and $325 million in conventional redevelopment projects that will affect approximately 79 properties with over 30,000 units. Additionally, in 2007 redevelopment expenditures on affordable properties will be approximately $36 million, predominantly funded by third-party tax credit equity, affecting more than 15 properties with more than 1,800 units.
 
Cost of Capital
 
We are focused on minimizing our cost of capital. We have a deliberate policy of using non-recourse property debt. The lower risk inherent in non-recourse property debt permits us to operate with higher debt leverage and a lower weighted average cost of capital. During 2006, we closed loans totaling $1,224.6 million at an average interest rate of 5.66%, which included the refinancing of loans totaling $586.3 million with prior interest rates averaging 6.34%.
 
Productivity
 
Over the past several years, we had growth in our general and administrative spending as a result of the building of our infrastructure in certain areas in which we had needs, including, operational systems, information technology and other automation, human resources, and expanded accounting, legal, and financial planning and analysis functions. During 2006, we reduced general and administrative expenses before variable compensation by approximately $8 million as compared to 2005. We are focused on continued containment of this spending going forward through enhanced productivity and process improvements.
 
Competition
 
In attracting and retaining residents to occupy our properties we compete with numerous other housing alternatives. Our properties compete directly with other rental apartments, as well as with condominiums and single-family homes that are available for rent or purchase in the markets in which our properties are located. Principal factors of competition include rent or price charged, attractiveness of the location and property and quality and breadth of services. The number of competitive properties in a particular area has a material effect on our ability to lease apartment units at our properties and on the rents we charge. Additionally, we compete with other real estate investors, including other apartment REITs, pension and investment funds, partnerships and investment companies in acquiring, redeveloping and managing apartment properties. This competition affects our ability to acquire properties we want to add to our portfolio and the price that we pay in such acquisitions.
 
Taxation
 
We have elected to be taxed as a REIT under the Internal Revenue Code of 1986, as amended, which we refer to as the Code, commencing with our taxable year ended December 31, 1994, and intend to continue to operate in such


7


Table of Contents

a manner. Our current and continuing qualification as a REIT depends on our ability to meet the various requirements imposed by the Code, which are related to organizational structure, distribution levels, diversity of stock ownership and certain restrictions with regard to owned assets and categories of income. If we qualify for taxation as a REIT, we will generally not be subject to United States Federal corporate income tax on our taxable 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.
 
Even if we qualify as a REIT, we may be subject to United States Federal income and excise taxes in various situations, such as on our undistributed income. We also will be required to pay a 100% tax on any net income on non-arm’s length transactions between us and a TRS (described below) and on any net income from sales of property that was property held for sale to customers in the ordinary course. We and our stockholders may be subject to state or local taxation in various state or local jurisdictions, including those in which we transact business or our stockholders reside. In addition, we could also be subject to the alternative minimum tax, or AMT, on our items of tax preference. Any taxes imposed on us could reduce our operating cash flow and net income. The state and local tax laws may not conform to the United States Federal income tax treatment.
 
Certain of our operations (property management, asset management, risk, etc.) are conducted through taxable REIT subsidiaries, each of which we refer to as a TRS. A TRS is a C-corporation that has not elected REIT status and as such is subject to United States Federal corporate income tax. We use TRS entities to facilitate our ability to offer certain services and activities to our residents, as these services and activities generally cannot be offered directly by the REIT.
 
Regulation
 
General
 
Apartment properties are subject to various laws, ordinances and regulations, including regulations relating to recreational facilities such as swimming pools, activity centers and other common areas. Changes in laws increasing the potential liability for environmental conditions existing on properties or increasing the restrictions on discharges or other conditions, as well as changes in laws affecting development, construction and safety requirements, may result in significant unanticipated expenditures, which would adversely affect our net income and cash flows from operating activities. In addition, future enactment of rent control or rent stabilization laws or other laws regulating multifamily housing may reduce rental revenue or increase operating costs in particular markets.
 
Environmental
 
Various Federal, state and local laws subject property owners or operators to liability for management, and the costs of removal or remediation, of certain hazardous substances present on a property. Such laws often impose liability without regard to whether the owner or operator knew of, or was responsible for, the release or presence of the hazardous substances. In connection with the ownership, operation and management of properties, we could potentially be liable for environmental liabilities or costs associated with our properties or properties we acquire or manage in the future. These and other risks related to environmental matters are described in more detail in Item 1A, “Risk Factors.”
 
Insurance
 
Our primary lines of insurance coverage are property, general liability, and workers’ compensation. We believe that our insurance coverages adequately insure our properties against the risk of loss attributable to fire, earthquake, hurricane, tornado, flood and other perils and adequately insure us against other risk. Our coverage includes deductibles, retentions and limits that are customary in the industry. We have established loss prevention, loss mitigation, claims handling, litigation management and loss reserving procedures to manage our exposure.
 
Employees
 
We currently have approximately 6,000 employees, of which approximately 4,700 are at the property level, performing various on-site functions, with the balance managing corporate and regional operations, including investment and debt transactions, legal, financial reporting, accounting, information systems, human resources and


8


Table of Contents

other support functions. Unions represent approximately 100 of our employees. We have never experienced a work stoppage and believe we maintain satisfactory relations with our employees.
 
Item 1A.   Risk Factors
 
The risk factors noted in this section and other factors noted throughout this Annual Report, describe certain risks and uncertainties that could cause our actual results to differ materially from those contained in any forward-looking statement.
 
Failure to generate sufficient net operating income may limit our ability to pay dividends.
 
Our ability to make payments to our investors depends on our ability to generate net operating income in excess of required debt payments and capital expenditure requirements. Net operating income may be adversely affected by events or conditions beyond our control, including:
 
  •  the general economic climate;
 
  •  competition from other apartment communities and other housing options;
 
  •  local conditions, such as loss of jobs or an increase in the supply of apartments, that might adversely affect apartment occupancy or rental rates;
 
  •  changes in governmental regulations and the related cost of compliance;
 
  •  increases in operating costs (including real estate taxes) due to inflation and other factors, which may not be offset by increased rents;
 
  •  changes in tax laws and housing laws, including the enactment of rent control laws or other laws regulating multifamily housing; and
 
  •  changes in interest rates and the availability of financing.
 
Redevelopment and construction risks could affect our profitability.
 
We intend to continue to redevelop certain of our properties. These activities are subject to the following risks:
 
  •  we may be unable to obtain, or experience delays in obtaining, necessary zoning, occupancy, or other required governmental or third party permits and authorizations, which could result in increased costs or the delay or abandonment of opportunities;
 
  •  we may incur costs that exceed our original estimates due to increased material, labor or other costs;
 
  •  we may be unable to complete construction and lease up of a property on schedule, resulting in increased construction and financing costs and a decrease in expected rental revenues;
 
  •  occupancy rates and rents at a property may fail to meet our expectations for a number of reasons, including changes in market and economic conditions beyond our control and the development by competitors of competing communities;
 
  •  we may be unable to obtain financing with favorable terms, or at all, for the proposed development of a property, which may cause us to delay or abandon an opportunity;
 
  •  we may abandon opportunities that we have already begun to explore for a number of reasons, including changes in local market conditions or increases in construction or financing costs, and, as a result, we may fail to recover expenses already incurred in exploring those opportunities;
 
  •  we may incur liabilities to third parties during the redevelopment process, for example, in connection with tenant terminations, or managing existing improvements on the site prior to tenant terminations; and
 
  •  loss of a key member of project team could adversely affect our ability to deliver redevelopment projects on time and within our budget.


9


Table of Contents

 
If we are not successful in our acquisition of properties, our results of operations could be adversely affected.
 
The selective acquisition of properties is a component of our strategy. However, we may not be able to complete transactions successfully in the future. Although we seek to acquire, properties only when such activities increase our net income, Funds From Operations or net asset value, such transactions may fail to perform in accordance with our expectations.
 
Our existing and future debt financing could render us unable to operate, result in foreclosure on our properties or prevent us from making distributions on our equity.
 
Our strategy is generally to incur debt to increase the return on our equity while maintaining acceptable interest coverage ratios. For the year ended December 31, 2006, we had a ratio of free cash flow (net operating income less spending for capital replacements) to combined interest expense and preferred stock dividends of 1.6:1. Our organizational documents do not limit the amount of debt that we may incur, and we have significant amounts of debt outstanding. Payments of principal and interest may leave us with insufficient cash resources to operate our properties or pay distributions required to be paid in order to maintain our qualification as a REIT. We are also subject to the risk that our cash flow from operations will be insufficient to make required payments of principal and interest, and the risk that existing indebtedness may not be refinanced or that the terms of any refinancing will not be as favorable as the terms of existing indebtedness. If we fail to make required payments of principal and interest on secured debt, our lenders could foreclose on the properties securing such debt, which would result in loss of income and asset value to us. As of December 31, 2006, substantially all of the properties that we owned or controlled were encumbered by debt.
 
Increases in interest rates would increase our interest expense.
 
As of December 31, 2006, we had approximately $1,663.4 million of variable-rate indebtedness outstanding. Of the total debt subject to variable interest rates, floating rate tax-exempt bond financing was $640.6 million. Floating rate tax-exempt bond financing is benchmarked against the BMA Index, which since 1981 has averaged 68% of the 30-day LIBOR rate. If this relationship continues, an increase in 30-day LIBOR of 1.0% (0.68% in tax-exempt interest rates) would result in our income before minority interests and cash flows being reduced by $14.6 million on an annual basis. This would be offset by variable rate interest income earned on certain assets, including cash and cash equivalents and notes receivable, as well as interest that is capitalized on a portion of this variable rate debt incurred in connection with our redevelopment activities. Considering these offsets, the same increase in 30-day LIBOR would result in our income before minority interests being reduced by $4.4 million on an annual basis.
 
Covenant restrictions may limit our ability to make payments to our investors.
 
Some of our debt and other securities contain covenants that restrict our ability to make distributions or other payments to our investors unless certain financial tests or other criteria are satisfied. Our credit facility provides, among other things, that we may make distributions to our investors during any four consecutive fiscal quarters in an aggregate amount that does not exceed the greater of 95% of our Funds From Operations for such period or such amount as may be necessary to maintain our REIT status. Our outstanding classes of preferred stock prohibit the payment of dividends on our Common Stock if we fail to pay the dividends to which the holders of the preferred stock are entitled.
 
Competition could limit our ability to lease apartments or increase or maintain rents.
 
Our apartment properties compete for residents with other housing alternatives, including other rental apartments, condominiums and single-family homes that are available for rent, as well as new and existing condominiums and single-family homes for sale. Competitive residential housing in a particular area could adversely affect our ability to lease apartments and to increase or maintain rental rates.


10


Table of Contents

 
We depend on distributions and other payments from our subsidiaries that they may be prohibited from making to us.
 
All of our properties are owned, and all of our operations are conducted, by the Aimco Operating Partnership and our other subsidiaries. As a result, we depend on distributions and other payments from our subsidiaries in order to satisfy our financial obligations and make payments to our investors. The ability of our subsidiaries to make such distributions and other payments depends on their earnings and may be subject to statutory or contractual limitations. As an equity investor in our subsidiaries, our right to receive assets upon their liquidation or reorganization will be effectively subordinated to the claims of their creditors. To the extent that we are recognized as a creditor of such subsidiaries, our claims may still be subordinate to any security interest in or other lien on their assets and to any of their debt or other obligations that are senior to our claims.
 
Because real estate investments are relatively illiquid, we may not be able to sell properties when appropriate.
 
Real estate investments are relatively illiquid and cannot always be sold quickly. Thus, we may not be able to change our portfolio promptly in response to changes in economic or other market conditions. Our ability to dispose of assets in the future will depend on prevailing economic and market conditions. This could have a material adverse effect on our financial condition or results of operations.
 
We may be subject to litigation associated with partnership acquisitions that could increase our expenses and prevent completion of beneficial transactions.
 
We have engaged in, and intend to continue to engage in, the selective acquisition of interests in partnerships that own apartment properties. In some cases, we have acquired the general partner of a partnership and then made an offer to acquire the limited partners’ interests in the partnership. In these transactions, we may be subject to litigation based on claims that we, as the general partner, have breached our fiduciary duty to our limited partners or that the transaction violates the relevant partnership agreement or state law. Although we intend to comply with our fiduciary obligations and the relevant partnership agreements, we may incur additional costs in connection with the defense or settlement of this type of litigation. In some cases, this type of litigation may adversely affect our desire to proceed with, or our ability to complete, a particular transaction. Any litigation of this type could also have a material adverse effect on our financial condition or results of operations.
 
We are self-insured for certain risks and the cost of insurance, increased claims activity or losses resulting from catastrophic events may affect our operating results and financial condition.
 
We are self-insured for a portion of our consolidated properties’ exposure to casualty losses resulting from fire, earthquake, hurricane, tornado, flood and other perils. We recognize casualty losses or gains based on the net book value of the affected property and any related insurance proceeds. In many instances, the actual cost to repair or replace the property may exceed its net book value and any insurance proceeds. We also insure certain unconsolidated properties for a portion of their exposure to such losses. In addition, we are self-insured for a portion of our exposure to third-party claims related to our employee health insurance plans, workers’ compensation coverage, and general liability exposure. With respect to our insurance obligations to unconsolidated properties and our exposure to claims of third parties, we establish reserves at levels that reflect our known and estimated losses. The ultimate cost of losses and the impact of unforeseen events may vary materially from recorded reserves, and variances may adversely affect our operating results and financial condition. We purchase insurance (or reinsurance where we insure unconsolidated properties) to reduce our exposure to catastrophe losses and limit our financial losses on large individual risks. The availability and cost of insurance are determined by market conditions outside our control. No assurance can be made that we will be able to obtain and maintain insurance at the same levels and on the same terms as we do today. If we are not able to obtain or maintain insurance in amounts we consider appropriate for our business, or if the cost of obtaining such insurance increases materially, we may have to retain a larger portion of the potential loss associated with our exposures to risks. The extent of our losses in connection with catastrophic events is a function of the severity of the event and the total amount of exposure in the affected area. When we have geographic concentration of exposures, a single catastrophe (such as an earthquake) or destructive weather trend affecting a region may have a significant impact on our financial


11


Table of Contents

condition and results of operations. We cannot accurately predict catastrophes, or the number and type of catastrophic events that will affect us. As a result, our operating and financial results may vary significantly from one period to the next. While we anticipate and plan for catastrophe losses, there can be no assurance that our financial results will not be adversely affected by our exposure to losses arising from catastrophic events in the future that exceed our previous experience and assumptions.
 
We depend on our senior management.
 
Our success depends upon the retention of our senior management, including Terry Considine, our chief executive officer and president. There are no assurances that we would be able to find qualified replacements for the individuals who make up our senior management if their services were no longer available. The loss of services of one or more members of our senior management team could have a material adverse effect on our business, financial condition and results of operations. We do not currently maintain key-man life insurance for any of our employees. The loss of any member of senior management could adversely affect our ability to pursue effectively our business strategy.
 
Affordable housing regulations may limit the opportunities at some of our properties and failure to comply with resident qualification requirements may result in financial penalties and/or loss of benefits.
 
We own consolidated and unconsolidated equity interests in certain properties and manage for third parties and affiliates other properties that benefit from governmental programs intended to provide housing to people with low or moderate incomes. These programs, which are usually administered by HUD or state housing finance agencies, typically provide mortgage insurance, favorable financing terms, tax-credit equity, or rental assistance payments to the property owners. As a condition of the receipt of assistance under these programs, the properties must comply with various requirements, which typically limit rents to pre-approved amounts and impose restrictions on resident incomes. Failure to comply with these requirements and restrictions may result in financial penalties or loss of benefits. We usually need to obtain the approval of HUD in order to manage, or acquire a significant interest in, a HUD-assisted property. We may not always receive such approval.
 
Laws benefiting disabled persons may result in our incurrence of unanticipated expenses.
 
Under the Americans with Disabilities Act of 1990, or ADA, all places intended to be used by the public are required to meet certain Federal requirements related to access and use by disabled persons. Likewise, the Fair Housing Amendments Act of 1988, or FHAA, requires apartment properties first occupied after March 13, 1990 to be accessible to the handicapped. These and other Federal, state and local laws may require modifications to our properties, or restrict renovations of the properties. Noncompliance with these laws could result in the imposition of fines or an award of damages to private litigants and also could result in an order to correct any non-complying feature, which could result in substantial capital expenditures. Although we believe that our properties are substantially in compliance with present requirements, we may incur unanticipated expenses to comply with the ADA and the FHAA.
 
Potential liability or other expenditures associated with potential environmental contamination may be costly.
 
Various Federal, state and local laws subject property owners or operators to liability for management, and the costs of removal or remediation, of certain hazardous substances present on a property. Such laws often impose liability without regard to whether the owner or operator knew of, or was responsible for, the release or presence of the hazardous substances. The presence of, or the failure to manage or remedy properly, hazardous substances may adversely affect occupancy at affected apartment communities and the ability to sell or finance affected properties. In addition to the costs associated with investigation and remediation actions brought by government agencies, and potential fines or penalties imposed by such agencies in connection therewith, the presence of hazardous substances on a property could result in claims by private plaintiffs for personal injury, disease, disability or other infirmities. Various laws also impose liability for the cost of removal, remediation or disposal of hazardous substances through a licensed disposal or treatment facility. Anyone who arranges for the disposal or treatment of hazardous substances is potentially liable under such laws. These laws often impose liability whether or not the person arranging for the


12


Table of Contents

disposal ever owned or operated the disposal facility. In connection with the ownership, operation and management of properties, we could potentially be liable for environmental liabilities or costs associated with our properties or properties we acquire or manage in the future.
 
Moisture infiltration and resulting mold remediation may be costly.
 
We have been named as a defendant in lawsuits that have alleged personal injury and property damage as a result of the presence of mold. In addition, we are aware of lawsuits against owners and managers of multifamily properties asserting claims of personal injury and property damage caused by the presence of mold, some of which have resulted in substantial monetary judgments or settlements. We have only limited insurance coverage for property damage loss claims arising from the presence of mold and for personal injury claims related to mold exposure. We have implemented policies, procedures, third-party audits and training, and include a detailed moisture intrusion and mold assessment during acquisition due diligence. We believe these measures will prevent or eliminate mold exposure from our properties and will minimize the effects that mold may have on our residents. To date, we have not incurred any material costs or liabilities relating to claims of mold exposure or to abate mold conditions. Because the law regarding mold is unsettled and subject to change we can make no assurance that liabilities resulting from the presence of or exposure to mold will not have a material adverse effect on our consolidated financial condition or results of operations.
 
The FBI has issued alerts regarding potential terrorist threats involving apartment buildings.
 
From time to time, the Federal Bureau of Investigation, or FBI, and the United States Department of Homeland Security issue alerts regarding potential terrorist threats involving apartment buildings. Threats of future terrorist attacks, such as those announced by the FBI and the Department of Homeland Security, could have a negative effect on rent and occupancy levels at our properties. The effect that future terrorist activities or threats of such activities could have on our business is uncertain and unpredictable. If we incur a loss at a property as a result of an act of terrorism, we could lose all or a portion of the capital we have invested in the property, as well as the future revenue from the property.
 
We may fail to qualify as a REIT.
 
If we fail to qualify as a REIT, we will not be allowed a deduction for dividends paid to our stockholders in computing our taxable income, and we will be subject to Federal income tax at regular corporate rates, including any applicable alternative minimum tax. This would substantially reduce our funds available for payment to our investors. Unless entitled to relief under certain provisions of the Code, we also would be disqualified from taxation as a REIT for the four taxable years following the year during which we ceased to qualify as a REIT. In addition, our failure to qualify as a REIT would trigger the following consequences:
 
  •  we would be obligated to repurchase certain classes of our preferred stock; and
 
  •  we would be in default under our primary credit facilities and certain other loan agreements.
 
We believe that we operate, and have always operated, in a manner that enables us to meet the requirements for qualification as a REIT for Federal income tax purposes. Our continued qualification as a REIT will depend on our satisfaction of certain asset, income, investment, organizational, distribution, stockholder ownership and other requirements on a continuing basis. Our ability to satisfy the asset tests depends upon our analysis of the fair market values of our assets, some of which are not susceptible to a precise determination, and for which we will not obtain independent appraisals. Our compliance with the REIT income and quarterly asset requirements also depends upon our ability to manage successfully the composition of our income and assets on an ongoing basis. Moreover, the proper classification of an instrument as debt or equity for Federal income tax purposes may be uncertain in some circumstances, which could affect the application of the REIT qualification requirements. Accordingly, there can be no assurance that the Internal Revenue Service, or the IRS, will not contend that our interests in subsidiaries or other issuers constitutes a violation of the REIT requirements. Moreover, future economic, market, legal, tax or other considerations may cause us to fail to qualify as a REIT, or our Board of Directors may determine to revoke our REIT status.


13


Table of Contents

 
REIT distribution requirements limit our available cash.
 
As a REIT, we are subject to annual distribution requirements, which limit the amount of cash we retain for other business purposes, including amounts to fund our growth. We generally must distribute annually at least 90% of our net REIT taxable income, excluding any net capital gain, in order for our distributed earnings not to be subject to corporate income tax. We intend to make distributions to our stockholders to comply with the requirements of the Code. However, differences in timing between the recognition of taxable income and the actual receipt of cash could require us to sell assets or borrow funds on a short-term or long-term basis to meet the 90% distribution requirement of the Code.
 
Limits on ownership of shares in our charter may result in the loss of economic and voting rights by purchasers that violate those limits.
 
Our charter limits ownership of our Common Stock by any single stockholder (applying certain “beneficial ownership” rules under the Federal securities laws) to 8.7% of our outstanding shares of Common Stock, or 15% in the case of certain pension trusts, registered investment companies and Mr. Considine. Our charter also limits ownership of our Common Stock and preferred stock by any single stockholder to 8.7% of the value of the outstanding Common Stock and preferred stock, or 15% in the case of certain pension trusts, registered investment companies and Mr. Considine. The charter also prohibits anyone from buying shares of our capital stock if the purchase would result in us losing our REIT status. This could happen if a transaction results in fewer than 100 persons owning all of our shares of capital stock or results in five or fewer persons (applying certain attribution rules of the Code) owning 50% or more of the value of all of our shares of capital stock. If anyone acquires shares in excess of the ownership limit or in violation of the ownership requirements of the Code for REITs:
 
  •  the transfer will be considered null and void;
 
  •  we will not reflect the transaction on our books;
 
  •  we may institute legal action to enjoin the transaction;
 
  •  we may demand repayment of any dividends received by the affected person on those shares;
 
  •  we may redeem the shares;
 
  •  the affected person will not have any voting rights for those shares; and
 
  •  the shares (and all voting and dividend rights of the shares) will be held in trust for the benefit of one or more charitable organizations designated by us.
 
We may purchase the shares of capital stock held in trust at a price equal to the lesser of the price paid by the transferee of the shares or the then current market price. If the trust transfers any of the shares of capital stock, the affected person will receive the lesser of the price paid for the shares or the then current market price. An individual who acquires shares of capital stock that violate the above rules bears the risk that the individual:
 
  •  may lose control over the power to dispose of such shares;
 
  •  may not recognize profit from the sale of such shares if the market price of the shares increases;
 
  •  may be required to recognize a loss from the sale of such shares if the market price decreases; and
 
  •  may be required to repay to us any distributions received from us as a result of his or her ownership of the shares.
 
Our charter may limit the ability of a third party to acquire control of us.
 
The 8.7% ownership limit discussed above may have the effect of precluding acquisition of control of us by a third party without the consent of our Board of Directors. Our charter authorizes our Board of Directors to issue up to 510,587,500 shares of capital stock. As of December 31, 2006, 426,157,736 shares were classified as Common Stock, of which 96,820,252 were outstanding, and 84,429,764 shares were classified as preferred stock, of which 26,854,962 were outstanding. Under our charter, our Board of Directors has the authority to classify and reclassify


14


Table of Contents

any of our unissued shares of capital stock into shares of capital stock with such preferences, rights, powers and restrictions as our Board of Directors may determine. The authorization and issuance of a new class of capital stock could have the effect of delaying or preventing someone from taking control of us, even if a change in control were in our stockholders’ best interests.
 
Maryland business statutes may limit the ability of a third party to acquire control of us.
 
As a Maryland corporation, we are subject to various Maryland laws that may have the effect of discouraging offers to acquire us and increasing the difficulty of consummating any such offers, even if an acquisition would be in our stockholders’ best interests. The Maryland General Corporation Law restricts mergers and other business combination transactions between us and any person who acquires beneficial ownership of shares of our stock representing 10% or more of the voting power without our Board of Directors’ prior approval. Any such business combination transaction could not be completed until five years after the person acquired such voting power, and generally only with the approval of stockholders representing 80% of all votes entitled to be cast and 662/3% of the votes entitled to be cast, excluding the interested stockholder, or upon payment of a fair price. Maryland law also provides generally that a person who acquires shares of our capital stock that represent 10% or more of the voting power in electing directors will have no voting rights unless approved by a vote of two-thirds of the shares eligible to vote. Additionally, Maryland law provides, among other things, that the board of directors has broad discretion in adopting stockholders’ rights plans and has the sole power to fix the record date, time and place for special meetings of the stockholders. In addition, Maryland law provides that corporations that:
 
  •  have at least three directors who are not employees of the entity or related to an acquiring person; and
 
  •  are subject to the reporting requirements of the Securities Exchange Act of 1934,
 
may elect in their charter or bylaws or by resolution of the board of directors to be subject to all or part of a special subtitle that provides that:
 
  •  the corporation will have a staggered board of directors;
 
  •  any director may be removed only for cause and by the vote of two-thirds of the votes entitled to be cast in the election of directors generally, even if a lesser proportion is provided in the charter or bylaws;
 
  •  the number of directors may only be set by the board of directors, even if the procedure is contrary to the charter or bylaws;
 
  •  vacancies may only be filled by the remaining directors, even if the procedure is contrary to the charter or bylaws; and
 
  •  the secretary of the corporation may call a special meeting of stockholders at the request of stockholders only on the written request of the stockholders entitled to cast at least a majority of all the votes entitled to be cast at the meeting, even if the procedure is contrary to the charter or bylaws.
 
To date, we have not made any of the elections described above.
 
Item 1B.  Unresolved Staff Comments
 
None.


15


Table of Contents

 
Item 2.   Properties
 
Our properties are located in 46 states, the District of Columbia and Puerto Rico. As of December 31, 2006, our conventional properties are operated through 17 regional operating centers. Affordable property operations are managed through Aimco Capital and are operated through three regional operating centers. The following table sets forth information on all of our property operations as of December 31, 2006 and 2005:
 
                                 
    2006     2005  
    Number of
    Number
    Number of
    Number
 
Regional Operating Center(1)
  Properties     of Units     Properties     of Units  
 
Conventional:
                               
Atlanta, GA
    32       8,286       41       10,712  
Austin, TX
                25       5,566  
Boston, MA
    16       5,745       16       5,745  
Chicago, IL
    30       8,339       32       8,784  
Columbus, OH
    34       9,664       39       10,139  
Dallas, TX
    36       8,026       31       7,945  
Denver, CO
    33       7,487       33       7,487  
Houston, TX
    37       9,776       37       9,776  
Indianapolis, IN
    33       12,318       32       11,947  
Los Angeles, CA
    39       10,867       36       10,622  
New York, NY
    12       589              
Orlando, FL
    29       8,041       31       8,600  
Philadelphia, PA
    16       7,493       15       7,180  
Phoenix, AZ
    28       7,544       36       10,002  
Rockville, MD
    29       12,157       29       12,156  
South Florida
    15       5,300       15       5,862  
Tampa, FL
    21       5,787       21       5,926  
Tidewater, VA
    28       7,618       28       7,716  
University Communities(2)
                15       4,443  
                                 
Total conventional owned and managed
    468       135,037       512       150,608  
                                 
Affordable (Aimco Capital):
                               
Central
    121       12,726       131       13,721  
Northeast
    87       12,551       104       14,769  
West
    63       6,908       71       7,607  
                                 
Total affordable owned and managed
    271       32,185       306       36,097  
                                 
Owned but not managed
    66       7,001       65       7,112  
Property management for third parties
    41       3,573       52       5,246  
Asset management for third parties
    410       38,617       435       41,421  
                                 
Total
    1,256       216,413       1,370       240,484  
                                 
 
 
(1) As our portfolio changes due to property acquisitions and dispositions, we periodically evaluate the organization of our regional operating centers, or ROCs. During 2006, we combined the Austin and Dallas ROCs and added a ROC in New York.
 
(2) The properties within University Communities at December 31, 2005 have been either sold or moved into various existing ROCs depending on the location of the property.


16


Table of Contents

 
At December 31, 2006, we owned an equity interest in and consolidated 703 properties containing 162,432 apartment units, which we refer to as “consolidated.” These consolidated properties contain, on average, 231 apartment units, with the largest property containing 2,877 apartment units. These properties offer residents a range of amenities, including swimming pools, clubhouses, spas, fitness centers, tennis courts and saunas. Many of the apartment units offer features such as vaulted ceilings, fireplaces, washer and dryer hook-ups, cable television, balconies and patios. Additional information on our consolidated properties is contained in “Schedule III, Real Estate and Accumulated Depreciation” in this Annual Report. At December 31, 2006, we held an equity interest in and did not consolidate 102 properties containing 11,791 apartment units, which we refer to as “unconsolidated.” In addition, we provided property management services for third parties owning 41 properties containing 3,573 apartment units, and asset management services for third parties owning 410 properties containing 38,617 apartment units, although in certain cases we may indirectly own generally less than one percent of the operations of such properties through a partnership syndication or other fund.
 
Substantially all of our consolidated properties are encumbered by mortgage indebtedness. At December 31, 2006, our consolidated properties were encumbered by aggregate mortgage indebtedness totaling $6,265.1 million having an aggregate weighted average interest rate of 6.12%. Such mortgage indebtedness was secured by 680 properties with a combined net book value of $8,936.3 million. Included in the 680 properties, we had a total of 60 mortgage loans, with an aggregate principal balance outstanding of $693.5 million, that were each secured by property and cross-collateralized with certain (but not all) other mortgage loans within this group of 60 mortgage loans. See Note 6 of the consolidated financial statements in Item 8 for additional information about our indebtedness.
 
Item 3.   Legal Proceedings
 
See the information under the caption “Legal Matters” in Note 8 of the consolidated financial statements in Item 8 for information regarding legal proceedings, which information is incorporated by reference in this Item 3.
 
Item 4.   Submission of Matters to a Vote of Security Holders
 
No matters were submitted to a vote of security holders during the fourth quarter of 2006.


17


Table of Contents

 
PART II
 
Item 5.   Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
 
Our Common Stock has been listed and traded on the NYSE under the symbol “AIV” since July 22, 1994. The following table sets forth the quarterly high and low sales prices of our Common Stock, as reported on the NYSE, and the dividends declared in the periods indicated:
 
                         
                Dividends
 
                Declared
 
Quarter Ended
  High     Low     (per share)  
 
2006
                       
December 31, 2006(1)
  $ 59.17     $ 52.63     $ 1.20  
September 30, 2006
    54.96       43.67       0.60  
June 30, 2006
    47.23       41.41       0.60  
March 31, 2006
    48.38       37.76       0.00  
2005
                       
December 31, 2005(2)
    39.80       34.93       1.20  
September 30, 2005
    44.14       37.57       0.60  
June 30, 2005
    41.30       36.24       0.60  
March 31, 2005
    39.39       34.17       0.60  
 
 
(1) On December 19, 2006, our Board of Directors declared a quarterly cash dividend of $0.60 per common share for the quarter ended December 31, 2006, that was paid on January 31, 2007, to stockholders of record on December 31, 2006. Our Board of Directors declared the dividend a month early in order to offset gains from 2006 property sales otherwise subject to REIT excise tax. Our Board of Directors anticipates that dividend declarations for the remainder of 2007 will occur on a schedule consistent with 2006.
 
(2) On December 28, 2005, our Board of Directors declared a quarterly cash dividend of $0.60 per common share for the quarter ended December 31, 2005, that was paid on January 31, 2006, to stockholders of record on December 31, 2005. Our Board of Directors declared the dividend a month early in order to offset gains from 2005 property sales otherwise subject to REIT excise tax.
 
On February 23, 2007, the closing price of our Common Stock was $60.53 per share, as reported on the NYSE, and there were 97,577,459 shares of Common Stock outstanding, held by 3,459 stockholders of record. The number of holders does not include individuals or entities who beneficially own shares but whose shares are held of record by a broker or clearing agency, but does include each such broker or clearing agency as one recordholder.
 
As a REIT, we are required to distribute annually to holders of common stock at least 90% of our “real estate investment trust taxable income,” which, as defined by the Code and United States Department of Treasury regulations, is generally equivalent to net taxable ordinary income. We measure our economic profitability and intend to pay regular dividends to our stockholders based on Funds From Operations, less Capital Replacements during the relevant period. Future payment of dividends are at the discretion of our 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 our Board of Directors deems relevant.
 
From time to time, we issue shares of Common Stock in exchange for common and preferred OP Units tendered to the Aimco Operating Partnership for redemption in accordance with the terms and provisions of the agreement of limited partnership of the Aimco Operating Partnership. Such shares are issued based on an exchange ratio of one share for each common OP Unit or the applicable conversion ratio for preferred OP Units. The shares are generally issued in exchange for OP Units in private transactions exempt from registration under the Securities Act of 1933, as amended, pursuant to Section 4(2) thereof. During the three and twelve months ended December 31, 2006, approximately 36,000 and 99,000 shares of Common Stock were issued in exchange for common OP Units.


18


Table of Contents

During the three and twelve months ended December 31, 2006, zero shares of Common Stock were issued in exchange for preferred OP Units.
 
The following table summarizes repurchases of our equity securities in the quarter ended December 31, 2006 (1):
 
                                 
                Total Number of
    Maximum
 
                Shares Purchased as
    Number of Shares
 
          Average
    Part of Publicly
    that May Yet Be
 
    Total Number of
    Price Paid
    Announced Plans or
    Purchased Under
 
Fiscal period(2)
  Shares Purchased     per Share     Programs     Plans or Programs  
 
October 1 — October 31, 2006
    0       N/A       0       6,065,180  
November 1 — November 30, 2006
    0       N/A       0       6,065,180  
December 1 — December 31, 2006
    366,100     $ 55.33       366,100       5,699,080  
                                 
Total
    366,100     $ 55.33       366,100          
                                 
 
 
(1) Our Board of Directors has, from time to time, authorized us to repurchase shares of our outstanding capital stock. In April 2005, our Board of Directors authorized us to repurchase up to a total of eight million shares of our Common Stock. We have approximately 5.70 million shares remaining on that authorization. This authorization has no expiration date. These repurchases may be made from time to time in the open market or in privately negotiated transactions.
 
(2) During the year ended December 31, 2006, we repurchased approximately 2.3 million shares of Common Stock for cash totaling approximately $120.3 million, or $52.25 per share.
 
Dividend Payments.  Our Credit Agreement includes customary covenants, including a restriction on dividends and other restricted payments, but permits dividends during any four consecutive fiscal quarters in an aggregate amount of up to 95% of our Funds From Operations for such period or such amount as may be necessary to maintain our REIT status.


19


Table of Contents

Performance Graph
 
The following graph compares cumulative total returns for our Common Stock, the Standard & Poor’s 500 Total Return Index (the “S&P 500”), the NASDAQ Composite, the SNL Residential REIT Index and the MSCI US REIT Index. The SNL Residential REIT Index was prepared by SNL Securities, an independent research and publishing firm specializing in the collection and dissemination of data on the banking, thrift and financial services industries. The MSCI US REIT Index is published by Morgan Stanley Capital International Inc., a provider of equity indices. The indices are weighted for all companies that fit the definitional criteria of the particular index and are calculated to exclude companies as they are acquired and add them to the index calculation as they become publicly traded companies. All companies of the definitional criteria in existence at the point in time presented are included in the index calculations. The graph assumes the investment of $100 in our Common Stock and in each index on December 31, 2001, and that all dividends paid have been reinvested.
 
 
 
                                                 
    Period Ending  
Index   12/31/01     12/31/02     12/31/03     12/31/04     12/31/05     12/31/06  
AIMCO
    100.00       88.49       88.65       106.65       113.27       175.76  
S&P 500
    100.00       77.90       100.24       11.14       116.59       135.00  
NASDAQ Composite
    100.00       68.76       103.67       113.16       115.57       127.58  
SNL Residential REITS Index
    100.00       94.37       118.81       157.59       179.03       250.45  
MSCI US REIT Index
    100.00       103.64       141.73       186.35       208.96       284.02  
 
Source: (other than with respect to S&P 500) SNL Financial LC, Charlottesville, VA ©2007.
 
The Performance Graph will not be deemed to be incorporated by reference into any filing by the Company under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent that the Company specifically incorporates the same by reference.


20


Table of Contents

 
Item 6.   Selected Financial Data
 
The following selected financial data is based on our audited historical financial statements. This information should be read in conjunction with such financial statements, including the notes thereto, and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included herein or in previous filings with the Securities and Exchange Commission.
 
                                         
    For the Years Ended December 31,  
    2006(1)     2005(2)     2004(2)     2003(2)     2002(2)  
    (Dollar amounts in thousands, except per share data)  
 
OPERATING DATA:
                                       
Total revenues
  $ 1,690,994     $ 1,408,464     $ 1,279,205     $ 1,207,131     $ 1,105,589  
Total operating expenses
    (1,353,841 )     (1,129,076 )     (994,970 )     (846,507 )     (704,421 )
Operating income
    337,153       279,388       284,235       360,624       401,168  
Income (loss) from continuing operations
    (42,674 )     (23,123 )     57,785       59,609       132,946  
Income from discontinued operations, net
    219,461       94,105       209,669       99,248       36,100  
Cumulative effect of change in accounting principle
                (3,957 )            
Net income
    176,787       70,982       263,497       158,857       169,046  
Net income attributable to preferred stockholders
    81,132       87,948       88,804       93,565       93,558  
Net income (loss) attributable to common stockholders
    95,655       (16,966 )     174,693       65,292       75,488  
OTHER INFORMATION:
                                       
Total consolidated properties (end of period)
    703       619       676       679       728  
Total consolidated apartment units (end of period)
    162,432       158,548       169,932       174,172       187,506  
Total unconsolidated properties (end of period)
    102       264       330       441       511  
Total unconsolidated apartment units (end of period)
    11,791       35,269       44,728       62,823       73,924  
Units managed for others (end of period)(3)
    42,190       46,667       49,074       50,565       56,722  
Earnings (loss) per common share — basic:
                                       
Income (loss) from continuing operations (net of income attributable to preferred stockholders)
  $ (1.29 )   $ (1.18 )   $ (0.33 )   $ (0.37 )   $ 0.46  
Net income (loss) attributable to common stockholders
  $ 1.00     $ (0.18 )   $ 1.88     $ 0.70     $ 0.88  
Earnings (loss) per common share — diluted:
                                       
Income (loss) from continuing operations (net of income attributable to preferred stockholders)
  $ (1.29 )   $ (1.18 )   $ (0.33 )   $ (0.37 )   $ 0.45  
Net income (loss) attributable to common stockholders
  $ 1.00     $ (0.18 )   $ 1.88     $ 0.70     $ 0.87  
Dividends declared per common share
  $ 2.40     $ 3.00     $ 2.40     $ 2.84     $ 3.28  
BALANCE SHEET INFORMATION:
                                       
Real estate, net of accumulated depreciation
  $ 9,081,218     $ 8,189,238     $ 7,672,449     $ 7,079,098     $ 6,907,139  
Total assets
    10,289,775       10,019,160       10,074,316       10,087,394       10,309,101  
Total indebtedness
    6,872,753       6,021,857       5,372,870       5,040,912       4,867,271  
Stockholders’ equity
    2,339,892       2,716,103       3,008,160       2,860,657       3,163,387  
 
 
(1) Based on circumstances and analysis that occurred after the date of our Fourth Quarter 2006 Earnings Release, we recorded a $2.9 million cumulative adjustment for the year ended December 31, 2006, which adjustment was based on an alternative valuation methodology and revised assumptions for certain High Performance Units of the Aimco Operating Partnership. As a result of this adjustment and the related impact on minority interest in the Aimco Operating Partnership, certain amounts reported in our 2006 consolidated financial statements differ from the corresponding amounts that were previously reported in our Fourth Quarter 2006 Earnings Release. This adjustment reduced our 2006 net income and stockholders’ equity by approximately $2.6 million and reduced basic and diluted earnings per share by $0.03. See High Performance Units in Note 10 to the consolidated financial statements in Item 8.


21


Table of Contents

 
(2) Certain reclassifications have been made to conform to the 2006 presentation. These reclassifications primarily represent presentation changes related to discontinued operations resulting from the 2002 adoption of Statement of Financial Accounting Standards No. 144.
 
(3) In 2006, 2005, 2004, 2003 and 2002 includes 38,617, 41,421, 41,233, 39,428 and 45,187 units, respectively, for which we provide asset management services only, although in certain cases we may indirectly own generally less than one percent of the operations of such properties through a partnership syndication or other fund.


22


Table of Contents

 
Item 7.   Management’s Discussion and Analysis of Financial Condition and Results of Operations
 
Executive Overview
 
We are a self-administered and self-managed real estate investment trust, or REIT, engaged in the ownership, acquisition, management and redevelopment of apartment properties. Our property operations are characterized by diversification of product, location and price point. As of December 31, 2006, we owned or managed 1,256 apartment properties containing 216,413 units located in 46 states, the District of Columbia and Puerto Rico. Our primary sources of income and cash are rents associated with apartment leases.
 
The key financial indicators that we use in managing our business and in evaluating our financial condition and operating performance are: Funds From Operations, or FFO; FFO less spending for Capital Replacements, or AFFO; net asset value; same store property operating results; net operating income; net operating income less spending for Capital Replacements, or Free Cash Flow; financial coverage ratios; and leverage as shown on our balance sheet. These terms are defined and described in the sections captioned “Funds From Operations” and “Capital Expenditures” below. The key macro-economic factors and non-financial indicators that affect our financial condition and operating performance are: rates of job growth; single-family and multifamily housing starts; and interest rates.
 
Because our operating results depend primarily on income from our properties, the supply and demand for apartments influences our operating results. Additionally, the level of expenses required to operate and maintain our properties, the pace and price at which we redevelop, acquire and dispose of our apartment properties, and the volume and timing of fee transactions affect our operating results. Our cost of capital is affected by the conditions in the capital and credit markets and the terms that we negotiate for our equity and debt financings.
 
Our focus in 2006 has been to increase revenue and implement cost management and productivity initiatives, which includes centralizing purchasing, restructuring business processes, using technology to increase efficiency and implementing structured monthly reporting to identify issues and improve effectiveness of spending. We believe that our efforts are having their intended effect, and have resulted in positive operating results and built the foundation for improved long-term operating results. These initiatives and others have also resulted in improved asset quality, and we will continue to seek opportunities to reinvest in our properties through capital expenditures and to manage our portfolio through property sales and acquisitions.
 
For 2007, our focus will continue to include the following: enhance operations to improve and sustain customer satisfaction; obtain rate and occupancy increases to bring improved profitability; upgrade the quality of our portfolio through portfolio management, capital replacement, capital improvement and redevelopment; increase efficiency through improved business processes and automation; improve balance sheet flexibility; expand the use of tax credit equity to finance redevelopment of affordable properties; minimize our cost of capital; and monetize a portion of the value inherent in our properties with increased entitlements.
 
The following discussion and analysis of the results of our operations and financial condition should be read in conjunction with the financial statements.
 
Results of Operations
 
  Overview
 
2006 compared to 2005
 
We reported net income of $176.8 million and net income attributable to common stockholders of $95.7 million for the year ended December 31, 2006, compared to net income of $71.0 million and net loss attributable to common stockholders of $17.0 million for the year ended December 31, 2005, increases of $105.8 million and $112.7 million, respectively. These increases were principally due to the following items, all of which are discussed in further detail within this section:
 
  •  an increase in net operating income associated with property operations, reflecting improved operations of our same store properties and other properties, and a large number of newly consolidated properties;


23


Table of Contents

 
  •  an increase in income from discontinued operations, primarily related to higher net gains on dispositions of real estate; and
 
  •  an increase in gain on disposition of unconsolidated real estate and other, including higher gains on sale of land parcels.
 
These increases were partially offset by:
 
  •  an increase in depreciation and amortization expense;
 
  •  an increase in interest expense; and
 
  •  unfavorable changes in the effects of minority interests in our consolidated real estate partnerships.
 
Our reported operating results for 2006 were affected significantly by our adoption of EITF 04-5, as discussed in Adoption of EITF 04-5 in Note 2 to the consolidated financial statements in Item 8. In accordance with the requirements of EITF 04-5, we consolidated 156 previously unconsolidated entities as of January 1, 2006. The consolidation of these entities contributed to increases in the reported amounts of certain revenue and expenses.
 
2005 compared to 2004
 
We reported net income of $71.0 million and net loss attributable to common stockholders of $17.0 million for the year ended December 31, 2005, compared to net income of $263.5 million and net income attributable to common stockholders of $174.7 million for the year ended December 31, 2004, decreases of $192.5 million and $191.7 million, respectively. These decreases were principally due to the following items, all of which are discussed in further detail within this section:
 
  •  a decrease in income from discontinued operations, primarily related to lower net gains on dispositions of real estate;
 
  •  a decrease in gain on disposition of unconsolidated real estate and other, primarily related to a 2004 gain on sale of land;
 
  •  an increase in depreciation and amortization expense;
 
  •  an increase in interest expense; and
 
  •  an increase in general and administrative expenses.
 
These decreases were partially offset by an increase in net operating income associated with property operations, which included increases related to acquisition, newly consolidated and same store properties.
 
The following paragraphs discuss these and other items affecting the results of our operations in more detail.
 
Rental Property Operations
 
Our operating income is generated primarily from the operations of our consolidated apartment properties. The following table summarizes the overall performance of our properties for the years ended December 31, 2006, 2005 and 2004 (in thousands):
 
                         
    2006     2005     2004  
 
Rental and other property revenues
  $ 1,629,988     $ 1,346,587     $ 1,211,865  
Property operating expenses
    758,128       633,984       567,937  
                         
Net operating income
  $ 871,860     $ 712,603     $ 643,928  
                         
 
For the year ended December 31, 2006, compared to the year ended December 31, 2005, net operating income for our consolidated property operations increased by $159.3 million, or 22.3%. The majority of this increase is attributable to newly consolidated properties (143 properties first consolidated in 2006 and 15 properties first consolidated in 2005), which contributed net operating income of $89.2 million in 2006. Newly consolidated properties are properties that: (i) were consolidated for all or part of the current year, (ii) were unconsolidated and


24


Table of Contents

accounted for by the equity method for all or part of the corresponding prior year, and (iii) were not sold or classified as held for sale during the current year. The consolidation of properties upon adoption of EITF 04-5 resulted in an unusually large number of newly consolidated properties in 2006 (see Note 2 to the consolidated financial statements in Item 8). The increase in rental property net operating income also reflects: a $44.6 million increase for consolidated same store properties (see “Conventional Same Store Property Operating Results” below); a $9.5 million increase related to operations of the acquisition properties, consisting of nine properties purchased in 2006 and six properties (including the Palazzo East at Park La Brea) purchased in 2005; a $6.2 million improvement in our affordable property operations; and a $5.4 million increase related to properties undergoing redevelopment.
 
For the year ended December 31, 2005, compared to the year ended December 31, 2004, net operating income for our consolidated property operations increased by $68.7 million, or 10.7%. This increase was principally due to a $40.3 million increase in consolidated same store net operating income (see “Conventional Same Store Property Operating Results” below); a $21.3 million increase related to operations of acquisition properties, which were principally comprised of Palazzo East at Park La Brea and five other properties purchased in 2005 and The Palazzo at Park La Brea and 10 other properties purchased in 2004; a $10.6 million increase related to operations of newly consolidated properties (15 properties first consolidated in 2005 and 36 properties first consolidated in 2004); a $3.9 million increase related to operations of our affordable properties; and a $2.7 million increase related to the completion of certain redevelopment properties. These increases were offset by $6.4 million of increased property management expenses and $3.3 million of higher net casualty losses in 2005 as compared to 2004, primarily relating to greater hurricane and tropical storm damage that occurred in 2005.
 
Conventional Same Store Property Operating Results
 
Same store operating results is a key indicator we use to assess the performance of our property operations and to understand the period over period operations of a consistent portfolio of properties. We define “consolidated same store” properties as conventional properties (i) that we manage, (ii) in which our ownership interest exceeds 10%, (iii) the operations of which have been stabilized for all periods presented, and (iv) that have not been classified as held for sale. The following tables summarize the operations of our consolidated conventional rental property operations:
 
                         
    Year Ended December 31,        
    2006     2005     Change  
 
Consolidated same store revenues
  $ 1,075,434     $ 1,007,789       6.7%  
Consolidated same store expenses
    458,449       435,370       5.3%  
                         
Same store net operating income
    616,985       572,419       7.8%  
Reconciling items(1)
    254,875       140,184       81.8%  
                         
Real estate segment net operating income
  $ 871,860     $ 712,603       22.3%  
                         
Same store operating statistics:
                       
Properties
    365       365          
Apartment units
    107,430       107,430          
Average physical occupancy
    94.4 %     92.4 %     2.0%  
Average rent/unit/month
  $ 811     $ 782       3.7%  
 
 
(1) Reflects property revenues and property operating expenses related to consolidated properties other than same store properties (e.g., affordable, acquisition, redevelopment and newly consolidated properties, including those properties consolidated as a result of the adoption of EITF 04-5) and casualty gains and losses.
 
For the year ended December 31, 2006, compared to the year ended December 31, 2005, consolidated same store net operating income increased $44.6 million, or 7.8%. Revenues increased $67.6 million, or 6.7%, primarily due to higher occupancy (up 2.0%), higher average rent (up $29 per unit) and a $7.5 million increase in utility reimbursements. Expenses increased by $23.1 million, or 5.3%, primarily due to a $6.5 million increase in real


25


Table of Contents

estate taxes, a $6.2 million increase in utilities, a $4.8 million increase in insurance, and a $3.0 million increase in employee compensation and related expenses.
 
                         
    Year Ended December 31,        
    2005     2004     Change  
 
Consolidated same store revenues
  $ 988,952     $ 925,806       6.8%  
Consolidated same store expenses
    428,218       405,370       5.6%  
                         
Same store net operating income
    560,734       520,436       7.7%  
Reconciling items(1)
    151,869       123,502       23.0%  
                         
Real estate segment net operating income
  $ 712,603     $ 643,938       10.7%  
                         
Same store operating statistics:
                       
Properties
    357       357          
Apartment units
    105,472       105,472          
Average physical occupancy
    92.4 %     90.1 %     2.3%  
Average rent/unit/month
  $ 782     $ 753       3.9%  
 
 
(1) Reflects property revenues and property operating expenses related to consolidated properties other than same store properties (e.g., affordable, acquisition, redevelopment and newly consolidated properties) and casualty gains and losses.
 
For the year ended December 31, 2005, compared to the year ended December 31, 2004, consolidated same store net operating income increased $40.3 million, or 7.7%. Revenues increased $63.1 million, or 6.8%, primarily due to higher occupancy (up 2.3%), higher average rent (up $29 per unit), and a $9.4 million decrease in bad debt expense. Expenses increased by $22.8 million, or 5.6%, primarily due to a $7.7 million increase in real estate taxes, a $6.6 million increase in employee compensation and related expenses, and a $6.0 million increase in utilities.
 
Property Management
 
We earn income from property management primarily from certain unconsolidated real estate partnerships for which we are the general partner. The income is primarily in the form of fees generated through property management and other associated activities. Reported revenue from property management decreases as we consolidate real estate partnerships because it is eliminated in consolidation. We expect this trend to continue as we increase our ownership in more of these partnerships or otherwise determine that consolidation is required by GAAP. Additionally, our revenue decreases as properties within our unconsolidated real estate partnerships are sold. Offsetting the revenue earned in property management are the direct expenses associated with property management.
 
The following table summarizes the overall performance of our property management business for the years ended December 31, 2006, 2005 and 2004 (in thousands):
 
                         
    2006     2005     2004  
 
Property management revenues, primarily from affiliates
  $ 12,312     $ 24,528     $ 32,461  
Property management expenses
    4,912       7,361       9,789  
                         
Net operating income from property management
  $ 7,400     $ 17,167     $ 22,672  
                         
 
For the year ended December 31, 2006, compared to the year ended December 31, 2005, net operating income from property management decreased by $9.8 million, or 56.9%. For the year ended December 31, 2005, compared to the year ended December 31, 2004, net operating income from property management decreased by $5.5 million, or 24.3%. In both comparisons the decreases were principally due to reductions in the numbers of unaffiliated and unconsolidated real estate partnerships that we managed. Most of these decreases resulted from the consolidation of partnerships due to increased ownership and GAAP requirements (including the adoption of EITF 04-5 in 2006 as discussed in Adoption of EITF 04-5 in Note 2 to the consolidated financial statements in Item 8), which required


26


Table of Contents

elimination of fee income and reclassification of related property management expenses. Sales of properties by unconsolidated partnerships also contributed to the decreases in income from property management.
 
Activity Fees and Asset Management
 
Activity fees are generated from transactions, including dispositions, refinancings, sales promotes and tax credit syndications and redevelopments. These transactions occur on varying timetables, thus the income varies from period to period. The majority of these fees are realized in connection with transactions related to affordable properties within the Aimco Capital portfolio. We have a large number of affiliated real estate partnerships for which we have identified a pipeline of transactional opportunities. As a result, we view activity fees as a predictable part of our core business strategy. Asset management revenue is from the financial management of partnerships, rather than management of day-to-day property operations. Asset management revenue includes certain fees that were earned in a prior period, but not recognized at that time because collectibility was not reasonably assured. Those fees may be recognized in a subsequent period upon occurrence of a transaction or improvement in operations that generates sufficient cash to pay the fees. Activity and asset management expenses are the direct expenses associated with transactional activities and asset management. These activities are conducted primarily by our taxable subsidiaries and the related operating income is generally subject to income taxes. As discussed in Tax Credit Arrangements in Note 2 to the consolidated financial statements in Item 8, in 2006 we revised our treatment of income from certain tax credit arrangements.
 
The following table summarizes the operating results of our transactional and asset management activities for the years ended December 31, 2006, 2005 and 2004, excluding related income tax effects (in thousands):
 
                         
    2006     2005     2004  
 
Activity fees and asset management revenues
  $ 48,694     $ 37,349     $ 34,879  
Activity and asset management expenses
    9,521       10,628       11,879  
                         
Net operating income from activity fees and asset management
  $ 39,173     $ 26,721     $ 23,000  
                         
 
Included in the activity fees and asset management revenues, primarily from affiliates for the years ended December 31, 2006, 2005 and 2004, were $41.4 million, $33.3 million and $30.3 million, respectively, of fees related to affordable properties within the Aimco Capital portfolio.
 
For the year ended December 31, 2006, compared to the year ended December 31, 2005, net operating income from activity fees and asset management increased $12.5 million, or 46.6%. This increase is primarily attributable to growth in our affordable housing tax credit syndication business, including a $4.3 million increase in syndication fees and a $4.6 million increase in other revenue earned in connection with these arrangements. The increase also reflects a $2.4 million increase in promote distributions from partnerships.
 
For the year ended December 31, 2005, compared to the year ended December 31, 2004, net operating income from activity fees and asset management increased by $3.7 million, or 16.2%. This overall increase was principally a result of increased activity fees related to syndication and developer activities of $6.0 million and $3.7 million, respectively, as well as a $1.3 million decrease in expenses associated with these activities. Additionally, we received $3.1 million in promote distributions from an unconsolidated partnership, as a result of us, as general partner, achieving financial returns to the limited partners in excess of established targets. These increases were offset by a $5.2 million decrease in asset management fees and decreases of $3.3 million and $1.9 million in activity fees related to disposition and refinancing activities, respectively.
 
Depreciation and Amortization
 
For the year ended December 31, 2006, compared to the year ended December 31, 2005, depreciation and amortization increased $94.4 million, or 25.1%. This increase was principally due to $39.7 million of depreciation for newly consolidated properties, particularly properties that were consolidated in 2006 in connection with the adoption of EITF 04-5 (see Adoption of EITF 04-5 in Note 2 to the consolidated financial statements in Item 8) and $46.2 million of depreciation related to assets recently placed in service, including acquired properties, redevelopment projects and other capital expenditures. Additionally, a $4.8 million increase resulted from a change


27


Table of Contents

effective July 1, 2005 in estimated useful lives that apply to capitalized payroll and certain indirect costs (see Capital Expenditures and Related Depreciation in Note 2 of the consolidated financial statements in Item 8).
 
For the year ended December 31, 2005, compared to the year ended December 31, 2004, depreciation and amortization increased $60.8 million, or 19.3%. This increase was principally due to $31.9 million of additional depreciation on certain real estate assets where the depreciation was adjusted prospectively (see Impairment of Long-Lived Assets in Note 2 of the consolidated financial statements in Item 8); $13.8 million and $8.3 million of additional depreciation related to newly consolidated and acquisition properties, respectively; and $11.0 million from the completion of certain redevelopment projects. Additionally, $4.3 million of the increase was due to a change in estimated useful lives that apply to capitalized payroll and certain indirect costs (see Capital Expenditures and Related Depreciation in Note 2 of the consolidated financial statements in Item 8).
 
General and Administrative Expenses
 
For the year ended December 31, 2006, compared to the year ended December 31, 2005, general and administrative expenses increased $8.9 million, or 9.6%. This increase reflects a $9.6 million increase in employee compensation and related costs, including higher stock-based compensation and variable compensation based on achievement of established performance targets. The increase was partially offset by a $3.9 million decrease in legal, audit and consulting expenses. In addition, in 2006 we recorded a $2.9 million adjustment based on an alternative method and revised assumptions for the valuation of High Performance Units (see High Performance Units in Note 10 to the consolidated financial statements in Item 8).
 
For the year ended December 31, 2005, compared to the year ended December 31, 2004, general and administrative expenses increased $15.4 million, or 19.9%. This increase was principally due to $14.1 million in higher compensation related to increased staffing levels, increased health care costs, and transition costs associated with the chief financial and chief accounting officer positions. Additionally, in 2005 we accrued $0.6 million in severance costs related to the restructuring of regional operating centers as a result of property dispositions.
 
Other Expenses (Income), Net
 
Other expenses (income), net includes income tax provision/benefit, franchise taxes, risk management activities related to our unconsolidated partnerships, partnership administration expenses and various other items.
 
For the year ended December 31, 2006, compared to the year ended December 31, 2005, other expenses (income), net increased by $0.9 million, or 11.6%. This increase was primarily attributable to a $4.9 million decrease in the income tax benefit for our continuing operations, reflecting smaller losses of our taxable REIT subsidiaries (see Note 9 to the consolidated financial statements in Item 8). The decrease was partially offset by net favorable legal settlements and adjustments to accruals for loss contingencies.
 
For the year ended December 31, 2005, compared to the year ended December 31, 2004, other expenses (income), net decreased by $4.4 million, or 35.6%. This decrease was principally due to a $9.5 million higher income tax benefit for our continuing operations, reflecting increased losses of our taxable REIT subsidiaries (see Note 9 to the consolidated financial statements in Item 8). The decrease in other expenses was partially offset by a $3.8 million increase in partnership expenses, which was largely the result of higher professional fees, and other expenses increases and reclassifications.
 
Interest Income
 
Interest income consists primarily of interest on notes receivable from non-affiliates and unconsolidated real estate partnerships, interest on cash and restricted cash accounts, and accretion of discounts on certain notes receivable from unconsolidated real estate partnerships. Transactions that result in accretion occur infrequently and thus accretion income may vary from period to period.
 
For the year ended December 31, 2006, as compared to the year ended December 31, 2005, interest income increased $1.3 million, or 4.2%. This increase reflects $8.0 million in interest income on cash and restricted cash balances of newly consolidated properties, particularly properties consolidated as a result of adopting EITF 04-5 in 2006 (see Adoption of EITF 04-5 in Note 2 the consolidated financial statements in Item 8). The increase also


28


Table of Contents

reflects a $4.6 million increase in interest income related to increased balances of notes receivable from non-affiliates (see Note 5 to the consolidated financial statements in Item 8) and $4.2 million of accretion income in connection with two property sales in 2006. These increases were largely offset by the elimination of $14.0 million in interest income on notes receivable from real estate partnerships that were consolidated in 2006 in connection with the adoption of EITF 04-5.
 
For the year ended December 31, 2005, as compared to the year ended December 31, 2004, interest income decreased $1.1 million, or 3.4%. This decrease was principally the result of a $3.8 million reduction in accretion income, partially offset by higher interest income from money market and interest-bearing accounts due to increased interest rates and higher cash balances.
 
Interest Expense
 
For the year ended December 31, 2006, compared to the year ended December 31, 2005, interest expense, which includes the amortization of deferred financing costs, increased $64.7 million, or 18.9%. This increase reflects $35.4 million in interest expense of newly consolidated properties, particularly those consolidated as a result of adopting EITF 04-5 in 2006 (see Adoption of EITF 04-5 in Note 2 the consolidated financial statements in Item 8). Additionally, interest expense on property debt increased by $33.9 million due to higher interest rates on variable rate loans, higher average balances related to refinancings and acquisitions. These increases were partially offset by a $6.9 million increase in capitalized interest, reflecting an increase in properties undergoing redevelopment and construction.
 
For the year ended December 31, 2005, compared to the year ended December 31, 2004, interest expense increased $25.3 million, or 8.0%. This increase was principally due to interest on the additional debt related to acquisition and newly consolidated properties $16.0 million and $5.0 million, respectively, and a $17.7 million increase due to higher borrowings and interest rates on variable rate debt. These increases were partially offset by $4.8 million in lower amortization of loan costs, primarily due to corporate debt restructuring in 2005, $8.6 million in higher capitalized interest due to increased redevelopment activity, and a $2.1 million decrease related to the redemption of mandatorily redeemable preferred securities in 2004 and early 2005.
 
Deficit Distributions to Minority Partners
 
When real estate partnerships consolidated in our financial statements make cash distributions to partners in excess of the carrying amount of the minority interest, we record a charge equal to the excess amount, even though there is no economic effect or cost.
 
For the year ended December 31, 2006, as compared to the year ended December 31, 2005, deficit distributions to minority partners increased $9.4 million, or 80.8%. This increase reflects higher levels of distributions to minority interests in 2006, including several large distributions in connection with debt refinancing transactions.
 
For the year ended December 31, 2005, as compared to the year ended December 31, 2004, deficit distributions to minority partners decreased $5.8 million, or 33.1%. This decrease was due to reduced levels of distributions being made by our consolidated real estate partnerships as a result of lower refinancing activity, decreased operating results, and our increased ownership of certain partnerships.
 
Gain on Dispositions of Unconsolidated Real Estate and Other
 
Gain on dispositions of unconsolidated real estate and other includes our share of gains related to dispositions of real estate by unconsolidated real estate partnerships, gains on dispositions of investments in unconsolidated real estate partnerships, gains on dispositions of land and other non-depreciable assets, and costs related to asset disposal activities. The amounts of reported gains reflect the changing level of our disposition activity and may vary from period to period. Losses incurred in connection with these transactions are reported separately as impairments.
 
For the year ended December 31, 2006, as compared to the year ended December 31, 2005, gain on dispositions of unconsolidated real estate and other increased $15.6 million. This increase is primarily attributable to an $11.0 million gain on the disposition of our interest in an unconsolidated joint venture that owned and operated several student housing properties and a $9.0 million increase in gains on disposition of land and other non-


29


Table of Contents

depreciable assets. These increases were partially offset by a decrease in our share of gains on sales of real estate by unconsolidated partnerships.
 
For the year ended December 31, 2005, as compared to the year ended December 31, 2004, gain on dispositions of unconsolidated real estate and other decreased $50.3 million. This decrease reflects a $34.6 million gain on the sale of a parcel of land located in Florida and $17.4 million representing our share of a gain from the sale of an unconsolidated core property, both of which occurred in 2004.
 
Minority Interest in Consolidated Real Estate Partnerships
 
Minority interest in consolidated real estate partnerships reflects minority partners’ share of operating results of consolidated real estate partnerships. This generally includes the minority partners’ share of property management fees, interest on notes and other amounts eliminated in consolidation that we charge to such partnerships. However, we generally do not recognize a benefit for the minority interest share of partnership losses for partnerships that have deficits in partners’ equity.
 
For the year ended December 31, 2006, as compared to the year ended December 31, 2005, minority interest in consolidated real estate partnerships changed unfavorably by $24.7 million. This change is primarily attributable to our recognition of $25.0 million for minority partners’ share of losses of partnerships with deficits in equity as a result of adopting EITF 04-5 in 2006 (see Adoption of EITF 04-5 in Note 2 to the consolidated financial statements in Item 8). The change also reflects differences related to our revised accounting treatment for tax credit arrangements (see Tax Credit Arrangements in Note 2 to the consolidated financial statements in Item 8), including (i) the reversal in 2006 of a previously recognized benefit of $9.0 million for losses of tax credit partnerships that were allocated to minority interests in prior years, but which are absorbed by us under our revised accounting treatment and (ii) a $6.7 million benefit recognized in 2005 for losses allocated to minority interests in tax credit partnerships, while no comparable amount was recognized in 2006 under our revised accounting treatment. These unfavorable changes were partially offset by a $16.0 million net increase in the minority interest share of other real estate partnership losses.
 
For the year ended December 31, 2005, as compared to the year ended December 31, 2004, the benefit from minority interest in consolidated real estate partnerships decreased $9.6 million. This decrease was driven by general improvement in property operating results during 2005 as compared to 2004, which resulted in minority interests absorbing a lower amount of partnership losses.
 
Income from Discontinued Operations, Net
 
For properties accounted for as held for sale, the results of operations for properties sold during the period or designated as held for sale at the end of the period are generally required to be classified as discontinued operations for all periods presented. The components of net earnings that are classified as discontinued operations include all property-related revenues and operating expenses, depreciation expense recognized prior to the classification as held for sale, property-specific interest expense to the extent there is secured debt on the property, and any related minority interest. In addition, any impairment losses on assets held for sale, and the net gain on the eventual disposal of properties held for sale are reported in discontinued operations.
 
For the years ended December 31, 2006, 2005, and 2004, income from discontinued operations, net totaled $219.5 million, $94.1 million and $209.7 million, respectively, which includes losses from operations of $0.8 million and $4.5 million in 2006 and 2005, respectively, and income from operations of $5.4 million in 2004. For 2006, the income from operations included the operating results of 77 properties and one tower of the Flamingo South Beach property (the South Tower) that were sold during 2006. For 2005 and 2004, the income from operations included the operating results of 160 properties and 214 properties, respectively, that were sold or classified as held for sale in 2004, 2005 and 2006. Due to varying number of properties and the timing of sales, the income from operations is not comparable year to year.
 
During 2006, we sold 77 properties and the South Tower, resulting in a net gain on sale of approximately $227.3 million (which is net of $32.9 million of related income taxes). Additionally, we recognized $0.4 million in impairment recoveries on assets sold in 2006 and $15.9 million of net recoveries of deficit distributions to minority


30


Table of Contents

partners. During 2005, we sold 83 properties, resulting in a net gain on sale of approximately $98.5 million (which is net of $4.5 million of related income taxes). Additionally, we recognized $3.8 million in impairment losses on assets sold or held for sale in 2005 and $14.6 million of net recoveries of deficit distributions to minority partners. During 2004, we sold 54 properties, resulting in a net gain on sale of approximately $233.3 million (which is net of $16.0 million of related income taxes). Additionally, we recognized $7.3 million in impairment losses on assets sold or held for sale in 2004 and $3.2 million of net recoveries of deficit distributions to minority partners.
 
Changes in the level of gains recognized from period to period reflect the changing level of our disposition activity from period to period. Additionally, gains on properties sold are determined on an individual property basis or in the aggregate for a group of properties that are sold in a single transaction, and are not comparable period to period. See Note 13 of the consolidated financial statements in Item 8 for additional information on discontinued operations.
 
Cumulative Effect of Change in Accounting Principle
 
On March 31, 2004, we recorded a $4.0 million cumulative effect of change in accounting principle related to the adoption of FIN 46. This charge is attributable to our recognition of cumulative losses allocable to minority interest that would otherwise have resulted in minority interest deficits. See Note 2 of the consolidated financial statements in Item 8 for further information.
 
Critical Accounting Policies and Estimates
 
We prepare our consolidated financial statements in accordance with GAAP, which requires us to make estimates and assumptions. We believe that the following critical accounting policies involve our more significant judgments and estimates used in the preparation of our consolidated financial statements.
 
Impairment of Long-Lived Assets
 
Real estate and other long-lived assets to be held and used are stated at cost, less accumulated depreciation and amortization, unless the carrying amount of the asset is not recoverable. If events or circumstances indicate that the carrying amount of a property may not be recoverable, we make an assessment of its recoverability by comparing the carrying amount to our estimate of the undiscounted future cash flows, excluding interest charges, of the property. If the carrying amount exceeds the aggregate undiscounted future cash flows, we recognize an impairment loss to the extent the carrying amount exceeds the estimated fair value of the property.
 
Real estate investments are subject to varying degrees of risk. Several factors may adversely affect the economic performance and value of our real estate investments. These factors include:
 
  •  the general economic climate;
 
  •  competition from other apartment communities and other housing options;
 
  •  local conditions, such as loss of jobs or an increase in the supply of apartments, that might adversely affect apartment occupancy or rental rates;
 
  •  changes in governmental regulations and the related cost of compliance;
 
  •  increases in operating costs (including real estate taxes) due to inflation and other factors, which may not be offset by increased rents;
 
  •  changes in tax laws and housing laws, including the enactment of rent control laws or other laws regulating multifamily housing;
 
  •  changes in market capitalization rates; and
 
  •  the relative illiquidity of such investments.
 
Any adverse changes in these and other factors could cause an impairment in our long-lived assets, including real estate and investments in unconsolidated real estate partnerships. Based on periodic tests of recoverability of long-lived assets, for the year ended December 31, 2005, we recorded impairment losses of $3.4 million related to


31


Table of Contents

properties to be held and used. For the years ended December 31, 2006 and 2004, we determined that the carrying amount for our properties to be held and used was recoverable and, therefore, we did not record any impairment losses related to such properties.
 
Notes Receivable and Interest Income Recognition
 
Notes receivable from unconsolidated real estate partnerships consist primarily of notes receivable from partnerships in which we are the general partner. The ultimate repayment of these notes is subject to a number of variables, including the performance and value of the underlying real estate property and the claims of unaffiliated mortgage lenders. Our notes receivable include loans extended by us that we carry at the face amount plus accrued interest, which we refer to as “par value notes,” and loans extended by predecessors whose positions we generally acquired at a discount, which we refer to as “discounted notes.”
 
We record interest income on par value notes as earned in accordance with the terms of the related loan agreements. We discontinue the accrual of interest on such notes when the notes are impaired, as discussed below, or when there is otherwise significant uncertainty as to the collection of interest. We record income on such nonaccrual loans using the cost recovery method, under which we apply cash receipts first to the recorded amount of the loan; thereafter, any additional receipts are recognized as income.
 
We recognize interest income on discounted notes receivable based upon whether the amount and timing of collections are both probable and reasonably estimable. We consider collections to be probable and reasonably estimable when the borrower has entered into certain closed or pending transactions (which include real estate sales, refinancings, foreclosures and rights offerings) that provide a reliable source of repayment. In such instances, we recognize accretion income, on a prospective basis using the effective interest method over the estimated remaining term of the loans, equal to the difference between the carrying amount of the discounted notes and the estimated collectible value. We record income on all other discounted notes using the cost recovery method. Accretion income recognized in any given period is based on our ability to complete transactions to monetize the notes receivable and the difference between the carrying value and the estimated collectible value of the notes; therefore, accretion income varies on a period by period basis and could be lower or higher than in prior periods.
 
Allowance for Losses on Notes Receivable
 
We assess the collectibility of notes receivable on a periodic basis, which assessment consists primarily of an evaluation of cash flow projections of the borrower to determine whether estimated cash flows are sufficient to repay principal and interest in accordance with the contractual terms of the note. We recognize impairments on notes receivable when it is probable that principal and interest will not be received in accordance with the contractual terms of the loan. The amount of the impairment to be recognized generally is based on the fair value of the partnership’s real estate that represents the primary source of loan repayment. In certain instances where other sources of cash flow are available to repay the loan, the impairment is measured by discounting the estimated cash flows at the loan’s original effective interest rate.
 
During the year ended December 31, 2006, we identified and recorded an impairment loss on notes receivable of $2.8 million. For the years ended December 31, 2005 and 2004, we recorded net recoveries of $1.4 million and $1.8 million of previously recorded impairment losses on notes receivable, respectively. We will continue to evaluate the collectibility of these notes, and we will adjust related allowances in the future due to changes in market conditions and other factors.
 
Capitalized Costs
 
We capitalize costs, including certain indirect costs, incurred in connection with our capital expenditure activities, including redevelopment and construction projects, other tangible property improvements, and replacements of existing property components. Included in these capitalized costs are payroll costs associated with time spent by site employees in connection with the planning, execution and control of all capital expenditure activities at the property level. We characterize as “indirect costs” an allocation of certain department costs, including payroll, at the regional operating center and corporate levels that clearly relate to capital expenditure activities. We capitalize interest, property taxes and insurance during periods in which redevelopment and construction projects


32


Table of Contents

are in progress. Costs incurred in connection with capital expenditure activities are capitalized where the costs of the improvements or replacements exceed $250. We charge to expense as incurred costs that do not relate to capital expenditure activities, including ordinary repairs, maintenance, resident turnover costs and general and administrative expenses. See Capital Expenditures and Related Depreciation in Note 2 to the consolidated financial statements in Item 8 for further information.
 
For the years ended December 31, 2006, 2005 and 2004, for continuing and discontinued operations, we capitalized $24.7 million, $18.1 million and $9.5 million, respectively, of interest costs and $66.2 million, $53.3 million and $46.7 million, respectively of site payroll and indirect costs.
 
Funds From Operations
 
Funds From Operations, or FFO, is a non-GAAP financial measure that we believe, when considered with the financial statements determined in accordance with GAAP, is helpful to investors in understanding our performance because it captures features particular to real estate performance by recognizing that real estate generally appreciates over time or maintains residual value to a much greater extent than do other depreciable assets such as machinery, computers or other personal property. The Board of Governors of the National Association of Real Estate Investment Trusts, or NAREIT, defines FFO as net income (loss), computed in accordance with GAAP, excluding gains from sales of depreciable property, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. Adjustments for unconsolidated partnerships and joint ventures are calculated to reflect FFO on the same basis. We compute FFO for all periods presented in accordance with the guidance set forth by NAREIT’s April 1, 2002, White Paper, which we refer to as the White Paper. We calculate FFO (diluted) by subtracting redemption related preferred stock issuance costs and dividends on preferred stock and adding back dividends/distributions on dilutive preferred securities and interest expense on dilutive mandatorily redeemable convertible preferred securities. FFO should not be considered an alternative to net income or net cash flows from operating activities, as determined in accordance with GAAP, as an indication of our performance or as a measure of liquidity. FFO is not necessarily indicative of cash available to fund future cash needs. In addition, although FFO is a measure used for comparability in assessing the performance of real estate investment trusts, there can be no assurance that our basis for computing FFO is comparable with that of other real estate investment trusts.


33


Table of Contents

For the years ended December 31, 2006, 2005 and 2004, our FFO is calculated as follows (in thousands):
 
                         
    2006     2005     2004  
 
Net income (loss) attributable to common stockholders(1)
  $ 95,655     $ (16,966 )   $ 174,693  
Adjustments:
                       
Depreciation and amortization(2)
    470,597       376,231       315,451  
Depreciation and amortization related to non-real estate assets
    (19,620 )     (17,700 )     (18,349 )
Depreciation of rental property related to minority partners and unconsolidated entities(3)
    (4,409 )     (12,474 )     (14,457 )
Depreciation of rental property related to minority partners’
interest —  adjustment(4)
    7,377              
Gain on dispositions of unconsolidated real estate and other
    (34,567 )     (18,958 )     (69,294 )
Gain on dispositions of non-depreciable assets
    11,525       2,480       38,977  
Deficit distributions to minority partners(5)
    21,004       11,615       17,374  
Cumulative effect of change in accounting principle
                3,957  
Discontinued operations:
                       
Gain on dispositions of real estate, net of minority partners’ interest(3)
    (260,206 )     (102,972 )     (249,353 )
Depreciation of rental property, net of minority partners’ interest(3)
    16,910       51,897       59,297  
Recovery of deficit distributions to minority partners, net(5)
    (15,927 )     (14,604 )     (3,231 )
Income tax arising from disposals
    32,918       4,481       16,015  
Minority interest in Aimco Operating Partnership’s share of above adjustments
    (21,721 )     (28,382 )     (10,289 )
Preferred stock dividends
    74,284       86,825       85,315  
Redemption related preferred stock issuance costs
    6,848       1,123       3,489  
                         
Funds From Operations
  $ 380,668     $ 322,596     $ 349,595  
Preferred stock dividends
    (74,284 )     (86,825 )     (85,315 )
Redemption related preferred stock issuance costs
    (6,848 )     (1,123 )     (3,489 )
Dividends/distributions on dilutive preferred securities
    202       168       2,798  
                         
Funds From Operations attributable to common stockholders — diluted
  $ 299,738     $ 234,816     $ 263,589  
                         
Weighted average number of common shares, common share equivalents and dilutive preferred securities outstanding:
                       
Common shares and equivalents(6)
    98,451       94,465       93,252  
Dilutive preferred securities
    71       74       1,106  
                         
Total
    98,522       94,539       94,358  
                         
 
 
Notes:
 
(1) Represents the numerator for earnings per common share, calculated in accordance with GAAP. Based on circumstances and analysis that occurred after the date of our Fourth Quarter 2006 Earnings Release, we recorded a $2.9 million cumulative adjustment for the year ended December 31, 2006, which adjustment was based on an alternative valuation methodology and revised assumptions for certain High Performance Units of the Aimco Operating Partnership. As a result of this adjustment and the related impact on minority interest in the Aimco Operating Partnership, our net income attributable to common stockholders and Funds From Operations for the year ended December 31, 2006, is approximately $2.6 million lower than the corresponding amounts previously reported in our Fourth Quarter 2006 Earnings Release. See High Performance Units in Note 10 to the consolidated financial statements in Item 8.


34


Table of Contents

 
(2) Includes amortization of management contracts where we are the general partner. Such management contracts were established in certain instances where we acquired a general partner interest in either a consolidated or an unconsolidated partnership. Because the recoverability of these management contracts depends primarily on the operations of the real estate owned by the limited partnerships, we believe it is consistent with the White Paper to add back such amortization, as the White Paper directs the add-back of amortization of assets uniquely significant to the real estate industry.
 
(3) “Minority partners’ interest,” means minority interest in our consolidated real estate partnerships.
 
(4) Represents prior period depreciation of certain tax credit redevelopment properties that Aimco included in an adjustment to minority interest in real estate partnerships for the year ended December 31, 2006 (See Tax Credit Arrangements in Note 2 to the consolidated financial statements). This prior period depreciation is added back to determine FFO in accordance with the NAREIT White Paper.
 
(5) In accordance with GAAP, deficit distributions to minority partners are charges recognized in our income statement when cash is distributed to a non-controlling partner in a consolidated real estate partnership in excess of the positive balance in such partner’s capital account, which is classified as minority interest on our balance sheet. We record these charges for GAAP purposes even though there is no economic effect or cost. Deficit distributions to minority partners occur when the fair value of the underlying real estate exceeds its depreciated net book value because the underlying real estate has appreciated or maintained its value. As a result, the recognition of expense for deficit distributions to minority partners represents, in substance, either (a) our recognition of depreciation previously allocated to the non-controlling partner or (b) a payment related to the non-controlling partner’s share of real estate appreciation. Based on White Paper guidance that requires real estate depreciation and gains to be excluded from FFO, we add back deficit distributions and subtract related recoveries in our reconciliation of net income to FFO.
 
(6) Represents the denominator for earnings per common share — diluted, calculated in accordance with GAAP, plus additional common share equivalents that are dilutive for FFO.
 
Liquidity and Capital Resources
 
Liquidity is the ability to meet present and future financial obligations either through the sale or maturity of existing assets or by the acquisition of additional funds through working capital management. Both the coordination of asset and liability maturities and effective working capital management are important to the maintenance of liquidity. Our primary source of liquidity is cash flow from our operations. Additional sources are proceeds from property sales and proceeds from refinancings of existing mortgage loans and borrowings under new mortgage loans.
 
Our principal uses for liquidity include normal operating activities, payments of principal and interest on outstanding debt, capital expenditures, dividends paid to stockholders and distributions paid to partners, and acquisitions of, and investments in, properties. We use our cash and cash equivalents and our cash provided by operating activities to meet short-term liquidity needs. In the event that our cash and cash equivalents and our cash provided by operating activities is not sufficient to cover our short-term liquidity demands, we have additional means, such as short-term borrowing availability and proceeds from property sales and refinancings, to help us meet our short-term liquidity demands. We use our revolving credit facility for general corporate purposes and to fund investments on an interim basis. We expect to meet our long-term liquidity requirements, such as debt maturities and property acquisitions, through long-term borrowings, both secured and unsecured, the issuance of debt or equity securities (including OP Units), the sale of properties and cash generated from operations.
 
At December 31, 2006, we had $229.8 million in cash and cash equivalents, an increase of $68.1 million from December 31, 2005. This increase reflects cash balances of newly consolidated properties and proceeds from sales and refinancing transactions that had not been distributed or applied to the outstanding balance of the revolving credit facility (see Note 8 to the consolidated financial statements in Item 8). At December 31, 2006, we had $347.5 million of restricted cash, primarily consisting of reserves and escrows held by lenders for bond sinking funds, capital expenditures, property taxes and insurance. In addition, cash, cash equivalents and restricted cash are held by partnerships that are not presented on a consolidated basis. The following discussion relates to changes in


35


Table of Contents

cash due to operating, investing and financing activities, which are presented in our consolidated statements of cash flows in Item 8.
 
Operating Activities
 
For the year ended December 31, 2006, our net cash provided by operating activities of $532.3 million was primarily from operating income from our consolidated properties, which is affected primarily by rental rates, occupancy levels and operating expenses related to our portfolio of properties. Cash provided by operating activities increased $176.7 million compared with the year ended December 31, 2005, driven by an increase in net income and changes in operating assets and liabilities. The changes in operating assets and liabilities were primarily due to a decrease in restricted cash, net of an increase in restricted cash from newly consolidated properties, and an increase in deferred revenues.
 
Investing Activities
 
For the year ended December 31, 2006, our net cash provided by investing activities of $233.0 million primarily resulted from proceeds received from the sales of properties, partially offset by originations of notes receivable relating to the West Harlem transaction, investments in our existing real estate assets through capital spending as well as the acquisition of nine properties (see Note 3 to the consolidated financial statements in Item 8 for further information on acquisitions).
 
Although we hold all of our properties for investment, we sell properties when they do not meet our investment criteria or are located in areas that we believe do not justify our continued investment when compared to alternative uses for our capital. During the year ended December 31, 2006, we sold 77 consolidated properties and the South Tower of the Flamingo South Beach property. These properties and the South Tower were sold for an aggregate sales price of $1,110.7 million and generated proceeds totaling $958.6 million, after the payment of transaction costs and the assumption of debt. Sales proceeds were used to repay a portion of our outstanding short-term indebtedness and for other corporate purposes.
 
We are currently marketing for sale certain properties that are inconsistent with our long-term investment strategy. Additionally, from time to time, we may market certain properties that are consistent with our long-term investment strategy but offer attractive returns, such as sales to buyers who intend to convert the properties to condominiums. Gross sales proceeds from 2007 dispositions are expected to be $400 million to $600 million, and we plan to use our share of the net proceeds from such dispositions to reduce debt, fund capital expenditures on existing assets, fund property and partnership acquisitions, potentially repurchase Common Stock and for other operating needs and corporate purposes.
 
Capital Expenditures
 
We classify all capital spending as Capital Replacements (which we refer to as CR), Capital Improvements (which we refer to as CI), casualties or redevelopment. Non-redevelopment and non-casualty capitalizable expenditures are apportioned between CR and CI based on the useful life of the capital item under consideration and the period we have owned the property (i.e., the portion that was consumed during our ownership of the item represents CR; the portion of the item that was consumed prior to our ownership represents CI).
 
For the year ended December 31, 2006, we spent a total of $76.6 million on CR. These are expenditures that represent the share of expenditures that are deemed to replace the consumed portion of acquired capital assets. For the year ended December 31, 2006, we spent a total of $99.2 million, $35.8 million and $230.8 million, respectively, on CI, casualties and redevelopment. CI expenditures represent all non-redevelopment and non-casualty capital expenditures that are made to enhance the value, profitability or useful life of an asset from its original purchase condition. Casualty expenditures represent capitalized costs incurred in connection with casualty losses and are associated with the restoration of the asset. A portion of the restoration costs may be reimbursed by insurance carriers subject to deductibles associated with each loss. Redevelopment expenditures represent expenditures that substantially upgrade the property.


36


Table of Contents

The table below details our share of actual spending, on both consolidated and unconsolidated real estate partnerships, for CR, CI, casualties and redevelopment for the year ended December 31, 2006 on a per unit and total dollar basis (based on approximately 143,054 ownership equivalent units (excluding non-managed units) weighted for the portion of the period that we owned the property), and reconciles it to our consolidated statement of cash flows for the same period (in thousands, except per unit amounts).
 
                 
    Actual Cost     Cost Per Unit  
 
Capital Replacements Detail:
               
Building and grounds
  $ 24,997     $ 175  
Turnover related
    40,002       279  
Includes: carpet, vinyl, tile, appliance, and fixture replacements
               
Capitalized site payroll and indirect costs
    11,600       81  
                 
Our share of Capital Replacements
  $ 76,599     $ 535  
                 
Capital Replacements:
               
Conventional
  $ 69,202          
Affordable
    7,397          
                 
Our share of Capital Replacements
    76,599          
                 
Capital Improvements:
               
Conventional
    83,138          
Affordable
    16,108          
Our share of Capital Improvements
    99,246          
                 
Casualties:
               
Conventional
    29,756          
Affordable
    6,088          
                 
Our share of casualties
    35,844          
                 
Redevelopment:
               
Conventional
    177,902          
Affordable
    52,944          
                 
Our share of redevelopment
    230,846          
                 
Our share of capital expenditures
    442,535          
Plus minority partners’ share of consolidated spending
    73,027          
Less our share of unconsolidated spending
    (2,998 )        
                 
Total capital expenditures per consolidated statement of cash flows
  $ 512,564          
                 
 
Included in the above spending for CI, casualties and redevelopment, was approximately $54.8 million of our share of capitalized site payroll and indirect costs related to these activities for the year ended December 31, 2006.
 
We funded all of the above capital expenditures with cash provided by operating activities, working capital, property sales and borrowings under the revolving credit facility.
 
Financing Activities
 
For the year ended December 31, 2006, net cash used in financing activities of $697.2 million primarily related to repayments of property loans, redemptions of Class Q Cumulative Preferred Stock, Class R Cumulative Preferred Stock and Class X Cumulative Convertible Preferred Stock, Common Stock and preferred stock dividends, distributions to minority interests, and repurchases of Common Stock. Proceeds from property loans, issuance of preferred stock and stock option exercises partially offset the cash outflow.


37


Table of Contents

 
Mortgage Debt
 
At December 31, 2006 and 2005, we had $6.3 billion and $5.7 billion, respectively, in consolidated mortgage debt outstanding, which included zero and $384.3 million, respectively, of mortgage debt classified within liabilities related to assets held for sale. During the year ended December 31, 2006, we refinanced or closed mortgage loans on 66 consolidated properties generating $1,224.6 million of proceeds from borrowings with a weighted average interest rate of 5.66%. Our share of the net proceeds after repayment of existing debt, payment of transaction costs and distributions to limited partners, was $589.4 million. We used these total net proceeds for capital expenditures and other corporate purposes. We intend to continue to refinance mortgage debt to generate proceeds in amounts exceeding our scheduled amortizations and maturities.
 
Revolving Credit Facility and Term Loans
 
We have an Amended and Restated Senior Secured Credit Agreement with a syndicate of financial institutions, which we refer to as the Credit Agreement. On March 22, 2006, we amended various terms in our Credit Agreement, including the ability to request an increase in the aggregate commitments (which may be revolving or term loan commitments) by an amount not to exceed $150 million; a reduction in the interest rate spread applicable to revolving loans to LIBOR plus a margin that can range from 1.125% to 1.75%; a reduction in the interest rate spread applicable to letters of credit; a reduction in the spread applicable to term loans to LIBOR plus 1.5%; and an extension of the maturity dates from November 2, 2007, to May 1, 2009, for the revolver and from November 2, 2009, to March 22, 2011, for the term loans.
 
The aggregate amount of commitments and loans under the Credit Agreement is $850.0 million, comprised of $400.0 million in term loans and $450.0 million of revolving loan commitments. At December 31, 2006, the term loans had an outstanding principal balance of $400.0 million and an interest rate of 6.91%. At December 31, 2006, the revolving loans had an outstanding principal balance of $140.0 million and a weighted average interest rate of 6.725% (based on various weighted average LIBOR borrowings outstanding with various maturities). The amount available under the revolving credit facility at December 31, 2006, was $277.3 million (after giving effect to $32.7 million outstanding for undrawn letters of credit issued under the revolving credit facility). The proceeds of revolving loans are generally permitted to be used to fund working capital and for other corporate purposes. For more information, see Note 7 of the consolidated financial statements in Item 8.
 
Equity Transactions
 
During the year ended December 31, 2006, we redeemed all outstanding shares of our 10.0% Class R Cumulative Preferred Stock for $173.5 million, all outstanding shares of our 10.1% Class Q Cumulative Preferred Stock for $63.3 million, and all outstanding shares of our 8.5% Class X Cumulative Convertible Preferred Stock for $50.0 million. On June 29, 2006, we sold 200 shares of Series A Community Reinvestment Act Perpetual Preferred Stock, $0.01 par value per share, which we refer to as the CRA Preferred Stock, with a liquidation preference of $500,000 per share, for net proceeds of approximately $97.5 million. See Preferred Stock in Note 11 to the consolidated financial statements in Item 8 for additional information about our preferred stock transactions during 2006.
 
Under our shelf registration statement, as of December 31, 2006 we had available for issuance approximately $877 million of debt and equity securities and the Aimco Operating Partnership had available for issuance $500 million of debt securities.
 
Our Board of Directors has, from time to time, authorized us to repurchase shares of our outstanding capital stock. During the year ended December 31, 2006, we repurchased approximately 2.3 million shares of Common Stock for cash totaling approximately $120.3 million. Currently, we are authorized to repurchase up to an additional 5.7 million shares of our Common Stock under an authorization that has no expiration date. These repurchases may be made from time to time in the open market or in privately negotiated transactions.


38


Table of Contents

 
Contractual Obligations
 
This table summarizes information contained elsewhere in this Annual Report regarding payments due under contractual obligations and commitments as of December 31, 2006 (amounts in thousands):
 
                                         
          Less than
    1-3
    3-5
    More than
 
    Total     One Year     Years     Years     5 Years  
 
Scheduled long-term debt maturities
  $ 6,332,753     $ 449,848     $ 1,077,408     $ 847,195     $ 3,958,302  
Secured credit facility and term loans
    540,000             140,000       400,000        
Redevelopment and other construction commitments
    146,655       106,319       40,336              
Leases for space occupied
    39,804       8,270       13,763       9,126       8,645  
Other obligations(1)
    16,900       16,900                    
                                         
Total
  $ 7,076,112     $ 581,337     $ 1,271,507     $ 1,256,321     $ 3,966,947  
                                         
 
 
(1) Includes a commitment to fund $14.4 million in second mortgage loans on certain properties in West Harlem, New York City and the final $2.5 million development fee payment to Casden Properties, LLC as a retainer on account for redevelopment services.
 
In addition, we may enter into commitments to purchase goods and services in connection with the operations of our properties. Those commitments generally have terms of one year or less and reflect expenditure levels comparable to our historical expenditures.
 
Future Capital Needs
 
In addition to the items set forth in “Contractual Obligations” above, we expect to fund any future acquisitions, additional redevelopment projects and capital improvements principally with proceeds from property sales (including tax-free exchange proceeds), short-term borrowings, debt and equity financings and operating cash flows.
 
In 2007, we plan to invest between $275 and $325 million in conventional redevelopment projects that will impact approximately 79 properties with over 30,000 units. Additionally, in 2007 redevelopment expenditures on affordable properties will be approximately $36 million, predominantly funded by third-party tax credit equity, impacting more than 15 properties with more than 1,800 units.
 
Off-Balance Sheet Arrangements
 
We own general and limited partner interests in unconsolidated real estate partnerships, in which our total ownership interests range typically from less than 1% up to 50%. However, based on the provisions of the relevant partnership agreements, we are not deemed to have control of these partnerships sufficient to require or permit consolidation for accounting purposes (see Note 2 of the consolidated financial statements in Item 8). There are no lines of credit, side agreements, or any other derivative financial instruments related to or between our unconsolidated real estate partnerships and us and no material exposure to financial guarantees. Accordingly, our maximum risk of loss related to these unconsolidated real estate partnerships is limited to the aggregate carrying amount of our investment in the unconsolidated real estate partnerships and any outstanding notes receivable as reported in our consolidated financial statements. See Note 4 of the consolidated financial statements in Item 8 for additional information about our investments in unconsolidated real estate partnerships.
 
Item 7A.   Quantitative and Qualitative Disclosures About Market Risk
 
Our primary market risk exposure relates to changes in interest rates. We are not subject to any foreign currency exchange rate risk or commodity price risk, or any other material market rate or price risks. We use predominantly long-term, fixed-rate non-recourse mortgage debt in order to avoid the refunding and repricing risks of short-term borrowings. We use short-term debt financing and working capital primarily to fund short-term uses


39


Table of Contents

and acquisitions and generally expect to refinance such borrowings with cash from operating activities, property sales proceeds, long-term debt or equity financings.
 
We had $1,663.4 million of floating rate debt outstanding at December 31, 2006. Of the total floating rate debt, the major components were floating rate tax-exempt bond financing ($640.6 million), floating rate secured notes ($482.8 million), revolving loans ($140.0 million), and term loans ($400.0 million). Historically, changes in tax-exempt interest rates have been at a ratio of less than 1:1 with changes in taxable interest rates. Floating rate tax-exempt bond financing is benchmarked against the BMA Index, which since 1981 has averaged 68% of the 30-day LIBOR rate. If this relationship continues, an increase in 30-day LIBOR of 1.0% (0.68% in tax-exempt interest rates) would result in our income before minority interests and cash flows being reduced by $14.6 million on an annual basis. This would be offset by variable rate interest income earned on certain assets, including cash and cash equivalents and notes receivable, as well as interest that is capitalized on a portion of this variable rate debt incurred in connection with our redevelopment activities. Considering these offsets, the same increase in 30-day LIBOR would result in our income before minority interests and cash flows being reduced by $4.4 million on an annual basis. Comparatively, if 30-day LIBOR had increased by 1% in 2005, our income before minority interests and cash flows, after considering such offsets, would have been reduced by $8.5 million on an annual basis. The potential reduction of income before minority interests was lower in 2006 as compared to 2005 primarily due to lower floating rate balances resulting from the sale of several properties that were encumbered by variable rate mortgages and the refinancing of existing variable rate mortgages.
 
We believe that the fair value of our floating rate secured tax-exempt bond debt and floating rate secured long-term debt as of December 31, 2006, approximate their carrying values. The fair value for our fixed-rate debt agreements was estimated based on the market rate for debt with the same or similar terms. The combined carrying amount of our fixed-rate secured tax-exempt bonds and fixed-rate secured notes payable at December 31, 2006 was $5.1 billion compared to the estimated fair value of $5.3 billion (see Note 2 to the consolidated financial statements in Item 8). If market rates for our fixed-rate debt were higher by 1%, the estimated fair value of our fixed-rate debt would have decreased from $5.3 billion to $5.0 billion. If market rates for our fixed-rate debt were lower by 1%, the estimated fair value of our fixed-rate debt would have increased from $5.3 billion to $5.6 billion.
 
Item 8.   Financial Statements and Supplementary Data
 
The independent registered public accounting firm’s report, consolidated financial statements and schedule listed in the accompanying index are filed as part of this report and incorporated herein by this reference. See “Index to Financial Statements” on page F-1 of this Annual Report.
 
Item 9.   Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
 
None.


40


Table of Contents

 
Item 9A.   Controls and Procedures
 
Disclosure Controls and Procedures
 
Our management, with the participation of our chief executive officer and chief financial officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report. Based on such evaluation, our chief executive officer and chief financial officer have concluded that, as of the end of such period, our disclosure controls and procedures are adequate.
 
Management’s Report on Internal Control Over Financial Reporting
 
Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act as a process designed by, or under the supervision of, our principal executive and principal financial officers and effected by our Board of Directors, management and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:
 
  •  pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of assets;
 
  •  provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorizations of our management and directors; and
 
  •  provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of assets that could have a material effect on the financial statements.
 
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risks that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
 
Management assessed the effectiveness of our internal control over financial reporting as of December 31, 2006. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework.
 
Based on their assessment, management concluded that, as of December 31, 2006, our internal control over financial reporting is effective.
 
Our independent registered public accounting firm has issued an audit report on management’s assessment of our internal control over financial reporting.
 
Changes in Internal Control over Financial Reporting
 
There have been no significant changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f)) under the Exchange Act) during fourth quarter 2006 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.


41


Table of Contents

Report of Independent Registered Public Accounting Firm
 
Stockholders and Board of Directors of Apartment Investment and Management Company
 
We have audited management’s assessment, included in the accompanying Management’s Report on Internal Control Over Financial Reporting, that Apartment Investment and Management Company (the “Company”) maintained effective internal control over financial reporting as of December 31, 2006, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to express an opinion on management’s assessment and an opinion on the effectiveness of the Company’s internal control over financial reporting based on our audit.
 
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, evaluating management’s assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
 
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
 
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
 
In our opinion, management’s assessment that Apartment Investment and Management Company maintained effective internal control over financial reporting as of December 31, 2006, is fairly stated, in all material respects, based on the COSO criteria. Also, in our opinion, Apartment Investment and Management Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2006, based on the COSO criteria.
 
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Apartment Investment and Management Company as of December 31, 2006 and 2005, and the related consolidated statements of income, stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2006, and our report dated February 26, 2007 expressed an unqualified opinion thereon.
 
/s/  Ernst & Young LLP
 
Denver, Colorado
February 26, 2007


42


Table of Contents

 
Item 9B.   Other Information
 
Fourth Amended and Restated Agreement of Limited Partnership of the Aimco Operating Partnership
 
On February 28, 2007, AIMCO-GP, Inc., the general partner of the Aimco Operating Partnership amended and restated the Third Amended and Restated Agreement of Limited Partnership, as amended to date. AIMCO-GP, Inc. determined that the Fourth Amended and Restated Agreement of Limited Partnership includes only such amendments as are permitted to be effected by AIMCO-GP, Inc. as the general partner pursuant to the terms of the partnership agreement.
 
Amendment to Purchase and Sale Agreement for Flamingo South Beach Property
 
On February 17, 2006, we closed the sale of a portion of the Flamingo South Beach property known as the South Tower. The South Tower sale price was $163.5 million and included 562 residential units and our rights to the property’s marina. Additionally, the buyer paid $5 million (which is non-refundable) for the option to purchase the 614-unit North Tower for $169 million between September 1, 2006, and February 28, 2007 (subject to the right to extend for up to six months subject to certain conditions), and the option to purchase the 513-unit Central Tower, along with the remainder of improvements on the property, for $267.5 million between December 1, 2007, and May 31, 2008 (subject to the right to extend for up to four months subject to certain conditions and provided that the buyer has previously purchased the North Tower). The agreement also granted us a $19.8 million profit participation interest in the buyer’s proposed condominium conversion after certain development fees and certain returns on the buyer’s equity have been achieved, plus twenty percent of the buyer’s net profits thereafter. On February 23, 2007, we amended the related purchase and sale agreement. The amendment gives the buyer the right to commence a marketing and sales program at the North Tower with respect to its planned condominium conversion; extends the option period for the North Tower to October 31, 2007, and extends the outside closing date to December 31, 2007. In order to extend the option period to October 31, 2007, the buyer must deliver notice by May 1, 2007, along with a $1 million non-refundable deposit. The parties entered into a revenue guarantee with respect to the North Tower whereby the buyer will pay any shortfall between actual revenue and budgeted revenue. In addition, the amendment reduced the profit participation interest to $14.8 million and, in exchange for that reduction and the buyer’s right to commence marketing and extend the closing date, the buyer has agreed to pay amounts totaling $5.0 million at the earlier of closing or at the time the buyer fails to exercise the purchase option on the North Tower.
 
PART III
 
Item 10.   Directors, Executive Officers and Corporate Governance
 
The information required by this item is presented under the captions “Board of Directors and Officers,” “Corporate Governance Matters — Code of Ethics,” “Other Matters — Section 16(a) Beneficial Ownership Reporting Compliance,” “Corporate Governance Matters — Nominating and Corporate Governance Committee,” “Corporate Governance Matters — Audit Committee,” and “Corporate Governance Matters — Audit Committee Financial Expert” in the proxy statement for our 2007 annual meeting of stockholders and is incorporated herein by reference.
 
Item 11.   Executive Compensation
 
The information required by this item is presented under the captions “Compensation Discussion and Analysis,” “Compensation and Human Resources Committee Report to Stockholders,” “Summary Compensation Table,” “Grants of Plan-Based Awards,” “Outstanding Equity Awards at Fiscal Year End,” “Option Exercises and Stock Vested,” “Potential Payments Upon Termination or Change in Control,” “Corporate Governance Matters — Director Compensation,” and “Corporate Governance Matters — Compensation and Human Resources Committee Interlocks and Insider Participation,” in the proxy statement for our 2007 annual meeting of stockholders and is incorporated herein by reference.


43


Table of Contents

 
Item 12.   Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
 
The information required by this item is presented under the captions “Security Ownership of Certain Beneficial Owners and Management” and “Securities Authorized for Issuance Under Equity Compensation Plans” in the proxy statement for our 2007 annual meeting of stockholders and is incorporated herein by reference.
 
Item 13.   Certain Relationships and Related Transactions, and Director Independence
 
The information required by this item is presented under the caption “Certain Relationships and Related Transactions” and “Corporate Governance Matters — Independence of Directors” in the proxy statement for our 2007 annual meeting of stockholders and is incorporated herein by reference.
 
Item 14.   Principal Accountant Fees and Services
 
The information required by this item is presented under the caption “Principal Accountant Fees and Services” in the proxy statement for our 2007 annual meeting of stockholders and is incorporated herein by reference.


44


Table of Contents

 
PART IV
 
Item 15.   Exhibits and Financial Statement Schedules
 
(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 and incorporated herein by reference.
 
(a)(2) The financial statement schedule listed in the Index to Financial Statements on Page F-1 of this report is filed as part of this report and incorporated herein by reference.
 
(a)(3) The Exhibit Index is incorporated herein by reference.
 
INDEX TO EXHIBITS(1)(2)
 
         
Exhibit No.
 
Description
 
  2 .1   Agreement and Plan of Merger, dated as of December 3, 2001, by and among Apartment Investment and Management Company, Casden Properties, Inc. and XYZ Holdings LLC (Exhibit 2.1 to Aimco’s Current Report on Form 8-K, filed December 6, 2001, is incorporated herein by this reference)
  3 .1   Charter (Exhibit 3.1 to Aimco’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2006, is incorporated herein by this reference)
  3 .2   Bylaws (Exhibit 3.2 to Aimco’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2001, is incorporated herein by this reference)
  10 .1   Fourth Amended and Restated Agreement of Limited Partnership of AIMCO Properties, L.P., dated as of July 29, 1994 as amended and restated as of February 28, 2007
  10 .2   Amended and Restated Secured Credit Agreement, dated as of November 2, 2004, by and among Aimco, AIMCO Properties, L.P., AIMCO/Bethesda Holdings, Inc., and NHP Management Company as the borrowers and Bank of America, N.A., Keybank National Association, and the Lenders listed therein (Exhibit 4.1 to Aimco’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2004, is incorporated herein by this reference)
  10 .3   First Amendment to Amended and Restated Secured Credit Agreement, dated as of June 16, 2005, by and among Aimco, AIMCO Properties, L.P., AIMCO/Bethesda Holdings, Inc., and NHP Management Company as the borrowers and Bank of America, N.A., Keybank National Association, and the Lenders listed therein (Exhibit 10.1 to Aimco’s Current Report on Form 8-K, dated June 16, 2005, is incorporated herein by this reference)
  10 .4   Second Amendment to Amended and Restated Senior Secured Credit Agreement, dated as of March 22, 2006, by and among Aimco, AIMCO Properties, L.P., and AIMCO/Bethesda Holdings, Inc., as the borrowers, and Bank of America, N.A., Keybank National Association, and the lenders listed therein (Exhibit 10.1 to Aimco’s Current Report on Form 10-K, dated March 22, 2006, is incorporated herein by this reference)
  10 .5   Master Indemnification Agreement, dated December 3, 2001, by and among Apartment Investment and Management Company, AIMCO Properties, L.P., XYZ Holdings LLC, and the other parties signatory thereto (Exhibit 2.3 to Aimco’s Current Report on Form 8-K, filed December 6, 2001, is incorporated herein by this reference)
  10 .6   Tax Indemnification and Contest Agreement, dated December 3, 2001, by and among Apartment Investment and Management Company, National Partnership Investments, Corp., and XYZ Holdings LLC and the other parties signatory thereto (Exhibit 2.4 to Aimco’s Current Report on Form 8-K, filed December 6, 2001, is incorporated herein by this reference)
  10 .7   Limited Liability Company Agreement of AIMCO JV Portfolio #1, LLC dated as of December 30, 2003 by and among AIMCO BRE I, LLC, AIMCO BRE II, LLC and SRV-AJVP#1, LLC (Exhibit 10.54 to Aimco’s Annual Report on Form 10-K for the year ended December 31, 2003, is incorporated herein by this reference)


45


Table of Contents

         
Exhibit No.
 
Description
 
  10 .8   Employment Contract executed on July 29, 1994 by and between AIMCO Properties, L.P. and Terry Considine (Exhibit 10.44C to Aimco’s Annual Report on Form 10-K for the year ended December 31, 1994, is incorporated herein by this reference)*
  10 .9   Apartment Investment and Management Company 1997 Stock Award and Incentive Plan (October 1999) (Exhibit 10.26 to Aimco’s Annual Report on Form 10-K for the year ended December 31, 1999, is incorporated herein by this reference)*
  10 .10   Form of Restricted Stock Agreement (1997 Stock Award and Incentive Plan) (Exhibit 10.11 to Aimco’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 1997, is incorporated herein by this reference)*
  10 .11   Form of Incentive Stock Option Agreement (1997 Stock Award and Incentive Plan) (Exhibit 10.42 to Aimco’s Annual Report on Form 10-K for the year ended December 31, 1998, is incorporated herein by this reference)*
  21 .1   List of Subsidiaries
  23 .1   Consent of Independent Registered Public Accounting Firm
  31 .1   Certification of Chief Executive Officer pursuant to Securities Exchange Act Rules 13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
  31 .2   Certification of Chief Financial Officer pursuant to Securities Exchange Act Rules 13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
  32 .1   Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
  32 .2   Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
  99 .1   Agreement re: disclosure of long-term debt instruments
 
 
(1) Schedule and supplemental materials to the exhibits have been omitted but will be provided to the Securities and Exchange Commission upon request.
 
(2) The file reference number for all exhibits is 001-13232, and all such exhibits remain available pursuant to the Records Control Schedule of the Securities and Exchange Commission.
 
Management contract or compensatory plan or arrangement


46


Table of Contents

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, on the 1st day of March 2007.
 
Apartment Investment and
Management Company
 
   
/s/  Terry Considine
Terry Considine
Chairman of the Board,
Chief Executive Officer and President
 
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.
 
             
Signature
 
Title
 
Date
 
/s/  Terry Considine

Terry Considine
  Chairman of the Board, Chief Executive
Officer and President
(principal executive officer)
  March 1, 2007
         
/s/  Thomas M. Herzog

Thomas M. Herzog
  Executive Vice President and Chief
Financial Officer
(principal financial officer)
  March 1, 2007
         
/s/  Scott W. Fordham

Scott W. Fordham
  Senior Vice President and Chief
Accounting Officer
(principal accounting officer)
  March 1, 2007
         
/s/  James N. Bailey

James N. Bailey
  Director   March 1, 2007
         
/s/  Richard S. Ellwood

Richard S. Ellwood
  Director   March 1, 2007
         
/s/  J. Landis Martin

J. Landis Martin
  Director   March 1, 2007
         
/s/  Thomas L. Rhodes

Thomas L. Rhodes
  Director   March 1, 2007
         
/s/  Michael A. Stein

Michael A. Stein
  Director   March 1, 2007


47


Table of Contents

APARTMENT INVESTMENT AND MANAGEMENT COMPANY
 
INDEX TO FINANCIAL STATEMENTS
 
         
    Page  
 
Financial Statements:
       
    F-2  
    F-3  
    F-4  
    F-5  
    F-6  
    F-8  
Financial Statement Schedule:
       
    F-40  
All other schedules are omitted because they are not applicable or the required information is shown in the financial statements or notes thereto
       


F-1


Table of Contents

 
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
Stockholders and Board of Directors Apartment Investment and Management Company
 
We have audited the accompanying consolidated balance sheets of Apartment Investment and Management Company as of December 31, 2006 and 2005, and the related consolidated statements of income, stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2006. Our audits also included the financial statement schedule listed in the accompanying Index to Financial Statements. These financial statements and schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.
 
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (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 Apartment Investment and Management Company at December 31, 2006 and 2005, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2006, in conformity with United States generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly, in all material respects the information set forth therein.
 
As discussed in Note 2 to the consolidated financial statements, in 2006 the Company adopted the provisions of Emerging Issues Task Force Issue 04-5, Determining Whether a General Partner, or the General Partners as a Group, Controls a Limited Partnership or Similar Entity When the Limited Partners Have Certain Rights.
 
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of Apartment Investment and Management Company’s internal control over financial reporting as of December 31, 2006, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 26, 2007 expressed an unqualified opinion thereon.
 
/s/  ERNST & YOUNG LLP
 
Denver, Colorado
February 26, 2007


F-2


Table of Contents

APARTMENT INVESTMENT AND MANAGEMENT COMPANY

CONSOLIDATED BALANCE SHEETS
As of December 31, 2006 and 2005
(In thousands, except share data)
 
                 
    2006     2005  
 
ASSETS
Real estate:
               
Buildings and improvements
  $ 9,561,537     $ 8,002,413  
Land
    2,420,948       2,196,111  
                 
Total real estate
    11,982,485       10,198,524  
Less accumulated depreciation
    (2,901,267 )     (2,009,286 )
                 
Net real estate
    9,081,218       8,189,238  
Cash and cash equivalents
    229,824       161,730  
Restricted cash
    347,506       283,684  
Accounts receivable
    85,772       59,889  
Accounts receivable from affiliates
    20,763       43,070  
Deferred financing costs
    73,749       63,738  
Notes receivable from unconsolidated real estate partnerships
    40,641       177,200  
Notes receivable from non-affiliates
    139,352       23,760  
Investment in unconsolidated real estate partnerships
    39,000       173,437  
Other assets
    231,950       211,245  
Deferred income tax assets, net
          9,835  
Assets held for sale
          622,334  
                 
Total assets
  $ 10,289,775     $ 10,019,160  
                 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Property tax-exempt bond financing
  $ 936,082     $ 995,897  
Property loans payable
    5,329,011       4,320,688  
Term loans
    400,000       400,000  
Credit facility
    140,000       217,000  
Other borrowings
    67,660       88,272  
                 
Total indebtedness
    6,872,753       6,021,857  
                 
Accounts payable
    54,972       34,381  
Accrued liabilities and other
    410,071       335,363  
Deferred income
    165,684       46,466  
Security deposits
    44,428       36,767  
Deferred income tax liabilities, net
    4,379        
Liabilities related to assets held for sale
          392,815  
                 
Total liabilities
    7,552,287       6,867,649  
                 
Minority interest in consolidated real estate partnerships
    212,149       217,679  
Minority interest in Aimco Operating Partnership
    185,447       217,729  
Stockholders’ equity:
               
Preferred Stock, perpetual
    723,500       860,250  
Preferred Stock, convertible
    100,000       150,000  
Class A Common Stock, $.01 par value, 426,157,976 shares authorized, 96,820,252 and 95,732,200 shares issued and outstanding, at December 31, 2006 and 2005, respectively
    968       957  
Additional paid-in capital
    3,095,430       3,081,706  
Notes due on common stock purchases
    (4,714 )     (25,911 )
Distributions in excess of earnings
    (1,575,292 )     (1,350,899 )
                 
Total stockholders’ equity
    2,339,892       2,716,103  
                 
Total liabilities and stockholders’ equity
  $ 10,289,775     $ 10,019,160  
                 
 
See notes to consolidated financial statements.


F-3


Table of Contents

APARTMENT INVESTMENT AND MANAGEMENT COMPANY

CONSOLIDATED STATEMENTS OF INCOME
For the Years Ended December 31, 2006, 2005 and 2004
(In thousands, except per share data)
 
                         
    2006     2005     2004  
 
REVENUES:
                       
Rental and other property revenues
  $ 1,629,988     $ 1,346,587     $ 1,211,865  
Property management revenues, primarily from affiliates
    12,312       24,528       32,461  
Activity fees and asset management revenues
    48,694       37,349       34,879  
                         
Total revenues
    1,690,994       1,408,464       1,279,205  
                         
OPERATING EXPENSES:
                       
Property operating expenses
    758,128       633,984       567,937  
Property management expenses
    4,912       7,361       9,789  
Activity and asset management expenses
    9,521       10,628       11,879  
Depreciation and amortization
    470,597       376,231       315,451  
General and administrative expenses
    101,702       92,826       77,424  
Other expenses (income), net
    8,981       8,046       12,490  
                         
Total operating expenses
    1,353,841       1,129,076       994,970  
                         
Operating income
    337,153       279,388       284,235  
Interest income
    32,315       31,001       32,101  
Recovery of (provision for) losses on notes receivable
    (2,785 )     1,365       1,765  
Interest expense
    (408,075 )     (343,335 )     (318,006 )
Deficit distributions to minority partners
    (21,004 )     (11,615 )     (17,374 )
Equity in losses of unconsolidated real estate partnerships
    (2,070 )     (3,139 )     (1,768 )
Real estate impairment (losses) recoveries, net
    813       (6,120 )     (3,426 )
Gain on dispositions of unconsolidated real estate and other
    34,567       18,958       69,294  
                         
Income (loss) before minority interests, discontinued operations and cumulative effect of change in accounting principle
    (29,086 )     (33,497 )     46,821  
Minority interests:
                       
Minority interest in consolidated real estate partnerships
    (19,628 )     5,065       14,630  
Minority interest in Aimco Operating Partnership, preferred
    (7,153 )     (7,226 )     (7,858 )
Minority interest in Aimco Operating Partnership, common
    13,193       12,535       4,192  
                         
Total minority interests
    (13,588 )     10,374       10,964  
                         
Income (loss) from continuing operations
    (42,674 )     (23,123 )     57,785  
Income from discontinued operations, net
    219,461       94,105       209,669  
                         
Income before cumulative effect of change in accounting principle
    176,787       70,982       267,454  
Cumulative effect of change in accounting principle
                (3,957 )
                         
Net income
    176,787       70,982       263,497  
Net income attributable to preferred stockholders
    81,132       87,948       88,804  
                         
Net income (loss) attributable to common stockholders
  $ 95,655     $ (16,966 )   $ 174,693  
                         
Earnings (loss) per common share — basic:
                       
Loss from continuing operations (net of preferred dividends)
  $ (1.29 )   $ (1.18 )   $ (0.33 )
Income from discontinued operations
    2.29       1.00       2.25  
Cumulative effect of change in accounting principle
                (0.04 )
                         
Net income (loss) attributable to common stockholders
  $ 1.00     $ (0.18 )   $ 1.88  
                         
Earnings (loss) per common share — diluted:
                       
Loss from continuing operations (net of preferred dividends)
  $ (1.29 )   $ (1.18 )   $ (0.33 )
Income from discontinued operations
    2.29       1.00       2.25  
Cumulative effect of change in accounting principle
                (0.04 )
                         
Net income (loss) attributable to common stockholders
  $ 1.00     $ (0.18 )   $ 1.88  
                         
Weighted average common shares outstanding
    95,758       93,894       93,118  
                         
Weighted average common shares and equivalents outstanding
    95,758       93,894       93,118  
                         
Dividends declared per common share
  $ 2.40     $ 3.00     $ 2.40  
                         
 
See notes to consolidated financial statements.


F-4


Table of Contents

APARTMENT INVESTMENT AND MANAGEMENT COMPANY

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
For the Years Ended December 31, 2006, 2005 and 2004
(In thousands)
 
                                                                 
                                  Notes
             
                Class A
          Due on
             
    Preferred Stock     Common Stock     Additional
    Common
    Distributions
       
    Shares
          Shares
          Paid-in
    Stock
    in Excess of
       
    Issued     Amount     Issued     Amount     Capital     Purchases     Earnings     Total  
 
Balances at December 31, 2003
    32,125     $ 855,242       93,887     $ 939     $ 3,042,540     $ (40,046 )   $ (998,018 )   $ 2,860,657  
Issuance of Preferred Stock
    18,805       372,500                   (12,828 )                 359,672  
Redemption of Preferred Stock
    (11,355 )     (186,242 )                 3,638             (3,489 )     (186,093 )
Conversion of Aimco Operating Partnership units to Common Stock
                743       7       23,574                   23,581  
Conversion of mandatorily redeemable convertible preferred stock to Common Stock
                2             100                   100  
Repurchases of Common Stock
                (397 )     (4 )     (12,594 )                 (12,598 )
Repayment of notes receivable from officers
                                  4,639             4,639  
Casden acquisition contingent consideration adjustment
                            (4,848 )                 (4,848 )
Officer and employee stock awards and purchases, net
                550       6       2,363       (1,318 )           1,051  
Stock options exercised
                69       1       1,882                   1,883  
Amortization of stock option and restricted stock compensation cost
                            6,506                   6,506  
Net income
                                        263,497       263,497  
Common Stock dividends
                                        (225,903 )     (225,903 )
Preferred Stock dividends
                                        (83,984 )     (83,984 )
                                                                 
Balances at December 31, 2004
    39,575       1,041,500       94,854       949       3,050,333       (36,725 )     (1,047,897 )     3,008,160  
Redemption of Preferred Stock
    (1,250 )     (31,250 )                 1,123             (1,123 )     (31,250 )
Conversion of Aimco Operating Partnership units to Common Stock
                426       4       16,890                   16,894  
Preferred Stock issuance costs
                            (409 )                 (409 )
Repayment of notes receivable from officers
                                  12,255             12,255  
Officer and employee stock awards and purchases, net
                379       4       2,219       (1,441 )           782  
Stock options exercised
                65             2,315                   2,315  
Purchase of Oxford warrants
                            (1,050 )                 (1,050 )
Common Stock issued as consideration for acquisition of interest in real estate
                8             310                   310  
Amortization of stock option and restricted stock compensation cost
                            9,975                   9,975  
Net income
                                        70,982       70,982  
Common Stock dividends
                                        (284,254 )     (284,254 )
Preferred Stock dividends
                                        (88,607 )     (88,607 )
                                                                 
Balances at December 31, 2005
    38,325       1,010,250       95,732       957       3,081,706       (25,911 )     (1,350,899 )     2,716,103  
Cumulative effect of change in accounting principle — adoption of EITF 04-5
                                        (75,012 )     (75,012 )
Issuance of 200 shares of CRA Preferred Stock
          100,000                   (2,509 )                 97,491  
Redemption of Preferred Stock
    (11,470 )     (286,750 )                 6,848             (6,848 )     (286,750 )
Conversion of Aimco Operating Partnership units to Common Stock
                99       1       4,560                   4,561  
Repurchases of Common Stock
                (2,301 )     (23 )     (120,235 )                 (120,258 )
Repayment of notes receivable from officers
                                  21,844             21,844  
Officer and employee stock awards and purchases, net
                456       5       678       (647 )           36  
Stock options exercised
                2,826       28       107,575                   107,603  
Excess income tax benefits related to stock-based compensation and other
                            454                   454  
Common Stock issued as consideration for acquisition of interest in real estate
                8             479                   479  
Amortization of stock option and restricted stock compensation cost
                            15,874                   15,874  
Net income
                                        176,787       176,787  
Common Stock dividends
                                        (232,185 )     (232,185 )
Preferred Stock dividends
                                        (87,135 )     (87,135 )
                                                                 
Balances at December 31, 2006
    26,855     $ 823,500       96,820     $ 968     $ 3,095,430     $ (4,714 )   $ (1,575,292 )   $ 2,339,892  
                                                                 
 
See notes to consolidated financial statements.


F-5


Table of Contents

APARTMENT INVESTMENT AND MANAGEMENT COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 2006, 2005 and 2004
(In thousands)
 
                         
    2006     2005     2004  
 
CASH FLOWS FROM OPERATING ACTIVITIES:
                       
Net income
  $ 176,787     $ 70,982     $ 263,497  
                         
Adjustments to reconcile net income to net cash provided by operating activities:
                       
Depreciation and amortization
    470,597       376,231       315,451  
Deficit distributions to minority partners
    21,004       11,615       17,374  
Equity in losses of unconsolidated real estate partnerships
    2,070       3,139       1,768  
Gain on dispositions of unconsolidated real estate and other
    (34,567 )     (18,958 )     (69,294 )
Real estate impairment losses (recoveries), net
    (813 )     6,120       3,426  
Deferred income tax provision (benefit)
    14,895       (19,146 )     706  
Cumulative effect of change in accounting principle
                3,957  
Minority interest in Aimco Operating Partnership
    (6,040 )     (5,309 )     3,666  
Minority interest in consolidated real estate partnerships
    19,628       (5,065 )     (14,630 )
Stock-based compensation expense
    15,874       9,975       6,506  
Amortization of deferred loan costs and other
    18,471       1,700       5,484  
Discontinued operations:
                       
Depreciation and amortization
    20,101       58,634       67,277  
Gain on dispositions of real estate, net of minority partners’ interest
    (260,206 )     (102,972 )     (249,354 )
Other adjustments to income from discontinued operations
    4,267       (3,139 )     26,959  
Changes in operating assets and operating liabilities:
                       
Accounts receivable
    (3,178 )     11,450       (2,067 )
Other assets
    45,332       17,542       (11,406 )
Accounts payable, accrued liabilities and other
    28,057       (57,250 )     (3,797 )
                         
Total adjustments
    355,492       284,567       102,026  
                         
Net cash provided by operating activities
    532,279       355,549       365,523  
                         
CASH FLOWS FROM INVESTING ACTIVITIES:
                       
Purchases of real estate
    (153,426 )     (243,996 )     (280,002 )
Capital expenditures
    (512,564 )     (443,882 )     (301,937 )
Proceeds from dispositions of real estate
    958,604       718,434       971,568  
Change in funds held in escrow from tax-free exchanges
    (19,021 )     (4,571 )     5,489  
Cash from newly consolidated properties
    23,269       4,186       14,765  
Distributions and sales proceeds from investments in real estate partnerships
    45,662       57,706       72,160  
Purchases of partnership interests and other assets
    (37,570 )     (125,777 )     (132,711 )
Originations of notes receivable
    (94,640 )     (38,336 )     (76,157 )
Proceeds from repayment of notes receivable
    9,604       28,556       79,599  
Other investing activities
    13,122       (2,281 )     (15,861 )
                         
Net cash provided by (used in) investing activities
    233,040       (49,961 )     336,913  
                         
CASH FLOWS FROM FINANCING ACTIVITIES:
                       
Proceeds from property loans
    1,185,670       721,414       501,611  
Principal repayments on property loans
    (1,004,142 )     (735,816 )     (728,084 )
Proceeds from tax-exempt bond financing
    75,568             69,471  
Principal repayments on tax-exempt bond financing
    (229,287 )     (78,648 )     (188,577 )
Net borrowings (paydowns) on term loans and revolving credit facility
    (77,000 )     248,300       (66,687 )
Proceeds (paydowns) on other borrowings
    (22,838 )           38,871  
Redemption of mandatorily redeemable preferred securities
          (15,019 )     (98,875 )
Proceeds from issuance of preferred stock, net
    97,491             359,672  
Redemptions of preferred stock
    (286,750 )     (31,250 )     (186,093 )
Repurchase of Class A Common Stock
    (109,937 )           (12,597 )
Proceeds from Class A Common Stock option exercises
    107,603       2,315       1,883  
Principal repayments received on notes due on Class A Common Stock purchases
    21,844       12,255       4,639  
Payment of Class A Common Stock dividends
    (231,697 )     (226,815 )     (225,903 )
Payment of preferred stock dividends
    (74,700 )     (86,582 )     (83,984 )
Contributions from minority interest
    458       34,990       44,292  
Payment of distributions to minority interest
    (130,585 )     (78,739 )     (119,056 )
Other financing activities
    (18,923 )     (15,606 )     (22,108 )
                         
Net cash used in financing activities
    (697,225 )     (249,201 )     (711,525 )
                         
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
    68,094       56,387       (9,089 )
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR
    161,730       105,343       114,432  
                         
CASH AND CASH EQUIVALENTS AT END OF YEAR
  $ 229,824     $ 161,730     $ 105,343  
                         
 
See notes to consolidated financial statements.


F-6


Table of Contents

APARTMENT INVESTMENT AND MANAGEMENT COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 2006, 2005 and 2004
(In thousands)
 
                         
    2006     2005     2004  
 
SUPPLEMENTAL CASH FLOW INFORMATION:
                       
Interest paid
  $ 438,946     $ 399,511     $ 372,703  
Cash paid for income taxes
    9,807       4,785        
Non-cash transactions associated with the acquisition of real estate and interests in unconsolidated real estate partnerships:
                       
Secured debt assumed in connection with purchase of real estate
    47,112       38,740       83,114  
Issuance of OP Units for interests in unconsolidated real estate partnerships and acquisitions of real estate
    13       125       2,609  
Non-cash transactions associated with consolidation of real estate partnerships:
                       
Real estate, net
    675,621       201,492       231,932  
Investments in and notes receivable primarily from affiliated entities
    (219,691 )     (72,341 )     (40,178 )
Restricted cash and other assets
    94,380       16,942       47,744  
Secured debt
    503,342       112,521       204,243  
Accounts payable, accrued and other liabilities
    41,580       17,326       21,394  
Minority interest in consolidated real estate partnerships
    57,157       6,834       29,439  
Other non-cash transactions:
                       
Conversion of common OP Units for Class A Common Stock
    4,362       16,853       23,322  
Conversion of preferred OP Units for Class A Common Stock
    199       41       259  
Origination of notes receivable from officers for Class A Common Stock purchases, net of cancellations
    647       1,441       1,318  
Exchanges of preferred stock
                150,000  
Tenders payable for purchase of limited partner interests
          950       2,799  
 
See notes to consolidated financial statements.


F-7


Table of Contents

APARTMENT INVESTMENT AND MANAGEMENT COMPANY
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2006
 
Note 1 — Organization
 
Apartment Investment and Management Company, or Aimco, is a Maryland corporation incorporated on January 10, 1994. We are a self-administered and self-managed real estate investment trust, or REIT, engaged in the acquisition, ownership, management and redevelopment of apartment properties. As of December 31, 2006, we owned or managed a real estate portfolio of 1,256 apartment properties containing 216,413 apartment units located in 46 states, the District of Columbia and Puerto Rico. Based on apartment unit data compiled by the National Multi Housing Council, as of January 1, 2006, we were the largest owner of apartment properties in the United States.
 
As of December 31, 2006, we:
 
  •  owned an equity interest in and consolidated 162,432 units in 703 properties (which we refer to as “consolidated”), of which 161,584 units were also managed by us;
 
  •  owned an equity interest in and did not consolidate 11,791 units in 102 properties (which we refer to as “unconsolidated”), of which 5,638 units were also managed by us; and
 
  •  provided services or managed, for third-party owners, 42,190 units in 451 properties, primarily pursuant to long-term agreements (including 38,617 units in 410 properties for which we provide asset management services only, and not also property management services), although in certain cases we may indirectly own generally less than one percent of the operations of such properties through a partnership syndication or other fund.
 
Through our wholly-owned subsidiaries, AIMCO-GP, Inc. and AIMCO-LP, Inc., we own a majority of the ownership interests in AIMCO Properties, L.P., which we refer to as the Aimco Operating Partnership. As of December 31, 2006, we held approximately a 90% interest in the common partnership units and equivalents of the Aimco Operating Partnership. We conduct substantially all of our business and own substantially all of our assets through the Aimco Operating Partnership. Interests in the Aimco Operating Partnership that are held by limited partners other than Aimco are referred to as “OP Units.” OP Units include common OP Units, partnership preferred units, or preferred OP Units, and high performance partnership units, or High Performance Units. The Aimco Operating Partnership’s income is allocated to holders of common OP Units based on the weighted average number of common OP Units outstanding during the period. The Aimco Operating Partnership records the issuance of common OP Units and the assets acquired in purchase transactions based on the market price of Aimco Class A Common Stock (which we refer to as Common Stock) at the date of closing of the transaction. The holders of the common OP Units receive distributions, prorated from the date of issuance, in an amount equivalent to the dividends paid to holders of Common Stock. Holders of common OP Units may redeem such units for cash or, at the Aimco Operating Partnership’s option, Common Stock. During each of 2006, 2005 and 2004, the weighted average ownership interest in the Aimco Operating Partnership held by the common OP Unit holders was approximately 10%. Preferred OP Units entitle the holders thereof to a preference with respect to distributions or upon liquidation. At December 31, 2006, 96,820,252 shares of our Common Stock were outstanding and the Aimco Operating Partnership had 10,135,562 common OP Units and equivalents outstanding for a combined total of 106,955,814 shares of Common Stock and OP Units outstanding (excluding preferred OP Units).
 
Except as the context otherwise requires, “we,” “our,” “us” and the “Company” refer to Aimco, the Aimco Operating Partnership and their consolidated entities, collectively.
 
Note 2 — Basis of Presentation and Summary of Significant Accounting Policies
 
Principles of Consolidation
 
The accompanying consolidated financial statements include the accounts of Aimco, the Aimco Operating Partnership, and their consolidated entities. As used herein, and except where the context otherwise requires, “partnership” refers to a limited partnership or a limited liability company and “partner” refers to a limited partner


F-8


Table of Contents

in a limited partnership or a member in a limited liability company. Interests held in consolidated real estate partnerships by limited partners other than us are reflected as minority interest in consolidated real estate partnerships. All significant intercompany balances and transactions have been eliminated in consolidation. The assets of consolidated real estate partnerships owned or controlled by Aimco or the Aimco Operating Partnership generally are not available to pay creditors of Aimco or the Aimco Operating Partnership.
 
As discussed under Variable Interest Entities below, we consolidate real estate partnerships and other entities that are variable interest entities when we are the primary beneficiary. Generally, we consolidate real estate partnerships and other entities that are not variable interest entities when we own, directly or indirectly, a majority voting interest in the entity. As discussed under Adoption of EITF 04-5 below, we have applied new criteria after June 29, 2005, in determining whether we control and consolidate certain partnerships.
 
Variable Interest Entities
 
FASB Interpretation No. 46 (revised December 2003), Consolidation of Variable Interest Entities, or FIN 46, addresses the consolidation by business enterprises of variable interest entities. As a result of the adoption of FIN 46, as of March 31, 2004, we consolidate all variable interest entities for which we are the primary beneficiary. Generally, a variable interest entity, or VIE, is an entity with one or more of the following characteristics: (a) the total equity investment at risk is not sufficient to permit the entity to finance its activities without additional subordinated financial support; (b) as a group, the holders of the equity investment at risk lack (i) the ability to make decisions about an entity’s activities through voting or similar rights, (ii) the obligation to absorb the expected losses of the entity, or (iii) the right to receive the expected residual returns of the entity; or (c) the equity investors have voting rights that are not proportional to their economic interests and substantially all of the entity’s activities either involve, or are conducted on behalf of, an investor that has disproportionately few voting rights. FIN 46 requires a VIE to be consolidated in the financial statements of the entity that is determined to be the primary beneficiary of the VIE. The primary beneficiary generally is the entity that will receive a majority of the VIE’s expected losses, receive a majority of the VIE’s expected residual returns, or both.
 
Upon adoption of FIN 46, we determined that we were the primary beneficiary of 27 previously unconsolidated and five previously consolidated VIEs. These VIEs consisted of partnerships that are engaged, directly or indirectly, in the ownership and management of 29 apartment properties with 3,478 units. The initial consolidation of the previously unconsolidated entities as of March 31, 2004 resulted in an increase in our consolidated total assets (primarily real estate), liabilities (primarily indebtedness) and minority interest of approximately $113.5 million, $90.6 million and $26.8 million, respectively. We recorded a charge of approximately $4.0 million for the cumulative effect on retained earnings resulting from the adoption of FIN 46. This charge is attributable to our recognition of cumulative losses allocable to minority interests that would otherwise have resulted in minority interest deficits.
 
As of December 31, 2006, we were the primary beneficiary of, and therefore consolidated, 53 VIEs, which owned 49 apartment properties with 6,845 units. Real estate with a carrying value of $457.2 million collateralized the debt of those VIEs. The creditors of the consolidated VIEs do not have recourse to our general credit. As of December 31, 2006, we also held variable interests in 188 VIEs for which we were not the primary beneficiary. Those VIEs consist primarily of partnerships that are engaged, directly or indirectly, in the ownership and management of 246 apartment properties with 13,371 units. We are involved with those VIEs as an equity holder, lender, management agent, or through other contractual relationships. At December 31, 2006, our maximum exposure to loss as a result of our involvement with unconsolidated VIEs is limited to our recorded investments in and receivables from those VIEs totaling $131.0 million and our contractual obligation to advance funds to certain VIEs totaling $14.4 million. We may be subject to additional losses to the extent of any financial support that we voluntarily provide in the future.
 
Adoption of EITF 04-5
 
In June 2005, the Financial Accounting Standards Board ratified Emerging Issues Task Force Issue 04-5, Determining Whether a General Partner, or the General Partners as a Group, Controls a Limited Partnership or Similar Entity When the Limited Partners Have Certain Rights, or EITF 04-5. EITF 04-5 provides an accounting


F-9


Table of Contents

model to be used by a general partner, or group of general partners, to determine whether the general partner(s) controls a limited partnership or similar entity in light of substantive kick-out rights and substantive participating rights held by the limited partners, and provides additional guidance on what constitutes those rights. EITF 04-5 was effective after June 29, 2005 for general partners of (a) all newly formed limited partnerships and (b) existing limited partnerships for which the partnership agreements have been modified. We consolidated four partnerships in the fourth quarter of 2005 based on EITF 04-5 requirements. The consolidation of those partnerships had an immaterial effect on our consolidated financial statements. EITF 04-5 was effective on January 1, 2006, for general partners of all limited partnerships and similar entities. We applied EITF 04-5 as of January 1, 2006, using a transition method that does not involve retrospective application to our financial statements for prior periods.
 
We consolidated 156 previously unconsolidated partnerships as a result of the application of EITF 04-5 in 2006. Those partnerships own, or control other entities that own, 149 apartment properties. Our direct and indirect interests in the profits and losses of those partnerships range from less than one percent to 50 percent, and average approximately 22 percent. The initial consolidation of those partnerships resulted in increases (decreases), net of intercompany eliminations, in amounts reported in our consolidated balance sheet as of January 1, 2006, as follows (in thousands):
 
         
    Increase
 
    (Decrease)  
 
Real estate, net
  $ 664,286  
Accounts and notes receivable from affiliates
    (150,057 )
Investment in unconsolidated real estate partnerships
    (64,419 )
All other assets
    122,545  
         
Total assets
  $ 572,355  
         
Total indebtedness
  $ 521,711  
All other liabilities
    81,950  
Minority interest in consolidated real estate partnerships
    53,258  
Minority interest in Aimco Operating Partnership
    (9,552 )
Stockholders’ equity
    (75,012 )
         
Total liabilities and stockholders’ equity
  $ 572,355  
         
 
Our income from continuing operations for the year ended December 31, 2006, include the following amounts for the partnerships consolidated as of January 1, 2006, in accordance with EITF 04-5 (in thousands):
 
         
Revenues
  $ 159,415  
Operating expenses
    114,680  
         
Operating income
    44,735  
Interest expense
    (32,776 )
Interest income
    3,651  
         
Income (loss) before minority interests
  $ 15,610  
         
 
In prior periods, we used the equity method to account for our investments in the partnerships that we consolidated in 2006 in accordance with EITF 04-5. Under the equity method, we recognized partnership income or losses based generally on our percentage interest in the partnership. Consolidation of a partnership does not ordinarily result in a change to the net amount of partnership income or loss that is recognized using the equity method. However, when a partnership has a deficit in equity, generally accepted accounting principles may require the controlling partner that consolidates the partnership to recognize any losses that would otherwise be allocated to noncontrolling partners, in addition to the controlling partner’s share of losses. Certain of the partnerships that we consolidated in accordance with EITF 04-5 had deficits in equity that resulted from losses or deficit distributions during prior periods when we accounted for our investment using the equity method. We would have been required to recognize the noncontrolling partners’ share of those losses had we applied EITF 04-5 in those prior periods. In


F-10


Table of Contents

accordance with our transition method for the adoption of EITF 04-5, we recorded a $75.0 million charge to retained earnings as of January 1, 2006, for the cumulative amount of additional losses that we would have recognized had we applied EITF 04-5 in prior periods. Substantially all of those losses were attributable to real estate depreciation expense. As a result of applying EITF 04-5 for the year ended December 31, 2006, our income from continuing operations includes partnership losses in addition to losses that would have resulted from continued application of the equity method of $25.0 million.
 
Tax Credit Arrangements
 
We sponsor certain partnerships that own and operate apartment properties that qualify for tax credits under Section 42 of the Internal Revenue Code and HUD subsidized rents under the Section 8 program. These partnerships acquire, develop and operate qualifying affordable housing properties and are structured to provide for the pass-through of tax credits and deductions to their partners. The tax credits are generally realized ratably over the first ten years of the tax credit arrangement and are subject to the partnership’s compliance with applicable laws and regulations for a period of 15 years. Typically, we are the general partner with a legal ownership interest of one percent or less. We market limited partner interests of at least 99 percent to unaffiliated institutional investors (“tax credit investors” or “investors”) and receive a syndication fee from each investor upon such investor’s admission to the partnership. At inception, each investor agrees to fund capital contributions to the partnerships. We agree to perform various services to the partnerships in exchange for fees over the expected duration of the tax credit service period. The related partnership agreements generally require adjustment of each tax credit investor’s required capital contributions if actual tax benefits to such investor differ from projected amounts.
 
In connection with our adoption of FIN 46 as of March 31, 2004, we determined that the partnerships in these arrangements are variable interest entities and, where we are general partner, we are the primary beneficiary that is required to consolidate the partnerships. During the period April 1, 2004, through June 30, 2006, we accounted for these partnerships as consolidated subsidiaries with a noncontrolling interest (minority interest) of at least 99 percent. Accordingly, we allocated to the minority interest substantially all of the income or losses of the partnerships, including the effect of fees that we charged to the partnerships. In 2006, in consultation with our independent auditors, we determined that we were required to revise our accounting treatment for tax credit transactions to more fully comply with the requirements of FIN 46. We also determined that our accounting treatment did not fully reflect the economic substance of the arrangements wherein we possess substantially all of the economic interests in the partnerships. Based on the contractual arrangements that obligate us to deliver tax benefits to the investors, and that entitle us through fee arrangements to receive substantially all available cash flow from the partnerships, we concluded that these partnerships are most appropriately accounted for by us as wholly owned subsidiaries. We also concluded that capital contributions received by the partnerships from tax credit investors represent, in substance, consideration that we receive in exchange for our obligation to deliver tax credits and other tax benefits to the investors. We have concluded that these receipts are appropriately recognized as revenue in our consolidated financial statements when our obligation to the investors is relieved upon delivery of the expected tax benefits.
 
In summary, our revised accounting treatment recognizes the income or loss generated by the underlying real estate based on our economic interest in the partnerships. Proceeds received in exchange for the transfer of the tax credits are recognized as revenue proportionately as the tax benefits are delivered to the tax credit investors and our obligation is relieved. Syndication fees and related costs are recognized in income upon completion of the syndication effort. Other direct and incremental costs incurred in structuring these arrangements are deferred and amortized over the expected duration of the arrangement in proportion to the recognition of related income. Investor contributions in excess of recognized revenue are reported as deferred income in our consolidated balance sheet.
 
We have applied the revised accounting treatment described above in our 2006 financial statements. We also recognized the cumulative effect of retroactive application of this revised accounting treatment in our operations for


F-11


Table of Contents

the year ended December 31, 2006. Adjustments related to prior years had the following effects on our net income for the year ended December 31, 2006 (in thousands):
 
         
Revenues
  $ (1,542 )
Operating expenses
    3,054  
Minority interest in consolidated real estate partnerships
    (9,030 )
Minority interest in Aimco Operating Partnership
    734  
         
Net decrease in net income
  $ (6,784 )
         
 
Acquisition of Real Estate Assets and Related Depreciation and Amortization
 
We capitalize the purchase price and incremental direct costs associated with the acquisition of properties as the cost of the assets acquired. In accordance with Statement of Financial Accounting Standards No. 141, Business Combinations, or SFAS 141, we allocate the cost of acquired properties to tangible assets and identified intangible assets based on their fair values. We determine the fair value of tangible assets, such as land, building, furniture, fixtures and equipment, on an “as-if vacant” basis, generally using internal valuation techniques that consider comparable market transactions, discounted cash flow techniques, replacement costs and other available information. We determine the fair value of identified intangible assets (or liabilities), which typically relate to in-place leases, using internal valuation techniques that consider the terms of the in-place leases, current market data for comparable leases, and our experience in leasing similar properties. The intangible assets or liabilities related to in-place leases are comprised of:
 
  1.  The value of the above- and below-market leases in-place. An asset or liability is recognized based on the difference between (a) the contractual amounts to be paid pursuant to the in-place leases and (b) our estimate of fair market lease rates for the corresponding in-place leases, measured over the period, including estimated lease renewals for below-market leases, that the leases are expected to remain in effect.
 
  2.  The estimated unamortized portion of avoided leasing commissions and other costs that ordinarily would be incurred to acquire the in-place leases.
 
  3.  The value associated with vacant units during the absorption period (estimates of lost rental revenue during the expected lease-up periods based on current market demand and stabilized occupancy levels).
 
The values of the above- and below-market leases are amortized to rental revenue over the expected remaining terms of the associated leases. Other intangible assets related to in-place leases are amortized to operating expenses over the expected remaining terms of the associated leases. Amortization is adjusted, as necessary, to reflect any early lease terminations that were not anticipated in determining amortization periods.
 
Depreciation for all tangible real estate assets is calculated using the straight-line method over their estimated useful lives. Acquired buildings and improvements are depreciated over a composite life of 14 to 52 years, based on the age, condition and other physical characteristics of the property. As discussed under Impairment of Long Lived Assets below, we may adjust depreciation of properties that are expected to be disposed of or demolished prior to the end of their useful lives. Furniture, fixtures and equipment associated with acquired properties are depreciated over five years.
 
Capital Expenditures and Related Depreciation
 
We capitalize costs, including certain indirect costs, incurred in connection with our capital expenditure activities, including redevelopment and construction projects, other tangible property improvements, and replacements of existing property components. Included in these capitalized costs are payroll costs associated with time spent by site employees in connection with the planning, execution and control of all capital expenditure activities at the property level. We characterize as “indirect costs” an allocation of certain department costs, including payroll, at the regional operating center and corporate levels that clearly relate to capital expenditure activities. We capitalize interest, property taxes and insurance during periods in which redevelopment and construction projects are in progress. Costs incurred in connection with capital expenditure activities are capitalized where the costs of the improvements or replacements exceed $250. We charge to expense as incurred costs that do not relate to capital


F-12


Table of Contents

expenditure activities, including ordinary repairs, maintenance, resident turnover costs and general and administrative expenses.
 
We depreciate capitalized costs using the straight-line method over the estimated useful life of the related component or improvement, which is five, 15 or 30 years. Prior to July 1, 2005, we recorded capitalized site payroll costs and most capitalized indirect costs separately from other costs of the related capital projects. We depreciated capitalized site payroll costs over five years and capitalized indirect costs associated with capital replacement and improvement projects over five or 15 years. Capitalized indirect costs associated with redevelopment projects, together with other costs of the redevelopment projects, were depreciated over the estimated useful lives of those projects, predominantly 30 years.
 
Effective July 1, 2005, we refined the estimated useful lives for the capitalized site payroll and indirect costs that were recorded separately from other costs of the related capital projects. All capitalized site payroll and indirect costs incurred after June 30, 2005 are allocated proportionately, based on direct costs, among capital projects and depreciated over the estimated useful lives of such projects. This change in estimate is also being applied prospectively to the June 30, 2005 carrying amounts, net of accumulated depreciation, of previously incurred site payroll and indirect costs. Those amounts, based on the periods the costs were incurred, were allocated among capital projects that were completed in the corresponding periods in proportion to the original direct costs of such projects and are being depreciated over the remaining useful lives of the projects. We anticipate that these refinements will result in generally higher depreciation expense in foreseeable future accounting periods. For the year ended December 31, 2005, these changes in estimated useful lives resulted in a decrease in net income of approximately $4.6 million, and resulted in a decrease in basic and diluted earnings per share of $0.05.
 
Certain homogeneous items that are purchased in bulk on a recurring basis, such as carpeting and appliances, are depreciated using group methods that reflect the average estimated useful life of the items in each group. Except in the case of property casualties, where the net book value of lost property is written off in the determination of casualty gains or losses, we generally do not recognize any loss in connection with the replacement of an existing property component because normal replacements are considered in determining the estimated useful lives used in connection with our composite and group depreciation methods.
 
For the years ended December 31, 2006, 2005 and 2004, we capitalized interest costs totaling $24.7 million, $18.1 million and $9.5 million, respectively, and site payroll and indirect costs totaling $66.2 million, $53.3 million and $46.7 million, respectively.
 
Asset Retirement Obligations
 
In March 2005, the FASB issued FASB Interpretation No. 47, Accounting for Conditional Asset Retirement Obligations, or FIN 47. FIN 47 clarifies the accounting for legal obligations to perform asset retirement activity in which the timing and/or method of settlement are conditional on future events. FIN 47 requires the fair value of such conditional asset retirement obligations to be recorded as incurred, if the fair value of the liability can be reasonably estimated. We have determined that FIN 47 applies to certain obligations that we have based on laws that require property owners to remove or remediate hazardous substances in certain circumstances. We adopted the provisions of FIN 47 as of December 31, 2005 and determined that asset retirement obligations that are required to be recognized under FIN 47 are immaterial to our financial condition and results of operations. See Note 8 for further discussion of asset retirement obligations.
 
Impairment of Long-Lived Assets
 
We apply the provisions of Statement of Financial Accounting Standards No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, or SFAS 144, to determine whether our real estate and other long-lived assets are impaired. Such assets to be held and used are stated at cost, less accumulated depreciation and amortization, unless the carrying amount of the asset is not recoverable. If events or circumstances indicate that the carrying amount of a property may not be recoverable, we make an assessment of its recoverability by comparing the carrying amount to our estimate of the undiscounted future cash flows, excluding interest charges, of the property. If the carrying amount exceeds the aggregate undiscounted future cash flows, we recognize an impairment loss to the extent the carrying amount exceeds the estimated fair value of the property. Based on periodic tests of


F-13


Table of Contents

recoverability of long-lived assets, for the year ended December 31, 2005, we recorded impairment losses of $3.4 million related to properties to be held and used. For the years ended December 31, 2006 and 2004, we determined that the carrying amounts of our properties to be held and used were recoverable and, therefore, we did not record any impairment losses related to such properties. The amounts reported in continuing operations for real estate impairment (losses) recoveries, net include impairment losses related to consolidated properties to be held and used, as well as our share of all impairment losses or recoveries related to unconsolidated properties. We report impairment losses or recoveries related to properties classified as held for sale in discontinued operations.
 
Our tests of recoverability address real estate assets that do not currently meet all conditions to be classified as held for sale, but are expected to be disposed of prior to the end of their estimated useful lives. If an impairment loss is not required to be recorded in accordance with SFAS 144, the recognition of depreciation is adjusted prospectively, as necessary, to reduce the carrying amount of the real estate to its estimated disposition value over the remaining period that the real estate is expected to be held and used. We also may adjust depreciation prospectively to reduce to zero the carrying amount of buildings that we plan to demolish in connection with a redevelopment project. These depreciation adjustments decreased net income by $31.2 million and $31.9 million, and resulted in decreases in basic and diluted earnings per share of $0.33 and $0.34, for the years ended December 31, 2006 and 2005, respectively.
 
Cash Equivalents
 
We consider highly liquid investments with an original maturity of three months or less to be cash equivalents.
 
Restricted Cash
 
Restricted cash includes capital replacement reserves, tax-free exchange funds, completion repair reserves, bond sinking fund amounts and tax and insurance escrow accounts held by lenders.
 
Accounts Receivable and Allowance for Doubtful Accounts
 
Accounts receivable are generally comprised of amounts receivable from residents, amounts receivable from non-affiliated real estate partnerships for which we provide property management and other services and other miscellaneous receivables from non-affiliated entities. We evaluate collectibility of accounts receivable from residents and establish an allowance, after the application of security deposits and other anticipated recoveries, for accounts greater than 30 days past due for current residents and all receivables due from former residents. Accounts receivable from residents are stated net of allowances for doubtful accounts of approximately $1.9 million and $2.3 million as of December 31, 2006 and 2005, respectively.
 
We evaluate collectibility of accounts receivable from non-affiliated entities and establish an allowance for amounts that are considered to be uncollectible. Accounts receivable relating to non-affiliated entities are stated net of allowances for doubtful accounts of approximately $4.1 million and $4.2 million as of December 31, 2006 and 2005, respectively.
 
Accounts Receivable and Allowance for Doubtful Accounts from Affiliates
 
Accounts receivable from affiliates are generally comprised of receivables related to property management and other services provided to unconsolidated real estate partnerships in which we have an ownership interest. We evaluate collectibility of accounts receivable balances from affiliates on a periodic basis, and establish an allowance for the amounts deemed to be uncollectible. Accounts receivable from affiliates are stated net of allowances for doubtful accounts of approximately $5.3 million and $4.7 million as of December 31, 2006 and 2005, respectively.
 
Deferred Costs
 
We defer lender fees and other direct costs incurred in obtaining new financing and amortize the amounts over the terms of the related loan agreements. Amortization of these costs is included in interest expense.
 
We defer leasing commissions and other direct costs incurred in connection with successful leasing efforts and amortize the costs over the terms of the related leases. Amortization of these costs is included in operating expenses.


F-14


Table of Contents

 
Advertising Costs
 
We generally expense all advertising costs as incurred to property operating expense. For the years ended December 31, 2006, 2005 and 2004, for both continuing and discontinued operations, total advertising expense was $34.7 million, $36.1 million and $33.1 million, respectively.
 
Notes Receivable from Unconsolidated Real Estate Partnerships and Related Interest Income and Provision for Losses
 
Notes receivable from unconsolidated real estate partnerships consist primarily of notes receivable from partnerships in which we are the general partner. The ultimate repayment of these notes is subject to a number of variables, including the performance and value of the underlying real estate property and the claims of unaffiliated mortgage lenders. Our notes receivable include loans extended by us that we carry at the face amount plus accrued interest, which we refer to as “par value notes,” and loans extended by predecessors whose positions we generally acquired at a discount, which we refer to as “discounted notes.”
 
We record interest income on par value notes as earned in accordance with the terms of the related loan agreements. We discontinue the accrual of interest on such notes when the notes are impaired, as discussed below, or when there is otherwise significant uncertainty as to the collection of interest. We record income on such nonaccrual loans using the cost recovery method, under which we apply cash receipts first to the recorded amount of the loan; thereafter, any additional receipts are recognized as income.
 
We recognize interest income on discounted notes receivable based upon whether the amount and timing of collections are both probable and reasonably estimable. We consider collections to be probable and reasonably estimable when the borrower has entered into certain closed or pending transactions (which include real estate sales, refinancings, foreclosures and rights offerings) that provide a reliable source of repayment. In such instances, we recognize accretion income, on a prospective basis using the effective interest method over the estimated remaining term of the loans, equal to the difference between the carrying amount of the discounted notes and the estimated collectible value. We record income on all other discounted notes using the cost recovery method.
 
We assess the collectibility of notes receivable on a periodic basis, which assessment consists primarily of an evaluation of cash flow projections of the borrower to determine whether estimated cash flows are sufficient to repay principal and interest in accordance with the contractual terms of the note. We recognize impairments on notes receivable when it is probable that principal and interest will not be received in accordance with the contractual terms of the loan. The amount of the impairment to be recognized generally is based on the fair value of the partnership’s real estate that represents the primary source of loan repayment. In certain instances where other sources of cash flow are available to repay the loan, the impairment is measured by discounting the estimated cash flows at the loan’s original effective interest rate.
 
Investments in Unconsolidated Real Estate Partnerships
 
We own general and limited partner interests in real estate partnerships that own apartment properties. We generally account for investments in real estate partnerships that we do not consolidate under the equity method. Under the equity method, our share of the earnings or losses of the entity for the periods being presented is included in equity in earnings (losses) from unconsolidated real estate partnerships, except for our share of impairments and property disposition gains related to such entities, which we report separately in the consolidated statements of income. Certain investments in real estate partnerships that were acquired in business combinations were determined to have insignificant value at the acquisition date and are accounted for under the cost method. Any distributions received from such partnerships are recognized as income when received.
 
The excess of the cost of the acquired partnership interests over the historical carrying amount of partners’ equity or deficit is ascribed generally to the fair values of land and buildings owned by the partnerships. We amortize the excess cost related to the buildings over the estimated useful lives of the buildings. Such amortization is recorded as a component of equity in losses of unconsolidated real estate partnerships.


F-15


Table of Contents

 
Intangible Assets
 
At December 31, 2006 and 2005, other assets included goodwill associated with our real estate segment of $81.9 million. We account for goodwill and other intangible assets in accordance with the requirements of Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets, or SFAS 142. SFAS 142 does not permit amortization of goodwill and other intangible assets with indefinite lives, but requires an annual impairment test of such assets. The impairment test compares the fair value of reporting units with their carrying amounts, including goodwill. Based on the application of the goodwill impairment test set forth in SFAS 142, we determined that our goodwill was not impaired in 2006, 2005 or 2004. As discussed in Note 9, we reduced goodwill by $6.2 million in 2005 in connection with the recognition of deferred income tax assets that were acquired in connection with business combinations in prior years.
 
Other assets also includes intangible assets for purchased management contracts with finite lives that we amortize on a straight-line basis over terms ranging from five to twenty years and intangible assets for in-place leases as discussed under Acquisition of Real Estate Assets and Related Depreciation and Amortization.
 
Capitalized Software Costs
 
Purchased software and other costs related to software developed for internal use are capitalized during the application development stage and are amortized using the straight-line method over the estimated useful life of the software, generally five years. We write off the costs of software development projects when it is no longer probable that the software will be completed and placed in service. For the years ended December 31, 2006, 2005 and 2004, we capitalized software development costs totaling $6.3 million, $9.9 million and $18.1 million, respectively. At December 31, 2006 and 2005, other assets included $31.6 million and $40.2 million of net capitalized software, respectively.
 
Minority Interest in Consolidated Real Estate Partnerships
 
We report unaffiliated partners’ interests in consolidated real estate partnerships as minority interest in consolidated real estate partnerships. Minority interest in consolidated real estate partnerships represents the minority partners’ share of the underlying net assets of our consolidated real estate partnerships. When these consolidated real estate partnerships make cash distributions to partners in excess of the carrying amount of the minority interest, we generally record a charge equal to the amount of such excess distribution, even though there is no economic effect or cost. We report this charge in the consolidated statements of income as deficit distributions to minority partners. We allocate the minority partners’ share of partnership losses to minority partners to the extent of the carrying amount of the minority interest. We generally record a charge when the minority partners’ share of partnership losses exceed the carrying amount of the minority interest, even though there is no economic effect or cost. We report this charge in the consolidated statements of income within minority interest in consolidated real estate partnerships. We do not record charges for distributions or losses in certain limited instances where the minority partner has a legal obligation and financial capacity to contribute additional capital to the partnership. For the years ended December 31, 2006, 2005, and 2004, we recorded charges for partnership losses resulting from depreciation of approximately $31.8 million, $9.5 million and $5.2 million, respectively, that were not allocated to minority partners because the losses exceeded the carrying amount of the minority interest.
 
Minority interest in consolidated real estate partnerships consists primarily of equity interests held by limited partners in consolidated real estate partnerships that have finite lives. The terms of the related partnership agreements generally require the partnership to be liquidated following the sale of the partnership’s real estate. As the general partner in these partnerships, we ordinarily control the execution of real estate sales and other events that could lead to the liquidation, redemption or other settlement of minority interests. The aggregate carrying value of minority interests in consolidated real estate partnerships is approximately $212.1 million at December 31, 2006. The aggregate fair value of these interests varies based on the fair value of the real estate owned by the partnerships. Based on the number of classes of finite-life minority interests, the number of properties in which there is direct or indirect minority ownership, complexities in determining the allocation of liquidation proceeds among partners and other factors, we believe it is impracticable to determine the total required payments to the minority interests in an assumed liquidation at December 31, 2006. As a result of real estate depreciation that is recognized in our financial


F-16


Table of Contents

statements and appreciation in the fair value of real estate that is not recognized in our financial statements, we believe that the aggregate fair value of our minority interests exceeds their aggregate carrying value. As a result of our ability to control real estate sales and other events that require payment of minority interests and our expectation that proceeds from real estate sales will be sufficient to liquidate related minority interests, we anticipate that the eventual liquidation of these minority interests will not have an adverse impact on our financial condition.
 
Revenue Recognition
 
Our properties have operating leases with apartment residents with terms generally of twelve months or less. We recognize rental revenue related to these leases, net of any concessions, on a straight-line basis over the term of the lease. We recognize revenues from property management, asset management, syndication and other services when the related fees are earned and are realized or realizable.
 
Stock-Based Compensation
 
On January 1, 2006 we adopted Statement of Financial Accounting Standards No. 123 (revised 2004), Share-Based Payment (see Note 12).
 
Discontinued Operations
 
In accordance with SFAS 144, we classify certain properties and related liabilities as held for sale (see Note 13). The operating results of such properties are presented in discontinued operations in both current periods and all comparable periods presented. Depreciation is not recorded on properties held for sale; however, depreciation expense recorded prior to classification as held for sale is included in discontinued operations. The net gain on sale and any impairment losses are presented in discontinued operations when recognized.
 
Derivative Financial Instruments
 
We primarily use long-term, fixed-rate and self-amortizing non-recourse debt to avoid, among other things, risk related to fluctuating interest rates. For our variable rate debt, we are sometimes required by our lenders to limit our exposure to interest rate fluctuations by entering into interest rate swap or cap agreements. The interest rate swap agreements moderate our exposure to interest rate risk by effectively converting the interest on variable rate debt to a fixed rate. The interest rate cap agreements effectively limit our exposure to interest rate risk by providing a ceiling on the underlying variable interest rate. The fair values of these instruments are reflected as assets or liabilities in the balance sheet, and periodic changes in fair value are included in interest expense. These instruments are not material to our financial position and results of operations.
 
Insurance
 
We believe that our insurance coverages insure our properties adequately against the risk of loss attributable to fire, earthquake, hurricane, tornado, flood, and other perils. In addition, we have insurance coverage for substantial portions of our property, workers’ compensation, health, and general liability exposures. Losses are accrued based upon our estimates of the aggregate liability for uninsured losses incurred using certain actuarial assumptions followed in the insurance industry and based on our experience.
 
Income Taxes
 
We have elected to be taxed as a REIT under the Internal Revenue Code of 1986, as amended, which we refer to as the Code, commencing with our taxable year ended December 31, 1994, and intend to continue to operate in such a manner. Our current and continuing qualification as a REIT depends on our ability to meet the various requirements imposed by the Code, which are related to organizational structure, distribution levels, diversity of stock ownership and certain restrictions with regard to owned assets and categories of income. If we qualify for taxation as a REIT, we will generally not be subject to United States Federal corporate income tax on our taxable 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.


F-17


Table of Contents

Even if we qualify as a REIT, we may be subject to United States Federal income and excise taxes in various situations, such as on our undistributed income. We also will be required to pay a 100% tax on any net income on non-arms length transactions between us and a TRS (described below) and on any net income from sales of property that was property held for sale to customers in the ordinary course. We and our stockholders may be subject to state or local taxation in various state or local jurisdictions, including those in which we transact business or our stockholders reside. In addition, we could also be subject to the alternative minimum tax, or AMT, on our items of tax preference. Any taxes imposed on us could reduce our operating cash flow and net income. The state and local tax laws may not conform to the United States Federal income tax treatment.
 
Certain of our operations (property management, asset management, risk, etc.) are conducted through taxable REIT subsidiaries, which are subsidiaries of the Aimco Operating Partnership and each of which we refer to as a TRS. A TRS is a C-corporation that has not elected REIT status and as such is subject to United States Federal corporate income tax. We use TRS entities to facilitate our ability to offer certain services and activities to our residents, as these services and activities generally cannot be offered directly by the REIT.
 
For our taxable REIT subsidiaries, deferred income taxes result from temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for Federal income tax purposes, and are measured using the enacted tax rates and laws that are expected to be in effect when the differences reverse. We reduce deferred tax assets by recording a valuation allowance when we determine based on available evidence that it is more likely than not that the assets will not be realized.
 
Earnings per Share
 
We calculate earnings per share based on the weighted average number of shares of Common Stock, common stock equivalents, and other potentially dilutive securities outstanding during the period (see Note 14).
 
Fair Value of Financial Instruments
 
We believe that the aggregate fair value of our cash and cash equivalents, receivables, payables and short-term secured debt approximates their aggregate carrying value at December 31, 2006, due to their relatively short-term nature and high probability of realization. We further believe that the aggregate fair value of our variable rate secured tax-exempt bond financing, variable rate property loans payable, term loans and borrowings under our credit facility also approximate their aggregate carrying value due to terms in the related agreements that require periodic interest adjustments based on market interest rates. For notes receivable, fixed rate secured tax-exempt bond debt and secured long-term debt, we estimate fair values using present value techniques. Present value calculations vary depending on the assumptions used, including the discount rate and estimates of future cash flows. We estimate fair value for our fixed rate debt instruments based on the market rate for debt with the same or similar terms. In many cases, the fair value estimates may not be realizable in immediate settlement of the instruments. The estimated aggregate fair value of our notes receivable was approximately $181 million and $211 million at December 31, 2006 and 2005, respectively. See Note 5 for further information on notes receivable. The estimated aggregate fair value of our secured tax-exempt bonds and property loans payable, including amounts reported in liabilities related to assets held for sale was approximately $6.4 billion and $5.8 billion at December 31, 2006, and December 31, 2005, respectively. The combined carrying value of our secured tax-exempt bonds and property loans payable, including amounts reported in liabilities related to assets held for sale, was approximately $6.3 billion and $5.7 billion at December 31, 2006 and 2005, respectively. See Note 6 for further details on secured tax-exempt bonds and secured notes payable.
 
Concentration of Credit Risk
 
Financial instruments that potentially could subject us to significant concentrations of credit risk consist principally of notes receivable. As discussed in Note 5, a significant portion of our notes receivable at December 31, 2006, are collateralized by properties in the West Harlem district of New York City. There are no other significant concentrations of credit risk with respect to our notes receivable due to the large number of partnerships that are borrowers under the notes and the geographic diversity of the properties that collateralize the notes.


F-18


Table of Contents

 
Use of Estimates
 
The preparation of our consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts included in the financial statements and accompanying notes thereto. Actual results could differ from those estimates.
 
Reclassifications
 
Certain items included in the 2005 and 2004 financial statements amounts have been reclassified to conform to the 2006 presentation.
 
Note 3 — Acquisitions
 
Real Estate Acquisitions
 
During 2006, we completed acquisitions of nine properties (including one property acquired by an unconsolidated joint venture), containing approximately 1,700 residential units for an aggregate purchase price of approximately $177.0 million, including transaction costs. Of the nine properties acquired, three are located in Pacifica, California; one in Chico, California; three in metro Jacksonville, Florida; one in Tampa, Florida; and one in Greenville, North Carolina. The purchases were funded with cash, new debt and the assumption of existing debt.
 
During 2005, we completed acquisitions of six properties (including Palazzo East at Park La Brea), containing approximately 1,006 residential units and six retail spaces for an aggregate purchase price of approximately $283.6 million, including transaction costs. Of the six properties acquired, four are located in the New York City area, one in Los Angeles, and one in New Jersey. The purchases were funded with cash, new debt and the assumption of existing debt.
 
Acquisitions of Partnership Interests
 
During 2006 and 2005, we acquired limited partnership interests in 48 partnerships and 84 partnerships, respectively, in which our affiliates served as general partner. In connection with such acquisitions, during 2006 we paid cash of approximately $18.4 million, including transaction costs, and during 2005 we paid approximately $56.0 million, including transaction costs, of which $55.6 million was in cash and the remainder in OP Units. The 2006 and 2005 amounts were approximately $24.3 million and $60.6 million, respectively, in excess of the carrying amount of minority interest in such limited partnerships, which excess we generally assigned to real estate.
 
Note 4 — Investments in Unconsolidated Real Estate Partnerships
 
We owned general and limited partner interests in unconsolidated real estate partnerships owning approximately 102, 264 and 330 properties at December 31, 2006, 2005 and 2004, respectively. We acquired these interests through various transactions, including large portfolio acquisitions and offers to individual limited partners. Our total ownership interests in these unconsolidated real estate partnerships ranges typically from less than 1% to 50%.
 
The following table provides selected combined financial information for unconsolidated real estate partnerships as of and for the years ended December 31, 2006, 2005 and 2004 (in thousands):
 
                         
    2006     2005     2004  
 
Real estate, net of accumulated depreciation
  $ 146,400     $ 763,219     $ 1,004,501  
Total assets
    166,874       954,970       1,255,434  
Secured and other notes payable
    140,089       932,454       1,146,141  
Total liabilities
    199,082       1,248,450       1,545,250  
Partners’ equity (deficit)
    (32,208 )     (293,480 )     (289,816 )
Rental and other property revenues
    99,708       311,429       320,687  
Property operating expenses
    (49,451 )     (177,970 )     (201,248 )
Depreciation expense
    (18,769 )     (63,056 )     (72,577 )
Interest expense
    (24,146 )     (84,252 )     (99,120 )
Gain on sale
    2,980       106,465       100,669  
Net income (loss)
    (1,443 )     82,123       50,778  


F-19


Table of Contents

The year-to-year decreases in amounts in the above table reflect dispositions of real estate owned by the unconsolidated real estate partnerships and the consolidation of certain partnerships previously accounted for under the equity method, including 156 partnerships consolidated in 2006 in connection with the adoption of EITF 04-5.
 
As a result of our acquisition of interests in unconsolidated real estate partnerships at a cost in excess of the historical carrying amount of the partnerships’ net assets, our aggregate investment in these partnerships at December 31, 2006 and 2005 of $39.0 million and $173.4 million, respectively, exceeds our share of the underlying historical partners’ deficit of the partnerships by approximately $44.8 million and $241.7 million, respectively.
 
Note 5 — Notes Receivable
 
The following table summarizes our notes receivable at December 31, 2006 and 2005 (in thousands):
 
                                                 
    2006     2005  
    Unconsolidated
                Unconsolidated
             
    Real Estate
    Non-
          Real Estate
    Non-
       
    Partnerships     Affiliates     Total     Partnerships     Affiliates     Total  
 
Par value notes
  $ 40,055     $ 18,815     $ 58,870     $ 89,640     $ 22,681     $ 112,321  
Discounted notes
    6,064       120,537       126,601       92,451       1,079       93,530  
Allowance for loan losses
    (5,478 )           (5,478 )     (4,891 )           (4,891 )
                                                 
Total notes receivable
    40,641     $ 139,352     $ 179,993     $ 177,200     $ 23,760     $ 200,960  
                                                 
Face value of discounted notes
  $ 41,781     $ 145,024     $ 186,805     $ 130,342     $     $ 130,342  
 
Included in notes receivable from unconsolidated real estate partnerships at December 31, 2006 and 2005, are $6.0 million and $28.8 million, respectively, in notes that were secured by interests in real estate or interests in real estate partnerships. We earn interest on these secured notes receivable at various annual interest rates ranging between 6.0% and 12.0% and averaging 10.3%.
 
Notes receivable from non-affiliates at December 31, 2006 include notes receivable totaling $81.6 million from 31 entities (the “borrowers”) that are wholly owned by a single individual. We originated these notes in November 2006 pursuant to a loan agreement that provides for total funding of approximately $110 million, including $14.4 million for property improvements and an interest reserve which have not yet been funded. The notes mature in ten years, bear interest at LIBOR plus 2.0%, are partially guaranteed by the owner of the borrowers, and are collateralized by second mortgages on 87 buildings containing 1,597 residential units and 42 commercial spaces in West Harlem, New York City. In conjunction with the loan agreement, we entered into a purchase option and put agreement with the borrowers under which we may purchase some or all of the buildings and, subject to achieving specified increases in rental income, the borrowers may require us to purchase the buildings. Our potential purchase of the buildings pursuant to the purchase option and put agreement may ultimately require cash payments and/or assumption of first mortgage debt totaling approximately $139 million to $206 million, in addition to amounts funded and committed under the loan agreement, depending on rental income levels and real estate fair values. We determined that the stated interest rate on the notes is a below-market interest rate and recorded a $19.4 million discount to reflect the estimated fair value of the notes based on an estimated market interest rate of LIBOR plus 4.0%. The discount was determined to be attributable to our real estate purchase option, which we recorded separately in other assets. The purchase option asset will be included in the cost of properties acquired pursuant to the option or otherwise be charged to expense. We determined that the borrowers are VIEs and, based on qualitative and quantitative analysis, determined that the individual who owns the borrowers and partially guarantees the notes is the primary beneficiary.
 
Included in notes receivable from non-affiliates at December 31, 2006 and 2005, are $6.0 million and $6.4 million, respectively, in other notes that were secured by interests in real estate or interests in real estate partnerships. We earn interest on these secured notes receivable at various annual interest rates ranging between 4.0% and 7.4% and averaging 6.5%. At December 31, 2006, notes receivable from non-affiliates also includes a $38.7 million unsecured discounted receivable, reflecting $50.0 million due in 2009 and an imputed interest rate of 12%.


F-20


Table of Contents

 
Notes receivable from non-affiliates at December 31, 2005, includes $2.5 million due from Alan I. Casden, representing the unpaid balance of notes receivable related to the settlement of litigation involving a company that was acquired in connection with the March 2002 acquisition of Casden Properties, Inc. (which we refer to as the Casden Transactions). The notes were secured by certain shares of Common Stock and certain cash settlement proceeds. In 2004, we entered into an agreement with respect to certain proceeds to be received by Mr. Casden and his right to deliver Common Stock at an agreed-upon value of $47 per share in satisfaction of the notes. Pursuant to this agreement, in 2004 we received $20 million in cash as payment in full on three notes due in 2004, 2005 and 2006. In 2005, we received cash payments of $7.0 million in satisfaction of the note due in 2007 and in partial satisfaction of the note due in 2008. In 2006, we received a final payment of $2.5 million in satisfaction of the note due in 2008. The 2004 agreement resolved a contingency based on the price of our Common Stock related to the Casden Transactions. In accordance with SFAS 141, in 2004 we recorded a $4.8 million charge to additional paid-in capital, representing the difference between the $29.1 million fair value of the consideration to be paid pursuant to the 2004 agreement and the $33.9 million carrying amount of the notes.
 
Interest income from total non-impaired par value and certain discounted notes for the years ended December 31, 2006, 2005 and 2004 totaled $5.8 million, $19.2 million and $20.5 million, respectively. For the years ended December 31, 2006, 2005, and 2004, we recognized accretion income on certain discounted notes of approximately $6.7 million, $2.5 million and $6.3 million, respectively.
 
The activity in the allowance for loan losses in total for both par value notes and discounted notes for the years ended December 31, 2006 and 2005, is as follows (in thousands):
 
                 
    2006     2005  
 
Balance at beginning of year
  $ (4,891 )   $ (7,149 )
Provisions for losses on notes receivable
    (3,104 )     (577 )
Recoveries of losses on notes receivable
    320       1,942  
Net reductions due to consolidation of real estate partnerships and property dispositions
    2,197       893  
                 
Balance at end of year
  $ (5,478 )   $ (4,891 )
                 
 
During the years ended December 31, 2006 and 2005, we determined that an allowance for loan losses of $3.4 million and $2.4 million, respectively, was required on certain of our par value notes that had carrying values of $9.0 million and $6.5 million, respectively. The average recorded investment in the impaired par value notes for the years ended December 31, 2006, 2005 and 2004 was $7.0 million, $6.7 million and $11.8 million, respectively. The remaining $49.9 million in par value notes receivable at December 31, 2006 is estimated to be collectible and, therefore, interest income on these par value notes is recognized as it is earned.
 
As of December 31, 2006 and 2005, we determined that an allowance for loan losses of $2.0 million and $2.5 million, respectively, was required on certain of our discounted notes that had carrying values of $4.4 million and $5.0 million, respectively. The average recorded investment in the impaired discounted notes for the years ended December 31, 2006 and 2005 was $4.6 million and $5.0 million, respectively.
 
Note 6 — Secured Tax-Exempt Bond Financings, Property Loans Payable and Other Borrowings
 
The following table summarizes our secured tax-exempt bond financings at December 31, 2006 and 2005, the majority of which is non-recourse to us (in thousands):
 
                         
    Weighted Average
             
    Interest Rate
    Principal Outstanding  
    2006     2006     2005  
 
Fixed rate secured tax-exempt bonds payable
    5.76 %   $ 295,532     $ 280,147  
Variable rate secured tax-exempt bonds payable
    4.23 %     640,550       715,750  
                         
Total
          $ 936,082     $ 995,897  
                         


F-21


Table of Contents

Fixed rate secured tax-exempt bonds payable mature at various dates through October 2045. Variable rate secured tax-exempt bonds payable mature at various dates through June 2034. Principal and interest on these bonds are generally payable in semi-annual installments or in monthly interest-only payments with balloon payments due at maturity. Certain of our tax-exempt bonds at December 31, 2006 are remarketed periodically by a remarketing agent to maintain a variable yield. If the remarketing agent is unable to remarket the bonds, then the remarketing agent can put the bonds to us. We believe that the likelihood of this occurring is remote. At December 31, 2006, our secured tax-exempt bond financings were secured by 72 properties with a combined net book value of $1,435.7 million.
 
The following table summarizes our property loans payable at December 31, 2006 and 2005, the majority of which are non-recourse to us (in thousands):
 
                         
    Weighted Average
             
    Interest Rate
    Principal Outstanding  
    2006     2006     2005  
 
Conventional fixed rate secured notes payable
    6.35 %   $ 4,846,259     $ 3,689,730  
Conventional variable rate secured notes payable
    6.53 %     370,113       554,748  
Secured notes credit facility
    5.34 %     112,639       76,210  
                         
Total
          $ 5,329,011     $ 4,320,688  
                         
 
Fixed rate secured notes payable mature at various dates through August 2053. Variable rate secured notes payable mature at various dates through July 2021. Principal and interest are generally payable monthly or in monthly interest-only payments with balloon payments due at maturity. At December 31, 2006, our secured notes payable were secured by 608 properties with a combined net book value of $7,500.6 million.
 
We have a secured revolving credit facility that provides for borrowings of up to $250 million primarily to be used for financing properties that we generally intend to hold for the intermediate term, as well as properties that are designated for redevelopment. In addition to the amounts in the above table, there were approximately zero and $4.0 million of notes that were provided through this facility that are obligations of unconsolidated real estate partnerships and not included within secured notes payable at December 31, 2006 and 2005, respectively. The interest rate on the notes provided through this facility is the Fannie Mae Discounted Mortgage-Backed Security index plus 0.85% (for those loans with debt coverage ratios greater than or equal to 1.70) or 1.05% (for those loans with debt service coverage ratios less than 1.70), which interest rate resets monthly. Each such loan under this facility is treated as a separate borrowing and is collateralized by a specific property, and none of the loans is cross-collateralized or cross-defaulted. This facility matures in September 2007, but can be terminated and repaid in full without penalty.
 
Our consolidated debt instruments generally contain covenants common to the type of facility or borrowing, including financial covenants establishing minimum debt service coverage ratios and maximum leverage ratios. At December 31, 2006, we were in material compliance with all financial covenants pertaining to our consolidated debt instruments.
 
Other borrowings totaled $67.7 million and $88.3 million at December 31, 2006 and 2005, respectively, and consist primarily of unsecured notes payable and obligations under sale and leaseback arrangements accounted for as financings. At December 31, 2006, other borrowings includes $59.2 million in fixed rate obligations with interest rates ranging from zero to 10.0% and $8.5 million in variable rate obligations bearing interest at the prime rate plus 1.75%. The maturity dates for other borrowings range from 2007 to 2039, although certain amounts are due upon occurrence of specified events, such as property sales.


F-22


Table of Contents

 
As of December 31, 2006, the scheduled principal amortization and maturity payments for our secured tax-exempt bonds, secured notes payable and other borrowings are as follows (in thousands):
 
                         
    Amortization     Maturities     Total  
 
2007
  $ 146,807     $ 303,041     $ 449,848  
2008
    139,955       393,993       533,948  
2009
    143,258       400,202       543,460  
2010
    151,025       187,399       338,424  
2011
    159,083       349,688       508,771  
Thereafter
                    3,958,302  
                         
                    $ 6,332,753  
                         
 
Note 7 — Term Loans and Credit Facility
 
On November 2, 2004, we entered into an Amended and Restated Senior Secured Credit Agreement, which we refer to as the Credit Agreement, with a syndicate of financial institutions. In addition to Aimco, the Aimco Operating Partnership and an Aimco subsidiary are also borrowers under the Credit Agreement. The Credit Agreement replaced our previous two separate credit agreements.
 
The Credit Agreement includes customary financial covenants, including the maintenance of specified ratios with respect to total indebtedness to gross asset value, total secured indebtedness to gross asset value, aggregate recourse indebtedness to gross asset value, variable rate debt to total indebtedness, debt service coverage and fixed charge coverage; the maintenance of a minimum adjusted tangible net worth; and limitations regarding the amount of cross-collateralized debt. The Credit Agreement includes other customary covenants, including a restriction on distributions and other restricted payments, but permits distributions during any four consecutive fiscal quarters in an aggregate amount of up to 95% of our funds from operations for such period or such amount as may be necessary to maintain our REIT status. The Credit Agreement also permits us to repurchase our Common Stock using up to 80% of sales proceeds in any trailing four-quarter period.
 
The original aggregate commitment under the Credit Agreement was $750 million, comprised of $450 million of revolving loan commitments and a $300 million term loan tranche. On June 16, 2005, we amended the Credit Agreement to provide for $100.0 million in additional term loan borrowings from a syndicate of financial institutions. The proceeds from the additional term loan were used to repay outstanding revolving loans.
 
Originally, the revolving loans bore interest at a rate equal to (i) the LIBOR rate plus a margin that could range from 1.50% to 2.00% (for LIBOR loans) or (ii) the base rate (determined by reference to the federal funds rate or Bank of America’s prime rate) plus a margin that could range from 0% to 0.25% (for base rate loans), in each case, depending on our leverage ratio. The original $300 million term loan bore interest at a rate equal to (i) the LIBOR rate plus 2.00% (for LIBOR loans) or (ii) the base rate plus 0.25% (for base rate loans), and the additional $100.0 million term loan bore interest at a rate equal to (i) the LIBOR rate plus 1.75% (for LIBOR loans) or (ii) the base rate plus 0.25%. The default rate of interest for the loan is equal to the applicable rate described above plus 3%. The revolving loans had an original maturity of November 2, 2007, and the term loans of November 2, 2009.
 
On March 22, 2006, we amended various terms in our Credit Agreement, including: the ability to request an increase in the aggregate commitments (which may be revolving or term loan commitments) by an amount not to exceed $150 million; a reduction in the interest rate spread applicable to revolving loans to LIBOR plus a margin that can range from 1.125% to 1.75%; a reduction in the interest rate spread applicable to letters of credit; a reduction in the spread applicable to term loans to LIBOR plus 1.5%; and an extension of the maturity dates to May 1, 2009 for the revolver and to March 22, 2011 for the term loans.
 
The lenders under the Credit Agreement may accelerate any outstanding loans if, among other things: we fail to make payments when due (subject to applicable grace periods); material defaults occur under other debt agreements; certain bankruptcy or insolvency events occur; material judgments are entered against us; we fail to comply with certain covenants, such as the requirement to deliver financial information or the requirement to


F-23


Table of Contents

provide notices regarding material events (subject to applicable grace periods in some cases); indebtedness is incurred in violation of the covenants; or prohibited liens arise.
 
At December 31, 2006, the outstanding principal balance of the term loans was $400.0 million at an interest rate of 6.91%. At December 31, 2006, the outstanding principal balance of the revolving loans was $140.0 million at a weighted average interest rate of 6.725% (based on various weighted average LIBOR borrowings outstanding with various maturities). The amount available under the revolving facility at December 31, 2006 was $277.3 million (after giving effect to $32.7 million outstanding for undrawn letters of credit issued under the revolving facility). As of December 31, 2006, we were in compliance with all financial covenant requirements.
 
Note 8 — Commitments and Contingencies
 
Commitments
 
In connection with our redevelopment and capital improvement activities, we have commitments of approximately $146.7 million related to construction projects that are expected to be substantially completed during 2007. We also enter into certain commitments for future purchases of goods and services in connection with the operations of our properties. Those commitments generally have terms of one year or less and reflect expenditure levels comparable to our historical expenditures.
 
As discussed in Note 5, we have a commitment to fund an additional $14.4 million in second mortgage loans on certain properties in West Harlem, New York City. We also could be required in certain circumstances to acquire the properties for cash and/or assumption of first mortgage debt totaling approximately $139 million to $206 million, in addition to amounts funded and committed under the loan agreement.
 
In connection with the Casden Transactions, we committed to invest up to $50 million for an interest in Casden Properties LLC. As of December 31, 2006, we had fulfilled our investment commitment. Casden Properties LLC is pursuing development opportunities in Southern California and other markets. We have an option, but not an obligation, to purchase at completion all multifamily rental projects developed by Casden Properties LLC. We also committed to pay an aggregate amount of $50 million to Casden Properties LLC as a retainer on account for redevelopment services, of which $47.5 million had been paid as of December 31, 2006. The final $2.5 million payment was made in January 2007.
 
Tax Credit Arrangements
 
We are required to manage certain consolidated real estate partnerships in compliance with various laws, regulations and contractual provisions that apply to our syndication of historic and low-income housing tax credits. In some instances, noncompliance with applicable requirements could result in projected tax benefits not being realized and require a refund or reduction of investor capital contributions, which are reported as deferred income in our consolidated balance sheet. The remaining compliance period for our tax credit syndication arrangements range from less than one year to 15 years. At December 31, 2006, we do not anticipate that any material refunds or reductions of investor capital contributions will be required in connection with these arrangements.
 
Legal Matters
 
In addition to the matters described below, we are a party to various legal actions and administrative proceedings arising in the ordinary course of business, some of which are covered by our general liability insurance program, and none of which we expect to have a material adverse effect on our consolidated financial condition or results of operations.
 
Limited Partnerships
 
In connection with our acquisitions of interests in real estate partnerships, we are sometimes subject to legal actions, including allegations that such activities may involve breaches of fiduciary duties to the partners of such real estate partnerships or violations of the relevant partnership agreements. We may incur costs in connection with the defense or settlement of such litigation. We believe that we comply with our fiduciary obligations and relevant


F-24


Table of Contents

partnership agreements. Although the outcome of any litigation is uncertain, we do not expect any such legal actions to have a material adverse effect on our consolidated financial condition or results of operations.
 
Environmental
 
Various Federal, state and local laws subject property owners or operators to liability for management, and the costs of removal or remediation, of certain hazardous substances present on a property. Such laws often impose liability without regard to whether the owner or operator knew of, or was responsible for, the release or presence of the hazardous substances. The presence of, or the failure to manage or remedy properly, hazardous substances may adversely affect occupancy at affected apartment communities and the ability to sell or finance affected properties. In addition to the costs associated with investigation and remediation actions brought by government agencies, and potential fines or penalties imposed by such agencies in connection therewith, the presence of hazardous substances on a property could result in claims by private plaintiffs for personal injury, disease, disability or other infirmities. Various laws also impose liability for the cost of removal, remediation or disposal of hazardous substances through a licensed disposal or treatment facility. Anyone who arranges for the disposal or treatment of hazardous substances is potentially liable under such laws. These laws often impose liability whether or not the person arranging for the disposal ever owned or operated the disposal facility. In connection with the ownership, operation and management of properties, we could potentially be liable for environmental liabilities or costs associated with our properties or properties we acquire or manage in the future.
 
We have determined that our legal obligations to remove or remediate hazardous substances may be conditional asset retirement obligations as defined in FASB Interpretation No. 47, Conditional Asset Retirement Obligations.  Except in limited circumstances where the asset retirement activities are expected to be performed in connection with a planned construction project or property casualty, we believe that the fair value of our asset retirement obligations cannot be reasonably estimated due to significant uncertainties in the timing and manner of settlement of those obligations. Asset retirement obligations that are reasonably estimable as of December 31, 2006, are immaterial to our consolidated financial condition and results of operations.
 
Mold
 
We have been named as a defendant in lawsuits that have alleged personal injury and property damage as a result of the presence of mold. In addition, we are aware of lawsuits against owners and managers of multifamily properties asserting claims of personal injury and property damage caused by the presence of mold, some of which have resulted in substantial monetary judgments or settlements. We have only limited insurance coverage for property damage loss claims arising from the presence of mold and for personal injury claims related to mold exposure. We have implemented policies, procedures, third-party audits and training, and include a detailed moisture intrusion and mold assessment during acquisition due diligence. We believe these measures will prevent or eliminate mold exposure from our properties and will minimize the effects that mold may have on our residents. To date, we have not incurred any material costs or liabilities relating to claims of mold exposure or to abate mold conditions. Because the law regarding mold is unsettled and subject to change we can make no assurance that liabilities resulting from the presence of or exposure to mold will not have a material adverse effect on our consolidated financial condition or results of operations.
 
Unclaimed Property and Use Taxes
 
Based on inquiries from several states, we are reviewing our historic forfeiture of unclaimed property pursuant to applicable state and local laws. We are also reviewing our historic filing of use tax returns in certain state and local jurisdictions that impose such taxes. Although the outcome is uncertain, we do not expect the effect of any non-compliance to have a material adverse effect on our consolidated financial condition or results of operations.
 
Insurance Litigation
 
The previously disclosed litigation brought by WestRM — West Risk Markets, Ltd. (“WestRM”) against XL Reinsurance America, Inc. (“XL”), Greenwich Insurance Company (“Greenwich”) and Lumbermens in which we have been made a third party defendant continues. Summary judgment has been entered against defendants XL and


F-25


Table of Contents

Greenwich. The court issued an opinion on the parties’ cross-motions for summary judgment on July 19, 2006, rejecting Greenwich/XL’s motions in their entirety and granting partial summary judgment in favor of us, dismissing the claims for fraud, civil conspiracy, negligent supervision, and aiding and abetting fraud. The court left intact Greenwich/XL’s claims for contractual indemnification, contractual subrogation, and unjust enrichment. Trial has been rescheduled to begin April 10, 2007. We believe that we have meritorious defenses to assert, and we will vigorously defend ourselves against the claims brought against us. In addition, we will vigorously prosecute our own claims. Although the outcome of any claim or matter in litigation is uncertain, we do not believe that we will incur any material loss or that the ultimate outcome of this matter will have a material adverse effect on our consolidated financial condition or results of operations.
 
FLSA Litigation
 
The Aimco Operating Partnership and NHP Management Company (“NHPMN”), our subsidiary, are defendants in a lawsuit alleging that they willfully violated the Fair Labor Standards Act (“FLSA”) by failing to pay maintenance workers overtime for time worked in excess of 40 hours per week. The complaint, filed in the United States District Court for the District of Columbia, attempts to bring a collective action under the FLSA and seeks to certify state subclasses in California, Maryland, and the District of Columbia. Specifically, the plaintiffs contend that the Aimco Operating Partnership and NHPMN failed to compensate maintenance workers for time that they were required to be “on-call.” Additionally, the complaint alleges the Aimco Operating Partnership and NHPMN failed to comply with the FLSA in compensating maintenance workers for time that they worked in excess of 40 hours in a week. In June 2005, the court conditionally certified the collective action on both the on-call and overtime issues. Approximately 1,049 individuals opted into the class. The defendants moved to decertify the collective action on both issues and that issue has been fully briefed. The parties anticipate that the court will set the decertification motion for oral argument, but that date has not yet been set. Because the court denied plaintiffs’ motion to certify state subclasses, on September 26, 2005, the plaintiffs filed a class action with the same allegations in the Superior Court of California (Contra Costa County), and on November 5, 2005, in Montgomery County Maryland Circuit Court. The California and Maryland cases have been stayed pending the resolution of the decertification motion in the District of Columbia case. Although the outcome of any litigation is uncertain, we do not believe that the ultimate outcome will have a material adverse effect on our consolidated financial condition or results of operations.
 
Operating Leases
 
We are obligated under office space and equipment non-cancelable operating leases. In addition, we sublease certain of our office space to tenants under non-cancelable subleases. Approximate minimum annual rentals under operating leases and approximate minimum payments to be received under annual subleases are as follows (in thousands):
 
                 
    Operating Lease
    Sublease
 
    Obligations     Receivables  
 
2007
  $ 8,270     $ 1,508  
2008
    7,621       1,086  
2009
    6,142       597  
2010
    5,178       597  
2011
    3,948        
Thereafter
    8,645        
                 
Total
  $ 39,804     $ 3,788  
                 
 
Substantially all of the office space and equipment subject to the operating leases described above are for the use of our corporate offices and regional operating centers. Rent expense recognized totaled $8.9 million, $7.4 million, and $5.8 million for the years ended December 31, 2006, 2005 and 2004, respectively. Sublease receipts that offset rent expense totaled approximately $1.3 million, $0.7 million and $0.9 million for the years ended December 31, 2006, 2005 and 2004, respectively.


F-26


Table of Contents

 
Note 9 — Income Taxes
 
Deferred income taxes reflect the net effects of temporary differences between the carrying amounts of assets and liabilities of the taxable REIT subsidiaries for financial reporting purposes and the amounts used for income tax purposes. Significant components of our deferred tax liabilities and assets are as follows (in thousands):
 
                 
    2006     2005  
 
Deferred tax liabilities:
               
Partnership differences
  $ 47,149     $ 53,347  
Depreciation
    7,729       6,330  
Other
    85       178  
                 
Total deferred tax liabilities
  $ 54,963     $ 59,855  
                 
Deferred tax assets:
               
Net operating, capital and other loss carryforwards
  $ 20,995     $ 34,046  
Receivables
    5,879       5,856  
Accrued liabilities
    5,010       6,942  
Accrued interest expense
    978       6,519  
Intangibles — management contracts
    8,293       9,880  
Tax credit carryforwards
    9,878       7,878  
Other
    1,424       442  
                 
Total deferred tax assets
    52,457       71,563  
Valuation allowance for deferred tax assets
    (1,873 )     (1,873 )
                 
Deferred tax assets, net of valuation allowance
    50,584       69,690  
                 
Net deferred income tax assets (liabilities)
  $ (4,379 )   $ 9,835  
                 
 
At December 31, 2006 and 2005, we maintained a $1.9 million valuation allowance for deferred tax assets primarily related to previously unrecognized alternative minimum tax credits, some of which were generated by predecessor entities, totaling approximately $1.9 million. During the year ended December 31, 2005, we reversed a $1.2 million valuation allowance for certain low income housing credits and rehabilitation credits based on our determination that it is more likely than not that the credits will be realized. During the year ended December 31, 2005 we identified approximately $12.2 million in previously unidentified net deferred tax assets that were acquired in connection with business combinations in prior years. We recorded adjustments to recognize these net assets and reduce goodwill and real estate acquired in the corresponding business combinations by $6.2 million and $6.0 million, respectively.


F-27


Table of Contents

 
Significant components of the provision (benefit) for income taxes are as follows and are classified within other expenses (income), net in continuing operations and income from discontinued operations, net in our statements of income for 2006, 2005 and 2004 (in thousands):
 
                         
    2006     2005     2004  
 
Current:
                       
Federal
  $ 5,380     $ 3,412     $ 7,345  
State
    1,272       1,590       748  
                         
Total current
    6,652       5,002       8,093  
                         
Deferred:
                       
Federal
    13,197       (17,303 )     634  
State
    1,698       (1,843 )     72  
                         
Total deferred
    14,895       (19,146 )     706  
                         
Total provision (benefit)
  $ 21,547     $ (14,144 )   $ 8,799  
                         
Classification:
                       
Continuing operations
  $ (11,448 )   $ (16,353 )   $ (6,825 )
Discontinued operations
  $ 32,995     $ 2,209     $ 15,624  
 
Consolidated income (loss) subject to tax, consisting of pretax income of our taxable REIT subsidiaries and gains on certain property sales that are subject to income tax under section 1374 of the Internal Revenue Code, is $53.3 million for 2006, $(36.9) million for 2005, and $20.5 million for 2004. The reconciliation of income tax attributable to continuing and discontinued operations computed at the U.S. statutory rate to income tax expense (benefit) is shown below (dollars in thousands):
 
                                                 
    2006     2005     2004  
    Amount     Percent     Amount     Percent     Amount     Percent  
 
Tax at U.S. statutory rates on consolidated income (loss)
                                               
subject to tax
  $ 18,639       35.0 %   $ (12,922 )     35.0 %   $ 7,174       35.0 %
State income tax, net of Federal tax benefit
    3,038       5.7 %     (253 )     0.7 %     818       4.0 %
Effect of permanent differences
    (130 )     −0.2 %     (69 )     0.2 %     314       1.5 %
Increase (decrease) in valuation allowance
          0.0 %     (900 )     2.4 %     493       2.4 %
                                                 
    $ 21,547       40.5 %   $ (14,144 )     38.3 %   $ 8,799       42.9 %
                                                 
 
Income taxes paid totaled approximately $9.8 million, $4.8 million, and $2.7 million in the years ended December 31, 2006, 2005 and 2004, respectively.
 
At December 31, 2006, we had net operating loss carryforwards (NOLs) of approximately $53.8 million for income tax purposes that expire in years 2020 to 2025. Subject to certain separate return limitations, we may use these NOLs to offset all or a portion of taxable income generated by our taxable REIT subsidiaries. We used approximately $37.9 million of NOLs during the year ended December 31, 2006, as a result of taxable sales made during the year. Additionally, our low-income housing and rehabilitation tax credit carryforwards remained unchanged as of December 31, 2006, at approximately $6.0 million for income tax purposes that expire in years 2012 to 2025. We had approximately $3.9 million of alternative minimum tax (AMT) credit carryforwards available at December 31, 2006 prior to the valuation allowance. These AMT credit carryforwards do not expire and can be used to offset future regular tax liabilities.
 
For income tax purposes, dividends paid to holders of Common Stock primarily consist of ordinary income, return of capital, capital gains, qualified dividends and unrecaptured Sec. 1250 gains, or a combination thereof. For


F-28


Table of Contents

the years ended December 31, 2006, 2005 and 2004, dividends per share held for the entire year were estimated to be taxable as follows:
 
                                                 
    2006(1)     2005(2)     2004  
    Amount     Percentage     Amount     Percentage     Amount     Percentage  
 
Ordinary income
  $ 0.05       2 %   $ 0.21       7 %   $ 0.04       2 %
Return of capital
                                   
Capital gains
    1.05       44 %     1.44       48 %     1.77       74 %
Qualified dividends
    0.05       2 %     0.24       8 %     0.03       1 %
Unrecaptured Sec.1250 gain
    1.25       52 %     1.11       37 %     0.56       23 %
                                                 
    $ 2.40       100 %   $ 3.00       100 %   $ 2.40       100 %
                                                 
 
 
(1) On December 19, 2006, our Board of Directors declared a quarterly cash dividend of $0.60 per common share for the quarter ended December 31, 2006, that was paid on January 31, 2007, to stockholders of record on December 31, 2006, which was one month earlier than the typical declaration. Pursuant to certain provisions within the Internal Revenue Code, this dividend was deemed paid by Aimco and received by the shareholders in 2006.
 
(2) On December 28, 2005, our Board of Directors declared a quarterly cash dividend of $0.60 per common share for the quarter ended December 31, 2005, that was paid on January 31, 2006, to stockholders of record on December 31, 2005, which was one month earlier than the typical declaration. Pursuant to certain provisions within the Internal Revenue Code, this dividend was deemed paid by Aimco and received by the shareholders in 2005.
 
Note 10 — Transactions Involving Minority Interest in Aimco Operating Partnership
 
Preferred OP Units
 
Various classes of preferred OP Units of the Aimco Operating Partnership are outstanding. Depending on the terms of each class, these preferred OP Units are convertible into common OP Units or redeemable for Common Stock and are paid distributions varying from 5.9% to 9.6% per annum per unit, or equal to the dividends paid on Common Stock based on the conversion terms. As of December 31, 2006, a total of 3.3 million preferred OP Units were outstanding with a redemption value of $89.2 million, which were redeemable into approximately 1.6 million shares of Common Stock. As of December 31, 2005, a total of 3.3 million preferred OP Units were outstanding with a redemption value of $90.2 million, which were redeemable into approximately 2.4 million shares of Common Stock.
 
During the years ended December 31, 2006 and 2005, approximately 7,600 and 1,700 preferred OP Units were tendered for redemption in exchange for approximately 3,500 and 1,100 shares of Common Stock, respectively. During the years ended December 31, 2006 and 2005, there were approximately 31,100 and 12,800 preferred OP Units tendered for redemption in exchange for cash, respectively.
 
Common OP Units
 
We completed tender offers for limited partnership interests resulting in the issuance of approximately 300 and 3,000 common OP Units in 2006 and 2005, respectively.
 
During the years ended December 31, 2006 and 2005, approximately 110,000 and 77,000 common OP Units, respectively, were redeemed in exchange for cash, and approximately 94,000 and 425,000 common OP Units, respectively, were redeemed in exchange for shares of Common Stock.
 
High Performance Units
 
From 1998 through 2005, the Aimco Operating Partnership issued various classes of High Performance Units, or HPUs, as follows: 1998 — Class I HPUs; 2001 — Class II HPUs, Class III HPUs, and Class IV HPUs; 2002 — Class V HPUs; 2003 — Class VI HPUs; 2004 — Class VII HPUs; 2005 — Class VIII HPUs; and 2006 — Class IX


F-29


Table of Contents

HPUs. These HPUs were issued to limited liability companies owned by certain members of our senior management (and independent directors in the case of Class I HPUs, only) in exchange for cash in amounts that we determined, with the assistance of a nationally recognized independent valuation expert, to be the fair value of the HPUs. The terms of the HPUs provide for the issuance, following a measurement period of generally three years (one year in the case of Class II HPUs and two years in the case of Class III HPUs), of an increased number of HPUs depending on the degree, if any, to which certain financial performance benchmarks are achieved over the applicable measurement period. The holders of HPUs at the conclusion of the measurement period receive the same amount of distributions that are paid to holders of an equivalent number of the Aimco Operating Partnership’s outstanding common OP Units. Prior to the end of the measurement period, the limited liability company holders of HPUs receive only nominal distributions. If the specified minimum benchmarks are not achieved at the conclusion of the applicable measurement period, the HPUs have only nominal value and may be reacquired by the Aimco Operating Partnership for a nominal amount.
 
The following table sets forth information for HPUs outstanding as of December 31, 2006:
 
                                 
          Gross
    End of
    Outstanding Units
 
    Year of
    Proceeds
    Measurement
    at December 31,
 
Class of HPUs
  Issuance     (thousands)     Period     2006  
 
Class I
    1998     $ 2,070       12/31/2000       2,379,084  
Class VII
    2004       752       12/31/2006       4,109  
Class VIII
    2005       780       12/31/2007       5,000  
Class IX
    2006       875       12/31/2008       5,000  
 
The minimum performance benchmarks were not achieved for HPU Classes II, III, IV, V, VI and VII. Accordingly, those HPUs had only nominal value at the conclusion of the related measurement period and, except for the Class VII HPUs, were reacquired by the Aimco Operating Partnership and cancelled. At December 31, 2006, performance benchmarks for the Class VIII HPUs and Class IX HPUs had been achieved that would have resulted in the issuance of the equivalent of approximately 881,000 common OP Units if the related measurement periods had ended on that date.
 
In determining the value of the historical High Performance Units, we used a discounted cash flow valuation methodology supported by a nationally recognized independent valuation expert. This discounted cash flow methodology used a 24% discount rate applied to probability-adjusted cash flows reflecting possible distribution outcomes. Using that methodology, we determined the fair value of High Performance Units as follows: Class V HPUs $1,066,000, Class VI HPUs $985,000, Class VII HPUs $915,000, Class VIII HPUs $780,000 and Class IX HPUs $875,000. We have evaluated an alternative methodology that (1) assumes an investor receives shares of Aimco common stock in the event that the performance hurdles are met at the end of the measurement period, (2) uses a discount rate for the three year measurement period of approximately 30%, and (3) applies a liquidity discount of 25% to reflect that the High Performance Units are illiquid securities absent a change of control of Aimco. Applying this alternative methodology results in an effectively lower net discount rate than the rate used in the discounted cash flow methodology and, as a result, the value of those High Performance Units would have been as follows: Class V HPUs $1,696,000, Class VI HPUs $1,496,000, Class VII HPUs $1,867,000, Class VIII HPUs $1,772,000 and Class IX HPUs $2,042,000. Using the alternative methodology resulted in a higher valuation than the discounted cash flow methodology based on the use of assumed common stock prices in conjunction with the discount rate and liquidity discount discussed above. Accordingly, after taking into account the percentage of each program subscribed and the unamortized portion of the Class VIII and Class IX HPUs, we recorded a cumulative adjustment of $2.9 million in the year ended December 31, 2006, to reflect the difference between these two methodologies. The $2.9 million correction is also due to a change in the assumptions of the discount rates used to value HPU V through HPU IX.


F-30


Table of Contents

Note 11 — Stockholders’ Equity
 
Preferred Stock
 
At December 31, 2006 and 2005, we had the following classes of preferred stock outstanding:
 
                                         
                      Balance
 
                Annual Dividend
    December 31,  
    Redemption
    Conversion
    Rate Per Share
    2006
    2005
 
Perpetual
  Date(1)     Price     (paid quarterly)     (thousands)     (thousands)  
 
Class G Cumulative Preferred Stock, $0.01 par value, 4,050,000 shares authorized, 4,050,000 shares issued
and outstanding
    07/15/2008             9.3750 %   $ 101,000     $ 101,000  
Class Q Cumulative Preferred Stock, $0.01 par value, 2,530,000 shares authorized, zero and 2,530,000 shares issued and outstanding(2)
    03/19/2006             10.100 %           63,250  
Class R Cumulative Preferred Stock, $0.01 par value, 6,940,000 shares authorized, zero and 6,940,000 shares issued and outstanding(3)
    07/20/2006             10.000 %           173,500  
Class T Cumulative Preferred Stock, $0.01 par value, 6,000,000 shares authorized, 6,000,000 shares issued
and outstanding
    07/31/2008             8.000 %     150,000       150,000  
Class U Cumulative Preferred Stock, $0.01 par value, 8,000,000 shares authorized, 8,000,000 shares issued
and outstanding
    03/24/2009             7.750 %     200,000       200,000  
Class V Cumulative Preferred Stock, $0.01 par value, 3,450,000 shares authorized, 3,450,000 shares issued
and outstanding
    09/29/2009             8.000 %     86,250       86,250  
Class Y Cumulative Preferred Stock, $0.01 par value, 3,450,000 shares authorized, 3,450,000 shares issued
and outstanding
    12/21/2009             7.875 %     86,250       86,250  
Series A Community Reinvestment Act Preferred Stock, $0.01 par value per share, 240 shares authorized, 200 shares issued and outstanding(6)
    06/30/2011             (6 )     100,000        
                                         
                              723,500       860,250  
                                         
Convertible(5):
                                       
Class W Cumulative Convertible Preferred Stock, $0.01 par value, 1,904,762 shares authorized, 1,904,762 shares issued and outstanding
    09/30/2007     $ 52.50       8.100 %     100,000       100,000  
Class X Cumulative Convertible Preferred Stock, $0.01 par value, 2,000,000 shares authorized, zero and 2,000,000 shares issued and outstanding(4)
    03/31/2006     $ 52.50       8.500 %           50,000  
                                         
                              100,000       150,000  
                                         
Total
                          $ 823,500     $ 1,010,250  
                                         


F-31


Table of Contents

 
(1) All classes of preferred stock are redeemable at our option on and after the dates specified.
 
(2) On March 19, 2006, we redeemed for cash all 2.53 million shares outstanding of the 10.1% Class Q Cumulative Preferred Stock, or the Class Q Preferred Stock, for a total redemption price of $25.035 per share, which included a redemption price of $25.0 per share and $0.035 per share of accumulated and unpaid dividends through March 19, 2006. This redemption resulted in $2.5 million of related preferred stock issuance costs being deducted in determining net income attributable to common stockholders.
 
(3) On July 20, 2006, we redeemed for cash all 6.94 million shares outstanding of the 10% Class R Cumulative Preferred Stock, or the Class R Preferred Stock, for a total redemption price of $25.243 per share, which included a redemption price of $25.00 per share and $0.243 per share of accumulated and unpaid dividends through July 20, 2006. This redemption resulted in $4.3 million of related preferred stock issuance costs being deducted in determining net income attributable to common stockholders.
 
(4) On March 31, 2006, we redeemed for cash all 2.00 million shares outstanding of the 8.5% Class X Cumulative Preferred Stock, or the Class X Preferred Stock, for a total redemption price of $25.531 per share, which included a redemption price of $25.00 per share and $0.531 per share of accumulated and unpaid dividends through March 31, 2006. The conversion price was $52.50 (equivalent to a conversion rate of 0.476 shares of Common Stock for each share of Class X Preferred Stock.) This redemption resulted in $0.1 million of related preferred stock issuance costs being deducted in determining net income attributable to common stockholders.
 
(5) The Articles Supplementary set forth the relative rights and preferences of each class of securities and as shown above, the dividend rate on each class of convertible securities is the rate specified in the articles supplementary for each class. Such rate can be increased to the rate of the dividends paid on the number of shares of Common Stock into which a share of such preferred security is convertible. The initial conversion price of each class was in excess of the fair market value of a share of Common Stock on the respective dates on which the purchasers of each class agreed to purchase such securities.
 
(6) On June 29, 2006, we sold 200 shares of our Series A Community Reinvestment Act Perpetual Preferred Stock, $0.01 par value per share, or the CRA Preferred Stock, with a liquidation preference of $500,000 per share, for net proceeds of $97.5 million. For the period from June 29, 2006, the date of original issuance, through March 31, 2015, the dividend rate is a variable rate per annum equal to the Three-Month LIBOR Rate (as defined in the articles supplementary designating the CRA Preferred Stock) plus 1.25%, calculated as of the beginning of each quarterly dividend period. The rate at December 31, 2006 was 6.62%. Upon liquidation, holders of the CRA Preferred Stock are entitled to a preference of $500,000 per share, plus an amount equal to accumulated, accrued and unpaid dividends, whether or not earned or declared. The CRA Preferred Stock ranks prior to our Common Stock and on the same level as our outstanding shares of preferred stock, with respect to the payment of dividends and the distribution of amounts upon liquidation, dissolution or winding up. The CRA Preferred Stock is not redeemable prior to June 30, 2011, except in limited circumstances related to REIT qualification. On and after June 30, 2011, the CRA Preferred Stock is redeemable for cash, in whole or from time to time in part, at our option, at a price per share equal to the liquidation preference, plus accumulated, accrued and unpaid dividends, if any, to the redemption date.
 
All classes of preferred stock are pari passu with each other and are senior to Common Stock. The holders of each class of preferred stock are generally not entitled to vote on matters submitted to stockholders. Dividends on all shares of preferred stock are subject to declaration by our Board of Directors. All of the above outstanding classes of preferred stock have a liquidation preference per share of $25, with the exceptions of the 8.1% Class W Cumulative Convertible Preferred Stock, which has a liquidation preference per share of $52.50 and the CRA Preferred Stock, which has a liquidation preference per share of $500,000.


F-32


Table of Contents

 
The dividends paid on each class of preferred stock classified as equity in the years ended December 31, 2006, 2005, and 2004 are as follows (in thousands, except per share data):
 
                                                 
    2006     2005     2004  
    Amount
    Total
    Amount
    Total
    Amount
    Total
 
    Per
    Amount
    Per
    Amount
    Per
    Amount
 
Class of Preferred Stock
  Share(1)     Paid     Share(1)     Paid     Share(1)     Paid  
 
Perpetual:
                                               
Class D
  $     $     $ 0.59 (2)     736     $ 4.87 (3)   $ 6,090  
Class G
    2.34       9,492       2.34       9,492       2.34       9,492  
Class Q
    0.67 (4)     1,686       2.53       6,388       2.53       6,388  
Class R
    1.49 (4)     10,361       2.50       17,350       2.50       17,350  
Class T
    2.00       12,000       2.00       12,000       2.00       12,000  
Class U
    1.94       15,500       1.94       15,500       1.08 (5)     8,655  
Class V
    2.00       6,900       2.09 (6)     7,207              
Class Y
    1.97       6,792       1.61 (7)     5,547              
Series A CRA
    8,720 (8)     1,744                          
                                                 
              64,475               74,220               59,975  
                                                 
Convertible:
                                               
Class N
                            2.59 (9)     10,361  
Class O
                            4.73 (9)     9,000  
Class P
                            1.16 (9)     4,648  
Class W
    4.25       8,100       4.25 (10)     8,100              
Class X
    1.06 (4)     2,125       2.13 (10)     4,262              
                                                 
              10,225               12,362               24,009  
                                                 
Total
          $ 74,700             $ 86,582             $ 83,984  
                                                 
 
 
(1) Amounts per share are calculated based on the number of preferred shares outstanding either at the end of each year or as of conversion or redemption date, as noted.
 
(2) For the period from January 1, 2005 to the date of redemption.
 
(3) Total amount paid includes dividends paid on 2.7 million shares of Class D Preferred Stock until November 5, 2004, when 1.5 million shares were redeemed for cash.
 
(4) For the period from January 1, 2006 to the date of redemption.
 
(5) For the period from March 24, 2004 (date of issuance) to December 31, 2004.
 
(6) For the period from September 29, 2004 (date of issuance) to December 31, 2005.
 
(7) For the period from December 21, 2004 (date of issuance) to December 31, 2005.
 
(8) For the period from June 29, 2006 (date of issuance) to December 31, 2006.
 
(9) For the period from January 1, 2004 to the date of redemption. For Class N Preferred Stock, includes a 2%, or $0.50 redemption premium per share, on 2.0 million shares.
 
(10) For the period from September 30, 2004 (date of issuance) to December 31, 2005.
 
Common Stock
 
During 2006 and 2005, we issued approximately 26,000 shares and 37,000 shares, respectively, of Common Stock to certain non-executive officers who purchased the shares at market prices. In exchange for the shares purchased, the officers executed notes payable totaling $1.1 million and $1.4 million, respectively. These notes, which are 25% recourse to the borrowers, have a 10-year maturity and bear interest either at a fixed rate of 6% annually or a floating rate based on the one-month LIBOR plus 3.85%, which is subject to an annual interest rate cap


F-33


Table of Contents

of typically 7.25%. Total payments in 2006 and 2005 on all notes from officers were $21.8 million and $12.3 million, respectively. In 2006, we reacquired approximately 10,000 shares of Common Stock from officers in exchange for the cancellation of related notes totaling $0.5 million.
 
In addition, in 2006 and 2005, we issued approximately 592,000 and 393,000 restricted shares of Common Stock, respectively, to certain officers and employees. The restricted stock was recorded at the fair market value of the Common Stock on the date of issuance. These shares of restricted Common Stock may not be sold, assigned, transferred, pledged, hypothecated or otherwise disposed of and are subject to a risk of forfeiture prior to the expiration of the applicable vesting period (typically ratably over a period of three to five years). Certain shares of restricted stock issued during 2005 are subject to accelerated vesting upon the achievement of a specified calendar year performance measure target. As of December 31, 2006, achievement of the specified target is not considered probable.
 
In 2006, we purchased on the open market approximately 2.3 million shares of Common Stock, respectively, at an average price per share of approximately $52.25. In 2005, we did not repurchase any shares of Common Stock. In 2004, we purchased 110,000 shares of Common Stock on the open market at an average price per share of approximately $31.97 and purchased 287,272 shares of Common Stock in a privately negotiated transaction at a price of $31.60 per share.
 
Stock Warrants
 
On December 2, 1997, we issued warrants, which we refer to as the Oxford Warrants, exercisable through December 31, 2006, to purchase up to an aggregate of 500,000 shares of Common Stock at $41 per share. The Oxford Warrants were issued to affiliates of Oxford Realty Financial Group, Inc., a Maryland corporation, or Oxford, in connection with the amendment of certain agreements pursuant to which we manage properties formerly controlled by Oxford or its affiliates. During the year ended December 31, 2005, we purchased from the holders thereof all outstanding Oxford Warrants for an aggregate purchase price of $1.05 million, which was determined to be fair value.
 
Registration Statements
 
As of December 31, 2006, under our shelf registration statement, which was declared effective in April 2004, we had available for issuance approximately $876.6 million of debt and equity securities, and the Aimco Operating Partnership had available for issuance $500.0 million of debt securities.
 
Note 12 — Share-Based Compensation and Employee Benefit Plans
 
Stock Award and Incentive Plan
 
We adopted the Apartment Investment and Management Company 1997 Stock Award and Incentive Plan, or the 1997 Plan, to attract and retain officers, key employees and independent directors. The 1997 Plan reserves for issuance a maximum of 20 million shares, which may be in the form of incentive stock options, non-qualified stock options and restricted stock, or other types of awards as authorized under the 1997 Plan. At December 31, 2006, there were approximately 3.4 million shares available to be granted. The 1997 Plan is administered by the Compensation and Human Resources Committee of the Board of Directors. In the case of incentive stock options, the exercise price of the options granted may not be less than the fair market value of Common Stock at the date of grant. The term of the incentive and non-qualified options is generally ten years from the date of grant. The options typically vest over a period of one to five years from the date of grant. We generally issue new shares upon exercise of options. Restricted stock awards typically vest over a period of three to five years.
 
Prior to 2006, we applied the accounting provisions of Statement of Financial Accounting Standards No. 123, Accounting for Stock-Based Compensation, or SFAS 123, as amended by Statement of Financial Accounting Standards No. 148, Accounting for Stock-Based Compensation — Transition and Disclosure — an amendment of FASB Statement No. 123, or SFAS 148, to all employee awards granted, modified, or settled on or after January 1, 2003, which resulted in recognition of compensation expense related to stock options based on the fair value of the stock options. For stock options granted prior to January 1, 2003, we applied Accounting Principles Board Opinion


F-34


Table of Contents

No. 25, Accounting for Stock Issued to Employees, or APB 25, and related interpretations. Under APB 25, because the exercise price of our employee stock options equaled the market price of the underlying stock on the date of grant, no compensation expense related to such options was recognized. We recognized compensation expense for stock options accounted for under SFAS 123 and restricted stock awards ratably over the period the awards vested. Compensation cost was reversed as forfeitures occurred.
 
Effective January 1, 2006, we adopted Statement of Financial Accounting Standards No. 123 (revised 2004), Share-Based Payment, or SFAS 123R, which superseded SFAS 123. SFAS 123R requires all share-based employee compensation, including grants of employee stock options, to be recognized in the financial statements based on fair value and provides for a modified prospective application method of adoption. Under this method, we are applying the provisions of SFAS 123R prospectively to new awards granted on or after January 1, 2006, and to existing awards that are modified after January 1, 2006, and are recognizing compensation cost over the remaining vesting period for the unvested portion of all outstanding awards granted prior to 2006. The measurement and recognition provisions of SFAS 123R that apply to our stock compensation arrangements are similar to those that we applied under SFAS 123 to awards granted on or after January 1, 2003. Under SFAS 123R, we continue to recognize the cost of stock-based compensation ratably over the vesting period. The primary change in our method of recognizing compensation cost relates to the treatment of forfeitures. Under SFAS 123R, expected forfeitures are required to be estimated in determining periodic compensation cost, whereas under SFAS 123 we recognized forfeitures as they occurred.
 
In connection with the adoption of SFAS 123R as of January 1, 2006, we estimated that forfeitures of unvested awards of stock options and restricted stock for which compensation expense was recognized prior to 2006 will total approximately $154,000. SFAS 123R provides that a cumulative effect of change in accounting principle be recognized for such estimated forfeitures as of the date of adoption. We believe the estimated forfeitures upon adoption of SFAS 123R are immaterial and have reported the cumulative effect adjustment in our general and administrative expenses for the year ended December 31, 2006. The adoption of SFAS 123R resulted in decreases of $1.2 million in 2006 income from continuing operations and net income and decreases of $0.01 in 2006 basic and diluted earnings per share. The adoption of SFAS 123R did not have a material effect on 2006 cash flows from operating or financing activities. After 2006, SFAS 123R is not expected to have any significant effect on our financial statements other than the timing of recognition of forfeitures.
 
We estimated the fair value of our options using a Black-Scholes closed-form valuation model using the assumptions set forth in the table below. For options granted in 2006, the expected term of the options reflects the average of the vesting period and the contractual term for the options. Expected volatility reflects the historical volatility of our Common Stock during the historical period commensurate with the expected term of the options that ended on the date of grant. The expected dividend yield reflects the actual amount per share paid on our Common Stock after 2003 and the risk-free interest rate reflects the annualized yield of a zero coupon U.S. Treasury security with a term equal to the expected term of the option. The weighted average fair value of options and our valuation assumptions for the years ended December 31, 2006, 2005 and 2004 were as follows:
 
                         
    2006     2005     2004  
 
Weighted average grant-date fair value
    $5.23       $3.57       $2.24  
Assumptions:
                       
Risk-free interest rate
    4.58 %     4.10 %     3.50 %
Expected dividend yield
    5.58 %     6.31 %     7.50 %
Expected volatility
    20.15 %     19.00 %     19.10 %
Weighted average expected life of options
    6.5 years       5.0 years       5.0 years  


F-35


Table of Contents

The following table summarizes activity for our outstanding stock options for the years ended December 31, 2006, 2005 and 2004 (numbers of options in thousands):
 
                                                 
    2006     2005     2004  
          Weighted
          Weighted
          Weighted
 
          Average
          Average
          Average
 
    Number
    Exercise
    Number
    Exercise
    Number
    Exercise
 
    of Options     Price     of Options     Price     of Options     Price  
 
Outstanding at beginning of year
    11,054     $ 38.78       10,838     $ 38.87       10,107     $ 39.59  
Granted
    692       43.15       383       38.14       1,219       32.19  
Exercised
    (2,826 )     38.03       (65 )     38.22       (69 )     29.11  
Forfeited
    (322 )     38.09       (102 )     39.98       (419 )     37.81  
                                                 
Outstanding at end of year
    8,598     $ 39.36       11,054     $ 38.78       10,838     $ 38.87  
Exercisable at end of year
    6,508     $ 39.56       8,177     $ 39.30       7,132     $ 39.47  
 
The intrinsic value of a stock option represents the amount by which the fair value of the underlying stock exceeds the exercise price of the option. Options outstanding at December 31, 2006, had an aggregated intrinsic value of $143.1 million and a weighted average remaining contractual term of 4.6 years. Options exercisable at December 31, 2006 had an aggregate intrinsic value of $107.2 million and a weighted average remaining contractual term of 3.7 years. The intrinsic value of stock options exercised during the years ended December 31, 2006, 2005 and 2004 was $34.9 million, $0.2 million and $0.2 million, respectively. We may realize tax benefits in connection with the exercise of options by employees of our taxable subsidiaries. We realized tax benefits of approximately $1.0 million for the year ended December 31, 2006.
 
The following table summarizes activity for restricted stock awards for the years ended December 31, 2006, 2005 and 2004 (numbers of shares in thousands):
 
                                                 
    2006     2005     2004  
          Weighted
          Weighted
          Weighted
 
          Average
          Average
          Average
 
    Number
    Grant-Date
    Number
    Grant-Date
    Number
    Grant-Date
 
    of Shares     Fair Value     of Shares     Fair Value     of Shares     Fair Value  
 
Unvested at beginning of year
    882     $ 35.08       775     $ 32.86       411     $ 41.33  
Granted
    607       44.47       429       38.50       566       29.89  
Vested
    (240 )     35.80       (254 )     33.91       (109 )     32.73  
Forfeited
    (161 )     35.41       (68 )     35.70       (93 )     41.33  
                                                 
Unvested at end of year
    1,088     $ 40.11       882     $ 35.08       775     $ 32.86  
                                                 
 
The aggregate fair value of shares that vested during the years ended December 31, 2006, 2005 and 2004 was $12.1 million, $8.3 million and $3.1 million, respectively.
 
Total compensation cost recognized for restricted stock and stock option awards was $15.9 million, $10.0 million and $6.5 million for the years ended December 31, 2006, 2005 and 2004, respectively. Of these amounts, $3.6 million $1.4 million and $1.2 million, respectively, were capitalized. At December 31, 2006, total unvested compensation cost not yet recognized was $33.9 million. We expect to recognize this compensation over a weighted average period of approximately 2.1 years. Certain awards of restricted stock and options granted in 2005 and 2006 are subject to immediate vesting based on achievement of a specified annual financial performance target during the scheduled vesting period. Recognition of related compensation cost may be accelerated based on our ongoing assessment of whether the performance target is probable of being achieved. At this time, we do not believe that achievement of the performance target is probable.


F-36


Table of Contents

 
The following table illustrates the pro forma effect on net income and earnings per share if the fair value based method under SFAS 123 had been applied to all outstanding and unvested awards for the years ended December 31, 2005 and 2004 (in thousands, except per share data):
 
                 
    2005     2004  
 
Net income (loss) attributable to common stockholders, as reported
  $ (16,966 )   $ 174,693  
Add stock-based employee compensation expense included in reported net income:
               
Restricted stock awards
    8,140       4,903  
Stock options
    1,835       1,603  
Deduct total stock-based employee compensation expense determined under fair value based method for all awards:
               
Restricted stock awards
    (8,140 )     (4,903 )
Stock options
    (3,422 )     (4,289 )
Add minority interest in Aimco Operating Partnership
    161       276  
                 
Pro forma net income (loss) attributable to common stockholders
  $ (18,392 )   $ 172,283  
                 
Basic earnings (loss) per common share:
               
Reported
  $ (0.18 )   $ 1.88  
Pro forma
  $ (0.20 )   $ 1.85  
Diluted earnings (loss) per common share:
               
Reported
  $ (0.18 )   $ 1.88  
Pro forma
  $ (0.20 )   $ 1.85  
 
Employee Stock Purchase Plan
 
We adopted an employee stock purchase plan effective September 1, 2006. Under the terms of this plan, eligible employees may authorize payroll deductions up to 15% of their base compensation to purchase shares of our Common Stock at a five percent discount from its fair value on the last day of the calendar quarter during which payroll deductions are made. In 2006, 648 shares were purchased under this plan at a price of $53.06. No compensation cost is recognized in connection with this plan.
 
401K Plan
 
We provide a 401(k) defined-contribution employee savings plan. Employees who have completed 30 days of service and are age 18 or older are eligible to participate. Our matching contributions are made in the following manner: (1) a 100% match on the first 3% of the participant’s contribution; (2) a 50% match on the next 2% of the participant’s contribution. We incurred costs in connection with this plan of approximately $4.5 million, $4.1 million and $3.2 million in 2006, 2005 and 2004, respectively.
 
Note 13 — Discontinued Operations and Assets Held for Sale
 
In accordance with SFAS 144 we report as discontinued operations real estate assets that meet the definition of a component of an entity and have been sold or meet the criteria to be classified as held for sale under SFAS 144. We included all results of these discontinued operations, less applicable income taxes, in a separate component of income on the consolidated statements of income under the heading “discontinued operations.” This treatment resulted in certain reclassifications of 2005 and 2004 financial statement amounts.
 
At December 31, 2006, we had no properties classified as held for sale. During the year ended December 31, 2006, we sold 77 properties with an aggregate of 17,307 units. Additionally, on February 17, 2006, we closed the sale of a portion of the Flamingo South Beach property known as the South Tower with an aggregate of 562 units. For the years ended December 31, 2006, 2005, and 2004, discontinued operations includes the results of operations of these 77 properties and the South Tower for periods prior to the date of sale. During 2005, we sold 83 properties with an aggregate of 16,835 units. For the years ended December 31, 2005 and 2004, discontinued operations


F-37


Table of Contents

include the results of operations of these 83 properties for periods prior to the date of sale. During 2004, we sold 54 properties with an aggregate of 12,248 units. For the year ended December 31, 2004, discontinued operations includes the results of operations of these 54 properties for periods prior to the date of sale.
 
The following is a summary of the components of income from discontinued operations for the years ended December 31, 2006, 2005, and 2004 (dollars in thousands):
 
                         
    2006     2005     2004  
 
Rental and other property revenues
  $ 77,851     $ 212,390     $ 296,670  
Property operating expenses
    (40,175 )     (112,151 )     (150,061 )
Depreciation and amortization
    (20,101 )     (58,634 )     (67,277 )
Other (expenses) income, net
    (5,976 )     (3,218 )     (5,163 )
                         
Operating income
    11,599       38,387       74,169  
Interest income
    798       742       522  
Interest expense
    (15,957 )     (46,654 )     (71,404 )
Minority interest in consolidated real estate partnerships
    2,753       2,992       2,160  
                         
Income (loss) from operations
    (807 )     (4,533 )     5,447  
Gain on dispositions of real estate, net of minority partners’ interest
    260,206       102,972       249,354  
Impairment (losses) recoveries on real estate assets sold or held for sale
    434       (3,836 )     (7,289 )
Recovery of deficit distributions to minority partners
    15,927       14,604       3,230  
Income tax arising from disposals
    (32,918 )     (4,481 )     (16,015 )
Minority interest in Aimco Operating Partnership
    (23,381 )     (10,621 )     (25,058 )
                         
Income from discontinued operations
  $ 219,461     $ 94,105     $ 209,669  
                         
 
Gain on disposition of real estate is reported net of incremental direct costs incurred in connection with the transaction, including any prepayment penalties incurred upon repayment of mortgage loans collateralized by the property being sold. Such prepayment penalties totaled $53.8 million, $25.3 million and $31.1 million for the years ended December 31, 2006, 2005 and 2004, respectively.
 
We are currently marketing for sale certain real estate properties that are inconsistent with our long-term investment strategy and evaluate whether such properties meet the criteria to be classified as held for sale. As of December 31, 2006, none of our properties meet such criteria. We expect that all properties classified as held for sale will sell within one year from the date classified as held for sale. Assets held for sale of $622.3 million at December 31, 2005 include real estate net book value of $615.5 million, represented by 66 properties and the South Tower with 16,414 units that were classified as assets held for sale during 2005 and 2006. Liabilities related to assets classified as held for sale of $392.8 million at December 31, 2005 include mortgage debt of $384.3 million. Net recoveries of impairment losses for the year ended December 31, 2006 were $0.4 million. Impairment losses recorded for the years ended December 31, 2005 and 2004 were $3.8 million and $7.3 million, respectively.


F-38


Table of Contents

 
Note 14 — Earnings per Share
 
We calculate earnings per share based on the weighted average number of shares of Common Stock, common stock equivalents and dilutive convertible securities outstanding during the period. The following table illustrates the calculation of basic and diluted earnings per share for the years ended December 31, 2006, 2005 and 2004 (in thousands, except per share data):
 
                         
    2006     2005     2004  
 
Numerator:
                       
Income (loss) from continuing operations
  $ (42,674 )   $ (23,123 )   $ 57,785  
Less net income attributable to preferred stockholders
    (81,132 )     (87,948 )     (88,804 )
                         
Numerator for basic and diluted earnings per share — Loss from continuing operations
  $ (123,806 )   $ (111,071 )   $ (31,019 )
                         
Income from discontinued operations
  $ 219,461     $ 94,105     $ 209,669  
                         
Cumulative effect of change in accounting principle
  $     $     $ (3,957 )
                         
Net income
  $ 176,787     $ 70,982     $ 263,497  
Less net income attributable to preferred stockholders
    (81,132 )     (87,948 )     (88,804 )
                         
Numerator for basic and diluted earnings per share — Net income (loss) attributable to common stockholders
  $ 95,655     $ (16,966 )   $ 174,693  
                         
Denominator:
                       
Denominator for basic earnings per share — weighted average number of shares of Common Stock outstanding
    95,758       93,894       93,118  
Effect of dilutive securities:
                       
Dilutive potential common shares
                 
                         
Denominator for diluted earnings per share
    95,758       93,894       93,118  
                         
Earnings (loss) per common share:
                       
Basic earnings (loss) per common share:
                       
Loss from continuing operations (net of income attributable to preferred stockholders)
  $ (1.29 )   $ (1.18 )   $ (0.33 )
Income from discontinued operations
    2.29       1.00       2.25  
Cumulative effect of change in accounting principle
                (0.04 )
                         
Net income (loss) attributable to common stockholders
  $ 1.00     $ (0.18 )   $ 1.88  
                         
Diluted earnings (loss) per common share:
                       
Loss from continuing operations (net of income attributable to preferred stockholders)
  $ (1.29 )   $ (1.18 )   $ (0.33 )
Income from discontinued operations
    2.29       1.00       2.25  
Cumulative effect of change in accounting principle
                (0.04 )
                         
Net income (loss) attributable to common stockholders
  $ 1.00     $ (0.18 )   $ 1.88  
                         
 
The Class W Cumulative Convertible Preferred Stock is convertible into Common Stock (see Note 11) and is anti-dilutive on an “if converted” basis. Therefore, we deduct all of the dividends on the convertible preferred stock to arrive at the numerator and no additional shares are included in the denominator when calculating basic and diluted earnings per common share. We have excluded from diluted earnings per share the common share equivalents related to approximately 10.8 million, 12.6 million and 12.4 million of vested and unvested stock options, shares issued for non-recourse notes receivable, and unvested restricted stock awards for the years ended December 31, 2006, 2005 and 2004, respectively, because their effect would be anti-dilutive. We consider the Aimco Operating Partnership’s High Performance Partnership Units for which the applicable measurement period


F-39


Table of Contents

has not ended to be potential Common Stock equivalents, but have excluded them from diluted earnings per share because their effect would be anti-dilutive.
 
Note 15 — Unaudited Summarized Consolidated Quarterly Information
 
Summarized unaudited consolidated quarterly information for 2006 and 2005 is provided below (amounts in thousands, except per share amounts).
 
                                         
    Quarter(1)        
2006
  First     Second     Third     Fourth        
 
Total revenues
  $ 408,504     $ 419,971     $ 423,931     $ 438,588          
Total operating expenses
    (324,070 )     (327,446 )     (338,730 )     (363,595 )        
Operating income
    84,434       92,525       85,201       74,993          
Income (loss) from continuing operations
    5,508       (3,554 )     (36,451 )     (8,177 )        
Income from discontinued operations, net
    78,563       38,646       11,576       90,676          
Net income (loss)
    84,071       35,092       (24,875 )     82,499          
Earnings (loss) per common share — basic:
                                       
Loss from continuing operations (net of income attributable to preferred stockholders)
  $ (0.19 )   $ (0.24 )   $ (0.60 )   $ (0.26 )        
Net income (loss) attributable to common stockholders
  $ 0.63     $ 0.17     $ (0.48 )   $ 0.69          
Earnings (loss) per common share — diluted:
                                       
Loss from continuing operations (net of income attributable to preferred stockholders)
  $ (0.19 )   $ (0.24 )   $ (0.60 )   $ (0.26 )        
Net income (loss) attributable to common stockholders
  $ 0.63     $ 0.17     $ (0.48 )   $ 0.69          
Weighted average common shares outstanding
    95,183       96,071       96,061       95,715          
Weighted average common shares and common share equivalents outstanding
    95,183       96,071       96,061       95,715          
 


F-40


Table of Contents

                                         
    Quarter(1)        
2005
  First     Second     Third     Fourth        
 
Total revenues
  $ 334,996     $ 344,125     $ 357,999     $ 371,344          
Total operating expenses
    (266,288 )     (269,982 )     (291,769 )     (301,037 )        
Operating income
    68,708       74,143       66,230       70,307          
Income (loss) from continuing operations
    (862 )     1,033       (6,521 )     (16,773 )        
Income from discontinued operations, net
    2,894       26,533       32,872       31,806          
Net income
    2,032       27,566       26,351       15,033          
Earnings (loss) per common share — basic:
                                       
Loss from continuing operations (net of income attributable to preferred stockholders)
  $ (0.25 )   $ (0.22 )   $ (0.30 )   $ (0.41 )        
Net income (loss) attributable to common stockholders
  $ (0.22 )   $ (0.06 )   $ (0.05 )   $ (0.07 )        
Earnings (loss) per common share — diluted:
                                       
Loss from continuing operations (net of income attributable to preferred stockholders)
  $ (0.25 )   $ (0.22 )   $ (0.30 )   $ (0.41 )        
Net income (loss) attributable to common stockholders
  $ (0.22 )   $ (0.06 )   $ (0.05 )   $ (0.07 )        
Weighted average common shares outstanding
    93,448       93,807       94,041       94,282          
Weighted average common shares and common share equivalents outstanding
    93,448       93,807       94,041       94,282          
 
 
(1) Certain reclassifications have been made to 2006 and 2005 quarterly amounts to conform to the full year 2006 presentation, primarily related to treatment of discontinued operations.
 
Note 16 — Business Segments
 
We have two reportable segments: real estate (owning and operating apartments) and investment management business (providing property management and other services relating to the apartment business to third parties and affiliates). We own and operate properties throughout the United States and Puerto Rico that generate rental and other property related income through the leasing of apartment units to a diverse base of residents. We separately evaluate the performance of each of our properties. However, because each of our properties has similar economic characteristics, the properties have been aggregated into a single apartment communities, or real estate, segment. All real estate revenues are from external customers and no revenues are generated from transactions with other segments. No single resident or related group of residents contributed 10% or more of total revenues during the years ended December 31, 2006, 2005 or 2004.
 
Statement of Financial Accounting Standards No. 131, Disclosures about Segments of an Enterprise and Related Information, or SFAS 131, requires that segment disclosures present the measure(s) used by the chief operating decision maker for purposes of assessing such segments’ performance. Our chief operating decision maker is comprised of several members of our executive management team who use several generally accepted industry financial measures to assess the performance of the business including net operating income, free cash flow, funds from operations, and adjusted funds from operations. The chief operating decision maker emphasizes net operating income as a key measurement of segment profit or loss. Accordingly, below we disclose net operating income for each of our segments. Net operating income is defined as segment revenues (after the elimination of intersegment revenues) less direct segment operating expenses. Certain reclassifications have been made to 2005 and 2004 amounts to conform to the 2006 presentation. These reclassifications primarily represent presentation changes related to discontinued operations.

F-41


Table of Contents

 
The following table presents revenues and net operating income for the years ended December 31, 2006, 2005 and 2004, from these segments, and reconciles net operating income of reportable segments to operating income as reported (in thousands):
 
                         
    2006     2005     2004  
 
Revenues:
                       
Real estate segment
  $ 1,629,988     $ 1,346,587     $ 1,211,865  
Investment management segment:
                       
Gross revenues
    157,165       141,649       144,075  
Elimination of intersegment revenues
    (96,159 )     (79,772 )     (76,735 )
                         
Net revenues after elimination
    61,006       61,877       67,340  
                         
Total revenues of reportable segments
  $ 1,690,994     $ 1,408,464     $ 1,279,205  
                         
Net operating income:
                       
Real estate segment
  $ 871,860     $ 712,603     $ 643,928  
Investment management segment
    46,573       43,888       45,672  
                         
Total net operating income of reportable segments
    918,433       756,491       689,600  
Reconciliation of net operating income of reportable segments to operating income:
                       
Depreciation and amortization
    (470,597 )     (376,231 )     (315,451 )
General and administrative expenses
    (101,702 )     (92,826 )     (77,424 )
Other (expenses) income, net
    (8,981 )     (8,046 )     (12,490 )
                         
Operating income
  $ 337,153     $ 279,388     $ 284,235  
                         
 
The assets of our reportable segments are as follows:
 
                 
    2006     2005  
    (In thousands)  
 
ASSETS:
               
Total assets for reportable segments(1)
  $ 10,004,701     $ 9,738,462  
Corporate and other assets
    285,074       280,698  
                 
Total consolidated assets
  $ 10,289,775     $ 10,019,160  
                 
 
 
(1) Total assets for reportable segments include assets associated with both of the real estate and investment management business segments, as well as our investment in unconsolidated real estate partnerships.
 
Our capital expenditures primarily relate to the real estate segment and totaled $512.6 million, $443.9 million and $301.9 million for the years ended December 31, 2006, 2005 and 2004, respectively.
 
Note 17 — Transactions with Affiliates
 
We earn revenue from affiliated real estate partnerships. These revenues include fees for property management services, partnership and asset management services, risk management services and transactional services such as syndication, refinancing, construction supervisory and disposition. In addition, we are reimbursed for our costs in connection with the management of the unconsolidated real estate partnerships. These fees and reimbursements for the years ended December 31, 2006, 2005 and 2004 totaled $27.7 million, $73.6 million and $89.6 million, respectively. The total accounts receivable due from affiliates was $20.8 million, net of allowance for doubtful accounts of $5.3 million, at December 31, 2006, and $43.1 million, net of allowance for doubtful accounts of $4.7 million, at December 31, 2005.
 
Additionally, we earn interest income on notes from real estate partnerships in which we are the general partner and hold either par value or discounted notes. Interest income earned on par value notes from unconsolidated real estate partnerships totaled $4.0 million, $17.4 million, and $16.8 million for the years ended December 31, 2006, 2005 and 2004, respectively. Accretion income earned on discounted notes from affiliated real estate partnerships totaled $6.7 million, $0.7 million, and $6.2 million for the years ended December 31, 2006, 2005 and 2004, respectively. See Note 5 for additional information on notes receivable from unconsolidated real estate partnerships.


F-42


Table of Contents

 
Note 18 — Recent Accounting Developments
 
In July 2006, the Financial Accounting Standards Board, or FASB, issued FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes, or FIN 48. FIN 48 prescribes a two-step process for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. The first step involves evaluation of a tax position to determine whether it is more likely than not that the position will be sustained upon examination, based on the technical merits of the position. The second step involves measuring the benefit to recognize in the financial statements for those tax positions that meet the more-likely-than-not recognition threshold. FIN 48 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. FIN 48 is effective for fiscal years beginning after December 15, 2006. We have not yet determined the effects that FIN 48 will have on our financial statements.
 
In September 2006, the FASB issued Statement of Financial Accounting Standards No. 157, Fair Value Measurements, or SFAS 157. SFAS 157 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants in the market in which the reporting entity transacts. SFAS 157 applies whenever other standards require assets or liabilities to be measured at fair value and does not expand the use of fair value in any new circumstances. SFAS 157 establishes a hierarchy that prioritizes the information used in developing fair value estimates. The hierarchy gives the highest priority to quoted prices in active markets and the lowest priority to unobservable data, such as the reporting entity’s own data. SFAS 157 requires fair value measurements to be disclosed by level within the fair value hierarchy. SFAS 157 is effective for fiscal years beginning after November 15, 2007. We have not yet determined the effects that SFAS 157 will have on our financial statements.
 
In February 2007, the FASB issued Statement of Financial Accounting Standards No. 159, The Fair Value Option for Financial Asset and Financial Liabilities, or SFAS 159. SFAS 159 permits entities to choose to measure many financial instruments and certain other items at fair value that are not currently required to be measured at fair value. The objective is to improve financial reporting by providing entities with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. SFAS 159 also establishes presentation and disclosure requirements designed to facilitate comparisons between entities that choose different measurement attributes for similar types of assets and liabilities. SFAS 159 is effective for fiscal years beginning after November 15, 2007. We have not yet determined whether we will elect the fair value option for any of our financial instruments.
 
Note 19 — Subsequent Event
 
On February 17, 2006, we closed the sale of a portion of the Flamingo South Beach property known as the South Tower. The South Tower sale price was $163.5 million and included 562 residential units and our rights to the property’s marina. Additionally, the buyer paid $5 million (which is non-refundable) for the option to purchase the 614-unit North Tower for $169 million between September 1, 2006, and February 28, 2007 (subject to the right to extend for up to six months subject to certain conditions), and the option to purchase the 513-unit Central Tower, along with the remainder of improvements on the property, for $267.5 million between December 1, 2007, and May 31, 2008 (subject to the right to extend for up to four months subject to certain conditions and provided that the buyer has previously purchased the North Tower). The agreement also granted us a $19.8 million profit participation interest in the buyer’s proposed condominium conversion after certain development fees and certain returns on the buyer’s equity have been achieved, plus twenty percent of the buyer’s net profits thereafter. On February 23, 2007, we amended the related purchase and sale agreement. The amendment gives the buyer the right to commence a marketing and sales program at the North Tower with respect to its planned condominium conversion; extends the option period for the North Tower to October 31, 2007, and extends the outside closing date to December 31, 2007. In order to extend the option period to October 31, 2007, the buyer must deliver notice by May 1, 2007, along with a $1 million non-refundable deposit. The parties entered into a revenue guarantee with respect to the North Tower whereby the buyer will pay any shortfall between actual revenue and budgeted revenue. In addition, the amendment reduced the profit participation interest to $14.8 million and, in exchange for that reduction and the buyer’s right to commence marketing and extend the closing date, the buyer has agreed to pay amounts totaling $5.0 million at the earlier of closing or at the time the buyer fails to exercise the purchase option on the North Tower.


F-43


Table of Contents

APARTMENT INVESTMENT AND MANAGEMENT COMPANY
REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 2006
(In Thousands Except Unit Data)
 
                                                                                                     
                            (2)
    (3)
    December 31, 2006        
        (1)
                  Initial Cost     Cost Capitalized
                      Accumulated
    Total Cost
       
    Property
  Date
      Year
    Number
          Buildings and
    Subsequent to
          Buildings and
          Depreciation
    Net of
       
Property Name
  Type   Consolidated   Location   Built     of Units     Land     Improvements     Acquisition     Land     Improvements     Total     (AD)     AD     Encumbrances  
 
Conventional Properties
                                                                                                   
100 Forest Place
  Mid Rise   Dec-97   OakPark, IL     1987       234     $ 2,664     $ 18,815     $ 2,826     $ 2,664     $ 21,641     $ 24,306     $ (6,543 )   $ 17,763     $ 25,150  
1582 First Avenue
  Mid Rise   Mar-05   New York, NY     1900       17       4,250       752       97       4,281       818       5,099       (73 )     5,026       2,756  
173 E. 90th
  Mid Rise   May-04   New York, NY     1910       72       11,773       4,535       865       12,067       5,106       17,173       (499 )     16,673       9,562  
236-238 East 88th Street
  Mid Rise   Jan-04   New York, NY     1900       43       8,751       2,914       1,006       8,823       3,847       12,670       (442 )     12,228       7,264  
237-239 Ninth Avenue
  Mid Rise   Mar-05   New York, NY     1900       36       8,430       1,866       402       8,494       2,204       10,698       (194 )     10,504       5,394  
306 East 89th Street
  Mid Rise   Jul-04   New York, NY     1930       20       2,659       1,006       118       2,681       1,102       3,782       (134 )     3,648       1,969  
311 & 313 East 73rd Street
  Mid Rise   Mar-03   New York, NY     1904       34       5,635       1,609       343       5,678       1,909       7,588       (409 )     7,179       2,915  
322-324 East 61st Street
  Mid Rise   Mar-05   New York, NY     1900       40       6,319       2,224       377       6,372       2,548       8,920       (205 )     8,715       3,865  
452 East 78th Street
  Mid Rise   Jan-04   New York, NY     1900       12       1,966       608       208       1,982       800       2,782       (87 )     2,695       1,690  
510 East 88th Street
  Mid Rise   Jan-04   New York, NY     1900       20       3,137       1,002       212       3,163       1,188       4,351       (129 )     4,222       2,781  
514-516 East 88th Street
  Mid Rise   Mar-05   New York, NY     1900       36       6,230       2,168       332       6,282       2,448       8,730       (194 )     8,536       4,754  
Anchorage Apartments
  Garden   Nov-96   League City, TX     1985       264       1,155       7,172       2,925       1,155       10,098       11,253       (2,816 )     8,437       3,853  
Apartment, The
  Garden   Jul-00   Omaha, NE     1973       204       959       8,526       973       959       9,499       10,458       (4,676 )     5,782       3,936  
Arbors (Grovetree), The
  Garden   Oct-97   Tempe, AZ     1967       200       1,092       6,208       1,901       1,092       8,109       9,201       (2,834 )     6,367       2,763  
Arbors of Battle Creek I
  Garden   Dec-99   Battle Creek, MI     1981       586       2,732       16,325       6,087       2,732       22,412       25,144       (5,846 )     19,298       7,300  
Arbors on Battle Creek II
  Garden   Dec-99   Battle Creek, MI     1987       76       496       3,555       406       496       3,961       4,457       (1,083 )     3,374       1,666  
Arbors on Westheimer
  Garden   Nov-96   Houston, TX     1972       360       1,760       9,325       8,099       1,760       17,424       19,184       (4,518 )     14,666       5,919  
Arbours Of Hermitage, The
  Garden   Jul-00   Hermitage, TN     1972       350       1,797       14,451       4,900       1,797       19,352       21,148       (8,089 )     13,059       10,798  
Ashford, The
  Garden   Dec-95   Atlanta, GA     1968       221       2,771       8,366       23,558       2,771       31,924       34,695       (7,721 )     26,975       8,817  
Aspen Point
  Garden   Dec-97   Arvada, CO     1972       120       353       3,807       3,728       353       7,535       7,888       (3,630 )     4,258       2,772  
Aspen Station
  Garden   Oct-01   Richmond, VA     1979       232       2,428       7,874       1,172       2,428       9,046       11,474       (3,143 )     8,331       6,559  
Atriums of Plantation
  Mid Rise   Aug-98   Plantation, FL     1979       210       1,807       10,385       2,243       1,807       12,628       14,435       (3,762 )     10,673       6,649  
Auburn Glen
  Garden   Dec-06   Jacksonville, FL     1974       251       2,310       13,364             2,310       13,364       15,674             15,674        
Autumn Run (IL)
  Garden   Oct-02   Naperville, IL     1984       320       1,812       16,911       1,636       1,812       18,547       20,359       (7,599 )     12,760       11,229  
Autumn Woods
  Garden   Sep-00   Jackson, MI     1973       112       1,042       3,705       1,553       1,042       5,258       6,300       (1,850 )     4,451       2,781  
BaLaye
  Garden   Apr-06   Tampa, FL     2002       324       5,869       33,260       59       10,391       28,798       39,189       (316 )     38,873       23,953  
Bank Lofts
  High Rise   Apr-01   Denver, CO     1920       117       3,525       9,045       913       3,525       9,957       13,482       (2,536 )     10,947       7,515  
Barcelona
  Garden   Oct-99   Houston ,TX     1963       127       770       4,250       1,433       770       5,683       6,452       (1,636 )     4,817       3,086  
Bay Parc Plaza
  High Rise   Sep-04   Miami, FL     2000       471       22,680       41,847       2,083       22,680       43,930       66,609       (2,446 )     64,164       47,497  
Bay Ridge at Nashua
  Garden   Jan-03   Nashua, NH     1984       412       3,352       39,831       1,012       3,352       40,843       44,195       (6,515 )     37,680       22,184  
Bayberry Hill Estates
  Garden   Aug-02   Framingham, MA     1971       424       18,915       35,945       6,220       18,915       42,165       61,081       (7,713 )     53,367       28,706  
Bayhead Village
  Garden   Oct-00   Indianapolis, IN     1978       202       1,411       5,139       1,832       1,411       6,970       8,381       (2,074 )     6,307       3,211  
Beau Jardin
  Garden   Apr-01   West Lafayette, IN     1968       252       5,460       5,291       2,123       5,460       7,415       12,875       (3,860 )     9,015       4,429  
Beech Lake
  Garden   May-99   Durham, NC     1986       345       2,222       12,641       3,135       2,222       15,776       17,997       (5,102 )     12,895       10,500  
Beech’s Farm
  Garden   Oct-00   Columbia, MD     1983       135       4,166       3,520       1,274       4,166       4,795       8,961       (1,224 )     7,736       10,825  
Belmont Place
  Garden   Jul-00   Marietta, GA     1972/2004       326       11,298       2,363       29,318       11,298       31,681       42,979       (3,897 )     39,082       19,223  
Bent Oaks
  Garden   May-98   Austin, TX     1978       146       1,096       6,423       1,022       1,096       7,444       8,540       (2,936 )     5,604       3,400  
Bent Tree I
  Garden   Oct-02   Indianapolis, IN     1983       240       1,850       6,430       931       1,850       7,361       9,211       (2,092 )     7,119       5,400  
Bent Tree III — Verandas
  Garden   Sep-00   Indianapolis, IN     1985       96       1,767       3,379       1,156       1,767       4,535       6,302       (1,022 )     5,280       3,100  
Bexley House
  High Rise   Oct-05   Columbus, OH     1972       64       666       6,203       255       666       6,458       7,124       (1,870 )     5,254       2,029  
Big Walnut
  Garden   Apr-02   Columbus, OH     1968       251       582       9,701       2,218       582       11,918       12,500       (5,565 )     6,935       5,152  
Bluffs (IN), The
  Garden   Dec-98   Laffayette, IN     1982       181       979       5,556       1,610       979       7,166       8,145       (3,169 )     4,976       2,951  
Bluffs, The (OR)
  Garden   Jan-06   Milwaukie, OR     1968       137       333       8,091       61       333       8,152       8,484       (3,595 )     4,890       3,515  


F-44


Table of Contents

                                                                                                     
                            (2)
    (3)
    December 31, 2006        
        (1)
                  Initial Cost     Cost Capitalized
                      Accumulated
    Total Cost
       
    Property
  Date
      Year
    Number
          Buildings and
    Subsequent to
          Buildings and
          Depreciation
    Net of
       
Property Name
  Type   Consolidated   Location   Built     of Units     Land     Improvements     Acquisition     Land     Improvements     Total     (AD)     AD     Encumbrances  
 
Boston Lofts
  High Rise   Apr-01   Denver, CO     1890       158       3,447       20,589       1,597       3,447       22,186       25,632       (5,366 )     20,267       15,083  
Boulder Creek
  Garden   Jul-94   Boulder, CO     1972       221       755       7,730       16,147       755       23,877       24,632       (9,402 )     15,230       13,879  
Brandywine
  Garden   Jul-94   St. Petersburg, FL     1971       477       1,437       12,725       4,244       1,437       16,968       18,405       (10,763 )     7,642       8,004  
Brant Rock Condominiums
  Garden   Oct-97   Houston, TX     1984       84       337       1,976       887       337       2,862       3,199       (1,129 )     2,070       880  
Breakers, The
  Garden   Oct-98   Daytona Beach, FL     1985       208       1,008       5,507       2,267       1,008       7,774       8,782       (2,705 )     6,077       6,839  
Brentwood Apartments
  Garden   Nov-96   Lake Jackson, TX     1980       104       592       2,741       1,323       592       4,064       4,656       (1,458 )     3,197       1,205  
Briarcliffe
  Garden   Oct-00   Lansing, MI     1974       308       3,146       9,586       2,279       3,146       11,865       15,011       (3,627 )     11,384       6,072  
Briarwest
  Garden   Oct-99   Houston, TX     1970       380       2,459       13,868       2,207       2,459       16,075       18,534       (5,065 )     13,469       8,629  
Briarwood
  Garden   Oct-99   Houston, TX     1970       351       2,033       11,855       2,696       2,033       14,551       16,585       (4,197 )     12,388       7,937  
Bridgewater Apartments, The
  Garden   Nov-96   Tomball, TX     1978       206       969       5,976       2,617       969       8,593       9,562       (2,309 )     7,253       3,102  
Brighton Crest
  Garden   Jan-00   Marietta, GA     1987       320       2,084       13,212       2,641       2,084       15,853       17,937       (7,389 )     10,548       9,257  
Broadcast Center
  Garden   Mar-02   Los Angeles, CA     1990       279       27,603       41,244       7,067       29,407       46,507       75,914       (6,188 )     69,726       38,563  
Broadmoor Ridge
  Garden   Dec-97   Colorado Springs, CO     1974       200       460       2,917       10,633       460       13,550       14,010       (2,962 )     11,047       7,472  
Bronson Place
  Garden   Jan-06   Mountlake Terrace, WA     1988       70       459       1,217       223       459       1,440       1,899       (1,439 )     459       1,878  
Brook Run
  Garden   May-98   Arlington Heights, IL     1985       182       2,245       12,936       1,721       2,245       14,657       16,902       (5,548 )     11,355       11,800  
Brookdale Lakes
  Garden   May-98   Naperville, IL     1990       200       2,709       15,346       2,013       2,709       17,359       20,067       (5,921 )     14,146       10,515  
Brookwood Apartments (IN)
  Garden   Apr-01   Indianapolis, IN     1967       404       4,546       9,136       3,825       4,545       12,962       17,507       (4,304 )     13,204       8,980  
Buena Vista
  Mid Rise   Jan-06   Pasadena, CA     1973       92       1,108       15,458       39       1,108       15,497       16,605       (4,313 )     12,292       4,361  
Burke Shire Commons
  Garden   Mar-01   Burke, VA     1986       360       4,867       23,617       2,646       4,867       26,262       31,129       (7,135 )     23,994       18,210  
Calhoun Beach Club
  High Rise   Dec-98   Minneapolis, MN     1928/1998       332       11,708       73,334       41,176       11,708       114,510       126,218       (26,825 )     99,393       40,940  
Canterbury Green Apartments
  Garden   Dec-99   Fort Wayne, IN     1979       1,988       13,659       73,115       19,176       13,659       92,291       105,951       (30,989 )     74,962       42,824  
Canyon Crest
  Garden   Jan-03   Littleton, CO     1966       90       1,313       6,092       418       1,312       6,511       7,823       (2,041 )     5,782       3,051  
Canyon Terrace
  Garden   Mar-02   Saugus, CA     1984       130       7,300       6,602       1,740       7,508       8,135       15,642       (1,703 )     13,939       5,668  
Cape Cod
  Garden   May-98   San Antonio, TX     1985       212       1,307       7,012       949       1,307       7,962       9,269       (2,958 )     6,311       3,940  
Captiva Club
  Garden   Dec-96   Tampa, FL     1973       357       1,600       6,870       11,599       1,600       18,469       20,069       (6,203 )     13,866       7,199  
Carriage Hill
  Garden   Jul-00   East Lansing, MI     1972       143       830       9,001       1,504       829       10,505       11,334       (4,291 )     7,044       4,669  
Casa De Monterey
  Garden   Jan-06   Norwalk, CA     1970       144       1,053       14,089       70       1,053       14,159       15,212       (6,101 )     9,111       3,664  
Castle Court
  High Rise   May-04   Bristol, MA     1974       240       15,239       7,850       2,578       15,244       10,424       25,667       (1,260 )     24,408       10,709  
Cedar Rim
  Garden   Apr-00   New Castle, WA     1980       104       773       5,497       3,479       773       8,976       9,750       (2,914 )     6,835       4,291  
Center Square
  High Rise   Oct-99   Doylestown, PA     1975       350       582       4,190       2,228       582       6,418       7,000       (2,117 )     4,883       8,729  
Chapelle Le Grande (IN)
  Garden   Jan-06   Merrillville, IN     1972       105       273       6,133       76       273       6,209       6,482       (3,549 )     2,933       3,030  
Charleston Landing
  Garden   Sep-00   Brandon, FL     1985       300       7,488       8,656       4,814       7,488       13,470       20,958       (2,066 )     18,892       10,750  
Chatham Harbor
  Garden   Oct-99   Altamonte Springs, FL     1985       324       2,288       13,068       1,953       2,288       15,021       17,308       (3,887 )     13,422       8,044  
Chelsea Ridge Apartments
  Garden   Apr-01   Wappingers Falls, NY     1966       835       10,403       33,000       11,621       10,403       44,621       55,024       (16,540 )     38,484       33,968  
Chesapeake Apartments
  Garden   Jan-96   Houston, TX     1983       320       775       7,317       2,363       775       9,680       10,455       (3,476 )     6,979       5,538  
Chesapeake Landing I
  Garden   Sep-00   Aurora, IL     1986       416       15,800       16,875       2,378       15,800       19,252       35,052       (5,121 )     29,931       24,949  
Chesapeake Landing II
  Garden   Mar-01   Aurora, IL     1987       184       1,969       7,980       1,165       1,969       9,144       11,114       (2,468 )     8,646       6,453  
Chestnut Hall
  High Rise   Oct-06   Philadelphia, PA     1923       315       6,911       20,296             6,911       20,296       27,207       (1,241 )     25,966       13,499  
Chestnut Hill (CT)
  Garden   Oct-99   Middletown, CT     1986       314       3,001       20,143       1,960       3,001       22,103       25,105       (6,413 )     18,691       16,070  
Chestnut Hill (PA)
  Garden   Apr-00   Philadelphia, PA     1963       821       6,463       49,315       18,378       6,463       67,693       74,156       (20,347 )     53,809       51,500  
Cheswick
  Garden   Jun-04   Indianapolis, IN     1976       187       873       5,854       721       873       6,575       7,448       (2,760 )     4,687       4,124  
Chimney Top
  Garden   Oct-02   Antioch, TN     1985       362       2,430       10,818       1,420       2,430       12,238       14,668       (2,382 )     12,286       7,769  
Chimneys of Cradle Rock
  Garden   Jun-04   Columbia, MD     1979       198       2,547       9,045       508       2,547       9,553       12,100       (1,940 )     10,160       4,803  
Citadel
  Garden   Jul-00   El Paso, TX     1973       261       1,024       8,337       618       1,024       8,955       9,978       (4,381 )     5,598       5,457  
Citadel Village
  Garden   Jul-00   Colorado Springs, CO     1974       122       928       6,779       1,414       928       8,193       9,121       (3,125 )     5,996       1,785  
Citrus Grove
  Garden   Jun-98   Redlands, CA     1985       198       1,118       6,642       1,761       1,118       8,403       9,521       (2,835 )     6,685       3,935  
Citrus Sunset
  Garden   Jul-98   Vista, CA     1985       97       663       3,992       1,309       663       5,301       5,964       (1,659 )     4,305       5,900  
Colonnade Gardens (Ferntree)
  Garden   Oct-97   Phoenix, AZ     1973       196       766       4,346       1,921       766       6,267       7,033       (2,293 )     4,740       2,047  
Colony at El Conquistador, The
  Garden   Jun-98   Bradenton, FL     1986       166       1,121       6,360       1,537       1,121       7,897       9,017       (2,442 )     6,575       2,724  
Colony at Kenilworth
  Garden   Oct-99   Towson, MD     1966       383       2,234       19,144       5,433       2,234       24,577       26,811       (11,373 )     15,438       12,338  
Columbus Avenue
  Mid Rise   Sep-03   New York, NY     1880       59       35,489       9,499       1,918       35,544       11,361       46,905       (2,222 )     44,683       18,996  


F-45


Table of Contents

                                                                                                     
                            (2)
    (3)
    December 31, 2006        
        (1)
                  Initial Cost     Cost Capitalized
                      Accumulated
    Total Cost
       
    Property
  Date
      Year
    Number
          Buildings and
    Subsequent to
          Buildings and
          Depreciation
    Net of
       
Property Name
  Type   Consolidated   Location   Built     of Units     Land     Improvements     Acquisition     Land     Improvements     Total     (AD)     AD     Encumbrances  
 
Cooper’s Point
  Garden   Oct-02   North Charleston, SC     1986       192       730       7,420       889       730       8,309       9,039       (3,518 )     5,521       7,631  
Copper Chase Apartments
  Garden   Dec-96   Katy, TX     1982       316       1,742       7,010       3,039       1,742       10,048       11,790       (4,516 )     7,274       5,127  
Copper Mill Apartments
  Garden   Oct-02   Richmond, VA     1987       192       1,039       8,842       1,144       1,039       9,985       11,024       (3,968 )     7,056       10,472  
Copperfield Apartments I & II
  Garden   Nov-96   Houston, TX     1983       196       940       7,900       1,456       940       9,355       10,295       (2,671 )     7,624       3,777  
Coral Garden Apartments
  Garden   Jul-94   Las Vegas, NV     1983       670       3,190       12,589       7,346       3,190       19,935       23,125       (10,432 )     12,693       1,691  
Country Club West
  Garden   May-98   Greeley, CO     1986       288       2,848       16,160       3,194       2,848       19,355       22,203       (6,361 )     15,842       10,258  
Country Lakes I
  Garden   Apr-01   Naperville, IL     1982       240       8,512       10,832       1,856       8,512       12,688       21,200       (3,421 )     17,779       10,161  
Country Lakes II
  Garden   May-97   Naperville, IL     1986       400       5,165       29,430       3,234       5,165       32,664       37,829       (10,362 )     27,467       14,376  
Courtney Park
  Garden   May-98   Fort Collins, CO     1986       248       2,727       15,459       2,703       2,727       18,162       20,889       (5,853 )     15,036       9,097  
Coventry Square Apartments
  Garden   Nov-96   Houston, TX     1983       270       700       5,072       2,808       700       7,880       8,580       (2,799 )     5,781       3,953  
Covington Pointe
  Garden   Oct-05   Dallas, TX     1984       180       1,983       11,730       276       1,983       12,005       13,988       (5,074 )     8,914       5,269  
Creekside
  Garden   Jan-00   Denver, CO     1974       328       1,702       13,694       1,827       1,702       15,521       17,223       (5,913 )     11,310       5,725  
Creekside (CA)
  Garden   Mar-02   Simi Valley, CA     1985       397       24,595       18,818       3,966       25,245       22,134       47,379       (4,768 )     42,611       35,226  
Crescent Gardens
  Mid Rise   Mar-02   West Hollywood, CA     1982       130       15,382       10,215       1,745       15,765       11,577       27,342       (2,412 )     24,931       14,952  
Crossings Of Bellevue
  Garden   May-98   Nashville, TN     1985       300       2,588       14,954       2,827       2,588       17,781       20,370       (6,355 )     14,014       6,685  
Crossroads
  Garden   May-98   Phoenix, AZ     1982       316       2,180       12,661       2,293       2,180       14,954       17,134       (5,796 )     11,338       5,440  
Crosswood
  Garden   Jan-06   Citrus Heights, CA     1976       180       805       18,095       244       805       18,339       19,145       (7,109 )     12,035       4,949  
Crows Nest Condominiums
  Garden   Nov-96   League City, TX     1984       176       939       5,831       1,560       939       7,391       8,330       (2,187 )     6,144       2,090  
Cypress Landing
  Garden   Dec-96   Savannah, GA     1984       200       1,083       5,696       2,295       1,083       7,991       9,074       (2,875 )     6,199       4,337  
Deer Creek
  Garden   Apr-00   Plainsboro, NJ     1975       288       2,215       16,804       3,193       2,215       19,998       22,213       (7,888 )     14,324       15,936  
Deerbrook at Baymeadows
  Garden   Oct-06   Jacksonville, FL     1984       144       2,276       13,188       (0 )     2,276       13,187       15,464       (92 )     15,372        
Deercross
  Garden   Oct-02   Blue Ash, OH     1985       336       4,124       13,061       980       4,124       14,041       18,165       (4,684 )     13,481       12,958  
Deercross (IN)
  Garden   Oct-00   Indianapolis, IN     1979       372       3,175       10,426       2,488       3,175       12,914       16,089       (3,992 )     12,097       7,742  
Defoors Crossing
  Garden   Jan-06   Atlanta, GA     1987       60       348       697       66       348       763       1,111       (763 )     348        
Doral Oaks
  Garden   Dec-97   Temple Terrace, FL     1967       252       2,095       3,943       11,298       2,095       15,241       17,337       (5,099 )     12,238       4,546  
Douglaston Villas and Townhomes
  Garden   Aug-99   Altamonte Springs, FL     1979       234       1,666       9,353       2,450       1,666       11,803       13,469       (4,059 )     9,410       6,005  
Dunes Apartment Homes, The
  Garden   Oct-99   Indian Harbor, FL     1963       200       1,200       5,739       1,376       1,200       7,115       8,314       (3,790 )     4,524       3,469  
Eagle’s Nest
  Garden   May-98   San Antonio, TX     1973       226       1,053       5,981       1,370       1,053       7,351       8,404       (3,560 )     4,845       3,695  
Easton Village Condominiums I & II
  Garden   Nov-96   Houston, TX     1983       146       1,070       9,790       1,006       906       10,961       11,867       (3,781 )     8,085       3,151  
Elm Creek
  Mid Rise   Dec-97   Elmhurst, IL     1986       372       5,534       30,830       12,394       5,534       43,225       48,758       (10,322 )     38,436       30,961  
Essex Park
  Garden   Oct-99   Columbia, SC     1971       323       1,122       9,666       2,217       1,122       11,883       13,005       (5,583 )     7,422       5,866  
Evanston Place
  High Rise   Dec-97   Evanston, IL     1988       189       3,232       25,546       1,533       3,232       27,079       30,311       (7,297 )     23,014       14,741  
Fairlane East
  Garden   Jan-01   Dearborn, MI     1973       244       6,480       11,177       4,340       6,480       15,517       21,997       (5,246 )     16,751       10,099  
Fairway
  Garden   Jan-00   Plano, TX     1978       256       3,078       5,199       3,649       3,078       8,848       11,925       (3,813 )     8,113       5,495  
Falls of Bells Ferry, The
  Garden   May-98   Marietta, GA     1987       720       6,568       37,283       12,946       6,568       50,229       56,797       (16,251 )     40,546       25,000  
Farmingdale
  Mid Rise   Oct-00   Darien, IL     1975       240       11,763       15,174       6,424       11,763       21,598       33,361       (3,862 )     29,499       18,734  
Ferntree
  Garden   Mar-01   Phoenix, AZ     1968       219       2,078       13,752       1,515       2,078       15,267       17,346       (3,591 )     13,754       4,148  
Fieldcrest (FL)
  Garden   Oct-98   Jacksonville, FL     1982       240       1,331       7,617       2,221       1,331       9,838       11,169       (3,244 )     7,926       8,854  
Fisherman’s Landing
  Garden   Dec-97   Bradenton, FL     1984       200       1,276       7,170       2,332       1,276       9,502       10,779       (3,152 )     7,626       8,149  
Fisherman’s Landing
  Garden   Sep-98   Temple Terrace, FL     1986       256       1,643       9,446       2,754       1,643       12,200       13,842       (3,886 )     9,957       12,298  
Fisherman’s Village
  Garden   Jan-06   Indianapolis, IN     1982       328       920       11,173       351       920       11,524       12,444       (5,483 )     6,960       6,350  
Fisherman’s Wharf Apartments
  Garden   Nov-96   Clute, TX     1981       360       1,257       7,584       3,444       1,257       11,028       12,285       (4,157 )     8,128       2,540  
Flamingo South Beach
  High Rise   Sep-97   Miami Beach, FL     1960/2005       1,126       32,191       38,399       215,387       32,185       253,793       285,978       (49,223 )     236,755       158,000  
Foothill Place
  Garden   Jul-00   Salt Lake City, UT     1973       450       3,865       21,817       4,707       3,865       26,525       30,390       (10,090 )     20,300       17,355  
Forest Ridge
  Garden   Jan-06   Flagstaff, AZ     1967       278       1,013       19,796       146       1,013       19,942       20,955       (7,124 )     13,831       5,220  
Four Quarters Habitat
  Garden   Jan-06   Miami, FL     1976       336       1,724       20,251       6,496       1,724       26,747       28,471       (12,230 )     16,242       13,426  
Fox Crest
  Garden   Jan-03   Waukegan, IL     1974       245       2,129       12,316       322       2,129       12,638       14,767       (2,088 )     12,679       6,740  
Fox Run (NJ)
  Garden   Jan-00   Plainsboro, NJ     1973       776       7,182       48,945       11,978       7,182       60,923       68,106       (21,475 )     46,630       30,079  
Foxchase
  Garden   Dec-97   Alexandria, VA     1947       2,113       15,419       96,062       19,482       15,419       115,545       130,964       (40,503 )     90,460       171,823  
Foxtree
  Garden   Oct-97   Tempe, AZ     1976       487       2,458       13,927       8,650       2,458       22,576       25,034       (7,785 )     17,250       6,406  
Frankford Place
  Garden   Jul-94   Carrollton, TX     1982       274       1,125       6,083       3,805       1,125       9,888       11,013       (3,608 )     7,404       4,499  


F-46


Table of Contents

                                                                                                     
                            (2)
    (3)
    December 31, 2006        
        (1)
                  Initial Cost     Cost Capitalized
                      Accumulated
    Total Cost
       
    Property
  Date
      Year
    Number
          Buildings and
    Subsequent to
          Buildings and
          Depreciation
    Net of
       
Property Name
  Type   Consolidated   Location   Built     of Units     Land     Improvements     Acquisition     Land     Improvements     Total     (AD)     AD     Encumbrances  
 
Franklin Oaks
  Garden   May-98   Franklin, TN     1987       468       3,936       22,832       8,099       3,936       30,932       34,868       (10,151 )     24,717       13,865  
Freedom Place Club
  Garden   Oct-97   Jacksonville, FL     1988       352       2,289       12,982       2,214       2,289       15,196       17,485       (5,346 )     12,139       5,022  
Georgetown (MA)
  Garden   Aug-02   Framingham, MA     1964       207       12,351       13,168       1,051       12,351       14,220       26,571       (2,699 )     23,872       14,665  
Glenbridge Manors
  Garden   Sep-03   Cincinnati, OH     1978       290       1,083       17,961       11,728       1,084       29,689       30,772       (4,817 )     25,956       20,190  
Glenwood
  Mid Rise   Jan-06   Jackson, MI     1978       144       567       5,511       120       567       5,631       6,198       (3,527 )     2,671       1,836  
Governor’s Park (CO)
  Garden   Jan-00   Ft. Collins, CO     1982       188       1,116       9,089       1,196       1,116       10,285       11,401       (3,996 )     7,405       6,096  
Granada
  Mid Rise   Aug-02   Framingham, MA     1958       72       4,577       4,058       765       4,577       4,823       9,400       (1,148 )     8,251       4,905  
Grand Pointe
  Garden   Dec-99   Columbia, MD     1974       325       2,715       16,771       3,773       2,715       20,544       23,259       (5,291 )     17,968       17,782  
Greens (AZ)
  Garden   Jul-94   Chandler, AZ     2000       324       2,303       713       30,189       2,303       30,902       33,205       (5,911 )     27,295       14,824  
Greenspoint Apartments
  Garden   Jan-00   Phoenix, AZ     1985       336       2,196       13,969       2,596       2,196       16,565       18,761       (6,717 )     12,044       10,670  
Greentree
  Garden   Dec-96   Carrollton, TX     1983       365       1,822       9,557       4,365       1,821       13,922       15,744       (4,721 )     11,023       8,130  
Hampton Hill Apartments
  Garden   Nov-96   Houston, TX     1984       332       1,311       7,122       3,079       1,311       10,201       11,512       (3,687 )     7,826       5,032  
Harbor Town at Jacaranda
  Garden   Sep-00   Plantation, FL     1988       280       9,776       10,643       4,224       9,776       14,867       24,643       (3,176 )     21,467       11,800  
Harbour, The
  Garden   Mar-01   Melbourne, FL     1987       162       4,108       3,563       1,730       4,108       5,294       9,402       (1,854 )     7,548        
Hastings Place Apartments
  Garden   Nov-96   Houston, TX     1984       176       934       5,021       2,539       934       7,559       8,493       (2,103 )     6,390       3,546  
Heather Ridge (TX)
  Garden   Dec-00   Arlington, TX     1982       180       785       4,900       861       785       5,761       6,546       (2,437 )     4,109       3,112  
Heritage Park at Alta Loma
  Garden   Jan-01   Alta Loma, CA     1986       232       1,200       6,428       2,505       1,200       8,934       10,133       (2,199 )     7,934       7,264  
Heritage Park Escondido
  Garden   Oct-00   Escondidi, CA     1986       196       1,009       7,314       551       1,009       7,865       8,874       (3,128 )     5,745       7,299  
Heritage Park Livermore
  Garden   Oct-00   Livermore, CA     1988       167       829       8,977       822       829       9,799       10,628       (2,722 )     7,906       7,432  
Heritage Park Montclair
  Garden   Mar-01   Montclair, CA     1985       144       690       4,149       586       690       4,734       5,424       (1,168 )     4,256       4,620  
Heritage Village Anaheim
  Garden   Oct-00   Anaheim, CA     1986       196       1,779       8,232       890       1,779       9,122       10,901       (3,570 )     7,331       8,858  
Hibben Ferry I
  Garden   Apr-00   Mt. Pleasant, SC     1983       240       1,460       8,886       8,297       1,460       17,183       18,644       (3,151 )     15,493       9,274  
Hidden Cove (CA)
  Garden   Jul-98   Escondido, CA     1985       334       3,043       17,615       4,215       3,043       21,830       24,873       (7,075 )     17,798       16,436  
Hidden Cove (MI)
  Garden   Apr-00   Belleville, MI     1976       120       433       5,166       959       433       6,125       6,559       (3,654 )     2,905       2,444  
Hidden Harbour
  Garden   Oct-02   Melbourne, FL     1985       216       984       8,050       1,028       984       9,077       10,061       (1,990 )     8,071       6,038  
Hidden Lake
  Garden   May-98   Tampa, FL     1983       267       1,361       7,765       2,121       1,361       9,886       11,247       (3,353 )     7,895       4,160  
Hiddentree
  Garden   Oct-97   East Lansing, MI     1966       261       1,470       8,340       2,763       1,470       11,103       12,573       (4,010 )     8,563       3,179  
Highcrest Townhomes
  Town Home   Jan-03   Woodridge, IL     1968       176       3,210       13,289       814       3,209       14,103       17,312       (4,450 )     12,862       5,732  
Highland Park
  Garden   Dec-96   Fort Worth, TX     1985       500       6,248       9,246       5,119       6,248       14,365       20,612       (5,551 )     15,062       9,604  
Highland Ridge
  Garden   Sep-04   Atlanta, GA     1984       219       1,357       6,778       4,598       1,357       11,376       12,733       (3,066 )     9,667        
Hillcreste (CA)
  Garden   Mar-02   Los Angeles, CA     1989       315       33,755       47,216       13,142       35,862       58,252       94,114       (8,353 )     85,761       58,936  
Hillmeade
  Garden   Nov-94   Nashville, TN     1985       288       2,872       16,069       11,124       2,872       27,193       30,065       (13,920 )     16,146        
Hills at the Arboretum, The
  Garden   Oct-97   Austin, TX     1983       327       1,367       7,764       11,965       1,367       19,729       21,096       (5,087 )     16,009       13,554  
Homestead
  Garden   Apr-05   East Lansing, MI     1986       168       674       7,650       365       674       8,014       8,688       (3,082 )     5,606       3,868  
Horizons West Apartments
  Mid Rise   Dec-06   Pacifica, CA     1970       78       2,240       12,899             2,240       12,899       15,140             15,140       5,703  
Hunt Club (MD)
  Garden   Sep-00   Gaithersburg, MD     1986       336       17,859       13,149       2,620       17,859       15,769       33,628       (4,282 )     29,346       18,286  
Hunt Club (PA)
  Garden   Sep-00   North Wales, PA     1986       320       17,122       13,653       2,650       17,122       16,303       33,426       (5,780 )     27,646       30,500  
Hunt Club (SC)
  Garden   Sep-03   Spartanburg, SC     1987       204       4,138       6,671       792       4,138       7,463       11,601       (1,925 )     9,676       5,385  
Hunt Club (TX)
  Garden   Mar-01   Austin, TX     1987       384       10,342       11,920       1,483       10,342       13,403       23,745       (5,276 )     18,469       19,936  
Hunt Club I
  Garden   Oct-00   Ypsilanti, MI     1988       296       2,498       8,872       1,809       2,498       10,681       13,178       (2,979 )     10,199       9,238  
Hunt Club II
  Garden   Mar-01   Ypsilanti, MI     1988       144       1,628       6,049       753       1,628       6,803       8,430       (1,788 )     6,642       5,031  
Hunter’s Chase
  Garden   Jan-01   Midlothian, VA     1985       320       7,639       8,668       1,899       7,639       10,567       18,207       (2,192 )     16,014       16,875  
Hunter’s Creek
  Garden   May-99   Cincinnati, OH     1981       146       661       3,818       1,377       661       5,195       5,856       (1,859 )     3,998       2,631  
Hunter’s Crossing (VA)
  Garden   Apr-01   Leesburg, VA     1967       164       2,244       7,763       2,039       2,244       9,801       12,045       (3,564 )     8,481       7,000  
Hunters Glen
  Garden   Apr-98   Austell, GA     1983       72       301       1,731       532       301       2,263       2,563       (791 )     1,772       573  
Hunters Glen IV
  Garden   Oct-99   Plainsboro, NJ     1976       264       2,227       14,811       3,419       2,227       18,230       20,457       (7,146 )     13,311       16,485  
Hunters Glen V
  Garden   Oct-99   Plainsboro, NJ     1977       304       2,688       17,797       3,894       2,688       21,691       24,379       (8,446 )     15,933       19,544  
Hunters Glen VI
  Garden   Oct-99   Plainsboro, NJ     1977       328       2,405       15,912       4,480       2,405       20,392       22,797       (8,664 )     14,133       20,336  
Huntington Athletic Club
  Garden   Oct-99   Morrisville, NC     1986       212       1,650       11,265       2,692       1,650       13,957       15,607       (5,926 )     9,681       6,114  
Hyde Park Tower
  High Rise   Oct-04   Chicago, IL     1990       155       4,683       14,928       1,575       4,731       16,456       21,186       (993 )     20,193       13,132  
Independence Green
  Garden   Jan-06   Farmington Hills, MI     1960       981       6,553       41,126       17,566       6,553       58,692       65,246       (21,175 )     44,071       31,312  


F-47


Table of Contents

                                                                                                     
                            (2)
    (3)
    December 31, 2006        
        (1)
                  Initial Cost     Cost Capitalized
                      Accumulated
    Total Cost
       
    Property
  Date
      Year
    Number
          Buildings and
    Subsequent to
          Buildings and
          Depreciation
    Net of
       
Property Name
  Type   Consolidated   Location   Built     of Units     Land     Improvements     Acquisition     Land     Improvements     Total     (AD)     AD     Encumbrances  
 
Indian Oaks
  Garden   Mar-02   Simi Valley, CA     1986       254       23,927       15,801       2,292       24,523       17,498       42,020       (3,508 )     38,512       26,712  
Island Club
  Garden   Oct-02   Columbus, OH     1984       308       1,724       9,458       1,184       1,724       10,642       12,366       (1,889 )     10,476       9,952  
Island Club (Beville)
  Garden   Oct-00   Daytona Beach, FL     1986       204       6,755       9,465       1,322       6,755       10,788       17,543       (4,674 )     12,869       8,440  
Island Club (CA)
  Garden   Oct-00   Oceanside, CA     1986       592       18,027       28,654       5,628       18,027       34,281       52,308       (8,923 )     43,385       37,664  
Island Club (MD)
  Garden   Mar-01   Columbia, MD     1986       176       2,351       14,590       1,299       2,351       15,889       18,240       (3,539 )     14,701       11,081  
Island Club (Palm Aire)
  Garden   Oct-00   Pomano Beach, FL     1988       260       7,615       7,652       8,726       7,615       16,377       23,993       (3,261 )     20,732       11,600  
Islandtree
  Garden   Oct-97   Savannah, GA     1985       216       1,267       7,191       1,746       1,267       8,937       10,204       (3,242 )     6,962       3,035  
Key Towers
  High Rise   Apr-01   Alexandria, VA     1964       140       1,526       7,050       1,222       1,526       8,272       9,798       (2,890 )     6,908       9,500  
King’s Crossing
  Garden   Jul-02   Columbia, MD     1983       168       2,948       6,535       596       2,963       7,116       10,079       (712 )     9,367       14,436  
Knolls, The
  Garden   Jul-02   Colorado Springs, CO     1972       262       3,144       14,689       9,741       3,144       24,431       27,575       (8,595 )     18,980       8,353  
Knollwood
  Garden   Jul-00   Nashville, TN     1972       326       1,911       14,032       6,810       1,911       20,842       22,753       (7,194 )     15,559       11,435  
La Jolla de Tucson
  Garden   May-98   Tucson, AZ     1978       223       1,342       7,816       1,428       1,342       9,243       10,585       (3,859 )     6,725       4,439  
Lake Castleton
  Garden   May-99   Indianapolis, IN     1997       1,261       5,183       29,611       9,713       5,183       39,324       44,507       (12,561 )     31,945       28,222  
Lake Forest Apartments
  Garden   Jul-00   Omaha, NE     1971       312       1,892       12,839       1,253       1,892       14,092       15,984       (7,140 )     8,844       8,416  
Lake Johnson Mews
  Garden   Oct-99   Raleigh, NC     1972       201       1,266       9,411       4,626       1,266       14,036       15,302       (5,419 )     9,883       6,083  
Lakehaven I
  Garden   Dec-97   Carol Stream, IL     1984       144       1,652       3,849       875       1,652       4,724       6,376       (3,215 )     3,161       5,416  
Lakehaven II
  Garden   Dec-97   Carol Stream, IL     1985       348       2,822       16,128       2,120       2,822       18,248       21,069       (7,463 )     13,606       13,627  
Lakes at South Coast, The
  Mid Rise   Mar-02   Costa Mesa, CA     1987       770       55,223       65,506       12,171       57,240       75,660       132,901       (12,561 )     120,339       105,000  
Lakes, The
  Garden   Jan-00   Raleigh, NC     1972       600       2,818       18,452       4,069       2,818       22,521       25,339       (11,159 )     14,179       9,495  
Lakeside (IL)
  Garden   Oct-99   Lisle, IL     1972       568       4,066       29,778       4,201       4,066       33,979       38,045       (11,944 )     26,102       21,228  
Lakeside (NC)
  Garden   Oct-05   Charlotte, NC     1981       216       1,144       9,336       170       1,144       9,506       10,650       (4,210 )     6,440       2,649  
Lakeside North at Carrollwood
  Garden   Sep-00   Tampa, FL     1984       168       3,118       5,358       1,073       3,118       6,432       9,550       (1,893 )     7,657       5,985  
Lakeside Place
  Garden   Oct-99   Houston, TX     1976       734       4,780       35,814       6,050       4,780       41,864       46,644       (17,342 )     29,302       19,525  
Lakewood
  Garden   Jul-02   Tomball, TX     1979       256       801       8,328       1,706       801       10,034       10,835       (3,807 )     7,028       4,607  
Lakewood At Pelham (SC)
  Garden   Jan-06   Greenville, SC     1979       271       541       6,437       2,088       541       8,524       9,065       (4,545 )     4,520       4,350  
Lamplighter Park
  Garden   Apr-00   Bellevue, WA     1967       174       1,974       8,478       3,007       1,974       11,485       13,459       (3,972 )     9,487       6,844  
Landmark
  Garden   Apr-00   Raleigh, NC     1970       292       1,691       13,442       2,394       1,691       15,836       17,527       (7,214 )     10,313       8,535  
Las Brisas (TX)
  Garden   Dec-95   San Antonio, TX     1983       176       1,082       5,214       1,542       1,082       6,756       7,838       (2,566 )     5,272       3,392  
Latrobe
  High Rise   Jan-03   Washington, DC     1980       176       1,305       11,257       4,335       1,305       15,592       16,897       (6,074 )     10,823       16,045  
Lazy Hollow
  Garden   Apr-05   Columbia, MD     1979       178       1,347       14,776       342       1,347       15,118       16,465       (4,570 )     11,895       8,931  
Lebanon Station
  Garden   Oct-99   Columbus, OH     1974       387       1,694       9,569       2,281       1,694       11,850       13,544       (4,284 )     9,260       6,177  
Legend Oaks
  Garden   May-98   Tampa, FL     1983       416       2,304       13,288       2,589       2,304       15,877       18,181       (5,552 )     12,629       6,058  
Lewis Park
  Garden   Jan-06   Carbondale, IL     1972       269       740       12,846       964       740       13,810       14,550       (7,406 )     7,143       4,602  
Lexington
  Garden   Jul-94   San Antonio, TX     1981       72       312       1,688       751       312       2,440       2,752       (1,035 )     1,717        
Lighthouse at Twin Lakes I
  Garden   Apr-00   Beltsville, MD     1969       479       2,518       17,396       4,706       2,518       22,102       24,620       (4,899 )     19,721       40,000  
Lighthouse at Twin Lakes II
  Garden   Apr-00   Beltsville, MD     1971       113       695       4,841       620       695       5,461       6,156       (1,371 )     4,785        
Lighthouse at Twin Lakes III
  Garden   Apr-00   Beltsville, MD     1978       107       482       3,299       235       482       3,534       4,016       (713 )     3,303        
Lincoln Place Garden
  Garden   Oct-04   Venice, CA     1951       755       129,417       10,439       31,719       129,417       42,158       171,574       (105 )     171,469       72,500  
Lodge, The
  Garden   Jan-00   Denver, CO     1973       376       1,987       13,935       2,862       1,987       16,797       18,784       (6,496 )     12,288       6,341  
Loft, The
  Garden   Oct-99   Raleigh, NC     1974       184       1,995       11,748       1,612       1,995       13,360       15,355       (5,235 )     10,120       4,515  
Los Arboles
  Garden   Sep-97   Chandler, AZ     1985       232       1,662       9,504       2,552       1,662       12,057       13,719       (4,246 )     9,472       5,498  
Malibu Canyon
  Garden   Mar-02   Calabasas, CA     1986       698       66,257       53,438       21,512       69,834       71,372       141,207       (15,466 )     125,740       64,368  
Maple Bay
  Garden   Dec-99   Virginia Beach, VA     1971       414       2,598       16,141       7,791       2,598       23,932       26,530       (6,103 )     20,427       19,624  
Mariners Cove
  Garden   Mar-02   San Diego, CA     1984       500             66,861       4,565       1,000       70,426       71,426       (10,733 )     60,692       8,224  
Mariner’s Cove
  Garden   Mar-00   Virginia Beach, VA     1974       458       1,517       10,034       15,750       1,517       25,785       27,301       (7,236 )     20,066       11,231  
Meadow Creek
  Garden   Jul-94   Boulder, CO     1972       332       1,435       24,532       4,985       1,435       29,518       30,953       (9,574 )     21,379       5,228  
Meadows
  Garden   Dec-00   Austin, TX     1983       100       580       3,667       506       580       4,173       4,752       (1,871 )     2,881       2,269  
Merrill House
  High Rise   Jan-00   Fairfax, VA     1962       159       1,836       10,831       2,008       1,836       12,839       14,675       (2,881 )     11,795       6,433  
Mesa Ridge
  Garden   May-98   San Antonio, TX     1986       200       1,210       6,863       1,075       1,210       7,938       9,148       (2,877 )     6,271       3,945  
Michigan Apartments
  Garden   Dec-99   Indianapolis, IN     1965       185       516       3,694       530       516       4,224       4,741       (1,489 )     3,252       988  
Montecito
  Garden   Jul-94   Austin, TX     1985       268       1,268       6,896       3,852       1,268       10,748       12,016       (4,846 )     7,170       4,469  


F-48


Table of Contents

                                                                                                     
                            (2)
    (3)
    December 31, 2006        
        (1)
                  Initial Cost     Cost Capitalized
                      Accumulated
    Total Cost
       
    Property
  Date
      Year
    Number
          Buildings and
    Subsequent to
          Buildings and
          Depreciation
    Net of
       
Property Name
  Type   Consolidated   Location   Built     of Units     Land     Improvements     Acquisition     Land     Improvements     Total     (AD)     AD     Encumbrances  
 
Mountain Run
  Garden   Dec-97   Arvada, CO     1974       96       685       2,614       2,794       685       5,407       6,092       (1,884 )     4,209       2,839  
Mountain View
  Garden   May-98   Colorado Springs, CO     1985       252       2,546       14,841       1,900       2,546       16,741       19,287       (5,804 )     13,483       7,069  
Mountain View (CA)
  Garden   Jan-06   San Dimas, CA     1978       168       1,702       24,144       161       1,702       24,305       26,008       (7,531 )     18,477       6,437  
Newport
  Garden   Jul-94   Avondale, AZ     1986       204       800       4,354       2,526       800       6,881       7,681       (2,924 )     4,756       3,688  
North Park
  Garden   Jan-06   Evansville, IN     1970       284       761       14,786       180       761       14,966       15,727       (7,997 )     7,730       6,091  
North River Place
  Garden   Jul-02   Chillicothe, OH     1980       120       858       3,351       402       858       3,753       4,611       (1,282 )     3,330       2,497  
North Slope
  Garden   Oct-02   Greenville, SC     1984       156       1,670       5,756       508       1,670       6,263       7,933       (1,659 )     6,274       3,745  
Northwoods
  Garden   Oct-02   Worthington, OH     1983       280       2,667       9,260       1,181       2,664       10,444       13,109       (1,760 )     11,348       6,465  
Northwoods (CT)
  Garden   Mar-01   Middletown, CT     1987       336       16,080       14,435       1,199       16,080       15,634       31,714       (4,372 )     27,343       21,275  
Oak Falls Condominiums
  Garden   Nov-96   Spring, TX     1983       144       1,017       5,420       1,786       1,017       7,206       8,223       (1,881 )     6,342       3,876  
Oak Forest
  Garden   Oct-02   Arlington, TX     1983       204       1,020       5,888       1,267       1,020       7,155       8,175       (2,975 )     5,200       3,720  
Oak Forest I
  Garden   Jan-06   Monroe, MI     1984       48       519       4,201       37       519       4,239       4,757       (2,039 )     2,719       1,505  
Oak Forest II
  Garden   Jan-06   Monroe, MI     1985       56       290       4,511       48       290       4,560       4,850       (2,315 )     2,534       1,839  
Oak Forest III
  Garden   Oct-06   Monroe, MI     1986       68       141       2,755       1       141       2,756       2,897       (1,860 )     1,036       1,728  
Oak Park Village I
  Garden   Oct-00   Lansing, MI     1973       618       10,048       16,771       5,876       10,048       22,647       32,696       (8,891 )     23,805       23,487  
Oakwood (OH)
  Garden   Jan-06   Toledo, OH     1988       143       567       6,022       128       567       6,150       6,717       (3,282 )     3,434       3,430  
Oakwood Miami
  High Rise   Dec-03   Miami, FL     1998       357       31,363       32,214       1,976       31,363       34,190       65,553       (2,512 )     63,041       46,004  
Ocean Oaks
  Garden   May-98   Port Orange, FL     1988       296       2,132       12,855       2,256       2,132       15,111       17,243       (4,626 )     12,618       10,295  
Ocean View Apartment
  Garden   Oct-06   Pacifica, CA     1963       63       1,794       10,312       9       7,974       4,140       12,115       (27 )     12,088       6,700  
Oceanfront
  Garden   Nov-96   Galveston, TX     1985       102       513       3,045       5,234       513       8,278       8,792       (1,962 )     6,829       1,549  
One Lytle Place
  High Rise   Jan-00   Cincinnati ,OH     1980       231       2,662       21,800       9,806       2,898       31,371       34,268       (6,093 )     28,176       11,797  
Pacifica Park
  Garden   Jul-06   Pacifica, CA     1977       104       2,902       16,447       1,079       12,717       7,712       20,428       (85 )     20,343       11,807  
Palazzo at Park La Brea
  Mid Rise   Feb-04   Los Angeles, CA     2002       521       47,822       125,464       4,399       47,822       129,863       177,686       (13,549 )     164,137       103,774  
Palazzo East at Park La Brea
  Mid Rise   Mar-05   Los Angeles, CA     2005       611       61,004       136,503       16,673       72,555       141,625       214,180       (9,287 )     204,893       150,000  
Palencia
  Garden   May-98   Tampa, FL     1985       420       2,804       16,262       8,744       2,804       25,007       27,810       (8,365 )     19,445       12,044  
Palm Lake
  Garden   Oct-99   Tampa ,FL     1972       150       876       5,218       1,880       876       7,098       7,974       (3,823 )     4,151       2,529  
Paradise Palms
  Garden   Jul-94   Phoenix, AZ     1985       129       647       3,515       5,440       647       8,956       9,603       (2,938 )     6,664       1,724  
Park at Cedar Lawn, The
  Garden   Nov-96   Galveston, TX     1985       192       1,025       6,162       1,985       1,025       8,148       9,173       (2,483 )     6,690       4,152  
Park at Deerbrook
  Garden   Oct-99   Humble, TX     1984       100       175       522       279       175       801       976       (801 )     175       2,283  
Park Capitol
  Garden   Apr-00   Salt Lake City, UT     1972       135       731       5,215       1,418       731       6,633       7,364       (2,845 )     4,519       4,849  
Park Towne
  High Rise   Apr-00   Philadelphia, PA     1959       973       10,451       47,301       27,396       10,451       74,697       85,148       (11,538 )     73,610       71,978  
Parktown Townhouses
  Garden   Oct-99   Deer Park, TX     1968       309       1,726       12,590       6,280       1,726       18,870       20,596       (5,797 )     14,799       6,512  
Parkway (VA)
  Garden   Mar-00   Willamsburg, VA     1971       148       386       2,834       1,600       386       4,434       4,820       (2,421 )     2,399       4,879  
Pathfinder Village
  Garden   Jan-06   Fremont, CA     1973       246       3,144       35,597       261       3,144       35,858       39,001       (12,492 )     26,509       12,532  
Peachtree Park
  Garden   Jan-96   Atlanta, GA     1962/1995       303       4,683       11,713       8,944       4,683       20,657       25,340       (6,840 )     18,500       10,357  
Peakview Place
  Garden   Jan-00   Englewood, CO     1975       296       2,016       19,985       3,643       2,016       23,628       25,644       (10,312 )     15,332       10,087  
Pebble Point
  Garden   Oct-02   Indianapolis, IN     1980       220       1,790       6,883       1,003       1,790       7,887       9,677       (2,807 )     6,870       5,433  
Peppermill Place Apartments
  Garden   Nov-96   Houston, TX     1983       224       844       5,169       1,981       844       7,150       7,994       (1,963 )     6,031       3,878  
Peppertree
  Garden   Mar-02   Cypress, CA     1971       136       7,835       5,224       1,528       8,030       6,558       14,587       (1,668 )     12,920       6,091  
Pine Lake Terrace
  Garden   Mar-02   Garden Grove, CA     1971       111       3,975       6,035       1,168       4,125       7,054       11,178       (1,426 )     9,752       4,307  
Pine Shadows
  Garden   May-98   Phoenix, AZ     1983       272       2,095       11,899       2,982       2,095       14,881       16,976       (5,041 )     11,935       7,500  
Pines, The
  Garden   Oct-98   Palm Bay, FL     1984       216       603       3,318       1,612       603       4,929       5,532       (1,656 )     3,876       2,043  
Plantation Crossing
  Garden   Jan-00   Marietta, GA     1979       180       1,106       9,202       1,999       1,106       11,202       12,308       (4,787 )     7,521       3,965  
Plantation Gardens
  Garden   Oct-99   Plantation ,FL     1971       372       3,747       19,109       3,347       3,747       22,456       26,203       (8,621 )     17,581       8,200  
Pleasant Valley Pointe
  Garden   Nov-94   Little Rock, AR     1985       112       907       5,085       1,784       907       6,869       7,776       (2,926 )     4,850        
Plum Creek
  Garden   Oct-02   Charlotte, NC     1984       276       3,076       9,144       664       3,076       9,808       12,884       (2,023 )     10,861       7,432  
Pointe At Stone Canyon, The
  Garden   Jan-06   Dallas, TX     1978       164       747       4,532       1,143       747       5,676       6,422       (2,914 )     3,508       2,671  
Post Ridge
  Garden   Jul-00   Nashville, TN     1972       150       1,041       7,907       1,459       1,041       9,366       10,407       (3,783 )     6,624       4,228  
Presidential House
  Mid Rise   Sep-05   N. Miami Beach, FL     1963       203       1,362       10,614       760       1,362       11,375       12,737       (4,525 )     8,211       4,693  
Preston Creek
  Garden   Oct-99   Dallas, TX     1979       228       1,598       8,944       4,746       1,598       13,690       15,288       (5,620 )     9,668       4,755  
Quail Hollow
  Garden   Oct-99   West Columbia, SC     1973       215       1,091       7,872       1,822       1,091       9,694       10,785       (3,582 )     7,203       4,470  


F-49


Table of Contents

                                                                                                     
                            (2)
    (3)
    December 31, 2006        
        (1)
                  Initial Cost     Cost Capitalized
                      Accumulated
    Total Cost
       
    Property
  Date
      Year
    Number
          Buildings and
    Subsequent to
          Buildings and
          Depreciation
    Net of
       
Property Name
  Type   Consolidated   Location   Built     of Units     Land     Improvements     Acquisition     Land     Improvements     Total     (AD)     AD     Encumbrances  
 
Quail Ridge
  Garden   May-98   Tucson, AZ     1974       253       1,559       9,173       1,944       1,559       11,117       12,676       (4,598 )     8,078       4,945  
Quail Run
  Garden   Oct-99   Zionsville, IN     1972       166       1,222       6,803       1,215       1,222       8,018       9,240       (2,956 )     6,284       4,928  
Ramblewood Apartments (MI)
  Garden   Dec-99   Grand Rapids, MI     1973       1,698       9,500       61,769       12,878       9,500       74,648       84,148       (20,554 )     63,594       30,676  
Raven Hill
  Garden   Jan-01   Burnsville, MN     1971       304       4,888       10,632       2,924       4,888       13,556       18,444       (5,610 )     12,834       10,742  
Ravensworth Towers
  High Rise   Jun-04   Annandale, VA     1974       219       1,811       18,680       1,162       1,811       19,842       21,654       (8,110 )     13,544       14,582  
Reflections
  Garden   Apr-02   Indianapolis, IN     1970       582       1,239       18,439       10,926       1,239       29,365       30,604       (10,081 )     20,523       12,550  
Reflections (Casselberry)
  Garden   Oct-02   Casselberry, FL     1984       336       3,052       11,607       2,418       3,052       14,026       17,077       (2,733 )     14,344       10,700  
Reflections (Tampa)
  Garden   Sep-00   Tampa, FL     1988       348       7,976       13,499       4,477       7,976       17,976       25,952       (3,636 )     22,315       13,500  
Reflections (Virginia Beach)
  Garden   Sep-00   Virginia Beach, VA     1987       480       15,988       13,684       3,579       15,988       17,262       33,250       (4,989 )     28,261       25,109  
Reflections (West Palm Beach)
  Garden   Oct-00   West Palm Beach, FL     1986       300       5,504       9,984       3,068       5,504       13,052       18,556       (3,175 )     15,381       9,248  
Regency Oaks
  Garden   Oct-99   Fern Park, FL     1965       343       1,806       9,847       5,358       1,806       15,205       17,011       (7,410 )     9,602       6,439  
Remington at Ponte Vedra Lakes
  Garden   Dec-06   Ponte Vedra Beach, FL     1986       344       5,491       31,735             5,491       31,735       37,226       (132 )     37,094       25,000  
River Club
  Garden   Apr-05   Edgewater, NJ     1998       266       30,578       30,638       935       30,579       31,572       62,150       (2,104 )     60,047       43,284  
River Reach
  Garden   Sep-00   Naples, FL     1986       556       17,728       18,337       4,016       17,728       22,353       40,081       (6,499 )     33,582       24,000  
Riverbend Village
  Garden   Jul-01   Arlington, TX     1983       201       893       4,128       1,925       893       6,054       6,946       (2,442 )     4,504       3,965  
Rivercrest
  Garden   Oct-99   Atlanta, GA     1970       312       2,320       16,370       11,491       2,320       27,861       30,181       (6,515 )     23,666       10,221  
Riverloft Apartments
  High Rise   Oct-99   Philadelphia, PA     1910       184       2,120       11,287       30,057       2,120       41,344       43,464       (11,671 )     31,793       22,817  
Rivers Edge
  Garden   Jul-00   Auburn, WA     1976       120       732       5,019       652       732       5,672       6,404       (2,335 )     4,069       3,331  
Riverside
  Mid Rise   Jul-94   Littleton, CO     1987       248       1,956       8,427       3,431       1,956       11,858       13,814       (5,010 )     8,804       7,375  
Riverside Park
  High Rise   Apr-00   Alexandria ,VA     1973       1,223       8,365       69,985       29,172       8,364       99,157       107,522       (35,272 )     72,249       80,490  
Riverwind at St. Andrews
  Garden   Apr-02   Columbia, SC     1984       160       1,246       4,370       268       1,246       4,638       5,884       (1,037 )     4,847       4,613  
Riverwood (IN)
  Garden   Oct-00   Indianapolis, IN     1978       120       1,032       3,424       1,199       1,032       4,623       5,655       (1,462 )     4,193       3,513  
Rosewood
  Garden   Mar-02   Camarillo, CA     1976       152       12,128       8,060       2,144       12,430       9,902       22,332       (1,987 )     20,344       7,674  
Royal Crest Estates (Fall River)
  Garden   Aug-02   Fall River, MA     1974       216       5,832       12,044       1,609       5,832       13,653       19,486       (3,505 )     15,980       9,935  
Royal Crest Estates (Marlboro)
  Garden   Aug-02   Marlborough, MA     1970       473       25,178       28,786       1,969       25,178       30,755       55,933       (8,443 )     47,490       30,318  
Royal Crest Estates (Nashua)
  Garden   Aug-02   Nashua, MA     1970       902       68,231       45,562       3,698       68,231       49,259       117,490       (12,931 )     104,559       53,300  
Royal Crest Estates (North Andover)
  Garden   Aug-02   North Andover, MA     1970       588       51,292       36,808       6,066       51,292       42,873       94,165       (11,667 )     82,498       47,024  
Royal Crest Estates (Warwick)
  Garden   Aug-02   Warwick, RI     1972       492       22,433       24,095       3,246       22,433       27,341       49,774       (6,836 )     42,938       24,932  
Royal Palms
  Garden   Jul-94   Mesa, AZ     1985       152       832       4,569       2,258       832       6,828       7,659       (2,488 )     5,172        
Runaway Bay
  Garden   Jul-02   Pinellas Park, FL     1986       192       1,933       7,341       581       1,933       7,922       9,856       (1,597 )     8,259       9,422  
Runaway Bay (CA)
  Garden   Oct-00   Antioch, CA     1986       280       12,503       10,499       1,956       12,503       12,456       24,959       (3,487 )     21,472       12,100  
Runaway Bay (FL)
  Garden   Oct-00   Lantana, FL     1987       404       5,934       16,052       3,199       5,934       19,251       25,186       (4,565 )     20,620       11,564  
Runaway Bay (MI)
  Garden   Oct-00   Lansing, MI     1987       288       2,106       6,559       2,152       2,106       8,711       10,817       (3,155 )     7,662       8,522  
Runaway Bay (NC)
  Garden   Oct-00   Charlotte, NC     1985       280       2,233       9,860       2,454       2,233       12,315       14,548       (3,666 )     10,881       6,000  
Runaway Bay (Virginia Beach)
  Garden   Nov-04   Virginia Beach, VA     1985       440       8,089       15,700       2,727       9,478       17,037       26,516       (1,485 )     25,031       17,430  
Runaway Bay II (OH)
  Garden   Jan-06   Columbus, OH     1982       132       824       6,519       399       824       6,917       7,742       (2,413 )     5,329       5,522  
Runawaybay I
  Garden   Sep-03   Columbus, OH     1982       304       2,273       11,980       1,365       2,273       13,345       15,618       (4,857 )     10,761       10,217  
Salem Park
  Garden   Apr-00   Ft. Worth, TX     1984       168       837       4,109       2,226       837       6,335       7,173       (2,536 )     4,636       3,396  
Sand Castles Apartments
  Garden   Oct-97   League City, TX     1987       138       978       5,542       1,854       978       7,396       8,374       (2,528 )     5,845       2,231  
Sandpiper Cove
  Garden   Dec-97   Boynton Beach, FL     1987       416       3,511       21,396       7,062       3,511       28,458       31,970       (8,145 )     23,824       20,695  
Savannah Trace
  Garden   Mar-01   Shaumburg, IL     1986       368       13,960       20,731       1,576       13,960       22,308       36,268       (5,834 )     30,434       22,971  
Sawgrass
  Garden   Jul-97   Orlando, FL     1986       208       1,443       8,137       2,799       1,443       10,936       12,378       (3,692 )     8,686       2,556  
Scandia
  Garden   Oct-00   Indianapolis, IN     1977       444       10,540       9,852       9,894       10,540       19,747       30,287       (5,453 )     24,835       19,571  
Scotch Pines East
  Garden   Jul-00   Ft. Collins, CO     1977       102       460       4,880       416       460       5,296       5,756       (2,424 )     3,332       2,687  
Scotchollow
  Garden   Jan-06   San Mateo, CA     1971       418       4,520       69,562       315       4,520       69,878       74,398       (21,218 )     53,180       27,385  
Shadetree
  Garden   Oct-97   Tempe, AZ     1965       124       591       3,359       2,430       591       5,789       6,380       (2,080 )     4,300       1,483  
Shadow Creek (AZ)
  Garden   May-98   Phoenix, AZ     1984       266       2,016       11,886       2,448       2,016       14,334       16,350       (5,432 )     10,918       5,395  
Shadow-Wood (LA)
  Garden   Jan-06   Monroe, LA     1974       120       319       6,049       99       319       6,148       6,467       (3,270 )     3,197       1,975  
Shenandoah Crossing
  Garden   Sep-00   Fairfax, VA     1984       640       18,492       57,197       5,459       18,492       62,656       81,148       (19,021 )     62,127       31,500  
Sienna Bay
  Garden   Apr-00   St. Petersburg, FL     1984       276       1,556       9,141       7,140       1,556       16,281       17,837       (4,499 )     13,338       11,000  
Signal Pointe
  Garden   Oct-99   Winter Park, FL     1971       368       1,485       12,653       3,779       1,485       16,433       17,918       (6,534 )     11,383       7,411  


F-50


Table of Contents

                                                                                                     
                            (2)
    (3)
    December 31, 2006        
        (1)
                  Initial Cost     Cost Capitalized
                      Accumulated
    Total Cost
       
    Property
  Date
      Year
    Number
          Buildings and
    Subsequent to
          Buildings and
          Depreciation
    Net of
       
Property Name
  Type   Consolidated   Location   Built     of Units     Land     Improvements     Acquisition     Land     Improvements     Total     (AD)     AD     Encumbrances  
 
Signature Point Apartments
  Garden   Nov-96   League City, TX     1994       304       2,810       17,579       2,033       2,810       19,612       22,421       (4,886 )     17,535       7,886  
Silver Ridge
  Garden   Oct-98   Maplewood, MN     1986       186       775       3,765       1,631       775       5,396       6,171       (2,107 )     4,064       4,525  
Snug Harbor
  Garden   Dec-95   Las Vegas, NV     1991       64       751       2,859       1,593       751       4,452       5,203       (1,759 )     3,444       1,873  
Somerset Lakes
  Garden   May-99   Indianapolis, IN     1974       360       3,436       19,668       2,913       3,436       22,580       26,016       (7,005 )     19,011       18,672  
Somerset Village
  Garden   May-96   West Valley City, UT     1985       486       4,315       16,727       6,410       4,315       23,137       27,452       (8,469 )     18,983       9,356  
South Willow
  Garden   Jul-94   West Jordan, UT     1987       440       2,224       12,075       4,712       2,224       16,787       19,012       (7,052 )     11,960       2,066  
Southridge
  Garden   Dec-00   Greenville, TX     1984       160       695       4,416       1,577       695       5,993       6,688       (3,166 )     3,521       3,165  
Springhill Lake
  Garden   Apr-00   Greenbelt, MD     1969       2,877       14,330       99,081       36,096       15,070       134,437       149,507       (48,191 )     101,316       113,500  
Springhouse (KY)
  Garden   Mar-04   Lexington, KY     1986       224       2,126       6,721       480       2,126       7,202       9,328       (1,560 )     7,768       6,541  
Springhouse (SC)
  Garden   Oct-02   North Charleston, SC     1986       248       3,488       10,331       769       3,488       11,101       14,589       (2,541 )     12,048       8,600  
Springhouse at Newport
  Garden   Jul-02   Newport News, VA     1986       432       9,479       11,425       2,222       9,479       13,647       23,126       (1,963 )     21,163       16,600  
Springwoods at Lake Ridge
  Garden   Jul-02   Lake Ridge, VA     1984       180       2,899       9,693       507       2,899       10,200       13,099       (591 )     12,508       15,180  
Spyglass
  Garden   Oct-02   Indianapolis, IN     1979       120       971       3,985       799       971       4,785       5,755       (1,464 )     4,291       2,708  
Spyglass at Cedar Cove
  Garden   Sep-00   Lexington Park, MD     1985       152       3,241       5,094       927       3,241       6,021       9,262       (1,640 )     7,622       4,215  
Stafford
  High Rise   Oct-02   Baltimore, MD     1889       96       706       4,032       3,737       706       7,769       8,476       (2,209 )     6,266        
Steeplechase
  Garden   Oct-00   Williamsburg, VA     1986       220       7,601       8,029       2,256       7,601       10,285       17,886       (2,690 )     15,196       12,425  
Steeplechase (MD)
  Garden   Sep-00   Largo, MD     1986       240       3,675       16,111       1,905       3,675       18,016       21,692       (4,504 )     17,188       11,559  
Steeplechase (OH)
  Garden   May-99   Loveland, OH     1988       272       1,975       9,264       1,719       1,960       10,999       12,959       (3,826 )     9,133       8,282  
Steeplechase (TX)
  Garden   Jul-02   Plano, TX     1985       368       6,438       9,596       1,545       6,438       11,141       17,578       (2,193 )     15,386       14,200  
Sterling Apartment Homes, The
  Garden   Oct-99   Philadelphia, PA     1962       535       8,508       54,050       14,449       8,508       68,499       77,007       (21,864 )     55,143       20,637  
Stirling Court Apartments
  Garden   Nov-96   Houston, TX     1984       228       913       4,953       1,847       913       6,800       7,713       (2,026 )     5,687       3,736  
Stone Creek Club
  Garden   Sep-00   Germantown, MD     1984       240       13,593       9,347       2,249       13,593       11,596       25,189       (4,854 )     20,335       11,699  
Stone Point Village
  Garden   Dec-99   Fort Wayne, IN     1981       296       1,541       8,636       2,754       1,541       11,391       12,932       (3,845 )     9,087       5,192  
Stonebrook
  Garden   Jun-97   Sanford, FL     1991       244       1,583       8,587       3,299       1,583       11,886       13,468       (4,215 )     9,253       5,892  
Stonebrook II
  Garden   Mar-99   Sanford, FL     1998       112       488       8,736       376       488       9,112       9,600       (1,657 )     7,943       3,268  
Stoney Brook Apartments
  Garden   Nov-96   Houston, TX     1972       113       275       1,865       1,422       275       3,287       3,563       (748 )     2,815       2,142  
Stonybrook
  Garden   May-98   Tucson, AZ     1983       411       2,167       12,670       314       2,167       12,984       15,151       (5,351 )     9,800       4,028  
Stratford, The (TX)
  Garden   May-98   San Antonio, TX     1979       269       1,825       10,748       1,704       1,825       12,452       14,277       (4,959 )     9,318       4,600  
Summit Creek
  Garden   May-98   Austin, TX     1985       164       1,211       6,037       1,230       1,211       7,267       8,478       (2,176 )     6,302       3,134  
Sun Lake
  Garden   May-98   Lake Mary, FL     1986       600       4,551       25,543       7,672       4,551       33,214       37,766       (10,859 )     26,907       24,101  
Sun River Village
  Garden   Oct-99   Tempe ,AZ     1981       334       1,837       13,717       2,788       1,837       16,505       18,342       (6,652 )     11,690       8,519  
Sunbury Downs Apartments
  Garden   Nov-96   Houston, TX     1982       240       936       6,059       1,898       936       7,957       8,893       (2,402 )     6,490       4,183  
Sunlake
  Garden   Sep-98   Brandon, FL     1986       88       610       4,062       1,012       610       5,075       5,685       (1,981 )     3,704       2,161  
Sycamore Creek
  Garden   Apr-00   Cincinnati ,OH     1978       295       1,984       9,614       3,332       1,984       12,946       14,929       (4,032 )     10,898       7,038  
Talbot Woods
  Garden   Sep-04   Middleboro, MA     1972       121       5,852       4,719       1,734       5,852       6,452       12,305       (714 )     11,591       6,283  
Tamarac Village
  Garden   Apr-00   Denver, CO     1979       564       3,413       21,411       5,060       3,413       26,471       29,883       (10,015 )     19,868       17,956  
Tamarind Bay
  Garden   Jan-00   St. Petersburg, FL     1980       200       694       6,855       3,048       694       9,903       10,597       (3,595 )     7,002       7,073  
Tar River Estates
  Garden   Oct-99   Greenville, NC     1969       220       1,288       13,999       3,110       1,288       17,109       18,397       (5,695 )     12,702       4,515  
Tatum Gardens
  Garden   May-98   Phoenix, AZ     1985       128       1,323       7,155       1,241       1,323       8,396       9,719       (3,461 )     6,258       3,169  
Tempo, The
  High Rise   Sep-04   New York, NY     1900       200       68,006       12,140       1,980       68,082       14,044       82,126       (844 )     81,281       31,962  
Terrace Garden Townhouses
  Town Home   Jan-06   Omaha, NE     1975       126       565       9,433       82       565       9,515       10,080       (4,801 )     5,279       4,130  
Timber Ridge
  Garden   Oct-99   Sharonville, OH     1972       248       1,184       8,077       1,499       1,184       9,575       10,759       (3,382 )     7,378       5,040  
Timbermill
  Garden   Oct-95   San Antonio, TX     1982       296       778       4,457       2,317       778       6,774       7,552       (2,867 )     4,685       2,692  
Timbertree
  Garden   Oct-97   Phoenix, AZ     1979       387       2,292       13,000       3,542       2,292       16,542       18,834       (6,843 )     11,990       5,680  
Towers Of Westchester Park, The
  High Rise   Jan-06   College Park, MD     1972       303       1,209       37,588       656       1,209       38,244       39,453       (13,854 )     25,599       10,860  
Township at Highlands
  Town Home   Nov-96   Littleton, CO     1985       161       1,615       9,773       4,139       1,536       13,992       15,528       (4,659 )     10,868       15,965  
Trails
  Garden   Apr-02   Nashville, TN     1985       248       685       10,242       1,115       685       11,356       12,041       (5,502 )     6,539       8,651  
Trails of Ashford
  Garden   May-98   Houston, TX     1979       514       2,650       14,985       3,195       2,650       18,180       20,830       (7,097 )     13,733       7,000  
Treetops
  Garden   Mar-01   San Bruno, CA     1987       308       3,703       62,460       13,046       3,703       75,506       79,209       (29,725 )     49,484       26,060  
Trinity Apartments
  Garden   Dec-97   Irving, TX     1985       496       2,053       12,387       3,536       2,053       15,923       17,976       (5,159 )     12,817       4,995  
Twin Lake Towers
  High Rise   Oct-99   Westmont, IL     1969       399       2,636       19,461       5,494       2,636       24,955       27,591       (11,123 )     16,468       10,638  


F-51


Table of Contents

                                                                                                     
                            (2)
    (3)
    December 31, 2006        
        (1)
                  Initial Cost     Cost Capitalized
                      Accumulated
    Total Cost
       
    Property
  Date
      Year
    Number
          Buildings and
    Subsequent to
          Buildings and
          Depreciation
    Net of
       
Property Name
  Type   Consolidated   Location   Built     of Units     Land     Improvements     Acquisition     Land     Improvements     Total     (AD)     AD     Encumbrances  
 
Twin Lakes Apartments
  Garden   Apr-00   Palm Harbor, FL     1986       262       2,018       12,754       2,027       2,018       14,781       16,799       (5,636 )     11,163       9,827  
Vantage Pointe
  Mid Rise   Aug-02   Swampscott, MA     1987       96       4,749       10,089       747       4,749       10,836       15,585       (2,308 )     13,276       8,475  
Verandahs at Hunt Club
  Garden   Jul-02   Apopka, FL     1985       210       1,848       8,400       929       1,848       9,329       11,177       (1,324 )     9,853       6,922  
Versailles
  Garden   Apr-02   Fort Wayne, IN     1969       156       369       6,104       965       369       7,069       7,438       (2,767 )     4,671       2,180  
Villa Del Sol
  Garden   Mar-02   Norwalk, CA     1972       121       7,294       4,861       1,591       7,476       6,270       13,746       (1,413 )     12,333       4,678  
Villa La Paz
  Garden   Jun-98   Sun City, CA     1988       96       573       3,370       644       573       4,015       4,588       (1,251 )     3,336       2,632  
Villa Nova Apartments
  Garden   Apr-00   Indianapolis, IN     1972       126       626       3,720       1,207       626       4,927       5,553       (1,324 )     4,229        
Village Creek at Brookhill
  Garden   Jul-94   Westminster, CO     1987       324       2,446       13,261       3,636       2,446       16,898       19,343       (7,109 )     12,234       13,037  
Village Crossing
  Garden   May-98   W. Palm Beach, FL     1986       189       1,618       9,757       2,214       1,618       11,971       13,589       (4,093 )     9,496       7,000  
Village East
  Garden   Jul-00   Colorado Springs, CO     1972       137       906       5,807       1,369       906       7,177       8,083       (2,990 )     5,093       2,000  
Village Gardens
  Garden   Oct-99   Fort Collins, CO     1973       141       830       5,784       896       830       6,680       7,511       (2,757 )     4,754       3,773  
Village Green Altamonte Springs
  Garden   Oct-02   Altamonte Springs, FL     1970       164       570       6,564       1,242       570       7,806       8,375       (3,246 )     5,129       3,071  
Village in the Woods
  Garden   Jan-00   Cypress, TX     1983       530       2,213       16,975       8,506       2,213       25,481       27,694       (8,461 )     19,233       11,945  
Village of Pennbrook
  Garden   Oct-98   Levitown, PA     1969       722       5,562       42,392       10,008       5,562       52,400       57,962       (14,469 )     43,494       39,528  
Village, The
  Garden   Jan-00   Barndon, FL     1986       112       570       5,700       995       570       6,695       7,265       (2,627 )     4,638       5,292  
Villages of Baymeadows
  Garden   Oct-99   Jacksonville, FL     1972       904       4,521       35,166       35,407       4,521       70,573       75,094       (20,681 )     54,413       40,000  
Villages of Bent Tree, Phase II
  Garden   Jan-06   Indianapolis, IN     1983       280       1,072       12,770       229       1,072       12,999       14,072       (4,776 )     9,296       7,950  
Villas at Little Turtle
  Garden   Sep-00   Westerville, OH     1985       160       1,309       5,513       1,154       1,309       6,668       7,977       (1,679 )     6,298       5,558  
Villas at Park La Brea, The
  Garden   Mar-02   Los Angeles, CA     2002       250       8,621       48,871       1,234       8,621       50,105       58,726       (6,844 )     51,882       34,867  
Vinings Peak
  Garden   Jan-00   Atlanta, GA     1980       280       1,830       15,148       3,408       1,830       18,556       20,386       (7,241 )     13,145       7,496  
Vista Del Lagos
  Garden   Dec-97   Chandler, AZ     1986       200       804       4,952       2,141       804       7,092       7,896       (2,508 )     5,388       2,944  
Vista Village
  Garden   Jan-06   El Paso, TX     1972       220       618       8,122       91       618       8,212       8,830       (5,263 )     3,567       3,181  
Walnut Springs
  Garden   Dec-96   San Antonio, TX     1983       224       970       5,119       1,868       970       6,987       7,957       (3,257 )     4,700       3,206  
Waterford Apartments, The
  Garden   Nov-96   Houston, TX     1984       312       983       6,801       2,845       983       9,645       10,629       (2,865 )     7,764       4,268  
Waterford Village
  Garden   Aug-02   Bridgewater, MA     1971       588       28,585       28,102       2,001       28,585       30,103       58,688       (9,168 )     49,519       32,886  
Watergate
  Garden   Jan-06   Little Rock, AR     1979       140       402       7,436       379       402       7,815       8,217       (5,100 )     3,117       2,625  
Waterways Village
  Garden   Jun-97   Aventura, FL     1991       180       4,504       11,064       2,515       4,504       13,579       18,083       (4,774 )     13,309       8,959  
Webb Bridge Crossing
  Garden   Sep-04   Alpharetta, GA     1985       164       959       6,261       2,374       959       8,634       9,593       (2,743 )     6,850       5,157  
West Lake Arms Apartments
  Garden   Oct-99   Indianapolis, IN     1977       1,381       3,684       27,139       15,053       3,684       42,191       45,875       (13,108 )     32,767       9,273  
West Winds
  Garden   Mar-04   Columbia, SC     1981       100       501       3,968       511       501       4,479       4,980       (1,413 )     3,567       2,123  
West Winds
  Garden   Oct-02   Orlando, FL     1985       272       3,122       10,683       1,668       3,122       12,351       15,473       (2,707 )     12,765       6,664  
West Woods
  Garden   Oct-00   Anappolis, MD     1981       57       1,557       1,891       734       1,557       2,624       4,181       (677 )     3,504       1,651  
Westgate
  Garden   Oct-99   Houston, TX     1971       313       1,920       11,222       2,395       1,920       13,618       15,537       (3,971 )     11,567       7,411  
Westway Village Apartments
  Garden   May-98   Houston, TX     1979       326       2,921       11,384       1,302       2,921       12,686       15,607       (5,055 )     10,552       7,639  
Wexford Village
  Garden   Aug-02   Worcester, MA     1974       264       6,339       17,939       956       6,339       18,894       25,233       (4,457 )     20,776       13,677  
Wickertree
  Garden   Oct-97   Phoenix, AZ     1983       226       1,225       6,923       1,917       1,225       8,839       10,065       (3,050 )     7,015       2,985  
Williams Cove
  Garden   Jul-94   Irving, TX     1984       260       1,227       6,659       2,862       1,227       9,521       10,748       (4,020 )     6,728       4,200  
Williamsburg
  Garden   May-98   Rolling Meadows, IL     1985       329       2,717       15,437       3,875       2,717       19,312       22,029       (6,796 )     15,233       9,685  
Williamsburg Manor
  Garden   Apr-00   Cary, NC     1972       183       1,432       8,175       1,536       1,432       9,711       11,143       (3,545 )     7,597       5,104  
Willow Park on Lake Adelaide
  Garden   Oct-99   Altamonte Springs, FL     1972       185       880       7,687       2,305       880       9,993       10,872       (4,378 )     6,494       6,228  
Willowick
  Garden   Oct-99   Greenville, SC     1974       180       537       4,775       878       537       5,653       6,190       (2,748 )     3,442       2,597  
Wilson Acres
  Garden   Apr-06   Greenville, NC     1979       146       744       4,374       152       1,175       4,095       5,270       (99 )     5,170       3,119  
Winchester Village Apartments
  Garden   Nov-00   Indianapolis, IN     1966       96       104       2,234       819       104       3,053       3,157       (1,052 )     2,105        
Winddrift (IN)
  Garden   Oct-00   Indianapolis, IN     1980       166       1,265       3,912       1,805       1,265       5,717       6,982       (1,609 )     5,374       4,737  
Windgate Place
  Garden   May-99   Charlotte, NC     1972       196       1,044       5,900       212       1,044       6,112       7,156       (2,599 )     4,557        
Windmere
  Garden   Jan-03   Houston, TX     1982       257       2,171       10,917       650       2,171       11,566       13,737       (3,955 )     9,783       5,180  
Windridge
  Garden   May-98   San Antonio, TX     1983       276       1,406       8,272       1,283       1,406       9,555       10,962       (3,598 )     7,363       4,830  
Windrift (CA)
  Garden   Mar-01   Oceanside, CA     1987       404       24,960       17,590       6,750       24,960       24,340       49,300       (7,192 )     42,108       28,999  
Windrift (FL)
  Garden   Oct-00   Orlando, FL     1987       288       3,696       10,029       2,440       3,696       12,469       16,165       (3,306 )     12,859       14,944  
Windsor at South Square
  Garden   Oct-99   Durham, NC     1972       230       1,326       8,329       1,929       1,326       10,258       11,585       (3,563 )     8,022       4,397  
Windsor Crossing
  Garden   Mar-00   Newport News, VA     1978       156       307       2,110       1,451       307       3,561       3,867       (1,474 )     2,393       2,841  


F-52


Table of Contents

                                                                                                     
                            (2)
    (3)
    December 31, 2006        
        (1)
                  Initial Cost     Cost Capitalized
                      Accumulated
    Total Cost
       
    Property
  Date
      Year
    Number
          Buildings and
    Subsequent to
          Buildings and
          Depreciation
    Net of
       
Property Name
  Type   Consolidated   Location   Built     of Units     Land     Improvements     Acquisition     Land     Improvements     Total     (AD)     AD     Encumbrances  
 
Windsor Park
  Garden   Mar-01   Woodbridge, VA     1987       220       4,279       15,970       1,224       4,279       17,194       21,472       (4,267 )     17,206       13,758  
Windward at the Villages
  Garden   Oct-97   W. Palm Beach, FL     1988       196       1,595       9,079       2,916       1,595       11,995       13,590       (3,457 )     10,133       2,469  
Wood Lake
  Garden   Jan-00   Atlanta, GA     1983       220       1,399       13,123       3,279       1,399       16,403       17,802       (6,357 )     11,445       6,638  
Wood View
  Garden   Jan-06   Atlanta, GA     1983       180       1,340       4,868       161       1,340       5,029       6,369       (4,105 )     2,264       4,936  
Woodcreek
  Garden   Oct-02   Mesa, AZ     1985       432       2,187       15,971       1,766       2,187       17,737       19,924       (7,781 )     12,142       14,346  
Woodfield Gardens
  Garden   May-99   Charlotte, NC     1974       132       402       2,276       795       402       3,071       3,474       (1,362 )     2,112        
Woodhollow
  Garden   Oct-97   Austin, TX     1974       108       658       3,728       1,051       658       4,779       5,437       (1,750 )     3,687       1,508  
Woodland Ridge
  Garden   Dec-00   Irving, TX     1984       130       600       3,617       976       600       4,593       5,193       (2,013 )     3,180       2,562  
Woods Edge
  Garden   Nov-04   Indianapolis, IN     1981       190       495       6,238       873       495       7,111       7,606       (1,152 )     6,454       4,799  
Woods of Burnsville
  Garden   Nov-04   Burnsville, MN     1984       400       2,354       20,488       1,308       2,354       21,795       24,149       (6,828 )     17,321       16,580  
Woods of Inverness
  Garden   Oct-99   Houston, TX     1983       272       1,427       11,698       1,544       1,427       13,242       14,669       (5,958 )     8,711       4,186  
Woods Of Williamsburg
  Garden   Jan-06   Williamsburg, VA     1976       125       430       4,024       291       430       4,315       4,746       (2,658 )     2,088       1,445  
Woodshire
  Garden   Mar-00   Virginia Beach, VA     1972       288       961       5,549       2,410       961       7,959       8,920       (2,371 )     6,549       6,632  
Wyntre Brook Apartments
  Garden   Oct-99   West Chester, PA     1976       212       1,010       9,283       10,234       1,010       19,517       20,527       (4,622 )     15,905       9,544  
Yorktown II Apartments
  High Rise   Dec-99   Lombard, IL     1973       368       2,971       18,163       5,951       2,971       24,114       27,085       (4,086 )     22,999       15,279  
Yorktree
  Garden   Oct-97   Carolstream, IL     1972       293       1,968       11,457       3,549       1,968       15,006       16,974       (5,379 )     11,595       4,807  
                         
                         
Total Conventional Properties
                        134,557       2,245,689       6,337,697       1,884,182       2,294,323       8,173,245       10,467,568       (2,410,198 )     8,057,370       5,466,111  
                         
                         
Affordable Properties
                                                                                                   
Adams Court
  Garden   Jan-06   Hempstead, NY     1981       84       94       6,047       63       94       6,110       6,204       (3,402 )     2,802       2,649  
All Hallows
  Garden   Jan-06   San Francisco, CA     1976       157       558       27,144       741       558       27,885       28,443       (10,222 )     18,221       2,806  
Alliance Towers
  High Rise   Mar-02   Lombard, IL     1971       101       530       1,934       572       530       2,506       3,036       (450 )     2,586       2,274  
Arrowsmith
  Garden   Mar-02   Corpus Christi, TX     1980       70       240       968       433       240       1,401       1,641       (364 )     1,277       1,362  
Arvada House
  High Rise   Nov-04   Arvada, CO     1977       88       641       3,314       1,671       405       5,221       5,627       (690 )     4,937       4,245  
Ashland Manor
  High Rise   Mar-02   East Moline, IL     1977       189       205       1,162       756       205       1,918       2,123       (372 )     1,751       1,109  
Aspen Stratford B
  High Rise   Oct-02   Newark, NJ     1920       60       362       2,887       697       362       3,584       3,945       (1,963 )     1,983       1,788  
Aspen Stratford C
  High Rise   Oct-02   Newark, NJ     1920       55       363       2,818       700       363       3,519       3,881       (1,895 )     1,986       1,576  
Baisley Park Gardens
  Mid Rise   Apr-02   Jamaica, NY     1982       212       1,765       12,309       2,992       1,765       15,301       17,065       (3,900 )     13,166       11,655  
Baldwin Oaks
  Mid Rise   Oct-99   Parsippany ,NJ     1980       251       746       8,516       1,217       746       9,733       10,479       (5,112 )     5,367       6,459  
Baldwin Towers
  High Rise   Jan-06   Pittsburgh, PA     1983       99       237       5,417       98       237       5,515       5,752       (3,222 )     2,531       2,266  
Bangor House
  High Rise   Mar-02   Bangor, ME     1979       121       1,140       4,595       702       1,140       5,296       6,436       (779 )     5,658       2,937  
Bannock Arms
  Garden   Mar-02   Boise, ID     1978       66       275       1,139       390       275       1,529       1,804       (319 )     1,485       1,439  
Bayview
  Garden   Jun-05   San Francisco, CA     1976       146       241       19,548       279       241       19,827       20,068       (6,704 )     13,364       2,440  
Beacon Hill
  High Rise   Mar-02   Hillsdale, MI     1980       198       1,380       5,524       1,378       1,380       6,902       8,282       (1,563 )     6,719       5,329  
Bedford House
  Mid Rise   Mar-02   Falmouth, KY     1979       48       230       919       190       230       1,109       1,339       (254 )     1,085       1,096  
Benjamin Banneker Plaza
  Mid Rise   Jan-06   Chester, PA     1976       70       79       4,236       289       79       4,525       4,604       (2,179 )     2,425       1,642  
Berger Apartments
  Mid Rise   Mar-02   New Haven, CT     1981       145       1,152       4,657       1,393       1,152       6,049       7,201       (1,265 )     5,936       2,250  
Biltmore Towers
  High Rise   Mar-02   Dayton, OH     1980       230       1,813       6,411       12,451       1,813       18,862       20,675       (3,486 )     17,189       10,802  
Blakewood
  Garden   Oct-05   Statesboro, GA     1973       42       23       1,187       251       23       1,438       1,461       (845 )     616       766  
Bloomsburg Towers
  Mid Rise   Jan-06   Bloomsburg, PA     1981       75       1       4,128       62       1       4,190       4,191       (2,377 )     1,813       1,641  
Bolton North
  High Rise   Jan-06   Baltimore, MD     1977       209       481       8,796       144       481       8,941       9,422       (5,083 )     4,339       2,999  
Brightwood Manor
  Garden   Jan-06   New Brighton, PA     1975       152       140       5,164       129       140       5,293       5,433       (3,193 )     2,240       1,554  
Broadmoor
  Garden   Jan-06   Riviera Beach, FL     1972       182       95       6,571       186       95       6,757       6,852       (4,094 )     2,758       1,014  
Brunswick House
  Mid Rise   Jan-06   Brunswick, MD     1980       52       79       2,828       60       79       2,889       2,967       (1,589 )     1,379       1,112  
Butternut Creek
  Mid Rise   Jan-06   Charlotte, MI     1980       100       702       4,215       117       702       4,332       5,035       (2,578 )     2,457       966  
Cache Creek Apartment Homes
  Mid Rise   Jun-04   Clearlake, CA     1986       80       1,545       9,405       416       1,545       9,821       11,366       (1,487 )     9,879       2,355  
California Square I
  High Rise   Jan-06   Louisville, KY     1982       101       154       5,704       152       154       5,855       6,010       (2,938 )     3,072       3,587  
California Square II
  Garden   Jan-06   Louisville, KY     1983       48       61       2,156       118       61       2,275       2,336       (1,268 )     1,068       1,585  
Campbell Heights
  High Rise   Oct-02   Washington, D.C.     1978       170       750       6,719       533       750       7,252       8,002       (2,061 )     5,942       8,067  
Canterbury Towers
  High Rise   Jan-06   Worcester, MA     1976       157       400       4,724       506       400       5,230       5,630       (2,732 )     2,898       6,105  
Carriage House (VA)
  Mid Rise   Dec-06   Petersburg, VA     1885       118       847       2,886       (0 )     847       2,886       3,733       (81 )     3,651       1,335  


F-53


Table of Contents

                                                                                                     
                            (2)
    (3)
    December 31, 2006        
        (1)
                  Initial Cost     Cost Capitalized
                      Accumulated
    Total Cost
       
    Property
  Date
      Year
    Number
          Buildings and
    Subsequent to
          Buildings and
          Depreciation
    Net of
       
Property Name
  Type   Consolidated   Location   Built     of Units     Land     Improvements     Acquisition     Land     Improvements     Total     (AD)     AD     Encumbrances  
 
Casa de Las Hermanitas
  Garden   Mar-02   Los Angeles, CA     1982       88       1,800       4,143       384       1,800       4,528       6,328       (844 )     5,484       1,763  
Castle Park
  Mid Rise   Mar-02   St. Louis, MO     1983       209       1,710       6,896       2,461       1,710       9,357       11,067       (2,041 )     9,026       9,009  
Castlewood
  Garden   Mar-02   Davenport, IA     1980       96       585       2,351       1,081       585       3,432       4,017       (712 )     3,305       3,548  
Centennial
  Garden   Mar-02   Fort Wayne, IN     1983       88       550       2,207       664       550       2,871       3,421       (701 )     2,720       2,970  
Cherry Ridge Terrace
  Garden   Mar-02   Northern Cambria, PA     1983       62       372       1,490       477       372       1,967       2,339       (479 )     1,860       1,223  
City Line
  Garden   Mar-02   Hampton, VA     1976       200       500       2,014       8,083       500       10,097       10,597       (813 )     9,784       5,068  
Clinton Manor
  Garden   Jan-06   Clinton, SC     1980       60       53       2,706       22       53       2,729       2,781       (2,153 )     628       890  
Clisby Towers
  Mid Rise   Jan-06   Macon, GA     1980       52       161       2,333       16       161       2,350       2,510       (1,539 )     972       1,087  
Coatesville Towers
  High Rise   Mar-02   Coatesville, PA     1979       90       500       2,011       430       500       2,441       2,941       (539 )     2,402       2,210  
Community Circle II
  Garden   Jan-06   Cleveland, OH     1975       129       210       4,751       111       210       4,863       5,073       (2,580 )     2,493       3,281  
Copperwood I Apartments
  Garden   Apr-06   The Woodlands, TX     1980       150       390       8,373       3,683       369       12,077       12,446       (2,370 )     10,075       5,660  
Copperwood II Apartments
  Garden   Oct-05   The Woodlands, TX     1981       150       452       5,552       1,549       425       7,128       7,554       (920 )     6,634       5,840  
Country Club Heights
  Garden   Mar-04   Quincy, IL     1976       200       676       5,715       4,715       676       10,430       11,106       (2,120 )     8,986       8,099  
Country Commons
  Garden   Jan-06   Bensalem, PA     1972       352       1,314       18,196       101       1,314       18,297       19,610       (7,969 )     11,642       6,797  
Courtyard
  Mid Rise   Jan-06   Cincinnati, OH     1980       137       642       5,597       40       642       5,637       6,278       (2,614 )     3,664       3,944  
Creekside Gardens
  Garden   Mar-02   Loveland, CO     1983       50       350       1,401       320       350       1,722       2,072       (492 )     1,579       1,735  
Creekview
  Garden   Mar-02   Stroudsburg, PA     1982       80       400       1,610       514       400       2,124       2,524       (396 )     2,128       2,764  
Crevenna Oaks
  Town Home   Jan-06   Burke, VA     1979       50       355       3,539       109       355       3,648       4,003       (1,860 )     2,143       1,302  
Crockett Manor
  Garden   Mar-04   Trenton, TN     1982       38       42       1,395       39       42       1,433       1,476       (101 )     1,375       978  
Cumberland Court
  Garden   Jan-06   Harrisburg, PA     1975       108       170       4,249       108       170       4,357       4,526       (2,683 )     1,844       1,538  
Daugette Tower
  High Rise   Mar-02   Gadsden, AL     1979       101       540       2,178       1,121       540       3,300       3,840       (733 )     3,106       753  
Delhaven Manor
  Mid Rise   Mar-02   Jackson, MS     1983       104       575       2,304       1,450       575       3,754       4,329       (731 )     3,598       3,809  
Denny Place
  Garden   Mar-02   North Hollywood, CA     1984       17       394       1,579       93       394       1,671       2,066       (294 )     1,771       1,147  
Druid Hills
  Garden   Jan-06   Walterboro, SC     1981       80       76       3,718       29       76       3,747       3,823       (2,780 )     1,043       1,358  
East Central Towers
  Mid Rise   Mar-02   Fort Wayne, IN     1980       167       800       3,203       416       800       3,619       4,419       (618 )     3,801       3,172  
East Farm Village
  High Rise   Mar-02   East Haven, CT     1981       240       2,800       11,188       1,778       2,800       12,965       15,765       (2,261 )     13,505       8,515  
Echo Valley
  Mid Rise   Mar-02   West Warwick, RI     1978       100       550       2,294       1,794       550       4,087       4,637       (859 )     3,779       4,267  
Elmwood
  Garden   Jan-06   Athens, AL     1981       80       185       2,804       130       185       2,934       3,119       (1,336 )     1,783       1,898  
Fairburn And Gordon II
  Garden   Jan-06   Atlanta, GA     1969       58       84       2,002       66       84       2,068       2,152       (1,200 )     952       235  
Fairwood
  Garden   Jan-06   Carmichael, CA     1979       86       166       5,275       125       166       5,400       5,566       (2,861 )     2,705       2,743  
Fleetwood Manor
  Garden   Jan-06   Greenville, SC     1980       100       238       3,623       38       238       3,661       3,899       (2,091 )     1,808       1,278  
Fountain Place
  Mid Rise   Jan-06   Connersville, IN     1980       102       423       3,193       47       423       3,240       3,663       (1,717 )     1,946       1,937  
Fox Run (TX)
  Garden   Mar-02   Orange, TX     1983       70       420       1,992       (0 )     420       1,992       2,412       (410 )     2,002       1,675  
Foxfire (MI)
  Garden   Jan-06   Jackson, MI     1975       160       782       6,927       499       782       7,427       8,209       (4,020 )     4,189       2,321  
Franklin Square School Apts
  Mid Rise   Jan-06   Baltimore, MD     1888       65       46       4,100       52       46       4,152       4,199       (1,758 )     2,440       2,276  
Friendset Apartments
  High Rise   Jan-06   Brooklyn, NY     1979       259       550       16,825       1,364       550       18,188       18,739       (8,379 )     10,360       7,538  
Friendship Arms
  Mid Rise   Mar-02   Hyattsville, MD     1979       151       970       3,887       897       970       4,784       5,754       (1,152 )     4,602       5,196  
Friendship Court
  Garden   Jan-06   Anderson, SC     1972       80       191       1,734       1       191       1,735       1,926       (216 )     1,710        
Frio
  Garden   Jan-06   Pearsall, TX     1980       63       109       2,425       141       109       2,566       2,675       (1,357 )     1,318       1,109  
Gary Manor
  High Rise   Mar-02   Gary, IN     1980       198       1,090       4,370       768       1,090       5,138       6,228       (931 )     5,297       5,297  
Gates Manor
  Garden   Mar-04   Clinton, TN     1981       80       266       2,225       291       266       2,516       2,782       (785 )     1,997       2,447  
Gateway Village
  Garden   Mar-04   Hillsborough, NC     1980       64       433       1,666       202       433       1,868       2,301       (352 )     1,948       1,525  
Gholson Hotel
  Mid Rise   Mar-02   Ranger, TX     1984       50       325       1,334       914       325       2,249       2,574       (303 )     2,271       2,132  
Glendale Terrace
  Garden   Jan-06   Aiken, SC     1972       60       38       1,554       15       38       1,570       1,608       (1,078 )     531       221  
Greenbriar
  Garden   Jan-06   Indianapolis, IN     1980       120       762       4,083       42       762       4,125       4,887       (2,404 )     2,483       1,462  
Hamlin Estates
  Garden   Mar-02   North Hollywood, CA     1983       30       1,010       1,691       133       1,010       1,824       2,834       (358 )     2,476       1,742  
Hanover Square
  High Rise   Jan-06   Baltimore, MD     1980       199       369       10,862       81       369       10,943       11,312       (5,338 )     5,974       6,283  
Harris Park Apartments
  Garden   Dec-97   Rochester, NY     1968       114       475       2,786       952       475       3,738       4,212       (1,479 )     2,733       601  
Hatillo Housing
  Mid Rise   Jan-06   Hatillo, PR     1982       64       177       2,901       37       177       2,938       3,115       (1,474 )     1,641       1,400  
Hemet Estates
  Garden   Mar-02   Hemet, CA     1983       80       700       2,802       2,367       652       5,217       5,869       (573 )     5,297       4,581  
Heritage House
  Mid Rise   Jan-06   Lewisburg, PA     1982       79       178       3,251       48       178       3,299       3,477       (1,706 )     1,771       2,140  


F-54


Table of Contents

                                                                                                     
                            (2)
    (3)
    December 31, 2006        
        (1)
                  Initial Cost     Cost Capitalized
                      Accumulated
    Total Cost
       
    Property
  Date
      Year
    Number
          Buildings and
    Subsequent to
          Buildings and
          Depreciation
    Net of
       
Property Name
  Type   Consolidated   Location   Built     of Units     Land     Improvements     Acquisition     Land     Improvements     Total     (AD)     AD     Encumbrances  
 
Heritage Square
  Garden   Mar-02   Texas City, TX     1983       50       668       859       336       668       1,195       1,863       (285 )     1,578       1,512  
Hickory Heights
  Garden   Jan-06   Abbeville, SC     1974       80       25       2,479       62       25       2,541       2,566       (1,551 )     1,015       443  
Highlawn Place
  High Rise   Mar-02   Huntington, WV     1977       133       550       2,204       718       550       2,922       3,472       (479 )     2,993       2,051  
Hillcrest Green
  Garden   Jan-06   Oklahoma City, OK     1973       96       204       3,264       50       204       3,314       3,518       (2,029 )     1,489       1,006  
Hillside Village
  Town Home   Jan-06   Catawissa, PA     1981       50       31       2,643       19       31       2,662       2,693       (1,440 )     1,252       1,240  
Hilltop
  Garden   Jan-06   Duquesne, PA     1975       152       153       7,311       119       153       7,431       7,584       (4,532 )     3,052       2,456  
Hopkins Village
  Mid Rise   Sep-03   Baltimore, MD     1979       165       857       4,207       834       857       5,041       5,897       (2,651 )     3,246       2,994  
Hudson Gardens
  Garden   Mar-02   Pasadena, CA     1983       41       914       1,548       168       914       1,716       2,631       (364 )     2,266       870  
Hudson Terrace
  Garden   Jan-06   Hudson, NY     1973       168       242       5,431       76       242       5,506       5,748       (3,184 )     2,564       1,474  
Indio Gardens
  Mid Rise   Oct-06   Indio, CA     1980       151             9,705                   9,705       9,705             9,705       6,400  
Ingram Square
  Garden   Jan-06   San Antonio, TX     1980       120       285       4,513       276       285       4,789       5,074       (2,369 )     2,705       2,664  
Jenny Lind Hall
  High Rise   Mar-04   Springfield, MO     1977       78       142       3,684       197       142       3,881       4,023       (175 )     3,848       1,099  
JFK Towers
  Mid Rise   Jan-06   Durham, NC     1983       177       335       8,386       75       335       8,461       8,795       (3,803 )     4,993       5,956  
Kalmia
  Garden   Jan-06   Graniteville, SC     1981       96       103       4,692       26       103       4,718       4,821       (3,066 )     1,755       1,974  
Kephart Plaza
  High Rise   Jan-06   Lock Haven, PA     1978       101       52       4,353       52       52       4,405       4,457       (2,522 )     1,935       1,775  
King Bell Apartments
  Garden   Jan-06   Milwaukie, OR     1982       62       204       2,497       86       204       2,583       2,787       (1,190 )     1,597       1,723  
Kirkwood House
  High Rise   Sep-04   Baltimore, MD     1979       261       1,746       6,663       443       1,746       7,106       8,852       (3,212 )     5,640       4,413  
Kubasek Trinity Manor (The Hollows)
  High Rise   Jan-06   Yonkers, NY     1981       130       8       8,354       202       8       8,555       8,563       (4,665 )     3,898       4,953  
Lafayette Commons
  Garden   Mar-04   West Lafayette, OH     1979       49       187       1,012       169       187       1,181       1,368       (168 )     1,201       873  
Lafayette Square
  Garden   Jan-06   Camden, SC     1978       72       64       1,953       23       64       1,976       2,039       (1,499 )     541       368  
Lakeview Arms
  Mid Rise   Jan-06   Poughkeepsie, NY     1981       72       111       3,256       119       111       3,375       3,486       (1,783 )     1,703       2,018  
Landau
  Garden   Oct-05   Clinton, SC     1970       80       47       2,837       78       47       2,915       2,962       (1,593 )     1,369       429  
Lasalle
  Garden   Oct-00   San Francisco, CA     1976       145       1,256       10,686       8,314       1,256       18,999       20,255       (5,269 )     14,986       3,116  
Laurelwood
  Garden   Jan-06   Morristown, TN     1981       65       75       1,870       85       75       1,955       2,030       (1,076 )     954       1,320  
Laurens Villa
  Garden   Jan-06   Laurens, SC     1980       60       53       2,540       275       53       2,816       2,868       (1,707 )     1,161       1,376  
Lavista
  Garden   Jan-06   Concord, CA     1981       75       565       5,073       144       565       5,218       5,783       (2,899 )     2,883       1,967  
Leona
  Garden   Dec-97   Uvalde, TX     1973       40       100       524       452       100       976       1,076       (469 )     607       372  
Lock Haven Gardens
  Garden   Jan-06   Lock Haven, PA     1979       150       169       7,040       121       169       7,161       7,330       (3,752 )     3,577       3,410  
Locust House
  High Rise   Mar-02   Westminster, MD     1979       99       650       2,604       463       650       3,067       3,717       (716 )     3,001       2,739  
Lodge Run
  Mid Rise   Jan-06   Portage, PA     1983       31       18       1,467       158       18       1,625       1,643       (1,040 )     603       580  
Long Meadow
  Garden   Jan-06   Cheraw, SC     1973       56       28       1,472       32       28       1,504       1,532       (986 )     546       286  
Loring Towers (MN)
  High Rise   Oct-02   Minneapolis, MN     1975       230       1,297       7,445       7,693       913       15,522       16,435       (3,297 )     13,138       8,222  
Loring Towers Apartments
  High Rise   Sep-03   Salem, MA     1973       250       727       7,740       2,715       727       10,454       11,182       (4,961 )     6,221       4,749  
Lynnhaven
  Garden   Mar-04   Durham, NC     1980       75       539       2,159       353       539       2,512       3,051       (375 )     2,676       1,981  
Maria Lopez Plaza
  Mid Rise   Jan-06   Bronx, NY     1982       216       498       17,754       170       498       17,924       18,422       (9,194 )     9,228       10,953  
Mill Pond
  Mid Rise   Jan-06   Tauton, MA     1982       49       70       2,714       124       70       2,838       2,908       (1,323 )     1,585       1,841  
Miramar Housing
  High Rise   Jan-06   Ponce, PR     1983       96       290       5,162       30       290       5,192       5,482       (2,558 )     2,924       3,116  
Montblanc Gardens
  Town Home   Dec-03   Yauco, PR     1982       128       391       3,859       726       391       4,584       4,975       (1,944 )     3,031       3,347  
Morrisania II
  High Rise   Jan-06   Bronx, NY     1979       203       404       16,038       398       404       16,436       16,840       (8,619 )     8,220       8,319  
Moss Gardens
  Mid Rise   Jan-06   Lafayette, LA     1980       114       125       4,218       61       125       4,278       4,403       (2,804 )     1,599       2,145  
New Baltimore
  Mid Rise   Mar-02   New Baltimore, MI     1980       101       888       2,360             888       2,360       3,248       (410 )     2,838        
New Vistas I
  Garden   Jan-06   Chicago, IL     1925       148       181       7,388       41       181       7,428       7,609       (5,072 )     2,537       1,825  
Newberry Arms
  Garden   Jan-06   Newberry, SC     1979       60       84       2,728       17       84       2,745       2,829       (1,780 )     1,048       872  
Newberry Park
  Garden   Dec-97   Chicago, IL     1985       84       1,150       7,862       373       1,150       8,236       9,386       (2,033 )     7,353       7,678  
Northlake Village
  Garden   Oct-00   Lima, OH     1971       150       487       1,317       1,177       487       2,494       2,980       (992 )     1,988       1,012  
Northpoint
  Garden   Jan-00   Chicago, IL     1921       304       2,280       14,334       15,176       2,510       29,279       31,789       (7,395 )     24,395       20,807  
Northwinds, The
  Garden   Mar-02   Wytheville, VA     1978       144       500       2,012       1,011       500       3,024       3,524       (761 )     2,763       1,945  
Oakwood Apartments
  Town Home   Mar-04   Cuthbert, GA     1982       50       188       1,058       398       188       1,456       1,644       (517 )     1,127       1,725  
Oakwood Gardens
  High Rise   Jan-06   Mount Vernon, NY     1930       100       202       8,733       259       202       8,992       9,194       (3,686 )     5,508       4,401  
Oakwood Manor
  Garden   Mar-04   Milan, TN     1984       34       95       498       28       95       527       622       (97 )     525       439  


F-55


Table of Contents

                                                                                                     
                            (2)
    (3)
    December 31, 2006        
        (1)
                  Initial Cost     Cost Capitalized
                      Accumulated
    Total Cost
       
    Property
  Date
      Year
    Number
          Buildings and
    Subsequent to
          Buildings and
          Depreciation
    Net of
       
Property Name
  Type   Consolidated   Location   Built     of Units     Land     Improvements     Acquisition     Land     Improvements     Total     (AD)     AD     Encumbrances  
 
Ocala Place
  Garden   Jan-06   Ocala, FL     1980       40       93       1,420       192       93       1,612       1,705       (829 )     876       626  
Olde Towne West I
  Mid Rise   Jan-06   Alexandria, VA     1976       172       130       5,664       1,558       130       7,222       7,351       (3,714 )     3,637       8,715  
Olde Towne West II
  Garden   Oct-02   Alexandria, VA     1977       72       214       2,865       481       214       3,346       3,560       (1,443 )     2,117       2,735  
Olde Towne West III
  Garden   Apr-00   Alexandria, VA     1978       75       581       3,463       1,435       581       4,898       5,479       (1,319 )     4,160       3,476  
O’Neil
  High Rise   Jan-06   Troy, NY     1978       115       77       4,078       427       77       4,506       4,583       (2,826 )     1,757       1,633  
Orange Village
  Garden   Jan-06   Hermitage, PA     1979       81       53       3,432       97       53       3,529       3,582       (1,962 )     1,619       1,880  
Orangeburg Manor
  Garden   Jan-06   Orangeburg, SC     1979       100       150       2,934       269       150       3,202       3,352       (2,001 )     1,351       1,263  
Overbrook Park
  Garden   Jan-06   Chillicothe, OH     1981       50       109       2,309       73       109       2,381       2,490       (1,144 )     1,347       1,489  
Oxford House
  Mid Rise   Mar-02   Deactur, IL     1979       156       993       4,164       332       993       4,495       5,488       (1,062 )     4,426       3,589  
Palm Springs Senior
  Garden   Mar-02   Palm Springs, CA     1981       116             8,745       (0 )           8,745       8,745       (1,347 )     7,398       7,330  
Panorama Park
  Garden   Mar-02   Bakersfield, CA     1982       66       570       2,288       325       570       2,613       3,183       (610 )     2,573       2,318  
Parc Chateau I
  Garden   Jan-06   Lithonia, GA     1973       86       124       3,349       53       124       3,402       3,526       (2,140 )     1,386       630  
Parc Chateau II
  Garden   Jan-06   Lithonia, GA     1974       88       147       3,414       45       147       3,459       3,606       (2,214 )     1,392       634  
Park Avenue Towers (PA)
  Garden   Oct-00   Wilkes-Barre, PA     1978       130       292       2,546       535       292       3,080       3,373       (1,449 )     1,924       2,195  
Park Place
  Mid Rise   Jun-05   St Louis, MO     1977       242       742       6,327       7,386       722       13,733       14,456       (1,794 )     12,662       9,970  
Park Place Texas
  Garden   Mar-02   Cleveland, TX     1983       60       390       1,587       360       390       1,948       2,338       (388 )     1,950       1,877  
Park Vista
  Garden   Oct-05   Anaheim, CA     1958       392       7,727       26,779       1,046       7,727       27,824       35,551       (5,396 )     30,156       38,024  
Parkview
  Garden   Mar-02   Sacramento, CA     1980       97       1,060       4,240       974       1,060       5,214       6,274       (1,015 )     5,259       2,681  
Parkways, The
  Garden   Jun-04   Chicago, IL     1925       446       3,684       23,257       13,320       3,431       36,830       40,261       (5,461 )     34,800       23,859  
Patman Switch
  Garden   Jan-06   Hughes Springs, TX     1978       82       202       1,906       516       202       2,423       2,625       (1,350 )     1,275       1,247  
Pavillion
  High Rise   Mar-04   Philadelphia, PA     1976       296             15,416       387             15,803       15,803       (1,940 )     13,863       10,080  
Pine Haven Villas
  Garden   Jan-06   Columbia, SC     1981       80       116       4,018       38       116       4,055       4,172       (2,371 )     1,801       1,711  
Pinebluff Village
  Mid Rise   Jan-06   Salisbury, MD     1980       151       291       7,998       222       291       8,220       8,511       (4,952 )     3,559       2,457  
Pinewood Place
  Garden   Mar-02   Toledo, OH     1979       99       420       1,698       942       420       2,639       3,059       (634 )     2,425       2,023  
Pleasant Hills
  Garden   Apr-05   Austin, TX     1982       100       1,188       2,631       3,244       1,229       5,833       7,062       (639 )     6,424       3,255  
Plummer Village
  Mid Rise   Mar-02   North Hills, CA     1983       75       624       2,647       697       624       3,344       3,968       (710 )     3,258        
Portland Plaza
  Garden   Jan-06   Louisville, KY     1983       71             2,926       49             2,976       2,976       (1,529 )     1,447       1,543  
Portner Place
  Town Home   Jan-06   Washington, DC     1980       48       1       3,558       15       1       3,573       3,574       (2,173 )     1,400       1,467  
Post Street Apartments
  High Rise   Jan-06   Yonkers, NY     1930       56       104       3,359       299       104       3,658       3,762       (1,913 )     1,849       1,806  
Pride Gardens
  Garden   Dec-97   Flora, MS     1975       76       102       1,071       1,395       102       2,466       2,568       (1,002 )     1,566       1,122  
Rancho California
  Garden   Jan-06   Temecula, CA     1984       55       356       5,594       91       356       5,685       6,041       (2,047 )     3,995       2,118  
Renwick Gardens
  High Rise   Jan-06   New York, NY     1979       224       402       17,402       1,437       402       18,839       19,241       (9,247 )     9,994       22,987  
Ridgewood (La Loma)
  Garden   Mar-02   Sacramento, CA     1980       75       700       2,804       501       700       3,305       4,005       (614 )     3,391       1,936  
Ridgewood Towers
  High Rise   Mar-02   East Moline, IL     1977       140       698       2,803       455       698       3,258       3,955       (732 )     3,223       1,899  
River Village
  High Rise   Jan-06   Flint, MI     1980       340       1,639       13,994       380       1,639       14,373       16,012       (7,112 )     8,900       8,496  
River’s Edge
  Town Home   Jan-06   Greenville, MI     1983       49       205       2,203       51       205       2,254       2,459       (1,400 )     1,059       993  
Riverwoods
  High Rise   Jan-06   Kankakee, IL     1983       125       254       8,362       83       254       8,445       8,699       (4,156 )     4,543       3,751  
Robbie Robinson
  Garden   Oct-05   Savannah, GA     1921       100       554       3,097       127       554       3,223       3,777       (272 )     3,505       3,200  
Rosedale Court Apartments
  Garden   Mar-04   Dawson Springs, KY     1981       40       194       1,177       114       194       1,291       1,485       (372 )     1,113       919  
Round Barn
  Garden   Mar-02   Champaign, IL     1979       156       1,015       4,387       549       1,015       4,936       5,951       (1,142 )     4,809       3,746  
Ruscombe Gardens
  Mid Rise   Jan-06   Baltimore, MD     1983       151       215       8,985       47       215       9,032       9,247       (4,399 )     4,848       3,651  
Rutherford Park
  Town Home   Jan-06   Hummelstown, PA     1981       85       376       4,814       46       376       4,859       5,235       (2,451 )     2,784       2,915  
San Jose Apartments
  Garden   Sep-05   San Antonio, TX     1970       220       404       5,770       14       404       5,783       6,187       (569 )     5,618        
San Juan Del Centro
  Mid Rise   Sep-05   Boulder, CO     1971       150       243       7,110       1       243       7,110       7,354       (774 )     6,580       12,362  
Sandy Hill Terrace
  High Rise   Mar-02   Norristown, PA     1980       175       1,650       6,599       1,664       1,650       8,263       9,913       (1,661 )     8,252       4,244  
Sandy Springs
  Garden   Mar-05   Macon, GA     1979       74       153       1,736       505       153       2,241       2,393       (1,200 )     1,193       2,150  
School Street
  Mid Rise   Jan-06   Taunton, MA     1920       75       181       4,373       272       181       4,645       4,826       (2,267 )     2,559       3,842  
Sharp-Leadenhall I
  Town Home   Mar-04   Baltimore, MD     1981       155       1,399       5,434       570       1,399       6,004       7,403       (1,423 )     5,980       5,656  
Sharp-Leadenhall II
  Town Home   Sep-03   Baltimore, MD     1981       37       171       1,636       270       171       1,906       2,076       (827 )     1,249       1,140  
Sheraton Towers
  High Rise   Mar-02   High Point, NC     1981       97       525       2,159       711       525       2,870       3,395       (527 )     2,868       3,292  
Sherman Hills
  High Rise   Jan-06   Wilkes-Barre, PA     1976       344       1,118       16,470       60       1,118       16,530       17,649       (12,423 )     5,226       3,923  


F-56


Table of Contents

                                                                                                     
                            (2)
    (3)
    December 31, 2006        
        (1)
                  Initial Cost     Cost Capitalized
                      Accumulated
    Total Cost
       
    Property
  Date
      Year
    Number
          Buildings and
    Subsequent to
          Buildings and
          Depreciation
    Net of
       
Property Name
  Type   Consolidated   Location   Built     of Units     Land     Improvements     Acquisition     Land     Improvements     Total     (AD)     AD     Encumbrances  
 
Shoreview
  Garden   Oct-99   San Francisco, CA     1976       156       633       8,610       10,151       633       18,761       19,394       (5,987 )     13,407       3,281  
South Bay Villa
  Garden   Mar-02   Los Angeles, CA     1981       80       663       2,770       3,456       659       6,230       6,889       (1,048 )     5,842        
South Park
  Garden   Mar-02   Elyria, OH     1970       138       200       931       1,838       200       2,769       2,969       (557 )     2,412       602  
Spring Manor
  Mid Rise   Jan-06   Holidaysburg, PA     1983       51       117       2,574       252       117       2,826       2,943       (1,863 )     1,079       1,019  
St. George Villas
  Garden   Jan-06   St. George, SC     1984       40       82       1,029       29       82       1,058       1,140       (616 )     524       565  
Sterling Village
  Town Home   Mar-02   San Bernadino, CA     1983       80       549       3,459       1,575       549       5,034       5,583       (527 )     5,056       4,481  
Stonegate Village
  Garden   Oct-00   New Castle, IN     1970       122       313       1,895       782       322       2,668       2,991       (631 )     2,360       567  
Strawbridge Square
  Garden   Oct-99   Alexandria, VA     1979       128       662       3,508       2,614       662       6,122       6,783       (1,495 )     5,288       7,196  
Sumler Terrace
  Garden   Jan-06   Norfolk, VA     1976       126       215       4,400       56       215       4,456       4,671       (3,075 )     1,596       1,591  
Summit Oaks
  Town Home   Jan-06   Burke, VA     1980       50       382       3,940       75       382       4,015       4,397       (1,944 )     2,453       1,648  
Suntree
  Garden   Jan-06   St. Johns, MI     1980       121       377       6,513       145       377       6,659       7,036       (3,442 )     3,594       2,023  
Swift Creek
  Garden   Jan-06   Hartsville, SC     1981       72       105       3,470       174       105       3,643       3,749       (2,423 )     1,326       1,638  
Tabor Towers
  Mid Rise   Jan-06   Lewisburg, WV     1979       84       155       3,369       46       155       3,415       3,570       (1,780 )     1,790       2,034  
Tamarac Pines Apartments I
  Garden   Nov-04   Woodlands, TX     1980       144       140       2,775       3,378       365       5,927       6,292       (1,037 )     5,255       4,376  
Tamarac Pines Apartments II
  Garden   Nov-04   Woodlands, TX     1980       156       142       3,195       3,668       266       6,738       7,004       (1,165 )     5,839       4,741  
Terraces
  Mid Rise   Jan-06   Kettering, OH     1979       102       503       3,873       36       503       3,910       4,412       (2,208 )     2,204       2,561  
Terry Manor
  Mid Rise   Oct-05   Los Angeles, CA     1977       170       1,775       5,848       3,873       1,745       9,751       11,496       (399 )     11,097        
The Club
  Garden   Jan-06   Lexington, NC     1972       87       66       2,560       112       66       2,672       2,738       (1,525 )     1,213       481  
The Glens
  Garden   Jan-06   Rock Hill, SC     1982       88       90       4,885       215       90       5,099       5,189       (2,882 )     2,307       2,341  
Tompkins Terrace
  Garden   Oct-02   Beacon, NY     1974       193       872       4,943       1,158       872       6,102       6,974       (1,225 )     5,749       2,617  
Trestletree Village
  Garden   Mar-02   Atlanta, GA     1981       188       1,150       4,655       753       1,150       5,408       6,558       (1,314 )     5,244       3,796  
Twentynine Palms
  Garden   Mar-02   Twenty-Nine Palms, CA     1983       48       311       1,247       381       311       1,628       1,939       (401 )     1,538       1,423  
United Front Homes
  Garden   Oct-06   New Bedford, MA     1900       200       1,792       16,170             1,792       16,170       17,963       (3,880 )     14,082       4,065  
United House
  High Rise   Jan-06   Scranton, PA     1978       91       236       3,818       25       236       3,842       4,078       (2,380 )     1,699       2,260  
University Square
  High Rise   Mar-05   Philadelphia, PA     1978       442       263       12,708       8,141       263       20,849       21,113       (3,714 )     17,399       14,217  
Van Nuys Apartments
  High Rise   Mar-02   Los Angeles, CA     1981       299       4,337       16,377       1,602       4,337       17,979       22,316       (3,171 )     19,145       16,738  
Vantage ’78
  Garden   Jan-06   Charlotte, NC     1957       168       656       5,732       143       656       5,874       6,530       (3,255 )     3,275       2,513  
Victory Square
  Garden   Mar-02   Canton, OH     1975       81       215       889       299       215       1,188       1,403       (354 )     1,049       895  
Villa Hermosa Apartments
  Mid Rise   Oct-02   New York, NY     1920       272       1,815       10,312       2,906       1,815       13,217       15,033       (4,661 )     10,371       7,308  
Village Oaks
  Mid Rise   Jan-06   Catonsville, MD     1980       181       1,156       6,160       1,408       1,156       7,567       8,723       (3,935 )     4,788       5,083  
Village of Kaufman
  Garden   Mar-05   Kaufman, TX     1981       68       370       1,606       63       370       1,669       2,039       (357 )     1,682       1,376  
Vista Park Chino
  Garden   Mar-02   Chino, CA     1983       40       380       1,521       265       380       1,787       2,167       (427 )     1,740       1,609  
Wah Luck House
  High Rise   Jan-06   Washington, DC     1982       153             11,198       94             11,292       11,292       (5,563 )     5,729       10,585  
Walhalla Gardens II
  Garden   Jan-06   Walhalla, SC     1972       36       16       973       25       16       998       1,015       (674 )     341       138  
Walnut Hills
  High Rise   Jan-06   Cincinnati, OH     1983       198       693       10,344       40       693       10,385       11,078       (5,319 )     5,759       6,787  
Wasco Arms
  Garden   Mar-02   Wasco, CA     1982       78       625       2,519       685       625       3,205       3,830       (790 )     3,040       3,126  
Washington Square West
  Mid Rise   Sep-04   Philadelphia, PA     1982       132       555       11,169       4,912       555       16,081       16,636       (3,348 )     13,288       4,043  
West 135th Street
  Mid Rise   Dec-97   New York, NY     1979       198       1,212       8,031       4,795       1,212       12,826       14,038       (5,016 )     9,022       13,626  
Westminster Oaks
  Town Home   Jan-06   Springfield, VA     1982       50             3,517       139             3,657       3,657       (1,707 )     1,950       1,147  
Westwood Terrace
  Mid Rise   Mar-02   Moline, IL     1976       97       720       3,242       313       720       3,555       4,275       (632 )     3,642       2,084  
White Cliff
  Garden   Mar-02   Lincoln Heights, OH     1977       72       215       938       284       215       1,222       1,437       (325 )     1,112       1,019  
Whitefield Place
  Garden   Apr-05   San Antonio, TX     1980       80       223       3,151       2,477       223       5,628       5,851       (902 )     4,949       1,981  
Wickford
  Garden   Mar-04   Henderson, NC     1983       44       247       946       37       247       983       1,231       (246 )     985       736  
Wilderness Trail
  High Rise   Mar-02   Pineville, KY     1983       124       1,010       4,048       292       1,010       4,339       5,349       (711 )     4,639       4,664  
Wilkes Towers
  High Rise   Mar-02   North Wilkesboro, NC     1981       72       410       1,680       423       410       2,103       2,513       (375 )     2,138       1,888  
Willowwood
  Garden   Mar-02   North Hollywood, CA     1984       19       1,051       840       125       1,051       965       2,016       (178 )     1,838       1,099  
Winnsboro Arms
  Garden   Jan-06   Winnsboro, SC     1978       60       71       1,898       48       71       1,946       2,017       (1,325 )     692       362  
Winter Gardens
  High Rise   Mar-04   St Louis, MO     1920       112       300       3,072       4,322       300       7,394       7,694       (629 )     7,065       3,965  
Woodcrest
  Garden   Dec-97   Odessa, TX     1972       80       41       229       297       41       526       567       (410 )     156       449  


F-57


Table of Contents

                                                                                                     
                            (2)
    (3)
    December 31, 2006        
        (1)
                  Initial Cost     Cost Capitalized
                      Accumulated
    Total Cost
       
    Property
  Date
      Year
    Number
          Buildings and
    Subsequent to
          Buildings and
          Depreciation
    Net of
       
Property Name
  Type   Consolidated   Location   Built     of Units     Land     Improvements     Acquisition     Land     Improvements     Total     (AD)     AD     Encumbrances  
 
Woodland
  Garden   Jan-06   Spartanburg, SC     1972       100       182       663       1,100       182       1,763       1,945       (184 )     1,762       332  
Woodland Hills
  Garden   Oct-05   Jackson, MI     1980       125       541       3,875       3,110       326       7,199       7,526       (490 )     7,036        
Yadkin
  Mid Rise   Mar-04   Salisbury, NC     1912       67       242       1,982       283       242       2,265       2,507       (809 )     1,698       1,841  
                         
                         
Total Affordable Properties
                        27,875       126,227       1,148,893       233,478       125,621       1,382,978       1,508,599       (488,485 )     1,020,114       798,982  
                         
                         
Other (4)
                                1,005       4,791       523       1,004       5,314       6,318       (2,584 )     3,734          
                         
                         
                          162,432     $ 2,372,921     $ 7,491,381     $ 2,118,183     $ 2,420,948     $ 9,561,537     $ 11,982,485     $ (2,901,267 )   $ 9,081,218     $ 6,265,093  
                         
                         
 
 
(1) Date we acquired the property or first consolidated the partnership which owns the property.
 
(2) Initial cost includes the tendering costs to acquire the minority interest share of our consolidated real estate partnerships.
 
(3) Costs capitalized subsequent to acquisition includes costs capitalized since acquisition or first consolidation of the partnership/property.
 
(4) Other includes land parcels and commercial properties.


F-58


Table of Contents

APARTMENT INVESTMENT AND MANAGEMENT COMPANY
 
REAL ESTATE AND ACCUMULATED DEPRECIATION
For the Years Ended December 31, 2006, 2005 and 2004
(In Thousands)
 
                         
    2006     2005     2004  
 
Real Estate
                       
Balance at beginning of year
  $ 10,198,524     $ 9,327,670     $ 8,470,451  
Additions during the year:
                       
Newly consolidated assets(1)
    1,146,086       260,715       277,580  
Acquisitions
    184,986       288,212       393,088  
Foreclosures
                2,022  
Capital expenditures
    485,758       436,781       301,937  
Deductions during the year:
                       
Casualty and other write-offs
    (21,192 )     (18,872 )     (13,869 )
Assets held for sale reclassification(2)
    (11,677 )     (95,982 )     (103,539 )
                         
Balance at end of year
  $ 11,982,485     $ 10,198,524     $ 9,327,670  
                         
Accumulated Depreciation
                       
Balance at beginning of year
  $ 2,009,286     $ 1,655,220     $ 1,391,353  
Additions during the year:
                       
Depreciation
    468,186       412,701       346,156  
Newly consolidated assets(1)
    452,824       40,277       (31,208 )
Deductions during the year:
                       
Casualty and other write-offs
    (5,604 )     (3,191 )     (4,038 )
Assets held for sale reclassification(2)
    (23,425 )     (95,721 )     (47,043 )
                         
Balance at end of year
  $ 2,901,267     $ 2,009,286     $ 1,655,220  
                         
 
 
(1) Includes acquisition of limited partnership interests and related activity.
 
(2) Represents activity on properties that have been sold or classified as held for sale that is included in the line items above.


F-59


Table of Contents

EXHIBIT INDEX
 
         
Exhibit No.
 
Description
 
  2 .1   Agreement and Plan of Merger, dated as of December 3, 2001, by and among Apartment Investment and Management Company, Casden Properties, Inc. and XYZ Holdings LLC (Exhibit 2.1 to Aimco’s Current Report on Form 8-K, filed December 6, 2001, is incorporated herein by this reference)
  3 .1   Charter (Exhibit 3.1 to Aimco’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2006, is incorporated herein by this reference)
  3 .2   Bylaws (Exhibit 3.2 to Aimco’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2001, is incorporated herein by this reference)
  10 .1   Fourth Amended and Restated Agreement of Limited Partnership of AIMCO Properties, L.P., dated as of July 29, 1994 as amended and restated as of February 28, 2007
  10 .2   Amended and Restated Secured Credit Agreement, dated as of November 2, 2004, by and among Aimco, AIMCO Properties, L.P., AIMCO/Bethesda Holdings, Inc., and NHP Management Company as the borrowers and Bank of America, N.A., Keybank National Association, and the Lenders listed therein (Exhibit 4.1 to Aimco’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2004, is incorporated herein by this reference)
  10 .3   First Amendment to Amended and Restated Secured Credit Agreement, dated as of June 16, 2005, by and among Aimco, AIMCO Properties, L.P., AIMCO/Bethesda Holdings, Inc., and NHP Management Company as the borrowers and Bank of America, N.A., Keybank National Association, and the Lenders listed therein (Exhibit 10.1 to Aimco’s Current Report on Form 8-K, dated June 16, 2005, is incorporated herein by this reference)
  10 .4   Second Amendment to Amended and Restated Senior Secured Credit Agreement, dated as of March 22, 2006, by and among Aimco, AIMCO Properties, L.P., and AIMCO/Bethesda Holdings, Inc., as the borrowers, and Bank of America, N.A., Keybank National Association, and the lenders listed therein (Exhibit 10.1 to Aimco’s Current Report on Form 10-K, dated March 22, 2006, is incorporated herein by this reference)
  10 .5   Master Indemnification Agreement, dated December 3, 2001, by and among Apartment Investment and Management Company, AIMCO Properties, L.P., XYZ Holdings LLC, and the other parties signatory thereto (Exhibit 2.3 to Aimco’s Current Report on Form 8-K, filed December 6, 2001, is incorporated herein by this reference)
  10 .6   Tax Indemnification and Contest Agreement, dated December 3, 2001, by and among Apartment Investment and Management Company, National Partnership Investments, Corp., and XYZ Holdings LLC and the other parties signatory thereto (Exhibit 2.4 to Aimco’s Current Report on Form 8-K, filed December 6, 2001, is incorporated herein by this reference)
  10 .7   Limited Liability Company Agreement of AIMCO JV Portfolio #1, LLC dated as of December 30, 2003 by and among AIMCO BRE I, LLC, AIMCO BRE II, LLC and SRV-AJVP#1, LLC (Exhibit 10.54 to Aimco’s Annual Report on Form 10-K for the year ended December 31, 2003, is incorporated herein by this reference)
  10 .8   Employment Contract executed on July 29, 1994 by and between AIMCO Properties, L.P. and Terry Considine (Exhibit 10.44C to Aimco’s Annual Report on Form 10-K for the year ended December 31, 1994, is incorporated herein by this reference)*
  10 .9   Apartment Investment and Management Company 1997 Stock Award and Incentive Plan (October 1999) (Exhibit 10.26 to Aimco’s Annual Report on Form 10-K for the year ended December 31, 1999, is incorporated herein by this reference)*
  10 .10   Form of Restricted Stock Agreement (1997 Stock Award and Incentive Plan) (Exhibit 10.11 to Aimco’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 1997, is incorporated herein by this reference)*
  10 .11   Form of Incentive Stock Option Agreement (1997 Stock Award and Incentive Plan) (Exhibit 10.42 to Aimco’s Annual Report on Form 10-K for the year ended December 31, 1998, is incorporated herein by this reference)*


Table of Contents

         
Exhibit No.
 
Description
 
  21 .1   List of Subsidiaries
  23 .1   Consent of Independent Registered Public Accounting Firm
  31 .1   Certification of Chief Executive Officer pursuant to Securities Exchange Act Rules 13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
  31 .2   Certification of Chief Financial Officer pursuant to Securities Exchange Act Rules 13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
  32 .1   Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
  32 .2   Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
  99 .1   Agreement re: disclosure of long-term debt instruments
 
 
(1) Schedule and supplemental materials to the exhibits have been omitted but will be provided to the Securities and Exchange Commission upon request.
 
(2) The file reference number for all exhibits is 001-13232, and all such exhibits remain available pursuant to the Records Control Schedule of the Securities and Exchange Commission.
 
Management contract or compensatory plan or arrangement