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Exhibit 99.1

Item 6. SELECTED FINANCIAL DATA

The following table sets forth selected consolidated financial and other information as of and for each of the years in the five-year period ended December 31, 2005. The table should be read in conjunction with our consolidated financial statements and the notes thereto, and Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations, included elsewhere in this Report.


	Years ended December 31,
	2005			2004			2003			2002			2001
	*(in thousands, except per share data and apartment homes owned)*
Operating Data (a)
Rental income	$	662,031		$	513,610		$	450,630		$	429,714		$	398,188
Income/(loss) before minority interests and discontinued operations		2,010			6,227			5,244			(31,041	)		(14,591	)
Income from discontinued operations, net of minority interests		152,469			89,896			63,126			81,992			75,162
Net income		155,166			97,152			70,404			53,229			61,828
Distributions to preferred stockholders		15,370			19,531			26,326			27,424			31,190
Net income available to common stockholders		139,796			71,892			24,807			25,805			27,142
Common distributions declared		163,690			152,203			134,876			118,888			108,956
Weighted average number of common shares outstanding — basic		136,143			128,097			114,672			106,078			100,339
Weighted average number of common shares outstanding — diluted		136,143			128,097			114,672			106,078			100,339
Weighted average number of common shares, OP Units, and common stock equivalents outstanding — diluted		150,141			145,842			136,975			127,838			120,728
Per share — basic and diluted:
Loss from continuing operations available to common stockholders, net of minority interests	$	(0.09	)	$	(0.14	)	$	(0.33	)	$	(0.53	)	$	(0.48	)
Income from discontinued operations, net of minority interests		1.12			0.70			0.55			0.77			0.75
Net income available to common stockholders		1.03			0.56			0.22			0.24			0.27
Common distributions declared		1.20			1.17			1.14			1.11			1.08
Balance Sheet Data
Real estate owned, at carrying value	$	5,512,424		$	5,243,296		$	4,351,551		$	3,967,483		$	3,907,667
Accumulated depreciation		1,123,829			1,007,887			896,630			748,733			646,366
Total real estate owned, net of accumulated depreciation		4,388,595			4,235,409			3,454,921			3,218,750			3,261,301
Total assets		4,541,593			4,332,001			3,543,643			3,276,136			3,348,091
Secured debt		1,116,259			1,197,924			1,018,028			1,015,740			974,177
Unsecured debt		2,043,518			1,682,058			1,114,009			1,041,900			1,090,020
Total debt		3,159,777			2,879,982			2,132,037			2,057,640			2,064,197
Stockholders’ equity		1,107,724			1,195,451			1,163,436			1,001,271			1,042,725
Number of common shares outstanding		134,012			136,430			127,295			106,605			103,133
Other Data
*Cash Flow Data*
Cash provided by operating activities	$	248,186		$	251,747		$	234,945		$	229,001		$	224,411
Cash used in investing activities		(219,017	)		(595,966	)		(304,217	)		(67,363	)		(64,055	)
Cash (used in)/provided by financing activities		(21,530	)		347,299			70,944			(163,127	)		(166,020	)
*Funds from Operations* (b)
Funds from operations — basic	$	238,254		$	211,670		$	193,750		$	153,016		$	159,202
Funds from operations — diluted		241,980			219,557			208,431			168,795			174,630
*Apartment Homes Owned*
Total apartment homes owned at December 31		74,875			78,855			76,244			74,480			77,567
Weighted average number of apartment homes owned during the year		76,069			76,873			74,550			76,567			76,487


(a)		Reclassified to conform to current year presentation in accordance with FASB Statement No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” as described in Note 3 to the consolidated financial statements.

(b)		Funds from operations, or FFO, is defined as net income (computed in accordance with generally accepted accounting principles), excluding gains (or losses) from sales of depreciable property, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. This definition conforms with the National Association of Real Estate Investment Trust’s definition issued in April 2002. We consider FFO in evaluating property acquisitions and our operating performance and believe that FFO should be considered along with, but not as an alternative to, net income and cash flows as a measure of our activities in accordance with generally accepted accounting principles. FFO does not represent cash generated from operating activities in accordance with generally accepted accounting principles and is not necessarily indicative of cash available to fund cash needs. For 2005, FFO includes $2.5 million of hurricane related insurance recoveries. For 2004, FFO includes a charge of $5.5 million to cover hurricane related expenses. For 2001, FFO includes a charge of $8.6 million related to workforce reductions, other severance costs, executive office relocation costs, and the write down of seven undeveloped land sites along with our investment in an online apartment leasing company. For the years ended December 31, 2004 and 2003, distributions to preferred stockholders exclude $5.7 million and $19.3 million, respectively, related to premiums on preferred stock conversions.


Item 7.		MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements

This Report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements include, without limitation, statements concerning property acquisitions and dispositions, development activity and capital expenditures, capital raising activities, rent growth, occupancy, and rental expense growth. Words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates,” and variations of such words and similar expressions are intended to identify such forward-looking statements. Such statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of United Dominion Realty Trust, Inc. to be materially different from the results of operations or plans expressed or implied by such forward-looking statements. Such factors include, among other things, unanticipated adverse business developments affecting us, or our properties, adverse changes in the real estate markets and general and local economies and business conditions. Although we believe that the assumptions underlying the forward-looking statements contained herein are reasonable, any of the assumptions could be inaccurate, and therefore such statements included in this Report may not prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by us or any other person that the results or conditions described in such statements or our objectives and plans will be achieved.

Business Overview

We are a real estate investment trust, or REIT, that owns, acquires, renovates, develops, and manages apartment communities nationwide. We were formed in 1972 as a Virginia corporation. In June 2003, we changed our state of incorporation from Virginia to Maryland. Our subsidiaries include two operating partnerships, Heritage Communities L.P., a Delaware limited partnership, and United Dominion Realty, L.P., a Delaware limited partnership. Unless the context otherwise requires, all references in this Report to “we,” “us,” “our,” “the company,” or “United Dominion” refer collectively to United Dominion Realty Trust, Inc. and its subsidiaries.

At December 31, 2005, our portfolio included 259 communities with 74,875 apartment homes nationwide. The following table summarizes our market information by major geographic markets (includes real estate held for disposition, real estate under development, and land, but excludes commercial properties):


										Year Ended
	As of December 31, 2005									December 31, 2005
	Number of		Number of		Percentage of			Carrying		Average			Total Income
	Apartment		Apartment		Carrying			Value		Physical			per Occupied
	Communities		Homes		Value			(in thousands)		Occupancy			Home (a)
MID-ATLANTIC REGION
Metropolitan DC		8		2,487		4.6	%	$	253,914		93.0	%	$	1,168
Raleigh, NC		11		3,663		4.0	%		218,931		93.6	%		671
Baltimore, MD		10		2,118		3.1	%		169,951		96.3	%		994
Richmond, VA		9		2,636		2.8	%		156,903		93.5	%		821
Greensboro, NC		8		2,123		2.0	%		110,713		92.7	%		603
Charlotte, NC		7		1,686		2.0	%		110,229		94.5	%		685
Wilmington, NC		6		1,868		1.8	%		98,512		96.3	%		716
Norfolk, VA		6		1,438		1.3	%		68,968		95.3	%		866
Other North Carolina		8		1,893		1.5	%		81,159		93.9	%		648
Other Mid-Atlantic		6		1,156		1.1	%		61,200		94.9	%		876
Other Virginia		3		820		0.9	%		48,888		93.6	%		1,004

WESTERN REGION
Southern California		26		7,018		19.3	%		1,062,700		93.7	%		1,262
Northern California		10		2,689		6.5	%		356,640		94.5	%		1,220
Seattle, WA		8		1,984		3.0	%		167,657		93.4	%		823
Monterey Peninsula, CA		7		1,568		2.7	%		140,507		91.8	%		931
Portland, OR		6		1,422		1.6	%		89,099		93.7	%		691

SOUTHEASTERN REGION
Tampa, FL		12		4,306		4.7	%		259,936		93.7	%		844
Orlando, FL		14		4,140		4.2	%		230,968		95.8	%		792
Nashville, TN		9		2,580		2.8	%		156,721		95.0	%		722
Jacksonville, FL		4		1,557		1.9	%		103,277		95.2	%		786
Atlanta, GA		6		1,426		1.4	%		78,116		92.8	%		668
Columbia, SC		6		1,584		1.2	%		67,911		95.3	%		641
Other Florida		6		1,737		2.2	%		118,984		96.3	%		884
Other Southeastern		2		798		0.8	%		41,610		94.9	%		527

SOUTHWESTERN REGION
Houston, TX		16		5,447		4.6	%		253,408		93.7	%		650
Phoenix, AZ		6		1,567		2.0	%		108,881		89.3	%		789
Arlington, TX		7		2,156		1.9	%		104,796		94.5	%		646
Denver, CO		3		1,484		1.8	%		100,142		91.5	%		674
Dallas, TX		4		1,383		1.7	%		96,208		96.2	%		787
Austin, TX		5		1,425		1.5	%		83,484		95.7	%		678
Other Southwestern		10		3,676		3.6	%		200,980		94.9	%		679

MIDWESTERN REGION
Columbus, OH		6		2,530		2.9	%		160,093		92.6	%		709
Other Midwestern		3		444		0.4	%		23,980		92.9	%		736
Real Estate Under Development		1		66		1.8	%		96,717		—			—
Land		—		—		0.4	%		24,774		—			—

Total		259		74,875		100.0	%	$	5,506,957		94.1	%	$	820


(a)		Total Income per Occupied Home represents total revenues per weighted average number of apartment homes occupied.

Liquidity and Capital Resources

Liquidity is the ability to meet present and future financial obligations either through operating cash flows, the sale or maturity of existing assets, or by the acquisition of additional funds through capital management. Both the coordination of asset and liability maturities and effective capital management are important to the maintenance of liquidity. Our primary source of liquidity is our cash flow from operations as determined by rental rates, occupancy levels, and operating expenses related to our portfolio of apartment homes. We routinely use our unsecured bank credit facility to temporarily fund certain investing and financing activities prior to arranging for longer-term financing. During the past several years, proceeds from the sale of real estate have been used for both investing and financing activities.

We expect to meet our short-term liquidity requirements generally through net cash provided by operations and borrowings under credit arrangements. We expect to meet certain long-term liquidity requirements such as scheduled debt maturities, the repayment of financing on development activities, and potential property acquisitions, through long-term secured and unsecured borrowings, the disposition of properties, and the issuance of additional debt or equity securities. We believe that our net cash provided by operations will continue to be adequate to meet both operating requirements and the payment of dividends by the company in accordance with REIT requirements in both the short- and long-term. Likewise, the budgeted expenditures for improvements and renovations of certain properties are expected to be funded from property operations.

We have a shelf registration statement filed with the Securities and Exchange Commission which provides for the issuance of an indeterminate amount of common stock, preferred stock, debt securities, warrants, purchase contracts and units to facilitate future financing activities in the public capital markets. This shelf registration statement replaces our previous $1.5 billion shelf registration statement. In 2005, we completed various financing activities under our previous $1.5 billion shelf registration statement. These activities are summarized in the section titled “Financing Activities” that follows. Access to capital markets is dependent on market conditions at the time of issuance.

Future Capital Needs

Future development expenditures are expected to be funded with proceeds from the sale of property, with construction loans, through joint ventures and, to a lesser extent, with cash flows provided by operating activities. Acquisition activity in strategic markets is expected to be largely financed through the issuance of equity and debt securities, the issuance of operating partnership units, the assumption or placement of secured and/or unsecured debt, and by the reinvestment of proceeds from the sale of properties.

During 2006, we have approximately $36.6 million of secured debt and $135.2 million of unsecured debt maturing and we anticipate repaying that debt with proceeds from borrowings under our secured or unsecured credit facilities, the issuance of new unsecured debt securities or equity, or from disposition proceeds.

Critical Accounting Policies and Estimates

Our critical accounting policies are those having the most impact on the reporting of our financial condition and results and those requiring significant judgments and estimates. These policies include those related to (1) capital expenditures, (2) impairment of long-lived assets, and (3) real estate investment properties. With respect to these critical accounting policies, we believe that the application of judgments and assessments is consistently applied and produces financial information that fairly depicts the results of operations for all periods presented.

Capital Expenditures

In conformity with accounting principles generally accepted in the United States, we capitalize those expenditures related to acquiring new assets, materially enhancing the value of an existing asset, or substantially extending the useful life of an existing asset. Expenditures necessary to maintain an existing property in ordinary operating condition are expensed as incurred.

During 2005, $156.1 million or $2,062 per home was spent on capital expenditures for all of our communities, excluding development and commercial properties. These capital improvements included turnover related expenditures for floor coverings and appliances, other recurring capital expenditures such as HVAC equipment, roofs, siding, parking lots, and other non-revenue enhancing capital expenditures, which aggregated $38.8 million or $513 per home. In addition, revenue enhancing capital expenditures, kitchen and bath upgrades, and other extensive interior upgrades totaled $98.6 million or $1,302 per home, and major renovations totaled $18.7 million or $247 per home for the year ended December 31, 2005.

The following table outlines capital expenditures and repair and maintenance costs for all of our communities, excluding real estate under development and commercial properties for the periods presented:


	Year Ended December 31,							Year Ended December 31,
	(dollars in thousands)							(per home)
	2005		2004		% Change			2005		2004		% Change
Turnover capital expenditures	$	17,916	$	16,863		6.2	%	$	237	$	220		7.7	%
Other recurring capital expenditures		20,928		19,191		9.1	%		276		250		10.4	%

Total recurring capital expenditures		38,844		36,054		7.7	%		513		470		9.2	%
Revenue enhancing improvements		98,592		45,933		114.6	%		1,302		599		117.4	%
Major renovations		18,686		261		7059.4	%		247		3		8133.3	%

Total capital improvements	$	156,122	$	82,248		89.8	%	$	2,062	$	1,072		92.4	%

Repair and maintenance		45,266		42,196		7.3	%		598		550		8.7	%

Total expenditures	$	201,388	$	124,444		61.8	%	$	2,660	$	1,622		64.0	%

Total capital improvements increased $73.9 million or $990 per home for the year ended December 31, 2005 compared to the same period in 2004. This increase was attributable to $18.7 million of major renovations at certain of our properties. These renovations included the re-wiring and/or re-plumbing of an entire building as well as major structural changes and/or architectural revisions to existing buildings. The increase was also attributable to an additional $52.7 million being invested in revenue enhancing improvements. We will continue to selectively add revenue enhancing improvements which we believe will provide a return on investment substantially in excess of our cost of capital. Recurring capital expenditures during 2006 are currently expected to be approximately $530 per home.

Impairment of Long-Lived Assets

We record impairment losses on long-lived assets used in operations when events and circumstances indicate that the assets might be impaired and the undiscounted cash flows estimated to be generated by the future operation and disposition of those assets are less than the net book value of those assets. Our cash flow estimates are based upon historical results adjusted to reflect our best estimate of future market and operating conditions and our estimated holding periods. The net book value of impaired assets is reduced to fair market value. Our estimates of fair market value represent our best estimate based upon industry trends and reference to market rates and transactions.

Real Estate Investment Properties

We purchase real estate investment properties from time to time and allocate the purchase price to various components, such as land, buildings, and intangibles related to in-place leases in accordance with FASB Statement No. 141, “Business Combinations.” The purchase price is allocated based on the relative fair value of each component. The fair value of buildings is determined as if the buildings were vacant upon acquisition and subsequently leased at market rental rates. As such, the determination of fair value considers the present value of all cash flows expected to be generated from the property including an initial lease-up period. We determine the fair value of in-place leases by assessing the net effective rent and remaining term of the lease relative to market terms for similar leases at acquisition. In addition, we consider the cost of acquiring similar leases, the foregone rents associated with the lease-up period, and the carrying costs associated with the lease-up period. The fair value of in-place leases is recorded and amortized as amortization expense over the remaining contractual lease period.

Statements of Cash Flow

The following discussion explains the changes in net cash provided by operating activities and net cash used in investing and financing activities that are presented in our Consolidated Statements of Cash Flows.

Operating Activities

For the year ended December 31, 2005, our net cash flow provided by operating activities was $248.2 million compared to $251.7 million for 2004. During 2005, the slight decrease in cash flow from operating activities resulted primarily from a $47.2 million increase in interest expense that was primarily offset by a $9.1 million net increase in operating assets/liabilities for the period, and a $32.6 million increase in property operating results from our apartment community portfolio (see discussion under “Apartment Community Operations”).

Investing Activities

For the year ended December 31, 2005, net cash used in investing activities was $219.0 million compared to $596.0 million for 2004. Changes in the level of investing activities from period to period reflects our strategy as it relates to our acquisition, capital expenditure, development, and disposition programs, as well as the impact of the capital market environment on these activities, all of which are discussed in further detail below.

Acquisitions

For the year ended December 31, 2005, we acquired eight apartment communities with 2,561 apartment homes for an aggregate consideration of $390.9 million and one parcel of land for $2.9 million. For 2004, we acquired 28 apartment communities with 8,060 apartment homes for an aggregate consideration of $390.9 million and one parcel of land for $16.3 million. Our long-term strategic plan is to achieve greater operating efficiencies by investing in fewer, more concentrated markets. As a result, we have been expanding our interests in the fast growing Southern California, Florida, and Metropolitan Washington DC markets over the past two years. During 2006, we plan to continue to channel new investments into those markets we believe will provide the best investment returns. Markets will be targeted based upon defined criteria including past performance, expected job growth, current and anticipated housing supply and demand, and the ability to attract and support household formation.

Real Estate Under Development

Development activity is focused in core markets in which we have strong operations in place. For the year ended December 31, 2005, we invested approximately $49.3 million in development projects, an increase of $30.2 million from our 2004 level of $19.1 million.

The following projects were under development as of December 31, 2005:


	Number of		Completed		Cost to		Budgeted		Estimated		Expected
	Apartment		Apartment		Date		Cost		Cost		Completion
	Homes		Homes		(In thousands)		(In thousands)		Per Home		Date
Verano at Town Square Rancho Cucamonga, CA		414		66	$	55,653	$	66,300	$	160,100		1Q06
Mandalay on the Lake Irving, TX		369		—		26,339		30,900		83,700		2Q06
2000 Post — Phase III San Francisco, CA		24		—		4,835		9,000		375,000		2Q06
Ridgeview Plano, TX		225		—		6,883		18,000		80,000		1Q07
Lincoln Towne Square — Phase II Plano, TX		303		—		3,007		21,000		69,300		3Q07

		1,335		66	$	96,717	$	145,200	$	108,800

In addition, we own four parcels of land that we continue to hold for future development that had a carrying value as of December 31, 2005 of $20.8 million.

Disposition of Investments

For the year ended December 31, 2005, United Dominion sold 22 communities with 6,352 apartment homes and 240 condominiums from five communities with a total of 648 condominiums for a gross consideration of $456.3 million. In addition, we sold our investment in an unconsolidated joint venture for $39.2 million and one parcel of land for $0.9 million. We recognized gains for financial reporting purposes of $143.5 million on these sales. Proceeds from the sales were used primarily to reduce debt and acquire additional communities. In connection with our third quarter portfolio sale of ten communities in Texas and North Carolina, we received short-term notes of $124.7 million. These notes had maturities ranging from September 2005 to July 2006. As of December 31, 2005, the outstanding balance on these notes was $59.8 million, bearing interest at 6.75%.

For the year ended December 31, 2004, we sold 19 communities with 5,425 apartment homes for an aggregate consideration of $270.1 million. In addition, we sold 24 of 36 townhomes of a community for $7.3 million. We recognized gains for financial reporting purposes of $52.9 million on these sales. Proceeds from the sales were used primarily to reduce debt.

During 2006, we plan to continue to pursue our strategy of exiting markets where long-term growth prospects are limited and redeploying capital into markets that would enhance future growth rates and economies of scale. We intend to use the proceeds from 2006 dispositions to reduce debt, acquire communities, and fund development activity.

Financing Activities

Net cash used in financing activities during 2005 was $21.5 million compared to net cash provided by financing activities of $347.3 million in 2004. As part of the plan to improve our balance sheet, we utilized proceeds from dispositions, equity and debt offerings, and refinancings to extend maturities, pay down existing debt, and purchase new properties.

The following is a summary of our financing activities for the year ended December 31, 2005:

	•		Repaid $133.8 million of secured debt and $70.9 million of unsecured debt, and incurred $8.5 million in prepayment penalties.

	•		Sold $50 million aggregate principal amount of 5.25% senior unsecured notes due January 2015 in February 2005 under our medium-term note program. These notes represent a re-opening of the 5.25% senior unsecured notes due January 2015 that were issued in November 2004, and these notes constitute a

			single series of notes. The February 2005 issuance of these notes brought the aggregate principal amount of the 5.25% senior unsecured notes to $150 million. The net proceeds of approximately $50 million were used for debt repayment and to fund the acquisition of apartment communities.

	•		Sold our shares in Rent.com, a leading Internet listing web site in the apartment and rental housing industry, in February 2005. As a result, we received cash proceeds and recorded a one-time gain of $12.3 million on the sale. As part of the transaction, an additional $0.8 million was placed in escrow and will be recorded as revenue when received.

	•		Sold $50 million aggregate principal amount of 5.25% senior unsecured notes due January 2015 in March 2005 under our medium-term note program. These notes represent a re-opening of the 5.25% senior unsecured notes due January 2015 that were issued in November 2004, and these notes constitute a single series of notes. The March 2005 issuance of these notes brought the aggregate principal amount of the 5.25% senior unsecured notes to $200 million. The net proceeds of approximately $50 million were used for debt repayment and to fund the acquisition of apartment communities.

	•		Sold $50 million aggregate principal amount of 5.25% senior unsecured notes due January 2015 in May 2005 under our medium-term note program. These notes represent a re-opening of the 5.25% senior unsecured notes due January 2015 that were issued in November 2004, and these notes constitute a single series of notes. The May 2005 issuance of these notes brought the aggregate principal amount of the 5.25% senior unsecured notes to $250 million. The net proceeds of approximately $50 million were used for debt repayment and to fund the acquisition of apartment communities.

	•		Amended and restated our $500 million unsecured revolving credit facility and extended the term an additional two years. The credit facility matures on May 31, 2008, and, at our option, can be extended for an additional year. We have the right to increase the credit facility to $750 million if the initial lenders increase their commitments or we receive commitments from additional lenders. Based on our current credit ratings, the credit facility carries an interest rate equal to LIBOR plus a spread of 57.5 basis points, which represents a 12.5 basis point reduction to the previous unsecured revolver, and the facility fee was reduced from 20 basis points to 15 basis points. Under a competitive bid feature and for so long as we maintain an Investment Grade Rating, we have the right to bid out 100% of the commitment amount.

	•		Converted a $75 million variable rate debt facility to a fixed rate of 4.86% on December 1, 2005.

	•		Sold $100 million aggregate principal amount of 5.25% medium-term notes due January 2016 in September 2005 under our medium-term note program. The net proceeds of approximately $100 million were used for debt repayment.

	•		Sold $250 million aggregate principal amount of our 4.00% convertible senior notes due 2035 in December 2005. We used the net proceeds of approximately $245 million to repay outstanding debt under our unsecured revolving bank credit facility and to repurchase shares of our common stock.

	•		Repurchased 1,069,500 shares of our common stock at an average price per share of $22.08 under our common stock repurchase program and repurchased 2,110,850 shares of our common stock at an average price per share of $23.51 in connection with the offering of our 4.00% convertible senior notes due 2035. As of December 31, 2005, approximately 1.2 million shares of common stock remained available for repurchase under the common stock repurchase program.

Credit Facilities

We have four secured revolving credit facilities with Fannie Mae with an aggregate commitment of $860 million. As of December 31, 2005, $656.3 million was outstanding under the Fannie Mae credit facilities leaving $203.7 million of unused capacity. The Fannie Mae credit facilities are for an initial term of ten years, bear interest at floating and fixed rates, and can be extended for an additional five years at our discretion. We have $363.9 million of

the funded balance fixed at a weighted average interest rate of 6.1%. The remaining balance on these facilities is currently at a weighted average variable rate of 4.7%.

We have a $500 million unsecured revolving credit facility that matures in May 2008 and, at our option, can be extended an additional year. We have the right to increase the credit facility to $750 million under certain circumstances. Based on our current credit ratings, the credit facility bears interest at a rate equal to LIBOR plus 57.5 basis points. As of December 31, 2005, $210.8 million was outstanding under the credit facility leaving $289.2 million of unused capacity.

The Fannie Mae credit facility and the bank revolving credit facility are subject to customary financial covenants and limitations.

Interest Rate Risk

We are exposed to interest rate risk associated with variable rate notes payable and maturing debt that has to be refinanced. United Dominion does not hold financial instruments for trading or other speculative purposes, but rather issues these financial instruments to finance its portfolio of real estate assets. Interest rate sensitivity is the relationship between changes in market interest rates and the fair value of market rate sensitive assets and liabilities. Our earnings are affected as changes in short-term interest rates impact our cost of variable rate debt and maturing fixed rate debt. A large portion of our market risk is exposure to short-term interest rates from variable rate borrowings outstanding under our Fannie Mae credit facility and our bank revolving credit facility, which totaled $292.5 million and $210.8 million, respectively, at December 31, 2005. The impact on our financial statements of refinancing fixed rate debt that matured during 2005 was immaterial.

If market interest rates for variable rate debt average 100 basis points more in 2006 than they did during 2005, our interest expense would increase, and income before taxes would decrease by $6.0 million. Comparatively, if market interest rates for variable rate debt had averaged 100 basis points more in 2005 than in 2004, our interest expense would have increased, and net income would have decreased by $7.4 million. If market rates for fixed rate debt were 100 basis points higher at December 31, 2005, the fair value of fixed rate debt would have decreased from $2.6 billion to $2.4 billion. If market interest rates for fixed rate debt were 100 basis points lower at December 31, 2005, the fair value of fixed rate debt would have increased from $2.6 billion to $2.7 billion.

These amounts are determined by considering the impact of hypothetical interest rates on our borrowing cost. These analyses do not consider the effects of the adjusted level of overall economic activity that could exist in such an environment. Further, in the event of a change of such magnitude, management would likely take actions to further mitigate our exposure to the change. However, due to the uncertainty of the specific actions that would be taken and their possible effects, the sensitivity analysis assumes no change in our financial structure.

Funds from Operations

Funds from operations, or FFO, is defined as net income (computed in accordance with generally accepted accounting principles), excluding gains (or losses) from sales of depreciable property, plus real estate depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. We compute FFO for all periods presented in accordance with the recommendations set forth by the National Association of Real Estate Investment Trust’s (“NAREIT”) April 1, 2002 White Paper. We consider FFO in evaluating property acquisitions and our operating performance, and believe that FFO should be considered along with, but not as an alternative to, net income and cash flow as a measure of our activities in accordance with generally accepted accounting principles. FFO does not represent cash generated from operating activities in accordance with generally accepted accounting principles and is not necessarily indicative of cash available to fund cash needs.

Historical cost accounting for real estate assets in accordance with generally accepted accounting principles implicitly assumes that the value of real estate assets diminishes predictably over time. Since real estate values instead have historically risen or fallen with market conditions, many industry investors and analysts have considered the presentation of operating results for real estate companies that use historical cost accounting to be insufficient by themselves. Thus, NAREIT created FFO as a supplemental measure of REIT operating performance and defines FFO as net income (computed in accordance with accounting principles generally accepted in the United

States), excluding gains (or losses) from sales of depreciable property, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. The use of FFO, combined with the required presentations, has been fundamentally beneficial, improving the understanding of operating results of REITs among the investing public and making comparisons of REIT operating results more meaningful. We generally consider FFO to be a useful measure for reviewing our comparative operating and financial performance (although FFO should be reviewed in conjunction with net income which remains the primary measure of performance) because by excluding gains or losses related to sales of previously depreciated operating real estate assets and excluding real estate asset depreciation and amortization, FFO can help one compare the operating performance of a company’s real estate between periods or as compared to different companies. We believe that FFO is the best measure of economic profitability for real estate investment trusts.

The following table outlines our FFO calculation and reconciliation to generally accepted accounting principles for the three years ended December 31, 2005 (dollars in thousands):


	2005			2004			2003
Net income	$	155,166		$	97,152		$	70,404
Adjustments:
Distributions to preferred stockholders		(15,370	)		(19,531	)		(26,326	)
Real estate depreciation, net of outside partners’ interest		193,510			147,182			120,744
Minority interests of unitholders in operating partnership		(795	)		(1,211	)		(2,648	)
Real estate depreciation related to unconsolidated entities		311			279			196
Discontinued Operations:
Real estate depreciation		18,914			33,446			42,214
Minority interests of unitholders in operating partnership		9,525			6,054			4,295
Net gains on the sale of depreciable property		(139,724	)		(52,903	)		(15,941	)
Net incremental gains on the sale of condominium homes		16,717			1,202			812


Funds from operations — basic	$	238,254		$	211,670		$	193,750


Distributions to preferred stockholders — Series D and E (Convertible)		3,726			7,887			14,681


Funds from operations — diluted	$	241,980		$	219,557		$	208,431


Weighted average number of common shares and OP Units outstanding — basic		144,689			136,852			122,589
Weighted average number of common shares, OP Units, and common stock equivalents outstanding — diluted		150,141			145,842			136,975

In the computation of diluted FFO, OP Units, out-performance partnership shares, and the shares of Series D Cumulative Convertible Redeemable Preferred Stock and Series E Cumulative Convertible Preferred Stock are dilutive; therefore, they are included in the diluted share count. For the years ended December 31, 2004 and 2003, distributions to preferred stockholders exclude $5.7 million and $19.3 million, respectively, related to premiums on preferred stock conversions.

Net incremental gains on the sale of condominium homes and the net incremental gain on the sale of a depreciable asset related to an unconsolidated entity are defined as net sales proceeds less a tax provision and the gross investment basis of the asset before accumulated depreciation. We consider FFO with gains/losses on the sale of condominium homes and gains/losses on the sale of depreciable assets related to an unconsolidated entity to be a meaningful supplemental measure of performance because the short-term use of funds produce a profit that differs from the traditional long-term investment in real estate for REITs.

The following table is our reconciliation of FFO share information to weighted average common shares outstanding, basic and diluted, reflected on the Consolidated Statements of Operations for the three years ended December 31, 2005 (shares in thousands):


	2005			2004			2003
Weighted average number of common shares and OP units outstanding — basic		144,689			136,852			122,589
Weighted average number of OP units outstanding		(8,546	)		(8,755	)		(7,917	)

Weighted average number of common shares outstanding — basic per the Consolidated Statements of Operations		136,143			128,097			114,672


Weighted average number of common shares, OP units, and common stock equivalents outstanding — diluted		150,141			145,842			136,975
Weighted average number of OP units outstanding		(8,546	)		(8,755	)		(7,917	)
Weighted average number of incremental shares from assumed conversion of stock options		(870	)		(897	)		(976	)
Weighted average number of Series A OPPSs outstanding		(1,778	)		(1,791	)		(1,773	)
Weighted average number of Series D preferred stock outstanding.		—			(2,892	)		(10,033	)
Weighted average number of Series E preferred stock outstanding.		(2,804	)		(3,410	)		(1,604	)

Weighted average number of common shares outstanding — diluted per the Consolidated Statements of Operations		136,143			128,097			114,672

FFO also does not represent cash generated from operating activities in accordance with generally accepted accounting principles, and therefore should not be considered an alternative to net cash flows from operating activities, as determined by generally accepted accounting principles, as a measure of liquidity. Additionally, it is not necessarily indicative of cash availability to fund cash needs. A presentation of cash flow metrics based on generally accepted accounting principles is as follows (dollars in thousands):


	2005			2004			2003
Net cash provided by operating activities	$	248,186		$	251,747		$	234,945
Net cash used in investing activities		(219,017	)		(595,966	)		(304,217	)
Net cash (used in)/provided by financing activities		(21,530	)		347,299			70,944

Results of Operations

The following discussion includes the results of both continuing and discontinued operations for the periods presented.

Net Income Available to Common Stockholders

2005-vs.-2004

Net income available to common stockholders was $139.8 million ($1.02 per diluted share) for the year ended December 31, 2005, compared to $71.9 million ($0.56 per diluted share) for the year ended December 31, 2004, representing an increase of $67.9 million ($0.46 per diluted share). The increase for the year ended December 31, 2005, when compared to the same period in 2004, resulted primarily from the following items, all of which are discussed in further detail elsewhere within this Report:

	•		$90.6 million more in gains recognized from the sale of depreciable property and an unconsolidated joint venture in 2005,

	•		a $32.6 million increase in apartment community operating results in 2005,

	•		a $14.2 million increase in non-property income in 2005,

	•		a $5.7 million decrease in premiums paid on preferred stock conversions in 2005,

	•		a $5.5 million charge recorded for hurricane related expenses in 2004,

	•		$4.2 million less in preferred stock distributions in 2005, and

	•		$2.5 million in hurricane related insurance recoveries in 2005.

These increases in income were partially offset by a $38.7 million increase in interest expense, a $31.8 million increase in real estate depreciation and amortization expense, an $8.5 million increase in losses on early debt retirement, and a $5.5 million increase in general and administrative expense in 2005 when compared to 2004.

2004-vs.-2003

Net income available to common stockholders was $71.9 million ($0.56 per diluted share) for the year ended December 31, 2004, compared to $24.8 million ($0.22 per diluted share) for the year ended December 31, 2003, representing an increase of $47.1 million ($0.34 per diluted share). The increase for the year ended December 31, 2004, when compared to the same period in 2003, resulted primarily from the following items, all of which are discussed in further detail elsewhere within this Report:

	•		$37.0 million more in gains recognized from the sale of depreciable property in 2004,

	•		a $19.2 million increase in apartment community operating results in 2004,

	•		a $13.5 million decrease in premiums paid on preferred stock conversions in 2004,

	•		$6.8 million less in preferred stock distributions in 2004,

	•		a $1.5 million increase in non-property income in 2004,

	•		$1.4 million less in impairment loss on investments in 2004, and

	•		a $1.3 million decrease in general and administrative expense in 2004.

These increases in income were partially offset by a $17.2 million increase in depreciation and amortization expense, a $6.6 million increase in interest expense, and a charge of $5.5 million for hurricane related expenses in 2004 when compared to 2003.

Apartment Community Operations

Our net income is primarily generated from the operation of our apartment communities. The following table summarizes the operating performance of our total apartment portfolio for each of the periods presented (dollars in thousands):


	Year Ended December 31,									Year Ended December 31,
	2005			2004			% Change			2004			2003			% Change
Property rental income	$	700,344		$	649,952			7.8	%	$	649,952		$	613,550			5.9	%
Property operating expense*		(269,486	)		(251,697	)		7.1	%		(251,697	)		(234,478	)		7.3	%

Property operating income	$	430,858		$	398,255			8.2	%	$	398,255		$	379,072			5.1	%

Weighted average number of homes		76,069			76,873			-1.0	%		76,873			74,550			3.1	%
Physical occupancy**		94.1	%		93.6	%		0.5	%		93.6	%		93.2	%		0.4	%


*		Excludes depreciation, amortization, and property management expenses. Also excludes $5.5 million of hurricane related expenses in 2004 and $2.5 million of hurricane related insurance recoveries in 2005.

**		Based upon weighted average stabilized units.

The following table is our reconciliation of property operating income to net income as reflected on the Consolidated Statements of Operations for the periods presented (dollars in thousands):


	2005			2004			2003
Property operating income	$	430,858		$	398,255		$	379,072
Commercial operating income		1,997			512			733
Non-property income		16,849			2,608			1,068
Depreciation and amortization		(215,192	)		(184,000	)		(166,577	)
Interest		(162,723	)		(124,087	)		(117,416	)
General and administrative and property management		(44,128	)		(37,197	)		(37,499	)
Other operating expenses		(1,178	)		(1,314	)		(1,265	)
Net gains on the sale of depreciable property and an unconsolidated joint venture		143,547			52,903			15,941
Loss on early debt retirement		(8,483	)		—			—
Impairment loss on real estate and investments		—			—			(1,392	)
Hurricane related expenses		—			(5,503	)		—
Hurricane related insurance recoveries		2,457			—			—
Minority interests		(8,838	)		(5,025	)		(2,261	)

Net income per the Consolidated Statements of Operations	$	155,166		$	97,152		$	70,404

2005-vs.-2004

Same Communities

Our same communities (those communities acquired, developed, and stabilized prior to September 30, 2004 and held on December 31, 2005, which consisted of 58,840 apartment homes) provided 73% of our property operating income for the year ended December 31, 2005.

For the year ended December 31, 2005, same community property operating income increased 3.4% or $10.3 million compared to 2004. The increase in property operating income was primarily attributable to a 3.8% or $18.6 million increase in revenues from rental and other income that was partially offset by a 4.4% or $8.3 million increase in operating expenses. The increase in revenues from rental and other income was primarily driven by a 2.0% or $10.3 million increase in rental rates, a 20.2% or $2.9 million decrease in concession expense, a 7.5% or $2.6 million increase in utility reimbursement income and fee income, a 7.8% or $2.5 million decrease in vacancy loss, and a 15.6% or $0.4 million decrease in bad debt expense. Physical occupancy increased 0.6% to 94.5%.

The increase in property operating expenses was primarily driven by a 4.3% or $2.0 million increase in real estate taxes, a 3.8% or $1.9 million increase in personnel costs, a 3.8% or $1.1 million increase in utilities expense, a 2.9% or $0.9 million increase in repair and maintenance costs, a 4.7% or $0.8 million increase in administrative and marketing costs, a 46.7% or $0.7 million increase in incentive compensation, and a 5.4% or $0.5 million increase in insurance costs.

As a result of the percentage changes in property rental income and property operating expenses, the operating margin (property operating income divided by property rental income) decreased 0.3% to 61.5%.

Non-Mature Communities

The remaining 27% of our property operating income during 2005 was generated from communities that we classify as “non-mature communities” (primarily those communities acquired or developed in 2003, 2004 and 2005, sold properties, and those properties classified as real estate held for disposition). The 41 communities with 12,458 apartment homes that we acquired in the fourth quarter of 2003, and in 2004 and 2005, provided $87.5 million of property operating income. The 22 communities with 6,352 apartment homes and 240 condominiums sold during 2005 provided $10.0 million of property operating income. In addition, our development communities, which included 244 apartment homes constructed since January 1, 2003, provided $0.7 million of property operating income during 2005, the four communities with a total of 384 condominiums classified as real estate held for disposition provided $0.3 million of property operating income, and other non-mature communities which includes homes that are undergoing major rehabilitation, provided $17.5 million of property operating income for the year ended December 31, 2005.

2004-vs.-2003

Same Communities

Our same communities (those communities acquired, developed, and stabilized prior to December 31, 2003 and held on December 31, 2004, which consisted of 62,497 apartment homes) provided 78% of our property operating income for the year ended December 31, 2004.

For 2004, same community property operating income decreased 1.2% or $3.9 million compared to 2003. The overall decrease in property operating income was primarily attributable to a 0.5% or $2.3 million increase in revenues from rental and other income that was offset by a 3.2% or $6.2 million increase in operating expenses. The increase in revenues from rental and other income was primarily driven by a 7.7% or $2.8 million decrease in vacancy loss and a 14.3% or $2.1 million increase in utility reimbursement income. These increases in income were offset by a 0.7% or $3.6 million decrease in rental rates. Physical occupancy increased 0.8% to 93.8%.

The increase in property operating expenses was primarily driven by a 5.4% or $2.8 million increase in personnel costs, a 4.7% or $1.5 million increase in repair and maintenance costs, a 3.5% or $1.1 million increase in utilities expense, and a 1.6% or $0.8 million increase in property taxes.

As a result of the percentage changes in property rental income and property operating expenses, the operating margin decreased 1.0% to 61.0%.

Non-Mature Communities

The remaining 22% of our property operating income during 2004 was generated from communities that we classify as “non-mature communities” (primarily those communities acquired or developed during 2003 and 2004, sold properties, and those properties classified as real estate held for disposition). The 39 communities with 11,574 apartment homes that we acquired during 2003 and 2004 provided $45.8 million of property operating income. The 19 communities with 5,425 apartment homes sold during 2004 provided $14.4 million of property operating income. In addition, our development communities, which included 178 apartment homes constructed since January 1, 2003, provided $1.0 million of property operating income during 2004, the 12 communities with 2,635 apartment homes classified as real estate held for disposition provided $11.3 million of property operating income, and other non-mature communities provided $13.5 million of property operating income for the year ended December 31, 2004.

Real Estate Depreciation and Amortization

For the year ended December 31, 2005, real estate depreciation and amortization on both continuing and discontinued operations increased $31.8 million or 17.6% compared to 2004, primarily due to the significant increase in the per home acquisition cost compared to the existing portfolio, and other capital expenditures.

For the year ended December 31, 2004, real estate depreciation and amortization on both continuing and discontinued operations increased $17.2 million or 10.5% compared to 2003, primarily due to the overall increase in the weighted average number of apartment homes, the significant increase in the per home acquisition cost compared to the existing portfolio, and other capital expenditures.

Interest Expense

For the year ended December 31, 2005, interest expense on both continuing and discontinued operations increased $47.2 million or 38.1% from 2004 primarily due to the issuance of debt and $8.5 million in prepayment penalties. For the year ended December 31, 2005, the weighted average amount of debt outstanding increased 30.7% or $697.4 million compared to 2004 and the weighted average interest rate increased from 5.0% to 5.3% during 2005. The weighted average amount of debt outstanding during 2005 is higher than 2004 as acquisition costs in 2005 have been funded, in most part, by the issuance of debt. The increase in the weighted average interest rate during 2005 reflects short-term bank borrowings and variable rate debt that had higher interest rates when compared to the prior year.

For the year ended December 31, 2004, interest expense on both continuing and discontinued operations increased $6.8 million or 5.8% from 2003 primarily due to the issuance of debt. For the year ended December 31, 2004, the weighted average amount of debt outstanding increased 21.2% or $435.9 million compared to the prior year. However, this was partially offset by the weighted average interest rate declining from 5.4% to 5.0% during 2004. The weighted average amount of debt outstanding during 2004 is higher than 2003 as acquisition costs in 2004 have been funded, in most part, by the issuance of debt. The decrease in the weighted average interest rate during 2004 reflects our ability to take advantage of lower interest rates through refinancing and the utilization of variable rate debt.

General and Administrative

For the year ended December 31, 2005, general and administrative expenses increased $5.5 million or 28.5% over 2004 primarily as a result of an increase in personnel and incentive compensation costs, an operating lease on an airplane, compliance costs and an operations improvement initiative.

For the year ended December 31, 2004, general and administrative expenses decreased $1.3 million or 6.4% over 2003. This decrease was primarily attributable to a decrease in investor relations, legal and consulting expenses.

Hurricane Related Expenses and Hurricane Related Insurance Recoveries

In 2005, $2.5 million of hurricane related insurance recoveries were recorded. In 2004, we recognized a $5.5 million charge to cover expenses associated with the damage in Florida caused by hurricanes Charley, Frances, and Jeanne. United Dominion reported that 25 of its 34 Florida communities were affected by the hurricanes.

Impairment Loss on Real Estate and Investments

In 2003, we recognized a $1.4 million charge for the write-off of our investment in Realeum, Inc., an unconsolidated development joint venture created to develop web-based solutions for multifamily property and portfolio management.

Gains on the Sale of Land, Depreciable Property and an Unconsolidated Joint Venture

For the years ended December 31, 2005 and 2004, we recognized gains for financial reporting purposes of $143.5 million and $52.9 million, respectively. Changes in the level of gains recognized from period to period reflect the changing level of our divestiture activity from period to period as well as the extent of gains related to specific properties sold.

Premium on Preferred Stock Conversions

In the fourth quarter of 2004, we exercised our right to redeem 2 million shares of our Series D Cumulative Convertible Redeemable Preferred Stock. Upon receipt of our redemption notice, the shares to be redeemed were converted by the holder into 3,076,769 shares of common stock at a price of $16.25 per share. As a result, we recognized a $5.7 million premium on preferred stock conversions.

In the second quarter of 2003, we exercised our right to redeem 2 million shares of our Series D Cumulative Convertible Redeemable Preferred Stock. Upon receipt of our redemption notice, the shares to be redeemed were converted by the holder into 3,076,923 shares of common stock at a price of $16.25 per share. In December 2003, we exercised our right to redeem an additional 4 million shares of our Series D preferred stock. Upon receipt of our redemption notice, the shares to be redeemed were converted by the holder into 6,154,000 shares of common stock at a price of $16.25 per share. As a result, we recognized a $19.3 million premium on preferred stock conversions during 2003.

The premium amount recognized to convert these shares represents the cumulative accretion to date between the conversion value of the preferred stock and the value at which it was recorded at the time of issuance.

eBay Purchase of Rent.com

On December 16, 2004, eBay announced that it had agreed to acquire privately held Rent.com, a leading Internet listing web site in the apartment and rental housing industry, for approximately $415 million plus acquisition costs, net of Rent.com’s cash on hand. On February 23, 2005, eBay announced that it had completed the acquisition. We owned shares in Rent.com, and as a result of the transaction, we recorded a one-time pre-tax gain of $12.3 million on the sale.

Inflation

We believe that the direct effects of inflation on our operations have been immaterial. Substantially all of our leases are for a term of one year or less which generally minimizes our risk from the adverse effects of inflation.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that have, or are reasonably likely to have, a current or future effect on our financial condition, changes in financial condition, revenue or expenses, results of operations, liquidity, capital expenditures or capital resources that are material.

Contractual Obligations

The following table summarizes our contractual obligations as of December 31, 2005 (dollars in thousands):


	Payments Due by Period
Contractual Obligations	Total		2006		2007-2008		2009-2010		Thereafter
Long-Term Debt Obligations	$	3,159,777	$	171,989	$	769,179	$	541,742	$	1,676,867
Capital Lease Obligations		—		—		—		—		—
Operating Lease Obligations		30,771		2,217		3,862		3,453		21,239
Purchase Obligations		—		—		—		—		—
Other Long-Term Liabilities Reflected on the Balance Sheet Under GAAP		—		—		—		—		—

During 2005, we incurred interest costs of $165.5 million, of which $2.8 million was capitalized.

Factors Affecting Our Business and Prospects

There are many factors that affect our business and the results of our operations, some of which are beyond our control. These factors include:

	•		unfavorable changes in apartment market and economic conditions that could adversely affect occupancy levels and rental rates,

	•		the failure of acquisitions to achieve anticipated results,

	•		possible difficulty in selling apartment communities,

	•		the timing and closing of planned dispositions under agreement,

	•		competitive factors that may limit our ability to lease apartment homes or increase or maintain rents,

	•		insufficient cash flow that could affect our debt financing and create refinancing risk,

	•		failure to generate sufficient revenue, which could impair our debt service payments and distributions to stockholders,

Report of Independent Registered Public Accounting Firm

Board of Directors and Stockholders
United Dominion Realty Trust, Inc.

We have audited the accompanying consolidated balance sheets of United Dominion Realty Trust, Inc. (the “Company”) as of December 31, 2005 and 2004, and the related consolidated statements of operations, stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2005. Our audits also included the financial statement schedule listed in the Index. 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 financial statements referred to above present fairly, in all material respects, the consolidated financial position of United Dominion Realty Trust, Inc. at December 31, 2005 and 2004, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2005, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of the Company’s internal control over financial reporting as of December 31, 2005, 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 17, 2006 (not provided herein) expressed an unqualified opinion thereon.


	Ernst & Young LLP

Richmond, Virginia
February 17, 2006,
Except for the earnings per share
paragraph in Note 1 and Notes 2 and 3,
as to which the date is
November 27, 2006

UNITED DOMINION REALTY TRUST, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except for share data)


	December 31,
	2005			2004
ASSETS

Real estate owned:
Real estate held for investment	$	4,933,500		$	4,376,585
Less: accumulated depreciation		(1,002,455	)		(814,623	)

		3,931,045			3,561,962
Real estate under development (net of accumulated depreciation of $140 and $0)		90,769			54,861
Real estate held for disposition (net of accumulated depreciation of $121,234 and $193,264)		366,781			618,586

Total real estate owned, net of accumulated depreciation		4,388,595			4,235,409
Cash and cash equivalents		15,543			7,904
Restricted cash		4,583			6,086
Deferred financing costs, net		31,036			25,122
Notes receivable		64,805			5,000
Investment in unconsolidated development joint venture		—			458
Funds held in escrow from 1031 exchanges pending the acquisition of real estate		—			17,039
Other assets		33,729			33,103
Other assets — real estate held for disposition		3,302			1,880

Total assets	$	4,541,593		$	4,332,001


LIABILITIES AND STOCKHOLDERS’ EQUITY

Secured debt	$	1,062,526		$	1,080,106
Secured debt — real estate held for disposition		53,733			117,818
Unsecured debt		2,043,518			1,682,058
Real estate taxes payable		22,446			25,104
Accrued interest payable		26,672			18,773
Security deposits and prepaid rent		24,072			21,910
Distributions payable		45,313			44,624
Accounts payable, accrued expenses, and other liabilities		53,223			48,724
Other liabilities — real estate held for disposition		18,547			13,840

Total liabilities		3,350,050			3,052,957

Minority interests		83,819			83,593

Stockholders’ equity:
Preferred stock, no par value; 50,000,000 shares authorized
5,416,009 shares 8.60% Series B Cumulative Redeemable issued and outstanding (5,416,009 in 2004)		135,400			135,400
2,803,812 shares 8.00% Series E Cumulative Convertible issued and outstanding (2,803,812 in 2004)		46,571			46,571
Common stock, $0.01 par value ($1.00 par value in 2004); 250,000,000 shares authorized 134,012,053 shares issued and outstanding (136,429,592 in 2004)		1,340			136,430
Additional paid-in capital		1,680,115			1,608,858
Distributions in excess of net income		(755,702	)		(731,808	)

Total stockholders’ equity		1,107,724			1,195,451

Total liabilities and stockholders’ equity	$	4,541,593		$	4,332,001

See accompanying notes to consolidated financial statements.

UNITED DOMINION REALTY TRUST, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)


	Years ended December 31,
	2005			2004			2003
REVENUES
Rental income	$	662,031		$	513,610		$	450,630
Non-property income:
Sale of technology investment		12,306			—			—
Sale of unconsolidated joint venture		3,823			—			—
Other income		6,261			2,608			1,068

Total non-property income		22,390			2,608			1,068

Total revenues		644,421			516,218			451,698


EXPENSES
Rental expenses:
Real estate taxes and insurance		74,352			59,666			50,849
Personnel		62,710			52,954			44,924
Utilities		36,432			30,825			26,497
Repair and maintenance		36,565			37,823			29,254
Administrative and marketing		21,441			17,888			16,454
Property management		19,309			17,881			16,873
Other operating expenses		1,178			1,226			1,205
Real estate depreciation and amortization		193,510			147,182			121,179
Interest		162,775			122,029			114,300
General and administrative		24,819			19,316			20,626
Other depreciation and amortization		2,658			3,201			2,901
Loss on early debt retirement		6,662			—			—
Impairment loss on investments		—			—			1,392

Total expenses		642,411			509,991			446,454


Income before minority interests and discontinued operations		2,010			6,227			5,244
Minority interests of outside partnerships		(108	)		(182	)		(614	)
Minority interests of unitholders in operating partnerships		795			1,211			2,648

Income before discontinued operations, net of minority interests		2,697			7,256			7,278
Income from discontinued operations, net of minority interests		152,469			89,896			63,126

Net income		155,166			97,152			70,404
Distributions to preferred stockholders — Series B		(11,644	)		(11,644	)		(11,645	)
Distributions to preferred stockholders — Series D (Convertible)		—			(3,473	)		(12,178	)
Distributions to preferred stockholders — Series E (Convertible)		(3,726	)		(4,414	)		(2,503	)
Premium on preferred stock conversions		—			(5,729	)		(19,271	)

Net income available to common stockholders	$	139,796		$	71,892		$	24,807


Earnings per common share — basic and diluted:
Loss from continuing operations available to common stockholders, net of minority interests	$	(0.09	)	$	(0.14	)	$	(0.33	)
Income from discontinued operations, net of minority interests	$	1.12		$	0.70		$	0.55
Net income available to common stockholders	$	1.03		$	0.56		$	0.22

Common distributions declared per share	$	1.20		$	1.17		$	1.14

Weighted average number of common shares outstanding — basic and diluted		136,143			128,097			114,672

See accompanying notes to consolidated financial statements.

UNITED DOMINION REALTY TRUST, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)


	Years ended December 31,
	2005			2004			2003
Operating Activities
Net income	$	155,166		$	97,152		$	70,404
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		215,192			184,088			166,637
Impairment loss on real estate and investments		—			—			1,392
Net gains on the sale of land and depreciable property		(139,724	)		(52,903	)		(15,941	)
Cancellation of operating partnership units in connection with the sale of equity investment		(1,000	)		—			—
Gain on the sale of technology investment		(12,306	)		—			—
Gain on the sale of unconsolidated joint venture		(3,823	)		—			—
Distribution of earnings from unconsolidated joint venture		124			—			—
Minority interests		8,838			5,025			2,261
Amortization of deferred financing costs and other		5,287			7,206			6,148
Amortization of deferred compensation		2,939			2,780			—
Changes in operating assets and liabilities:
Decrease/(increase) in operating assets		8,695			(1,769	)		(2,560	)
Increase in operating liabilities		8,798			10,168			6,604

Net cash provided by operating activities		248,186			251,747			234,945
Investing Activities
Proceeds from the sale of real estate investments, net		308,753			190,105			93,613
Repayment of notes receivables		64,845			75,586			—
Acquisition of real estate assets (net of liabilities assumed and equity)		(413,744	)		(755,966	)		(314,739	)
Development of real estate assets		(49,343	)		(19,131	)		(13,640	)
Capital expenditures and other major improvements — real estate assets		(156,122	)		(82,390	)		(53,146	)
Capital expenditures — non-real estate assets		(3,209	)		(1,578	)		(1,858	)
Proceeds from the sale of technology investment		12,306			—			—
Distribution of capital from unconsolidated joint venture		458			—			—
Decrease/(increase) in funds held in escrow from tax free exchanges pending the acquisition of real estate		17,039			(2,592	)		(14,447	)

Net cash used in investing activities		(219,017	)		(595,966	)		(304,217	)
Financing Activities
Proceeds from the issuance of secured debt		25,342			—			37,415
Scheduled principal payments on secured debt		(8,611	)		(36,814	)		(22,442	)
Non-scheduled principal payments on secured debt		(125,221	)		(95,011	)		(17,549	)
Proceeds from the issuance of unsecured debt		499,983			475,775			323,382
Payments on unsecured debt		(70,860	)		(46,585	)		(214,591	)
Net (repayment)/proceeds of revolving bank debt		(67,300	)		140,200			(37,900	)
Payment of financing costs		(14,455	)		(8,849	)		(6,463	)
Issuance of note receivable		—			—			(8,000	)
Proceeds from the issuance of common stock		4,334			99,461			179,811
Proceeds from the repayment of officer loans		—			459			2,171
Proceeds from the issuance of performance shares		343			(50	)		657
Purchase of minority interest from outside partners		(522	)		—			—
Conversion of operating partnership units to cash		(50	)		—			—
Distributions paid to minority interests		(12,900	)		(13,553	)		(9,756	)
Distributions paid to preferred stockholders		(15,370	)		(20,347	)		(27,532	)
Distributions paid to common stockholders		(163,001	)		(147,387	)		(128,188	)
Repurchases of common and preferred stock		(73,242	)		—			(71	)

Net cash (used in)/provided by financing activities		(21,530	)		347,299			70,944
Net increase in cash and cash equivalents		7,639			3,080			1,672
Cash and cash equivalents, beginning of year		7,904			4,824			3,152

Cash and cash equivalents, end of year	$	15,543		$	7,904		$	4,824


Supplemental Information:
Interest paid during the period	$	160,367		$	115,519		$	116,057
Non-cash transactions:
Conversion of operating partnership minority interests to common stock (99,573 shares in 2005, 170,209 shares in 2004, and 216,983 shares in 2003)		1,444			2,035			2,206
Conversion of minority interests in Series B, LLC		690			—			—
Issuance of restricted stock awards		7,709			3,250			5,297
Issuance of preferred stock in connection with acquisitions		—			—			58,811
Issuance of preferred operating partnership units in connection with acquisitions		—			—			26,872
Issuance of operating partnership units in connection with acquisitions		7,653			—			7,135
Cancellation of a note receivable with the acquisition of a property		—			8,000			—
Secured debt assumed with the acquisition of properties		26,825			311,714			4,865
Receipt of a note receivable in connection with sales of real estate investments		124,650			75,586			—
Deferred gain in connection with the sale of real estate investments		6,410			—			—

See accompanying notes to consolidated financial statements.

UNITED DOMINION REALTY TRUST, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(In thousands, except share data)


																			Deferred			Notes
																			Compensation-			Receivable			Accumulated
																Distributions in			Unearned			from			Other
	Preferred Stock						Common Stock						Paid-in			Excess of			Restricted			Officer-			Comprehensive
	Shares			Amount			Shares			Amount			Capital			Net Income			Stock Awards			Stockholders			Loss			Total
Balance, December 31, 2002		13,416,009		$	310,400			106,605,259		$	106,605		$	1,140,786		$	(541,428	)	$	(2,504	)	$	(2,630	)	$	(9,958	)	$	1,001,271

Comprehensive Income Net income																	70,404												70,404
Other comprehensive income:
Unrealized gain on derivative financial instruments																										8,096			8,096

Comprehensive income																	70,404									8,096			78,500

Issuance of common and restricted shares								1,546,525			1,547			18,664						(5,297	)								14,914
Issuance of common shares through public offering								9,700,000			9,700			154,936															164,636
Issuance of 8.00% Series E Cumulative Convertible shares		3,425,217			56,893									1,905															58,798
Common shares repurchased								(4,564	)		(5	)		(66	)														(71	)
Adjustment for conversion of minority interests of unitholders in operating partnerships								216,983			217			1,989															2,206
Principal repayments on notes receivable from officer-stockholders																							2,171						2,171
Accretion of premium on Series D conversions					19,271												(19,271	)											—
Conversion of 7.50% Series D Cumulative Convertible Redeemable shares		(6,000,000	)		(150,000	)		9,230,923			9,231			140,769															—
Common stock distributions declared ($1.14 per share)																	(134,876	)											(134,876	)
Preferred stock distributions declared-Series B ($2.15 per share)																	(11,645	)											(11,645	)
Preferred stock distributions declared-Series D ($2.04 per share)																	(12,178	)											(12,178	)
Preferred stock distributions declared-Series E ($0.84 per share)																	(2,503	)											(2,503	)
Amortization of deferred compensation																				2,213									2,213

Balance, December 31, 2003		10,841,226			236,564			127,295,126			127,295			1,458,983			(651,497	)		(5,588	)		(459	)		(1,862	)		1,163,436

Comprehensive Income Net income																	97,152												97,152
Other comprehensive income:
Unrealized gain on derivative financial instruments																										1,862			1,862

Comprehensive income																	97,152									1,862			99,014

Issuance of common and restricted shares								769,083			769			10,171															10,940
Issuance of common shares through public offering								4,497,000			4,497			86,804															91,301
Adjustment for conversion of minority interests of unitholders in operating partnerships								170,209			170			1,865															2,035
Principal repayments on notes receivable from officer-stockholders																							459						459
Accretion of premium on Series D conversions					5,729												(5,729	)											—
Conversion of 7.50% Series D Cumulative Convertible Redeemable shares		(2,000,000	)		(50,000	)		3,076,769			3,077			46,923															—
Conversion of 8.00% Series E Cumulative Convertible shares		(621,405	)		(10,322	)		621,405			622			9,700															—
Common stock distributions declared ($1.17 per share)																	(152,203	)											(152,203	)

UNITED DOMINION REALTY TRUST, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY — (Continued)
(In thousands, except share data)


																	Deferred		Notes
																	Compensation-		Receivable		Accumulated
														Distributions in			Unearned		from		Other
	Preferred Stock				Common Stock						Paid-in			Excess of			Restricted		Officer-		Comprehensive
	Shares		Amount		Shares			Amount			Capital			Net Income			Stock Awards		Stockholders		Loss		Total
Preferred stock distributions declared-Series B ($2.15 per share)															(11,644	)								(11,644	)
Preferred stock distributions declared-Series D ($2.09 per share)															(3,473	)								(3,473	)
Preferred stock distributions declared-Series E ($1.33 per share)															(4,414	)								(4,414	)
Adjustment for FASB 123 adoption												(5,588	)					5,588						—

Balance, December 31, 2004		8,219,821		181,971		136,429,592			136,430			1,608,858			(731,808	)		—		—		—		1,195,451

Comprehensive Income Net income															155,166									155,166

Comprehensive income															155,166									155,166

Issuance of common and restricted shares						663,238			680			6,595												7,275
Common shares repurchased						(3,180,350	)		(32	)		(73,210	)											(73,242	)
Adjustment for change in par value from $1.00 to $0.01									(135,822	)		135,822												—
Adjustment for conversion of minority interests of unitholders in operating partnerships						99,573			84			1,360												1,444
Adjustment for conversion of minority interests in Series B LLC												690												690
Common stock distributions declared ($1.20 per share)															(163,690	)								(163,690	)
Preferred stock distributions declared-Series B ($2.15 per share)															(11,644	)								(11,644	)
Preferred stock distributions declared-Series E ($1.33 per share)															(3,726	)								(3,726	)

Balance, December 31, 2005		8,219,821	$	181,971		134,012,053		$	1,340		$	1,680,115		$	(755,702	)	$	—	$	—	$	—	$	1,107,724

See accompanying notes to consolidated financial statements.

UNITED DOMINION REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2005

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization and formation

United Dominion Realty Trust, Inc., a Maryland corporation, was formed in 1972. United Dominion operates within one defined business segment with activities related to the ownership, management, development, acquisition, renovation, and disposition of multifamily apartment communities nationwide. At December 31, 2005, United Dominion owned 259 communities with 74,875 completed apartment homes and had five communities with 1,335 apartment homes under development.

Basis of presentation

The accompanying consolidated financial statements include the accounts of United Dominion and its subsidiaries, including United Dominion Realty, L.P., (the “Operating Partnership”), and Heritage Communities L.P. (the “Heritage OP”), (collectively, “United Dominion”). As of December 31, 2005, there were 166,300,080 units in the Operating Partnership outstanding, of which 156,122,288 units or 93.9% were owned by United Dominion and 10,177,792 units or 6.1% were owned by limited partners (of which 1,764,662 are owned by the holders of the Series A OPPS, see below). As of December 31, 2005, there were 5,542,200 units in the Heritage OP outstanding, of which 5,203,572 units or 93.9% were owned by United Dominion and 338,628 units or 6.1% were owned by limited partners. The consolidated financial statements of United Dominion include the minority interests of the unitholders in the Operating Partnership and the Heritage OP. All significant intercompany accounts and transactions have been eliminated in consolidation.

Use of estimates

The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities at the dates of the financial statements and the amounts of revenues and expenses during the reporting periods. Actual amounts realized or paid could differ from those estimates. Certain previously reported amounts have been reclassified to conform to the current financial statement presentation.

Real estate

Real estate assets held for investment are carried at historical cost less accumulated depreciation and any recorded impairment losses.

Expenditures for ordinary repair and maintenance costs are charged to expense as incurred. Expenditures for improvements, renovations, and replacements related to the acquisition and/or improvement of real estate assets are capitalized at cost and depreciated over their estimated useful lives if the value of the existing asset will be materially enhanced or the life of the related asset will be substantially extended beyond the original life expectancy.

United Dominion recognizes impairment losses on long-lived assets used in operations when there is an event or change in circumstance that indicates an impairment in the value of an asset and the undiscounted future cash flows are not sufficient to recover the asset’s carrying value. Our cash flow estimates are based upon historical results adjusted to reflect our best estimate of future market and operating conditions and our estimated holding periods. If such indicators of impairment are present, an impairment loss is recognized based on the excess of the carrying amount of the asset over its fair value. Our estimates of fair market value represent our best estimate based upon industry trends and reference to market rates and transactions.

United Dominion purchases real estate investment properties from time to time and allocates the purchase price to various components, such as land, buildings, and intangibles related to in-place leases in accordance with FASB Statement No. 141, “Business Combinations.” The purchase price is allocated based on the relative fair value of each component. The fair value of buildings is determined as if the buildings were vacant upon acquisition and subsequently leased at market rental rates. As such, the determination of fair value considers the present value of all

UNITED DOMINION REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2005

cash flows expected to be generated from the property including an initial lease up period. United Dominion determines the fair value of in-place leases by assessing the net effective rent and remaining term of the lease relative to market terms for similar leases at acquisition. The fair value of in-place leases is recorded and amortized as amortization expense over the remaining contractual lease period. United Dominion determines the fair value of in-place leases by considering the cost of acquiring similar leases, the foregone rents associated with the lease-up period, and the carrying costs associated with the lease-up period.

For long-lived assets to be disposed of, impairment losses are recognized when the fair value of the asset less estimated cost to sell is less than the carrying value of the asset. Properties classified as real estate held for disposition generally represent properties that are under contract for sale. Real estate held for disposition is carried at the lower of cost, net of accumulated depreciation, or fair value, less the cost to dispose, determined on an asset-by-asset basis. Expenditures for ordinary repair and maintenance costs on held for disposition properties are charged to expense as incurred. Expenditures for improvements, renovations, and replacements related to held for disposition properties are capitalized at cost. Depreciation is not recorded on real estate held for disposition.

Depreciation is computed on a straight-line basis over the estimated useful lives of the related assets which is 35 years for buildings, 10 to 35 years for major improvements, and 3 to 10 years for furniture, fixtures, equipment, and other assets. The value of acquired in-place leases is amortized over the remaining term of each acquired in-place lease.

All development projects and related carrying costs are capitalized and reported on the Consolidated Balance Sheet as “Real estate under development.” As each building in a project is completed and becomes available for lease-up, the total cost of the building is transferred to real estate held for investment and the assets are depreciated over their estimated useful lives. The cost of development projects includes interest, real estate taxes, insurance, and allocated development overhead during the construction period.

Interest, real estate taxes, and incremental labor and support costs for personnel working directly on the development site are capitalized as part of the real estate under development to the extent that such charges do not cause the carrying value of the asset to exceed its net realizable value. During 2005, 2004, and 2003, total interest capitalized was $2.8 million, $1.0 million, and $1.8 million, respectively.

Cash equivalents

Cash equivalents include all cash and liquid investments with maturities of three months or less when purchased.

Restricted cash

Restricted cash consists of escrow deposits held by lenders for real estate taxes, insurance and replacement reserves, and security deposits.

Deferred financing costs

Deferred financing costs include fees and other external costs incurred to obtain debt financings and are generally amortized on a straight-line basis, which approximates the effective interest method, over a period not to exceed the term of the related debt. Unamortized financing costs are written-off when debt is retired before its maturity date. During 2005, 2004, and 2003, amortization expense was $6.5 million, $5.1 million, and $4.7 million, respectively.

Investments in unconsolidated development joint ventures

Investments in unconsolidated joint ventures are accounted for using the equity method when major business decisions require approval by the other partners and United Dominion does not have control of the assets. Investments are recorded at cost and subsequently adjusted for equity in net income (loss) and cash contributions and distributions. United Dominion eliminates intercompany profits on sales of services that are provided to joint ventures. Differences between the carrying value of investments and the underlying equity in net assets of the

UNITED DOMINION REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2005

investee are due to capitalized interest on the investment balance and capitalized development and leasing costs that are recovered by United Dominion through fees during construction.

Revenue recognition

United Dominion’s apartment homes are leased under operating leases with terms generally of one year or less. Rental income is recognized after it is earned and collectability is reasonably assured.

Advertising costs

All advertising costs are expensed as incurred and reported on the Consolidated Statements of Operations within the line item “Administrative and marketing.” During 2005, 2004, and 2003, total advertising expense was $11.2 million, $10.5 million, and $10.6 million, respectively

Interest rate swap agreements

United Dominion accounts for its derivative instruments in accordance with Statements of Financial Accounting Standards No. 133 and No. 138, “Accounting for Certain Derivative Instruments and Hedging Activities.” At December 31, 2005, United Dominion has no derivative financial instruments reported on its Consolidated Balance Sheet. Prior to their maturity in July 2004, United Dominion’s derivative financial instruments consisted of interest rate swap agreements that were designated as cash flow hedges of debt with variable interest rate features, and as qualifying hedges for financial reporting purposes. For a derivative instrument that qualifies as a cash flow hedge, the effective portion of the gain or loss on the derivative instrument is reported as a component of other comprehensive income and reclassified into earnings during the same period or periods during which the hedged transaction affects earnings. The remaining gain or loss on the derivative instrument in excess of the cumulative change in the present value of future cash flows of the hedged item, if any, is recognized in current earnings during the period of change.

As part of United Dominion’s overall interest rate risk management strategy, we used derivative financial instruments as a means to artificially fix variable rate debt or to hedge anticipated financing transactions. United Dominion’s derivative transactions used for interest rate risk management included various interest rate swaps with indices that related to the pricing of specific financial instruments of United Dominion. Because of the close correlation between the hedging instrument and the underlying cash flow exposure being hedged, fluctuations in the value of the derivative instruments were generally offset by changes in the cash flow of the underlying exposures. As a result, United Dominion appropriately controlled the risk so that derivatives used for interest rate risk management would not have a material unintended effect on consolidated earnings. United Dominion does not enter into derivative financial instruments for trading purposes.

The fair value of United Dominion’s derivative instruments were reported on the balance sheet at their current fair value. The estimated fair value for our interest rate swaps relied on prevailing market interest rates. The interest rate swap agreements were designated with all or a portion of the principal balance and term of a specific debt obligation. Each interest rate swap involved the periodic exchange of payments over the life of the related agreement. An amount received or paid on the interest rate swap was recorded on an accrual basis as an adjustment to the related interest expense of the outstanding debt based on the accrual method of accounting. The related amount payable to and receivable from counterparties was included in other liabilities and other assets, respectively.

When the terms of the underlying transaction were modified, or when the underlying hedged item ceased to exist, all changes in the fair value of the instrument were marked-to-market with changes in value included in net income each period until the instrument matured, unless the instrument was redesignated as a hedge of another transaction. If a derivative instrument was terminated or the hedging transaction was no longer determined to be effective, amounts held in accumulated other comprehensive income were reclassified into earnings over the term of the future cash outflows on the related debt.

UNITED DOMINION REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2005

Comprehensive income

Comprehensive income, which is defined as all changes in equity during each period except for those resulting from investments by or distributions to stockholders, is displayed in the accompanying Statements of Stockholders’ Equity. Other comprehensive income for 2004 and 2003 consisted of unrealized gains or losses from derivative financial instruments.

Stock-based employee compensation plans

United Dominion adopted the fair-value-based method of accounting for share-based payments effective January 1, 2004 using the prospective method described in FASB Statement No. 148, “Accounting for Stock-Based Compensation — Transition and Disclosure.” Currently, United Dominion uses the Black-Scholes-Merton formula to estimate the value of stock options granted to employees and expects to continue to use this acceptable option valuation model upon the required adoption of Statement 123(R) on January 1, 2006. Because Statement 123(R) must be applied not only to new awards but to previously granted awards that are not fully vested on the effective date, and because United Dominion adopted Statement 123 using the prospective transition method (which applied only to awards granted, modified or settled after the adoption date), compensation cost for some previously granted awards that were not recognized under Statement 123 will be recognized under Statement 123(R). We do not anticipate that the adoption of Statement 123(R) will have a material impact on our financial statements.

Minority interests in operating partnerships

Interests in operating partnerships held by limited partners are represented by operating partnership units (“OP Units”). The operating partnerships’ income is allocated to holders of OP Units based upon net income available to common stockholders and the weighted average number of OP Units outstanding to total common shares plus OP Units outstanding during the period. Capital contributions, distributions, and profits and losses are allocated to minority interests in accordance with the terms of the individual partnership agreements. OP Units can be exchanged for cash or shares of United Dominion’s common stock on a one-for-one basis, at the option of United Dominion. OP Units, as a percentage of total OP Units and shares outstanding, were 5.9% at December 31, 2005, 6.3% at December 31, 2004, and 6.4% at December 31, 2003.

During 2003, we issued 1,617,815 Preferred Operating Partnership Units (“Preferred OP Units”) totaling $26.9 million as partial consideration for the purchase of four communities. The Preferred OP Units carry a fixed coupon of 8.0% ($1.33 per share) until such time as the common share dividend is equal to or exceeds this amount for four consecutive quarters, at which time the Preferred OP Units will be entitled to receive dividends equivalent to the dividend paid to holders of common stock.

Minority interests in other partnerships

United Dominion has limited partners in certain real estate partnerships acquired in certain merger transactions. Net income for these partnerships is allocated based upon the percentage interest owned by these limited partners in each respective real estate partnership.

Earnings per share

Basic earnings per common share is computed based upon the weighted average number of common shares outstanding during the year. Diluted earnings per common share is computed based upon common shares outstanding plus the effect of dilutive stock options and other potentially dilutive common stock equivalents. The dilutive effect of stock options and other potentially dilutive common stock equivalents is determined using the treasury stock method based on United Dominion’s average stock price.

UNITED DOMINION REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2005

The following table sets forth the computation of basic and diluted earning per share (dollars in thousands, except per share amounts):


	2005			2004			2003
Numerator for basic and diluted earnings per share -
Net income available to common stockholders	$	139,796		$	71,892		$	24,807
Denominator:
Denominator for basic earnings per share -
Weighted average common shares outstanding		136,920			128,711			115,109
Non-vested restricted stock awards		(777	)		(614	)		(437	)

		136,143			128,097			114,672

Effect of dilutive securities:
Employee stock options and non-vested restricted stock awards		—			—			—

Denominator for dilutive earnings per share		136,143			128,097			114,672

Basic earnings per share	$	1.03		$	0.56		$	0.22

Diluted earnings per share	$	1.03		$	0.56		$	0.22

The effect of the conversion of the operating partnership units, Series A Out-Performance Partnership Shares, and convertible preferred stock is not dilutive and is therefore not included in the above calculations. If the operating partnership units were converted to common stock, the additional shares of common stock outstanding for the three years ended December 31, 2005, would be 10,324,037, 10,460,639, and 9,690,883 weighted average common shares, respectively. If the Series A Out-Performance Partnership Shares were converted to common stock, the additional shares of common stock outstanding for the three years ended December 31, 2005, would be 1,778,251, 1,791,329, and 1,853,204 weighted average common shares, respectively. If the convertible preferred stock were converted to common stock, the additional shares of common stock outstanding for the three years ended December 31, 2005, would be 2,803,812, 6,301,821, and 11,636,293 weighted average common shares, respectively.

Income taxes

United Dominion is operated as, and elects to be taxed as, a real estate investment trust (“REIT”) under the Internal Revenue Code of 1986, as amended (the “Code”). Generally, a REIT complies with the provisions of the Code if it meets certain requirements concerning its income and assets, as well as if it distributes at least 90% of its REIT taxable income to its stockholders and will not be subject to U.S. federal income taxes if it distributes at least 100% of its income. Accordingly, no provision has been made for federal income taxes of the REIT. United Dominion is subject to certain state and local excise or franchise taxes, for which provision has been made. If we fail to qualify as a REIT in any taxable year, our taxable income will be subject to United States Federal income tax at regular corporate rates (including any applicable alternative minimum tax). Even if we qualify as a REIT, we may be subject to certain state and local income taxes and to United States Federal income tax. We also will be required to pay a 100% tax on non-arms length transactions between us and a taxable REIT subsidiary and on any net income from sales of property that the IRS successfully asserts was property held for sale to customers in the ordinary course.

The differences between net income available to common stockholders for financial reporting purposes and taxable income before dividend deductions relate primarily to temporary differences, principally real estate depreciation and the tax deferral of certain gains on property sales. The differences in depreciation result from differences in the book and tax basis of certain real estate assets and the differences in the methods of depreciation and lives of the real estate assets.

Impact of recently issued accounting pronouncements

In March 2005, the FASB issued FASB Interpretation No. 47, “Accounting for Conditional Asset Retirement Obligations, an Interpretation of FASB Statement No. 143, Asset Retirement Obligations” (FIN 47). A conditional asset retirement obligation refers to a legal obligation to retire assets where the timing and/or method of settlement are conditioned on future events. FIN 47 requires an entity to recognize a liability for the fair value of a conditional asset retirement obligation when incurred if the liability’s fair value can be reasonably estimated. We adopted the

UNITED DOMINION REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2005

provisions of FIN 47 for the year ended December 31, 2005. The adoption of this Interpretation did not have a material impact on our consolidated financial position, results of operations or cash flows.

In June 2005, the FASB ratified its consensus in EITF Issue 04-05, “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” (Issue 04-05). The effective date for Issue 04-05 is June 29, 2005 for all new or modified partnerships and January 1, 2006 for our remaining partnerships for the applicable provisions. The adoption of the provisions of EITF 04-05 is not anticipated to have a material impact on our financial position or results of operations.

2. REAL ESTATE OWNED

United Dominion operates in 43 markets dispersed throughout 16 states. At December 31, 2005, our largest apartment market was Southern California, where we owned 21.5% of our apartment homes, based upon carrying value. Excluding Southern California, United Dominion did not own more than 7.2% of its apartment homes in any one market, based upon carrying value.

The following table summarizes real estate held for investment at December 31, with restated amounts that reflect discontinued operations as of September 30, 2006 (dollars in thousands):


	2005			2004
Land and land improvements	$	1,219,540		$	1,077,373
Buildings and improvements		3,469,817			3,097,762
Furniture, fixtures, and equipment		244,143			201,450

Real estate held for investment		4,933,500			4,376,585
Accumulated depreciation		(1,002,455	)		(814,623	)

Real estate held for investment, net	$	3,931,045		$	3,561,962

The following is a reconciliation of the carrying amount of real estate held for investment at December 31, with restated amounts that reflect discontinued operations as of September 30, 2006 (dollars in thousands):


	2005		2004		2003
Balance at beginning of year	$	4,376,585	$	3,258,723	$	3,220,769
Real estate acquired		403,591		1,025,066		399,425	(a)
Capital expenditures		153,324		92,796		45,302
Transfers from development		—		—		12,157
Transfers to held for disposition, net		—		—		(415,930	)

Balance at end of year	$	4,933,500	$	4,376,585	$	3,258,723


(a)		In connection with one of our acquisitions in 2003, United Dominion acquired a note receivable for $5 million that is due October 2011. The note bears interest of 9.0% that is payable in annual installments.

The following is a reconciliation of accumulated depreciation for real estate held for investment at December 31, with restated amounts that reflect discontinued operations as of September 30, 2006 (dollars in thousands):


	2005			2004		2003
Balance at beginning of year	$	814,623		$	670,226	$	626,327
Depreciation expense for the year (b)		189,510			144,397		120,560
Transfers to wholly owned taxable REIT subsidiary		(1,678	)		—		—
Transfers to held for disposition, net		—			—		(76,661	)

Balance at end of year	$	1,002,455		$	814,623	$	670,226


(b)		Includes $0.8 million, $0.8 million, and $1.0 million for 2005, 2004, and 2003, respectively, related to depreciation on non-real estate assets located at United Dominion’s apartment communities, classified as “Other depreciation and amortization” on the Consolidated Statements of Operations. Excludes $4.8 million, $3.4 million, and $1.3 million in 2005, 2004, and 2003, respectively, of amortization expense on the fair market value of in-place leases at the time of acquisition.

UNITED DOMINION REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2005

The following is a summary of real estate held for investment by major geographic markets (in order of carrying value, excluding real estate held for disposition and real estate under development) at December 31, 2005, with restated amounts that reflect discontinued operations as of September 30, 2006 (dollars in thousands):


	Number of		Initial
	Apartment		Acquisition		Carrying		Accumulated
	Communities		Cost		Value		Depreciation		Encumbrances
MID-ATLANTIC REGION
Metropolitan DC		8	$	226,964	$	251,024	$	28,044	$	30,691
Raleigh, NC		11		179,935		218,931		69,640		63,752
Baltimore, MD		10		146,257		169,951		37,096		13,286
Richmond, VA		9		106,326		156,903		52,635		61,532
Charlotte, NC		6		63,833		81,955		19,863		—
Wilmington, NC		6		64,213		98,512		34,592		—
Norfolk, VA		6		42,741		68,968		27,877		9,117
Other North Carolina		4		15,904		28,054		17,472		—
Other Mid-Atlantic		6		46,135		61,200		20,184		16,770
Other Virginia		3		30,946		48,888		15,138		19,462

WESTERN REGION
Southern California		26		1,014,412		1,062,700		61,347		230,292
Northern California		10		334,096		356,640		42,186		67,354
Seattle, WA		6		107,717		113,371		12,210		54,869
Monterey Peninsula, CA		7		85,323		140,507		22,135		—
Portland, OR		5		76,990		81,625		11,223		17,790

SOUTHEASTERN REGION
Tampa, FL		12		203,254		251,435		57,456		61,749
Orlando, FL		14		167,524		230,968		79,061		69,311
Nashville, TN		9		111,843		156,721		41,703		28,976
Jacksonville, FL		4		82,396		103,277		25,411		—
Atlanta, GA		6		57,669		78,116		28,611		18,558
Columbia, SC		6		52,795		67,911		27,082		—
Other Florida		5		98,298		111,025		17,872		44,873
Other Southeastern		1		1,814		7,905		4,759		—

SOUTHWESTERN REGION
Houston, TX		16		185,965		253,408		67,194		39,604
Arlington, TX		6		75,335		91,340		25,065		18,375
Denver, CO		2		64,362		68,673		15,031		—
Phoenix, AZ		3		45,168		66,268		19,209		22,135
Dallas, TX		3		84,452		89,800		15,747		51,971
Austin, TX		5		75,779		83,484		19,574		6,073
Other Southwestern		6		122,301		144,399		39,215		41,674

MIDWESTERN REGION
Columbus, OH		6		111,315		160,093		40,016		39,278
Other Midwestern		3		20,241		23,980		5,720		5,985
Richmond Corporate		—		6,597		2,212		1,435		3,724
Commercial		—		3,225		3,256		652		—

		230	$	4,112,155	$	4,933,500	$	1,002,455	$	1,037,201

UNITED DOMINION REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2005

The following is a summary of real estate held for disposition by major category at December 31, 2005, with restated amounts that reflect discontinued operations as of September 30, 2006 (dollars in thousands):


			Initial
	Number of		Acquisition		Carrying		Accumulated
	Properties		Cost		Value		Depreciation		Encumbrances
Apartments		31	$	429,931	$	483,771	$	121,234	$	53,733
Land		2		4,152		4,244		—		—

			$	434,083	$	488,015	$	121,234	$	53,733

The following is a summary of real estate under development by major category at December 31, 2005, with restated amounts that reflect discontinued operations as of September 30, 2006 (dollars in thousands):


			Initial
	Number of		Acquisition		Carrying		Accumulated
	Properties		Cost		Value		Depreciation		Encumbrances
Apartments		2	$	29,300	$	70,378	$	140	$	25,325
Land		3		20,531		20,531		—		—

			$	49,831	$	90,909	$	140	$	25,325

Total Real Estate Owned			$	4,596,069	$	5,512,424	$	1,123,829	$	1,116,259

In 2005, $2.5 million of hurricane related insurance recoveries were recorded. In 2004, United Dominion recognized a $5.5 million charge to cover expenses associated with the damage in Florida caused by hurricanes Charley, Frances, and Jeanne. United Dominion reported that 25 of its 34 Florida communities were affected by the hurricanes.

In 2003, United Dominion recognized a $1.4 million charge for the write-off of its investment in Realeum, Inc., an unconsolidated development joint venture created to develop web-based solutions for multifamily property and portfolio management.

3. INCOME FROM DISCONTINUED OPERATIONS

United Dominion adopted FASB Statement No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” (FAS 144) as of January 1, 2002. FAS 144 requires, among other things, that the primary assets and liabilities and the results of operations of United Dominion’s real properties which have been sold subsequent to January 1, 2002, or are held for disposition subsequent to January 1, 2002, be classified as discontinued operations and segregated in United Dominion’s Consolidated Statements of Operations and Balance Sheets. Properties classified as real estate held for disposition generally represent properties that are under contract for sale and are expected to close within the next twelve months. For purposes of these financial statements, FAS 144 results in the presentation of the primary assets and liabilities and the net operating results of those properties sold or classified as held for disposition through September 30, 2006, as discontinued operations for all periods presented. The adoption of FAS 144 does not have an impact on net income available to common stockholders. FAS 144 only results in the reclassification of the operating results of all properties sold or classified as held for disposition through September 30, 2006 within the Consolidated Statements of Operations for the years ended December 31, 2005, 2004, and 2003, and the reclassification of the assets and liabilities within the Consolidated Balance Sheets as of December 31, 2005 and 2004.

For the year ended December 31, 2005, United Dominion sold 22 communities with a total of 6,352 apartment homes, 240 condominiums from five communities with a total of 648 condominiums, and one parcel of land. We recognized gains for financial reporting purposes of $139.7 million on these sales. At December 31, 2005, United Dominion had four communities with a total of 384 condominiums and a net book value of $29.1 million, and two parcels of land with a net book value of $5.2 million included in real estate held for disposition. In conjunction with the sale of ten communities in July 2005, we received short-term notes for $124.7 million that bear interest at 6.75% and had maturities ranging from September 2005 to July 2006. As of December 31, 2005, the balance on the notes receivable was $59.8 million. We recognized gains for financial reporting purposes of $15.2 million and will recognize $6.4 million in additional gains in 2006 as the notes receivable mature and are paid. During 2004, United Dominion sold 19 communities with a total of 5,425 apartment homes, 24 condominiums from a community of 36 condominiums, and one parcel of land. During 2003, United Dominion sold seven communities with a total of 1,927 apartment homes and two commercial properties. The results of operations for these properties and the interest expense associated with the secured debt on these properties are classified on the Consolidated Statements of Operations in the line item titled “Income from discontinued operations, net of minority interests.”

UNITED DOMINION REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2005

The following is a summary of income from discontinued operations for the years ended December 31, with restated amounts that reflect discontinued operations as of September 30, 2006 (dollars in thousands):


	2005			2004			2003
Rental income	$	80,338		$	136,798		$	163,659
Non-property loss		(1,717	)		(2	)		—

		78,621			136,796			163,659

Rental expenses		35,557			58,073			66,745
Real estate depreciation		18,914			33,446			42,214
Interest (income)/expense		(52	)		1,972			2,877
Loss on early debt retirement		1,821			—			—
Other expenses		111			258			343

		56,351			93,749			112,179

Income before net gain on the sale of land and depreciable property, and minority interests		22,270			43,047			51,480
Net gain on the sale of land and depreciable property		139,724			52,903			15,941

Income before minority interests		161,994			95,950			67,421
Minority interests on income from discontinued operations		(9,525	)		(6,054	)		(4,295	)

Income from discontinued operations, net of minority interests	$	152,469		$	89,896		$	63,126

4. SECURED DEBT

Secured debt on continuing and discontinued operations of United Dominion’s real estate portfolio, which encumbers $1.9 billion or 35% of real estate owned based upon book value ($3.6 billion or 65% of United Dominion’s real estate owned is unencumbered) consists of the following as of December 31, 2005 (dollars in thousands):


					Weighted			Weighted		Number of
	Principal Outstanding				Average			Average		Communities
	December 31,		December 31,		Interest Rate			Years to Maturity		Encumbered
	2005		2004		2005			2005		2005
Fixed Rate Debt
Mortgage notes payable	$	359,281	$	428,223		5.33	%		5.4		14
Tax-exempt secured notes payable		26,400		39,160		5.85	%		19.1		3
Fannie Mae credit facilities		363,875		288,875		6.09	%		5.3		9

Total fixed rate secured debt		749,556		756,258		5.71	%		5.8		26

Variable Rate Debt
Mortgage notes payable		66,464		45,758		5.40	%		5.1		4
Tax-exempt secured note payable.		7,770		7,770		3.45	%		22.5		1
Fannie Mae credit facilities		292,469		367,469		4.71	%		6.9		47
Freddie Mac credit facility		—		20,669		n/a			n/a		n/a

Total variable rate secured debt		366,703		441,666		4.81	%		6.9		52

Total secured debt	$	1,116,259	$	1,197,924		5.42	%		6.2		78

UNITED DOMINION REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2005

Fixed Rate Debt

Mortgage notes payable Fixed rate mortgage notes payable are generally due in monthly installments of principal and interest and mature at various dates from September 2006 through July 2027 and carry interest rates ranging from 4.10% to 7.87%.

Tax-exempt secured notes payable Fixed rate mortgage notes payable that secure tax-exempt housing bond issues mature at various dates from May 2008 through March 2031 and carry interest rates ranging from 5.30% to 6.47%. Interest on these notes is generally payable in semi-annual installments.

Secured credit facilities At December 31, 2005, United Dominion’s fixed rate secured credit facilities consisted of $363.9 million of the $656.3 million outstanding on an $860 million aggregate commitment under four revolving secured credit facilities with Fannie Mae. The Fannie Mae credit facilities are for an initial term of ten years, bear interest at floating and fixed rates, and can be extended for an additional five years at our discretion. As of December 31, 2005, the fixed rate Fannie Mae credit facilities had a weighted average fixed rate of interest of 6.09%.

Variable Rate Debt

Mortgage notes payable Variable rate mortgage notes payable are generally due in monthly installments of principal and interest and mature at various dates from May 2006 through July 2013. As of December 31, 2005, these notes had interest rates ranging from 4.82% to 6.23%.

Tax-exempt secured note payable The variable rate mortgage note payable that secures tax-exempt housing bond issues matures in July 2028. As of December 31, 2005, this note had an interest rate of 3.45%. Interest on this note is payable in monthly installments.

Secured credit facilities At December 31, 2005, United Dominion’s variable rate secured credit facilities consisted of $292.5 million outstanding on the Fannie Mae credit facilities. As of December 31, 2005, the variable rate Fannie Mae credit facilities had a weighted average floating rate of interest of 4.71%.

The aggregate maturities of secured debt for the fifteen years subsequent to December 31, 2005 are as follows (dollars in thousands):


	Fixed						Variable
	Mortgage		Tax-Exempt		Credit		Mortgage		Tax-Exempt		Credit
Year	Notes		Notes		Facilities		Notes		Notes		Facilities		TOTAL
2006	$	31,703	$	320	$	—	$	4,750	$	—	$	—	$	36,593
2007		81,247		345		—		901		—		—		82,493
2008		4,109		5,145		—		23,578		—		—		32,832
2009		4,330		245		—		—		—		—		4,575
2010		98,007		265		138,875		—		—		—		237,147
2011		11,797		280		125,000		—		—		39,513		176,590
2012		50,312		300		100,000		—		—		52,956		203,568
2013		61,885		315		—		37,415		—		200,000		299,615
2014		704		340		—		—		—		—		1,044
2015		756		360		—		—		—		—		1,116
2016		812		—		—		—		—		—		812
2017		873		—		—		—		—		—		873
2018		939		—		—		—		—		—		939
2019		1,010		—		—		—		—		—		1,010
2020		1,087		—		—		—		—		—		1,087
Thereafter		9,710		18,485		—		—		7,770		—		35,965

	$	359,281	$	26,400	$	363,875	$	66,464	$	7,770	$	292,469	$	1,116,259

UNITED DOMINION REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2005

During the first quarter of 2005, we prepaid approximately $110 million of secured debt. In conjunction with these prepayments, we incurred prepayment penalties of $8.5 million in both continuing and discontinued operations as “Loss on early debt retirement.” These penalties were funded by the proceeds from the sale of our technology investment of $12.3 million.

5. UNSECURED DEBT

A summary of unsecured debt as of December 31, 2005 and 2004 is as follows (dollars in thousands):


	2005		2004
Commercial Banks
Borrowings outstanding under an unsecured credit facility due May 2008 (a)	$	210,800	$	278,100
Senior Unsecured Notes — Other
7.73% Medium-Term Notes due April 2005		—		21,100
7.02% Medium-Term Notes due November 2005		—		49,760
7.95% Medium-Term Notes due July 2006		85,374		85,374
7.07% Medium-Term Notes due November 2006		25,000		25,000
7.25% Notes due January 2007		92,255		92,255
4.30% Medium-Term Notes due July 2007		75,000		75,000
4.50% Medium-Term Notes due March 2008		200,000		200,000
8.50% Monthly Income Notes due November 2008		29,081		29,081
4.25% Medium-Term Notes due January 2009		50,000		50,000
6.50% Notes due June 2009		200,000		200,000
3.90% Medium-Term Notes due March 2010		50,000		50,000
5.00% Medium-Term Notes due January 2012		100,000		100,000
5.13% Medium-Term Notes due January 2014		200,000		200,000
5.25% Medium-Term Notes due January 2015		250,000		100,000
5.25% Medium-Term Notes due January 2016		100,000		—
8.50% Debentures due September 2024		54,118		54,118
4.00% Convertible Senior Notes due December 2035 (b)		250,000		—
Other (c)		370		750

		1,761,198		1,332,438

Unsecured Notes — Other
Verano Construction Loan due February 2006		24,820		24,820
ABAG Tax-Exempt Bonds due August 2008		46,700		46,700

		71,520		71,520

Total Unsecured Debt	$	2,043,518	$	1,682,058


(a)		During the second quarter of 2005, United Dominion amended and restated its $500 million unsecured revolving credit facility and extended the term an additional two years. The credit facility matures on May 31, 2008, and at United Dominion’s option, can be extended for an additional year. United Dominion has the right to increase the credit facility to $750 million if the initial lenders increase their commitments or we receive commitments from additional lenders. Based on United Dominion’s current credit ratings, the credit facility carries an interest rate equal to LIBOR plus a spread of 57.5 basis points, which represents a 12.5 basis point reduction to the previous unsecured revolver, and the facility fee was reduced from 20 basis points to 15 basis points. Under a competitive bid feature and for so long as United Dominion maintains an Investment Grade Rating, United Dominion has the right to bid out 100% of the commitment amount.

(b)		Prior to December 15, 2030, upon the occurrence of specified events, the notes will be convertible at the option of the holder into cash and, in certain circumstances, shares of United Dominion’s common stock at an initial conversion rate of 35.2988 shares per $1,000 principal amount of notes (which equates to an initial conversion price of approximately $28.33 per share). On or after December 15, 2030, the notes will be convertible at any time prior to the second business day prior to maturity at the option of the holder into cash and, in certain circumstances, shares of United Dominion’s common stock at the above initial conversion rate. The initial conversion rate is subject to adjustment in certain circumstances.

(c)		Represents deferred gains from the termination of interest rate risk management agreements.

UNITED DOMINION REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2005

The following is a summary of short-term bank borrowings under United Dominion’s bank credit facility at December 31, (dollars in thousands):


	2005			2004			2003
Total revolving credit facilities at December 31	$	500,000		$	500,000		$	500,000
Borrowings outstanding at December 31		210,800			278,100			137,900
Weighted average daily borrowings during the year		315,487			127,665			171,179
Maximum daily borrowings during the year		440,200			356,500			272,800
Weighted average interest rate during the year		3.6	%		2.0	%		2.1	%
Weighted average interest rate at December 31		4.7	%		2.7	%		1.6	%
Weighted average interest rate at December 31 - after giving effect to swap agreements		n/a			n/a			4.2	%

At December 31, 2004, all of United Dominion’s interest rate swap agreements associated with commercial bank borrowings had matured.

6. STOCKHOLDERS’ EQUITY

Preferred Stock

The Series B Cumulative Redeemable Preferred Stock has no stated par value and a liquidation preference of $25 per share. The Series B has no voting rights except as required by law. The Series B has no stated maturity and is not subject to any sinking fund or mandatory redemption and is not convertible into any of our other securities. The Series B is not redeemable prior to May 29, 2007. On or after this date, the Series B may be redeemed for cash at our option, in whole or in part, at a redemption price of $25 per share plus accrued and unpaid dividends. The redemption price is payable solely out of the sale proceeds of our other capital stock. All dividends due and payable on the Series B have been accrued or paid as of the end of each fiscal year.

Distributions declared on the Series B in 2005 were $2.15 per share or $0.5375 per quarter. The Series B is listed on the NYSE under the symbol “UDRpb.” At December 31, 2005, a total of 5,416,009 shares of the Series B were outstanding.

All of the remaining outstanding shares of our Series D Cumulative Convertible Redeemable Preferred Stock were converted by the holder into shares of our common stock. The Series D had no stated maturity, no stated par value, no voting rights except as required by law, and a liquidation preference of $25 per share. The Series D was convertible at any time into 1.5385 shares of common stock, subject to certain adjustments, at the option of the holder of the Series D. We had the option to redeem at any time all or part of the Series D at a price per share of $25, payable in cash, plus all accrued and unpaid dividends, provided that the current market price of our common stock was at least equal to the conversion price, initially set at $16.25 per share.

In 2004, we exercised our right to redeem the remaining 2 million shares of our Series D that were outstanding. Upon receipt of our redemption notice, the shares to be redeemed were converted by the holder into 3,076,769 shares of common stock at a price of $16.25 per share. In 2003, we exercised our right to redeem 6 million shares of our Series D. Upon receipt of our redemption notice, the 6 million shares to be redeemed were converted by the holder into 9,230,923 shares of common stock at a price of $16.25 per share.

The Series E Cumulative Convertible Preferred Stock has no stated par value and a liquidation preference of $16.61 per share. Subject to certain adjustments and conditions, each share of the Series E is convertible at any time and from time to time at the holder’s option into one share of our common stock. The holders of the Series E are entitled to vote on an as-converted basis as a single class in combination with the holders of common stock at any meeting of our stockholders for the election of directors or for any other purpose on which the holders of common stock are entitled to vote. The Series E has no stated maturity and is not subject to any sinking fund or any mandatory redemption.

UNITED DOMINION REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2005

In 2004, Series E holders converted a total of 621,405 shares of Series E into 621,405 shares of our common stock.

Distributions declared on the Series E in 2005 were $1.33 per share or $0.3322 per quarter. The Series E is not listed on any exchange. At December 31, 2005 a total of 2,803,812 shares of the Series E were outstanding.

Dividend Reinvestment and Stock Purchase Plan

United Dominion’s Dividend Reinvestment and Stock Purchase Plan (the “Stock Purchase Plan”) allows common and preferred stockholders the opportunity to purchase, through the reinvestment of cash dividends, additional shares of United Dominion’s common stock. As of December 31, 2005, 9,849,009 shares of common stock had been issued under the Stock Purchase Plan. Shares in the amount of 15,150,991 were reserved for further issuance under the Stock Purchase Plan as of December 31, 2005. During 2005, 55,818 shares were issued under the Stock Purchase Plan for a total consideration of approximately $1.3 million.

Restricted Stock Awards

United Dominion’s 1999 Long-Term Incentive Plan (“LTIP”) authorizes the grant of restricted stock awards to employees, officers, consultants, and directors of United Dominion. Deferred compensation expense is recorded over the vesting period and is based upon the value of the common stock on the date of issuance. For the years ended December 31, 2005, 2004 and 2003, we recognized $3.2 million, $2.7 million, and $2.2 million, respectively, of compensation expense related to the amortization of restricted stock. As of December 31, 2005, 903,481 shares of restricted stock have been issued under the LTIP.

Shareholder Rights Plan

United Dominion’s First Amended and Restated Rights Agreement is intended to protect long-term interests of stockholders in the event of an unsolicited, coercive or unfair attempt to take over United Dominion. The plan authorized a dividend of one Preferred Share Purchase Right (the “Rights”) on each share of common stock outstanding. Each Right, which is not currently exercisable, will entitle the holder to purchase 1/1000 of a share of a new series of United Dominion’s preferred stock, to be designated as Series C Junior Participating Cumulative Preferred Stock, at a price to be determined upon the occurrence of the event, and for which the holder must be paid $45 should the takeover occur. Under the Plan, the rights will be exercisable if a person or group acquires more than 15% of United Dominion’s common stock or announces a tender offer that would result in the ownership of 15% of United Dominion’s common stock.

7. FINANCIAL INSTRUMENTS

The following estimated fair values of financial instruments were determined by United Dominion using available market information and appropriate valuation methodologies. Considerable judgment is necessary to interpret market data and develop estimated fair values. Accordingly, the estimates presented herein are not necessarily indicative of the amounts United Dominion would realize on the disposition of the financial instruments. The use of different market assumptions or estimation methodologies may have a material effect on the estimated fair value amounts. The carrying amounts and estimated fair value of United Dominion’s financial instruments as of December 31, 2005 and 2004, are summarized as follows (dollars in thousands):

2005

2004

Carrying

Fair

Carrying

Fair

Amount

Value

Amount

Value

Secured debt

1,116,259

1,123,108

1,197,924

1,228,953

Unsecured debt

2,043,518

2,032,211

1,682,058

1,654,760

The following methods and assumptions were used by United Dominion in estimating fair values.

UNITED DOMINION REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2005

Cash equivalents

The carrying amount of cash equivalents approximates fair value.

Notes receivable

In July 2005, United Dominion received short-term notes in the principal amount of $124.7 million that bear interest at 6.75% and had maturities ranging from September 2005 to July 2006. The notes were received in conjunction with the sale of ten communities. As of December 31, 2005, the outstanding balance on these notes was $59.8 million. In June 2003, United Dominion received a promissory note in the principal amount of $5 million that is due October 2011. The note was received in connection with one of our acquisitions and bears interest of 9.0% that is payable in annual installments. The carrying amount of these notes receivable approximate their fair value.

Secured and unsecured debt

Estimated fair value is based on mortgage rates, tax-exempt bond rates, and corporate unsecured debt rates believed to be available to United Dominion for the issuance of debt with similar terms and remaining lives. The carrying amount of United Dominion’s variable rate secured debt approximates fair value as of December 31, 2005 and 2004. The carrying amounts of United Dominion’s borrowings under variable rate unsecured debt arrangements, short-term revolving credit agreements, and lines of credit approximate their fair values as of December 31, 2005 and 2004.

Derivative financial instruments

At December 31, 2005, United Dominion has no derivative financial instruments reported on its Consolidated Balance Sheet.

For the years ended December 31, 2004 and 2003, United Dominion recognized $1.9 million and $8.1 million, respectively, of unrealized gains in comprehensive income. For the year ended December 31, 2004, United Dominion recognized a loss of $0.2 million in net income related to the ineffective portion of United Dominion’s hedging instruments. For the year ended December 31, 2003, United Dominion recognized $0.3 million in realized gains in net income related to the ineffective portion of United Dominion’s hedging instruments.

8. INCOME TAXES

The aggregate cost of our real estate assets for federal income tax purposes was approximately $4.9 billion at December 31, 2005.

The following table reconciles United Dominion’s net income to REIT taxable income for the three years ended December 31, 2005 (dollars in thousands):


	2005			2004			2003
Net income	$	155,166		$	97,152		$	70,404
Elimination of TRS income		(17,802	)		(1,120	)		(246	)
Minority interest		(1,828	)		(1,950	)		(3,364	)
Depreciation and amortization expense		56,274			46,916			44,108
Disposition of properties		(74,323	)		(10,029	)		2,363
Revenue recognition timing differences.		(87	)		(195	)		1,750
Investment loss, not deductible for tax		—			(593	)		—
Other expense timing differences		(1,160	)		(1,072	)		(844	)

REIT taxable income before dividends	$	116,240		$	129,109		$	114,171

Dividend paid deduction	$	149,475		$	153,409		$	132,722

UNITED DOMINION REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2005

For income tax purposes, distributions paid to common stockholders may consist of ordinary income, capital gains, and non-taxable return of capital, or a combination thereof. Distributions that exceed our current and accumulated earnings and profits constitute a return of capital rather than taxable income and reduce the stockholder’s basis in their common shares. To the extent that a distribution exceeds both current and accumulated earnings and profits and the stockholder’s basis in the common shares, it generally will be treated as a gain from the sale or exchange of that stockholder’s common shares. For the three years ended December 31, 2005, distributions declared per common share were taxable as follows:


	2005		2004		2003
Ordinary income	$	0.64	$	0.77	$	0.82
Long-term capital gain		0.22		0.20		0.10
Unrecaptured section 1250 gain		0.13		0.08		0.02
Return of capital		0.21		0.12		0.20

	$	1.20	$	1.17	$	1.14

We have a taxable REIT subsidiary that is subject to state and federal income taxes. Income tax expense consists of the following for the years ended December 31, 2005 and 2004, and is included in gains on the sales (dollars in thousands):


	2005		2004
Income tax expense
Current	$	11,090	$	867
Deferred		313		—

Total income tax expense	$	11,403	$	867

Income tax expense differed from the amounts computed by applying the U.S. federal income tax rate of 35% to pretax income for the years ended December 31, 2005 and 2004 as follows (dollars in thousands):


	2005		2004
Income tax expense
Computed tax expense	$	10,193	$	675
Increase in income tax expense resulting from state taxes and other		1,210		192

Total income tax expense	$	11,403	$	867

Deferred income taxes reflect the estimated net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the corresponding amounts for income tax purposes. Our taxable REIT subsidiary’s deferred tax assets and liabilities are as follows at December 31, 2005 and 2004 (dollars in thousands):


	2005			2004
Deferred tax assets:
Depreciation	$	32		$	—
Reserves		19			—

Total deferred tax assets		51			—
Deferred tax liabilities:
Gain on sales		(49	)		—
Interest		(315	)		—

Total deferred tax liabilities		(364	)		—

Net deferred tax liability	$	(313	)	$	—

9. EMPLOYEE BENEFIT PLANS

Profit Sharing Plan

The United Dominion Realty Trust, Inc. Profit Sharing Plan (the “Plan”) is a defined contribution plan covering all eligible full-time employees. Under the Plan, United Dominion makes discretionary profit sharing and matching contributions to the Plan as determined by the Compensation Committee of the Board of Directors. Aggregate

UNITED DOMINION REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2005

provisions for contributions, both matching and discretionary, which are included in United Dominion’s Consolidated Statements of Operations for the three years ended December 31, 2005, 2004, and 2003 were $0.6 million, $0.6 million, and $0.3 million, respectively.

Stock Option Plan

In May 2001, the stockholders of United Dominion approved the 1999 Long-Term Incentive Plan (the “LTIP”), which supersedes the 1985 Stock Option Plan. With the approval of the LTIP, no additional grants will be made under the 1985 Stock Option Plan. The LTIP authorizes the granting of awards which may take the form of options to purchase shares of common stock, stock appreciation rights, restricted stock, dividend equivalents, other stock-based awards, and any other right or interest relating to common stock or cash. The Board of Directors reserved 4 million shares for issuance upon the grant or exercise of awards under the LTIP. The LTIP generally provides, among other things, that options are granted at exercise prices not lower than the market value of the shares on the date of grant and that options granted must be exercised within ten years. The maximum number of shares of stock that may be issued subject to incentive stock options is 4 million shares. Shares under options that expire or are cancelable are available for subsequent grant.

United Dominion adopted the fair-value-based method of accounting for share-based payments effective January 1, 2004 using the prospective method described in FASB Statement No. 148, “Accounting for Stock-Based Compensation — Transition and Disclosure.” Currently, United Dominion uses the Black-Scholes-Merton formula to estimate the value of stock options granted to employees and expects to continue to use this acceptable option valuation model upon the required adoption of Statement 123(R) on January 1, 2006. Because Statement 123(R) must be applied not only to new awards but to previously granted awards that are not fully vested on the effective date, and because United Dominion adopted Statement 123 using the prospective transition method (which applied only to awards granted, modified or settled after the adoption date), compensation cost for some previously granted awards that were not recognized under Statement 123 will be recognized under Statement 123(R). There were no options granted during 2005, 2004 or 2003.

A summary of United Dominion’s stock option activity during the three years ended December 31, 2005 is provided in the following table:


	Number			Weighted Average		Range of
	Outstanding			Exercise Price		Exercise Prices
Balance, December 31, 2002		3,667,329		$	12.01	$	9.63-$15.38
Granted		—			—		—
Exercised		(1,106,142	)		12.41		9.63-15.38
Forfeited		(25,000	)		9.65		9.63-9.88

Balance, December 31, 2003		2,536,187		$	11.88	$	9.63-$15.38
Granted		—			—		—
Exercised		(562,064	)		11.90		9.63-15.25
Forfeited		(13,500	)		12.02		10.88-13.96

Balance, December 31, 2004		1,960,623		$	11.88	$	9.63-$15.38
Granted		—			—		—
Exercised		(298,566	)		12.02		9.88-14.63
Forfeited		(19,834	)		13.80		9.88-15.25

Balance, December 31, 2005		1,642,223		$	11.84	$	9.63-$15.38

Exercisable at December 31,
2003		2,207,685		$	11.77	$	9.63-$15.38
2004		1,938,343			11.84		9.63-15.38
2005		1,635,666			11.82		9.63-15.38

The weighted average remaining contractual life on all options outstanding is 4.1 years. 643,110 of share options had exercise prices between $9.63 and $10.88, 596,796 of share options had exercise prices between $11.15 and $12.23, and 402,317 of share options had exercise prices between $13.76 and $15.38.

UNITED DOMINION REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2005

As of December 31, 2005 and 2004, stock-based awards for 2,583,586 and 2,890,251 shares of common stock, respectively, were available for future grants under the 1999 LTIP’s existing authorization.

10. COMMITMENTS AND CONTINGENCIES

Commitments

Real Estate Under Development

United Dominion is committed to completing its real estate currently under development, which has an estimated cost to complete of $48.5 million as of December 31, 2005.

Land and Other Leases

United Dominion is party to several ground leases relating to operating communities. In addition, United Dominion is party to various other operating leases related to the operation of its regional offices and an airplane. Future minimum lease payments for non-cancelable land and other leases as of December 31, 2005 are as follows (dollars in thousands):


	Ground		Operating
	Leases		Leases
2006.	$	1,060	$	1,157
2007		1,060		902
2008		1,060		840
2009		1,064		837
2010		1,064		488
Thereafter		21,239		—

	$	26,547	$	4,224

United Dominion incurred $2.4 million of rent expense for the year ended December 31, 2005. United Dominion incurred $1.9 million of rent expense for each of the years ended December 31, 2004 and 2003.

Contingencies

Series B Out-Performance Program

In May 2003, the stockholders of United Dominion approved the Series B Out-Performance Program (the “Series B Program”) pursuant to which certain executive officers of United Dominion (the “Series B Participants”) were given the opportunity to invest indirectly in United Dominion by purchasing interests in a limited liability company (the “Series B LLC”), the only asset of which is a special class of partnership units of United Dominion Realty, L.P. (“Series B Out-Performance Partnership Shares” or “Series B OPPSs”). The purchase price for the Series B OPPSs was determined by United Dominion’s board of directors to be $1 million, assuming 100% participation, and was based upon the advice of an independent valuation expert. The Series B Program measured the cumulative total return on our common stock over the 24-month period from June 1, 2003 to May 31, 2005.

The Series B Program was designed to provide participants with the possibility of substantial returns on their investment if the total cumulative return on United Dominion’s common stock, as measured by the cumulative amount of dividends paid plus share price appreciation during the measurement period (a) exceeded the cumulative total return of the Morgan Stanley REIT Index peer group index over the same period; and (b) was at least the equivalent of a 22% total return, or 11% annualized.

At the conclusion of the measurement period on May 31, 2005, United Dominion’s total cumulative return did not satisfy these criteria, and therefore, the Series B LLC as holder of the Series B OPPSs did not receive (for the indirect benefit of the Series B Participants as holders of interests in the Series B LLC) distributions and allocations of income and loss from the Operating Partnership (accounted for on a consistent basis with all other OP Units)

UNITED DOMINION REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2005

equal to the distributions and allocations that would be received on the number of OP Units. As a result, the investment made by the holders of the Series B OPPSs was forfeited.

Series C Out-Performance Program

In May 2005, the stockholders of United Dominion approved the Series C Out-Performance Program (the “Series C Program”) pursuant to which certain executive officers and other key employees of United Dominion (the “Series C Participants”) were given the opportunity to invest indirectly in United Dominion by purchasing interests in UDR Out-Performance III, LLC, a Delaware limited liability company (the “Series C LLC”), the only asset of which is a special class of partnership units of United Dominion Realty, L.P. (“Series C Out-Performance Partnership Shares” or “Series C OPPSs”). The purchase price for the Series C OPPSs was determined by the Compensation Committee of United Dominion’s board of directors to be $750,000, assuming 100% participation, and was based upon the advice of an independent valuation expert. The Series C Program will measure the cumulative total return on our common stock over the 36-month period from June 1, 2005 to May 30, 2008.

The Series C Program is designed to provide participants with the possibility of substantial returns on their investment if the total cumulative return on United Dominion’s common stock, as measured by the cumulative amount of dividends paid plus share price appreciation during the measurement period is at least the equivalent of a 36% total return, or 12% annualized (“Minimum Return”).

At the conclusion of the measurement period, if United Dominion’s total cumulative return satisfies these criteria, the Series C LLC as holder of the Series C OPPSs will receive (for the indirect benefit of the Series C Participants as holders of interests in the Series C LLC) distributions and allocations of income and loss from the Operating Partnership equal to the distributions and allocations that would be received on the number of OP Units obtained by:

	i.		determining the amount by which the cumulative total return of United Dominion’s common stock over the measurement period exceeds the Minimum Return (such excess being the “Excess Return”);

	ii.		multiplying 2% of the Excess Return by United Dominion’s market capitalization (defined as the average number of shares outstanding over the 36-month period, including common stock, OP Units, and common stock equivalents) multiplied by the daily closing price of United Dominion’s common stock, up to a maximum of 1% of market capitalization; and

	iii.		dividing the number obtained in (ii) by the market value of one share of United Dominion’s common stock on the valuation date, determined by the volume-weighted average price per day of common stock for the 20 trading days immediately preceding the valuation date.

If, on the valuation date, the cumulative total return of United Dominion’s common stock does not meet the Minimum Return, then the Series C Participants will forfeit their entire initial investment.

Litigation and Legal Matters

United Dominion is subject to various legal proceedings and claims arising in the ordinary course of business. United Dominion cannot determine the ultimate liability with respect to such legal proceedings and claims at this time. United Dominion believes that such liability, to the extent not provided for through insurance or otherwise, will not have a material adverse effect on our financial condition, results of operations or cash flow.

11. INDUSTRY SEGMENTS

United Dominion owns and operates multifamily apartment communities throughout the United States that generate rental and other property related income through the leasing of apartment units to a diverse base of tenants. United Dominion separately evaluates the performance of each of its apartment communities. However, because each of the apartment communities has similar economic characteristics, facilities, services, and tenants, the

UNITED DOMINION REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2005

apartment communities have been aggregated into a single apartment communities segment. All segment disclosure is included in or can be derived from United Dominion’s consolidated financial statements.

There are no tenants that contributed 10% or more of United Dominion’s total revenues during 2005, 2004, or 2003.

12. UNAUDITED SUMMARIZED CONSOLIDATED QUARTERLY FINANCIAL DATA

Summarized consolidated quarterly financial data for the year ended December 31, 2005, with restated amounts that reflect discontinued operations as of September 30, 2006, is as follows (dollars in thousands, except per share amounts):


	Three Months Ended
	Previously				Previously				Previously					Previously
	Reported		Restated		Reported		Restated		Reported		Restated			Reported		Restated
	March 31		March 31		June 30		June 30		September 30		September 30			December 31		December 31
Rental income (a)	$	152,394	$	148,575	$	157,391	$	153,507	$	161,566	$	157,715		$	166,158	$	162,234
Income/(loss) before minority interests and discontinued operations		2,705		1,490		1,708		436		58		(1,363	)		2,838		1,447
Gain on sale of depreciable property		7,023		7,023		46,781		46,781		12,851		12,851			73,069		73,069
Income from discontinued operations, net of minority interests		12,221		13,365		50,653		51,850		14,816		16,154			69,791		71,100
Net income available to common stockholders		11,099		11,099		48,599		48,599		11,292		11,292			68,806		68,806

Earnings per common share:
Basic	$	0.08	$	0.08	$	0.36	$	0.36	$	0.08	$	0.08		$	0.51	$	0.51
Diluted		0.08		0.08		0.36		0.36		0.08		0.08			0.51		0.51


(a)		Represents rental income from continuing operations.

Summarized consolidated quarterly financial data for the year ended December 31, 2004, with restated amounts that reflect discontinued operations as of September 30, 2006, is as follows (dollars in thousands, except per share amounts):


	Three Months Ended
	Previously				Previously				Previously					Previously
	Reported		Restated		Reported		Restated		Reported		Restated			Reported		Restated
	March 31 (a)		March 31 (a)		June 30 (a)		June 30 (a)		September 30 (a)		September 30 (a)			December 31 (a)		December 31 (a)
Rental income (b)	$	124,235	$	120,460	$	128,092	$	124,290	$	131,320	$	127,645		$	144,976	$	141,215
Income/(loss) before minority interest and discontinued operations		4,227		3,217		5,960		4,781		40		(1,107	)		445		(664	)
Gain on sale of land and depreciable property		1,205		1,205		13,814		13,814		20,220		20,220			17,664		17,664
Income from discounted operations, net of minority interests		11,013		11,960		22,561		23,665		27,411		28,486			24,746		25,785
Net income available to common stockholders		8,665		8,665		21,855		21,855		21,160		21,160			20,212		20,212

Earnings per common share:
Basic	$	0.07	$	0.07	$	0.17	$	0.17	$	0.17	$	0.17		$	0.15	$	0.15
Diluted		0.07		0.07		0.17		0.17		0.17		0.17			0.15		0.15


(a)		The first, second and third quarters of 2004 each include $1.6 million of expense for premiums paid for the conversion of shares of Series D preferred stock into common stock. The fourth quarter of 2004 includes $1.0 million of expense for premiums paid for the conversion of shares of Series D preferred stock into common stock.

(b)		Represents rental income from continuing operations.

UNITED DOMINION REALTY TRUST, INC.
SCHEDULE III — REAL ESTATE OWNED
FOR THE YEAR ENDED DECEMBER 31, 2005


									Cost of
									Improvements		Gross Amount at
			Initial Costs						Capitalized		Which Carried at Close of Period
							Total		Subsequent
			Land and		Buildings		Initial		to Acquisition		Land and		Buildings		Total		Accumulated
			Land		and		Acquisition		(Net of		Land		and		Carrying		Depreciation		Date of		Date
Property	Encumbrances		Improvements		Improvements		Costs		Disposals)		Improvements		Improvements		Value (A)		(B)		Construction		Acquired
MID-ATLANTIC REGION
Dominion Middle Ridge	$	17,769,407	$	3,311,468	$	13,283,047	$	16,594,515	$	3,549,584	$	3,536,061	$	16,608,039	$	20,144,099	$	5,673,690		1990		06/25/96
Dominion Lake Ridge		12,921,808		2,366,061		8,386,439		10,752,500		2,825,393		2,573,392		11,004,501		13,577,893		3,959,984		1987		02/23/96
Presidential Greens		—		11,237,698		18,789,985		30,027,683		2,628,284		11,387,017		21,268,950		32,655,967		4,663,728		1938		05/15/02
Taylor Place		—		6,417,889		13,411,278		19,829,167		4,385,013		6,591,430		17,622,750		24,214,180		4,034,036		1962		04/17/02
Ridgewood		—		5,612,147		20,085,474		25,697,621		3,573,634		5,684,212		23,587,043		29,271,255		4,777,857		1988		08/26/02
The Calvert		—		262,807		11,188,623		11,451,430		2,917,630		2,330,329		12,038,731		14,369,061		1,628,459		1962		11/26/03
Commons at Town Square		—		135,780		10,012,173		10,147,953		600,795		9,154,107		1,594,641		10,748,747		258,829		1971		12/03/03
Waterside Towers		—		873,713		46,852,061		47,725,775		2,893,127		34,675,076		15,943,825		50,618,902		2,196,087		1971		12/03/03
Waterside Townhomes		—		129,000		4,621,000		4,750,000		323,665		3,638,423		1,435,242		5,073,665		195,924		1971		12/03/03
Wellington Place at Olde Town		—		13,753,346		36,233,961		49,987,307		362,520		13,753,346		36,596,481		50,349,827		655,589		1987		09/13/05
METROPOLITAN DC		30,691,215		44,099,910		182,864,041		226,963,950		24,059,645		93,323,393		157,700,203		251,023,595		28,044,183
Dominion On Spring Forest		—		1,257,500		8,586,255		9,843,755		5,664,058		1,819,508		13,688,305		15,507,813		8,063,732		1978/81		05/21/91
Dominion Park Green		—		500,000		4,321,872		4,821,872		2,895,880		742,725		6,975,027		7,717,752		3,665,544		1987		09/27/91
Dominion On Lake Lynn		12,134,000		3,622,103		12,405,020		16,027,123		5,925,326		4,313,650		17,638,799		21,952,449		7,529,371		1986		12/01/92
Dominion Courtney Place		—		1,114,600		5,119,259		6,233,859		4,575,575		1,510,378		9,299,056		10,809,434		4,900,517		1979/81		07/08/93
Dominion Walnut Ridge		9,589,520		1,791,215		11,968,852		13,760,067		4,218,718		2,316,086		15,662,699		17,978,785		6,657,701		1982/84		03/04/94
Dominion Walnut Creek		15,153,866		3,170,290		21,717,407		24,887,697		6,569,026		3,814,435		27,642,288		31,456,723		11,616,249		1985/86		05/17/94
Dominion Ramsgate		—		907,605		6,819,154		7,726,759		1,989,904		1,062,270		8,654,393		9,716,663		3,125,715		1988		08/15/96
Copper Mill		—		1,548,280		16,066,720		17,615,000		1,710,445		1,925,344		17,400,101		19,325,445		5,483,226		1997		12/31/96
Trinity Park		10,968,900		4,579,648		17,575,712		22,155,360		2,591,061		4,695,582		20,050,839		24,746,421		6,214,686		1987		02/28/97
Meadows at Kildaire		15,906,030		2,846,027		20,768,425		23,614,452		2,108,239		6,925,532		18,797,159		25,722,691		6,798,874		2000		05/25/00
Oaks at Weston		—		9,943,644		23,305,862		33,249,506		747,025		10,203,256		23,793,275		33,996,531		5,584,096		2001		06/28/02
RALEIGH, NC		63,752,316		31,280,912		148,654,538		179,935,450		38,995,258		39,328,765		179,601,942		218,930,708		69,639,710
Gatewater Landing		—		2,078,422		6,084,526		8,162,948		3,803,951		2,352,778		9,614,121		11,966,899		4,359,887		1970		12/16/92
Dominion Kings Place		—		1,564,942		7,006,574		8,571,516		2,227,550		1,671,923		9,127,143		10,799,066		3,893,849		1983		12/29/92
Dominion At Eden Brook		—		2,361,167		9,384,171		11,745,338		3,518,669		2,726,003		12,538,004		15,264,007		5,397,884		1984		12/29/92
Dominion Great Oaks		13,285,808		2,919,481		9,099,691		12,019,172		5,571,060		4,328,152		13,262,080		17,590,232		6,469,950		1974		07/01/94
Dominion Constant Friendship		—		903,122		4,668,956		5,572,078		1,566,714		1,086,412		6,052,380		7,138,792		2,425,700		1990		05/04/95
Lakeside Mill		—		2,665,869		10,109,175		12,775,044		1,510,604		2,710,326		11,575,322		14,285,648		4,703,932		1989		12/10/99
Tamar Meadow		—		4,144,926		17,149,514		21,294,440		2,272,188		4,202,461		19,364,168		23,566,628		3,593,416		1990		11/22/02
Calvert’s Walk		—		4,408,192		24,692,115		29,100,307		1,568,902		4,452,121		26,217,088		30,669,209		2,759,740		1988		03/30/04
Arborview		—		4,653,393		23,951,828		28,605,221		1,523,017		4,694,342		25,433,896		30,128,238		2,736,663		1992		03/30/04
Liriope		—		1,620,382		6,790,681		8,411,063		131,693		1,622,363		6,920,392		8,542,755		755,333		1997		03/30/04
BALTIMORE, MD		13,285,808		27,319,896		118,937,230		146,257,126		23,694,348		29,846,880		140,104,594		169,951,474		37,096,354
Dominion Olde West		—		1,965,097		12,203,965		14,169,062		5,512,982		2,444,251		17,237,793		19,682,044		9,307,383		1978/82/84/85/87		12/31/84 & 8/27/91
Dominion Creekwood		—		—		—		—		3,331,437		76,962		3,254,475		3,331,437		955,451		1984		08/27/91
Dominion Laurel Springs		—		464,480		3,119,716		3,584,196		3,056,812		778,979		5,862,029		6,641,008		2,894,355		1972		09/06/91
Dominion English Hills		15,409,295		1,979,174		11,524,313		13,503,487		7,771,090		2,873,091		18,401,486		21,274,577		10,231,879		1969/76		12/06/91
Dominion Gayton Crossing		10,063,000		825,760		5,147,968		5,973,728		7,111,805		1,435,820		11,649,713		13,085,533		7,614,479		1973		09/28/95
Dominion West End		16,896,683		2,059,252		15,049,088		17,108,340		5,801,844		2,870,787		20,039,397		22,910,184		7,711,367		1989		12/28/95
Courthouse Green		7,865,616		732,050		4,702,353		5,434,403		3,741,406		1,196,356		7,979,453		9,175,809		5,052,964		1974/78		12/31/84
Waterside At Ironbridge		11,297,000		1,843,819		13,238,590		15,082,409		2,377,879		2,068,745		15,391,543		17,460,288		4,494,457		1987		09/30/97
Carriage Homes at Wyndham		—		473,695		30,996,525		31,470,220		975,207		3,654,306		28,791,121		32,445,427		3,679,651		1998		11/25/03
Legacy at Mayland		—		—		—		—		10,896,257		622,305		10,273,952		10,896,257		692,693
RICHMOND, VA		61,531,594		10,343,327		95,982,518		106,325,845		50,576,720		18,021,603		138,880,962		156,902,565		52,634,677
Dominion Harris Pond		—		886,788		6,728,097		7,614,885		2,411,470		1,292,902		8,733,453		10,026,355		3,696,584		1987		07/01/94
Dominion Mallard Creek		—		698,860		6,488,061		7,186,921		1,950,035		728,374		8,408,582		9,136,956		3,050,931		1989		08/16/94
Dominion At Sharon		—		667,368		4,856,103		5,523,471		1,797,222		970,559		6,350,133		7,320,693		2,467,435		1984		08/15/96
Providence Court		—		—		22,047,803		22,047,803		10,919,273		7,634,765		25,332,311		32,967,076		9,050,790		1997		09/30/97
Dominion Crossing		—		1,666,312		4,774,020		6,440,332		479,761		1,666,398		5,253,695		6,920,093		454,238		1985		08/31/04
Dominion Norcroft		—		1,968,664		13,051,238		15,019,902		563,625		1,979,077		13,604,449		15,583,526		1,142,781		1991/97		08/31/04
CHARLOTTE, NC		—		5,887,992		57,945,322		63,833,314		18,121,385		14,272,077		67,682,622		81,954,699		19,862,760

UNITED DOMINION REALTY TRUST, INC.
SCHEDULE III — REAL ESTATE OWNED
FOR THE YEAR ENDED DECEMBER 31, 2005


									Cost of
									Improvements		Gross Amount at
			Initial Costs						Capitalized		Which Carried at Close of Period
							Total		Subsequent
			Land and		Buildings		Initial		to Acquisition		Land and		Buildings		Total		Accumulated
			Land		and		Acquisition		(Net of		Land		and		Carrying		Depreciation		Date of		Date
Property	Encumbrances		Improvements		Improvements		Costs		Disposals)		Improvements		Improvements		Value (A)		(B)		Construction		Acquired
Cape Harbor		—		1,891,671		18,113,109		20,004,780		2,715,319		2,310,437		20,409,662		22,720,099		7,012,838		1996		08/15/96
Mill Creek-Wilmington		—		1,404,498		4,489,398		5,893,896		15,103,701		1,979,446		19,018,150		20,997,597		7,115,288		1986/98		09/30/91
The Creek		—		417,500		2,506,206		2,923,706		2,949,452		546,034		5,327,124		5,873,158		2,977,376		1973		06/30/92
Forest Hills		—		1,028,000		5,420,478		6,448,478		3,988,083		1,219,115		9,217,446		10,436,561		4,644,726		1964/69		06/30/92
Clear Run		—		874,830		8,740,602		9,615,432		7,010,480		1,341,941		15,283,971		16,625,912		6,223,558		1987/89		07/22/94
Crosswinds		—		1,096,196		18,230,236		19,326,432		2,531,781		1,242,450		20,615,763		21,858,213		6,617,858		1990		02/28/97
WILMINGTON, NC		—		6,712,695		57,500,029		64,212,724		34,298,815		8,639,424		89,872,116		98,511,539		34,591,644
Forest Lake At Oyster Point		—		780,117		8,861,878		9,641,995		4,068,878		1,223,412		12,487,461		13,710,873		5,044,122		1986		08/15/95
Woodscape		—		798,700		7,209,525		8,008,225		6,014,965		1,895,654		12,127,536		14,023,190		6,538,636		1974/76		12/29/87
Eastwind		—		155,000		5,316,738		5,471,738		3,636,350		493,355		8,614,734		9,108,088		4,247,478		1970		04/04/88
Dominion Waterside at Lynnhaven		—		1,823,983		4,106,710		5,930,693		3,369,516		2,064,906		7,235,303		9,300,209		2,857,998		1966		08/15/96
Heather Lake		—		616,800		3,400,672		4,017,472		6,658,926		1,088,260		9,588,138		10,676,398		6,084,003		1972/74		03/01/80
Dominion Yorkshire Downs		9,117,528		1,088,887		8,581,771		9,670,658		2,478,815		1,316,333		10,833,140		12,149,473		3,104,717		1987		12/23/97
NORFOLK, VA		9,117,528		5,263,487		37,477,294		42,740,781		26,227,450		8,081,920		60,886,311		68,968,231		27,876,953
Colony Village		—		346,330		3,036,956		3,383,286		2,634,311		597,409		5,420,187		6,017,597		3,945,908		1972/74		12/31/84
Brynn Marr		—		432,974		3,821,508		4,254,482		3,205,922		731,721		6,728,683		7,460,404		4,839,141		1973/77		12/31/84
Liberty Crossing		—		840,000		3,873,139		4,713,139		4,076,267		1,540,137		7,249,269		8,789,406		5,061,739		1972/74		11/30/90
Bramblewood		—		401,538		3,150,912		3,552,450		2,234,316		631,891		5,154,875		5,786,766		3,625,468		1980/82		12/31/84
OTHER NORTH CAROLINA		—		2,020,842		13,882,515		15,903,357		12,150,816		3,501,159		24,553,014		28,054,173		17,472,256
Brittingham Square		—		650,143		4,962,246		5,612,389		1,478,815		837,604		6,253,601		7,091,204		2,421,065		1991		05/04/95
Greens at Schumaker Pond		—		709,559		6,117,582		6,827,141		2,226,841		919,231		8,134,752		9,053,982		3,050,332		1988		05/04/95
Greens at Cross Court		—		1,182,414		4,544,012		5,726,426		2,235,144		1,403,696		6,557,874		7,961,570		2,517,177		1987		05/04/95
Greens at Hilton Run		16,770,382		2,754,447		10,482,579		13,237,026		3,580,418		3,127,309		13,690,135		16,817,444		5,155,165		1988		05/04/95
Dover Country		—		2,007,878		6,365,053		8,372,931		4,344,090		2,384,744		10,332,277		12,717,021		4,635,012		1970		07/01/94
Greens At Cedar Chase		—		1,528,667		4,830,738		6,359,405		1,199,533		1,729,307		5,829,631		7,558,938		2,404,961		1988		05/04/95
OTHER MID-ATLANTIC		16,770,382		8,833,108		37,302,210		46,135,318		15,064,841		10,401,890		50,798,269		61,200,159		20,183,712
Greens at Falls Run		—		2,730,722		5,300,203		8,030,925		2,429,791		2,947,874		7,512,842		10,460,716		2,760,958		1989		05/04/95
Manor at England Run		19,462,000		3,194,527		13,505,239		16,699,766		14,271,592		4,958,881		26,012,478		30,971,358		9,866,718		1990		05/04/95
Greens at Hollymead		—		965,114		5,250,374		6,215,488		1,240,357		1,100,699		6,355,146		7,455,845		2,510,755		1990		05/04/95
OTHER VIRGINIA		19,462,000		6,890,363		24,055,816		30,946,179		17,941,740		9,007,454		39,880,465		48,887,919		15,138,431

TOTAL MID-ATLANTIC REGION		214,610,843		148,652,532		774,601,513		923,254,045		261,131,018		234,424,563		949,960,500		1,184,385,063		322,540,680

WESTERN REGION
Pine Avenue		—		2,158,423		8,887,744		11,046,167		4,248,781		2,857,568		12,437,380		15,294,948		3,022,136		1987		12/07/98
Grand Terrace		—		2,144,340		6,594,615		8,738,955		1,635,202		2,259,958		8,114,199		10,374,157		2,354,278		1986		06/30/99
Windemere at Sycamore Highland		—		5,809,490		23,450,119		29,259,609		406,018		5,815,647		23,849,980		29,665,627		4,518,565		2001		11/21/02
Harbor Greens		—		20,476,466		28,537,805		49,014,271		7,108,916		20,482,155		35,641,032		56,123,187		5,099,246		1965		06/12/03
Pine Brook Village		18,270,000		2,581,763		25,504,086		28,085,849		3,697,355		3,793,142		27,990,063		31,783,204		4,017,816		1979		06/12/03
Pacific Shores		19,145,000		7,345,226		22,623,676		29,968,902		5,270,219		7,347,018		27,892,103		35,239,121		3,810,635		1971		06/12/03
Huntington Vista		—		8,055,452		22,485,746		30,541,198		3,089,261		8,055,452		25,575,007		33,630,459		3,651,094		1970		06/12/03
Pacific Palms		—		12,285,059		6,236,783		18,521,843		926,178		12,308,339		7,139,682		19,448,021		1,116,431		1962		07/31/03
Missions at Back Bay		—		229,270		14,128,763		14,358,033		199,454		10,618,842		3,938,645		14,557,486		539,691		1969		12/16/03
Presidio at Rancho Del Oro		13,325,000		9,163,939		22,694,492		31,858,431		1,698,811		9,265,907		24,291,335		33,557,242		2,230,902		1987		06/25/04
Coronado at Newport — North		55,498,155		62,515,901		46,082,056		108,597,957		3,896,466		62,519,046		49,975,377		112,494,423		3,555,007		1968		10/28/04
Huntington Villas		—		61,535,270		18,017,201		79,552,471		1,647,465		61,541,458		19,658,479		81,199,936		1,560,777		1972		09/30/04
Villa Venetia		—		70,825,106		24,179,600		95,004,706		1,786,795		70,828,801		25,962,699		96,791,500		1,912,611		1972		10/28/04
The Crest		60,515,659		21,953,480		67,808,654		89,762,134		1,456,026		21,954,350		69,263,810		91,218,160		5,109,811		1989		09/30/04
Vista Del Rey		—		10,670,493		7,079,834		17,750,327		509,512		10,670,512		7,589,327		18,259,839		586,484		1969		09/30/04
Foxborough		—		12,070,601		6,186,721		18,257,322		897,406		12,076,129		7,078,599		19,154,728		538,375		1969		09/30/04
Villas at Carlsbad		9,472,903		6,516,636		10,717,601		17,234,237		571,493		6,516,636		11,289,094		17,805,730		781,680		1966		10/28/04
Rosebeach		—		8,414,478		17,449,593		25,864,072		483,267		8,414,478		17,932,861		26,347,339		1,341,572		1970		09/30/04
The Villas at San Dimas		13,069,635		8,180,619		16,735,364		24,915,983		451,401		8,180,619		17,186,765		25,367,384		1,209,848		1981		10/28/04
The Villas at Bonita		8,314,665		4,498,439		11,699,117		16,197,556		313,956		4,499,424		12,012,088		16,511,512		849,453		1981		10/28/04
Ocean Villa		9,912,557		5,134,982		12,788,885		17,923,867		429,140		5,134,982		13,218,025		18,353,007		917,962		1965		10/28/04
Waterstone at Murrieta		—		10,597,865		34,702,760		45,300,625		1,261,303		10,597,865		35,964,063		46,561,928		2,550,103		1990		11/02/04
Summit at Mission Bay		—		22,598,529		17,181,401		39,779,930		1,575,564		22,598,529		18,756,966		41,355,494		1,351,725		1953		11/01/04
Coronado South		—		58,784,785		50,066,757		108,851,542		650,232		58,784,785		50,716,989		109,501,774		2,331,741		1970		03/31/05
The Arboretum		22,768,196		29,562,468		14,283,292		43,845,760		2,161,614		29,563,965		16,443,410		46,007,374		1,159,104		1970		10/28/04
Rancho Vallecitos		—		3,302,967		10,877,286		14,180,253		1,916,363		3,498,434		12,598,183		16,096,616		5,230,480		1988		10/13/99

UNITED DOMINION REALTY TRUST, INC.
SCHEDULE III — REAL ESTATE OWNED
FOR THE YEAR ENDED DECEMBER 31, 2005


									Cost of
									Improvements		Gross Amount at
			Initial Costs						Capitalized		Which Carried at Close of Period
							Total		Subsequent
			Land and		Buildings		Initial		to Acquisition		Land and		Buildings		Total		Accumulated
			Land		and		Acquisition		(Net of		Land		and		Carrying		Depreciation		Date of		Date
Property	Encumbrances		Improvements		Improvements		Costs		Disposals)		Improvements		Improvements		Value (A)		(B)		Construction		Acquired
SOUTHERN CALIFORNIA		230,291,770		467,412,047		546,999,951		1,014,411,998		48,288,200		480,184,039		582,516,158		1,062,700,197		61,347,528
Foothills Tennis Village		15,851,700		3,617,507		14,542,028		18,159,535		3,899,508		3,806,188		18,252,855		22,059,043		4,394,898		1988		12/07/98
Woodlake Village		31,454,300		6,772,438		26,966,750		33,739,188		6,988,099		7,161,625		33,565,662		40,727,287		8,463,964		1979		12/07/98
2000 Post Street		—		9,860,627		44,577,506		54,438,133		1,321,886		10,037,339		45,722,680		55,760,019		8,857,791		1987		12/07/98
Birch Creek		7,561,729		4,365,315		16,695,509		21,060,824		3,542,166		4,709,287		19,893,704		24,602,990		5,036,201		1968		12/07/98
Highlands of Marin		—		5,995,838		24,868,350		30,864,188		1,592,849		6,150,835		26,306,203		32,457,037		5,918,324		1991		12/07/98
Marina Playa		12,486,738		6,224,383		23,916,283		30,140,666		4,317,585		6,518,063		27,940,188		34,458,251		7,199,190		1971		12/07/98
Crossroads Apartments		—		4,811,488		10,169,520		14,981,008		674,295		4,835,724		10,819,578		15,655,303		939,332		1986		07/28/04
River Terrace		—		22,161,247		40,547,515		62,708,762		80,209		22,161,397		40,627,574		62,788,971		1,012,097		2005		08/01/05
Lake Pines		—		14,031,365		30,813,108		44,844,472		48,568		14,031,365		30,861,675		44,893,040		161,719		1972		11/29/05
Bay Terrace		—		8,544,559		14,614,803		23,159,362		79,031		8,544,559		14,693,834		23,238,394		202,306		1962		10/07/05
NORTHERN CALIFORNIA		67,354,467		86,384,767		247,711,371		334,096,138		22,544,197		87,956,382		268,683,954		356,640,335		42,185,822
Arbor Terrace		12,862,690		1,453,342		11,994,972		13,448,314		1,349,701		1,565,777		13,232,237		14,798,015		3,988,470		1996		03/27/98
Aspen Creek		—		1,177,714		9,115,789		10,293,503		774,784		1,327,649		9,740,639		11,068,287		2,464,521		1996		12/07/98
Crowne Pointe		8,640,800		2,486,252		6,437,256		8,923,508		1,897,342		2,589,065		8,231,785		10,820,850		2,478,935		1987		12/07/98
Hilltop		6,540,100		2,173,969		7,407,628		9,581,597		1,446,523		2,348,366		8,679,754		11,028,120		2,263,836		1985		12/07/98
The Hawthorne Apartments		26,825,490		6,473,970		30,500,720		36,974,690		114,787		6,475,086		30,614,391		37,089,477		830,468		2003		07/21/05
The Kennedy Building		—		6,178,440		22,317,620		28,496,060		70,798		6,180,746		22,386,111		28,566,858		184,435		2005		11/10/05
SEATTLE, WA		54,869,080		19,943,687		87,773,985		107,717,672		5,653,934		20,486,689		92,884,918		113,371,606		12,210,666
Boronda Manor		—		1,946,423		8,981,742		10,928,165		6,786,982		3,000,418		14,714,730		17,715,147		2,842,751		1979		12/07/98
Garden Court		—		888,038		4,187,950		5,075,988		3,469,128		1,369,130		7,175,986		8,545,116		1,399,511		1973		12/07/98
Cambridge Court		—		3,038,877		12,883,312		15,922,189		10,568,856		4,714,689		21,776,356		26,491,045		4,366,375		1974		12/07/98
Laurel Tree		—		1,303,902		5,115,356		6,419,258		4,374,304		1,994,152		8,799,410		10,793,562		1,753,520		1977		12/07/98
The Pointe at Harden Ranch		—		6,388,446		23,853,534		30,241,980		19,026,637		9,438,067		39,830,550		49,268,617		7,408,399		1986		12/07/98
The Pointe at Northridge		—		2,043,736		8,028,443		10,072,179		6,767,092		3,107,993		13,731,277		16,839,271		2,633,433		1979		12/07/98
The Pointe at Westlake		—		1,329,064		5,334,004		6,663,068		4,191,497		2,028,735		8,825,829		10,854,565		1,731,103		1975		12/07/98
MONTEREY PENINSULA, CA		—		16,938,486		68,384,341		85,322,827		55,184,496		25,653,185		114,854,138		140,507,323		22,135,091
Lancaster Commons		8,570,300		2,485,291		7,451,165		9,936,456		730,253		2,553,632		8,113,076		10,666,709		2,359,445		1992		12/07/98
Tualatin Heights		9,220,000		3,272,585		9,134,089		12,406,674		1,276,665		3,441,883		10,241,456		13,683,339		2,971,205		1989		12/07/98
Evergreen Park Apartments		—		3,878,138		9,973,051		13,851,189		1,745,562		4,061,970		11,534,781		15,596,751		3,345,800		1988		03/27/98
Andover Park		—		2,916,576		16,994,580		19,911,155		490,885		2,943,565		17,458,475		20,402,040		1,347,087		1989		09/30/04
Hunt Club		—		6,014,006		14,870,326		20,884,332		391,675		6,049,453		15,226,554		21,276,007		1,199,044		1985		09/30/04
PORTLAND, OR		17,790,300		18,566,596		58,423,211		76,989,807		4,635,039		19,050,504		62,574,342		81,624,846		11,222,580

TOTAL WESTERN REGION		370,305,617		609,245,583		1,009,292,858		1,618,538,441		136,305,866		633,330,798		1,121,513,509		1,754,844,307		149,101,687

SOUTHEASTERN REGION
Bay Cove		—		2,928,847		6,578,257		9,507,104		7,097,576		3,542,795		13,061,885		16,604,680		6,767,252		1972		12/16/92
Summit West		—		2,176,500		4,709,970		6,886,470		5,058,919		2,688,145		9,257,244		11,945,389		4,945,099		1972		12/16/92
Pinebrook		—		1,780,375		2,458,172		4,238,547		4,887,880		2,080,046		7,046,382		9,126,427		4,216,408		1977		09/28/93
Lakewood Place		9,855,656		1,395,051		10,647,377		12,042,428		3,605,908		1,765,018		13,883,318		15,648,336		5,575,384		1986		03/10/94
Hunters Ridge		10,312,031		2,461,548		10,942,434		13,403,982		3,770,741		3,133,653		14,041,071		17,174,723		5,655,441		1992		06/30/95
Bay Meadow		—		2,892,526		9,253,525		12,146,051		4,658,265		3,572,076		13,232,240		16,804,316		5,085,080		1985		12/09/96
Cambridge		—		1,790,804		7,166,329		8,957,133		2,436,260		2,179,335		9,214,058		11,393,393		3,447,886		1985		06/06/97
Laurel Oaks		—		1,361,553		6,541,980		7,903,533		2,538,839		1,640,637		8,801,735		10,442,372		3,133,963		1986		07/01/97
Island Walk Apartments		—		8,446,075		31,350,185		39,796,260		7,485,979		9,470,997		37,811,241		47,282,239		9,255,687		1991		12/07/98
Sugar Mill Creek		9,107,000		2,241,880		7,552,520		9,794,400		2,089,869		2,420,028		9,464,242		11,884,269		2,533,096		1988		12/07/98
Inlet Bay		—		7,701,679		23,149,670		30,851,349		3,904,987		7,823,325		26,933,011		34,756,336		4,294,661		1988/89		06/30/03
MacAlpine Place		32,474,234		10,869,386		36,857,512		47,726,898		645,703		10,875,525		37,497,076		48,372,601		2,546,194		2001		12/01/04
TAMPA, FL		61,748,921		46,046,224		157,207,931		203,254,155		48,180,926		51,191,578		200,243,502		251,435,081		57,456,151
Fisherman’s Village		—		2,387,368		7,458,897		9,846,265		5,240,486		3,280,304		11,806,448		15,086,751		5,631,076		1984		12/29/95
Seabrook		—		1,845,853		4,155,275		6,001,128		4,451,370		2,342,339		8,110,159		10,452,498		4,283,055		1984		02/20/96
Dover Village		—		2,894,702		6,456,100		9,350,802		5,246,095		3,459,772		11,137,125		14,596,897		6,285,412		1981		03/31/93
Lakeside North		—		1,532,700		11,076,062		12,608,762		6,416,200		2,297,399		16,727,564		19,024,962		7,994,702		1984		04/14/94
Regatta Shore		—		757,008		6,607,367		7,364,375		8,127,967		1,573,700		13,918,642		15,492,342		6,786,596		1988		06/30/94
Alafaya Woods		8,950,593		1,653,000		9,042,256		10,695,256		4,374,945		2,235,052		12,835,150		15,070,201		5,481,688		1988/90		10/21/94
Vinyards		7,920,000		1,840,230		11,571,625		13,411,855		5,311,383		2,665,622		16,057,617		18,723,238		7,246,599		1984/86		10/31/94
Andover Place		12,925,000		3,692,187		7,756,919		11,449,106		4,455,590		4,622,276		11,282,419		15,904,696		5,624,941		1988		09/29/95 & 09/30/96
Los Altos		12,134,612		2,803,805		12,348,464		15,152,269		4,080,504		3,519,625		15,713,148		19,232,773		6,137,430		1990		10/31/96
Lotus Landing		—		2,184,723		8,638,664		10,823,387		3,602,105		2,442,815		11,982,676		14,425,492		3,828,172		1985		07/01/97
Seville On The Green		—		1,282,616		6,498,062		7,780,678		3,955,393		1,574,921		10,161,150		11,736,071		3,213,602		1986		10/21/97
Arbors at Lee Vista		13,394,266		3,975,679		16,920,454		20,896,133		3,910,511		4,473,618		20,333,026		24,806,644		6,106,608		1991		12/31/97
Heron Lake		—		1,446,553		9,287,878		10,734,431		3,455,489		1,633,813		12,556,107		14,189,920		3,552,080		1989		03/27/98
Ashton at Waterford		13,986,375		3,871,744		17,537,879		21,409,623		816,301		3,987,764		18,238,161		22,225,924		6,888,837		2000		05/28/98
ORLANDO, FL		69,310,846		32,168,168		135,355,902		167,524,070		63,444,340		40,109,020		190,859,390		230,968,410		79,060,796
Legacy Hill		—		1,147,660		5,867,567		7,015,227		4,665,564		1,487,672		10,193,118		11,680,791		4,619,571		1977		11/06/95
Hickory Run		—		1,468,727		11,583,786		13,052,513		3,161,700		1,892,764		14,321,449		16,214,213		5,563,167		1989		12/29/95
Carrington Hills		17,683,960		2,117,244		—		2,117,244		25,690,844		3,889,506		23,918,582		27,808,088		7,894,361		1999		12/06/95
Brookridge		—		707,508		5,461,251		6,168,759		2,104,418		945,770		7,327,407		8,273,177		2,976,007		1986		03/28/96
Club at Hickory Hollow		—		2,139,774		15,231,201		17,370,975		3,100,465		2,804,820		17,666,620		20,471,440		6,400,972		1987		02/21/97
Breckenridge		—		766,428		7,713,862		8,480,290		1,631,146		992,549		9,118,887		10,111,436		3,064,351		1986		03/27/97
Williamsburg		—		1,376,190		10,931,309		12,307,499		2,135,780		1,665,463		12,777,817		14,443,279		4,141,614		1986		05/20/98
Colonnade		11,292,100		1,459,754		16,014,857		17,474,611		1,185,285		1,686,284		16,973,612		18,659,896		4,473,308		1998		01/07/99

UNITED DOMINION REALTY TRUST, INC.
SCHEDULE III — REAL ESTATE OWNED
FOR THE YEAR ENDED DECEMBER 31, 2005


									Cost of
									Improvements		Gross Amount at
			Initial Costs						Capitalized		Which Carried at Close of Period
							Total		Subsequent
			Land and		Buildings		Initial		to Acquisition		Land and		Buildings		Total		Accumulated
			Land		and		Acquisition		(Net of		Land		and		Carrying		Depreciation		Date of		Date
Property	Encumbrances		Improvements		Improvements		Costs		Disposals)		Improvements		Improvements		Value (A)		(B)		Construction		Acquired
The Preserve at Brentwood		—		3,181,524		24,674,264		27,855,788		1,202,666		3,182,047		25,876,407		29,058,454		2,569,478		1998		06/01/04
NASHVILLE, TN		28,976,060		14,364,809		97,478,097		111,842,906		44,877,868		18,546,875		138,173,899		156,720,774		41,702,829
Greentree		—		1,634,330		11,226,990		12,861,320		6,290,517		2,469,872		16,681,965		19,151,837		7,617,668		1986		07/22/94
Westland		—		1,834,535		14,864,742		16,699,277		6,201,004		2,749,764		20,150,516		22,900,281		8,525,876		1990		05/09/96
Antlers		—		4,034,039		11,192,842		15,226,881		7,881,166		5,021,183		18,086,864		23,108,047		8,237,422		1985		05/28/96
St. John’s Plantation		—		4,288,214		33,320,388		37,608,602		508,541		4,288,214		33,828,929		38,117,143		1,029,640		1989		06/30/05
JACKSONVILLE, FL		—		11,791,118		70,604,962		82,396,080		20,881,228		14,529,034		88,748,274		103,277,308		25,410,605
Stanford Village		—		884,500		2,807,839		3,692,339		1,719,656		1,205,252		4,206,742		5,411,995		2,845,335		1985		09/26/89
Griffin Crossing		—		1,509,633		7,544,018		9,053,651		2,434,940		1,887,112		9,601,478		11,488,591		4,487,014		1987/89		06/08/94
Gwinnett Square		6,384,352		1,924,325		7,376,454		9,300,779		2,922,554		2,233,488		9,989,846		12,223,333		4,178,804		1985		03/29/95
Dunwoody Pointe		6,123,700		2,763,324		6,902,996		9,666,320		6,453,088		3,455,697		12,663,711		16,119,408		6,535,332		1980		10/24/95
Riverwood		6,050,000		2,985,599		11,087,903		14,073,502		5,271,345		3,508,441		15,836,406		19,344,847		7,322,929		1980		06/26/96
Waterford Place		—		1,579,478		10,302,679		11,882,157		1,645,626		1,716,769		11,811,014		13,527,783		3,241,264		1985		04/15/98
ATLANTA, GA		18,558,052		11,646,859		46,021,889		57,668,748		20,447,208		14,006,759		64,109,197		78,115,956		28,610,677
Gable Hill		—		824,847		5,307,194		6,132,041		2,056,722		1,201,961		6,986,802		8,188,763		4,003,897		1985		12/04/89
St. Andrews Commons		—		1,428,826		9,371,378		10,800,204		2,938,014		2,037,918		11,700,301		13,738,218		5,717,327		1986		05/20/93
Forestbrook		—		395,516		2,902,040		3,297,556		2,212,233		597,465		4,912,323		5,509,789		3,174,993		1974		07/01/93
Waterford		—		957,980		6,947,939		7,905,919		2,703,770		1,332,380		9,277,309		10,609,689		4,068,515		1985		07/01/94
Hampton Greene		—		1,363,046		10,118,453		11,481,499		2,318,609		2,026,860		11,773,248		13,800,108		5,155,351		1990		08/19/94
Rivergate		—		1,122,500		12,055,625		13,178,125		2,885,879		1,503,300		14,560,704		16,064,004		4,962,097		1989		08/15/96
COLUMBIA, SC		—		6,092,715		46,702,629		52,795,344		15,115,227		8,699,885		59,210,687		67,910,571		27,082,179
Mallards of Wedgewood		—		959,284		6,864,666		7,823,950		2,835,350		1,267,652		9,391,649		10,659,300		4,014,918		1985		07/27/95
Riverbridge		44,873,487		15,968,090		56,400,716		72,368,806		1,103,059		15,971,280		57,500,585		73,471,865		3,765,471		1999/2001		12/01/04
The Groves		—		789,953		4,767,055		5,557,008		3,008,510		1,508,555		7,056,962		8,565,518		3,163,467		1989		12/13/95
Mallards of Brandywine		—		765,949		5,407,683		6,173,632		1,826,871		996,812		7,003,692		8,000,503		2,675,747		1985		07/01/97
LakePointe		—		1,434,450		4,940,166		6,374,616		3,952,896		1,843,711		8,483,801		10,327,512		4,252,549		1984		09/24/93
OTHER FLORIDA		44,873,487		19,917,726		78,380,286		98,298,012		12,726,685		21,588,009		89,436,688		111,024,697		17,872,153
Patriot Place		—		212,500		1,600,757		1,813,257		6,091,516		1,516,329		6,388,444		7,904,773		4,759,768		1974		10/23/85
OTHER SOUTHEASTERN		—		212,500		1,600,757		1,813,257		6,091,516		1,516,329		6,388,444		7,904,773		4,759,768

TOTAL SOUTHEASTERN REGION		223,467,366		142,240,119		633,352,453		775,592,572		231,764,999		170,187,490		837,170,081		1,007,357,571		281,955,159

SOUTHWESTERN REGION
Woodtrail		—		1,543,000		5,457,000		7,000,000		3,216,199		1,786,784		8,429,414		10,216,199		3,873,883		1978		12/31/96
Green Oaks		—		5,313,920		19,626,181		24,940,101		5,804,076		6,136,571		24,607,606		30,744,177		8,513,754		1985		06/25/97
Sky Hawk		—		2,297,741		7,157,965		9,455,706		2,890,390		2,815,773		9,530,322		12,346,096		3,938,390		1984		05/08/97
South Grand at Pecan Grove		—		4,058,090		14,755,809		18,813,899		8,071,277		5,036,823		21,848,353		26,885,176		7,889,074		1985		09/26/97
Braesridge		12,361,700		3,048,212		10,961,749		14,009,961		3,391,006		3,589,476		13,811,491		17,400,967		4,880,233		1982		09/26/97
Skylar Pointe		—		3,604,483		11,592,432		15,196,915		5,661,263		3,828,771		17,029,408		20,858,178		6,823,784		1979		11/20/97
Stone Canyon		—		899,515		—		899,515		9,666,559		1,333,651		9,232,422		10,566,074		2,821,750		1998		12/17/97
Chelsea Park		5,737,800		1,991,478		5,787,626		7,779,104		2,777,460		2,487,334		8,069,230		10,556,564		3,046,647		1983		03/27/98
Country Club Place		5,005,200		498,632		6,520,172		7,018,804		1,689,454		720,952		7,987,306		8,708,258		2,639,222		1985		03/27/98
Arbor Ridge		—		1,688,948		6,684,229		8,373,177		1,032,378		2,128,817		7,276,738		9,405,555		2,736,015		1983		03/27/98
London Park		—		2,018,478		6,667,450		8,685,928		2,848,867		2,552,445		8,982,350		11,534,795		3,453,294		1983		03/27/98
Marymont		—		1,150,669		4,155,411		5,306,080		1,405,359		1,193,462		5,517,977		6,711,439		1,643,175		1983		03/27/98
Riviera Pines		—		1,413,851		6,453,847		7,867,698		1,946,742		1,502,364		8,312,076		9,814,440		2,220,737		1979		03/27/98
Towne Lake		—		1,333,958		5,308,884		6,642,842		2,287,407		1,737,352		7,192,897		8,930,249		2,700,965		1984		03/27/98
The Legend at Park 10		—		1,995,011		—		1,995,011		11,989,145		3,864,976		10,119,181		13,984,156		4,774,986		1998		05/19/98
The Bradford		16,498,944		1,151,180		40,829,514		41,980,694		2,765,258		6,623,188		38,122,765		44,745,952		5,238,174		1990/91		11/20/03
HOUSTON, TX		39,603,644		34,007,166		151,958,269		185,965,435		67,442,840		47,338,739		206,069,536		253,408,275		67,194,084
Autumnwood		—		2,412,180		8,687,820		11,100,000		2,373,588		2,809,344		10,664,244		13,473,588		3,944,912		1984		12/31/96
Cobblestone		—		2,925,372		10,527,738		13,453,110		4,382,497		3,347,912		14,487,695		17,835,607		5,522,986		1984		12/31/96
Summit Ridge		6,456,400		1,725,508		6,308,032		8,033,540		2,637,265		2,320,264		8,350,541		10,670,805		3,016,710		1983		03/27/98
Derby Park		8,818,600		3,121,153		11,764,974		14,886,127		2,805,619		3,811,885		13,879,861		17,691,746		5,050,391		1984		03/27/98
Aspen Court		3,099,900		776,587		4,944,947		5,721,534		1,669,751		1,168,152		6,223,133		7,391,285		2,152,258		1986		03/27/98
The Cliffs		—		3,483,876		18,657,051		22,140,927		2,135,771		3,840,227		20,436,471		24,276,698		5,377,326		1992		01/29/02
ARLINGTON, TX		18,374,900		14,444,676		60,890,562		75,335,238		16,004,492		17,297,784		74,041,946		91,339,730		25,064,583
Greensview		—		6,450,216		24,405,137		30,855,353		2,669,358		6,066,831		27,457,879		33,524,711		8,320,439		1987/2002		12/07/98
The Reflections		—		6,305,326		27,201,579		33,506,905		1,641,491		6,534,151		28,614,245		35,148,396		6,710,791		1981/96		04/30/02
DENVER, CO		—		12,755,542		51,606,716		64,362,258		4,310,848		12,600,983		56,072,124		68,673,106		15,031,230
Finisterra		—		1,273,798		26,392,207		27,666,005		1,373,300		1,411,829		27,627,476		29,039,305		7,464,413		1997		03/27/98
Sierra Foothills		14,031,553		2,728,172		—		2,728,172		19,206,215		4,882,732		17,051,655		21,934,387		8,147,644		1998		02/18/98
Sierra Canyon		8,104,100		1,809,864		12,963,581		14,773,444		521,384		1,870,350		13,424,479		15,294,828		3,597,072		2001		12/28/01
PHOENIX, AZ		22,135,653		5,811,834		39,355,788		45,167,621		21,100,899		8,164,911		58,103,609		66,268,520		19,209,129
Highlands of Preston.		—		2,151,056		8,167,630		10,318,686		2,836,789		2,557,570		10,597,904		13,155,475		3,576,398		1985		03/27/98
Meridian		23,970,724		6,012,806		29,094,168		35,106,974		1,660,017		6,440,129		30,326,862		36,766,991		8,429,794		2000/02		1/27/98 & 12/28/01
Lincoln Towne Square.		28,000,000		7,541,141		31,484,858		39,025,999		852,083		7,546,164		32,331,918		39,878,082		3,741,085		1999		03/12/04
DALLAS, TX		51,970,724		15,705,003		68,746,656		84,451,659		5,348,888		16,543,863		73,256,685		89,800,548		15,747,277
Pecan Grove		—		1,406,750		5,293,250		6,700,000		1,378,860		1,487,178		6,591,682		8,078,860		2,016,109		1984		12/31/96
Anderson Mill		6,072,561		3,134,669		11,170,376		14,305,045		4,355,990		3,554,049		15,106,986		18,661,035		6,695,640		1984		03/27/97
Red Stone Ranch		—		1,896,723		17,525,536		19,422,259		548,484		5,393,898		14,576,845		19,970,743		5,840,232		2000		06/14/00
Barton Creek Landing		—		3,150,998		14,269,086		17,420,084		1,187,298		3,187,081		15,420,301		18,607,382		3,673,370		1986		03/28/02
Lakeline Villas		—		4,633,398		13,297,860		17,931,258		234,284		4,633,454		13,532,088		18,165,542		1,348,673		2002		07/15/04

UNITED DOMINION REALTY TRUST, INC.
SCHEDULE III — REAL ESTATE OWNED
FOR THE YEAR ENDED DECEMBER 31, 2005


									Cost of
									Improvements			Gross Amount at
			Initial Costs						Capitalized			Which Carried at Close of Period
							Total		Subsequent
			Land and		Buildings		Initial		to Acquisition			Land and		Buildings			Total		Accumulated
			Land		and		Acquisition		(Net of			Land		and			Carrying		Depreciation			Date of		Date
Property	Encumbrances		Improvements		Improvements		Costs		Disposals)			Improvements		Improvements			Value (A)		(B)			Construction		Acquired
AUSTIN, TX		6,072,561		14,222,538		61,556,108		75,778,646		7,704,916			18,255,660		65,227,902			83,483,562		19,574,024
Oak Park		18,278,466		3,966,129		22,227,701		26,193,830		1,702,837			5,701,753		22,194,914			27,896,667		8,800,874			1982/98		12/31/96
Oak Forest		23,395,160		5,630,740		23,293,922		28,924,662		11,882,036			6,602,836		34,203,862			40,806,698		13,047,020			1996/98		12/31/96
Mandolin		—		4,222,640		27,909,437		32,132,077		4,584,407			6,401,642		30,314,842			36,716,484		7,582,342			2001		12/28/01
Inn at Los Patios		—		3,005,300		11,544,700		14,550,000		(1,490,425	)		3,005,300		10,054,275			13,059,575		2,396,606			1990		08/15/98
Turtle Creek		—		1,913,177		7,086,823		9,000,000		2,090,290			2,283,999		8,806,291			11,090,290		3,130,326			1985		12/31/96
Shadow Lake		—		2,523,670		8,976,330		11,500,000		3,329,195			2,955,682		11,873,513			14,829,195		4,257,609			1984		12/31/96
OTHER SOUTHWESTERN		41,673,626		21,261,656		101,038,913		122,300,569		22,098,340			26,951,212		117,447,697			144,398,909		39,214,776

TOTAL
SOUTHWESTERN REGION		179,831,108		118,208,415		535,153,013		653,361,427		144,011,223			147,153,152		650,219,499			797,372,661		201,035,104

MIDWESTERN REGION
Sycamore Ridge		—		4,067,900		15,433,285		19,501,185		2,880,987			4,392,526		17,989,645			22,382,172		4,798,033			1997		07/02/98
Heritage Green		—		2,990,199		11,391,797		14,381,996		10,047,897			3,259,776		21,170,116			24,429,893		6,021,964			1998		07/02/98
Alexander Court		11,770,120		1,573,412		—		1,573,412		21,866,129			6,305,483		17,134,058			23,439,541		7,184,446			1999		07/02/98
Governour’s Square		27,507,483		7,512,513		28,695,050		36,207,563		6,643,191			8,080,536		34,770,218			42,850,754		9,487,577			1967		12/07/98
Hickory Creek		—		3,421,413		13,539,402		16,960,815		3,829,210			3,805,819		16,984,207			20,790,025		4,442,530			1988		12/07/98
Britton Woods		—		3,476,851		19,213,411		22,690,262		3,510,780			4,209,922		21,991,120			26,201,042		8,081,231			1991		04/20/01
COLUMBUS, OH		39,277,603		23,042,288		88,272,945		111,315,233		48,778,194			30,054,063		130,039,364			160,093,427		40,015,780
Washington Park		—		2,011,520		7,565,279		9,576,799		1,399,256			2,158,441		8,817,613			10,976,055		2,529,500			1998		12/07/98
Fountainhead		—		390,542		1,420,166		1,810,708		432,682			406,183		1,837,207			2,243,390		595,292			1966		12/07/98
Jamestown of Toledo		5,984,700		1,800,271		7,053,585		8,853,856		1,906,768			1,962,901		8,797,724			10,760,624		2,595,483			1965		12/07/98
OTHER MIDWESTERN		5,984,700		4,202,333		16,039,030		20,241,363		3,738,706			4,527,525		19,452,544			23,980,069		5,720,276

TOTAL
MIDWESTERN REGION		45,262,303		27,244,621		104,311,975		131,556,596		52,516,900			34,581,588		149,491,908			184,073,496		45,736,056

TOTAL APARTMENTS	$	1,033,477,237	$	1,045,591,270	$	3,056,711,812	$	4,102,303,081	$	825,730,007		$	1,219,677,591	$	3,708,355,497		$	4,928,033,088	$	1,000,368,686


REAL ESTATE HELD FOR DISPOSITION Apartments
Montgomery Chase Condominiums	$	—	$	6,802,519	$	14,427,386	$	21,229,905	$	(18,339,918	)	$	7,469,801	$	(4,579,814	)	$	2,889,986	$	(9,727	)		1983		01/04/05
Belcara at McCormick Ranch		—		1,999,645		5,655,296		7,654,941		2,682,310			2,199,482		8,137,770			10,337,252		30,874			1980		01/31/05
University Park		—		3,079,034		7,256,292		10,335,326		(2,860,918	)		3,121,973		4,352,435			7,474,408		22,845			1980		02/11/05
The Gallery at Bayport Condos		—		1,732,280		6,332,455		8,064,735		436,496			1,818,294		6,682,938			8,501,232		34,104			1991		07/21/05
Beechwood		—		1,409,377		6,086,677		7,496,054		2,052,996			1,691,278		7,857,772			9,549,050		3,560,316			1985		12/22/93
Steeplechase		—		3,208,108		11,513,978		14,722,086		13,454,071			4,093,435		24,082,722			28,176,157		8,094,402			1990/97		03/07/96
Northwinds		—		1,557,654		11,735,787		13,293,441		2,067,610			1,875,137		13,485,914			15,361,051		4,837,876			1989/97		08/15/96
Deerwood Crossings		—		1,539,901		7,989,043		9,528,944		2,124,045			1,715,826		9,937,164			11,652,989		3,877,552			1973		08/15/96
Dutch Village		—		1,197,593		4,826,266		6,023,859		1,555,262			1,312,239		6,266,882			7,579,121		2,531,503			1970		08/15/96
Lake Brandt		—		1,546,950		13,489,466		15,036,416		1,418,731			1,857,767		14,597,379			16,455,147		5,222,300			1995		08/15/96
Park Forest		—		679,671		5,770,413		6,450,084		1,833,426			970,920		7,312,589			8,283,510		2,372,182			1987		09/26/96
Deep River Pointe		—		1,670,648		11,140,329		12,810,977		844,860			1,836,524		11,819,312			13,655,837		3,623,282			1997		10/01/97
The Trails At Mount Moriah		—		5,930,816		22,094,751		28,025,567		5,679,201			6,587,342		27,117,427			33,704,768		8,383,676			1990		01/09/98
Catalina		—		1,543,321		5,631,679		7,175,000		1,606,557			1,760,097		7,021,461			8,781,557		2,513,996			1982		12/31/96
Wimbledon Court		—		1,809,183		10,930,306		12,739,489		3,156,365			2,923,748		12,972,106			15,895,854		4,456,626			1983		12/31/96
Oaks of Lewisville		11,884,206		3,726,795		13,563,181		17,289,976		5,368,205			4,618,214		18,039,968			22,658,181		7,240,586			1983		03/27/97
Parc Plaza		—		1,683,531		5,279,123		6,962,654		2,283,169			2,254,565		6,991,258			9,245,823		2,976,568			1986		10/30/97
Summergate		—		1,171,300		3,928,700		5,100,000		1,307,129			1,432,497		4,974,632			6,407,129		1,969,003			1984		12/31/96
Greenwood Creek		—		1,958,378		8,551,018		10,509,396		2,947,248			2,339,302		11,117,342			13,456,644		3,604,729			1984		03/27/98
Cumberland Trace		—		632,281		7,895,674		8,527,955		2,210,837			742,110		9,996,682			10,738,792		3,458,082			1973		08/15/96
Village At Cliffdale		13,319,700		941,284		15,498,216		16,439,500		2,303,162			1,218,326		17,524,336			18,742,662		5,945,914			1992		08/15/96
Morganton Place		—		819,090		13,217,086		14,036,176		1,101,917			895,716		14,242,376			15,138,093		4,580,293			1994		08/15/96
Woodberry		—		388,699		6,380,899		6,769,598		1,715,755			1,009,255		7,476,098			8,485,353		3,040,343			1987		08/15/96
Vista Point		—		1,587,400		5,612,600		7,200,000		1,966,000			1,823,509		7,342,491			9,166,000		2,840,743			1986		12/31/96
Mountain View		—		6,401,851		21,569,403		27,971,254		3,497,600			6,387,939		25,080,915			31,468,854		6,895,396			1973		12/07/98
Dominion Crown Point		—		2,122,179		22,338,577		24,460,756		3,813,162			3,971,293		24,302,625			28,273,918		10,932,380			1987/2000		07/01/94
Beaumont		13,583,200		2,339,132		12,559,224		14,898,356		1,015,988			2,456,550		13,457,795			15,914,344		5,379,787			1996		06/14/00
Stonehaven		—		6,471,126		29,535,426		36,006,552		2,364,993			6,700,583		31,670,962			38,371,545		7,017,594			1989/90		05/28/02
Lakeside		—		3,373,265		4,583,677		7,956,942		2,076			3,373,265		4,585,754			7,959,018		7,584			1985		12/29/05
Sierra Palms		14,945,588		4,638,950		17,361,050		22,000,000		1,108,221			4,822,937		18,285,284			23,108,221		5,792,797			1996		12/31/96

Total Apartments		53,732,694		73,961,961		332,753,979		406,715,939		50,716,557			85,279,923		372,152,574			457,432,496		121,233,607

Under Development
Mandalay on the Lake		—		6,222,578		16,992,320		23,214,898		3,124,019			3,124,019		23,214,898			26,338,917
Land
Mountain View Phase II		—		220,000		—		220,000		—			220,000		—			220,000		—
Fossil Creek		—		3,932,115		—		3,932,115		91,483			3,683,156		340,442			4,023,598		—

Total Land		—		4,152,115		—		4,152,115		91,483			3,903,156		340,442			4,243,598		--

Total Held for Disposition	$	53,732,694	$	84,336,653	$	349,746,299	$	434,082,952	$	53,932,060		$	92,307,098	$	395,707,913		$	488,015,012	$	121,233,607

UNITED DOMINION REALTY TRUST, INC.
SCHEDULE III — REAL ESTATE OWNED
FOR THE YEAR ENDED DECEMBER 31, 2005


									Cost of
									Improvements		Gross Amount at
			Initial Costs						Capitalized		Which Carried at Close of Period
							Total		Subsequent
			Land and		Buildings		Initial		to Acquisition		Land and		Buildings		Total		Accumulated
			Land		and		Acquisition		(Net of		Land		and		Carrying		Depreciation		Date of	Date
Property	Encumbrances		Improvements		Improvements		Costs		Disposals)		Improvements		Improvements		Value (A)		(B)		Construction	Acquired
REAL ESTATE UNDER DEVELOPMENT
Apartments
2000 Post III	$	—	$	1,755,643	$	779,735	$	2,535,378	$	2,299,574	$	1,755,643	$	3,079,309	$	4,834,952	$	—
Verano at Town Square		25,325,194		13,557,235		3,645,406		17,202,641		38,450,206		17,272,015		38,380,832		55,652,847		140,437
Ridgeview Phase I		—		2,341,936		—		2,341,936		240,024		1,789,978		791,982		2,581,960		—
Ridgeview Phase II		—		1,918,411		—		1,918,411		32,836		1,469,609		481,638		1,951,247		—
Ridgeview Townhomes		—		2,349,923		—		2,349,923		—		2,349,923		—		2,349,923		—
Lincoln Towne Square Phase II		—		2,951,277		—		2,951,277		55,510		2,939,593		67,193		3,006,787		—

Total Apartments		25,325,194		24,874,425		4,425,141		29,299,566		41,078,149		27,576,762		42,800,953		70,377,715		140,437

Land
Presidio		—		1,523,922		—		1,523,922		—		1,523,922		—		1,523,922		—
UDR/ Pacific Los Alisos, LP		—		17,297,661		—		17,297,661		—		17,297,661		—		17,297,661		—
Parkers Landing II		—		1,709,606		—		1,709,606		—		1,709,606		—		1,709,606		—

Total Land		—		20,531,189		—		20,531,189		—		20,531,189		—		20,531,189		--

Total Real Estate Under Development	$	25,325,194	$	45,405,614	$	4,425,141	$	49,830,755	$	41,078,149	$	48,107,951	$	42,800,953	$	90,908,905	$	140,437

Exhibit 12

Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends
(Dollars in thousands)


	Years ended December 31,
	2005			2004			2003			2002			2001
Income/(loss) before discontinued operations, net of minority interests	$	2,697		$	7,256		$	7,278		$	(28,763	)	$	(13,334	)
Add:
Portion of rents representative of the interest factor		667			651			651			691			794
Minority interests		(687	)		(1,029	)		(2,034	)		(2,278	)		(1,257	)
Loss on equity investment in joint venture		—			—			—			—			254
Interest on indebtedness from continuing operations		162,775			122,029			114,300			124,901			128,817

Earnings	$	165,452		$	128,907		$	120,195		$	94,551		$	115,274

Fixed charges and preferred stock dividend:
Interest on indebtedness from continuing operations	$	162,775		$	122,029		$	114,300		$	124,901		$	128,817
Capitalized interest		2,769			986			1,808			931			2,925
Portion of rents representative of the interest factor		667			651			651			691			794

Fixed charges		166,211			123,666			116,759			126,523			132,536

Add:
Preferred stock dividend		15,370			19,531			26,326			27,424			31,190
Accretion of preferred stock		—			5,729			19,271			—			—

Preferred stock dividend and accretion of preferred stock		15,370			25,260			45,597			27,424			31,190
Combined fixed charges and preferred stock dividend	$	181,581		$	148,926		$	162,356		$	153,947		$	163,726

Ratio of earnings to fixed charges		1.00x			1.04x			1.03x			—			—
Ratio of earnings to combined fixed charges and preferred stock dividend		—			—			—			—			—

For the year ended December 31, 2005, the ratio of earnings to combined fixed charges and preferred stock dividend was deficient of achieving a 1:1 ratio by $16.1 million.

For the year ended December 31, 2004, the ratio of earnings to combined fixed charges and preferred stock dividend was deficient of achieving a 1:1 ratio by $20.0 million.

For the year ended December 31, 2003, the ratio of earnings to combined fixed charges and preferred stock dividend was deficient of achieving a 1:1 ratio by $42.2 million.

For the year ended December 31, 2002, the ratio of earnings to fixed charges was deficient of achieving a 1:1 ratio by $32.0 million.

For the year ended December 31, 2002, the ratio of earnings to combined fixed charges and preferred stock dividend was deficient of achieving a 1:1 ratio by $59.4 million.

For the year ended December 31, 2001, the ratio of earnings to fixed charges was deficient of achieving a 1:1 ratio by $17.3 million.

For the year ended December 31, 2001, the ratio of earnings to combined fixed charges and preferred stock dividend was deficient of achieving a 1:1 ratio by $48.5 million.


Exhibit No.		Description
23.1		Consent of Independent Registered Public Accounting Firm

99.1		Updated financial information for the years ended December 31, 2005, 2004, and 2003



Date: November 30, 2006	/s/ Michael A. Ernst
	Michael A. Ernst
	Executive Vice President and Chief Financial Officer



Date: November 30, 2006	/s/ David L. Messenger
	David L. Messenger
	Vice President and Chief Accounting Officer


Exhibit No.		Description
23.1		Consent of Independent Registered Public Accounting Firm

99.1		Updated financial information for the years ended December 31, 2005, 2004, and 2003


Registration Statement Number		Description
33-40433		Form S-3, pertaining to the registration of 900,000 shares of the Company’s common stock.

33-58201		Form S-8, pertaining to the Employee’s Stock Purchase Plan.

333-11207		Form S-3, pertaining to the registration of 1,679,840 shares of the Company’s Common Stock.

333-32829		Form S-8, pertaining to the Company’s Stock Purchase and Loan Plan.

333-48557		Form S-3, pertaining to the registration of 104,920 shares of Common Stock, including rights to purchase Series C Junior Participating Redeemable Preferred Stock.

333-53401		Form S-3, pertaining to the registration of 1,528,089 shares of Common Stock, including rights to purchase Series C Junior Participating Redeemable Preferred Stock.

333-58600		Form S-8, pertaining to the Employee’s Stock Purchase Plan.

333-64281		Form S-3, pertaining to the registration of 849,498 shares of Common Stock, including rights to Purchase Series C Junior Participating Redeemable Preferred Stock.

333-72885		Form S-3, pertaining to the registration of 130,416 shares of Common Stock, including rights to purchase Series C Junior Participating Redeemable Preferred Stock.

333-75897		Form S-8, pertaining to the Company’s 1999 Long Term Incentive Plan.

333-77107		Form S-3, pertaining to the registration of 1,023,732 shares of Common Stock, including rights to purchase Series C Junior Participating Redeemable Preferred Stock.


Maryland (State or other jurisdiction of incorporation)		1-10524 (Commission File Number)		54-0857512 (I.R.S. Employer Identification No.)


o		Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)


o		Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)


o		Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))


Index To Exhibit 99.1	Page Number
Selected Financial Data		1
Management’s Discussion and Analysis of Financial Condition and Results of Operations		2
Financial Statements and Supplementary Data		18
Financial Statement Schedule — Schedule III — Summary of Real Estate Owned		44
Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends		51


Registration Statement Number		Description
333-77161		Form S-3, pertaining to the registration of 481,251 shares of Common Stock, including rights to purchase Series C Junior Participating Redeemable Preferred Stock.

333-80279		Form S-8, pertaining to the Company’s 1999 Open Market Purchase Program.

333-82929		Form S-3, pertaining to the registration of 95,119 shares of Common Stock, including rights to purchase Series C Junior Participating Redeemable Preferred Stock.

333-86808		Form S-3, pertaining to the registration of 12,307,692 shares of Common Stock, including rights to purchase Series C Junior Participating Redeemable Preferred Stock.

333-106959		Form S-3, pertaining to the registration of 3,425,217 shares of Common Stock, including rights to purchase Series C Junior Participating Redeemable Preferred Stock.

333-116804		Form S-3, pertaining to the registration of 1,617,815 shares of Common Stock, including rights to purchase Series C Junior Participating Redeemable Preferred Stock.

333-129743		Form S-3, pertaining to the registration of 11,000,000 shares of Common Stock, including rights to purchase Series C Junior Participating Redeemable Preferred Stock, issuable under the Company’s Dividend Reinvestment and Stock Purchase Plan.

333-131278		Form S-3, pertaining to the registration of an indeterminate amount of Common Stock, Preferred Stock, Debt Securities, Warrants, Purchase Contracts and Units.

333-135261		Form S-8, pertaining to the registration of 46,860 shares of Common Stock, including rights to purchase Series C Junior Participating Redeemable Preferred Stock.

	•		development and construction risks that may impact our profitability,

	•		potential damage from natural disasters, including hurricanes and other weather-related events, which could result in substantial costs,

	•		delays in completing developments and lease-ups on schedule,

	•		our failure to succeed in new markets,

	•		changing interest rates, which could increase interest costs and affect the market price of our securities,

	•		potential liability for environmental contamination, which could result in substantial costs, and

	•		the imposition of federal taxes if we fail to qualify as a REIT in any taxable year.


	Page
FINANCIAL STATEMENTS FILED AS PART OF THIS REPORT
Report of Independent Registered Public Accounting Firm		19
Consolidated Balance Sheets at December 31, 2005 and 2004		20
Consolidated Statements of Operations for each of the three years in the period ended December 31, 2005		21
Consolidated Statements of Cash Flows for each of the three years in the period ended December 31, 2005		22
Consolidated Statements of Stockholders’ Equity for each of the three years in the period ended December 31, 2005		23
Notes to Consolidated Financial Statements		25

SCHEDULE FILED AS PART OF THIS REPORT
Schedule III — Summary of Real Estate Owned		44


(A)		The aggregate cost for federal income tax purposes was approximately $4.9 billion at December 31, 2005.

(B)		The depreciable life for all buildings is 35 years.