8-K

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



Form 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): December 2, 2004

Associated Estates Realty Corporation (Exact name of registrant as specified in its charter)

Commission File Number 1-12486

Ohio	34-1747603
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification Number)
5025 Swetland Court, Richmond Hts., Ohio	44143-1467
(Address of principal executive offices)	(Zip Code)

Registrant's telephone number, including area code (216) 261-5000

N/A (Former Name or Former Address, if Changed Since Last Report)



Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

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

[ ] Soliciting material pursuant to Rule 14a-12 under the Exhange Act (17 CFR 240.14a-12)

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

[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 5.03. Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.

On December 2, 2004, the Executive Committee Board of Directors of Associated Estates Realty Corporation (the "Company") duly authorized an amendment to the Second Amended and Restated Articles of Incorporation, as amended, of the Company (the "Articles Amendment") establishing the terms of the 8.70% Class B Series II Cumulative Redeemable Preferred Stock (the "Class B Series II Preferred Shares"). As described in more detail under Item 8.01 below, the Company has entered into a placement agent agreement and a purchase agreement for the sale of 2,320,000 depositary shares each representing a 1/10 fractional interest in a Class B Series II Preferred Share (the "Depositary Shares"), or an aggregate of 232,000 Class B Series II Preferred Shares, which sale is expected to occur on December 10, 2004.  The form of Articles Amendment, which is set forth as Exhibit 3.1 to this report, will be filed with the Secretary of State of the State of Ohio on or about December 8, 2004.

Item 8.01 Other Events.

On December 3, 2004, the Company entered into a Placement Agent Agreement (the "Placement Agent Agreement") with Cohen & Steers Capital Advisors, LLC ("Cohen & Steers") pursuant to which the Company engaged Cohen & Steers as placement agent for the offering of the Depositary Shares. Also on December 3, 2004, the Company entered into a purchase agreement (the "Purchase Agreement") with certain institutional investors and other purchasers (collectively, the "Purchasers"), pursuant to which the Purchasers have agreed to purchase, and the Company has agreed to sell, 2,320,000 Depositary Shares at a price of $25.00 per share. The Purchase Agreement provides that the obligations of the Purchasers to purchase the Depositary Shares are subject to customary closing conditions and that the closing of the sale will occur on or about December 10, 2004. The Depositary Shares are being offered pursuant to the Registration Statement on Form S-3, as amended (File No. 333-22419), filed by the Company on March 7, 1997.

A copy of the Placement Agent Agreement and the Purchase Agreement are attached hereto as Exhibits 1.1 and 1.2, respectively. The terms of the Class B Series II Preferred Shares are set forth in the Articles Amendment attached hereto as Exhibit 3.1 and the terms of the Depositary Shares are set forth in the form of depositary agreement to be entered into by the Company with National City Bank at the closing and attached hereto as Exhibit 4.2.

Item 9.01 Financial Statements and Exhibits

(c) Exhibits

The following exhibits are filed with this report pursuant to Regulation S-K Item 601.

1.1	Placement Agent Agreement dated December 3, 2004.
1.2	Purchase Agreement dated December 3, 2004.
3.1	Form of Amendment to the Second Amended and Restated Articles of Incorporation, as amended, of the Registrant establishing the terms of the 8.70% Class B Series II Cumulative Redeemable Preferred Shares.
3.2	Second Amended and Restated Articles of Incorporation, as amended, of the Registrant.
4.1	Form of Certificate representing 8.70% Class B Series II Cumulative Redeemable Preferred Shares (incorporated herein by reference to Form 8-A filed by the Registrant on December 8, 2004).
4.2	Form of Deposit Agreement by and among Associated Estates Realty Corporation, National City Bank and the holders from time to time of the Depositary Receipts (which includes as an exhibit the form of Depositary Receipt) (incorporated herein by reference to Form 8-A filed by the Registrant on December 8, 2004).
12.1	Computation of ratio of earnings to fixed charges.
99.1	Press Release dated December 3, 2004.
99.2	Press Release dated December 6, 2004.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	ASSOCIATED ESTATES REALTY CORPORATION
December 8, 2004	/s/ Lou Fatica
(Date)	Lou Fatica, Vice President,
	Chief Financial Officer and Treasurer

EX-1.1

PLACEMENT AGENT AGREEMENT

December 3, 2004

Cohen & Steers Capital Advisors, LLC

757 Third Avenue

New York, New York 10017

Re: Placement of Securities of Associated Estates Realty Corporation

Dear Sirs:

This letter (the "Agreement") confirms our agreement to retain Cohen & Steers Capital Advisors, LLC (the "Placement Agent") as our exclusive agent for a period commencing on the date of this letter and terminating on January 3, 2005, unless extended by the parties, to introduce Associated Estates Realty Corporation, an Ohio corporation (the "Company"), to certain investors as prospective purchasers (the "Offer") 8.7% of depository shares ("Depositary Shares"), each representing a 1/10 fractional interest in a Class B Series II Cumulative Redeemable Preferred Share of the Company (the "Securities"). The engagement described herein (i) may be terminated by the Company at any time prior to the Closing Date (as defined below) subject to the provisions of Section 3(c)and (ii) shall be in accordance with applicable laws and pursuant to the following procedures and terms and conditions:

1. The Company will:

(a) Cause the Company's independent public accountants to address to the Company and the Placement Agent and deliver to the Company, the Placement Agent and the Purchasers (as such term is defined in the Purchase Agreement(s) dated the date hereof between the Company and the purchasers party thereto (all such agreements, collectively, the "Purchase Agreement")) (i) a letter or letters (which letters are frequently referred to as "comfort letters") dated the date hereof, and (ii) if so requested by the Placement Agent, a "bring-down" comfort letter, delivered on and dated each date on which the sale of all or a portion of the Securities is consummated pursuant to the Purchase Agreement (each such date, a "Closing Date" and the time of such consummation on any such Closing Date, a "Closing"), which, with respect to the letter or letters referred to in clause (i) above, will be substantially in the form attached hereto as Annex I, and with respect to the letter referred to in clause (ii) above, will be in form and substance reasonably satisfactory to the Placement Agent.

(b) On the Closing Date, cause outside counsel to the Company to deliver opinions to the Placement Agent and the Purchasers substantially in the form of Annex II hereto.

(c) As soon as practicable after the Closing, apply for listing the Preferred Securities for trading on the New York Stock Exchange, Inc. ("NYSE") and will use its reasonable best efforts to obtain approval from the NYSE with respect to such listing as soon as reasonably practicable within 30 days after the Closing Date and, if such approval is not obtained within 30 days, to continue to use its reasonable best efforts to obtain such approval as soon as practicable thereafter.

(d) Prior to Closing, the Company shall not sell or approve the solicitation of offers for the purchase of additional Securities in excess of the amount which shall be authorized by the Company or in excess of the aggregate offering price of the Securities pursuant to the Offer.

2. The Company understands and agrees that the Placement Agent is being retained solely to use its reasonable efforts to introduce the Company to potential purchasers of the Securities. The Placement Agent shall have no obligation to underwrite or purchase any Securities. The Company authorizes the Placement Agent to use the Prospectus in connection with the Offer.

3. (a) The Placement Agent will use reasonable efforts on behalf of the Company in connection with the Placement Agent's services hereunder. No offers or sales of Securities shall be made to any person except by the Company. The Placement Agent's aggregate fee for its services hereunder will be (i) 1.5% of gross proceeds of the Securities sold (other than Securities sold to Cohen & Steers Capital Management) and (ii) 1.0% of gross proceeds of the Securities sold to Cohen & Steers Capital Management, if any. Such fee shall be payable by the Company at and subject to the consummation of the Closing. The Company, upon consultation with the Placement Agent, may establish in the Company's reasonable discretion a minimum amount of Securities to be sold in the offering contemplated hereby. The Placement Agent will not enter into any agreement or arrangement with any broker, dealer or other person in connection with the placement of Securities (collectively, "participating person(s)") which will obligate the Company to pay additional fees or expenses to or on behalf of a participating person without the prior written consent of the Company (such consent not to be unreasonably withheld or delayed), it being understood that Jefferies & Company will be acting as settlement agent ("Settlement Agent") on behalf of the Company in connection with the Offer and the Company will pay the fees and expenses of the Settlement Agent in connection therewith.

(b) The Company agrees that it will pay the costs and expenses incident to the performance of the obligations hereunder whether or not any Securities are offered or sold pursuant to the Offer, including, without limitation (i) all reasonable and customary mailing and handling costs and expenses incurred by dealers and brokers (including your counsel) (subject to the last sentence of paragraph 3(b)), commercial banks, trust companies and nominees incurred in forwarding the Prospectus to their customers, (ii) the filing fees and expenses, if any, incurred with respect to any filing with the NYSE, (iii) all costs and expenses incident to the preparation, issuance, execution and delivery of the Securities, (iv) all costs and expenses (including filing fees) incident to the preparation, printing and filing under the Securities Act of 1933, as amended (the "Act"), of the Registration Statement and the prospectus forming a part thereof, including, without limitation, in each case, all exhibits, amendments and supplements thereto, (v) all costs and expenses incurred in connection with the required registration or qualification of the Securities issuable under the laws of such jurisdictions as the Placement Agent may designate, if any (including, without limitation, reasonable fees of counsel for the Placement Agent and its reasonable disbursements), (vi) all costs and expenses incurred by the Company in connection with the printing (including word processing and duplication costs) and delivery of the Prospectus (including, without limitation, any preliminary and supplemental blue sky memoranda) including, without limitation, mailing and shipping, (vii) all fees and expenses incurred in marketing the Offer, and (viii) the fees and disbursements of Baker & Hostetler LLP, counsel to the Company, and any other counsel to the Company, and PricewaterhouseCoopers, LLP, auditors to the Company. In addition, the Company agrees to reimburse the Placement Agent for all out-of-pocket expenses of the Placement Agent in connection with the Offer, including, without limitation, its reasonable travel expenses and other disbursements in connection with the Offer; provided, however, that the Company shall not be obligated to reimburse the Placement Agent or pay the Placement Agent's counsel for any of such counsel's legal fees, expenses and disbursements incurred in connection with the Offer.

(c) Notwithstanding anything to the contrary contained herein, in the event the Company shall issue and sell any Securities to any purchasers introduced to the Company by the Placement Agent within 12 months following the termination of this agreement by the Company, the Company shall, upon the closing in respect of any such offer and sale, pay to the Placement Agent an amount in cash equal to the fees in Section 3(a) that would have been payable to Placement Agent if this Agreement had not been terminated.

4. The Company and the Placement Agent hereby agree as follows:

(a) The Company will indemnify and hold harmless the Placement Agent and each of its respective partners, directors, officers, associates, affiliates, subsidiaries, employees, consultants, attorneys and agents, and each person, if any, controlling the Placement Agent or any of its affiliates within the meaning of either Section 15 of the Act, or Section 20 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), from and against any and all losses, claims, damages, liabilities or costs (and any reasonable legal or other expenses incurred by such Placement Agent in investigating or defending the same or in giving testimony or furnishing documents in response to a request of any government agency or to a subpoena) in any way relating to, arising out of or caused by any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement (as defined below) or the Prospectus (as defined below) (as amended or supplemented if the Company shall have furnished any amendments or supplements thereto) or in any way relating to, arising out of or caused by any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. Such indemnity agreement shall not, however, apply to any such loss, claim, damage, liability, cost or expense which is held in a final judgment of a court of competent jurisdiction (not subject to further appeal) to have arisen out of the gross negligence or willful misconduct of the Placement Agent or any indemnitee described in this paragraph 4(a).

(b) The Placement Agent will indemnify and hold harmless the Company and each of its directors, officers, associates, affiliates, subsidiaries, employees, consultants, attorneys, agents, and each person controlling the Company or any of its affiliates within the meaning of either Section 15 of the Act or Section 20 of the Exchange Act from and against any and all losses, claims, damages, liabilities, costs or expenses (and any reasonable legal or other expenses incurred by such indemnitee in investigating or defending the same or in giving testimony or furnishing documents in response to a request of any government agency or to a subpoena) (i) which are held in a final judgment of a court of competent jurisdiction (not subject to further appeal) to have arisen out of the gross negligence or willful misconduct of such Placement Agent or any of its respective partners, directors, officers, associates, affiliates, subsidiaries, employees, consultants, attorneys and agents, or any person, if any, controlling the Placement Agent or any of its affiliates within the meaning of Section15 of the Act or Section 20 of the Exchange Act or (ii) which result from violations by the Placement Agent of law or of requirements, rules or regulations of federal or state securities regulators, self-regulatory associations or organizations in the securities industry, stock exchanges or organizations with similar functions or responsibilities with respect to securities brokers or dealers, as determined by a court of competent jurisdiction or applicable federal or state securities regulators, self-regulatory associations or organizations in the securities industry or stock exchanges or organizations, as applicable.

(c) If any action, proceeding or investigation is commenced as to which any indemnified party hereunder proposes to demand indemnification under this Agreement, such indemnified party will notify the indemnifying party with reasonable promptness. The indemnifying party shall have the right to retain counsel of its own choice (which counsel shall be reasonably satisfactory to the indemnified party) to represent the indemnified party and such counsel shall, to the extent consistent with its professional responsibilities, cooperate with the indemnified party and any additional counsel retained by the indemnified party at its own expense. The indemnifying party will not be liable under this Agreement for any settlement of any claim against the indemnified party made without the indemnifying party's written consent.

In order to provide for just and equitable contribution, if a claim for indemnification pursuant to this paragraph 4 is made but it is found in a final judgment by a court of competent jurisdiction (not subject to further appeal) that such indemnification may not be enforced in such case, even though the express provisions hereof provided for indemnification in such case, then the Company, on the one hand, and the Placement Agent, on the other hand, shall contribute to the losses, claims, damages, liabilities or costs to which the indemnified persons may be subject in accordance with the relative benefits received from the offering and sale of the Securities by the Company, on the one hand, and the Placement Agent, on the other hand (it being understood that, with respect to the Placement Agent, such benefits received are limited to fees actually paid by the Company and received by the Placement Agent pursuant to this Agreement), and also the relative fault of the Company, on the one hand, and the Placement Agent, on the other hand, in connection with the statements, acts or omissions which resulted in such losses, claims, damages, liabilities or costs, and the relevant equitable considerations shall also be considered. No person found liable for a fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who is not also found liable for such fraudulent misrepresentation. Notwithstanding the foregoing, the Placement Agent shall not be obligated to contribute any amount hereunder that exceeds the fees received by the Placement Agent in respect to the offering and sale of the Securities.

5. The Company represents and warrants to the Placement Agent as of the date hereof and as of each Closing Date as follows:

(a) The Company meets the requirements for use of Form S-3 under the Act. The Company's Registration Statement (as defined below) was declared effective by the SEC (as defined below) and the Company has filed such post-effective amendments thereto as may be required prior to the execution of the Agreement and each such post-effective amendment became effective. The SEC has not issued, and to the Company's knowledge, the SEC does not intend nor has it threatened to issue, a stop order with respect to the Registration Statement, nor has it otherwise suspended or withdrawn the effectiveness of the Registration Statement, either temporarily or permanently, nor, to the Company's knowledge, does it intend or has it threatened to do so. On the effective date, (i) the Registration Statement complied in all material respects with the requirements of the Act and the rules and regulations promulgated under the Act (the "Regulations"); at the effective date the Basic Prospectus (as defined below) complied, and at the Closing the Prospectus will comply, in all material respects with the requirements of the Act and the Regulations; and (ii) the Registration Statement at the effective date and as amended or supplemented on the date hereof and on the Closing Date did not, does not and will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; and the Prospectus as of any such time, did not, does not and will not include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that the representations and warranties in this subsection shall not apply to statements in or omissions from the Registration Statement or the Prospectus made in reliance upon and in conformity with information furnished to the Company in writing by the Placement Agent or its affiliates expressly for use therein (it being understood by the parties hereto that the only such information furnished by the Placement Agent or its affiliates for use therein is the information contained in the fourth and fifth paragraphs under the heading "Plan of Distribution" in the Prospectus Supplement (as defined below)). As used in this Agreement, the term "Registration Statement" means the "shelf" registration statement on FormS-3 (File No. 333-22419) as declared effective by the Securities and Exchange Commission (the "SEC"), including exhibits, financial statements, schedules and documents incorporated by reference therein. The term "Basic Prospectus" means the prospectus included in the Registration Statement. The term "Prospectus Supplement" means the prospectus supplement specifically relating to the Securities as shall be filed with the SEC pursuant to Rule 424 under the Act in connection with the sale of the Securities. The term "Prospectus" means the Basic Prospectus and the Prospectus Supplement. Any reference in this Agreement to the Registration Statement or the Prospectus shall be deemed to refer to and include the documents incorporated by reference therein as of the date hereof or the date of the Prospectus, as the case may be, and any reference herein to any amendment or supplement to the Registration Statement or the Prospectus shall be deemed to refer to and include any documents filed after such date and through the date of such amendment or supplement under the Exchange Act and so incorporated by reference.

(b) Since the date as of which information is given in the Prospectus Supplement, except as otherwise stated therein, (A) there has been no material adverse change or any development involving a prospective material adverse change in or affecting the condition, financial or otherwise, or in the earnings, business affairs or business prospects of the Company and the subsidiaries of the Company, if any (the "Subsidiaries") considered as one enterprise, whether or not arising in the ordinary course of business, (B) there have been no transactions entered into by the Company or any of its Subsidiaries, other than those in the ordinary course of business, which are material with respect to the Company and its Subsidiaries considered as one enterprise, and (C) other than regular quarterly dividends, there has been no dividend or distribution of any kind declared, paid or made by the Company on any class of its capital stock.

(c) The Company has been duly incorporated and is validly existing in good standing under the laws of the State of Ohio. Each of the Subsidiaries of the Company has been duly organized and is validly existing in good standing under the laws of its jurisdiction of organization. Each of the Company and its Subsidiaries has the requisite power and authority to own and lease its properties and to conduct its business as described in the Prospectus; and each of the Company and its Subsidiaries is duly qualified to transact business in each jurisdiction in which such qualification is required, whether by reason of the ownership or leasing of property or the conduct of business, except where the failure to so qualify would not have a material adverse effect on the condition, financial or otherwise, or the earnings, business affairs or business prospects of the Company and its Subsidiaries considered as one enterprise.

(d) As of the date hereof the authorized capital stock of the Company consisted of 41,000,000 common shares, without par value, 3,000,000 Class A preferred shares of which 225,000 have been designated as 9-3/4% Class A Cumulative Redeemable Preferred Shares (the "Class A Shares"), 3,000,000 Class B preferred shares of which (i)400,000 have been designated as Class B Series I Cumulative Preferred Shares and (ii) 232,000 have been designated as 8.7% Class B Series II Cumulative Redeemable Preferred Shares, and 3,000,000 non-cumulative preferred shares, of which 19,654,360 common shares, 225,000 Class A Shares and, after giving effect to the Offer, 232,000 8.7% Class B Series II Cumulative Redeemable Preferred Shares are issued and outstanding as of such date. The Company's issued and outstanding shares have been duly authorized and validly issued and are fully paid and non-assessable; the Securities have been duly authorized, and when issued and delivered as contemplated hereby, will be validly issued, fully paid and non-assessable and will be listed, subject to notice of issuance, on the NYSE, effective within 30 days after the Closing Date; the Securities, the deposit agreement between the Company and National City Bank, as Depositary, to be dated the Closing Date (the "Deposit Agreement") and the shares of the Company (including without limitation the Securities and the Depositary Shares) conform to all statements relating thereto contained in the Prospectus; and the issuance of the Securities is not subject to preemptive or other similar rights. No order halting or suspending trading in securities of the Company nor prohibiting the sale of such securities has been issued to and is outstanding against the Company or its directors, officers or promoters and no investigations or proceedings for such purposes are pending or threatened.

(e) Neither the Company nor any of its Subsidiaries is in violation of its organizational documents or in default in the performance or observance of any material obligation, agreement, covenant or condition contained in any contract, indenture, mortgage, loan agreement, note, lease or other instrument or agreement to which the Company or any of its Subsidiaries is a party or by which it or any of them may be bound, or to which any of the property or assets of the Company or any of its Subsidiaries is subject where such violation or default would have a material adverse effect on the condition, financial or otherwise, or the earnings, business affairs or business prospects of the Company and its Subsidiaries considered as one enterprise; and, the execution, delivery and performance of this Agreement, the Purchase Agreement, the Deposit Agreement and the issuance and delivery of the Securities and the Depositary Shares and the consummation of the transactions contemplated herein have been duly authorized by all necessary action by the Company and will not conflict with or constitute a material breach of, or default under, or result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the Company or any of its Subsidiaries pursuant to, any contract, indenture, mortgage, loan agreement, note, lease or other instrument or agreement to which the Company or any of its Subsidiaries is a party or by which it or any of them may be bound, or to which any of the property or assets of the Company or any of its Subsidiaries is subject, nor will any such action result in any violation of the provisions of the articles of incorporation, by-laws or other organizational documents of the Company or any of its Subsidiaries or any applicable law, administrative regulation or administrative or court decree.

(f) The Company is organized in conformity with the requirements for qualification and, as of the date hereof and as of each Closing Date, operates in a manner that qualifies it as a "real estate investment trust" under the Internal Revenue Code of 1986, as amended, and the rules and regulations thereunder and will be so qualified after giving effect to the sale of the Securities.

(g) The Company is not required to be registered under the Investment Company Act of 1940, as amended.

(h) There is no action, suit or proceeding before or by any court or governmental agency or body, domestic or foreign, now pending, or, to the knowledge of the Company, threatened or contemplated, against or affecting the Company or any of its Subsidiaries, which is required to be disclosed in the Prospectus (other than as disclosed therein).

(i) No authorization, approval or consent of any court or United States federal or state governmental authority or agency is necessary in connection with the sale of the Securities hereunder.

(j) The Company and its Subsidiaries possess such material certificates, authorities or permits issued by the appropriate state, federal or foreign regulatory agencies or bodies necessary to conduct the business now conducted by them, and neither the Company nor any of its Subsidiaries has received any notice of proceedings relating to the revocation or modification of any such certificate, authority or permit which, singly or in the aggregate, if the subject of an unfavorable decision, ruling or finding, would materially and adversely affect the condition, financial or otherwise, or the earnings, business affairs or business prospects of the Company and its Subsidiaries considered as one enterprise, nor, to the knowledge of the Company, are any such proceedings threatened or contemplated.

(k) The Company has full power and authority to enter into this Agreement, and each of this Agreement, the Purchase Agreement and the Deposit Agreement has been duly authorized, executed and delivered by the Company and constitutes a legal, valid and binding agreement of the Company, enforceable against the Company in accordance with its terms except as may be limited by (i) the effect of bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or affecting the rights or remedies of creditors or (ii) the effect of general principles of equity, whether enforcement is considered in a proceeding in equity or at law and the discretion of the court before which any proceeding therefor may be brought.

(l) The Company, when taken together with its Subsidiaries, has good and marketable title to all of the properties and assets reflected in the audited financial statements contained in the Prospectus, subject to no lien, mortgage, pledge or encumbrance of any kind except those reflected in such financial statements (or as otherwise described in the Prospectus) or which are not material or which constitute customary provisions of mortgage loans secured by the Company's or its Subsidiaries properties creating obligations of the Company or its Subsidiaries with respect to proceeds of the properties, environmental liabilities and other customary protections for the mortgagees.

(m) There is no contract, agreement, indenture or other document to which the Company or any of its Subsidiaries is a party required to be filed as an exhibit to the Company's Annual Report on Form10-K for the fiscal year ended December31, 2003 or any subsequent Exchange Act filings prior to the date hereof that has not been so filed as required.

(n) Any certificate signed by any officer of the Company and delivered to the Placement Agent or to counsel for the Placement Agent shall be deemed a representation and warranty by the Company to the Placement Agent as to the matters covered thereby.

6. The Placement Agent represents and warrants to the Company that, (i) it is registered as a broker-dealer under the Exchange Act and licensed or otherwise qualified to do business as a broker-dealer in all states in which it will offer any Securities pursuant to this Agreement, (ii) it will not provide the potential investors with any information or other materials other than the Prospectus and (iii) the Placement Agent will only act as agent in those jurisdictions in which it is authorized to do so.

7. Please be advised that the Placement Agent and its affiliates are engaged in a broad range of securities activities and financial services. In the ordinary course of the Placement Agent's business, the Placement Agent or its affiliates (i) may at any time hold long or short positions, and may trade or otherwise effect transactions, for the Placement Agent's own account or the accounts of customers, in debt or equity securities of any prospective investor, the Company or any other company that may be involved in any proposed offering of the Securities and (ii) may at any time be providing or arranging financing and other financial services to a prospective investor or other companies that may be involved in a competing transaction.

8. This Agreement, including any right to indemnity or contribution hereunder, shall inure to the benefit of and be binding upon the Company and you and the other parties entitled to indemnification pursuant to the terms of Section 3, and the respective successors and assigns of such parties. Nothing in this Agreement is intended, or shall be construed, to give to any other person or entity any right hereunder or by virtue hereof. This Agreement may not be assigned by the Company or you without the prior written consent of the other party hereto. The last sentence of Section 3(b) and Sections 3(c), 7, 8, 9, 10 and 11 shall survive the termination of this Agreement.

9. This Agreement constitutes the entire agreement among the parties hereto and supersedes all prior agreements, understandings and arrangements, oral or written, among the parties hereto with respect to the subject matter hereof and thereof. This Agreement may be amended only in a writing that is executed by each of the parties hereto.

10. This Agreement shall be governed by the laws of the State of New York governing contracts made and to be performed in such State without giving effect to principles of conflicts of law. Any right to trial by jury in any action, proceeding or counterclaim (whether based upon contract, tort or otherwise) related to or arising out of the Offer, and the Placement Agent's activities pursuant to, or the performance by the Placement Agent of the services contemplated by, this Agreement is hereby waived. The Company hereby submits to the non-exclusive jurisdiction of the federal and New York State courts located in the City of New York in connection with any dispute related to this Agreement or any of the matters contemplated hereby. The Company agrees that any legal suit, action or proceeding brought by the Placement Agent, any of its affiliates or any indemnified party to enforce any rights under or with respect to this Agreement or the Offer may be instituted in any state or federal court in the City of New York, State of New York, waives to the fullest extent permitted by law any objection which it may now or hereafter have to the laying of venue of any such suit, action or proceeding and irrevocably submits to the non-exclusive jurisdiction of any such court in any such suit, action or proceeding. Nothing in this Section 10 shall affect the right of the Placement Agent, any of its affiliates or any indemnified party to serve process in any manner permitted by law or limit the right of the Placement Agent, any of its affiliates or any indemnified party to bring proceedings against the company in the courts of any jurisdiction or jurisdictions.

11. In the event that any provision hereof shall be determined to be invalid or unenforceable in any respect, such determination shall not affect such provision in any other respect or any other provision hereof, which shall remain in full force and effect. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original and all of which together shall be deemed to be the same Agreement.

If the foregoing is in accord with your understanding of our agreement, please sign in the space provided below and return a signed copy of this letter to the Company.

Sincerely,

ASSOCIATED ESTATES REALTY CORPORATION

By: /s/ Jeffrey I. Friedman

Name: Jeffery I. Friedman

Title: President & CEO

Accepted by:

COHEN & STEERS CAPITAL ADVISORS, LLC

By: /s/ Bradley G. Razook

Name: Bradley G. Razook

Title: Managing Director

EX-1.2

PURCHASE AGREEMENT

This Purchase Agreement (this "Agreement"), dated as of December 3, 2004, is by and among Associated Estates Realty Corporation, an Ohio corporation (the "Company"), each Purchaser (as defined below) listed under the heading "Direct Purchasers" on Schedule A (each, a "Direct Purchaser"), each Investment Adviser listed under the heading "Investment Advisers" on the signature pages hereto (each, an "Investment Adviser") who are entering into this Agreement on behalf of themselves (as to Section 4 of this Agreement) and those Purchasers which are a fund or individual or other investment advisory client of such Investment Adviser listed under their respective names on Schedule B (each, a "Client"), and each Broker-Dealer listed on Schedule C (each, a "Broker-Dealer") which is entering into this Agreement on behalf of itself (as to Section 5 of this Agreement) and those Purchasers which are customers for which it has power of attorney to sign listed under their respective names on Schedule C (each, a "Customer"). Each of the Customers, Direct Purchasers and Clients are referred to herein as individually, a "Purchaser" and collectively, the "Purchasers."

WHEREAS, the Purchasers desire to purchase from the Company (or their Investment Advisers and Broker-Dealers desire to purchase on their behalf from the Company), and the Company desires to sell to each Purchaser the number of depositary shares (the "Depositary Shares"), each representing a 1/10 fractional interest in a share of the Company's Class B Series II Cumulative Redeemable Preferred Shares (the "Offered Shares") set forth opposite the name of that Purchaser on Schedule A, Schedule B or Schedule C, as the case may be, at a price per share of $25.00.

NOW, THEREFORE, in consideration of the mutual promises herein contained, the parties hereto agree as follows:

1. Purchase and Sale. Subject to the terms and conditions hereof, the Investment Advisers and the Broker-Dealers (on behalf of Purchasers which are Clients and Customers, respectively) and the other Purchasers hereby severally and not jointly agree to purchase from the Company, and the Company agrees to issue and sell to the several Purchasers the number of Offered Shares set forth next to such Purchaser's name on Schedule A, Schedule B or Schedule C, as the case may be, at a price per share of $25.00 (the "Purchase Price") at the Closing (as defined below). The aggregate Purchase Price payable on the Closing Date in respect of all shares of Series B Preferred Stock pursuant to this Purchase Agreement is set forth on Schedule D hereof.

2. Representations and Warranties of Purchaser. Each Purchaser represents severally and not jointly that:

(a) Due Authorization. Such Purchaser has full power and authority to enter into this Agreement and is duly authorized to purchase the Offered Shares in the amount set forth opposite its name on Schedule A, Schedule B or Schedule C, as the case may be. This Agreement has been duly authorized by such Purchaser and duly executed and delivered by or on behalf of such Purchaser. This Agreement constitutes a legal, valid and binding agreement of such Purchaser, enforceable against such Purchaser in accordance with its terms except as may be limited by (i) the effect of bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or affecting the rights or remedies of creditors or (ii) the effect of general principles of equity, whether enforcement is considered in a proceeding in equity or at law and the discretion of the court before which any proceeding therefor may be brought (the "Enforceability Exceptions").

(b) Prospectus and Prospectus Supplement. Such Purchaser has received a copy of the Company's Basic Prospectus dated March 7, 1997 the preliminary prospectus supplement dated November 8, 2004 and the Prospectus Supplement dated December 3, 2004 (each as defined below).

(c) Ownership of Excess Shares. As of the date hereof and after giving effect to the transaction contemplated hereby, such Purchaser, together with its subsidiaries, is not a Person (as defined in the Company's Articles of Incorporation, as amended or supplemented (the "Articles")) who Beneficially Owns or Constructively Owns (as each such term is defined in the Articles) directly or indirectly more than 9.8% in number of shares of any class or series of the issued and outstanding capital shares of the Company other than the Company's common shares, without par value (the "Common Shares") and, with respect to the Common Shares, such Purchaser is not a Person who Beneficially Owns or Constructively Owns directly or indirectly more than 4%. Purchaser expressly acknowledges that the provisions of the Articles, in general, and the amendment to the Articles that establish the terms of the Offered Shares ("Articles Amendment"), in particular, prohibit the Beneficial Ownership or Constructively Ownership by any Person directly or indirectly of more than 9.8% of any class or series of preferred shares or 4% of Common Shares of the Company and, if Purchaser's Depositary Shares acquired pursuant to this Agreement or otherwise constitute Excess Shares (as defined in the Charter), the Company may repurchase such number of the Depositary Shares on the terms set forth in the Articles as is necessary to cause Purchaser to thereafter not own any Excess Shares.

3. Representations and Warranties of Company. The Company represents and warrants that:

(a) The Company meets the requirements for use of Form S-3 under the Securities Act of 1933, as amended (the "Act"). The Registration Statement (as defined below) was declared effective by the SEC (as defined below) and the Company has filed such post-effective amendments thereto as may be required under applicable law prior to the execution of this Agreement and each such post-effective amendment became effective. The SEC has not issued, nor to the Company's knowledge, has the SEC threatened to issue or intends to issue, a stop order with respect to the Registration Statement, nor has it otherwise suspended or withdrawn the effectiveness of the Registration Statement or to the Company's knowledge, threatened to do so, either temporarily or permanently, nor, to the Company's knowledge, does it intend to do so. On the effective date of the Registration Statement, the Registration Statement complied in all material respects with the requirements of the Act and the rules and regulations promulgated under the Act (the "Regulations"); at the effective date of the Registration Statement the Basic Prospectus (as defined below) complied, and at the Closing Date the Prospectus (as defined below) will comply, in all material respects with the requirements of the Act and the Regulations; each of the Basic Prospectus and the Prospectus as of its respective date and at the Closing Date did not, does not and will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; provided, however, that the representations and warranties in this subsection shall not apply to statements in or omissions from the Prospectus made in reliance upon and in conformity with information furnished to the Company in writing by or on behalf of any of the Purchasers, Cohen & Steers Capital Advisors, LLC, in its capacity as placement agent ("Placement Agent"), any Investment Advisers or Broker-Dealers, or any of their respective affiliates, expressly for use in the Prospectus. As used in this Agreement, the term "Registration Statement" means the shelf registration statement on Form S-3 (File No. 333-22419), as declared effective by the Securities and Exchange Commission (the "SEC"), including exhibits, financial statements, schedules and documents incorporated by reference therein. The term "Basic Prospectus" means the prospectus included in the Registration Statement, as amended, or as supplemented and filed with the SEC pursuant to Rule 424 under the Act in connection with the sale of the Offered Shares hereunder. The term "Prospectus Supplement" means the prospectus supplement specifically relating to the Offered Shares to be filed with the SEC pursuant to Rule 424 under the Act in connection with the sale of the Offered Shares hereunder. The term "Prospectus" means the Basic Prospectus and the Prospectus Supplement taken together. The term "preliminary prospectus" means any form of preliminary prospectus used in connection with the marketing of the Offered Shares, including the preliminary prospectus supplement filed with the SEC on November 8, 2004 and the Basic Prospectus used with any such preliminary prospectus supplement in connection with the marketing of the Offered Shares. Any reference in this Agreement to the Registration Statement, the Prospectus or any preliminary prospectus shall be deemed to refer to and include the documents incorporated by reference therein as of the date hereof or the date of the Prospectus or any preliminary prospectus as the case may be, and any reference herein to any amendment or supplement to the Registration Statement, the Prospectus or any preliminary prospectus shall be deemed to refer to and include any documents filed after such date and through the date of such amendment or supplement under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and so incorporated by reference.

(b) Since the date as of which information is given in the Registration Statement and the Prospectus, except as otherwise disclosed therein, (i) there has been no material adverse change or any development which could reasonably be expected to give rise to a prospective material adverse change in or affecting the condition, financial or otherwise, or in the earnings or business affairs or, to the Company's knowledge, business prospects of the Company and the subsidiaries of the Company, if any (the "Subsidiaries") considered as one enterprise, whether or not arising in the ordinary course of business, (ii) there have been no transactions entered into by the Company or any of its Subsidiaries, other than those in the ordinary course of business, which are material with respect to the Company and its Subsidiaries considered as one enterprise, and (iii) other than regular quarterly dividends, there has been no dividend or distribution of any kind declared, paid or made by the Company on any class of its shares of equity securities.

(c) The Company has been duly organized as a corporation and is validly existing in good standing under the laws of the State of Ohio. Each of the Subsidiaries of the Company has been duly organized and is validly existing in good standing under the laws of its jurisdiction of organization. Each of the Company and its Subsidiaries has the required power and authority to own and lease its properties and to conduct its business as described in the Prospectus; and each of the Company and its Subsidiaries is duly qualified to transact business in each jurisdiction in which such qualification is required, whether by reason of the ownership or leasing of property or the conduct of business, except where the failure to so qualify would not have a material adverse effect on the condition, financial or otherwise, or the earnings, business affairs or, to the Company's knowledge, business prospects of the Company and its Subsidiaries considered as one enterprise.

(d) As of the date hereof, the authorized capital stock of the Company consisted of 41,000,000 common shares, without par value; 3,000,000 Class A preferred shares, of which 225,000 have been designated as 9-3/4% Class A Cumulative Redeemable Preferred Shares (the "Class A Preferred Shares"); 3,000,000 Class B preferred shares, of which 400,000 have been designated as Class B Series I Cumulative Preferred Shares; and 3,000,000 noncumulative preferred shares, of which 19,654,360 Common Shares and 225,000 Class A Preferred Shares are issued and outstanding as of such date (without giving effect to any preferred stock issued or to be issued as contemplated by this Agreement or the application of the proceeds of the offering contemplated hereby). The issued and outstanding shares of the Company have been duly authorized and validly issued and are fully paid and non-assessable; the Offered Shares have been duly authorized, and when issued in accordance with the terms of the Articles Amendment and delivered and paid for as contemplated hereby, will be validly issued, fully paid and non-assessable; the Offered Shares, the Common Shares and the Class A Preferred Shares of the Company conform to all statements relating thereto contained in the Prospectus; and the issuance of the Offered Shares is not subject to preemptive or other similar rights.

(e) Neither the Company nor any of its Subsidiaries is in violation of its organizational documents or in default in the performance or observance of any obligation, agreement, covenant or condition contained in any material contract, indenture, mortgage, loan agreement, note, lease or other instrument or agreement to which the Company or any of its Subsidiaries is a party or by which it or any of them are bound, or to which any of the property or assets of the Company or any of its Subsidiaries is subject, except where such violation or default would not have a material adverse effect on the condition, financial or otherwise, or the earnings, business affairs or, to the Company's knowledge, business prospects of the Company and its Subsidiaries considered as one enterprise; and the execution, delivery and performance of this Agreement, the execution and filing of the Articles Amendment, and the issuance and delivery of the Offered Shares and the consummation of the transactions contemplated herein have been duly authorized by all necessary action and will not conflict with or constitute a material breach of, or material default under, or result in the creation or imposition of any lien, charge or encumbrance upon any material property or assets of the Company or any of its Subsidiaries pursuant to, any material contract, indenture, mortgage, loan agreement, note, lease or other instrument or agreement to which the Company or any of its Subsidiaries is a party or by which it or any of them are bound, or to which any of the property or assets of the Company or any of its Subsidiaries is subject, nor will any such action result in any violation of the provisions of the Articles, as amended and supplemented by the Articles Amendment, by-laws or other organizational documents of the Company or any of its Subsidiaries or any law, administrative regulation or administrative or court decree applicable to the Company.

(f) The Company is organized in conformity with the requirements for qualification and, as of the date hereof and as of the Closing, operates in a manner that qualifies it as a "real estate investment trust" under the Internal Revenue Code of 1986, as amended, and the rules and regulations thereunder and will be so qualified after giving effect to the sale of the Offered Shares.

(g) The Company is not required to be registered under the Investment Company Act of 1940, as amended.

(h) No legal or governmental proceedings are pending to which the Company or any of its Subsidiaries is a party or to which the property of the Company or any of its Subsidiaries is subject that are required to be described in the Registration Statement or the Prospectus and are not described therein, and, to the Company's knowledge, no such proceedings have been threatened against the Company or any of its Subsidiaries or with respect to any of their respective properties that are required to be described in the Registration Statement or the Prospectus and are not described therein.

(i) No authorization, approval or consent of or filing with any court or United States federal or state governmental authority or agency is necessary in connection with the sale of the Offered Shares hereunder, except (i) such as may be required under the Act or the Regulations or state securities laws or real estate syndication laws and (ii) the filing of the Articles Amendment as set forth in paragraph (l) below, and any such required authorization, approval or consent or filing has been obtained or made, as the case may be, or will be obtained or made prior to the time that any Offered Shares are issued pursuant to this Agreement.

(j) The Company and its Subsidiaries possess such certificates, authorities or permits issued by the appropriate state, federal or foreign regulatory agencies or bodies necessary to conduct the business now conducted by them, except where the failure to possess such certificates, authority or permits would not have a material adverse effect on the condition, financial or otherwise, or the earnings, business affairs or, to the Company's knowledge, business prospects of the Company and its Subsidiaries considered as one enterprise. Neither the Company nor any of its Subsidiaries has received any notice of proceedings relating to the revocation or modification of any such certificate, authority or permit which, singly or in the aggregate, if the subject of an unfavorable decision, ruling or finding, would materially and adversely affect the condition, financial or otherwise, or the earnings, business affairs or, to the Company's knowledge, business prospects of the Company and its Subsidiaries considered as one enterprise, nor, to the knowledge of the Company, are any such proceedings threatened or contemplated.

(k) The Company has full power and authority to enter into this Agreement, and this Agreement has been duly authorized, executed and delivered by the Company and constitutes a legal, valid and binding agreement of the Company, enforceable against the Company in accordance with its terms except as may be limited by the Enforceability Exceptions.

(l) The Articles Amendment, and the filing of the Articles Amendment with the Secretary of State of Ohio on behalf of the Company, have each been duly authorized by the Company; the Articles Amendment will be filed with the Secretary of State of Ohio on behalf of the Company prior to the time that any Offered Shares are issued pursuant to this Agreement and when so filed will constitute a valid and legally binding amendment to the Articles enforceable against the Company in accordance with its terms, except as enforceability may be limited by the Enforceability Exceptions.

(m) As of the dates set forth therein or incorporated by reference, the Company or its subsidiaries had good and marketable title to all of the properties and assets reflected in the audited financial statements contained in the Prospectus, subject to no lien, mortgage, pledge or encumbrance of any kind except (i) those reflected in such financial statements, (ii) as are otherwise described in the Prospectus, (iii) as do not materially adversely affect the value of such property or interests or interfere with the use made or proposed to be made of such property or interests by the Company and each of its Subsidiaries or (iv) which constitute customary provisions of mortgage loans secured by the Company's properties creating obligations of the Company or its subsidiaries with respect to proceeds of the properties, environmental liabilities and other customary protections for the mortgagees.

(n) Neither the issuance, sale and delivery of the Offered Shares nor the application of the proceeds thereof by the Company as described in the Prospectus will cause the Company to violate or be in violation of Regulation T, U or X of the Board of Governors of the Federal Reserve System or any other regulation of such Board of Governors.

(o) The statements set forth in the Basic Prospectus under the caption "Description of Preferred Shares" and the statements set forth in the Prospectus Supplement under the caption "Description of Class B Series II Preferred Shares and Depositary," in each case, insofar as such statements purport to summarize provisions of laws or documents referred to therein, are correct in all material respects and fairly present the information required to be presented therein.

4. Representation and Warranties of the Investment Advisers. To induce the Company to enter into this Agreement, each of the Investment Advisers hereby represents and warrants that:

(a) It is an investment adviser duly registered with the SEC under the Investment Advisers Act of 1940.

(b) It has been duly authorized to act as investment adviser on behalf of each Client on whose behalf it is signing this Agreement (as identified under the name of such Investment Adviser on Schedule B hereto) and has the sole authority to make the investment decision to purchase Offered Shares hereunder on behalf of such Client.

(c) It has the power and authority to enter into and execute this Agreement on behalf of each of the Clients listed under its name on Schedule B hereto.

(d) This Agreement has been duly authorized, executed and delivered by it and, assuming it has been duly authorized, executed and delivered by the Company, constitutes a legal, valid and binding agreement of such Investment Adviser, enforceable against those Clients on whose behalf it is signing this Agreement in accordance with its terms except as may be limited by the Enforceability Exceptions.

(e) It has received a copy of the Company's Basic Prospectus dated March 7, 1997 and Prospectus Supplement dated December 3, 2004.

5. Representation and Warranties of the Broker-Dealers. To induce the Company to enter into this Agreement, each Broker-Dealer represents and warrants that:

(a) It is duly registered and in good standing as a broker-dealer under the Exchange Act and is licensed or otherwise qualified to do business as a broker-dealer with the National Association of Securities Dealers, Inc. and in all states in which it will offer any Offered Shares pursuant to this Agreement.

(b) It has delivered a copy of the Prospectus to each Purchaser set forth under its name on Schedule C hereto.

(c) It has been granted a duly authorized power-of-attorney to execute and deliver this Agreement on behalf of each Customer on whose behalf it is signing this Agreement (as identified under the name of such Broker-Dealer on Schedule C hereto) and such power has not been revoked.

(d) This Agreement has been duly authorized, executed and delivered by it and, assuming it has been duly authorized, executed and delivered by the Company, constitutes a legal, valid and binding agreement of such Broker-Dealer, enforceable against it in accordance with its terms except as may be limited by the Enforceability Exceptions.

6. Conditions to Obligations of the Parties. (a) The Purchasers' several obligation to purchase the Offered Shares shall be subject to the following conditions having been met:

(i) the representations and warranties set forth in Section 3 of this Agreement shall be true and correct with the same force and effect as though expressly made at and as of the Closing,

(ii) the Purchasers shall have received an opinion from Baker & Hostetler LLP, counsel to the Company, dated as of the date of the Closing, substantially in the form attached hereto as Exhibit A,

(iii) the Placement Agent shall have received a comfort letter from PricewaterhouseCoopers LP, dated as of the Closing, substantially in the form attached hereto as Exhibit B, and

(v) on the Closing Date, the Company shall have delivered to the Purchasers a certificate of the Chief Executive Officer and Chief Financial Officer of the Company, dated as of the Closing Date, setting forth that each of the representations and warranties contained in this Agreement shall be true on and as of the Closing Date as if made as of the Closing Date and each of the conditions and covenants contained herein shall have been complied with to the extent compliance is required prior to Closing, and shall have delivered such other customary certificates as the Placement Agent shall have reasonably requested.

(b) The Company's obligation to issue and sell the Offered Shares shall be subject to the following conditions having been met:

(i) the representations and warranties set forth in Sections 2, 4 and 5 of this Agreement shall be true and correct with the same force and effect as though expressly made at and as of the Closing, and

(ii) the Settlement Agent (as defined below) shall have received payment in full of the Purchase Price for the Offered Shares by federal wire transfer of immediately available funds, in not less than the aggregate amount of $58,000,000 net of fees, commissions and expenses.

7. Closing. Provided that the conditions set forth in Section 6 hereto and the last sentence of this Section 7 have been met or waived at such time, the transactions contemplated hereby shall be consummated on December 10, 2004, or at such other time and date as the parties hereto shall agree (such time and date of payment and delivery being herein called the "Closing"). At the Closing, settlement shall occur through Jeffries & Company, Inc., or an affiliate thereof (the "Settlement Agent"), on a delivery versus payment basis through the DTC ID System.

8. Covenants. The Company hereby covenants and agrees that (a) as soon as practicable, the Company shall apply for listing the Offered Shares for trading on the New York Stock Exchange ("NYSE") and will use its reasonable best efforts to obtain approval of the NYSE with respect to such listing as soon as practicable within 30 days after the Closing Date, and if such approval is not so obtained within 30 days, to continue to use its reasonable best efforts to obtain such approval as soon as practicable thereafter and (b) subject to all Purchasers consummating the purchase of the Offered Shares at the Closing, the Company will use the proceeds of the offering contemplated hereby as set forth under the caption "Use of Proceeds" in the Prospectus Supplement.

9. Termination. This Agreement may be terminated, and the transactions contemplated hereby may be abandoned, by written notice promptly given to the other parties hereto, by the Company or any Purchaser, if the Closing shall not have occurred on or prior to January 15, 2005; provided that the Company or such Purchaser, as the case may be, shall not be entitled to terminate this Agreement pursuant to this Section 9 if the failure of Closing to occur on or prior to such date results primarily from such party itself having materially breached any representation, warranty or covenant contained in this Agreement.

10. Notices. Except as otherwise herein provided, all statements, requests, notices and agreements shall be in writing and, if to the Purchasers, shall be sufficient in all respects if delivered or sent by facsimile to 212-446-9181 or by certified mail to Cohen & Steers Capital Advisors, LLC, 757 Third Avenue, New York, New York 10017, Attention: Bradley Razook, and, if to the Company, shall be sufficient in all respects if delivered or sent to the Company by facsimile to 216-261-3902 or by certified mail to the Company at 5025 Swetland Court, Cleveland, OH 44143, Attention: Chief Financial Officer

11. Governing Law. This Agreement shall be construed in accordance with and governed by the substantive laws of the State of New York, without regard to conflict of laws principles.

12. Entire Agreement. This Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and may be amended only in a writing that is executed by each of the parties hereto.

13. Counterparts. This Agreement may be executed in separate counterparts, each of which shall be deemed an original, and all of which together shall be deemed to constitute one and the same instrument. Executed counterparts may be delivered by facsimile.

14. Construction. When used herein, the phrase "to the knowledge of" the Company or "known to" the Company or any similar phrase means the actual knowledge of the Chief Executive Officer, Chief Financial Officer or Chief Operating Officer of the Company and includes the knowledge that such officers would have obtained of the matter represented after reasonable due and diligent inquiry of those employees of the Company whom such officers reasonably believe would have actual knowledge of the matters represented.

IN WITNESS WHEREOF, the parties hereto have caused this Purchase Agreement to be executed and delivered as of the date first above written.

ASSOCIATED ESTATES REALTY CORPORATION

By: /s/ Jeffrey I. Friedman

Name: Jeffrey I. Friedman

Title: Chairman of the Board and Chief

Executive Officer

DIRECT PURCHASERS

MLP Trading Co., LLC

By: /s/ Terry Feeney

Terry Feeney

Chief Operating Officer

PETER J. WEIDHORN Defined Contribution Money

Purchase Plan DTD 12-86

By: /s/ Peter J. Weidhorn

Peter J. Weidhorn

Signature Page for Purchase Agreement Page 2

INVESTMENT ADVISERS

Cohen & Steers Capital Management Inc.

on behalf of itself (solely with respect to

paragraph 4) and each Client set forth under its

name on Schedule B

By: /s/ William Scapell

William Scapell

Senior Vice President and Portfolio Manager

Dividend Capital Investments on behalf of itself

(solely with respect to paragraph 4) and each

Client set forth under its name on Schedule B

By: /s/ John P. Keeton

John P. Keeton

Trader

ING Clarion Real Estate Securities L.P. on behalf of itself

(solely with respect to paragraph 4) and each Client

set forth under its name on Schedule B

By: /s/ Sherry L. Rexroad

Sherry L. Rexroad

Senior Director and Portfolio Manager

Signature Page for Purchase Agreement Page 3

Janus Capital Management LLC on behalf of itself (solely with respect to paragraph 4) and each Client set forth under its name on Schedule B

By: /s/ Heidi J. Walter

Heidi J. Walter

Vice President and Assistant General Counsel

of Janus Capital Management LLC

JPMorgan Fleming Investment Management on behalf of itself (solely with

respect to paragraph 4) and each Client set forth under its name on

Schedule B

By: /s/ Kay Herr

Kay Herr

Vice President

Kayne Anderson Capital Advisors, L.P. on behalf of itself (solely with respect to paragraph 4) and each Client set forth under its name on Schedule B

By: /s/ David Shladovsky

David Shladovsky

General Counsel

Kensington Investment Group, Inc. on behalf of itself (solely with respect to paragraph 4) and each Client set forth under its name on Schedule B

By: /s/ Joel S. Beam

Joel S. Beam

Portfolio Manager

Signature Page for Purchase Agreement Page 4

Neuberger Berman LLC on behalf of itself (solely with

respect to paragraph 4) and each Client set forth

under its name on Schedule B

By: /s/ Steven R. Brown

Steven R. Brown

Managing Director & Portfolio Manager

RREEF America L.L.C. on behalf of itself (solely with respect to paragraph 4) and each Client set forth under its name on Schedule B

By: /s/ Mark D. Zeisloft

Mark D. Zeisloft

Managing Director

Cashel Capital Advisors, Inc. on behalf of itself (solely with respect to paragraph 4) and each Client set forth under its name on Schedule B

By: /s/ James Lang

James Lang

Managing Director

Signature Page for Purchase Agreement Page 5

CUSTOMERS

Each of the Several persons or entities listed under the heading "Account

Name" on Attachment 1 to Schedule C hereto

By: Ryan Beck & Company, as agent and attorney-in-fact

By: /s/ Jay Suskind

Jay Suskind

Executive Vice President

Ryan Beck & Company on behalf of itself and solely with respect to

paragraph 5

By: /s/ Jay Suskind

Jay Suskind

Executive Vice President

Each of the Several persons or entities listed under the heading "Account

Name" on Attachment 1 to Schedule C hereto

By: Gilford Securities Incorporated, as agent and attorney-in-fact

By: /s/ Robert Maley

Robert Maley

Senior Vice President

Signature Page for Purchase Agreement Page 4

Gilford Securities Incorporated on behalf of itself and solely with respect to

paragraph 5

By: /s/ Robert Maley

Robert Maley

Senior Vice President

Signature Page for Purchase Agreement Schedule A - Page1

SCHEDULE A

NAME OF DIRECT PURCHASERS NUMBER OF SHARES

MLP Trading Co., LLC 100,000

Peter J. Weidhorn Defined Contribution Money

Purchase Plan DTD 12-86 10,000

SCHEDULE B

NAME OF INVESTMENT ADVISER NUMBER OF SHARES

Cohen & Steers Capital Management Inc.

CLIENTS

Cohen & Steers Advantage Income Fund, Inc. 70,000

Cohen & Steers Quality Income Realty Fund, Inc. 90,000

Cohen & Steers Premium Income Realty Fund, Inc. 83,000

Cohen & Steers REIT and Preferred Income Fund, Inc. 40,000

TOTAL 283,000

Dividend Capital Investments

CLIENTS

Dividend Capital Realty Income Fund 20,000

ING Clarion Real Estate Securities L.P.

CLIENTS

ING Clarion Real Estate Global Fun 174,000

Nikko Global Income REIT Mother Fund 26,000

TOTAL 200,000

Janus Capital Management LLC

CLIENTS

Janus World Funds Plc,

on behalf of its series Janus U.S. REIT Fund 139,000

JPMorgan Fleming Investment Management

CLIENTS

IBM - REIT - JP Morgan Investor - M/T 7,100

YMCA RETIREMENT FUND - REITS 800

ACRE FUND - CHASE 58,610

UNDISCOVERED MANAGERS REIT FUND 14,990

SUTTER HEALTH - REIT- BNY WESTERN - M/T 5,000

JPMCB US REAL ESTATE SECURITIES FUND 13,500

TOTAL 100,000

Kayne Anderson Capital Advisors, L.P.

CLIENTS

Kayne Anderson REIT Fund, L.P. 40,000

Kayne Anderson Income Partners, LP 4,000

HFR RV Performance Master Trust 6,000

TOTAL 50,000

Kensington Investment Group, Inc.

CLIENTS

Kensington Select Income Fund 242,000

Majestic Insurance 14,000

TOTAL 256,000

Neuberger Berman LLC

CLIENTS

Neuberger Berman Real Estate Securities

Income Fund 200,000

RREEF America L.L.C.

CLIENTS

Scudder RREEF Real Estate Fund, Inc. 221,000

Scudder RREEF Real Estate Fund II, Inc. 429,000

TOTAL 650,000

Cashel Capital Advisors, Inc.

CLIENTS

Cashel Capital L.P 5,000

SCHEDULE C

NAME OF BROKER DEALER: NUMBER OF SHARES

Ryan Beck & Company

Customers for whom it is signing this Agreement

as agent and attorney-in-fact :

Each of the several persons or entities set forth

under the heading "Account Name" on Attachment

1 to Schedule C hereto The amount set forth opposite such

name on Attachment 1 to Schedule C

hereto under the heading "Amount" (in

the aggregate 300,000)

Gilford Securities Incorporated

Customers for whom it is signing this Agreement

as agent and attorney-in-fact :

Each of the several persons or entities set forth

under the heading "Account Name" on Attachment

1 to Schedule C hereto The amount set forth opposite such

name on Attachment 1 to Schedule C

hereto under the heading "Amount" (in

the aggregate 7,000)

ATTACHMENT 1 TO SCHEDULE C

Account Name Amount

Gilford Securities

David M. Lovit 800

Murray W. Lovit 700

David M. Lovit SEP IRA FCC as custodian 500

Patricia G. Lovit SEP IRA FCC as custodian 300

Dr. Steven & Robin Rosenberg JT TEN 2,000

Samuel & Evelyn Krieger JT TEN 200

Arnold R. Bruhn TTEE Paula Bruhn Irrevocable

Living Trust UA DTD 3-16-00 FBO Paula Bruhn 2,000

Susan Garfinkel R/O IRA FCC as custodian 500

TOTAL 7,000

Ryan Beck & Co.

Eric Vacca 1,000

Penny Richman 1,400

Ron Mizrahi 1,000

Carlyle F. Carlson TTEE 1,000

John J. Byrne 4,000

James P. Morgan 1,000

IRA FBO T. Michael Knasel 2,000

Mirjo Enterprises 1,000

Marco Cohen 500

Melinda L. Lambert 400

Harry Stone 1,200

Sadie Whittaker 2,000

IRA FBO Margo Canciglia 1,000

IRA FBO Ronald J. Reith 400

Innova Chem Inc. Retirement 400

Joseph M. Pollack Revocable Trust 1,000

Raymond A. Heller & Dorothy 1,000

Joseph Annunziata 2,000

David H. Coy 1,000

Bud Hatfield 500

Adelle K. Goodman 500

Hirsch Metals Corp. 500

Toni Ann Harris TTEE 500

Charles Kottler TTEE 500

IRA FBO Joseph Bruno 3,500

Marie A. Daoust Living Trust 4,000

IRA FBO Carlyle Carlson 1,000

IRA FBO John J. Brady 400

Harlee B. Hatoff 800

Irving Nelkin and Co. 2,000

Pershing LLC as Prime Broker 4,000

IRA FBO Frank Delaney 1,000

Warren M. Kesselman 1,000

IRA FBO Howard Feldman 200

IRA FBO Stephen J. Nannis 1,000

James F. Nelson 1,200

Gerhard Gedenk 500

Harvey Canter 500

Fred Theile 400

Jane F. Treherne-Thomas, Trustee 500

IRA FBO Mark A. Edgar 400

IRA FBO Bernard Harris 300

Frances H. Pepper 400

Frederick H. Frey 300

Michael Cohen 500

Talia Cohen Succ TTEE 800

IRA FBO Mary C. Bonn 400

Ronald Holtzman 500

IRA FBO Myron Gurman 1,000

Edmund P. Marsden 400

Dr. Juergen Drews 595

Patricia A. Paszamant 200

Nathan Paszamant 100

IRA FBO Geraldine Maccrory 400

Claire G. Collins 400

Russell Chiosso TTEE 2,000

Terry Katz 400

Claire Shirley Larsen TTEE 400

Vincent E. Gallagher 200

Richard P. Small Trust 400

IRA FBO Gregory E. Rauscher 2,000

Bonnie L. Ballard 400

Alfred C. Ivers Revocable Living Trust 1,000

Robert McClaren 1,200

Robert Agar 500

Lawrence P. Kavanagh 1,000

Anthony Del Gaizo 1,000

Clifton Lodge 203 F&AM 1,600

IRA FBO Edward D. Bernstein M.D. 1,000

Ann S. Pier 3,000

Linda A. Clardy TTEE 2,000

IRA FBO Stephen Denman 1,000

Sondra Schneider 500

IRA FBO Joan M. Danaher 1,000

George L. Nunn 800

Gerda Wittlinger 300

Barbara Agar 500

Wan-Ju Chen 1,000

Shanti Dhupar 500

Rosalie C. Schnittker 500

Kenneth R. Burnstein 400

IRA FBO Jack Fowler 400

IRA FBO William N. Reese 1,000

Jules Appleman 1,200

Cynthia Simon 79,400

Allen Simon TF 79,400

Full Gospel Assembly of God 3,000

Cynthia Simon 2 3,000

Linda Rubin (Income) 5,000

Pearl Knittle Revocable Living Trust 1,000

IRA FBO William Bergelson 500

IRA FBO Randolph R. Williams 500

DCG & T TTEE 1,000

Peter A. Degregorio 1,000

Sigal Living Trust 530

Frank C. Haugland 200

Sugden Living Trust 280

Stephen J. Shapiro 500

Schoen & Strassman LLP PSP 500

Margaret Minassian 250

Thomas V. Ashbahian 200

Ryan Beck and Co. 42,045

TOTAL 300,000

SCHEDULE D

Aggregate Purchase Amount

Ryan Beck & Company $7,500,000

Cohen & Steers Advantage Income Fund, Inc. $1,750,000

Cohen & Steers Quality Income Realty Fund, Inc. $2,250,000

Cohen & Steers Premium Income Realty Fund, Inc. $2,075,000

Cohen & Steers REIT and Preferred Income Fund, Inc. $1,000,000

Cohen & Steers TOTAL $7,075,000

Dividend Capital Realty Income Fund $500,000

Gilford Securities Incorporated $175,000

ING Clarion Real Estate Global Fund $4,350,000

Nikko Global Income REIT Mother Fund $650,000

ING TOTAL $5,000,000

Janus World Funds Plc, on behalf of its series Janus U.S. REIT Fund $3,475,000

IBM - REIT - JP Morgan Investor - M/T $177,500

YMCA RETIREMENT FUND - REITS $20,000

ACRE FUND - CHASE $1,465,250

UNDISCOVERED MANAGERS REIT FUND $374,750

SUTTER HEALTH - REIT- BNY WESTERN - M/T $125,000

JPMCB US REAL ESTATE SECURITIES FUND $ 337,500

JP Morgan TOTAL $2,500,000

Kayne Anderson REIT Fund, L.P. $1,000,000

Kayne Anderson Income Partners, LP $100,000

HFR RV Performance Master Trust $150,000

Kayne Anderson TOTAL $1,250,000

Kensington Select Income Fund $6,050,000

Majestic Insurance $350,000

Kensington TOTAL $6,400,000

MLP Trading Co., LLC $2,500,000

Neuberger Berman Real Estate Securities Income Fund $5,000,000

Peter J. Weidhorn Defined Contribution Money Purchase Plan

DTD 12-86 $250,000

Scudder RREEF Real Estate Fund, Inc. $5,525,000

Scudder RREEF Real Estate Fund II, Inc. $10,725,000

Scudder RREEF TOTAL $16,250,000

Cashel Capital L.P. $125,000

TOTAL AGGREGATE PURCHASE PRICE $58,000,000

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EX-99.1

EXHIBIT 99.1

NEWS RELEASE

For Immediate Release

News Release No.: 04-14

Release Date: December 3, 2004

Associated Estates Realty Corporation Prices $58 Million Of Class B Series II Preferred Shares

Cleveland, Ohio - December 3, 2004- Associated Estates Realty Corporation announced today that it has priced $58 million of Class B Series II Cumulative Redeemable Preferred Shares. The Class B Shares have a $250.00 liquidation value per share (equivalent to $25.00 per depositary share) and will pay an 8.70 percent annual dividend. The Class B Shares will be redeemable at par on or after December 15, 2009 at the option of the Company. The first dividend is expected to be payable on March 15, 2005 to shareholders of record on March 1, 2005. The Class B Shares will trade on the New York Stock Exchange.

Completion of the offering is expected to occur on or about December 10, 2004. Proceeds from the sale of the shares will be used to redeem all of the Company's 9.75% Class A Preferred Shares, and to pay the issuance cost associated with the Class B Shares offering. Cohen & Steers Capital Advisors, LLC acted as the placement agent in the sale. This press release shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction. Additional information regarding the Class B Shares is available in the prospectus supplement dated December 3, 2004, to be filed with the Securities and Exchange Commission. A copy of the prospectus supplement will be available on the Company's web site at www.aecrealty.com, or by contacting the Company's investor relations department at 1-800-440-2372, ext. 8752.

This news release contains forward-looking statements based on current judgments and current knowledge of management, which are subject to certain risks, trends and uncertainties that could cause actual results to vary from those projected, which are based on certain assumptions as noted in this news release. Accordingly, readers are cautioned not to place undue reliance on forward-looking statements. These forward-looking statements are intended to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The words "expects," "projects," "believes," "plans," "anticipates," and similar expressions are intended to identify forward looking statements. Investors are cautioned that the Company's forward-looking statements involve risks and uncertainty.

Associated Estates Realty Corporation, one of the largest multifamily property owners in the United States, is a real estate investment trust ("REIT"), headquartered in Richmond Heights, Ohio, a suburb of Cleveland. The Company directly or indirectly owns, manages, or is a joint venture partner in 107 multifamily properties containing a total of 23,457 units located in 12 states.

For more information, please contact: Barbara E. Hasenstab, Vice President of Investor Relations and Corporate Communications, by telephone at 216-797-8798 or e-mail at IR@aecrealty.com. This press release and other corporate information are available through the Company's web site on the Internet at www.aecrealty.com. AEC's web site is linked to Sharebuilder, an online service that allows investments in shares of AEC common stock directly on a recurring basis. For more information, access the Investor Relations "News" section of www.aecrealty.com

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