exv99w1

EX-99.1 4 d12710exv99w1.htm UPDATED FINANCIAL INFORMATION exv99w1

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, 2002. 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.

UNITED DOMINION REALTY TRUST, INC.
SELECTED FINANCIAL DATA
(in thousands, except per share data and apartment homes owned)


			Years ended December 31,

			2002*			2001*			2000*			1999*			1998*

Operating Data (a)
	Rental income		$	583,964		$	551,009		$	524,240		$	483,817		$	346,599
	Income before minority interests and discontinued operations			13,550			26,661			17,690			28,696			3,826
	Income from discontinued operations, net of minority interests			40,157			36,698			59,025			65,416			70,047
	Net income			53,229			61,828			76,615			93,622			72,332
	Distributions to preferred shareholders			27,424			31,190			36,891			37,714			23,593
	Net income available to common shareholders			25,805			27,142			42,653			55,908			48,739
	Common distributions declared			118,888			108,956			110,225			109,607			107,758
	Weighted average number of common shares outstanding - basic			106,078			100,339			103,072			103,604			99,966
	Weighted average number of common shares outstanding - diluted			106,078			100,339			103,072			103,604			99,966
	Weighted average number of common shares, OP Units, and common share equivalents - diluted			127,838			120,728			123,005			124,127			103,793
	Per share:
		Income/(loss) from continuing operations available to common shareholders, net of minority interests	$	(0.14	)	$	(0.10	)	$	(0.16	)	$	(0.09	)	$	(0.21	)
		Income from discontinued operations, net of minority interests		0.38			0.37			0.57			0.63			0.70
		Basic earnings per share		0.24			0.27			0.41			0.54			0.49
		Diluted earnings per share		0.24			0.27			0.41			0.54			0.49
		Common distributions declared		1.11			1.08			1.07			1.06			1.05

Balance Sheet Data (a)
	Real estate owned, at carrying value		$	3,967,483		$	3,907,667		$	3,836,320		$	3,953,045		$	3,952,752
	Accumulated depreciation			748,733			646,366			509,405			395,864			316,630
	Total real estate owned, net of accumulated depreciation			3,218,750			3,261,301			3,326,915			3,557,181			3,636,122
	Total assets			3,276,136			3,348,091			3,453,957			3,688,317			3,762,940
	Secured debt			1,015,740			974,177			866,115			1,000,136			1,072,185
	Unsecured debt			1,041,900			1,090,020			1,126,215			1,127,169			1,045,564
	Total debt			2,057,640			2,064,197			1,992,330			2,127,305			2,117,749
	Shareholders’ equity			1,001,271			1,042,725			1,218,892			1,310,212			1,374,121
	Number of common shares outstanding			106,605			103,133			102,219			102,741			103,639

Other Data (a)
	*Cash Flow Data*
	Cash provided by operating activities		$	226,700		$	224,411		$	224,160		$	190,602		$	140,597
	Cash (used in)/provided by investing activities			(65,062	)		(64,055	)		58,705			(103,836	)		(263,864	)
	Cash (used in)/provided by financing activities			(163,127	)		(166,020	)		(280,238	)		(105,169	)		148,875
	*Funds from Operations* (b)
	Net income		$	53,229		$	61,828		$	76,615		$	93,622		$	72,332
	Adjustments:
		Distributions to preferred shareholders		(27,424	)		(31,190	)		(36,891	)		(37,714	)		(23,593	)
		Real estate depreciation, net of other partnerships’ interest		148,422			133,041			130,097			99,150			75,751
		Minority interests of unitholders in operating partnership		(936	)		(694	)		(1,401	)		(755	)		1,541
		Real estate depreciation related to unconsolidated entities		471			1,105			251			181			—
	Discontinued Operations:
		Real estate depreciation		9,308			17,165			21,423			21,392			23,836
		Minority interests of unitholders in operating partnership		2,645			2,661			4,286			5,189			—
		Gains on sales of depreciable property		(32,698	)		(24,714	)		(31,450	)		(37,995	)		(27,099	)

	*Funds from operations - basic*		$	153,017		$	159,202		$	162,930		$	143,070		$	122,768


	Years ended December 31,

	2002*			2001*			2000*			1999*			1998*

Adjustment:
Distributions to preferred shareholders - Series D (Convertible)		15,779			15,428			15,300			15,154			986

*Funds from operations - diluted*	$	168,796		$	174,630		$	178,230		$	158,224		$	123,754

Adjustment:
Recurring capital expenditures		(32,341	)		(31,535	)		(24,794	)		(43,528	)		(25,019	)

*Adjusted Funds from Operations - diluted* (c)	$	136,455		$	143,095		$	153,436		$	114,696		$	98,735

*Apartment Homes Owned*
Total apartment homes owned at December 31		74,480			77,567			77,219			82,154			86,893
Weighted average number of apartment homes owned during the year		76,567			76,487			80,253			85,926			70,724

(a) In 1998, United Dominion completed the following statutory mergers: (i) ASR Investments Corporation Inc. on March 27, 1998 for an aggregate purchase price of $323 million and; (ii) American Apartment Communities II on December 7, 1998 for an aggregate purchase price of $794 million.

(b) Funds from operations (“FFO”) is defined as net income (computed in accordance with generally accepted accounting principles), excluding gains (losses) from sales of depreciable property, plus depreciation and amortization, less preferred dividends 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. United Dominion considers FFO in evaluating property acquisitions and its operating performance and believes that FFO should be considered along with, but not as an alternative to, net income and cash flows as a measure of United Dominion’s activities in accordance with generally accepted accounting principles and is not necessarily indicative of cash available to fund cash needs. For 2001, FFO includes a non-recurring 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 United Dominion’s investment in an online apartment leasing company. For 2000, FFO includes a non-recurring charge of $3.7 million related to the settlement of litigation and an organizational charge.

(c) Adjusted funds from operations is defined as FFO less recurring capital expenditures for our stabilized portfolio.

*Reclassified to conform to current year presentation as described in Note 3 to the consolidated financial statements.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULE

UNITED DOMINION REALTY TRUST, INC.


	Page

FINANCIAL STATEMENTS FILED AS PART OF THIS REPORT
Report of Ernst & Young LLP, Independent Auditors		10
Consolidated Balance Sheets at December 31, 2002 and 2001		11
Consolidated Statements of Operations for each of the three years in the period ended December 31, 2002		12
Consolidated Statements of Cash Flows for each of the three years in the period ended December 31, 2002		13
Consolidated Statements of Shareholders’ Equity for each of the three years in the period ended December 31, 2002		14
Notes to Consolidated Financial Statements		16
SCHEDULE FILED AS PART OF THIS REPORT
Schedule III—Summary of Real Estate Owned		38

All other schedules are omitted since the required information is not present or is not present in amounts sufficient to require submission of the schedule, or because the information required is included in the financial statements and notes thereto.

Report of Ernst & Young LLP, Independent Auditors

The Board of Directors and Shareholders
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, 2002 and 2001, and the related consolidated statements of operations, shareholders’ equity, and cash flows for each of the three years in the period ended December 31, 2002. Our audits also included the financial statement schedule listed in the Index at Item 15(a). 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 auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of United Dominion Realty Trust, Inc. at December 31, 2002 and 2001, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2002, in conformity with accounting principles generally accepted in the United States. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.

As discussed in Note 15 to the consolidated financial statements, in 2003, the Company adopted the provisions of Statement of Financial Accounting Standards No. 145, “Rescission of FASB Statement No. 4, 44 and 64, Amendment of FASB Statement No. 13, and Technical Correction.” As discussed in Note 3 and Note 16 to the consolidated financial statements, in 2002 the Company adopted the provisions of Statement of Financial Accounting Standards No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets.” As discussed in Note 1 to the consolidated financial statements, in 2001 the Company changed its method of accounting for derivative financial instruments.

ERNST & YOUNG LLP

Richmond, Virginia
January 27, 2003,
except for Note 14, as to which the date is
February 27, 2003,
Note 15, as to which the date is
May 12, 2003, and
Notes 2, 3, and 16, as to which the date is
February 13, 2004

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


					December 31,

					2002*			2001*

ASSETS
Real estate owned (Note 2):
	Real estate held for investment				$	3,842,145		$	3,466,888
				Less: accumulated depreciation		(734,845	)		(586,121	)

						3,107,300			2,880,767
	Real estate under development					28,892			40,240
	Real estate held for disposition (net of accumulated depreciation of $13,888 and $60,245) (Note 3)					82,558			340,294

	Total real estate owned, net of accumulated depreciation					3,218,750			3,261,301
Cash and cash equivalents						3,152			4,641
Restricted cash						11,445			23,358
Deferred financing costs, net						17,548			15,605
Investment in unconsolidated development joint venture (Note 4)						—			3,355
Other assets						23,805			33,776
Real estate held for disposition assets						1,436			6,055

	Total assets				$	3,276,136		$	3,348,091

LIABILITIES AND SHAREHOLDERS’ EQUITY
Secured debt (Note 5)					$	1,015,740		$	923,736
Secured debt - real estate held for disposition (Note 5)						—			50,441
Unsecured debt (Note 6)						1,041,900			1,090,020
Real estate taxes payable						29,299			24,820
Accrued interest payable						11,907			16,779
Security deposits and prepaid rent						20,943			18,554
Distributions payable						35,141			33,457
Accounts payable, accrued expenses, and other liabilities						49,458			65,872
Real estate held for disposition liabilities						1,261			6,022

	Total liabilities					2,205,649			2,229,701
Minority interests						69,216			75,665
Shareholders’ equity (Note 7):
	Preferred stock, no par value; $25 liquidation preference, 25,000,000 shares authorized;
		5,416,009 shares 8.60% Series B Cumulative Redeemable issued and outstanding (5,416,009 in 2001)				135,400			135,400
		8,000,000 shares 7.50% Series D Cumulative Convertible Redeemable issued and outstanding (8,000,000 in 2001)				175,000			175,000
	Common stock, $1 par value; 150,000,000 shares authorized 106,605,259 shares issued and outstanding (103,133,279 in 2001)					106,605			103,133
	Additional paid-in capital					1,140,786			1,098,029
	Distributions in excess of net income					(541,428	)		(448,345	)
	Deferred compensation - unearned restricted stock awards					(2,504	)		(1,312	)
	Notes receivable from officer-shareholders					(2,630	)		(4,309	)
	Accumulated other comprehensive loss, net (Note 8)					(9,958	)		(14,871	)

			Total shareholders’ equity			1,001,271			1,042,725

	Total liabilities and shareholders’ equity				$	3,276,136		$	3,348,091

*Reclassified to conform to current year presentation as described in Note 3 to the consolidated financial statements.

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,

			2002*			2001*			2000*

REVENUES
	Rental income		$	583,964		$	551,009		$	524,240
	Non-property income			1,806			4,593			5,326

		Total revenues		585,770			555,602			529,566
EXPENSES
	Rental expenses:
		Real estate taxes and insurance		63,251			58,472			56,506
		Personnel		59,355			55,759			53,960
		Utilities		33,570			33,682			29,760
		Repairs and maintenance		36,717			32,104			29,043
		Administrative and marketing		21,329			19,982			19,096
		Property management		17,240			17,107			18,392
		Other operating expenses		1,203			1,376			1,305
	Real estate depreciation			149,848			134,680			131,571
	Interest			130,791			139,470			149,728
	General and administrative			19,343			21,730			15,724
	Other depreciation and amortization			4,073			3,308			4,059
	Impairment loss on investments			—			2,648			—
	Loss/(gain) on early debt retirement			35,500			3,219			(988	)
	Litigation settlement charges			—			—			2,700
	Severance costs and other organizational charges			—			5,404			1,020

		Total expenses		572,220			528,941			511,876

Income before minority interests and discontinued operations				13,550			26,661			17,690
Minority interests of outside partnerships				(1,414	)		(2,225	)		(1,501	)
Minority interests of unitholders in operating partnerships				936			694			1,401

Income before discontinued operations, net of minority interests				13,072			25,130			17,590
Income from discontinued operations, net of minority interests				40,157			36,698			59,025

Net income				53,229			61,828			76,615
Distributions to preferred shareholders - Series A and B				(11,645	)		(15,762	)		(21,591	)
Distributions to preferred shareholders - Series D (Convertible)				(15,779	)		(15,428	)		(15,300	)
(Premium) / discount on preferred share repurchases				—			(3,496	)		2,929

Net income available to common shareholders			$	25,805		$	27,142		$	42,653

Earnings/(loss) per common share - basic and diluted:
	Loss from continuing operations available to common shareholders, net of minority interests		$	(0.14	)	$	(0.10	)	$	(0.16	)
	Income from discontinued operations, net of minority interests		$	0.38		$	0.37		$	0.57
	Net income available to common shareholders		$	0.24		$	0.27		$	0.41

Common distributions declared per share			$	1.11		$	1.08		$	1.07

Weighted average number of common shares outstanding - basic and diluted				106,078			100,339			103,072

*Reclassified to conform to current year presentation as described in Note 3 to the consolidated financial statements.

See accompanying notes to consolidated financial statements.

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


				Years ended December 31,

				2002			2001			2000

Operating Activities
	Net income			$	53,229		$	61,828		$	76,615
	Adjustments to reconcile net income to net cash provided by operating activities:
		Depreciation and amortization			163,328			155,327			157,361
		Impairment loss on real estate and investments			—			5,436			—
		Gains on sales of land and depreciable property			(32,698	)		(24,748	)		(31,450	)
		Minority interests			3,122			4,192			4,386
		(Gain)/loss on early debt retirement			36,965			3,471			(831	)
		Amortization of deferred financing costs and other			5,256			965			2,551
		Changes in operating assets and liabilities:
			Decrease in operating liabilities		(15,265	)		(3,188	)		(2,333	)
			Decrease in operating assets		12,763			21,128			17,861

Net cash provided by operating activities					226,700			224,411			224,160
Investing Activities
	Proceeds from sales of real estate investments, net				284,834			109,713			160,257
	Proceeds received for excess expenditures over investment contribution in development joint venture				—			—			30,176
	Acquisition of real estate assets, net of liabilities assumed				(282,600	)		(74,372	)		(4,635	)
	Development of real estate assets				(22,763	)		(53,607	)		(84,431	)
	Capital expenditures and other major improvements—real estate assets, net of escrow reimbursement				(42,827	)		(53,096	)		(41,496	)
	Capital expenditures-non-real estate assets				(1,706	)		(1,442	)		(1,166	)
	Other investing activities				—			8,749			—

Net cash (used in)/provided by investing activities					(65,062	)		(64,055	)		58,705
Financing Activities
	Proceeds from the issuance of secured debt				324,282			225,171			67,285
	Scheduled principal payments on secured debt				(11,176	)		(55,130	)		(62,575	)
	Non-scheduled principal payments and prepayment penalties on secured debt				(294,662	)		(52,182	)		(100,793	)
	Proceeds from the issuance of unsecured debt				198,476			—			248,035
	Payments and prepayment premiums on unsecured debt				(210,413	)		(21,307	)		(214,984	)
	Net repayment of revolving bank debt				(54,400	)		(14,200	)		(33,200	)
	Payment of financing costs				(5,510	)		(4,807	)		(5,648	)
	Proceeds from the issuance of common stock				60,252			66,319			7,660
	Proceeds from the issuance of performance shares				—			1,236			—
	Distributions paid to minority interests				(8,926	)		(12,868	)		(10,272	)
	Cash paid to buy out minority interests				—			(4,267	)		(341	)
	Distributions paid to preferred shareholders				(27,424	)		(34,308	)		(36,909	)
	Distributions paid to common shareholders				(117,116	)		(108,511	)		(110,098	)
	Repurchases of common and preferred stock				(16,510	)		(151,166	)		(28,398	)

Net cash used in financing activities					(163,127	)		(166,020	)		(280,238	)
Net (decrease)/increase in cash and cash equivalents					(1,489	)		(5,664	)		2,627
Cash and cash equivalents, beginning of year					4,641			10,305			7,678

Cash and cash equivalents, end of year				$	3,152		$	4,641		$	10,305

Supplemental Information:
	Interest paid during the period			$	135,223		$	148,863		$	152,434
	Issuance of restricted stock awards				2,904			1,363			830
	Non-cash transactions:
		Secured debt assumed with the acquisition of properties			41,636			18,230			10,130
		Reduction in secured debt from the disposition of properties			35,885			28,315			45,088
		Conversion of operating partnership minority interests to common stock (92,159 shares in 2002, 74,271 shares in 2001, and 19,156 shares in 2000)			1,252			643			247

See accompanying notes to consolidated financial statements.

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


			Preferred Stock						Common Stock
															Paid-in
			Shares			Amount			Shares			Amount			Capital

Balance, December 31, 1999				18,114,860		$	427,872			102,740,777		$	102,741		$	1,083,687
Comprehensive Income
	Net income
	Comprehensive income
	Issuance of common shares to employees, officers, and director-shareholders									5,000			5			158
	Issuance of common shares through dividend reinvestment and stock purchase plan									767,513			767			6,538
	Purchase of common and preferred stock			(706,631	)		(17,666	)		(1,398,866	)		(1,399	)		(9,333	)
	Issuance of restricted stock awards									85,670			86			744
	Adjustment for cash purchase and conversion of minority interests of unitholders in operating partnerships									19,156			19			(407	)
	Principal repayments on notes receivable from officer-shareholders
	Common stock distributions declared ($1.07 per share)
	Preferred stock distributions declared—Series A ($2.31 per share)
	Preferred stock distributions declared—Series B ($2.15 per share)
	Preferred stock distributions declared—Series D ($1.91 per share)
	Amortization of deferred compensation

Balance, December 31, 2000				17,408,229		$	410,206			102,219,250		$	102,219		$	1,081,387

Comprehensive Income
	Net income
	Other comprehensive income:
		Cumulative effect of a change in accounting principle
		Unrealized loss on derivative financial instruments

	Comprehensive income

	Issuance of common shares to employees, officers, and director-shareholders									257,158			258			2,318
	Issuance of common shares through dividend reinvestment and stock purchase plan									332,243			332			4,054
	Issuance of common shares through public offering									4,100,000			4,100			52,316
	Purchase of common and preferred stock			(91,900	)		(2,298	)		(3,962,076	)		(3,962	)		(47,362	)
	Redemption of Series A preferred stock			(3,900,320	)		(97,508	)								3,496
	Issuance of restricted stock awards									112,443			112			1,251
	Adjustment for cash purchase and conversion of minority interests of unitholders in operating partnerships									74,271			74			569
	Principal repayments on notes receivable from officer-shareholders
	Common stock distributions declared ($1.08 per share)
	Preferred stock distributions declared—Series A ($1.05 per share)
	Preferred stock distributions declared—Series B ($2.15 per share)
	Preferred stock distributions declared—Series D ($1.93 per share)
	Amortization of deferred compensation

Balance, December 31, 2001				13,416,009		$	310,400			103,133,279		$	103,133		$	1,098,029

[Additional columns below]

[Continued from above table, first column(s) repeated]

Deferred

Compensation - Accumulated

Distributions in Unearned Notes Receivable Other

Excess of Restricted from Officer- Comprehensive

Net Income Stock Awards Shareholders Loss Total

Balance, December 31, 1999
$ (296,030 ) $ (305 ) $ (7,753 ) $ — $ 1,310,212

Comprehensive Income

Net income
76,615 76,615

Comprehensive income
76,615 76,615

Issuance of common shares to employees, officers, and director-shareholders
163

Issuance of common shares through dividend reinvestment and stock purchase plan
7,305

Purchase of common and preferred stock
(28,398 )

Issuance of restricted stock awards
(830 ) —

Adjustment for cash purchase and conversion of minority interests of unitholders in operating partnerships
(388 )

Principal repayments on notes receivable from officer-shareholders
192 192

Common stock distributions declared ($1.07 per share)
(110,225 ) (110,225 )

Preferred stock distributions declared—Series A ($2.31 per share)
(9,473 ) (9,473 )

Preferred stock distributions declared—Series B ($2.15 per share)
(12,118 ) (12,118 )

Preferred stock distributions declared—Series D ($1.91 per share)
(15,300 ) (15,300 )

Amortization of deferred compensation
307 307

Balance, December 31, 2000
$ (366,531 ) $ (828 ) $ (7,561 ) $ — $ 1,218,892

Comprehensive Income

Net income
61,828 61,828

Other comprehensive income:

Cumulative effect of a change in accounting principle
(3,848 ) (3,848 )

Unrealized loss on derivative financial instruments
(11,023 ) (11,023 )

Comprehensive income
61,828 (14,871 ) 46,957

Issuance of common shares to employees, officers, and director-shareholders
2,576

Issuance of common shares through dividend reinvestment and stock purchase plan
4,386

Issuance of common shares through public offering
56,416

Purchase of common and preferred stock
(53,622 )

Redemption of Series A preferred stock
(3,496 ) (97,508 )

Issuance of restricted stock awards
(1,363 ) —

Adjustment for cash purchase and conversion of minority interests of unitholders in operating partnerships
643

Principal repayments on notes receivable from officer-shareholders
3,252 3,252

Common stock distributions declared ($1.08 per share)
(108,956 ) (108,956 )

Preferred stock distributions declared—Series A ($1.05 per share)
(4,111 ) (4,111 )

Preferred stock distributions declared—Series B ($2.15 per share)
(11,651 ) (11,651 )

Preferred stock distributions declared—Series D ($1.93 per share)
(15,428 ) (15,428 )

Amortization of deferred compensation
879 879

Balance, December 31, 2001
$ (448,345 ) $ (1,312 ) $ (4,309 ) $ (14,871 ) $ 1,042,725

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


			Preferred Stock				Common Stock
													Paid-in
			Shares		Amount		Shares			Amount			Capital

Comprehensive Income
	Net income
	Other comprehensive income:
		Unrealized gain on derivative financial instruments (Note 8)

	Comprehensive income

	Issuance of common shares to employees, officers, and director-shareholders							1,000,592			1,001			10,782
	Issuance of common shares through dividend reinvestment and stock purchase plan							152,343			152			2,347
	Issuance of common shares through public offering							3,166,800			3,167			41,139
	Purchase of common stock							(1,145,412	)		(1,146	)		(15,369	)
	Issuance of restricted stock awards							205,498			205			2,699
	Adjustment for cash purchase and conversion of minority interests of unitholders in operating partnerships							92,159			93			1,159
	Principal repayments on notes receivable from officer-shareholders
	Common stock distributions declared ($1.11 per share)
	Preferred stock distributions declared—Series B ($2.15 per share)
	Preferred stock distributions declared—Series D ($1.98 per share)
	Amortization of deferred compensation

Balance, December 31, 2002				13,416,009	$	310,400		106,605,259		$	106,605		$	1,140,786

[Additional columns below]

See accompanying notes to consolidated financial statements.

UNITED DOMINION REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2002

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization and formation

United Dominion Realty Trust, Inc., a Virginia 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, 2002, United Dominion owned 260 communities with 74,480 completed apartment homes and had three communities with 616 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, 2002, there were 100,984,826 units in the Operating Partnership outstanding, of which 94,616,256 units or 93.7% were owned by United Dominion and 6,368,570 units or 6.3% were owned by non-affiliated limited partners. As of December 31, 2002, there were 3,492,889 units in the Heritage OP outstanding, of which 3,115,471 units or 89.2% were owned by United Dominion and 377,418 units or 10.8% were owned by non-affiliated limited partners. The consolidated financial statements of United Dominion include the minority interests of the unitholders in the operating partnerships. All significant inter-company accounts and transactions have been eliminated in consolidation.

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% (95% prior to 2001) of its REIT taxable income to its shareholders 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. However, United Dominion is subject to certain state and local excise or franchise taxes, for which provision has been made.

The differences between net income available to common shareholders 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.

The following table reconciles United Dominion’s net income to REIT taxable income for the three years ended December 31, 2002 (dollars in thousands):


	2002			2001			2000

Net income	$	53,229		$	61,828		$	76,615
Minority interest expense		(1,137	)		(1,442	)		(2,851	)
Depreciation and amortization expense		49,513			45,327			62,828
(Loss)/gain on the disposition of properties		(186	)		343			10,120
Revenue recognition timing differences		1,272			589			780
Impairment loss, not deductible for tax		—			2,788			—
Investment loss, not deductible for tax		—			2,648			—
Other expense timing differences		(3,914	)		2,787			(2,414	)

REIT taxable income before dividends	$	98,777		$	114,868		$	145,078

Dividend deduction	$	111,965		$	140,146		$	147,116

UNITED DOMINION REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2002

For income tax purposes, distributions paid to common shareholders consist of ordinary income, capital gains and return of capital, or a combination thereof. For the three years ended December 31, 2002, distributions declared per common share were taxable as follows:


	2002		2001		2000

Ordinary income	$	0.55	$	0.74	$	0.81
Long-term capital gain		0.14		0.11		0.15
Unrecaptured section 1250 gain		0.11		0.07		0.11
Return of capital		0.31		0.16		—

	$	1.11	$	1.08	$	1.07

Use of estimates

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

Reclassifications

Certain reclassifications have been made to amounts in prior years’ financial statements to conform with current year 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 repairs and maintenance costs are charged to expense as incurred. Expenditures for improvements, renovations, and replacements related to the acquisition and 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. 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.

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 repairs 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.

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 2002, 2001, and 2000, total interest capitalized was $0.9 million, $2.9 million, and $3.6 million, respectively.

UNITED DOMINION REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2002

Cash and cash equivalents

Cash and 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 2002, 2001, and 2000, amortization expense was $4.5 million, $3.6 million, and $5.0 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 the venture. Differences between the carrying value of investments and the underlying equity in net assets of the 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 (see Note 4—Investment in Unconsolidated Development Joint Venture).

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 collectibility 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 2002, 2001, and 2000, total advertising expense was $11.0 million, $9.6 million, and $9.3 million, respectively.

Interest rate swap agreements

Statements of Financial Accounting Standards No. 133 and 138, “Accounting for Certain Derivative Instruments and Hedging Activities” became effective on January 1, 2001. The accounting standards require companies to carry all derivative instruments, including certain embedded derivatives, in the Consolidated Balance Sheet at fair value. The accounting for changes in the fair value of a derivative instrument depends on whether it has been designated and qualifies as part of a hedging relationship and on the type of hedging relationship. For those derivative instruments that are designated and qualify as hedging instruments, a company must designate the hedging instrument, based on the exposure being hedged, as either a fair value hedge, cash flow hedge, or a hedge of a net investment in a foreign operation. At December 31, 2002 and 2001, all of United Dominion’s derivative financial instruments are interest rate swap agreements that are designated as cash flow hedges of debt with variable interest rate features and are qualifying hedges for financial reporting purposes. For derivative instruments that qualify as cash flow hedges, 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. The adoption of Statements 133 and 138 on January 1, 2001, resulted in a cumulative effect of an accounting change of a $3.8 million loss, all of which was recorded directly to other comprehensive income.

As part of United Dominion’s overall interest rate risk management strategy, we use derivative financial instruments as a means to artificially fix variable rate debt or to hedge anticipated financing transactions. United Dominion’s derivative

UNITED DOMINION REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2002

transactions used for interest rate risk management include various interest rate swaps with indices that relate 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 are generally offset by changes in the cash flow of the underlying exposures. As a result, United Dominion believes that it has appropriately controlled the risk so that derivatives used for interest rate risk management will 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 is reported on balance sheet at their current fair value. Estimated fair values for interest rate swaps rely on prevailing market interest rates. These fair value amounts should not be viewed in isolation, but rather in relation to the values of the underlying hedged transactions and investments and to the overall reduction in exposure to adverse fluctuations in interest rates. Each interest rate swap agreement is designated with all or a portion of the principal balance and term of a specific debt obligation. The interest rate swaps involve the periodic exchange of payments over the life of the related agreements. Amounts received or paid on the interest rate swaps are 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 amounts payable to and receivable from counterparties are included in other liabilities and other assets, respectively.

Prior to the adoption of Statements 133 and 138 on January 1, 2001, United Dominion also used interest rate swap contracts for hedging purposes. For interest rate swaps, the net amounts paid or received and net amounts accrued through the end of the accounting period were included in interest expense. The fair value of the interest rate swap contracts were not recorded on the Consolidated Balance Sheet and unrealized gains or losses were not recognized in the Consolidated Statements of Operations. Gains and losses on any contracts terminated early were deferred and amortized to income over the remaining average life of the terminated contract.

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 shareholders, is displayed in the accompanying Statements of Shareholders’ Equity. Other comprehensive income consists of gains or losses from derivative financial instruments.

Stock-based compensation

United Dominion has elected to follow the intrinsic value method under Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” (“APB 25”) in accounting for its employee stock options because the alternative fair value accounting provided for under Statement 123, “Accounting for Stock-Based Compensation,” requires the use of option valuation models that were not developed for use in valuing employee stock options. Under APB 25, because the exercise price of United Dominion’s employee stock options equals the market price of the underlying stock on the date of grant, no compensation cost has been recognized.

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 shareholders 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, was 6.2% at December 31, 2002 and 6.8% at December 31, 2001 and 2000.

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 on the percentage interest owned by these limited partners in each respective real estate partnership.

UNITED DOMINION REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2002

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.

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


	2002		2001		2000

Numerator for basic and diluted earnings per share—net income available to common shareholders	$	25,805	$	27,142	$	42,653
Denominator:
Denominator for basic earnings per share—weighted average common shares outstanding		106,078		100,339		103,072
Effect of dilutive securities:
Employee stock options and non-vested restricted stock awards		—		—		—

Denominator for dilutive earnings per share		106,078		100,339		103,072

Basic earnings per share	$	0.24	$	0.27	$	0.41

Diluted earnings per share	$	0.24	$	0.27	$	0.41

The effect of the conversion of the operating partnership units and convertible preferred stock is not dilutive and is therefore not included as a dilutive security in the earnings per share computation. The weighted average effect of the conversion of the operating partnership units for the years ended December 31, 2002, 2001, and 2000 was 6,999,384 shares, 7,281,835 shares, and 7,489,435 shares, respectively. The weighted average effect of the conversion of the convertible preferred stock for the years ended December 31, 2002, 2001, and 2000 was 12,307,692 shares.

Impact of recently issued accounting standards

In November 2002, the FASB issued Interpretation 45, “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others.” This statement requires that a liability for the fair value of a guarantee be recognized at the time the obligation is undertaken. The statement also requires that the liability be measured over the term of the related guarantee. This statement is effective for all guarantees entered into subsequent to December 31, 2002. For all guarantees entered into prior to December 31, 2002, there is to be no change in accounting; however, disclosure of management’s estimate of its future obligation under the guarantee is to be made. As of December 31, 2002, management estimates that its likelihood of funding its guarantor obligations is remote and the impact to United Dominion would be immaterial.

In January 2003, the FASB issued Interpretation 46, “Consolidation of Variable Interest Entities.” This statement refines the identification process of variable interest entities and how an entity assesses its interests in a variable interest entity to decide whether to consolidate that entity. United Dominion, from time to time, enters into partnership and joint venture arrangements, which may be required to be consolidated under this statement. United Dominion is currently assessing the impact that this statement will have on its consolidated financial statements.

UNITED DOMINION REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2002

2. REAL ESTATE OWNED

United Dominion operates in 57 markets dispersed throughout 20 states. At December 31, 2002, our largest apartment market was Dallas, Texas, where we owned 6.6% of our apartment homes, based upon carrying value. Excluding Dallas, United Dominion did not own more than 5.9% of its apartment homes in any one market, based upon carrying value.

The following table summarizes real estate held for investment at December 31, (dollars in thousands):


	2002*			2001*

Land and land improvements	$	702,436		$	622,355
Buildings and improvements		2,933,248			2,660,249
Furniture, fixtures, and equipment		206,209			184,006
Construction in progress		252			278

Real estate held for investment		3,842,145			3,466,888
Accumulated depreciation		(734,845	)		(586,121	)

Real estate held for investment, net	$	3,107,300		$	2,880,767

The following is a reconciliation of the carrying amount of real estate held for investment at December 31, (dollars in thousands):


	2002*			2001*			2000*

Balance at beginning of year	$	3,466,888		$	3,252,146		$	3,577,848
Real estate acquired		323,989			91,093			14,898
Capital expenditures		51,366			62,665			46,299
Transfers from development		31,548			63,772			68,025
Transfers to held for disposition, net		(31,646	)		—			(448,760	)
Impairment loss on real estate		—			(2,788	)		—
Disposal of fully depreciated assets		—			—			(6,164	)

Balance at end of year	$	3,842,145		$	3,466,888		$	3,252,146

The following is a reconciliation of accumulated depreciation for real estate held for investment at December 31, (dollars in thousands):


	2002*			2001*			2000*

Balance at beginning of year	$	586,121		$	450,362		$	373,164
Depreciation expense for the year(a)		160,332			153,113			154,419
Transfers to held for disposition, net		(11,608	)		(17,354	)		(71,057	)
Disposal of fully depreciated assets		—			—			(6,164	)

Balance at end of year	$	734,845		$	586,121		$	450,362

(a) Includes $1,176, $1,268, and $1,425 for 2002, 2001, and 2000, 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.

* Reclassified to conform to current year presentation as described in Note 3 to the consolidated financial statements.

The following is a summary of real estate held for investment by major geographic markets, reclassified to conform to current year presentation as described in Note 3 to the consolidated financial statements (in order of carrying value, excluding real estate held for disposition and real estate under development) at December 31, 2002 (dollars in thousands):

UNITED DOMINION REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2002


	Number of		Initial
	Apartment		Acquisition		Carrying		Accumulated
	Communities		Cost		Value		Depreciation		Encumbrances

Dallas, TX		15	$	225,658	$	262,197	$	44,093	$	50,188
Houston, TX		22		178,188		231,886		43,338		57,954
Phoenix, AZ		11		181,480		216,888		36,248		61,371
Orlando, FL		14		167,524		205,970		51,337		92,000
Raleigh, NC		11		179,935		203,887		42,345		58,593
Metropolitan DC		7		148,403		165,606		15,711		70,676
Mid Cities, TX		10		142,462		158,031		27,474		39,056
Tampa, FL		10		132,927		153,925		33,972		57,405
Columbus, OH		6		111,315		149,247		20,425		56,576
San Francisco, CA		4		136,504		141,245		14,625		21,112
Charlotte, NC		10		109,961		139,050		37,295		12,043
Southern California		5		107,816		130,459		11,270		11,484
Nashville, TN		8		83,987		120,572		25,088		—
Greensboro, NC		8		85,362		104,653		23,258		—
Monterey Peninsula, CA		9		95,091		98,264		11,478		2,581
Richmond, VA		8		74,856		97,759		35,060		66,657
Wilmington, NC		6		64,213		91,247		23,812		—
Baltimore, MD		7		80,141		89,345		18,775		28,410
Atlanta, GA		6		57,669		72,547		19,544		30,446
Columbia, SC		6		52,795		62,716		19,781		5,000
Jacksonville, FL		3		44,787		58,974		16,654		23,202
Norfolk, VA		6		42,741		54,727		20,186		7,359
Lansing, MI		4		50,237		50,185		6,117		31,570
Seattle, WA		3		31,953		34,291		5,006		25,830
Other Western		5		144,232		151,649		14,844		46,720
Other Pacific		8		122,608		124,176		14,036		55,177
Other Southwestern		7		92,897		99,013		14,559		9,765
Other Florida		7		60,564		91,040		22,143		—
Other North Carolina		8		61,677		75,865		25,722		11,550
Other Southeastern		4		56,716		69,273		15,050		35,021
Other Midwestern		8		62,593		67,421		8,650		26,320
Other Mid-Atlantic		5		37,618		42,835		10,703		12,542
Other Northeastern		2		14,732		18,253		5,113		5,167
Richmond Corporate		—		6,597		7,325		670		3,965
Commercial		—		1,624		1,624		463		—

		253	$	3,247,863	$	3,842,145	$	734,845	$	1,015,740

The following is a summary of real estate held for disposition by major category, reclassified to conform the current year presentation as described in Note 3 to the consolidated financial statements, at December 31, 2002 (dollars in thousands):


			Initial
	Number of		Acquisition		Carrying		Accumulated
	Properties		Cost		Value		Depreciation		Encumbrances

Apartments		7	$	72,640	$	79,474	$	11,836	$	—
Commercial		2		7,682		8,399		2,052		—
Land		3		9,629		8,573		—		—

			$	89,951	$	96,446	$	13,888	$	—

UNITED DOMINION REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2002

The following is a summary of real estate under development by major category, reclassified to conform the current year presentation as described in Note 3 to the consolidated financial statements, at December 31, 2002 (dollars in thousands):


			Initial
	Number of		Acquisition		Carrying		Accumulated
	Properties		Cost		Value		Depreciation		Encumbrances

Apartments		3	$	21,269	$	21,269	$	—	$	—
Land		6		7,623		7,263		—		—

			$	28,892	$	28,892	$	—	$	—

Total Real Estate Owned			$	3,366,706	$	3,967,483	$	748,733	$	1,015,740

United Dominion is pursuing its strategy of exiting markets where long-term growth prospects are limited and the redeployment of capital would enhance future growth rates and economies of scale. During the first quarter of 2002, United Dominion placed nine assets, with an aggregate net book value of $89.3 million, under contract for sale and reclassified them as real estate held for disposition. These sales closed in the second quarter of 2002 and resulted in our withdrawal from Naples, Florida; Tucson, Arizona; Las Vegas, Nevada; and substantially all of Memphis, Tennessee. Although these sales resulted in an aggregate net gain of $11.5 million, certain of these assets were sold at net selling prices below their net book values at March 31, 2002. As a result, United Dominion recorded an aggregate $2.3 million impairment loss during the first quarter for the write down of a portfolio of five apartment communities in Memphis, Tennessee.

During the first quarter of 2001, management performed an analysis of the carrying value of all undeveloped land parcels in connection with United Dominion’s plans to accelerate the disposition of these sites. As a result, an aggregate $2.8 million impairment loss was recognized on seven undeveloped sites in selected markets. An impairment loss was indicated as a result of the net book value of the assets being greater than the estimated fair market value less the cost of disposal.

During the second quarter of 2000, management transferred approximately $197 million of assets from real estate held for disposition to real estate held for investment and, as a result, approximately $10 million in depreciation expense was recognized on the communities transferred in order to reflect depreciation on these properties while they were classified in real estate held for disposition. Furthermore, approximately $5 million of additional depreciation expense was recognized on these assets during 2000 subsequent to their transfer to real estate held for investment. Depreciation expense in 2000 was further increased by the impact of over $150 million in development completions in late 1999 and 2000 and approximately $200 million in acquisitions and capital improvements in 1999 and 2000.

3. INCOME FROM DISCONTINUED OPERATIONS

United Dominion adopted SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” as of January 1, 2002. SFAS No. 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, SFAS No. 144 results in the presentation of the net operating results of those properties sold or classified as held for disposition through September 30, 2003, as discontinued operations for all periods presented. The adoption of SFAS No. 144 does not have an impact on net income available to common shareholders. SFAS No. 144 only results in the reclassification of the operating results of all properties sold or classified as held for disposition through September 30, 2003 within the Consolidated Statements of Operations for the years ended December 31, 2002, 2001, and 2000, and the reclassification of the assets and liabilities within the Consolidated Balance Sheets for the years ended December 31, 2002 and 2001.

For the nine months ended September 30, 2003, United Dominion sold six communities with a total of 1,675 apartment homes and two commercial properties with a total of 181,503 square feet. At September 30, 2003, United Dominion had one community with 252 apartment homes and a net book value of $4.6 million and one parcel of land with a net book value of $3.8 million included in real estate held for disposition. During 2002, United Dominion sold 25 communities with a total of 6,990 apartment homes, one parcel of land, and one commercial property with 143,000 square feet. During 2001, United Dominion sold nine communities with 1,889 apartment homes and five parcels of land. The results of operations for these properties and the

UNITED DOMINION REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2002

interest expense associated with the secured debt on these properties are classified on the Consolidated Statements of Operations in the line item entitled “Income from discontinued operations, net of minority interests.”

The following is a summary of income from discontinued operations for the years ended December 31, (dollars in thousands):


	2002			2001			2000

Rental income	$	44,908		$	68,816		$	103,028

Rental expenses		19,479			28,816			42,848
Real estate depreciation		9,308			17,165			21,423
Interest		2,150			4,909			6,312
Loss on early debt retirement		1,465			218			157
Impairment loss on real estate		2,301			2,788			—
Other expenses		101			275			427

		34,804			54,171			71,167
Income before gain on sale of land and depreciable property, and minority interests		10,104			14,645			31,861
Net gain on sale of land and depreciable property		32,698			24,714			31,450

Income before minority interests		42,802			39,359			63,311
Minority interests on income from discontinued operations		(2,645	)		(2,661	)		(4,286	)

Income from discontinued operations, net of minority interests	$	40,157		$	36,698		$	59,025

4. INVESTMENT IN UNCONSOLIDATED DEVELOPMENT JOINT VENTURE

In June 2000, United Dominion completed the formation of a joint venture that would invest approximately $101 million to develop five apartment communities with a total of 1,438 apartment homes. United Dominion owned a 25% interest in the joint venture and served as the managing partner. Prior to establishing the joint venture, United Dominion commenced construction on all five of the projects. Upon closing of the venture in June 2000, United Dominion contributed the projects in return for its equity interest of approximately $8 million in the venture and was reimbursed for approximately $35 million of development outlays that were incurred prior to closing the joint venture. We recognized fee income for services provided by United Dominion to the joint venture, to the extent of the outside partner’s interest, of approximately $0.6 million, $2.6 million, and $3.0 million for the years ended December 31, 2002, 2001, and 2000, respectively. In December 2001, United Dominion purchased three of the five apartment communities with 794 apartment homes for a total aggregate cost of approximately $61 million. In June 2002, United Dominion purchased the remaining two apartment communities with 644 apartment homes for approximately $52 million. United Dominion’s interest in the gains on the sale of these properties by the joint venture to United Dominion was recorded as a reduction of its basis in the assets and; therefore, is not reflected in the Consolidated Statements of Operations.

The following is a summary of the operating results of the joint venture as of December 31, (dollars in thousands):


		2002			2001			2000

Rental income		$	2,774		$	9,841		$	1,930
Expenses:
Depreciation and amortization			1,101			3,684			268
Mortgage interest			1,114			3,826			1,557
Operating and other expenses			1,958			4,260			549

	Total expenses		4,173			11,770			2,374

Loss before gains on sales of investments			(1,399	)		(1,929	)		(444	)
Gains on sales of depreciable property			7,588			913			—

Net income/(loss)		$	6,189		$	(1,016	)	$	(444	)

UNITED DOMINION REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2002

5. SECURED DEBT

Secured debt on continuing and discontinued operations, which encumbers $1.5 billion or 38.3% of United Dominion’s real estate owned ($2.4 billion or 61.7% of United Dominion’s real estate owned is unencumbered) consists of the following at December 31, 2002 (dollars in thousands):


						Weighted			Weighted		Number of
						Average			Average		Communities
		Principal Outstanding				Interest Rate			Years to Maturity		Encumbered

		2002		2001		2002			2002		2002

Fixed Rate Debt
Mortgage notes payable (a)		$	187,927	$	450,643		7.55	%		6.6		13
Tax-exempt secured notes payable			61,278		65,806		6.68	%		11.6		8
Fannie Mae credit facilities			288,875		—		6.40	%		8.0		9
Fannie Mae credit facilities—swapped			17,000		17,000		6.74	%		14.8		—

	Total fixed rate secured debt		555,080		533,449		6.83	%		8.2		30
Variable Rate Debt
Mortgage notes payable			11,752		15,082		4.72	%		7.3		3
Tax-exempt secured notes payable			7,770		19,915		1.50	%		25.2		1
Fannie Mae credit facilities			370,469		405,731		1.98	%		14.1		51
Freddie Mac credit facility			70,669		—		1.79	%		8.1		8

	Total variable rate secured debt		460,660		440,728		2.01	%		13.2		63

Total Secured Debt		$	1,015,740	$	974,177		4.65	%		10.4		93

(a)

Includes fair value adjustments aggregating $2.2 million in 2002 and $7.9 million in 2001, recorded in connection with the assumption of debt associated with two acquisitions consummated in 1998.

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 January 2004 through June 2034 and carry interest rates ranging from 6.66% to 8.50%.

Tax-exempt secured notes payable. Fixed rate mortgage notes payable that secure tax-exempt housing bond issues mature at various dates through November 2025 and carry interest rates ranging from 6.09% to 7.90%. Interest on these notes is generally payable in semi-annual installments.

Secured credit facilities. At December 31, 2002, United Dominion’s fixed rate secured credit facilities consisted of $305.9 million of the $676.3 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 United Dominion’s discretion. In order to limit a portion of its interest rate exposure, United Dominion has two interest rate swap agreements associated with the Fannie Mae credit facilities. These agreements have an aggregate notional value of $17.0 million under which United Dominion pays a fixed rate of interest and receives a variable rate on the notional amount. The interest rate swap agreements effectively change United Dominion’s interest rate exposure on $17.0 million of secured debt from a variable rate to a weighted average fixed rate of 6.74%.

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 January 2005 through September 2027. At December 31, 2002, these notes had interest rates ranging from 4.18% to 5.23%.

Tax-exempt secured notes payable. Variable rate mortgage notes payable which secure tax-exempt housing bond issues mature in July 2028. At December 31, 2002, this note had an interest rate of 1.50%. Interest on this note is payable in semi-annual installments.

Secured credit facilities. At December 31, 2002, United Dominion’s variable rate secured credit facilities consisted of $370.5 million outstanding on the Fannie Mae credit facilities and $70.7 million outstanding on the Freddie Mac credit facility. At

UNITED DOMINION REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2002

December 31, 2002, the variable rate Fannie Mae credit facilities had a weighted average floating rate of interest of 1.98% and the Freddie Mac credit facility had a weighted average floating rate of interest of 1.79%.

The aggregate maturities of secured debt for the fifteen years subsequent to December 31, 2002 are as follows (dollars in thousands):


		Fixed						Variable

		Mortgage		Tax-Exempt		Credit		Mortgage		Tax-Exempt		Credit
Year		Notes		Notes		Facilities		Notes		Notes		Facilities		Total

	2003	$	5,854	$	13,213		—	$	438		—		—	$	19,505
	2004		54,096		5,820		—		460		—		—		60,376
	2005		18,720		873		—		4,998		—		—		24,591
	2006		30,457		933		—		3,847		—		—		35,237
	2007		6,797		630		—		148		—		—		7,575
	2008		1,364		5,453		—		154		—		—		6,971
	2009		23,754		579		—		161		—		—		24,494
	2010		26,485		626	$	138,875		169		—		—		166,155
	2011		704		671		50,000		177		—	$	70,669		122,221
	2012		761		723		100,000		185		—		—		101,669
	2013		823		3,847		—		194		—		—		4,864
	2014		891		835		—		202		—		—		1,928
	2015		963		13,350		—		212		—		52,956		67,481
	2016		1,042		579		—		222		—		134,513		136,356
	2017		1,127		626		—		185		—		—		1,938
Thereafter			14,089		12,520		17,000		—	$	7,770		183,000		234,379

		$	187,927	$	61,278	$	305,875	$	11,752	$	7,770	$	441,138	$	1,015,740

For the year ended December 31, 2002, United Dominion recognized $18.4 million of expenses as a result of prepayment penalties incurred from the refinancing of certain secured loans, using proceeds from the Fannie Mae and Freddie Mac credit facilities and the early payoff of loans on the sale of properties. For the year ended December 31, 2001, United Dominion recognized $3.2 million of expenses related to prepayment penalties for the early payoff of loans on the sale of properties. These prepayment penalties were funded by proceeds of the new credit facilities, proceeds from the related asset sales, and from the release of cash escrows retained by former lenders of $14.0 million and $10.3 million for the years ended December 31, 2002 and 2001, respectively.

UNITED DOMINION REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2002

6. UNSECURED DEBT

A summary of unsecured debt at December 31, 2002 and 2001 is as follows (dollars in thousands):


		2002		2001

Commercial Banks
	Borrowings outstanding under an unsecured credit facility due August 2003 (a)	$	175,800	$	230,200
	Borrowings outstanding under an unsecured term loan due May 2004—2005 (b)		100,000		100,000
Senior Unsecured Notes—Other
	7.60% Medium-Term Notes due January 2002		—		46,750
	7.65% Medium-Term Notes due January 2003 (c)		10,000		10,000
	7.22% Medium-Term Notes due February 2003		11,815		11,815
	8.63% Notes due March 2003		78,005		78,030
	7.98% Notes due March 2002–2003 (d)		7,428		14,857
	5.05% City of Portland, OR Bonds due October 2003		7,345		7,345
	7.67% Medium-Term Notes due January 2004		46,585		53,510
	7.73% Medium-Term Notes due April 2005		21,100		22,400
	7.02% Medium-Term Notes due November 2005		49,760		49,760
	7.95% Medium-Term Notes due July 2006		85,374		103,179
	7.07% Medium-Term Notes due November 2006		25,000		25,000
	7.25% Notes due January 2007		92,265		105,020
	ABAG Tax-Exempt Bonds due August 2008		46,700		46,700
	8.50% Monthly Income Notes due November 2008		29,081		57,400
	6.50% Notes due June 2009 (e)		200,000		—
	8.50% Debentures due September 2024 (f)		54,118		124,920
	Other (g)		1,524		3,134

			766,100		759,820

	Total Unsecured Debt	$	1,041,900	$	1,090,020

(a)		United Dominion has a $375 million three-year unsecured bank revolving credit facility that matures in August 2003. As of December 31, 2002, $175.8 million was outstanding under the bank credit facility leaving $199.2 million of unused capacity. Under the bank credit facility, United Dominion may borrow at a rate of LIBOR plus 1.1% and pays a facility fee, which is equal to 0.25% of the commitment. The bank credit facility is subject to customary financial covenants and limitations. As of December 31, 2002, management believes that United Dominion is in compliance with all covenants and limitations.

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


	2002			2001			2000

Total revolving credit facilities at December 31	$	375 ,000		$	375,000		$	375,000
Borrowings outstanding at December 31		175,800			230,200			244,400
Weighted average daily borrowings during the year		156,493			248,367			195,128
Maximum daily borrowings during the year		311,600			347,200			308,000
Weighted average interest rate during the year		2.9	%		5.2	%		7.3	%
Weighted average interest rate at December 31		2.5	%		3.2	%		7.7	%
Weighted average interest rate at December 31—after giving effect to swap agreements		5.6	%		6.1	%		7.5	%

At December 31, 2002, United Dominion had five interest rate swap agreements associated with commercial bank borrowings with an aggregate notional value of $105 million under which United Dominion paid a fixed rate of interest and received a variable rate of interest on the notional amounts. The interest rate swaps, which mature in August 2003 and July 2004, effectively change United Dominion’s interest rate exposure on the $105 million of borrowings from a variable rate to a weighted average fixed rate of approximately 7.47%. At December 31, 2002, 2001, and 2000, the weighted average interest rate of commercial borrowings, after giving effect to swap agreements, was 5.6%, 6.1%, and 7.5%, respectively.

UNITED DOMINION REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2002

(b) As of December 31, 2002, United Dominion had five interest rate swap agreements associated with borrowings under the term loan with an aggregate notional value of $100 million under which United Dominion pays a fixed rate of interest and receives a variable rate of interest on the notional amounts. The interest rate swaps, which mature in May 2003 and May 2004, effectively change United Dominion’s interest rate exposure on these borrowings from a variable rate to a weighted average fixed rate of approximately 8.17%.

(c) United Dominion has one interest rate swap agreement associated with these unsecured notes with an aggregate notional value of $10 million under which United Dominion pays a fixed rate of interest and receives a variable rate on the notional amount. The interest rate swap agreement, which matures in January 2003, effectively changes United Dominion’s interest rate exposure on the $10 million from a variable rate to a fixed rate of 7.65%.

(d) Payable annually in three equal principal installments of $7.4 million.

(e) In June 2002, United Dominion issued $200 million of 6.50% senior unsecured notes due in June 2009. The net proceeds of $198.5 million from the sale were used to reduce outstanding debt under United Dominion’s $375 million unsecured revolving credit facility.

(f) Includes an investor put feature that grants a one-time option to redeem the debentures in September 2004.

(g) Includes $1.5 million and $3.0 million at December 31, 2002 and 2001, respectively, of deferred gains from the termination of interest rate risk management agreements.

For the year ended December 31, 2002, United Dominion recognized $18.6 million of expenses as a result of premiums paid for the redemption of certain higher coupon notes and debentures and the write-off of deferred financing costs. For the year ended December 31, 2001, United Dominion recognized $0.3 million of expenses related to the write-off of deferred financing costs and the repurchase of certain notes.

7. SHAREHOLDERS’ EQUITY

Preferred Stock

The Series B Cumulative Redeemable Preferred Stock (Series B) has no stated par value and a liquidation preference of $25 per share. With no voting rights and no stated maturity, Series B is not subject to any sinking fund or mandatory redemption and is not convertible into any other securities of United Dominion. 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 the option of United Dominion, 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 other capital stock of United Dominion. All dividends due and payable on the Series B have been accrued or paid as of the end of each fiscal year.

The Series D Convertible Redeemable Preferred Stock (Series D) has no stated par value and a liquidation preference of $25 per share. The Series D has no voting rights, no stated maturity, is not subject to any sinking fund or mandatory redemption, and is convertible into 1.5385 shares of common stock at the option of the holder of the Series D at any time at $16.25 per share. United Dominion has the right to cause the holder of the Series D to convert the Series D to common shares at $16.25 based on twenty trading days at or above $17.06 for the life of the security. United Dominion has the right to purchase 2 million shares of the Series D in accordance with a predetermined schedule, provided that the volume weighted average price of our common shares is $16.25 for a twenty day trading period. The repurchase price payable will be computed in accordance with the table below, expressed as a percentage of the liquidation preference, determined by the period in which the Series D repurchase date occurs, together with all accrued and unpaid dividends to and including the repurchase date:


Series D Repurchase
Date Occurs During Period	Repurchase Price

January 1, 2003 to June 30, 2003		101.0	%
July 1, 2003 to December 6, 2003		100.5	%

After December 7, 2003, United Dominion may, at its option, 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 at least equals the conversion price, initially set at $16.25 per share. The redemption is payable solely out of the sale proceeds of other capital stock. In addition, United Dominion may not redeem, in any consecutive twelve-month period, a number of shares of Series D having an aggregate liquidation preference of more than $100 million.

On June 15, 2001, United Dominion completed the redemption of all of its outstanding 9.25% Series A Cumulative Redeemable Preferred Stock at $25 per share plus accrued dividends.

UNITED DOMINION REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2002

Officers’ Stock Purchase and Loan Plan

As of December 31, 2002, United Dominion has $2.6 million of notes receivable from certain officers and directors of United Dominion (original principal balances of $3.0 million), at an interest rate of 7.0% that mature between June 2004 and October 2005. The purpose of the loans was for the borrowers to purchase shares of United Dominion’s common stock pursuant to United Dominion’s 1991 Stock Purchase and Loan Plan. The loans are evidenced by promissory notes between the borrowers and United Dominion and are secured by a pledge of the shares of common stock (241,750 shares with a market value of $4.0 million at December 31, 2002). The notes require that dividends received on the shares be applied towards payment of the notes.

In addition, United Dominion entered into a Servicing and Purchase Agreement (the “Servicing Agreement”) with Sun Trust Bank (the “Bank”) whereby United Dominion has agreed to act as servicing agent for and to purchase certain loans made by the Bank to officers and directors of United Dominion (the “Borrowers”) to finance the purchase of shares of United Dominion’s common stock. The loans are evidenced by promissory notes (“Notes”) between each Borrower and the Bank. The Servicing Agreement provides that the Bank can require United Dominion to purchase the Notes upon an event of default by the Borrower or United Dominion under the Servicing Agreement and at certain other times during the term of the Servicing Agreement. The aggregate outstanding principal balance of the Notes as of December 31, 2002 was $11.1 million (original principal balance was $11.7 million), and all of the Notes mature during 2004. Because certain of the Borrowers elected floating rate loans and others elected fixed rate loans, the interest rates on these loans as of December 31, 2002 ranged from 3.63% to 7.68%. Each Borrower entered into a Participation Agreement with United Dominion that requires that all cash dividends received on the shares (1,037,998 shares at December 31, 2002 with a closing market value of $17.0 million) be applied towards payment of the Notes. Based upon the fact that 100% of all cash dividend payments are paid to amortize the Notes and that the Notes are recourse to the Borrowers, United Dominion believes that its exposure to liability under the Notes is remote.

Dividend Reinvestment and Stock Purchase Plan

United Dominion’s Dividend Reinvestment and Stock Purchase Plan (the “Stock Purchase Plan”) allows common and preferred shareholders the opportunity to purchase, through the reinvestment of cash dividends, additional shares of United Dominion’s common stock. As of December 31, 2002, 9,590,060 shares of common stock had been issued under the Stock Purchase Plan. Shares in the amount of 4,409,940 were reserved for further issuance under the Stock Purchase Plan at December 31, 2002. During 2002, 152,343 shares were issued under the Stock Purchase Plan for a total consideration of approximately $2.5 million.

Restricted Stock Awards

United Dominion’s 1999 Long-Term Incentive Plan (“LTIP”) authorizes the granting of restricted stock awards to employees, officers, and directors of United Dominion. The total restricted stock awards under the LTIP may not exceed 15% of the total number of available shares, or 600,000. Deferred compensation expense is recorded over the vesting period and is based upon the value of the common stock on the date of issuance. As of December 31, 2002, 440,601 shares of restricted stock have been issued under the LTIP.

Shareholder Rights Plan

United Dominion’s 1998 Shareholder Rights Plan is intended to protect long-term interests of shareholders in the event of an unsolicited, coercive, or unfair attempt to take over the company. 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 1/1,000 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 take over 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.

UNITED DOMINION REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2002

8. 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 value. 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 at December 31, 2002 and 2001, are summarized as follows (dollars in thousands):


	2002						2001

	Carrying			Fair			Carrying			Fair
	Amount			Value			Amount			Value

Secured debt	$	1,015,740		$	1,051,182		$	974,177		$	1,013,136
Unsecured debt		1,041,900			1,106,362			1,090,020			1,109,380
Interest rate swap agreements		(9,636	)		(9,636	)		(14,931	)		(14,931	)

The following methods and assumptions were used by United Dominion in estimating the fair values set forth above.

Cash and cash equivalents

The carrying amount of cash and cash equivalents approximates 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 at December 31, 2002 and 2001. 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 at December 31, 2002 and 2001.

Derivative financial instruments

The following table presents the fair values of United Dominion’s derivative financial instruments outstanding, based on external market quotations, as of December 31, 2002 (dollars in thousands):


Notional		Fixed			Type of	Effective		Contract		Fair
Amount		Rate			Contract	Date		Maturity		Value

*Secured Debt:*
*FNMA*
$	7,000		6.48	%	Swap		06/30/99		06/30/04	$	(511	)
	10,000		6.92	%	Swap		12/01/99		04/01/04		(664	)

	17,000		6.74	%							(1,175	)
*Unsecured Debt:*
*Bank Credit Facility*
	5,000		8.85	%	Swap		06/26/95		07/01/04		(377	)
	25,000		7.49	%	Swap		11/01/00		08/01/03		(845	)
	25,000		7.49	%	Swap		11/01/00		08/01/03		(845	)
	25,000		7.31	%	Swap		12/01/00		08/01/03		(815	)
	25,000		7.31	%	Swap		12/04/00		08/01/03		(815	)

	105,000		7.47	%							(3,697	)
*Bank Term Loan*
	25,000		7.64	%	Swap		11/15/00		05/15/03		(531	)
	20,000		7.64	%	Swap		11/15/00		05/15/03		(425	)
	23,500		8.82	%	Swap		11/15/00		05/15/04		(1,696	)
	23,000		8.82	%	Swap		11/15/00		05/15/04		(1,660	)
	8,500		7.41	%	Swap		12/04/00		05/15/03		(172	)

	100,000		8.17	%							(4,484	)
*Medium-Term Notes*
	10,000		7.65	%	Swap		01/26/99		01/27/03		(280	)

$	232,000									$	(9,636	)

UNITED DOMINION REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2002

For the year ended December 31, 2002, United Dominion recognized $4.9 million of net unrealized gains in comprehensive income and a $0.05 million gain in net income related to the ineffective portion of United Dominion’s hedging instruments. In addition, United Dominion has recognized $9.6 million of derivative financial instrument liabilities on the Consolidated Balance Sheet.

As of December 31, 2002, United Dominion expects to reclassify $7.7 million of net losses on derivative instruments from accumulated other comprehensive loss to earnings (interest expense which, combined with the interest paid on the underlying debt, results in interest expense at the fixed rates shown above) during the next twelve months on the related hedged transactions.

Risk of counterparty non-performance

United Dominion has not obtained collateral or other security to support financial instruments. In the event of non-performance by the counterparty, United Dominion’s credit loss on its derivative instruments is limited to the value of the derivative instruments that are favorable to United Dominion at December 31, 2002, of which we have none. However, such non-performance is not anticipated as the counterparties are highly rated credit quality U.S. financial institutions and management believes that the likelihood of realizing material losses from counterparty non-performance is remote.

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 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, 2002, 2001, and 2000 were $0.9 million, $0.7 million, and $1.3 million, respectively.

Stock Option Plan

In May 2001, the shareholders 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, 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. Of the 4 million shares reserved, 3.4 million shares are for stock-based awards, such as stock options, with the remaining 600,000 shares reserved for restricted stock awards. 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 10 million shares. Shares under options that expire or are cancelable are available for subsequent grant.

Pro forma information regarding net income and earnings per share is required by Statement 123 “Accounting for Stock-Based Compensation” (“SFAS No. 123”), and has been determined as if United Dominion had accounted for its employee stock options under the fair value method of accounting as defined in SFAS No. 123.

The fair value for these options was estimated at the date of grant using a Black-Scholes option pricing model with the following weighted average assumptions for 2002, 2001, and 2000:


	2002			2001			2000

Risk free interest rate		4.1	%		3.2	%		5.2	%
Dividend yield		7.7	%		9.1	%		7.2	%
Volatility factor		0.177			0.171			0.164
Weighted average expected life (years)		4			3			7

UNITED DOMINION REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2002

The weighted average fair value of options granted during 2002, 2001, and 2000 was $0.84, $0.46, and $0.65 per option, respectively.

For purposes of the pro forma disclosures, the estimated fair value of the options is amortized to expense over the options’ vesting period. United Dominion’s pro forma information is as follows (dollars in thousands, except per share amounts):


		2002		2001		2000

Net income available to common shareholders, as reported		$	25,805	$	27,142	$	42,653
Deduct:
Total stock option compensation expense determined under the fair value method for all awards, net of related tax effects			380		449		948

Pro forma net income		$	25,425	$	26,693	$	41,705

Earnings per common share—basic
	As reported	$	0.24	$	0.27	$	0.41
	Pro forma		0.24		0.27		0.40
Earnings per common share—diluted
	As reported	$	0.24	$	0.27	$	0.41
	Pro forma		0.24		0.26		0.40

A summary of United Dominion’s stock option activity during the three years ended December 31, 2002 is provided in the following table:


	Number			Weighted Average		Range of
	Outstanding			Exercise Price		Exercise Prices

Balance, December 31, 1999		4,215,592		$	12.09	$	9.19 - $15.38
Granted		653,300			9.91		9.88 - 10.75
Exercised		(11,584	)		9.19		9.19
Forfeited		(364,363	)		12.95		9.63 - 15.25

Balance, December 31, 2000		4,492,945		$	11.71	$	9.19 - $15.38
Granted		1,289,484			11.96		10.81 - 14.20
Exercised		(356,408	)		11.02		9.19 - 14.25
Forfeited		(813,649	)		11.52		9.63 - 15.38

Balance, December 31, 2001		4,612,372		$	11.90	$	9.63 - $15.38
Granted		129,150			14.26		14.15 - 14.88
Exercised		(1,000,592	)		11.68		9.63 - 15.38
Forfeited		(87,999	)		11.04		9.63 - 15.25

Balance, December 31, 2002		3,652,931		$	12.01		9.63 - 15.38

Exercisable at December 31,
2000		2,692,997			12.35		9.19 - 15.38
2001		1,968,265			12.38		9.63 - 15.38
2002		2,793,811			11.97		9.63 - 15.38

The weighted average remaining contractual life on all options outstanding is 6.2 years. 1,141,644 of share options had exercise prices between $13.13 and $15.38, 1,086,000 of share options had exercise prices between $11.15 and $12.40, and 1,425,287 of share options had exercise prices between $9.63 and $10.88.

At December 31, 2002 and 2001, stock-based awards for 3,149,350 and 3,278,500 shares of common stock, respectively, were available for future grants under the 1999 LTIP’s existing authorization and no option shares were available for future grants under the 1985 Stock Option Plan.

UNITED DOMINION REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2002

10. RESTRUCTURING CHARGES

During the first quarter of 2001, United Dominion announced the appointment of a new chief executive officer and senior management structure. The new management team began a comprehensive review of the organizational structure of United Dominion and its operations. As a result of this review, United Dominion recorded a charge of $5.4 million related to workforce reductions and other miscellaneous costs. These charges are included in the Consolidated Statements of Operations within the line item “Severance costs and other organizational charges.” All charges came under consideration subsequent to the appointment of United Dominion’s new CEO in February 2001 and were approved by management and the Board of Directors in March 2001. All of the $5.4 million charge was paid during 2001.

The planned workforce reductions resulted in a charge of $4.5 million during the first quarter of 2001 and in the planned termination of approximately 200 full-time equivalent positions, or 10% of total staffing in corporate functions, including senior management and general and administrative functions, and in apartment operations. Employee termination benefits included severance packages and related benefits and outplacement services for employees terminated. United Dominion also recognized $0.4 million related to relocation costs associated with the new executive offices in Denver and $0.5 million related to other miscellaneous costs.

In addition, management performed an analysis of the carrying value of all undeveloped land parcels in connection with United Dominion’s plans to accelerate the disposition of these sites. As a result, an aggregate $2.8 million impairment loss was recognized on seven undeveloped sites in selected markets. An impairment loss was indicated as a result of the net book value of the assets being greater than the estimated fair market value less the cost of disposal. United Dominion also recognized a $0.4 million charge for the write down of its investment in an online apartment leasing company.

11. 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 $59.0 million at December 31, 2002.

Ground and Operating 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. Future minimum lease payments for non-cancelable ground and operating leases at December 31, 2002 are as follows (dollars in thousands):


		Ground Leases		Operating Leases

2003		$	1,022	$	526
2004			1,022		485
2005			1,022		311
2006			1,022		102
2007			1,022		59
Thereafter			23,105		4

	Total	$	28,215	$	1,487

United Dominion incurred $2.0 million, $2.3 million, and $2.6 million of rent expense for the years ended December 31, 2002, 2001, and 2000, respectively.

UNITED DOMINION REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2002

Contingencies

Out-Performance Program

In May 2001, the shareholders of United Dominion approved the Out-Performance Program (the “Program”) pursuant to which executives and other key officers of United Dominion were given the opportunity to invest in United Dominion by purchasing performance shares (“Out-Performance Partnership Shares” or “OPPSs”) of the Operating Partnership for an initial investment of $1.27 million (the full market value of the OPPSs at inception, as determined by an independent investment banking firm). The Program measures United Dominion’s performance over a 28-month period beginning February 2001.

The Program is designed to provide participants with the possibility of substantial returns on their investment if United Dominion’s total return, considering the reinvestment of dividend income as well as share price appreciation, on its common stock during the measurement period exceeds the greater of (a) industry average (defined as the total cumulative return of the Morgan Stanley REIT Index over the same period) or (b) a 30% total return (12% annualized) (the “minimum return”).

At the conclusion of the measurement period, if United Dominion’s total return satisfies these criteria, the holders of the OPPSs will receive 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 interests in the Operating Partnership (“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 greater of the cumulative total return of the peer group index (the Morgan Stanley REIT Index) or the minimum return (such being the “excess return”);

ii. multiplying 4% of the excess return by United Dominion’s market capitalization (defined as the average number of shares and OP Units outstanding over the 28-month period multiplied by the daily closing price of United Dominion’s common stock) up to a maximum of 2% of market capitalization; and

iii. dividing the number obtained in (ii) by the market value of one share of United Dominion common stock on the valuation date, determined by the volume-weighted average price of the 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 or the total return of the peer group and there is no excess return, then the holders of the OPPSs will forfeit their entire initial investment of $1.27 million. The OPPSs, unlike United Dominion’s other OP Units, are not convertible into common stock except upon a change of control of United Dominion or upon the death of the participant. It is this feature, combined with the fact that management paid market value for the shares, that we believe makes this program better than previous programs, such as stock options, that were likewise designed to motivate and retain executives and key management. It ensures that management’s goals are perpetually aligned with the shareholders since the OP Units can not be conveyed or disposed of except as outlined previously. Accordingly, the contingently issuable OPPSs are not included in common stock and common stock equivalents in the calculation of earnings per share. Based upon results through December 31, 2002, 1,578,534 OPPSs would have been issued had the Program terminated on that date. However, since the ultimate determination of OPPSs to be issued will not occur until June 2003, and the number of OPPSs is determinable only upon future events, the financial statements do not reflect any additional impact for these events.

Legal Matters

United Dominion and its subsidiaries are engaged in various litigations and have a number of unresolved claims pending. The ultimate liability in respect of such litigations and claims cannot be determined at this time. United Dominion is of the opinion that such liability, to the extent not provided for through insurance or otherwise, is not likely to be material in relation to the consolidated financial statements of United Dominion.

UNITED DOMINION REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2002

12. 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 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 2002, 2001, or 2000.

13. UNAUDITED SUMMARIZED CONSOLIDATED QUARTERLY FINANCIAL DATA

Summarized consolidated quarterly financial data for the year ended December 31, 2002 is as follows (dollars in thousands, except per share amounts):


	Three Months Ended

	March 31(a)*			June 30*		September 30(b)*			December 31(c)*

Rental income (d)	$	142,913		$	144,873	$	146,855		$	149,323
Income/(loss) before minority interests and discontinued operations		(4,863	)		13,563		(1,245	)		6,095
Gain on sale of land and depreciable property		919			11,826		19,128			825
Income from discontinued operations, net of minority interests		2,885			14,494		21,519			1,258
Net income/(loss) available to common shareholders		(8,538	)		20,513		13,602			227
Earnings/(loss) per common share:
Basic	$	(0.08	)	$	0.19	$	0.13		$	0.00
Diluted		(0.08	)		0.19		0.13			0.00

(a) The first quarter of 2002 includes $15.8 million of expense associated with the refinancing of certain mortgages using proceeds from the new Fannie Mae and Freddie Mac credit facilities.

(b) The third quarter of 2002 includes $12.6 million of expense due to premiums paid for the redemption of certain higher coupon bonds.

(c) The fourth quarter of 2002 includes $5.2 million of expense due to premiums paid for the redemption of certain higher coupon bonds.

(d) Represents income from continuing operations.

Summarized consolidated quarterly financial data for the year ended December 31, 2001 is as follows (dollars in thousands, except per share amounts):


	Three Months Ended

	March 31(a)*			June 30*		September 30*		December 31(b)*

Rental income (c)	$	135,716		$	136,808	$	138,421	$	140,064
Income/(loss) before minority interests and discontinued operations		(1,268	)		10,315		10,839		6,775
Gain/(loss) on sale of land and depreciable property		4,102			20,646		—		(34	)
Income from discontinued operations, net of minority interests		7,235			22,089		3,324		4,050
Net income/(loss) available to common shareholders		(3,308	)		20,136		6,778		3,536
Earnings/(loss) per common share:
Basic	$	(0.03	)	$	0.20	$	0.07	$	0.04
Diluted		(0.03	)		0.20		0.07		0.04

(a) The first quarter of 2001 includes $8.6 million of non-recurring charges related to workforce reductions, other severance costs, executive relocation costs, and the write down of land and our investment in an online apartment leasing company.

(b) The fourth quarter of 2001 includes a $2.2 million charge related to the write down of our investment in a web-based property management and leasing system.

(c) Represents income from continuing operations.

*Reclassified to conform to current year presentation as described in Note 3 to the consolidated financial statements.

UNITED DOMINION REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2002

14. SUBSEQUENT EVENTS

On January 30, 2003, United Dominion completed the sale of 2.0 million shares of common stock at a public offering price of $15.71 per share, resulting in net proceeds to United Dominion of approximately $31 million. The proceeds will be used to repay debt and for general corporate purposes.

On February 27, 2003, United Dominion completed the sale of $150 million of 4.50% medium-term notes due in March 2008 under a new $300 million medium-term note program. The net proceeds from the issuance of approximately $149 million are anticipated to be used to repay amounts outstanding on United Dominion’s $375 million unsecured revolving credit facility.

15. ADOPTION OF SFAS 145 AND OTHER EVENTS

On January 1, 2003, United Dominion adopted Statement of Financial Accounting Standards No. 145, “Rescission of FASB Statement No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Correction” (SFAS 145). The provisions of SFAS 145 related to the rescission of SFAS No. 4 require United Dominion to reclassify prior period items that do not meet the extraordinary classification into continuing operations. During the three years ended December 31, 2002, the Company has incurred such expenses and in compliance with SFAS 145 has reported those expenses as a component of continuing operations for each period presented and in its quarterly reports filed since December 31, 2002.

Subsequent to March 31, 2003, United Dominion sold 3.1 million shares of its common stock in a public offering and received approximately $50.9 million in net proceeds from the offering.

16. ADOPTION OF SFAS 144 AND OTHER EVENTS

On January 1, 2002, United Dominion adopted SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets.” SFAS No. 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. For purposes of these financial statements, SFAS No. 144 results in the presentation of the net operating results of those properties sold or classified as held for disposition through September 30, 2003, as discontinued operations for all periods presented. The adoption of SFAS No. 144 does not have an impact on net income available to common shareholders. SFAS No. 144 only results in the reclassification of the operating results of all properties sold or classified as held for disposition through September 30, 2003 within the Consolidated Statements of Operations for the years ended December 31, 2002, 2001, and 2000, and the reclassification of the assets and liabilities within the Consolidated Balance Sheets for the years ended December 31, 2002 and 2001.

In March 2003, United Dominion negotiated a new $500 million unsecured revolving credit facility to replace our $375 million unsecured revolver and $100 million unsecured term loan. The credit facility’s interest rate is 25 and 30 basis points lower than the previous unsecured revolver and term loan, respectively.

In April 2003, United Dominion completed the sale of 3.0 million shares of common stock at a public offering price of $16.97 per share, resulting in net proceeds to United Dominion of approximately $49.2 million. The proceeds were used to acquire additional apartment communities.

In May 2003, United Dominion completed the sale of an additional 100,000 shares of common stock at a public offering price of $16.97 per share in connection with the exercise of the underwriter’s over-allotment option on the April 2003 offering. The net proceeds of $1.6 million were used for general corporate purposes.

In May 2003, United Dominion exercised its right to redeem 2.0 million shares of its Series D Cumulative Redeemable Preferred Stock that were subsequently converted by the holder into 3,076,923 shares of common stock at a price of $16.25 per share.

In June 2003, United Dominion issued $56.9 million of our new Series E Cumulative Convertible Preferred Stock (“Series E”) and 1,617,815 Preferred Operating Partnership Units (“OP Units”) totaling $26.9 million as partial consideration for the purchase of four communities in Southern California. Each share of Series E and OP Units were priced at $16.61 per share and dividends on the Series E and OP Units carry a fixed coupon of 8.0% until such time as the common share dividend is equal to or exceeds this amount for four consecutive quarters, at which time the Series E and OP Units will be entitled to receive dividends equivalent to the dividends paid to holders of United Dominion’s common stock.

UNITED DOMINION REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2002

In July 2003, United Dominion completed the sale of an additional $50 million of 4.50% medium-term notes due in March 2008 under our medium-term note program. The net proceeds from the issuance of approximately $49.9 million were used to repay amounts outstanding on United Dominion’s $500 million unsecured revolving credit facility.

In September 2003, United Dominion completed the sale of 4.0 million shares of common stock at a public offering price of $18.40 per share. United Dominion also granted the underwriter an option to purchase an additional 600,000 shares to cover over-allotments. The net proceeds from the offering of approximately $72.3 million were used for general corporate purposes, including funding future acquisitions and development, with the remaining balance used to reduce outstanding variable rate debt under our unsecured credit facilities.

In October 2003, United Dominion completed the sale of $75 million of 5.13% senior unsecured notes due in January 2014 under our medium-term note program. The net proceeds from the issuance of $74.5 million were used to repay amounts outstanding on United Dominion’s $500 million unsecured revolving credit facility.

In October 2003, United Dominion completed the sale of 600,000 shares of common stock at a public offering price of $18.40 per share in connection with the exercise of the over-allotment option granted to the underwriters for United Dominion’s September 2003 offering of 4.0 million shares of common stock. The net proceeds from the offering of $10.8 million were used for general corporate purposes, including funding future acquisitions and development, with the remaining balance used to reduce outstanding variable rate debt under our unsecured credit facilities.

In November 2003, United Dominion completed the sale of $50 million of 4.25% senior unsecured notes due in January 2009. The net proceeds from the issuance of $49.8 million were used to fund acquisitions of apartment communities.

In December 2003, United Dominion exercised its right to redeem 4.0 million shares of its Series D Cumulative Redeemable Preferred Stock that were subsequently converted by the holder into 6,153,846 shares of common stock at a price of $16.25 per share.

In January 2004, United Dominion completed the sale of $75 million of 5.13% senior unsecured notes due in January 2014. These notes represent a re-opening of the 5.13% senior notes due January 2014 issued by United Dominion in October 2003, and these notes will constitute a single series of notes, bringing the aggregate principal amount outstanding of the 5.13% senior notes to $150 million. The net proceeds of approximately $73.9 million from this issuance were used to repay secured and unsecured debt obligations maturing in the first quarter of 2004

Schedule III
Summary of Real Estate Owned
(in thousands)


									Cost of			Gross Amount at
			Initial Costs						Improvements			Which Carried at Close of Period
							Total		Capitalized
			Land and		Buildings		Initial		Subsequent			Land and		Buildings
			Land		and		Acquisition		to Acquisition			Land		and
	Encumbrances		Improvements		Improvements		Costs		(Net of Disposals)			Improvements		Improvements

Preston Oaks	$	—	$	1,784	$	6,416	$	8,200	$	841		$	1,949	$	7,092
Rock Creek		—		4,077		15,823		19,900		4,771			4,652		20,019
Windridge		—		3,414		14,027		17,441		3,272			4,056		16,657
Catalina		—		1,543		5,632		7,175		907			1,678		6,404
Wimbledon Court		—		1,809		10,930		12,739		2,316			2,847		12,208
Lakeridge		—		1,631		5,669		7,300		1,261			1,826		6,735
Summergate		—		1,171		3,929		5,100		875			1,406		4,569
Oak Forest		23,540		5,631		23,294		28,925		10,805			6,378		33,352
Oaks Of Lewisville		12,265		3,727		13,563		17,290		3,946			4,540		16,696
Kelly Crossing		—		2,497		9,156		11,653		1,724			2,986		10,391
Highlands Of Preston		—		2,151		8,168		10,319		1,838			2,492		9,665
The Summit		8,575		1,932		9,041		10,973		1,513			2,333		10,153
Springfield		5,808		3,075		6,823		9,898		1,160			3,275		7,783
Meridian		—		6,013		29,094		35,107		864			6,380		29,591
Mandolin I		—		2,663		20,975		23,638		446			2,783		21,301
DALLAS, TX		50,188		43,118		182,540		225,658		36,539			49,581		212,616
Woodtrail		—		1,543		5,457		7,000		2,556			1,740		7,816
Park Trails		—		1,145		4,105		5,250		1,004			1,248		5,006
Green Oaks		—		5,314		19,626		24,940		3,291			5,940		22,291
Sky Hawk		—		2,298		7,158		9,456		2,005			2,718		8,743
South Grand At Pecan Grove		19,509		4,058		14,756		18,814		4,880			4,857		18,837
Breakers		—		1,527		5,298		6,825		2,329			1,920		7,234
Braesridge		10,255		3,048		10,962		14,010		2,511			3,493		13,028
Skylar Pointe		—		3,604		11,593		15,197		4,315			3,728		15,784
Stone Canyon		—		899		—		899		9,439			1,324		9,014
Briar Park		—		329		2,794		3,123		242			351		3,014
Chelsea Park		5,390		1,991		5,788		7,779		2,161			2,442		7,498
Clear Lake Falls		—		1,090		4,535		5,625		—			1,163		4,462
Country Club Place		4,900		499		6,520		7,019		1,068			666		7,421
Arbor Ridge		5,531		1,689		6,684		8,373		629			2,069		6,933
London Park		6,125		2,019		6,667		8,686		1,986			2,455		8,217
Marymont		—		1,151		4,155		5,306		858			1,174		4,990
Nantucket Square		—		1,068		4,833		5,901		(392	)		1,075		4,434
Riverway		—		523		2,828		3,351		256			553		3,054
Riviera Pines		6,244		1,414		6,454		7,868		1,056			1,470		7,454
The Gallery		—		769		3,359		4,128		261			794		3,595
Towne Lake		—		1,334		5,309		6,643		1,495			1,609		6,529
The Legend at Park 10		—		1,995		—		1,995		11,748			3,926		9,817
HOUSTON, TX		57,954		39,307		138,881		178,188		53,698			46,715		185,171
Vista Point		—		1,587		5,613		7,200		1,493			1,727		6,966
Sierra Palms		—		4,639		17,361		22,000		582			4,748		17,834
Northpark Village		—		1,519		13,537		15,056		1,857			1,876		15,037
Stonegate		5,180		735		7,940		8,675		1,067			905		8,837
Finisterra		—		1,274		26,392		27,666		615			1,341		26,940
La Privada		15,400		7,303		18,508		25,811		2,122			7,845		20,088
Terracina		22,413		3,757		34,781		38,538		6,771			4,582		40,727
Woodland Park		—		3,017		6,706		9,723		1,030			3,226		7,527
Sierra Foothills		12,691		2,728		—		2,728		18,771			4,842		16,657
Villagio at McCormick Ranch		5,687		3,333		5,976		9,309		860			3,720		6,449
Sierra Canyon		—		1,810		12,964		14,774		240			1,821		13,193
PHOENIX, AZ		61,371		31,702		149,778		181,480		35,408			36,633		180,255
Fisherman’s Village		—		2,387		7,459		9,846		3,624			3,144		10,326
Seabrook		—		1,846		4,155		6,001		2,816			2,268		6,549
Dover Village		—		2,895		6,456		9,351		3,891			3,441		9,801
Lakeside North		12,440		1,533		11,076		12,609		5,093			2,263		15,439
Regatta Shore		—		757		6,607		7,364		3,947			1,535		9,776
Alafaya Woods		8,725		1,653		9,042		10,695		2,297			2,111		10,881
Vinyards		8,475		1,840		11,572		13,412		3,309			2,424		14,297
Andover Place		13,230		3,692		7,757		11,449		3,273			4,503		10,219

[Additional columns below]

[Continued from above table, first column(s) repeated]

Total

Carrying Accumulated Date of Date

Value (A) Depreciation (B) Construction Acquired

Preston Oaks
$ 9,041 $ 1,750 1980 12/31/96

Rock Creek
24,671 5,312 1979 12/31/96

Windridge
20,713 4,432 1980 12/31/96

Catalina
8,082 1,586 1982 12/31/96

Wimbledon Court
15,055 2,858 1983 12/31/96

Lakeridge
8,561 1,784 1984 12/31/96

Summergate
5,975 1,234 1984 12/31/96

Oak Forest
39,730 8,462 1996/98 12/31/96

Oaks Of Lewisville
21,236 4,736 1983 03/27/97

Kelly Crossing
13,377 2,563 1984 06/18/97

Highlands Of Preston
12,157 2,148 1985 03/27/98

The Summit
12,486 2,136 1983 03/27/98

Springfield
11,058 1,767 1985 03/27/98

Meridian
35,971 1,948 2000/02 01/27/98 & 12/28/01

Mandolin I
24,084 1,377 2001 12/28/01

DALLAS, TX
262,197 44,093

Woodtrail
9,556 2,562 1978 12/31/96

Park Trails
6,254 1,344 1983 12/31/96

Green Oaks
28,231 5,275 1985 06/25/97

Sky Hawk
11,461 2,524 1984 05/08/97

South Grand At Pecan Grove
23,694 4,605 1985 09/26/97

Breakers
9,154 1,976 1985 09/26/97

Braesridge
16,521 3,081 1982 09/26/97

Skylar Pointe
19,512 4,084 1979 11/20/97

Stone Canyon
10,338 1,426 1998 12/17/97

Briar Park
3,365 538 1987 03/27/98

Chelsea Park
9,940 1,716 1983 03/27/98

Clear Lake Falls
5,625 844 1980 03/27/98

Country Club Place
8,087 1,538 1985 03/27/98

Arbor Ridge
9,002 1,622 1983 03/27/98

London Park
10,672 1,958 1983 03/27/98

Marymont
6,164 931 1983 03/27/98

Nantucket Square
5,509 765 1983 03/27/98

Riverway
3,607 670 1985 03/27/98

Riviera Pines
8,924 1,235 1979 03/27/98

The Gallery
4,389 579 1968 03/27/98

Towne Lake
8,138 1,542 1984 03/27/98

The Legend at Park 10
13,743 2,523 1998 05/19/98

HOUSTON, TX
231,886 43,338

Vista Point
8,693 1,844 1986 12/31/96

Sierra Palms
22,582 3,859 1996 12/31/96

Northpark Village
16,913 3,254 1983 03/27/98

Stonegate
9,742 1,785 1978 03/27/98

Finisterra
28,281 4,619 1997 03/27/98

La Privada
27,933 3,914 1987 03/27/98

Terracina
45,309 8,346 1984 05/28/98

Woodland Park
10,753 1,873 1979 06/09/98

Sierra Foothills
21,499 4,406 1998 02/18/98

Villagio at McCormick Ranch
10,169 1,470 1980 01/18/01

Sierra Canyon
15,014 878 2001 12/28/01

PHOENIX, AZ
216,888 36,248

Fisherman’s Village
13,470 3,951 1984 12/29/95

Seabrook
8,817 2,848 1984 02/20/96

Dover Village
13,242 4,651 1981 03/31/93

Lakeside North
17,702 5,573 1984 04/14/94

Regatta Shore
11,311 3,602 1988 06/30/94

Alafaya Woods
12,992 4,008 1988/90 10/21/94

Vinyards
16,721 5,162 1984/86 10/31/94

Andover Place
14,722 3,864 1988 09/29/95 & 09/30/96

Cost of Gross Amount at

Initial Costs Improvements Which Carried at Close of Period

Total Capitalized

Land and Buildings Initial Subsequent Land and Buildings

Land and Acquisition to Acquisition Land and

Encumbrances Improvements Improvements Costs (Net of Disposals) Improvements Improvements

Los Altos
12,199 2,804 12,348 15,152 2,879 3,347 14,684

Lotus Landing
— 2,185 8,638 10,823 2,061 2,414 10,470

Seville On The Green
— 1,283 6,498 7,781 1,918 1,456 8,243

Arbors @ Lee Vista
13,383 3,976 16,920 20,896 1,869 4,386 18,379

Heron Lake
8,603 1,447 9,288 10,735 1,276 1,619 10,392

Ashton @ Waterford
14,945 3,872 17,538 21,410 193 3,911 17,692

ORLANDO, FL
92,000 32,170 135,354 167,524 38,446 38,822 167,148

Dominion On Spring Forest
— 1,257 8,586 9,843 4,013 1,717 12,139

Dominion Park Green
— 500 4,322 4,822 1,825 716 5,931

Dominion On Lake Lynn
16,250 3,622 12,405 16,027 3,582 4,152 15,457

Dominion Courtney Place
— 1,115 5,119 6,234 3,337 1,450 8,121

Dominion Walnut Ridge
9,515 1,791 11,969 13,760 2,303 2,176 13,887

Dominion Walnut Creek
17,050 3,170 21,717 24,887 3,691 3,730 24,848

Dominion Ramsgate
— 908 6,819 7,727 957 1,041 7,643

Copper Mill
— 1,548 16,067 17,615 1,094 1,828 16,881

Trinity Park
15,778 4,580 17,576 22,156 1,236 4,631 18,761

Meadows at Kildaire
— 2,846 20,768 23,614 1,768 6,875 18,507

Oaks at Weston
— 9,944 23,306 33,250 146 9,945 23,451

RALEIGH, NC
58,593 31,281 148,654 179,935 23,952 38,261 165,626

Dominion Middle Ridge
14,198 3,311 13,283 16,594 1,133 3,423 14,304

Dominion Lake Ridge
9,142 2,366 8,387 10,753 1,124 2,524 9,353

Presidential Greens
20,153 11,238 18,790 30,028 159 11,238 18,949

Taylor Place
— 6,418 13,411 19,829 823 6,456 14,196

Ridgewood Apartments
12,512 5,612 20,086 25,699 303 5,613 20,389

Ridgewood Townhomes
— 4,507 16,263 20,771 37 4,507 16,301

Greens At Falls Run
— 2,731 5,300 8,031 925 2,878 6,078

Manor At England Run
14,671 3,195 13,505 16,700 12,697 4,869 24,528

METROPOLITAN DC
70,676 39,378 109,025 148,403 17,203 41,508 124,098

Autumnwood
— 2,412 8,688 11,100 1,465 2,737 9,828

Cobblestone
— 2,925 10,528 13,453 3,134 3,182 13,405

Pavillion
— 4,428 19,033 23,461 1,833 4,771 20,523

Oak Park
16,236 3,966 22,228 26,194 758 5,549 21,403

Parc Plaza
— 1,684 5,279 6,963 1,610 2,163 6,410

Summit Ridge
7,700 1,726 6,308 8,034 1,648 2,214 7,468

Greenwood Creek
— 1,958 8,551 10,509 1,678 2,302 9,885

Derby Park
11,130 3,121 11,765 14,886 1,623 3,762 12,747

Aspen Court
3,990 776 4,945 5,721 1,017 1,099 5,639

The Cliffs
— 3,484 18,657 22,141 803 3,655 19,289

ARLINGTON, TX
39,056 26,480 115,982 142,462 15,569 31,434 126,597

Bay Cove
— 2,929 6,578 9,507 3,678 3,334 9,851

Summit West
— 2,176 4,710 6,886 2,572 2,470 6,988

Pinebrook
— 1,780 2,458 4,238 3,217 2,010 5,445

Lakewood Place
10,300 1,395 10,647 12,042 1,517 1,633 11,926

Hunters Ridge
10,232 2,462 10,942 13,404 1,956 2,993 12,367

Bay Meadow
— 2,893 9,254 12,147 2,727 3,437 11,437

Cambridge
— 1,791 7,166 8,957 1,605 2,106 8,456

Laurel Oaks
— 1,362 6,542 7,904 1,303 1,544 7,663

Parker’s Landing
29,453 10,178 37,869 48,047 1,658 9,298 40,407

Sugar Mill Creek
7,420 2,242 7,553 9,795 765 2,385 8,175

TAMPA, FL
57,405 29,208 103,719 132,927 20,998 31,210 122,715

Sycamore Ridge
13,160 4,068 15,433 19,501 1,238 4,226 16,513

Heritage Green
— 2,990 11,392 14,382 9,405 3,134 20,653

Alexander Court
— 1,573 — 1,573 21,370 6,218 16,725

Governour’s Square
28,459 7,513 28,695 36,208 3,053 7,825 31,436

Hickory Creek
— 3,421 13,539 16,960 984 3,493 14,451

Britton Woods
14,957 3,477 19,214 22,691 1,882 4,030 20,543

COLUMBUS, OH
56,576 23,042 88,273 111,315 37,932 28,926 120,321

2000 Post Street
— 9,861 44,578 54,439 690 9,926 45,203

Birch Creek
7,630 4,365 16,696 21,061 1,367 4,614 17,814

Highlands Of Marin
— 5,996 24,868 30,864 919 6,079 25,704

Marina Playa
13,482 6,224 23,916 30,140 1,765 6,461 25,444

SAN FRANCISCO, CA
21,112 26,446 110,058 136,504 4,741 27,080 114,165

[Additional columns below]

[Continued from above table, first column(s) repeated]

Total

Carrying Accumulated Date of Date

Value (A) Depreciation (B) Construction Acquired

Los Altos
18,031 4,046 1990 10/31/96

Lotus Landing
12,884 2,419 1985 07/01/97

Seville On The Green
9,699 1,955 1986 10/21/97

Arbors @ Lee Vista
22,765 3,719 1991 12/31/97

Heron Lake
12,011 2,096 1989 03/27/98

Ashton @ Waterford
21,603 3,443 2000 05/28/98

ORLANDO, FL
205,970 51,337

Dominion On Spring Forest
13,856 6,104 1978/81 05/21/91

Dominion Park Green
6,647 2,726 1987 09/27/91

Dominion On Lake Lynn
19,609 5,018 1986 12/01/92

Dominion Courtney Place
9,571 3,290 1979/81 07/08/93

Dominion Walnut Ridge
16,063 4,744 1982/84 03/04/94

Dominion Walnut Creek
28,578 7,992 1985/86 05/17/94

Dominion Ramsgate
8,684 1,976 1988 08/15/96

Copper Mill
18,709 3,660 1997 12/31/96

Trinity Park
23,392 4,005 1987 02/28/97

Meadows at Kildaire
25,382 2,042 2000 05/25/00

Oaks at Weston
33,396 788 2001 06/28/02

RALEIGH, NC
203,887 42,345

Dominion Middle Ridge
17,727 3,593 1990 06/25/96

Dominion Lake Ridge
11,877 2,599 1987 02/23/96

Presidential Greens
30,187 738 1938 05/15/02

Taylor Place
20,652 621 1962 04/17/02

Ridgewood Apartments
26,002 431 1988 08/26/02

Ridgewood Townhomes
20,808 340 1983 08/26/02

Greens At Falls Run
8,956 1,845 1989 05/04/95

Manor At England Run
29,397 5,544 1990 05/04/95

METROPOLITAN DC
165,606 15,711

Autumnwood
12,565 2,455 1984 12/31/96

Cobblestone
16,587 3,354 1984 12/31/96

Pavillion
25,294 4,710 1979 12/31/96

Oak Park
26,952 5,730 1982/98 12/31/96

Parc Plaza
8,573 1,829 1986 10/30/97

Summit Ridge
9,682 1,883 1983 03/27/98

Greenwood Creek
12,187 2,160 1984 03/27/98

Derby Park
16,509 2,926 1984 03/27/98

Aspen Court
6,738 1,272 1986 03/27/98

The Cliffs
22,944 1,155 1992 01/29/02

ARLINGTON, TX
158,031 27,474

Bay Cove
13,185 4,690 1972 12/16/92

Summit West
9,458 3,482 1972 12/16/92

Pinebrook
7,455 3,081 1977 09/28/93

Lakewood Place
13,559 3,991 1986 03/10/94

Hunters Ridge
15,360 3,864 1992 06/30/95

Bay Meadow
14,874 3,275 1985 12/09/96

Cambridge
10,562 2,205 1985 06/06/97

Laurel Oaks
9,207 1,958 1986 07/01/97

Parker’s Landing
49,705 6,102 1991 12/07/98

Sugar Mill Creek
10,560 1,324 1988 12/07/98

TAMPA, FL
153,925 33,972

Sycamore Ridge
20,739 2,840 1997 07/02/98

Heritage Green
23,787 3,613 1998 07/02/98

Alexander Court
22,943 3,598 1999 07/02/98

Governour’s Square
39,261 5,032 1967 12/07/98

Hickory Creek
17,944 2,329 1988 12/07/98

Britton Woods
24,573 3,013 1991 04/20/01

COLUMBUS, OH
149,247 20,425

2000 Post Street
55,129 5,055 1987 12/07/98

Birch Creek
22,428 2,520 1968 12/07/98

Highlands Of Marin
31,783 3,334 1991 12/07/98

Marina Playa
31,905 3,716 1971 12/07/98

SAN FRANCISCO, CA
141,245 14,625

Cost of Gross Amount at

Initial Costs Improvements Which Carried at Close of Period

Total Capitalized

Land and Buildings Initial Subsequent Land and Buildings

Land and Acquisition to Acquisition Land and

Encumbrances Improvements Improvements Costs (Net of Disposals) Improvements Improvements

The Highlands
— 321 2,830 3,151 2,871 709 5,313

Emerald Bay
— 626 4,723 5,349 4,850 1,267 8,932

Dominion Peppertree
— 1,546 7,699 9,245 1,797 1,807 9,235

Dominion Crown Point
— 2,122 22,339 24,461 2,213 3,897 22,777

Dominion Harris Pond
— 887 6,728 7,615 1,436 1,231 7,820

Dominion Mallard Creek
— 699 6,488 7,187 982 796 7,373

Chateau Village
— 1,046 6,979 8,025 2,538 1,467 9,096

Dominion At Sharon
— 667 4,856 5,523 1,098 908 5,713

Providence Court
— 1 22,048 22,049 9,760 7,519 24,290

Stoney Pointe
12,043 1,500 15,856 17,356 1,544 1,770 17,130

CHARLOTTE, NC
12,043 9,415 100,546 109,961 29,089 21,371 117,679

Pine Avenue
11,484 2,158 8,888 11,046 2,635 2,827 10,854

The Grand Resort
— 8,884 35,707 44,591 17,337 11,775 50,153

Grand Terrace
— 2,144 6,595 8,739 1,237 2,227 7,749

Windemere at Sycamore Highland
— 5,810 23,450 29,260 86 5,809 23,537

Rancho Vallecitos
— 3,303 10,877 14,180 1,348 3,402 12,126

SOUTHERN CALIFORNIA
11,484 22,299 85,517 107,816 22,643 26,040 104,419

Legacy Hill
— 1,148 5,868 7,016 3,062 1,446 8,632

Hickory Run
— 1,469 11,584 13,053 1,997 1,729 13,321

Carrington Hills
— 2,117 — 2,117 24,677 3,736 23,058

Brookridge
— 707 5,461 6,168 1,340 939 6,569

Club At Hickory Hollow
— 2,140 15,231 17,371 2,195 2,702 16,864

Breckenridge
— 766 7,714 8,480 913 952 8,441

Williamsburg
— 1,376 10,931 12,307 1,715 1,642 12,380

Colonnade
— 1,460 16,015 17,475 686 1,609 16,552

NASHVILLE, TN
— 11,183 72,804 83,987 36,585 14,755 105,817

Beechwood
— 1,409 6,087 7,496 1,099 1,674 6,921

Steeplechase
— 3,208 11,514 14,722 12,697 3,925 23,494

Northwinds
— 1,558 11,736 13,294 1,178 1,749 12,723

Deerwood Crossings
— 1,540 7,989 9,529 1,378 1,686 9,221

Dutch Village
— 1,198 4,826 6,024 854 1,287 5,591

Lake Brandt
— 1,547 13,489 15,036 932 1,824 14,144

Park Forest
— 680 5,770 6,450 677 864 6,263

Deep River Pointe
— 1,671 11,140 12,811 476 1,814 11,473

GREENSBORO, NC
— 12,811 72,551 85,362 19,291 14,823 89,830

Boronda Manor
296 1,946 8,982 10,928 331 1,970 9,289

Garden Court
139 888 4,188 5,076 226 895 4,407

Harding Park Townhomes
71 550 2,051 2,601 102 573 2,130

Cambridge Court
436 3,039 12,883 15,922 684 3,121 13,485

Laurel Tree
175 1,304 5,115 6,419 222 1,318 5,323

Pine Grove
194 1,383 5,784 7,167 224 1,391 6,000

The Pointe At Harden Ranch
815 6,388 23,854 30,242 800 6,424 24,618

The Pointe At Northridge
274 2,044 8,029 10,073 366 2,085 8,354

The Pointe At Westlake
181 1,329 5,334 6,663 218 1,348 5,533

MONTEREY PENINSULA, CA
2,581 18,871 76,220 95,091 3,173 19,125 79,139

Dominion Olde West
— 1,965 12,204 14,169 2,482 2,382 14,269

Dominion Creekwood
— — — — 1,164 50 1,114

Dominion Laurel Springs
— 465 3,120 3,585 1,365 639 4,311

Dominion English Hills
20,044 1,979 11,524 13,503 5,440 2,816 16,127

Dominion Gayton Crossing
10,400 826 5,148 5,974 6,354 1,165 11,163

Dominion West End
16,493 2,059 15,049 17,108 2,848 2,701 17,255

Courthouse Green
8,085 732 4,702 5,434 2,350 1,101 6,683

Waterside At Ironbridge
11,635 1,844 13,239 15,083 900 2,008 13,975

RICHMOND, VA
66,657 9,870 64,986 74,856 22,903 12,862 84,897

Cape Harbor
— 1,892 18,113 20,005 1,596 2,271 19,330

Mill Creek
— 1,404 4,489 5,893 13,823 1,941 17,775

The Creek
— 418 2,506 2,924 1,833 489 4,268

Forest Hills
— 1,028 5,421 6,449 2,511 1,208 7,752

Clear Run
— 875 8,741 9,616 5,945 1,281 14,280

Crosswinds
— 1,096 18,230 19,326 1,326 1,215 19,437

WILMINGTON, NC
— 6,713 57,500 64,213 27,034 8,405 82,842

[Additional columns below]

[Continued from above table, first column(s) repeated]

Total

Carrying Accumulated Date of Date

Value (A) Depreciation (B) Construction Acquired

The Highlands
6,022 3,754 1970 01/17/84

Emerald Bay
10,199 4,473 1972 02/06/90

Dominion Peppertree
11,042 3,526 1987 12/14/93

Dominion Crown Point
26,674 6,336 1987/2000 07/01/94

Dominion Harris Pond
9,051 2,604 1987 07/01/94

Dominion Mallard Creek
8,169 2,188 1989 08/16/94

Chateau Village
10,563 2,998 1974 08/15/96

Dominion At Sharon
6,621 1,615 1984 08/15/96

Providence Court
31,809 5,887 1997 09/30/97

Stoney Pointe
18,900 3,914 1991 02/28/97

CHARLOTTE, NC
139,050 37,295

Pine Avenue
13,681 1,325 1987 12/07/98

The Grand Resort
61,928 5,822 1971 12/07/98

Grand Terrace
9,976 1,179 1986 06/30/99

Windemere at Sycamore Highland
29,346 158 2001 11/21/02

Rancho Vallecitos
15,528 2,786 1988 10/13/99

SOUTHERN CALIFORNIA
130,459 11,270

Legacy Hill
10,078 3,136 1977 11/06/95

Hickory Run
15,050 3,765 1989 12/29/95

Carrington Hills
26,794 4,739 1999 12/06/95

Brookridge
7,508 2,077 1986 03/28/96

Club At Hickory Hollow
19,566 4,205 1987 02/21/97

Breckenridge
9,393 1,976 1986 03/27/97

Williamsburg
14,022 2,596 1986 05/20/98

Colonnade
18,161 2,594 1998 01/07/99

NASHVILLE, TN
120,572 25,088

Beechwood
8,595 2,618 1985 12/22/93

Steeplechase
27,419 5,332 1990/97 03/07/96

Northwinds
14,472 3,282 1989/97 08/15/96

Deerwood Crossings
10,907 2,680 1973 08/15/96

Dutch Village
6,878 1,725 1970 08/15/96

Lake Brandt
15,968 3,671 1995 08/15/96

Park Forest
7,127 1,542 1987 09/26/96

Deep River Pointe
13,287 2,408 1997 10/01/97

GREENSBORO, NC
104,653 23,258

Boronda Manor
11,259 1,308 1979 12/07/98

Garden Court
5,302 640 1973 12/07/98

Harding Park Townhomes
2,703 302 1984 12/07/98

Cambridge Court
16,606 2,049 1974 12/07/98

Laurel Tree
6,641 819 1977 12/07/98

Pine Grove
7,391 794 1963 12/07/98

The Pointe At Harden Ranch
31,042 3,525 1986 12/07/98

The Pointe At Northridge
10,439 1,225 1979 12/07/98

The Pointe At Westlake
6,881 816 1975 12/07/98

MONTEREY PENINSULA, CA
98,264 11,478

Dominion Olde West
16,651 7,082 1978/82/84/85/87 12/31/84 & 8/27/91

Dominion Creekwood
1,164 260 1984 08/27/91

Dominion Laurel Springs
4,950 2,051 1972 09/06/91

Dominion English Hills
18,943 7,813 1969/76 12/06/91

Dominion Gayton Crossing
12,328 6,119 1973 09/28/95

Dominion West End
19,956 5,137 1989 12/28/95

Courthouse Green
7,784 3,838 1974/78 12/31/84

Waterside At Ironbridge
15,983 2,760 1987 09/30/97

RICHMOND, VA
97,759 35,060

Cape Harbor
21,601 4,755 1996 08/15/96

Mill Creek
19,716 4,848 1986/98 09/30/91

The Creek
4,757 2,206 1973 06/30/92

Forest Hills
8,960 3,271 1964/69 06/30/92

Clear Run
15,561 4,299 1987/89 07/22/94

Crosswinds
20,652 4,433 1990 02/28/97

WILMINGTON, NC
91,247 23,812

Cost of Gross Amount at

Initial Costs Improvements Which Carried at Close of Period

Total Capitalized

Land and Buildings Initial Subsequent Land and Buildings

Land and Acquisition to Acquisition Land and

Encumbrances Improvements Improvements Costs (Net of Disposals) Improvements Improvements

Gatewater Landing
— 2,078 6,085 8,163 1,465 2,184 7,444

Dominion Kings Place
4,325 1,565 7,007 8,572 953 1,653 7,872

Dominion At Eden Brook
7,390 2,361 9,384 11,745 1,406 2,466 10,685

Dominion Great Oaks
11,446 2,920 9,100 12,020 3,889 4,281 11,628

Dominion Constant Friendship
— 903 4,669 5,572 845 1,049 5,368

Lakeside Mill
5,249 2,666 10,109 12,775 615 2,694 10,696

Tamar Meadow
— 4,145 17,149 21,294 31 4,145 17,180

BALTIMORE, MD
28,410 16,638 63,503 80,141 9,204 18,472 70,873

Stanford Village
— 885 2,808 3,693 1,426 1,197 3,922

Griffin Crossing
— 1,510 7,544 9,054 1,786 1,873 8,967

Gwinnett Square
8,851 1,924 7,376 9,300 2,121 2,204 9,217

Dunwoody Pointe
9,870 2,763 6,903 9,666 4,900 3,342 11,224

Riverwood
11,725 2,986 11,088 14,074 4,093 3,485 14,682

Waterford Place
— 1,579 10,303 11,882 552 1,668 10,766

ATLANTA, GA
30,446 11,647 46,022 57,669 14,878 13,769 58,778

Gable Hill
— 825 5,307 6,132 1,592 1,194 6,530

St. Andrews Commons
— 1,429 9,371 10,800 1,893 1,882 10,811

Forestbrook
5,000 395 2,902 3,297 1,879 555 4,621

Waterford
— 958 6,948 7,906 1,672 1,292 8,286

Hampton Greene
— 1,363 10,118 11,481 1,559 1,901 11,139

Rivergate
— 1,123 12,056 13,179 1,326 1,439 13,066

COLUMBIA, SC
5,000 6,093 46,702 52,795 9,921 8,263 54,453

Greentree
12,455 1,634 11,227 12,861 4,244 2,349 14,756

Westland
10,747 1,834 14,865 16,699 4,042 2,668 18,073

Antlers
— 4,034 11,193 15,227 5,901 4,907 16,221

JACKSONVILLE, FL
23,202 7,502 37,285 44,787 14,187 9,924 49,050

Forest Lake At Oyster Point
— 780 8,862 9,642 2,061 1,187 10,516

Woodscape
— 799 7,209 8,008 2,591 1,803 8,796

Eastwind
— 155 5,317 5,472 1,477 403 6,546

Dominion Waterside At Lynnhaven
— 1,824 4,107 5,931 1,363 2,033 5,261

Heather Lake
— 617 3,400 4,017 3,661 1,020 6,658

Dominion Yorkshire Downs
7,359 1,089 8,582 9,671 833 1,260 9,244

NORFOLK, VA
7,359 5,264 37,477 42,741 11,986 7,706 47,021

2900 Place
— 1,819 5,593 7,412 467 1,825 6,054

Brandywine Creek
14,140 4,666 17,514 22,180 (1,889 ) 4,755 15,536

Lakewood
4,130 1,113 3,878 4,991 563 1,232 4,322

Nemoke Trail
13,300 3,431 12,223 15,654 807 3,495 12,966

LANSING, MI
31,570 11,029 39,208 50,237 (52 ) 11,307 38,878

Arbor Terrace
9,800 1,453 11,995 13,448 645 1,499 12,594

Crowne Pointe
8,330 2,486 6,437 8,923 1,192 2,523 7,592

Hilltop
7,700 2,174 7,408 9,582 501 2,316 7,767

SEATTLE, WA
25,830 6,113 25,840 31,953 2,338 6,338 27,953

Greensview, Aurora, CO
— 6,450 24,405 30,855 2,234 6,010 27,079

Mountain View, Aurora, CO
— 6,402 21,569 27,971 2,097 6,369 23,699

The Reflections, Aurora, CO
— 6,305 27,202 33,507 783 6,411 27,879

Foothills Tennis Village, Roseville, CA
15,820 3,618 14,542 18,160 679 3,731 15,108

Woodlake Village, Sacramento, CA
30,900 6,772 26,967 33,739 1,624 7,020 28,343

OTHER WESTERN
46,720 29,547 114,685 144,232 7,417 29,541 122,108

Lancaster Commons, Salem, OR
7,910 2,485 7,451 9,936 448 2,509 7,875

Tualatin Heights, Tualatin, OR
10,090 3,273 9,134 12,407 792 3,376 9,823

University Park, Portland, OR
— 3,007 8,191 11,198 420 3,020 8,598

Evergreen Park, Vancouver, WA
5,127 3,878 9,973 13,851 894 3,916 10,829

Aspen Creek, Puyallup, WA
6,746 1,178 9,116 10,294 326 1,268 9,352

Beaumont, Tacoma, WA
10,640 2,339 12,559 14,898 511 2,393 13,016

Stonehaven, Federal Way, WA
8,660 6,471 29,536 36,007 312 6,479 29,840

Campus Commons, Pullman, WA
6,004 1,144 12,873 14,017 (2,135 ) 1,256 10,626

OTHER PACIFIC
55,177 23,775 98,833 122,608 1,568 24,217 99,959

Inn @ Los Patios, San Antonio, TX
— 3,005 11,545 14,550 (1,490 ) 3,005 10,055

[Additional columns below]

[Continued from above table, first column(s) repeated]

Total

Carrying Accumulated Date of Date

Value (A) Depreciation (B) Construction Acquired

Gatewater Landing
9,628 3,046 1970 12/16/92

Dominion Kings Place
9,525 2,898 1983 12/29/92

Dominion At Eden Brook
13,151 3,944 1984 12/29/92

Dominion Great Oaks
15,909 4,595 1974 07/01/94

Dominion Constant Friendship
6,417 1,670 1990 05/04/95

Lakeside Mill
13,390 2,511 1989 12/10/99

Tamar Meadow
21,325 111 1990 11/22/02

BALTIMORE, MD
89,345 18,775

Stanford Village
5,119 2,275 1985 09/26/89

Griffin Crossing
10,840 3,224 1987/89 06/08/94

Gwinnett Square
11,421 2,842 1985 03/29/95

Dunwoody Pointe
14,566 4,304 1980 10/24/95

Riverwood
18,167 4,981 1980 06/26/96

Waterford Place
12,434 1,918 1985 04/15/98

ATLANTA, GA
72,547 19,544

Gable Hill
7,724 3,161 1985 12/04/89

St. Andrews Commons
12,693 4,281 1986 05/20/93

Forestbrook
5,176 2,457 1974 07/01/93

Waterford
9,578 2,897 1985 07/01/94

Hampton Greene
13,040 3,679 1990 08/19/94

Rivergate
14,505 3,306 1989 08/15/96

COLUMBIA, SC
62,716 19,781

Greentree
17,105 5,314 1986 07/22/94

Westland
20,741 5,747 1990 05/09/96

Antlers
21,128 5,593 1985 05/28/96

JACKSONVILLE, FL
58,974 16,654

Forest Lake At Oyster Point
11,703 3,483 1986 08/15/95

Woodscape
10,599 4,899 1974/76 12/29/87

Eastwind
6,949 3,148 1970 04/04/88

Dominion Waterside At Lynnhaven
7,294 1,761 1966 08/15/96

Heather Lake
7,678 5,002 1972/74 03/01/80

Dominion Yorkshire Downs
10,504 1,893 1987 12/23/97

NORFOLK, VA
54,727 20,186

2900 Place
7,879 890 1966 12/07/98

Brandywine Creek
20,291 2,505 1974 12/07/98

Lakewood
5,554 714 1974 12/07/98

Nemoke Trail
16,461 2,008 1978 12/07/98

LANSING, MI
50,185 6,117

Arbor Terrace
14,093 2,454 1996 03/27/98

Crowne Pointe
10,115 1,325 1987 12/07/98

Hilltop
10,083 1,227 1985 12/07/98

SEATTLE, WA
34,291 5,006

Greensview, Aurora, CO
33,089 3,291 1987/2002 12/07/98

Mountain View, Aurora, CO
30,068 3,785 1973 12/07/98

The Reflections, Aurora, CO
34,290 1,145 1981/96 04/30/02

Foothills Tennis Village, Roseville, CA
18,839 2,192 1988 12/07/98

Woodlake Village, Sacramento, CA
35,363 4,431 1979 12/07/98

OTHER WESTERN
151,649 14,844

Lancaster Commons, Salem, OR
10,384 1,374 1992 12/07/98

Tualatin Heights, Tualatin, OR
13,199 1,710 1989 12/07/98

University Park, Portland, OR
11,618 1,329 1987 03/27/98

Evergreen Park, Vancouver, WA
14,745 1,945 1988 03/27/98

Aspen Creek, Puyallup, WA
10,620 1,401 1996 12/07/98

Beaumont, Tacoma, WA
15,409 2,734 1996 06/14/00

Stonehaven, Federal Way, WA
36,319 1,109 1989/90 05/28/02

Campus Commons, Pullman, WA
11,882 2,434 1972 03/27/98

OTHER PACIFIC
124,176 14,036

Inn @ Los Patios, San Antonio, TX
13,060 1,486 1990 08/15/98

Cost of Gross Amount at

Initial Costs Improvements Which Carried at Close of Period

Total Capitalized

Land and Buildings Initial Subsequent Land and Buildings

Land and Acquisition to Acquisition Land and

Encumbrances Improvements Improvements Costs (Net of Disposals) Improvements Improvements

Pecan Grove, Austin, TX
— 1,407 5,293 6,700 621 1,478 5,843

Anderson Mill, Austin, TX
9,765 3,135 11,170 14,305 3,667 3,498 14,474

Red Stone Ranch, Cedar Park, TX
— 1,897 17,526 19,423 209 5,386 14,246

Barton Creek Landing, Austin, TX
— 3,151 14,269 17,420 491 3,151 14,760

Turtle Creek, Little Rock, AR
— 1,913 7,087 9,000 1,064 2,207 7,857

Shadow Lake, Little Rock, AR
— 2,523 8,976 11,499 1,554 2,851 10,202

OTHER SOUTHWESTERN
9,765 17,031 75,866 92,897 6,116 21,576 77,437

Mallards Of Wedgewood, Lakeland, FL
— 959 6,865 7,824 2,025 1,252 8,597

Brantley Pines, Ft. Myers, FL
— 1,893 8,248 10,141 5,081 844 14,378

Ashlar, Ft. Myers, FL
— 3,952 11,718 15,670 16,456 7,594 24,532

The Groves, Port Orange, FL
— 790 4,767 5,557 1,862 1,444 5,975

Lakeside, Port Orange, FL
— 2,404 6,420 8,824 1,411 2,586 7,649

Mallards Of Brandywine, Deland, FL
— 766 5,408 6,174 1,283 990 6,467

LakePointe, Melbourne, FL
— 1,434 4,940 6,374 2,358 1,782 6,950

OTHER FLORIDA
— 12,198 48,366 60,564 30,476 16,492 74,548

Washington Park, Centerville, OH
— 2,012 7,565 9,577 1,095 2,150 8,522

Fountainhead, Dayton, OH
— 391 1,420 1,811 195 391 1,615

Jamestown Of Toledo, Toledo, OH
5,110 1,800 7,054 8,854 903 1,892 7,865

Sunset Village, Flint, MI
— 797 1,829 2,626 432 869 2,189

American Heritage, Waterford, MI
3,640 1,021 3,958 4,979 256 1,031 4,204

Ashton Pines, Waterford, MI
— 1,822 8,014 9,836 572 1,848 8,560

Kings Gate, Sterling Heights, MI
4,620 1,181 4,828 6,009 390 1,241 5,158

Lancaster Lake, Clarkson, MI
12,950 4,238 14,663 18,901 985 4,334 15,552

OTHER MIDWESTERN
26,320 13,262 49,331 62,593 4,828 13,756 53,665

Colony Village, New Bern, NC
— 346 3,037 3,383 2,120 573 4,930

Brynn Marr, Jacksonville, NC
— 433 3,822 4,255 2,727 730 6,252

Liberty Crossing, Jacksonville, NC
— 840 3,873 4,713 3,068 1,440 6,341

Bramblewood, Goldsboro, NC
— 402 3,151 3,553 1,636 588 4,601

Cumberland Trace, Fayetteville, NC
— 632 7,896 8,528 1,014 704 8,838

Village At Cliffdale, Fayetteville, NC
11,550 941 15,498 16,439 1,437 1,175 16,701

Morganton Place, Fayetteville, NC
— 819 13,217 14,036 696 887 13,845

Woodberry, Asheville, NC
— 389 6,381 6,770 1,490 992 7,268

OTHER NORTH CAROLINA
11,550 4,802 56,875 61,677 14,188 7,089 68,776

Jamestown Of St. Matthews, ST. Matthews, KY
11,970 3,866 14,422 18,288 1,312 3,975 15,625

Patriot Place, Florence, SC
— 212 1,601 1,813 5,802 1,506 6,109

River Place, Macon, GA
6,142 1,097 7,492 8,589 2,233 1,803 9,019

The Trails At Mount Moriah, Memphis, TN
16,909 5,931 22,095 28,026 3,210 6,489 24,747

OTHER SOUTHEASTERN
35,021 11,106 45,610 56,716 12,557 13,773 55,500

Greens At Hollymead, Charlottesville, VA
— 965 5,250 6,215 717 1,058 5,874

Brittingham Square, Salisbury, MD
— 650 4,962 5,612 710 815 5,507

Greens At Schumaker Pond, Salisbury, MD
— 710 6,118 6,828 961 871 6,918

Greens At Cross Court, Easton, MD
— 1,182 4,544 5,726 1,112 1,368 5,470

Greens At Hilton Run, Lexington Park, MD
12,542 2,754 10,483 13,237 1,717 3,087 11,867

OTHER MID-ATLANTIC
12,542 6,261 31,357 37,618 5,217 7,199 35,636

Dover Country, Dover, DE
— 2,008 6,365 8,373 2,731 2,362 8,742

Greens At Cedar Chase, Dover, DE
5,167 1,528 4,830 6,358 791 1,722 5,427

OTHER NORTHEASTERN
5,167 3,537 11,195 14,732 3,521 4,084 14,169

TOTAL APARTMENTS
$ 1,011,775 $ 599,099 $ 2,640,543 $ 3,239,642 $ 593,554 $ 701,057 $ 3,132,139

REAL ESTATE HELD FOR DISPOSITION

Apartments

Knolls At Newgate
$ — $ 1,726 $ 3,530 $ 5,256 $ 1,871 $ 1,871 $ 5,256

Paradise Falls
— 1,622 6,171 7,793 3,023 1,845 8,971

Silk Oak, Fresno, CA
— 2,325 4,566 6,891 (1,376 ) 1,731 3,784

Sunflower, San Antonio, TX
— 2,209 7,891 10,100 953 2,350 8,703

Parke 33, Lakeland, FL
— 3,857 13,055 16,912 (155 ) 3,838 12,919

International Village, Speedway, IN
— 3,934 11,479 15,413 1,584 4,005 12,992

Regency Park South, Indianapolis, IN
— 2,643 7,632 10,275 934 2,727 8,482

Total Apartments
— 18,316 54,324 72,640 6,834 18,367 61,107

Commercial

Gloucester Exchange
— 404 2,278 2,682 647 609 2,720

[Additional columns below]

[Continued from above table, first column(s) repeated]

Total

Carrying Accumulated Date of Date

Value (A) Depreciation (B) Construction Acquired

Pecan Grove, Austin, TX
7,321 1,256 1984 12/31/96

Anderson Mill, Austin, TX
17,972 4,385 1984 03/27/97

Red Stone Ranch, Cedar Park, TX
19,632 1,995 2000 06/14/00

Barton Creek Landing, Austin, TX
17,911 694 1986 03/28/02

Turtle Creek, Little Rock, AR
10,064 2,025 1985 12/31/96

Shadow Lake, Little Rock, AR
13,053 2,718 1984 12/31/96

OTHER SOUTHWESTERN
99,013 14,559

Mallards Of Wedgewood, Lakeland, FL
9,849 2,801 1985 07/27/95

Brantley Pines, Ft. Myers, FL
15,222 6,030 1986 08/11/94

Ashlar, Ft. Myers, FL
32,126 4,347 1999/2000 12/24/97

The Groves, Port Orange, FL
7,419 2,202 1989 12/13/95

Lakeside, Port Orange, FL
10,235 1,929 1985 07/01/97

Mallards Of Brandywine, Deland, FL
7,457 1,734 1985 07/01/97

LakePointe, Melbourne, FL
8,732 3,100 1984 09/24/93

OTHER FLORIDA
91,040 22,143

Washington Park, Centerville, OH
10,672 1,526 1998 12/07/98

Fountainhead, Dayton, OH
2,006 298 1966 12/07/98

Jamestown Of Toledo, Toledo, OH
9,757 1,286 1965 12/07/98

Sunset Village, Flint, MI
3,058 507 1940 12/07/98

American Heritage, Waterford, MI
5,235 659 1968 12/07/98

Ashton Pines, Waterford, MI
10,408 1,247 1987 12/07/98

Kings Gate, Sterling Heights, MI
6,399 767 1973 12/07/98

Lancaster Lake, Clarkson, MI
19,886 2,360 1988 12/07/98

OTHER MIDWESTERN
67,421 8,650

Colony Village, New Bern, NC
5,503 3,260 1972/74 12/31/84

Brynn Marr, Jacksonville, NC
6,982 4,025 1973/77 12/31/84

Liberty Crossing, Jacksonville, NC
7,781 4,025 1972/74 11/30/90

Bramblewood, Goldsboro, NC
5,189 2,998 1980/82 12/31/84

Cumberland Trace, Fayetteville, NC
9,542 2,257 1973 08/15/96

Village At Cliffdale, Fayetteville, NC
17,876 3,998 1992 08/15/96

Morganton Place, Fayetteville, NC
14,732 3,107 1994 08/15/96

Woodberry, Asheville, NC
8,260 2,052 1987 08/15/96

OTHER NORTH CAROLINA
75,865 25,722

Jamestown Of St. Matthews, ST. Matthews, KY
19,600 2,438 1968 12/07/98

Patriot Place, Florence, SC
7,615 4,075 1974 10/23/85

River Place, Macon, GA
10,822 3,552 1988 04/08/94

The Trails At Mount Moriah, Memphis, TN
31,236 4,985 1990 01/09/98

OTHER SOUTHEASTERN
69,273 15,050

Greens At Hollymead, Charlottesville, VA
6,932 1,737 1990 05/04/95

Brittingham Square, Salisbury, MD
6,322 1,670 1991 05/04/95

Greens At Schumaker Pond, Salisbury, MD
7,789 2,079 1988 05/04/95

Greens At Cross Court, Easton, MD
6,838 1,703 1987 05/04/95

Greens At Hilton Run, Lexington Park, MD
14,954 3,514 1988 05/04/95

OTHER MID-ATLANTIC
42,835 10,703

Dover Country, Dover, DE
11,104 3,381 1970 07/01/94

Greens At Cedar Chase, Dover, DE
7,149 1,732 1988 05/04/95

OTHER NORTHEASTERN
18,253 5,113

TOTAL APARTMENTS
$ 3,833,196 $ 733,712

REAL ESTATE HELD FOR DISPOSITION

Apartments

Knolls At Newgate
$ 7,127 $ 2,147 1972 07/01/94

Paradise Falls
10,816 2,204 1986 12/31/96

Silk Oak, Fresno, CA
5,515 885 1985 12/07/98

Sunflower, San Antonio, TX
11,053 2,110 1980 12/31/96

Parke 33, Lakeland, FL
16,757 437 2001 06/28/02

International Village, Speedway, IN
16,997 2,502 1968 12/07/98

Regency Park South, Indianapolis, IN
11,209 1,551 1968 12/07/98

Total Apartments
79,474 11,836

Commercial

Gloucester Exchange
3,329 1,506 1974 11/12/87

[Additional columns below]

[Continued from above table, first column(s) repeated]

Total

Carrying Accumulated Date of Date

Value (A) Depreciation (B) Construction Acquired

Pacific South Center
5,070 546 1965 08/28/86

Total Commercial
8,399 2,052

Land

Fossil Creek
3,719 —

Parke 33 II
1,732 —

Villa Toscana
3,122 —

Total Land
8,573 —

$ 96,446 $ 13,888

REAL ESTATE UNDER DEVELOPMENT

Apartments

Mandolin II, Dallas, TX
$ 5,396 $ —

Rancho Cucamongo, Rancho Cucamongo, CA
13,806 —

2000 Post III, San Francisco, CA
2,067 —

Total Apartments
21,269 —

Land

Copper Mill II
833 —

Parker’s Landing Phase II
1,167 —

Wimbledon Court II
602 —

Coit Road
2,806 —

Coit Road II
1,995 —

Mountain View Phase II
220 —

Total Land
7,623 —

$ 28,892 $ —

COMMERCIAL HELD FOR INVESTMENT

Hanover Village
$ 1,624 $ 463 — 06/30/86

Total Commercial
1,624 463

Richmond - Corporate
7,325 670 1999 11/30/99

$ 8,949 $ 1,133

TOTAL REAL ESTATE OWNED
$ 3,967,483 $ 748,733

(A) The aggregate cost for federal income tax purposes was approximately $3.3 billion at December 31, 2002.

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

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


			Years ended December 31,

			2002*			2001*			2000*			1999*			1998*

Income before discontinued operations, net of minority interests			$	13,072		$	25,130		$	17,590		$	28,206		$	2,285
Add:
	Portion of rents representative of the interest factor			691			794			866			928			569
	Minority interests			478			1,531			(267	)		490			1,541
	Loss on equity investment in joint venture			—			254			111			—			—
	Interest on indebtedness from continuing operations			130,791			139,470			149,728			144,418			95,084

		Earnings	$	145,032		$	167,179		$	168,028		$	174,042		$	99,479

Fixed charges and preferred stock dividend:
	Interest on indebtedness from continuing operations		$	130,791		$	139,470		$	149,728		$	144,418		$	95,084
	Capitalized interest			931			2,925			3,650			5,153			3,360
	Portion of rents representative of the interest factor			691			794			866			928			569

		Fixed charges		132,413			143,189			154,244			150,499			99,013

Add:
	Preferred stock dividend			27,424			31,190			36,891			37,714			23,593

		Combined fixed charges and preferred stock dividend	$	159,837		$	174,379		$	191,135		$	188,213		$	122,606

Ratio of earnings to fixed charges				1.10	x		1.17	x		1.09	x		1.16	x		1.00	x
Ratio of earnings to combined fixed charges and preferred stock dividend				—			—			—			—			—

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 $14.8 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 $7.2 million.

For the year ended December 31, 2000, the ratio of earnings to combined fixed charges and preferred stock dividend was deficient of achieving a 1:1 ratio by $23.1 million.

For the year ended December 31, 1999, the ratio of earnings to combined fixed charges and preferred stock dividend was deficient of achieving a 1:1 ratio by $14.2 million.

For the year ended December 31, 1998, the ratio of earnings to combined fixed charges and preferred stock dividend was deficient of achieving a 1:1 ratio by $23.1 million.

* Reclassified to conform to current year presentation as described in Note 3 to the consolidated financial statements.

(a)		In 1998, United Dominion completed the following statutory mergers: (i) ASR Investments Corporation Inc. on March 27, 1998 for an aggregate purchase price of $323 million and; (ii) American Apartment Communities II on December 7, 1998 for an aggregate purchase price of $794 million.

(b)		Funds from operations (“FFO”) is defined as net income (computed in accordance with generally accepted accounting principles), excluding gains (losses) from sales of depreciable property, plus depreciation and amortization, less preferred dividends 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. United Dominion considers FFO in evaluating property acquisitions and its operating performance and believes that FFO should be considered along with, but not as an alternative to, net income and cash flows as a measure of United Dominion’s activities in accordance with generally accepted accounting principles and is not necessarily indicative of cash available to fund cash needs. For 2001, FFO includes a non-recurring 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 United Dominion’s investment in an online apartment leasing company. For 2000, FFO includes a non-recurring charge of $3.7 million related to the settlement of litigation and an organizational charge.

(c)		Adjusted funds from operations is defined as FFO less recurring capital expenditures for our stabilized portfolio.


						Deferred
						Compensation -						Accumulated
			Distributions in			Unearned			Notes Receivable			Other
			Excess of			Restricted			from Officer-			Comprehensive
			Net Income			Stock Awards			Shareholders			Loss			Total

Balance, December 31, 1999			$	(296,030	)	$	(305	)	$	(7,753	)	$	—		$	1,310,212
Comprehensive Income
	Net income			76,615												76,615

	Comprehensive income			76,615												76,615

	Issuance of common shares to employees, officers, and director-shareholders															163
	Issuance of common shares through dividend reinvestment and stock purchase plan															7,305
	Purchase of common and preferred stock															(28,398	)
	Issuance of restricted stock awards						(830	)								—
	Adjustment for cash purchase and conversion of minority interests of unitholders in operating partnerships															(388	)
	Principal repayments on notes receivable from officer-shareholders									192						192
	Common stock distributions declared ($1.07 per share)			(110,225	)											(110,225	)
	Preferred stock distributions declared—Series A ($2.31 per share)			(9,473	)											(9,473	)
	Preferred stock distributions declared—Series B ($2.15 per share)			(12,118	)											(12,118	)
	Preferred stock distributions declared—Series D ($1.91 per share)			(15,300	)											(15,300	)
	Amortization of deferred compensation						307									307

Balance, December 31, 2000			$	(366,531	)	$	(828	)	$	(7,561	)	$	—		$	1,218,892

Comprehensive Income
	Net income			61,828												61,828
	Other comprehensive income:
		Cumulative effect of a change in accounting principle											(3,848	)		(3,848	)
		Unrealized loss on derivative financial instruments											(11,023	)		(11,023	)

	Comprehensive income			61,828									(14,871	)		46,957

	Issuance of common shares to employees, officers, and director-shareholders															2,576
	Issuance of common shares through dividend reinvestment and stock purchase plan															4,386
	Issuance of common shares through public offering															56,416
	Purchase of common and preferred stock															(53,622	)
	Redemption of Series A preferred stock			(3,496	)											(97,508	)
	Issuance of restricted stock awards						(1,363	)								—
	Adjustment for cash purchase and conversion of minority interests of unitholders in operating partnerships															643
	Principal repayments on notes receivable from officer-shareholders									3,252						3,252
	Common stock distributions declared ($1.08 per share)			(108,956	)											(108,956	)
	Preferred stock distributions declared—Series A ($1.05 per share)			(4,111	)											(4,111	)
	Preferred stock distributions declared—Series B ($2.15 per share)			(11,651	)											(11,651	)
	Preferred stock distributions declared—Series D ($1.93 per share)			(15,428	)											(15,428	)
	Amortization of deferred compensation						879									879

Balance, December 31, 2001			$	(448,345	)	$	(1,312	)	$	(4,309	)	$	(14,871	)	$	1,042,725

(a)		Includes $1,176, $1,268, and $1,425 for 2002, 2001, and 2000, 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.

*		Reclassified to conform to current year presentation as described in Note 3 to the consolidated financial statements.

(b)		As of December 31, 2002, United Dominion had five interest rate swap agreements associated with borrowings under the term loan with an aggregate notional value of $100 million under which United Dominion pays a fixed rate of interest and receives a variable rate of interest on the notional amounts. The interest rate swaps, which mature in May 2003 and May 2004, effectively change United Dominion’s interest rate exposure on these borrowings from a variable rate to a weighted average fixed rate of approximately 8.17%.

(c)		United Dominion has one interest rate swap agreement associated with these unsecured notes with an aggregate notional value of $10 million under which United Dominion pays a fixed rate of interest and receives a variable rate on the notional amount. The interest rate swap agreement, which matures in January 2003, effectively changes United Dominion’s interest rate exposure on the $10 million from a variable rate to a fixed rate of 7.65%.

(d)		Payable annually in three equal principal installments of $7.4 million.

(e)		In June 2002, United Dominion issued $200 million of 6.50% senior unsecured notes due in June 2009. The net proceeds of $198.5 million from the sale were used to reduce outstanding debt under United Dominion’s $375 million unsecured revolving credit facility.

(f)		Includes an investor put feature that grants a one-time option to redeem the debentures in September 2004.

(g)		Includes $1.5 million and $3.0 million at December 31, 2002 and 2001, respectively, of deferred gains from the termination of interest rate risk management agreements.

	i.		determining the amount by which the cumulative total return of United Dominion’s common stock over the measurement period exceeds the greater of the cumulative total return of the peer group index (the Morgan Stanley REIT Index) or the minimum return (such being the “excess return”);

	ii.		multiplying 4% of the excess return by United Dominion’s market capitalization (defined as the average number of shares and OP Units outstanding over the 28-month period multiplied by the daily closing price of United Dominion’s common stock) up to a maximum of 2% of market capitalization; and

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

(a)		The first quarter of 2002 includes $15.8 million of expense associated with the refinancing of certain mortgages using proceeds from the new Fannie Mae and Freddie Mac credit facilities.

(b)		The third quarter of 2002 includes $12.6 million of expense due to premiums paid for the redemption of certain higher coupon bonds.

(c)		The fourth quarter of 2002 includes $5.2 million of expense due to premiums paid for the redemption of certain higher coupon bonds.

(d)		Represents income from continuing operations.

(a)		The first quarter of 2001 includes $8.6 million of non-recurring charges related to workforce reductions, other severance costs, executive relocation costs, and the write down of land and our investment in an online apartment leasing company.

(b)		The fourth quarter of 2001 includes a $2.2 million charge related to the write down of our investment in a web-based property management and leasing system.

(c)		Represents income from continuing operations.

(A)		The aggregate cost for federal income tax purposes was approximately $3.3 billion at December 31, 2002.

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