10-Q

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)
[X]	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2002
OR
[   ]	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	FOR THE TRANSITION PERIOD FROM                 TO

Commission File Number 1-13232

Apartment Investment and Management Company

(Exact name of registrant as specified in its charter)

Maryland (State or other jurisdiction of Incorporation or organization)	84-1259577 (I.R.S. Employer Identification No.)
2000 South Colorado Boulevard, Tower 2, Suite 2-1000 Denver, Colorado (Address of principal executive offices)	80222-7900 (Zip Code)

(303) 757-8101
(Registrant’s telephone number, including area code)

Not Applicable
(Former name, former address, and former fiscal year,
if changed since last report)

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

     The number of shares of Class A Common Stock outstanding as of July 31, 2002: 91,564,622

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION
	ITEM 1. Financial Statements
		CONSOLIDATED BALANCE SHEETS
		CONSOLIDATED STATEMENTS OF INCOME
		CONSOLIDATED STATEMENTS OF CASH FLOWS
		NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
	ITEM 2. Management’s Discussion and Analysis of Financial Condition and\ Results of Operations
	ITEM 3. Quantitative and Qualitative Disclosures about Market Risk
PART II. OTHER INFORMATION
	ITEM 1. Legal Proceedings
	ITEM 2. Changes in Securities and Use of Proceeds
	ITEM 3. Defaults Upon Senior Securities
	ITEM 4. Submission of Matters to a Vote of Security Holders
	ITEM 5. Other Information
	ITEM 6. Exhibits and Reports on Form 8-K
SIGNATURES
EX-10.1 32nd Amendment to 3rd Amended Agmnt of LP
EX-10.2 2nd Amendment to 4th Amended Credit Agmnt
EX-10.3 2nd Amendment to Interim Credit Agreement
EX-99.1 Agreement re: disclosure of long-term debt
EX-99.2 Certification Pursuant to 18 USC Sec. 1350
EX-99.3 Certification Pursuant to 18 USC Sec. 1350

APARTMENT INVESTMENT AND MANAGEMENT COMPANY

FORM 10-Q

INDEX

			Page
	PART I. FINANCIAL INFORMATION
ITEM 1.		Financial Statements
		Consolidated Balance Sheets as of June 30, 2002 (unaudited) and December 31, 2001		2
		Consolidated Statements of Income for the Three and Six Months Ended June 30, 2002 and 2001 (unaudited)		3
		Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2002 and 2001 (unaudited)		4
		Notes to Consolidated Financial Statements (unaudited)		5
ITEM 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations		23
ITEM 3.		Quantitative and Qualitative Disclosures about Market Risk		41
	PART II. OTHER INFORMATION
ITEM 1.		Legal Proceedings		42
ITEM 2.		Changes in Securities and Use of Proceeds		42
ITEM 3.		Defaults Upon Senior Securities		43
ITEM 4.		Submission of Matters to a Vote of Security Holders		43
ITEM 5.		Other Information		43
ITEM 6.		Exhibits and Reports on Form 8-K		44
Signatures				45

1

APARTMENT INVESTMENT AND MANAGEMENT COMPANY

CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Share Data)

				June 30, 2002			December 31, 2001
				(Unaudited)
ASSETS
Real estate:
	Land			$	1,619,711		$	1,229,999
	Buildings and improvements				7,936,341			7,011,059
Total real estate					9,556,052			8,241,058
	Less accumulated depreciation				(1,726,417	)		(1,597,936	)
		Net real estate			7,829,635			6,643,122
Assets held for sale					18,330			152,733
Cash and cash equivalents					60,739			80,000
Restricted cash					195,411			138,223
Accounts receivable					124,172			100,339
Deferred financing costs					66,555			82,693
Notes receivable from unconsolidated real estate partnerships					290,631			243,511
Investments in unconsolidated real estate partnerships					604,558			601,935
Other assets					259,507			258,116
			Total assets	$	9,449,538		$	8,300,672
LIABILITIES AND STOCKHOLDERS’ EQUITY
Secured tax-exempt bond financing				$	1,206,272		$	991,127
Secured notes payable					3,840,828			3,426,705
Term loan					150,000			—
Credit facility					—			213,500
			Total indebtedness		5,197,100			4,631,332
Liabilities related to assets held for sale					8,354			129,510
Accounts payable					10,896			10,597
Accrued liabilities and other					357,910			240,478
Deferred income					17,063			9,075
Security deposits					35,967			31,174
Deferred income taxes payable					36,707			36,348
			Total liabilities		5,663,997			5,088,514
Mandatorily redeemable convertible preferred securities					20,637			20,637
Minority interest in consolidated real estate partnerships					93,848			113,782
Minority interest in AIMCO Operating Partnership					407,699			367,124
Stockholders’ equity:
	Preferred Stock, perpetual				552,520			502,520
	Preferred Stock, convertible				434,447			621,947
	Class A Common Stock, $.01 par value, 454,962,738 shares and 456,962,738 shares authorized, 91,422,761 and 74,498,582 shares issued and outstanding, at June 30, 2002 and December 31, 2001, respectively				914			745
	Additional paid-in capital				2,967,500			2,209,803
	Unvested restricted stock				(8,149	)		(5,775	)
	Notes due on common stock purchases				(50,224	)		(46,460	)
	Distributions in excess of earnings				(633,651	)		(572,165	)
			Total stockholders’ equity		3,263,357			2,710,615
			Total liabilities and stockholders’ equity	$	9,449,538		$	8,300,672

See notes to consolidated financial statements.

2

APARTMENT INVESTMENT AND MANAGEMENT COMPANY

CONSOLIDATED STATEMENTS OF INCOME
(In Thousands, Except Per Share Data)
(Unaudited)

		Three Months Ended June 30,						Six Months Ended June 30,
		2002			2001			2002			2001
RENTAL PROPERTY OPERATIONS:
Rental and other property revenues		$	359,296		$	316,259		$	688,710		$	631,288
Property operating expense			(147,350	)		(124,829	)		(273,277	)		(243,116	)
Income from property operations			211,946			191,430			415,433			388,172
INVESTMENT MANAGEMENT BUSINESS:
Management fees and other income primarily from affiliates			28,817			35,084			53,187			71,941
Management and other expenses			(18,392	)		(22,461	)		(35,388	)		(48,644	)
Amortization of intangibles			(916	)		(4,332	)		(2,040	)		(9,233	)
Income from investment management business			9,509			8,291			15,759			14,064
General and administrative expenses			(4,921	)		(4,457	)		(8,017	)		(8,549	)
Other expenses			(5,000	)		—			(5,000	)		—
Provision for losses on notes receivable			(3,156	)		—			(3,156	)		—
Depreciation of rental property			(69,821	)		(93,116	)		(139,907	)		(185,754	)
Interest expense			(86,819	)		(78,481	)		(168,376	)		(162,754	)
Interest and other income			22,653			17,368			41,395			32,038
Equity in earnings (losses) of unconsolidated real estate partnerships			(870	)		(4,731	)		2,611			(9,207	)
Minority interest in consolidated real estate partnerships			(848	)		(5,511	)		(4,247	)		(10,788	)
Operating earnings			72,673			30,793			146,495			57,222
Distributions to minority partners in excess of income			(12,558	)		126			(10,972	)		(10,814	)
Discontinued operations:
	Income (loss) from operations		(1,273	)		1,441			(96	)		1,223
	Gain (loss) on disposals		(5,858	)		1,490			(1,902	)		1,556
	Income tax arising from disposals		—			—			(768	)		—
Total discontinued operations			(7,131	)		2,931			(2,766	)		2,779
Income before minority interest in AIMCO Operating Partnership			52,984			33,850			132,757			49,187
Minority interest in AIMCO Operating Partnership, common			(4,239	)		(1,225	)		(11,237	)		(443	)
Minority interest in AIMCO Operating Partnership, preferred			(2,712	)		(2,190	)		(5,428	)		(4,291	)
Net income			46,033			30,435			116,092			44,453
Net income attributable to preferred stockholders			23,895			22,408			49,374			41,103
Net income attributable to common stockholders		$	22,138		$	8,027		$	66,718		$	3,350
Basic earnings per common share		$	0.26		$	0.11		$	0.84		$	0.05
Diluted earnings per common share		$	0.26		$	0.11		$	0.82		$	0.05
Dividends declared per common share		$	0.82		$	0.78		$	1.64		$	1.56

See notes to consolidated financial statements.

3

APARTMENT INVESTMENT AND MANAGEMENT COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
(Unaudited)

				Six Months Ended
				June 30,
				2002			2001
CASH FLOWS FROM OPERATING ACTIVITIES:
	Net income			$	116,092		$	44,453
	Adjustments to reconcile net income to net cash provided by operating activities:
		Depreciation and amortization of intangibles			141,947			194,987
		Distributions to minority partners in excess of income			10,972			10,814
		Loss (gain) on disposals from discontinued operations			1,902			(1,556	)
		Minority interest in AIMCO Operating Partnership			16,665			4,734
		Minority interest in consolidated real estate partnerships			4,247			10,788
		Equity in (earnings) losses of unconsolidated real estate partnerships			(2,611	)		9,207
		Changes in operating assets and operating liabilities			(22,322	)		(32,404	)
			Total adjustments		150,800			196,570
			Net cash provided by operating activities		266,892			241,023
CASH FLOWS FROM INVESTING ACTIVITIES:
	Purchase of and additions to real estate				(212,454	)		(33,205	)
	Initial capital expenditures				(13,649	)		(21,710	)
	Capital enhancements				(4,545	)		(14,007	)
	Capital replacements				(35,514	)		(28,978	)
	Redevelopment additions to real estate				(84,910	)		(62,810	)
	Proceeds from sales of property				179,671			80,775
	Proceeds from sales of investments				22,747			232,537
	Cash from newly consolidated properties				166			22,486
	Purchase of notes receivable, general and limited partnership interests and other assets				(54,525	)		(52,923	)
	Purchase/originations of notes receivable				(59,610	)		(53,281	)
	Proceeds from repayment of notes receivable				25,013			8,517
	Cash paid in connection with merger/acquisition related costs				(23,931	)		(36,783	)
	Distributions received from investments in unconsolidated real estate partnerships				8,079			23,945
			Net cash (used in) provided by investing activities		(253,462	)		64,563
CASH FLOWS FROM FINANCING ACTIVITIES:
	Proceeds from secured notes payable borrowings				136,975			237,063
	Principal repayments on secured notes payable				(199,324	)		(211,453	)
	Proceeds from secured tax-exempt bond financing				130,719			—
	Principal repayments on secured tax-exempt bond financing				(236,554	)		(6,592	)
	Principal repayments on secured short-term financing				—			(25,105	)
	Net borrowings (pay downs) on term loan and revolving credit facilities				(63,500	)		(158,740	)
	Payment of loan costs				(1,914	)		(10,981	)
	Proceeds from issuance of common and preferred stock, exercise of options/warrants				426,915			84,494
	Principal repayments received on notes due from officers on Common Stock purchases				3,026			5,656
	Repurchase of Common Stock and Operating Partnership Units				(1,415	)		(29,898	)
	Proceeds from issuance of High Performance Units				808			—
	Payment of common stock dividends				(128,300	)		(111,956	)
	Payment of distributions to minority interests				(50,849	)		(60,191	)
	Payment of preferred stock dividends				(49,278	)		(39,605	)
			Net cash used in financing activities		(32,691	)		(327,308	)
NET DECREASE IN CASH AND CASH EQUIVALENTS					(19,261	)		(21,722	)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD					80,000			157,115
CASH AND CASH EQUIVALENTS AT END OF PERIOD				$	60,739		$	135,393

See notes to consolidated financial statements.

4

APARTMENT INVESTMENT AND MANAGEMENT COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2002
(Unaudited)

NOTE 1 — Organization

     Apartment Investment and Management Company, a Maryland corporation incorporated on January 10, 1994 (“AIMCO” and, together with its consolidated subsidiaries and other controlled entities, the “Company”), owns a majority of the ownership interests in AIMCO Properties, L.P. (the “AIMCO Operating Partnership”) through its wholly owned subsidiaries, AIMCO-GP, Inc. and AIMCO-LP, Inc. The Company held approximately an 87% interest in the AIMCO Operating Partnership as of June 30, 2002. AIMCO-GP, Inc. is the sole general partner of the AIMCO Operating Partnership. Interests in the AIMCO Operating Partnership that are held by limited partners other than the Company are referred to as “OP Units.”

     As of June 30, 2002, AIMCO:

• owned or controlled (consolidated) and managed 170,592 units in 663 apartment properties;

• held an equity interest in (unconsolidated) 128,911 units in 966 apartment properties, of which 85,833 units were also managed by the Company; and

• provided services or managed, for unrelated third party owners, 26,503 units in 212 apartment properties, primarily pursuant to long term, non-cancelable agreements.

     At June 30, 2002, 91,422,761 shares of AIMCO’s Class A Common Stock (the “Common Stock”) were outstanding and the AIMCO Operating Partnership had 12,503,130 common OP Units and equivalents outstanding, for a combined total of 103,925,891 shares of Common Stock and OP Units outstanding (excluding preferred OP Units). Holders of common OP Units may redeem such units for cash or, at the Company’s option, Common Stock.

NOTE 2 — Basis of Presentation

     The accompanying unaudited consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and six months ended June 30, 2002 are not necessarily indicative of the results that may be expected for the year ending December 31, 2002.

     The balance sheet at December 31, 2001 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.

     For further information, refer to the statements and notes thereto included in the AIMCO annual report on Form 10-K for the year ended December 31, 2001. Certain 2001 financial statement amounts have been reclassified to conform to the 2002 presentation.

     The accompanying consolidated financial statements include the accounts of AIMCO, the AIMCO Operating Partnership, majority owned subsidiaries and controlled real estate limited partnerships. Interests held by limited partners in real estate partnerships controlled by the Company are reflected as minority interest in consolidated real estate partnerships. All significant intercompany balances and transactions have been eliminated in consolidation. Minority interest in limited partnerships represents the non-controlling partners’ share of the underlying net assets of the Company’s controlled limited partnerships. When these partnerships make cash distributions in excess of net income, the Company, as the majority partner, records a charge equal to the minority partners’ excess of distribution

5

over net income, even though there is no economic effect, cost or risk to the Company. This charge is classified in the consolidated statements of income as distributions to minority partners’ in excess of income. Losses are allocated to minority partners to the extent they do not create a minority interest deficit, in which case, the Company recognizes 100% of the losses in operating earnings. With regard to such partnerships, no losses related to the minority interest ownership were charged to operations for the three and six months ended June 30, 2002 and 2001, respectively. The assets of property owning limited partnerships and limited liability companies owned or controlled by AIMCO or the AIMCO Operating Partnership generally are not available to pay creditors of AIMCO or the AIMCO Operating Partnership.

NOTE 3 — Notes Receivable from Unconsolidated Real Estate Partnerships

     The following table summarizes the Company’s notes receivable from unconsolidated real estate partnerships at June 30, 2002 and 2001 (in thousands):

	Notes Receivable from Unconsolidated
	Real Estate Partnerships
	June 30, 2002		June 30, 2001
Par value notes	$	158,315	$	115,999
Discounted notes		132,316		129,909
Total	$	290,631	$	245,908

     The Company recognizes interest income earned from its investments in notes receivable when the collectibility of such amounts is both probable and estimable. The notes receivable were either extended by the Company and are carried at the face amount plus accrued interest (“par value notes”) or were made by predecessors whose positions have been acquired by the Company at a discount (“discounted notes”).

     As of June 30, 2002 and 2001, the Company held, primarily through its consolidated subsidiaries, $158.3 million and $116.0 million, respectively, of par value notes receivable from unconsolidated real estate partnerships, including accrued interest, for which management believes the collectibility of such amounts is both probable and estimable. As such, interest income from the par value notes is generally recognized as it is earned. Interest income from such notes for the three and six months ended June 30, 2002 totaled $8.8 million and $16.9 million, respectively, and for the three and six months ended June 30, 2001 totaled $8.0 million and $14.8 million, respectively.

     As of June 30, 2002 and 2001, the Company held discounted notes, including accrued interest, with a carrying value of $132.3 million and $129.9 million, respectively. The total face value plus accrued interest of these notes was $275.6 million and $225.0 million at June 30, 2002 and 2001, respectively.

     Under the cost recovery method, the discounted notes are carried at the acquisition amount, less subsequent cash collections, until such time as collectibility of principal and interest is probable and the timing and amounts are estimable. Based upon closed or pending transactions (which include sales, refinancing, foreclosures and rights offering activities), the Company has determined that certain notes are collectible for amounts greater than their carrying value. Accordingly, the difference between the carrying value of the discounted notes and the estimated collectible value is being amortized, as interest income, on a prospective basis over the estimated remaining life of the loans. For the three and six months ended June 30, 2002 the Company recognized deferred interest income and discounts of approximately $11.1 million ($0.12 per basic share and $0.11 per diluted share) and $15.5 million ($0.17 per basic and diluted share), respectively, and for the three and six months ended June 30, 2001 the Company recognized deferred interest income and discounts of approximately $2.4 million ($0.03 per basic and diluted share) and $2.6 million ($0.04 per basic and diluted share), respectively. These amounts are net of allocated expenses of $0.2 million and $0.6 million for the three and six months ended June 30, 2002, and $1.2 million and $2.4 million for the three and six months ended June 30, 2001. The notes receivable generally are realizable through collection of cash or obtaining ownership of the property.

     The Company continues to monitor and monetize its loans made to affiliated partnerships, of which it is typically the general partner and assesses the collectibility or impairment of each note on a periodic basis. During the second

6

quarter of 2002, the Company identified and recorded $3.2 million in impairments. The Company will continue to monitor and assess these notes and expects to identify both recoveries and impairments, but does not expect any net impairments to be material to the Company’s financial position or results of operations.

NOTE 4 — Commitments and Contingencies

  Legal

     The Company is a party to various legal actions resulting from its operating activities. These actions are routine litigation and administrative proceedings arising in the ordinary course of business, some of which are covered by liability insurance, and none of which are expected to have a material adverse effect on the consolidated financial condition or results of operations of the Company and its subsidiaries taken as a whole.

  Limited Partnerships

     In connection with the Company’s acquisitions of interests in limited partnerships that own properties, the Company and its affiliates are sometimes subject to legal actions, including allegations that such activities may involve breaches of fiduciary duties to the limited partners of such partnerships or violations of the relevant partnership agreements. The Company may incur costs in connection with the defense or settlement of such litigation. The Company believes it complies with its fiduciary obligations and relevant partnership agreements and does not expect any such legal actions to have a material adverse effect on the consolidated financial condition or results of operations of the Company and its subsidiaries taken as a whole.

  Environmental

     Various federal, state and local laws subject property owners or operators to liability for the costs of removal or remediation of certain hazardous substances present on a property. Such laws often impose liability without regard to whether the owner or operator knew of, or was responsible for, the release of the hazardous substances. The presence of, or the failure to properly remedy, hazardous substances may adversely affect occupancy at affected apartment communities and our ability to sell or finance affected properties. In addition to the costs associated with investigation and remediation actions brought by governmental agencies, the presence of hazardous wastes on a property could result in claims by private plaintiffs for personal injury, disease, disability or other infirmities. Various laws also impose liability for the cost of removal or remediation of hazardous substances at the disposal or treatment facility. Anyone who arranges for the disposal or treatment of hazardous or toxic substances is potentially liable under such laws. These laws often impose liability whether or not the person arranging for the disposal ever owned or operated the disposal facility. In connection with the ownership, operation and management of our properties, the Company could potentially be liable for environmental liabilities or costs associated with its properties or properties it acquires or manages in the future.

     There have been recent reports of lawsuits against owners and managers of multifamily properties asserting claims of personal injury and property damage caused by the presence of mold in residential units. Some of these lawsuits have resulted in substantial monetary judgments or settlements. The Company has been named as a defendant in suits that have alleged the presence of mold. Prior to March 31, 2002, the Company was insured against claims arising from the presence of mold due to water intrusion. However, since March 31, 2002, certain of the Company’s insurance carriers have excluded from insurance coverage property damage loss claims arising from the presence of mold although certain of the Company’s insurance carriers do provide some coverage for personal injury claims. The Company has implemented protocols and procedures to prevent or eliminate mold from its properties and believes that its measures will eliminate, or at least minimize, the effects that mold could have on its residents. To date, the Company has not incurred any material costs or liabilities relating to claims of mold exposure or to abate mold conditions. Because the law regarding mold is unsettled and subject to change, however, the Company can make no assurance that liabilities resulting from the presence of or exposure to mold will not have a material adverse effect on the consolidated financial condition or results of operations of the Company and its subsidiaries taken as a whole.

7

  Other Legal Matters

     In December 2001, the Company and certain of its affiliated partnerships that own properties voluntarily entered into an agreement with the U.S. Environmental Protection Agency (“EPA”) and HUD pursuant to which they agreed to pay a fine of $130,000, conduct lead-based paint inspections and other testing, if necessary, on properties initially built prior to 1978, and re-issue lead-based paint disclosures to residents of such properties which have not been certified as lead-base paint free. In return, neither the Company nor its properties will be subject to any additional fines for inadequate disclosures prior to the Company’s execution of the agreement. The cost of the settlement, inspections and remediations incurred to date had been reserved for at the time the Company acquired the NHP and Insignia portfolios. Any remaining costs are not expected to be material.

     On January 30, 2002, AIMCO and four of its affiliated partnerships were named as defendants in a lawsuit brought by the City Attorney for the City and County of San Francisco in the Superior Court, County of San Francisco. The City Attorney asserts that the defendants have violated certain state and local residential housing codes, and engaged in unlawful business practices and unfair competition, in connection with four properties owned and operated by the affiliated partnerships. The City Attorney asserts civil penalties from $500 to $1,000 per day for each affected unit, as well as other statutory and equitable relief. The Company has engaged in preliminary discussions with the City Attorney to resolve the lawsuit. In the event it is unable to resolve the lawsuit, the Company believes it has meritorious defenses to assert and will vigorously defend itself. The matter has been set for trial on December 30, 2002. While the outcome of any litigation is uncertain, the Company does not believe that the ultimate outcome will have a material adverse effect on the consolidated financial condition or results of operations of the Company and its subsidiaries taken as a whole.

     National Program Services, Inc. and Vito Gruppuso (collectively “NPS”) are insurance agents who in 2000 sold to AIMCO and its affiliates property insurance issued by National Union Fire Insurance Company of Pittsburgh, PA (“National Union”). The financial failure of NPS has resulted in defaults in June 2002 under two agreements by which NPS indemnified AIMCO from losses relating to the matters described below. As a result of such defaults, the Company faces the risk of impairment of a $16.7 million insurance-related receivable as well as a contingent liability of $5.7 million. The Company’s receivable arose from the improper and premature cancellation by National Union of the Company’s property insurance coverage in April 2001. The Company had paid to National Union amounts in excess of $10 million in prepaid premiums for property insurance coverage that was to continue through at least April 2002. In addition, the Company has a $6.7 million receivable from NPS to reimburse the Company for payments on a premium finance agreement, proceeds of which were to pay premiums to National Union. The Company holds two $5 million surety bonds issued by Lumberman’s Mutual Insurance Company to secure the NPS indemnities. In addition, the Company has pending litigation in the U.S. District Court for the District of Colorado against National Union, First Capital Group, a New York based insurance wholesaler, NPS and other agents of National Union, for refund of at least $10 million of prepaid premium plus other damages resulting from the cancellation of the coverage. The cancellation of the property insurance coverage in 2001 has no effect on AIMCO’s present property insurance coverage or on coverage that existed through April 2001. With respect to the contingent liability arising from the NPS defaults, the Company received in July 2002 a demand for payment of $5.7 million from Cananwill, Inc., a premium funding company, allegedly due for premium payments made to National Union. The Company believes it has meritorious defenses to assert, and the Company will vigorously defend itself in the event Cananwill commences any litigation. In the event of litigation and an adverse determination, the Company will seek reimbursement of any loss from the bonds securing the NPS indemnification agreements as well as from all third parties responsible for the misapplication of AIMCO’s payments. While the outcome of any claim or matter in litigation is uncertain, the Company does not believe that it will incur any material loss in connection with the receivable or that the ultimate outcome of these separate but related matters will have a material adverse effect on the financial condition or results of operations of the Company and its subsidiaries taken as a whole.

NOTE 5 — Stockholders’ Equity

  Preferred Stock

     On March 19, 2002, the Company announced that on April 18, 2002 it would redeem for Common Stock all 5,000,000 outstanding shares of its Class K Convertible Cumulative Preferred Stock, par value $0.01 per share (the “Class K Preferred Stock”) at a redemption price of $27.2125 per share of Class K Preferred Stock. The redemption price was payable in shares of Common Stock at a price of $45.7835 per share, or the issuance of 0.5944 shares of Common Stock for each share of Class K Preferred Stock redeemed. Subsequent to this announcement all 5,000,000 shares of Class K Preferred Stock were converted into approximately 2,972,000 shares of Common Stock.

     On March 25, 2002, the Company sold 1,000,000 shares of Class R Cumulative Preferred Stock, par value $0.01 per share (the “Class R Preferred Stock”) in a registered public offering, and on April 11, 2002, the Company sold an additional 1,000,000 shares of Class R Preferred Stock in a registered public offering. The total net proceeds from both of these offerings of approximately $50 million were used to repay short-term indebtedness. Holders of the Class R Preferred Stock are entitled to receive dividends in an annual amount of $2.50 or 10% of the $25 per share liquidation preference. These dividends are cumulative from the date of original issuance and are payable quarterly each year. Class R Preferred Stock is senior to Common Stock as to dividends and liquidation. Upon any liquidation, dissolution or winding up of AIMCO, before payments of distributions by AIMCO are made to any holders of Common Stock, the holders of Class R Preferred Stock are entitled to receive a liquidation preference of $25 per share, plus accumulated, accrued and unpaid dividends. Each share of Class R Preferred Stock is redeemable beginning July 20, 2006 at the option of the Company, at a price equal to the liquidation preference of $25 per share, plus all accrued and unpaid dividends, if any, to the date fixed for redemption.

8

     On May 6, 2002, the Company converted 2,500,000 shares of AIMCO Class L Convertible Cumulative Preferred Stock, par value $0.01 per share (the “Class L Preferred Stock”), with a face value of $62.5 million, into 1,344,664 shares of Common Stock. Following this conversion, as of June 30 2002, 2,500,000 shares of Class L Preferred Stock remained outstanding.

  Common Stock

     On June 5, 2002, AIMCO completed the sale of 8,000,000 shares of Common Stock in an underwritten public offering at a net price of $46.17 per share. The net proceeds of approximately $369 million were used to repay outstanding short-term indebtedness under the Company’s credit facility and the term loan that was used to finance AIMCO’s acquisition of Casden Properties Inc., (“Casden”) in March of 2002, which included the merger of Casden into AIMCO (the “Casden Merger”).

     During the three and six months ended June 30, 2002, approximately 262,000 and 272,000 shares of Common Stock, respectively, were issued in exchange for common OP Units.

9

NOTE 6 — Earnings Per Share

     Earnings per share is calculated based on the weighted average number of shares of Common Stock, common stock equivalents and dilutive convertible securities outstanding during the period. The following table illustrates the calculation of basic and diluted earnings per share for the three and six months ended June 30, 2002 and 2001 (in thousands, except per share data):

			Three Months Ended
			June 30,
			2002			2001
NUMERATOR:
Net income			$	46,033		$	30,435
Less: Net income attributable to preferred stockholders				(23,895	)		(22,408	)
Numerator for basic and diluted earnings per share — income attributable to common stockholders			$	22,138		$	8,027
DENOMINATOR:
Denominator for basic earnings per share — weighted average number of shares of Common Stock outstanding				83,655			72,716
Effect of dilutive securities:
Dilutive potential common shares				1,897			1,638
Denominator for dilutive earnings per share				85,552			74,354
Basic earnings (loss) per common share:
	Operations		$	0.33		$	0.08
	Discontinued operations			(0.07	)		0.03
		Total	$	0.26		$	0.11
Diluted earnings (loss) per common share:
	Operations		$	0.33		$	0.08
	Discontinued operations			(0.07	)		0.03
		Total	$	0.26		$	0.11

			Six Months Ended
			June 30,
			2002			2001
NUMERATOR:
Net income			$	116,092		$	44,453
Less: Net income attributable to preferred stockholders				(49,374	)		(41,103	)
Numerator for basic and diluted earnings per share — income attributable to common stockholders			$	66,718		$	3,350
DENOMINATOR:
Denominator for basic earnings per share — weighted average number of shares of Common Stock outstanding				79,250			71,667
Effect of dilutive securities:
Dilutive potential common shares				1,646			1,576
Denominator for dilutive earnings per share				80,896			73,243
Basic earnings (loss) per common share:
	Operations		$	0.87		$	0.02
	Discontinued operations			(0.03	)		0.03
		Total	$	0.84		$	0.05
Diluted earnings (loss) per common share:
	Operations		$	0.85		$	0.02
	Discontinued operations			(0.03	)		0.03
		Total	$	0.82		$	0.05

10

NOTE 7 — Industry Segments

     AIMCO has two reportable segments: real estate (owning and operating apartments); and investment management business (providing, to third parties including affiliates, services relating to the apartment business). The Company owns and operates multi-family apartment communities throughout the United States and Puerto Rico that generate rental and other property related income through the leasing of apartment units to a diverse base of tenants. The Company separately evaluates the performance of each of its apartment communities. However, because each of the apartment communities has similar economic characteristics, the apartment communities have been aggregated into a single apartment communities segment, or real estate segment. There are different components of the multi-family business for which management considers disclosure to be useful. All real estate revenues are from external customers and no revenues are generated from transactions with other segments. There were no tenants that contributed 10% or more of the Company’s total revenues during the three and six months ended June 30, 2002 or 2001. The Company also manages apartment properties and provides other services for third parties and affiliates through its investment management business segment. As disclosed, a significant portion of the revenues of the investment management business are from affiliates of the Company.

     A performance measure used by management of the Company for each segment is its contribution to free cash flow (“Free Cash Flow” or “FCF”). Free Cash Flow is defined by the Company as net operating income less the capital spending required to maintain and improve the related assets. Free Cash Flow measures profitability prior to the cost of capital. Other performance measures used by management of the Company include funds from operations, adjusted funds from operations and earnings before structural depreciation. The Company deducts Capital Replacement spending to arrive at Free Cash Flow and adjusted funds from operations. During the second quarter of 2002, the Company began deducting Capital Enhancement spending as well as Capital Replacement spending. This additional deduction is reflected on a prospective basis.

     The following tables present the contribution (separated between consolidated and unconsolidated activity) to the Company’s Free Cash Flow for the three and six months ended June 30, 2002 and 2001, from these segments, and a reconciliation of Free Cash Flow to funds from operations, funds from operations less actual spending for Capital Replacements and Capital Enhancements, and net income (in thousands, except equivalent units (ownership effected) and monthly rents):

11

FREE CASH FLOW FROM BUSINESS COMPONENTS
For the Three Months Ended June 30, 2002 and 2001
(in thousands, except unit data)

					2002												2001
					Consolidated			Unconsolidated			Total			%			Consolidated			Unconsolidated		Total			%
Real Estate
	Conventional Apartments
		Average monthly rent greater than $1,200 per unit (equivalent units of 9,093 and 4,442 for 2002 and 2001)			$	22,007		$	981		$	22,988			10.9	%	$	10,708		$	1,512	$	12,220			5.9	%
		Average monthly rent $1,000 to $1,200 per unit (equivalent units of 4,891 and 3,125 for 2002 and 2001)				8,876			866			9,742			4.6	%		8,112			484		8,596			4.2	%
		Average monthly rent $900 to $1,000 per unit (equivalent units of 11,968 and 8,772 for 2002 and 2001)				21,225			878			22,103			10.4	%		18,746			467		19,213			9.3	%
		Average monthly rent $800 to $900 per unit (equivalent units of 15,332 and 12,940 for 2002 and 2001)				24,596			824			25,420			12.0	%		24,457			1,684		26,141			12.7	%
		Average monthly rent $700 to $800 per unit (equivalent units of 21,323 and 16,858 for 2002 and 2001)				26,346			1,311			27,657			13.1	%		22,736			2,035		24,771			12.0	%
		Average monthly rent $600 to $700 per unit (equivalent units of 32,137 and 37,174 for 2002 and 2001)				32,463			3,972			36,435			17.2	%		44,528			3,375		47,903			23.3	%
		Average monthly rent $500 to $600 per unit (equivalent units of 36,792 and 38,363 for 2002 and 2001)				30,652			2,779			33,431			15.8	%		33,122			3,076		36,198			17.6	%
		Average monthly rent less than $500 per unit (equivalent units of 18,691 and 16,049 for 2002 and 2001)				7,941			(274	)		7,667			3.6	%		8,874			764		9,638			4.7	%
			Subtotal conventional real estate contribution to Free Cash Flow			174,106			11,337			185,443			87.6	%		171,283			13,397		184,680			89.7	%
	Affordable Apartments (equivalent units of 23,404 and 14,197 for 2002 and 2001)					13,602			5,940			19,542			9.2	%		4,320			6,146		10,466			5.1	%
	College housing (average rent of $610 and $630 per month for 2002 and 2001) (equivalent units of 2,860 and 3,301 for 2002 and 2001)					3,095			59			3,154			1.5	%		2,394			86		2,480			1.2	%
	Other real estate					1,004			45			1,049			0.5	%		739			148		887			0.4	%
	Minority interest					(17,495	)		—			(17,495	)		(8.2	%)		(18,367	)		—		(18,367	)		(8.9	%)
Total real estate contribution to Free Cash Flow						174,312	(1)		17,381			191,693			90.6	%		160,369	(1)		19,777		180,146			87.5	%
Investment Management Business
	Management contracts (property and asset management)
		Controlled properties				9,143			—			9,143			4.3	%		7,366			—		7,366			3.6	%
		Third party with terms in excess of one year				566			—			566			0.3	%		410			—		410			0.2	%
		Third party cancelable in 30 days				206			—			206			0.1	%		585			—		585			0.3	%
	Insurance operations					(3,520	)		—			(3,520	)		(1.7	%)		—			—		—			0.0	%
				Investment management business contribution to Free Cash Flow before activity based fees		6,395			—			6,395			3.0	%		8,361			—		8,361			4.1	%
	Activity based fees					4,030			—			4,030			1.9	%		4,262			—		4,262			2.1	%
				Total investment management business contribution to Free Cash Flow		10,425	(2)		—			10,425			4.9	%		12,623	(2)		—		12,623			6.2	%
Interest and other income
	Transactional income					13,185			—			13,185			6.2	%		8,523			—		8,523			4.2	%
	General partner loan interest					8,820			—			8,820			4.2	%		7,954			—		7,954			3.9	%
	Money market and interest bearing accounts					648			—			648			0.3	%		891			—		891			0.4	%
				Total interest and other income contribution to Free Cash Flow		22,653			—			22,653			10.7	%		17,368			—		17,368			8.5	%
General and administrative expenses						(4,921	)		—			(4,921	)		(2.3	%)		(4,457	)		—		(4,457	)		(2.2	%)
Other expenses						(5,000	)		—			(5,000	)		(2.4	%)		—			—		—			0.0	%
Provision for losses on notes receivable						(3,156	)		—			(3,156	)		(1.5	%)		—			—		—			0.0	%
Free Cash Flow (FCF) (3)					$	194,313		$	17,381		$	211,694			100.0	%	$	185,903		$	19,777	$	205,680			100.0	%

12

FREE CASH FLOW FROM BUSINESS COMPONENTS
For the Three Months Ended June 30, 2002 and 2001
(in thousands, except per share data)

					2002									2001
					Consolidated			Unconsolidated			Total			Consolidated			Unconsolidated			Total
Free Cash Flow (FCF)(3)					$	194,313		$	17,381		$	211,694		$	185,903		$	19,777		$	205,680
Cost of Senior Capital:
	Interest expense:
		Secured debt
			Long-term, fixed rate			(74,340	)		(11,259	)		(85,599	)		(68,151	)		(11,470	)		(79,621	)
			Long-term, variable rate (principally tax-exempt)			(5,173	)		(910	)		(6,083	)		(7,276	)		(1,306	)		(8,582	)
			Short-term			(3,573	)		—			(3,573	)		(1,883	)		(35	)		(1,918	)
		Lines of credit and other unsecured debt				(7,142	)		—			(7,142	)		(5,011	)		(1	)		(5,012	)
		Interest expense on mandatorily redeemable convertible preferred securities				(257	)		—			(257	)		(489	)		—			(489	)
		Interest capitalized				3,666			—			3,666			4,329			—			4,329
			Total interest expense before minority interest			(86,819	)		(12,169	)		(98,988	)		(78,481	)		(12,812	)		(91,293	)
		Minority interest share of interest expense				8,824			—			8,824			12,644			—			12,644
			Total interest expense after minority interest			(77,995	)		(12,169	)		(90,164	)		(65,837	)		(12,812	)		(78,649	)
Distributions on preferred OP Units						(2,712	)		—			(2,712	)		(2,190	)		—			(2,190	)
Dividends on preferred securities owned by minority interest						—			—			—			(679	)		—			(679	)
Dividends on preferred stock						(23,895	)		—			(23,895	)		(22,408	)		—			(22,408	)
		Total dividends/distributions on preferred OP Units and securities				(26,607	)		—			(26,607	)		(25,277	)		—			(25,277	)
Non-structural depreciation, net of Capital Replacements/Enhancements						10,542			1,687			12,229			(412	)		(89	)		(501	)
Amortization of intangibles						(916	)		—			(916	)		(4,332	)		—			(4,332	)
Discontinued operations:
		Income (loss) from operations				(1,273	)		—			(1,273	)		1,441			—			1,441
		Gain (loss) on disposals				(5,858	)		—			(5,858	)		1,490			—			1,490
				Earnings Before Structural Depreciation (EBSD) (3)		92,206			6,899			99,105			92,976			6,876			99,852
Structural depreciation, net of minority interest						(52,401	)		(7,769	)		(60,170	)		(79,119	)		(11,607	)		(90,726	)
Distributions to minority partners in excess of income						(12,558	)		—			(12,558	)		126			—			126
				Net income (loss) attributable to common OP Unitholders and stockholders		27,247			(870	)		26,377			13,983			(4,731	)		9,252
Discontinued operations:
		Loss (gain) on disposals				5,858			—			5,858			(1,490	)		—			(1,490	)
		Depreciation, net of minority interest				1,095			—			1,095			847			—			847
		Distributions to minority partners in excess of income				1,321			—			1,321			—			—			—
Structural depreciation, net of minority interest						52,401			7,769			60,170			79,119			11,607			90,726
Distributions to minority partners in excess of income						12,558			—			12,558			(126	)		—			(126	)
Non-structural depreciation, net of minority interest						9,597			1,472			11,069			13,105			2,254			15,359
Amortization of intangibles						916			—			916			4,332			—			4,332
				Funds From Operations (FFO) (3)		110,993			8,371			119,364			109,770			9,130			118,900
Capital Replacements						(15,875	)		(2,481	)		(18,356	)		(12,694	)		(2,165	)		(14,859	)
Capital Enhancements						(4,264	)		(678	)		(4,942	)		—			—			—
				Adjusted Funds From Operations (AFFO) (3)	$	90,854		$	5,212		$	96,066		$	97,076		$	6,965		$	104,041

		2002						2001
						Earnings						Earnings
		Earnings		Shares		Per Share		Earnings		Shares		Per Share
EBSD
	Basic	$	99,105		96,276			$	99,852		84,872
	Diluted		112,826		110,642				116,813		103,288
Net Income
	Basic		26,377		96,276	$	0.27		9,252		84,872	$	0.11
	Diluted		26,377		98,173	$	0.27		9,252		86,351	$	0.11
FFO
	Basic		119,364		96,276				118,900		84,872
	Diluted		133,085		110,642				135,861		103,288
AFFO
	Basic		96,066		96,276				104,041		84,872
	Diluted		99,170		101,737				121,002		103,288
Operating Earnings
	Basic		46,066		96,276				6,195		84,872
	Diluted		46,066		98,173				6,195		86,351

13

FREE CASH FLOW FROM BUSINESS COMPONENTS
For the Six Months Ended June 30, 2002 and 2001
(in thousands, except unit data)

					2002											2001
					Consolidated			Unconsolidated		Total			%			Consolidated			Unconsolidated		Total			%
Real Estate
		Conventional Apartments
				Average monthly rent greater than $1,200 per unit (equivalent units of 9,438 and 4,316 for 2002 and 2001)	$	40,399		$	1,730	$	42,129			10.0	%	$	20,315		$	3,003	$	23,318			5.7	%
				Average monthly rent $1,000 to $1,200 per unit (equivalent units of 5,194 and 3,770 for 2002 and 2001)		18,880			1,651		20,531			4.9	%		19,271			1,095		20,366			5.0	%
				Average monthly rent $900 to $1,000 per unit (equivalent units of 11,446 and 7,976 for 2002 and 2001)		42,726			2,106		44,832			10.6	%		36,116			863		36,979			9.1	%
				Average monthly rent $800 to $900 per unit (equivalent units of 14,215 and 12,562 for 2002 and 2001)		43,989			1,757		45,746			10.9	%		47,658			2,945		50,603			12.4	%
				Average monthly rent $700 to $800 per unit (equivalent units of 21,724 and 16,309 for 2002 and 2001)		54,978			3,818		58,796			14.0	%		47,088			4,092		51,180			12.5	%
				Average monthly rent $600 to $700 per unit (equivalent units of 34,368 and 37,765 for 2002 and 2001)		71,511			7,174		78,685			18.7	%		92,508			7,736		100,244			24.5	%
				Average monthly rent $500 to $600 per unit (equivalent units of 36,493 and 37,191 for 2002 and 2001)		62,102			5,914		68,016			16.2	%		67,203			6,859		74,062			18.1	%
				Average monthly rent less than $500 per unit (equivalent units of 17,670 and 16,171 for 2002 and 2001)		16,934			76		17,010			4.0	%		19,429			1,137		20,566			5.0	%
				Subtotal conventional real estate contribution to Free Cash Flow		351,519			24,226		375,745			89.3	%		349,588			27,730		377,318			92.3	%
		Affordable Apartments (equivalent units of 23,205 and 14,445 for 2002 and 2001)				19,986			12,082		32,068			7.6	%		10,923			12,642		23,565			5.8	%
		College housing (average rent of $610 and $538 per month for 2002 and 2001) (equivalent units of 2,857 and 3,333 for 2002 and 2001)				6,171			156		6,327			1.5	%		5,813			259		6,072			1.5	%
		Other real estate				2,013			69		2,082			0.5	%		(314	)		242		(72	)		0.0	%
		Minority interest				(38,175	)		—		(38,175	)		(9.1	)%		(45,099	)		—		(45,099	)		(11.0	)%
	Total real estate contribution to Free Cash Flow					341,514	(1)		36,533		378,047			89.8	%		320,911	(1)		40,873		361,784			88.6	%
Investment Management Business
		Management contracts (property and asset management)
				Controlled properties		17,579			—		17,579			4.2	%		13,463			—		13,463			3.4	%
				Third party with terms in excess of one year		1,107			—		1,107			0.3	%		606			—		606			0.1	%
				Third party cancelable in 30 days		528			—		528			0.1	%		910			—		910			0.2	%
		Insurance operations				(5,920	)		—		(5,920	)		(1.4	)%		—			—		—			0.0	%
				Investment management business contribution to Free Cash Flow before activity based fees		13,294			—		13,294			3.2	%		14,979			—		14,979			3.7	%
Activity based fees						4,505			—		4,505			1.1	%		8,318			—		8,318			2.0	%
		Total investment management business contribution to Free Cash Flow				17,799	(2)		—		17,799			4.3	%		23,297	(2)		—		23,297			5.7	%
Interest and other income
		Transactional income				23,280			—		23,280			5.5	%		13,258			—		13,258			3.2	%
		General partner loan interest				16,904			—		16,904			4.0	%		14,755			—		14,755			3.6	%
		Money market and interest bearing accounts				1,211			—		1,211			0.3	%		4,025			—		4,025			1.0	%
			Total interest and other income contribution to Free Cash Flow			41,395			—		41,395			9.8	%		32,038			—		32,038			7.8	%
General and administrative expenses						(8,017	)		—		(8,017	)		(1.9	)%		(8,549	)		—		(8,549	)		(2.1	)%
Other expenses						(5,000	)		—		(5,000	)		(1.2	)%		—			—		—			0.0	%
Provision for losses on notes receivable						(3,156	)		—		(3,156	)		(0.8	)%		—			—		—			0.0	%
Free Cash Flow (FCF) (3)					$	384,535		$	36,533	$	421,068			100.0	%	$	367,697		$	40,873	$	408,570			100.0	%

14

FREE CASH FLOW FROM BUSINESS COMPONENTS
For the Six Months Ended June 30, 2002 and 2001
(in thousands, except per share data)

				2002									2001
				Consolidated			Unconsolidated			Total			Consolidated			Unconsolidated			Total
Free Cash Flow (FCF)(3)				$	384,535		$	36,533		$	421,068		$	367,697		$	40,873		$	408,570
Cost of Senior Capital:
	Interest expense:
		Secured debt
			Long-term, fixed rate		(144,492	)		(20,923	)		(165,415	)		(134,206	)		(22,608	)		(156,814	)
			Long-term, variable rate (principally tax-exempt)		(10,967	)		(1,517	)		(12,484	)		(14,820	)		(2,656	)		(17,476	)
			Short-term		(7,156	)		—			(7,156	)		(3,926	)		(47	)		(3,973	)
		Lines of credit and other unsecured debt			(12,236	)		—			(12,236	)		(14,749	)		(2	)		(14,751	)
		Interest expense on mandatorily redeemable convertible preferred securities			(517	)		—			(517	)		(1,014	)		—			(1,014	)
		Interest capitalized			6,992			—			6,992			5,961			—			5,961
			Total interest expense before minority interest		(168,376	)		(22,440	)		(190,816	)		(162,754	)		(25,313	)		(188,067	)
		Minority interest share of interest expense			18,038			—			18,038			25,996			—			25,996
			Total interest expense after minority interest		(150,338	)		(22,440	)		(172,778	)		(136,758	)		(25,313	)		(162,071	)
Distributions on preferred OP Units					(5,428	)		—			(5,428	)		(4,291	)		—			(4,291	)
Dividends on preferred securities owned by minority interest					(98	)		—			(98	)		(1,357	)		—			(1,357	)
Dividends on preferred stock					(49,374	)		—			(49,374	)		(41,103	)		—			(41,103	)
	Total dividends/distributions on preferred OP Units and securities				(54,900	)		—			(54,900	)		(46,751	)		—			(46,751	)
Non-structural depreciation, net of Capital Replacements/Enhancements					13,204			3,164			16,368			(1,233	)		(378	)		(1,611	)
Amortization of intangibles					(2,040	)		—			(2,040	)		(9,233	)		—			(9,233	)
Discontinued operations:
	Income (loss) from operations				(96	)		—			(96	)		1,223			—			1,223
	Gain (loss) on disposals				(1,902	)		—			(1,902	)		1,556			—			1,556
	Income tax arising from disposals				(768	)		—			(768	)		—			—			—
			Earnings Before Structural Depreciation (EBSD) (3)		187,695			17,257			204,952			176,501			15,182			191,683
Structural depreciation, net of minority interest					(101,379	)		(14,646	)		(116,025	)		(152,687	)		(24,389	)		(177,076	)
Distributions to minority partners in excess of income					(10,972	)		—			(10,972	)		(10,814	)		—			(10,814	)
			Net income (loss) attributable to common OP Unitholders and stockholders		75,344			2,611			77,955			13,000			(9,207	)		3,793
Discontinued operations:
	Loss (gain) on disposals				1,902			—			1,902			(1,556	)		—			(1,556	)
	Depreciation, net of minority interest				1,902			—			1,902			3,863			—			3,863
	Distributions to minority partners in excess of income				1,321			—			1,321			—			—			—
	Income tax arising from disposals				768			—			768			—			—			—
Structural depreciation, net of minority interest					101,379			14,646			116,025			152,687			24,389			177,076
Distributions to minority partners in excess of income					10,972			—			10,972			10,814			—			10,814
Non-structural depreciation, net of minority interest					22,542			2,556			25,098			23,392			4,478			27,870
Amortization of intangibles					2,040			—			2,040			9,233			—			9,233
			Funds From Operations (FFO) (3)		218,170			19,813			237,983			211,433			19,660			231,093
Capital Replacements					(31,480	)		(5,043	)		(36,523	)		(22,162	)		(4,100	)		(26,262	)
Capital Enhancements					(4,264	)		(678	)		(4,942	)		—			—			—
			Adjusted Funds From Operations (AFFO) (3)	$	182,426		$	14,092		$	196,518		$	189,271		$	15,560		$	204,831

		2002						2001
						Earnings						Earnings
		Earnings		Shares		Per Share		Earnings		Shares		Per Share
EBSD
	Basic	$	204,952		91,566			$	191,683		83,311
	Diluted		235,292		107,526				223,229		100,932
Net Income
	Basic		77,955		91,566	$	0.85		3,793		83,311	$	0.05
	Diluted		77,955		93,212	$	0.84		3,793		84,051	$	0.05
FFO
	Basic		237,983		91,566				231,093		83,311
	Diluted		268,323		107,526				262,640		100,932
AFFO
	Basic		196,518		91,566				204,831		83,311
	Diluted		216,241		103,073				236,378		100,932
Operating Earnings
	Basic		91,693		91,566				11,828		83,311
	Diluted		91,693		93,212				11,828		84,051

15

(1) Reconciliation of total consolidated real estate contribution to Free Cash Flow to consolidated rental and other property revenues (in thousands):

		Three Months Ended				Six Months Ended
		June 30,				June 30,
		2002		2001		2002		2001
Consolidated real estate contribution to Free Cash Flow		$	174,312	$	160,369	$	341,514	$	320,911
Plus: minority interest			17,495		18,367		38,175		45,099
Plus: Capital Replacements			15,875		12,694		31,480		22,162
Plus: Capital Enhancements (year to date)			4,264		—		4,264		—
Plus: property operating expense			147,350		124,829		273,277		243,116
	Rental and other property revenues	$	359,296	$	316,259	$	688,710	$	631,288

(2) Reconciliation of total investment management business contribution to Free Cash Flow to consolidated management fees and other income primarily from affiliates (in thousands):

		Three Months Ended				Six Months Ended
		June 30,				June 30,
		2002		2001		2002		2001
Consolidated investment management business contribution to Free Cash Flow		$	10,425	$	12,623	$	17,799	$	23,297
Plus: management and other expenses			18,392		22,461		35,388		48,644
	Management fees and other income primarily from affiliates	$	28,817	$	35,084	$	53,187	$	71,941

(3) Free Cash Flow, Earnings Before Structural Depreciation, Funds From Operations, and Adjusted Funds From Operations are measurement standards used by the Company’s management. These should not be considered alternatives to net income or net cash flow from operating activities, as determined in accordance with generally accepted accounting principles (“GAAP”), as an indication of the Company’s performance or as a measure of liquidity.

• “Free Cash Flow” or “FCF” is defined by the Company as net operating income less the Capital Replacement spending required to maintain, and the Capital Enhancement spending made to improve, the related assets. It measures profitability prior to the cost of capital.

• “Earnings Before Structural Depreciation” or “EBSD” is defined by the Company as net income (loss), determined in accordance with GAAP, plus “structural depreciation”, (i.e., depreciation of buildings and land improvements whose useful lives exceed 20 years).

• “Funds From Operations” or “FFO” is defined by the Board of Governors of the National Association of Real Estate Investment Trusts (“NAREIT”) as net income (loss), computed in accordance with GAAP, excluding gains and losses from extraordinary items and disposals from discontinued operations, net of related income taxes, plus real estate related depreciation and amortization (excluding amortization of financing costs), including depreciation for unconsolidated partnerships, joint ventures and discontinued operations. The Company calculates FFO based on the NAREIT definition, as further adjusted for minority interest in the AIMCO Operating Partnership, plus amortization of intangibles, plus distributions to minority partners in excess of income and less dividends on preferred stock. The Company calculates FFO (diluted) by adding back the interest expense and preferred dividends relating to convertible securities whose conversion is dilutive to FFO. The Company’s basis for computing FFO may not be comparable with that of other real estate investment trusts.

• “Adjusted Funds From Operations” or “AFFO” is defined by the Company as FFO less Capital Replacement and Capital Enhancement spending. Capital Replacement spending was equal to $104 and $214 per apartment unit for the three and six months ended June 30, 2002, respectively and $95 and $170 per apartment unit for the three and six months ended June 30, 2001, respectively. Capital Enhancement spending was equal to $28 per apartment unit for the six months ended June 30, 2002. In 2001 Capital Enhancement spending was not deducted to arrive at AFFO.

16

Reconciliation of FCF, EBSD, FFO and AFFO to Net Income (in thousands):

		For the Three Months Ended June 30, 2002												For the Three Months Ended June 30, 2001
		FCF			EBSD			FFO			AFFO			FCF			EBSD			FFO			AFFO
Amount per Free Cash Flow schedule		$	211,694		$	99,105		$	119,364		$	96,066		$	205,680		$	99,852		$	118,900		$	104,041
Total interest expense after minority interest			(90,164	)		—			—			—			(78,649	)		—			—			—
Dividends on preferred securities owned by minority interest			—			—			—			—			(680	)		—			—			—
Distributions on preferred OP Units			—			2,712			2,712			2,712			—			2,190			2,190			2,190
Dividends on preferred stock			—			23,895			23,895			23,895			—			22,408			22,408			22,408
Structural depreciation, net of minority interest			(60,170	)		(60,170	)		(60,170	)		(60,170	)		(90,726	)		(90,726	)		(90,726	)		(90,726	)
Non-structural depreciation, net of minority interest			(11,069	)		—			(11,069	)		(11,069	)		(15,359	)		—			(15,359	)		(15,359	)
Discontinued operations:
	Income (loss) from operations		(1,273	)		—			—			—			1,441			—			—			—
	Depreciation, net of minority interest		—			—			(1,095	)		(1,095	)		—			—			(847	)		(847	)
	Distributions to minority partners in excess of income		—			—			(1,321	)		(1,321	)		—			—			—			—
	Gain (loss) on disposals		(5,858	)		—			(5,858	)		(5,858	)		1,490			—			1,490			1,490
Distributions to minority partners in excess of income			(12,558	)		(12,558	)		(12,558	)		(12,558	)		126			126			126			126
Capital Replacements			18,356			—			—			18,356			14,859			—			—			14,859
Capital Enhancements			4,942			—			—			4,942			—			—			—			—
Amortization of intangibles			(916	)		—			(916	)		(916	)		(4,332	)		—			(4,332	)		(4,332	)
Minority interest in AIMCO Operating Partnership			(6,951	)		(6,951	)		(6,951	)		(6,951	)		(3,415	)		(3,415	)		(3,415	)		(3,415	)
Net income		$	46,033		$	46,033		$	46,033		$	46,033		$	30,435		$	30,435		$	30,435		$	30,435

		For the Six Months Ended June 30, 2002												For the Six Months Ended June 30, 2001
		FCF			EBSD			FFO			AFFO			FCF			EBSD			FFO			AFFO
Amount per Free Cash Flow schedule		$	421,068		$	204,952		$	237,983		$	196,518		$	408,570		$	191,683		$	231,093		$	204,831
Total interest expense after minority interest			(172,778	)		—			—			—			(162,071	)		—			—			—
Dividends on preferred securities owned by minority interest			(97	)		—			—			—			(1,360	)		—			—			—
Distributions on preferred OP Units			—			5,428			5,428			5,428			—			4,291			4,291			4,291
Dividends on preferred stock			—			49,374			49,374			49,374			—			41,103			41,103			41,103
Structural depreciation, net of minority interest			(116,025	)		(116,025	)		(116,025	)		(116,025	)		(177,076	)		(177,076	)		(177,076	)		(177,076	)
Non-structural depreciation, net of minority interest			(25,098	)		—			(25,098	)		(25,098	)		(27,870	)		—			(27,870	)		(27,870	)
Discontinued operations:
	Income (loss) from operations		(96	)		—			—			—			1,223			—			—			—
	Depreciation, net of minority interest		—			—			(1,902	)		(1,902	)		—			—			(3,863	)		(3,863	)
	Distributions to minority partners in excess of income		—			—			(1,321	)		(1,321	)		—			—			—			—
	Gain (loss) on disposals		(1,902	)		—			(1,902	)		(1,902	)		1,556			—			1,556			1,556
	Income tax arising from disposals		(768	)		—			(768	)		(768	)		—			—			—			—
Distributions to minority partners in excess of income			(10,972	)		(10,972	)		(10,972	)		(10,972	)		(10,814	)		(10,814	)		(10,814	)		(10,814	)
Capital Replacements			36,523			—			—			36,523			26,262			—			—			26,262
Capital Enhancements			4,942			—			—			4,942			—			—			—			—
Amortization of intangibles			(2,040	)		—			(2,040	)		(2,040	)		(9,233	)		—			(9,233	)		(9,233	)
Minority interest in AIMCO Operating Partnership			(16,665	)		(16,665	)		(16,665	)		(16,665	)		(4,734	)		(4,734	)		(4,734	)		(4,734	)
Net income		$	116,092		$	116,092		$	116,092		$	116,092		$	44,453		$	44,453		$	44,453		$	44,453

17

ASSETS (in thousands):

		June 30, 2002		December 31, 2001
Total assets for reportable segments		$	8,867,015	$	7,926,764
Corporate and other assets			582,523		373,908
	Total consolidated assets	$	9,449,538	$	8,300,672

NOTE 8 — Dilutive Securities

     On April 26, 2002, AIMCO stockholders approved the sale by the AIMCO Operating Partnership of 5,000 of its Class V High Performance Partnership Units (the “Class V Units”) to a limited liability company owned by a limited number of AIMCO employees for an aggregate offering price of $1.1 million. The Class V Units have identical characteristics to the Class IV Units sold in 2001, except for the dilutive impact limit, which was reduced from 1.5% to 1.0%, and a different three-year measurement period. The valuation period of the Class V Units began on January 1, 2002 and will end on December 31, 2004.

     In June 2001, AIMCO stockholders approved the sale by the AIMCO Operating Partnership of an aggregate of 15,000 of its Class II, III, and IV High Performance Partnership Units (the “Class II Units”, “Class III Units” and “Class IV Units,” respectively, and together with the “Class V Units”, collectively the “High Performance Units”) to three limited liability companies owned by a limited number of AIMCO employees for an aggregate offering price of $4.9 million.

     The valuation period for the Class II Units ended on December 31, 2001, with no value added, and therefore the allocable investment of $1.275 million made by the holders was lost.

     The valuation periods for the Class III Units and Class IV Units end December 31, 2002 and 2003, respectively. At June 30, 2002, the Company did not meet the required measurement benchmarks for Class III Units, Class IV Units or Class V Units, and therefore, the Company has not recorded any value to the High Performance Units in the consolidated financial statements as of June 30, 2002, and such High Performance Units have had no dilutive effect. The table below illustrates the calculation of the value of High Performance Units at June 30, 2002 (in thousands):

Class																Out-		Value
of High	Final	AIMCO			Morgan						Out-			Average		performance		of High
Performance	Valuation	Total			Stanley			Minimum			performance			Market		Stockholder		Performance		OP Unit		OP Unit
Unit	Date	Return (1)			REIT Index			Return			Return			Capitalization		Value Added (2)		Units (3)		Dilution		Dilution %
Class III	December 31, 2002		9.10	%		28.11	%		23.20	%		0.00	%	$	4,020,409	$	0	$	0		0		0.00	%
Class IV	December 31, 2003		9.10	%		28.11	%		36.80	%		0.00	%	$	4,020,409	$	0	$	0		0		0.00	%
Class V	December 31, 2004		8.88	%		13.54	%		36.80	%		0.00	%	$	4,352,396	$	0	$	0		0		0.00	%

(1)	Calculated based on a $48.36 starting price for Class III Units and Class IV Units and a $45.19 starting price for Class V Units, dividend reinvestment on the dividend payment date using the closing price for that date, and an ending price based on an average of the volume weighted average trading price for the 20 trading days immediately preceding the end of the period
(2)	Outperformance Return multiplied by average market capitalization
(3)	Outperformance Stockholder Value Added multiplied by 5%

18

Loans Related to High Performance Units

     From time to time, the Company has made loans to certain employees who were offered the opportunity to invest in High Performance Units through a senior management partnership. These loans were provided to facilitate broader participation among eligible employees. Each loan is a full recourse loan repayable pursuant to an installment payment or a payroll deduction plan. Installment loans are secured by a pledge of AIMCO securities owned by the employee that had a value greater than or equal to the amount of the loan at the date the loan was made. Subsequent to June 30, 2002, in connection with the sale of Class V Units the Company loaned an aggregate amount of not more than $500,000 to certain employees. No such loans were made to Terry Considine, Chairman and Chief Executive Officer, or to Peter Kompaniez, Vice Chairman and President of the Company. The following table sets forth certain information with respect to these loans to employees through June 30, 2002. The employees named below are executive officers of AIMCO; non-executive officers who received loans are grouped in the "other employees" category. In order to comply with the Sarbanes-Oxley Act of 2002, the Company will no longer provide loans to executive officers.

						Amount Repaid
	Interest			Highest Amount		Since Inception		June 30, 2002
Name	Rate			Owed During 2001		(through 6/30/02)		Balance
Harry G. Alcock		7.0	%	$	291,623	$	76,405	$	215,218
Joseph DeTuno		7.0	%		30,000		7,860		22,140
Patrick J. Foye		7.0	%		369,419		14,636		354,783
Paul J. McAuliffe		7.0	%		409,632		107,323		302,309
Lance Graber		7.0	%		71,711		—		71,711
Other employees as a group (46 persons)		7.0	%		523,227		128,935		394,292
Total					$1,695,612		$335,159		$1,360,453

     AIMCO has additional dilutive securities, which include options, warrants, convertible preferred securities and convertible debt securities. The following table represents the total amount of shares of Common Stock that would be outstanding if all dilutive securities were converted or exercised (not all of which are included in the fully diluted share count) as of June 30, 2002:

Type of Security		As of June 30, 2002
Common Stock			91,422,761
Common OP Units and equivalents			12,503,130
Vested options and warrants			4,303,334
Convertible preferred stock			8,999,171
Convertible preferred OP Units			2,553,219
Convertible debt securities			409,185
	Total		120,190,800

NOTE 9 — Transfers of Financial Assets

     In 2001, the Company sold certain tax-exempt bond receivables acquired in connection with its acquisition of Oxford Tax Exempt Fund and retained a residual interest in the sold bonds. The fair value of the retained residual interests were estimated based on the present value of future expected cash flows of the bonds, which are derived from the underlying properties’ operations. During the second quarter of 2002, in connection with the sale of certain assets (see Note 10), as well as additional proceeds received from the refinancing of the tax-exempt bonds of the underlying properties, the Company’s retained residual interests aggregating approximately $23 million were collected.

NOTE 10 — Discontinued Operations and Assets Held for Sale

     In October 2001, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standard No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets (“SFAS 144”). SFAS 144 establishes criteria beyond that previously specified in Statement of Financial Accounting Standard No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of (“SFAS 121”), to determine when a long-lived asset is classified as held for sale, and it provides a single accounting model for the disposal of long-lived assets. SFAS 144 was effective for the Company beginning January 1, 2002. Due to

19

the adoption of SFAS 144, the Company now reports assets held for sale (as defined by SFAS 144) and assets sold in the current period, as discontinued operations. All results of these discontinued operations, less applicable income taxes, are included in a separate component of income on the consolidated statements of income.

     The components of income (loss) from operations related to discontinued operations for the three and six months ended June 30, 2002 and the three and six months ended June 30, 2001 are shown below. These include the results of operations through the date of each respective sale for sold properties and a full period of operations for those assets held for sale for the three and six months ended June 30, 2002 and a full period of operations for the three and six months ended June 30, 2001 (dollars in thousands):

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2002			2001			2002			2001
RENTAL PROPERTY OPERATIONS:
Rental and other property revenues	$	3,052		$	7,511		$	9,946		$	14,716
Property operating expense		(1,592	)		(2,254	)		(4,051	)		(5,396	)
Income from property operations		1,460			5,257			5,895			9,320
Depreciation of rental property		(1,162	)		(2,223	)		(1,989	)		(4,036	)
Interest expense		(377	)		(2,686	)		(2,582	)		(5,629	)
Interest and other income		1			7			2			—
Minority interest in consolidated real estate partnerships		126			1,086			(101	)		1,568
Operating earnings		48			1,441			1,225			1,223
Distributions to minority partners in excess of income		(1,321	)		—			(1,321	)		—
Income (loss) from operations	$	(1,273	)	$	1,441		$	(96	)	$	1,223

     The Company is currently marketing for sale certain real estate properties that are inconsistent with the Company’s long-term investment strategies (as determined by management from time to time). As of June 30, 2002, the Company classified as assets held for sale 6 properties with an aggregate number of 1,321 units. Other properties, both consolidated and unconsolidated, are being marketed for sale yet are not accounted for as assets held for sale as they do not meet the criteria under SFAS 144.

     The Company incurred net losses from the sale of certain assets in the second quarter of 2002 of approximately $23.9 million, principally from the sale of senior living facilities, which were deemed as non-strategic assets of the Company. This loss was partially offset as discussed below for a net loss on disposal of $5.9 million.

     Included in discontinued operations, as part of the net loss from the disposition of properties in the second quarter of 2002, the Company has recorded income of approximately $18.0 million. This adjustment resulted from the Company’s historical estimation process in determining the carrying value of assets sold. The recognition of this amount in the current period is considered to be a change in estimate associated with the historical estimated gain or loss on the sale of these properties. The amount of the change in estimate was identified based upon better insight to information in connection with the finalization of the recording of the purchase price accounting (to appropriate entities), of the Company’s historical acquisitions. The recognition of this change in estimate resulted in an increase in basic earnings per share of $0.19 and $0.20 for the three and six months ended June 30, 2002, respectively and an increase in diluted earnings per share of $0.18 and $0.19 for the three and six months ended June 30, 2002, respectively.

NOTE 11 — Recent Accounting Developments

     In July 2001, the FASB issued Statement of Financial Accounting Standard No. 141, Business Combinations (“SFAS 141”) and Statement of Financial Accounting Standard No. 142, Goodwill and Other Intangible Assets (“SFAS 142”). SFAS 141 requires the Company to reflect intangible assets apart from goodwill and supercedes previous guidance related to business combinations. The requirements of SFAS 141 are effective for any business combination accounted for by the purchase method that is completed after June 30, 2001. The adoption of SFAS

20

141 did not have a material effect on the Company’s financial position or results of operations. SFAS 142 eliminates amortization of goodwill and indefinite lived intangible assets and requires the Company to perform impairment tests at least annually on all goodwill and other indefinite lived intangible assets. The Company adopted the requirements of SFAS 142 beginning January 1, 2002. The Company has completed the transitional goodwill impairment test required by SFAS 142 and did not identify any impairments.

     The adoption of the non-amortization provision of SFAS 142 affected net income and earnings per share for the three and six months ended June 30, 2002 and would have affected net income and earnings per share for the three and six months ended June 30, 2001 as shown below (in thousands, except per share amounts):

		Three Months Ended					Six Months Ended
		June 30,					June 30,
		2002		2001			2002		2001
Reported net income		$	46,033	$	30,435		$	116,092	$	44,453
Add back: Goodwill amortization			—		1,682			—		3,363
Adjusted minority interest in AIMCO Operating Partnership			—		(235	)		—		(470	)
Adjusted net income		$	46,033	$	31,822		$	116,092	$	47,346
Basic earnings per common share:
	Reported net income	$	0.26	$	0.11		$	0.84	$	0.05
	Goodwill amortization		—		0.02			—		0.04
	Adjusted net income	$	0.26	$	0.13		$	0.84	$	0.09
Diluted earnings per common share:
	Reported net income	$	0.26	$	0.11		$	0.82	$	0.05
	Goodwill amortization		—		0.02			—		0.04
	Adjusted net income	$	0.26	$	0.13		$	0.82	$	0.09

     In April 2002, the FASB issued Statement of Financial Accounting Standard No. 145, Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections (“SFAS 145”). SFAS 145 rescinds Statement of Financial Accounting Standard No. 4 (“SFAS 4”), which required all gains and losses from extinguishment of debt to be aggregated and, if material, classified as an extraordinary item, net of related income tax effect. Historically, the Company has deducted these costs as ordinary interest expense. Statement of Financial Accounting Standard No. 64 amended SFAS 4, and is no longer necessary because SFAS 4 has been rescinded. Statement of Financial Accounting Standard No. 44 and the amended sections of Statement of Financial Accounting Standard No. 13 are not applicable to the Company and therefore have no effect on the Company’s financial statements. SFAS 145 is effective for fiscal years beginning after May 15, 2002, with early application encouraged. The adoption of SFAS 145 will likely not have a material effect on the Company because the Company has previously deducted the described costs.

     In June 2002, the FASB issued Statement of Financial Accounting Standard No. 146, Accounting for Costs Associated with Exit or Disposal Activities (“SFAS 146”), which requires that a liability for a cost associated with an exit or disposal activity be recognized when the liability is incurred and nullifies EITF 94-3. The Company plans to adopt SFAS No. 146 in January 2003. Management believes that the adoption of this statement will not have a material effect on the Company’s future results of operations.

NOTE 12 — Casden Merger

     On March 11, 2002, the Company completed the acquisition of Casden pursuant to an Agreement and Plan of Merger dated as of December 3, 2001, by and among AIMCO, Casden and XYZ Holding LLC. The acquisition of Casden included the merger of Casden into AIMCO, and the merger of a subsidiary of AIMCO into another REIT affiliated with Casden. The $1.1 billion acquisition is comprised of the following:

21

• 4,975 conventional apartment units located in Southern California;

• 11,027 affordable apartment units located in 25 states; and

• National Partnership Investments Corporation (“NAPICO”), a subsidiary of Casden, which as general partner of numerous limited partnerships controls more than 400 properties with more than 41,000 units.

     In addition, as part of the Casden Merger, AIMCO has committed to the following:

• Purchase two properties currently under development that will have a total of 1,731 units, for minimum deferred consideration of $619 million, which is payable upon satisfactory completion and 60% occupancy;

• Invest up to $50 million for a 20% limited liability interest in Casden Properties, LLC, a newly formed company controlled by third parties. Casden Properties, LLC will act as general contractor for the entity that is developing the two properties AIMCO has committed to purchase. In addition, Casden Properties, LLC intends to pursue new development opportunities in Southern California and other markets. AIMCO will have an option, but not an obligation to purchase, at completion, all multi-family rental projects of Casden Properties, LLC; and

• Provide a stand-by facility of $70 million in debt financing associated with the two properties under development.

     AIMCO paid $1.1 billion, which included an earnout of $15 million as a result of property performance for the period ended December 31, 2001. The Company issued 3.508 million shares of Class A Common Stock and 882,784 common OP Units (valued at $164.9 million and $41.5 million, respectively, based on $47 per share/unit), paid approximately $198 million in cash and assumed responsibility for existing mortgage indebtedness of approximately $673 million. The Company also incurred $21 million in transaction costs comprised of professional fees, which included legal, accounting, tax and acquisition due diligence. This transaction was accounted for as a purchase, and as a result, the results of operations were included in the consolidated statement of income from the date of acquisition. The current allocation of the purchase price of Casden is based upon preliminary estimates and is subject to final resolution of certain contingent liabilities and other evaluations of fair value.

     In connection with the Casden Merger, the Company borrowed $287 million from Lehman Commercial Paper Inc. and other participating lenders, pursuant to a term loan (the “Casden Loan”) to pay the cash required to complete the Casden Merger. A portion of the Casden Loan was repaid in June 2002 with proceeds from the Company's public offering of Common Stock reducing the outstanding balance to $150 million at June 30, 2002.

NOTE 13 — Subsequent Events

Redemption of Class B Cumulative Convertible Preferred Stock

     On July 29, 2002, the Company announced that on August 28, 2002 it would redeem all outstanding shares of its Class B Cumulative Convertible Preferred Stock, par value $0.01 per share (the “Class B Preferred Stock”) for cash equal to the liquidation preference of $100 per share, plus accrued and unpaid dividends through the redemption date of $1.73545 per share. As of June 30, 2002 there were 419,471 shares of Class B Preferred Stock outstanding, which shares are convertible into 1,377,573 shares of Common Stock at the holder’s option at any time prior to the redemption date.

Pending Acquisition

     On August 12, 2002, the Company announced that it had entered into a definitive agreement pursuant to which the Company will acquire 100% ownership of eleven conventional garden and mid-rise apartment properties, containing 4,323 units located primarily in the greater Boston area. The total cost of the acquisition will include a purchase price of $500 million for the properties, an estimated $2.5 million in transaction costs and $6.2 million of initial capital expenditures to address identified property needs. The Company may also spend as much as an additional $28 million in initial capital expenditures to complete a kitchen and bath program that was initiated by the prior owner. Initial funding for the acquisition will be a combination of non-recourse property debt committed to AIMCO and comprised of $308.7 million in long-term, fixed rate, fully amortizing notes with an average interest rate of 5.69%; and the remainder from the Company’s credit facility. The Company expects to repay the facility with operating cash flow and proceeds from property sales. Closing is expected to occur by the end of August 2002.

22

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Overview

     The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for forward-looking statements in certain circumstances. Certain information included in this Report contains or may contain information that is forward-looking, including, without limitation, statements regarding the effect of acquisitions, the Company’s future financial performance and the effect of government regulations. Actual results may differ materially from those described in the forward-looking statements and will be affected by a variety of risks and factors including, without limitation: national and local economic conditions; the general level of interest rates; the terms of governmental regulations that affect the Company and interpretations of those regulations; the competitive environment in which the Company operates; financing risks, including the risk that the Company’s cash flows from operations may be insufficient to meet required payments of principal and interest; real estate risks, including variations of real estate values and the general economic climate in local markets and competition for tenants in such markets; acquisition and development risks, including failure of such acquisitions to perform in accordance with projections; and possible environmental liabilities, including costs that may be incurred due to necessary remediation of contamination of properties presently owned or previously owned by the Company. In addition, the Company’s current and continuing qualification as a real estate investment trust involves the application of highly technical and complex provisions of the Internal Revenue Code and depends on its ability to meet the various requirements imposed by the Internal Revenue Code, through actual operating results, distribution levels and diversity of stock ownership. Readers should carefully review the Company’s financial statements and the notes thereto, as well as the risk factors described in the documents the Company files from time to time with the Securities and Exchange Commission.

     AIMCO is a real estate investment trust with headquarters in Denver, Colorado and 19 regional operating centers, which holds a geographically diversified portfolio of apartment communities. As of June 30, 2002, the Company owned or managed 326,006 apartment units, comprised of 170,592 units in 663 apartment properties owned or controlled by the Company (the “Owned Properties”), 128,911 units in 966 apartment properties in which the Company has an equity interest (the “Equity Properties”) and 26,503 units in 212 apartment properties which the Company provided services or managed for unrelated third parties (the “Managed Properties” and together with the Owned Properties and the Equity Properties, the “AIMCO Properties”). The apartment communities are located in 47 states, the District of Columbia and Puerto Rico.

     In the three months ended June 30, 2002, the Company:

• purchased $7.3 million of limited partnership interests;

• sold 18 apartment communities, 7 senior living facilities and one commercial property for total proceeds of $211.1 million, with debt payoff of $167.9 million, resulting in net proceeds of $43.2 million, of which the Company’s share was $31.2 million; and

• closed 33 mortgage loans, generating total proceeds of $406.3 million, that after payment of $379.0 million in existing debt and transaction costs, resulted in $27.3 million of net proceeds, of which the Company’s share was $22.4 million.

     In the six months ended June 30, 2002, the Company:

• purchased $12.3 million of limited partnership interests;

• sold 31 apartment communities, 7 senior living facilities and one commercial property for a total of $280.1 million, with debt payoff of $201.6 million, resulting in net proceeds of $78.5 million, of which the Company’s share was $46.2 million; and

• closed 44 mortgage loans, generating total proceeds of $465.7 million, that after payment of $427.0 million in existing debt and transaction costs, resulted in $38.7 million of net proceeds, of which the Company’s share was $31.7 million.

     See further discussion on the items above for the six months ended June 30, 2002, under the heading "Liquidity and Capital Resources."

23

Critical Accounting Policies and Estimates

     The consolidated financial statements are prepared in accordance with accounting principles generally accepted in the U.S., which require the Company to make estimates and assumptions. The Company believes that the following critical accounting policies, among others, affect its more significant judgments and estimates used in the preparation of its consolidated financial statements.

Impairment of Long-Lived Assets

     Real estate and other long-lived assets are recorded at cost, less accumulated depreciation, unless considered impaired. If events or circumstances indicate that the carrying amount of a property may be impaired, the Company will make an assessment of its recoverability by estimating the undiscounted future cash flows, excluding interest charges, of the property. If the carrying amount exceeds the aggregate future cash flows, the Company would recognize an impairment loss to the extent the carrying amount exceeds the fair value of the property.

     Real property investments are subject to varying degrees of risk. Several factors may adversely affect the economic performance and value of our real estate investments. These factors include changes in the national, regional and local economic climates; local conditions, such as an oversupply of multifamily properties or a reduction in the demand for our multifamily properties; competition from single family alternatives and other multifamily property owners; changes in market rental rates; physical deterioration, and economic obsolescence. Any adverse changes in these factors could cause an impairment in the Company’s assets, including real estate, investments in unconsolidated real estate partnerships, notes receivable from unconsolidated real estate partnerships, and the retained residual interest in financial assets.

Notes Receivable and Interest Income Recognition

     The Company recognizes interest income earned from its investments in notes receivable based upon whether the collectibility of such amounts is both probable and estimable. The notes receivable were either extended by the Company and are carried at the face amount plus accrued interest (“par value notes”) or were made by predecessors whose positions have been acquired by the Company at a discount (“discounted notes”).

     The Company continues to monitor its loans made to affiliated partnerships, of which it is typically the general partner, and assesses the collectibility or impairment of each note on a periodic basis. Under the cost recovery method, the discounted notes are carried at the acquisition amount, less subsequent cash collections, until such time as collectibility of principal and interest is probable and the timing and amounts are estimable. Based upon closed or pending transactions (which include sales, refinancing, foreclosures and rights offering activities), the Company has determined that certain notes are collectible for amounts greater than their carrying value. Accordingly, the difference between the carrying value of the discounted notes and the estimated collectible value, is then amortized, as interest income, on a prospective basis over the estimated remaining life of the loans.

Allowance for Losses on Notes Receivable

     The Company is required to estimate the collectibility of its notes receivable. Management’s judgment is required in assessing the ultimate realization of these receivables including the current credit-worthiness of each borrower. Allowances are based on management’s opinion of an amount that is adequate to absorb losses in the existing portfolio. The allowance for losses on notes receivable is established through a provision for loss based on management’s evaluation of the risk inherent in the notes receivable portfolio, the composition of the portfolio, specific impaired notes receivable and current economic conditions. Such evaluation, which includes a review of notes receivable on which full collectibility may not be reasonably assured, considers among other matters, full realizable value or the fair value of the underlying collateral, economic conditions, historical loss experience, management’s estimate of probable credit losses and other factors that warrant recognition in providing for an adequate allowance for losses on notes receivable allowance. During the second quarter of 2002, the Company identified and recorded $3.2 million in losses on notes receivable. The Company will continue to monitor and assess these notes and expects to identify both recoveries and impairments, but does not expect any net impairments to be material to the Company’s financial position or results of operations. Changes in required reserves may occur in the future due to changes in the market environment.

24

Capitalized Costs

     The Company capitalizes direct and indirect costs (including interest, real estate taxes and other costs) in connection with redevelopment, initial capital expenditure, capital enhancement and capital replacement spending related to its owned or controlled properties. Indirect costs that do not relate to the above activities, including general and administrative expenses, are charged to expense as incurred. Management is required to use professional judgment in determining whether such costs meet the criteria for immediate expense or capitalization. The amounts capitalized are dependent on the volume, timing and costs of such activities. As a result, changes in costs and activities may have a significant impact on the Company’s results of operations and cash flows if the costs being capitalized are not proportionately increased or reduced, as the case may be. See further discussion under the heading "Capital Expenditures."

Intangible Assets

     The Company has intangible assets related to goodwill and other acquired intangibles. In July 2001, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standard No. 142, Goodwill and Other Intangible Assets (“SFAS 142”). SFAS 142 eliminates amortization of goodwill and indefinite lived intangible assets and requires the Company to perform impairment tests at least annually on all goodwill and other indefinite lived intangible assets. The Company adopted the requirements of SFAS 142 beginning January 1, 2002. The Company has completed the transitional goodwill impairment test required by SFAS 142 and did not identify any impairments. The determination of the estimated useful lives of these intangible assets and whether or not these assets are impaired involves significant judgments and the determination of the fair value of the Company’s reporting units. Inherent in such fair value determinations are indicators of impairment and market valuations, and assumptions about the Company’s strategic plans with regard to its operations. Changes in strategy or market conditions could significantly affect these judgments and require adjustments to recorded asset balances.

Income Taxes

     The Company currently has deferred tax assets, which are subject to periodic recoverability assessments. Realization of our deferred tax assets is principally dependent upon our achievement of projected future taxable income. Our judgments regarding future profitability may change due to future market conditions, our ability to continue to successfully execute our business plan and other factors. These changes, if any, may require possible material adjustments to these deferred tax asset balances.

Legal Contingencies

     The Company is currently involved in certain legal proceedings. The Company does not believe these proceedings will have a material adverse effect on its consolidated financial position and the results of operations of the Company and its subsidiaries taken as a whole. It is possible, however, that future results of operations for any particular quarterly or annual period could be materially affected by changes in assumptions and the effectiveness of strategies, related to these proceedings.

Insurance

     A portion of the Company’s insurance for workers’ compensation, property casualty, general liability, and vehicle liability is self-insured. A third-party administrator is used to process all such claims. The Company’s reserves associated with the exposure to these self-insured liabilities are reviewed by management for adequacy at the end of each reporting period.

Transfers of Financial Assets

     Gains and losses from sales of financial assets are recognized in the consolidated statements of income when the Company relinquishes control of the transferred financial assets in accordance with Statement of Financial Accounting Standards No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities — a replacement of FAS Statement No. 125 and other related pronouncements. The gain or loss on the sale of financial assets depends in part on the previous carrying amount of the assets involved in the transfer, allocated between the assets sold and the retained residual interests based upon their respective fair values at the date of sale.

     The Company recognizes any interests in the transferred assets and any liabilities incurred in connection with the sale of financial assets in its consolidated statements of financial condition at fair value. Subsequently, changes in

25

the fair value of such interests are recognized in the consolidated statements of income. The use of different estimates or assumptions could produce different financial results.

Stock Option Compensation

     Currently, the Company accounts for its stock option compensation in accordance with Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees, which results in no compensation expense for options issued with an exercise price equal to or exceeding market value of the Company’s Common Stock on the date of the grant, instead of Statement of Financial Accounting Standards No. 123, Accounting for Stock-Based Compensation (“SFAS 123”), which would result in compensation expense being recorded based on the fair value of the stock option compensation issued. Effective January 1, 2003, the Company will account for its stock option compensation in accordance with SFAS 123 and expense all new employee stock option grants. The Company has not yet determined the effect of this change due to uncertainty in the number of shares subject to, and value of, future potential option grants.

Results of Operations

  Comparison of the Three Months Ended June 30, 2002 to the Three Months Ended June 30, 2001

Net Income

     The Company recognized net income of $46.0 million for the three months ended June 30, 2002, compared with $30.4 million for the three months ended June 30, 2001. The following paragraphs discuss the results of operations in detail.

Consolidated Rental Property Operations

     Consolidated rental and other property revenues from the consolidated Owned Properties totaled $359.3 million for the three months ended June 30, 2002, compared with $316.3 million for the three months ended June 30, 2001, an increase of $43.0 million, or 13.6%. This increase in consolidated rental and other property revenues was a result of the following:

• The acquisition of properties contributed 94.9% of the increase. These contributing acquisitions include properties acquired in the Casden Merger and two properties acquired in 2001.

• The purchase of controlling interests in, and the subsequent consolidation of, partnerships contributed 17.3% of the increase. These partnerships included six properties that were first consolidated at the end of 2001 and one that was first consolidated in the second quarter of 2002.

• The effect of the foregoing was offset 12.2% by the sale of 16 apartment properties in 2001.

     Consolidated property operating expenses for the consolidated Owned Properties, consisting of on-site payroll costs, utilities (net of reimbursements received from residents), contract services, property management fees, turnover costs, repairs and maintenance, advertising and marketing, property taxes and insurance, totaled $147.4 million for the three months ended June 30, 2002, compared with $124.8 million for the three months ended June 30, 2001, an increase of $22.6 million or 18.1%. This increase in property operating expenses was a result of the following:

• The acquisition of properties contributed 80.5% of the increase. These contributing acquisitions include properties acquired in the Casden Merger and two properties acquired in 2001.

• The purchase of controlling interests in, and the subsequent consolidation of, partnerships contributed 13.4% of the increase. These partnerships included six properties that were first consolidated at the end of 2001 and one property that was first consolidated in the second quarter of 2002.

26

• An increase of 8.9% as a result of a reduction in the level of certain direct and indirect costs being capitalized due to the refinement of management’s estimates based on the initial results of a detailed time reporting system to capture such activities. See further discussion under the heading "Capital Expenditures."

• Properties in the redevelopment portfolio coming on-line contributed 5.1% of the increase.

• The disposition of 16 apartment properties in 2001 offset the above increases by 7.9%.

Consolidated Investment Management Business

     Income from the consolidated investment management business, which is primarily earned from affiliated unconsolidated real estate partnerships in which the Company is the general partner, was $9.5 million for the three months ended June 30, 2002, compared to $8.3 million for the three months ended June 30, 2001, an increase of $1.2 million or 14.5%. This increase in consolidated investment management business was a result of the following:

• $3.4 million increase in accounting and reporting fees and partnership reimbursements due to the identified collectibility of fees previously reserved.

• $3.4 million increase related to reduced amortization of intangibles, of which $1.7 million was due to property management and asset management contract intangibles that were fully amortized in 2001, and $1.7 million was attributable to the elimination of goodwill amortization in accordance with the adoption of SFAS 142.

• $2.8 million increase in deferred asset management and developer fees (net of $1.0 million in related expenses) earned through the National Partnership Investments Corporation, which was acquired in the first quarter of 2002 in connection with the Casden Merger.

• $1.9 million increase related to a decrease in compensation expense due to a reduction in work force, due in part to a planned reduction in third party property management.

• $4.0 million decrease due to reduced construction fees earned related to unaffiliated third parties.

• $3.0 million decrease in activity based fees, due to lower refinancing and disposition transactions.

• $2.0 million decrease in fees for services provided to third parties, due to a planned reduction in third party asset management.

• $1.3 million decrease in insurance operations, as a result of a $3.5 million increase in estimates for prior period losses.

Consolidated General and Administrative Expenses

     Consolidated general and administrative expenses remained consistent with $4.9 million for the three months ended June 30, 2002 compared to $4.5 million for the three months ended June 30, 2001.

Consolidated Other Expenses

     Consolidated other expenses were $5.0 million for the three months ended June 30, 2002 compared to none for the three months ended June 30, 2001. These expenses included the following:

• $2.0 million increase relating to payments in settlements of claims asserted against the Company, including litigation and arbitration.

• $1.1 million increase in legal reserves against contingent liabilities presented by pending litigation matters.

• $1.0 million increase due to the write-off of pursuit costs related to potential acquisitions that were not completed.

27

• $0.9 million increase in personnel costs primarily related to severance, hiring and transition of certain accounting functions from Greenville, South Carolina to the Company’s corporate headquarters in Denver, Colorado.

Consolidated Provision for Losses on Notes Receivable

     Consolidated provision for losses on notes receivable was $3.2 million for the three months ended June 30, 2002, compared to no losses for the three months ended June 30, 2001. The Company continues to monitor and monetize its loans made to affiliated partnerships, of which it is typically the general partner, and assesses the collectibility of each note on a periodic basis. During the second quarter of 2002, the Company identified and recorded $3.2 million in impairments. The Company will continue to monitor and assess these notes and expects to identify both recoveries and impairments, but does not expect any net impairments to be material to the Company’s financial position or results of operations.

Consolidated Depreciation of Rental Property

     Consolidated depreciation of rental property decreased $23.3 million to $69.8 million for the three months ended June 30, 2002, compared to $93.1 million for the three months ended June 30, 2001. This decrease was a result of the following:

• A decrease of $26.0 million, or 111.6%, due to the change in useful lives, which was consistent with management’s expectations. During 2001, the Company completed a comprehensive review of its real estate related depreciation. As a result of this review, the Company changed its estimate of the remaining useful lives for its buildings and improvements. The Company believes the change reflects the remaining useful lives of the assets and is consistent with prevailing industry practice. The Company expects this change in useful lives to increase net income by approximately $65.0 million to $70.0 million in 2002 over 2001, of which a portion, approximately $10.0 million to $15.0 million, will be recognized as an increase to equity in earnings of unconsolidated real estate partnerships.

• An adjustment to depreciation expense based on additional insight and new information obtained in connection with the finalization of the recording of the purchase price accounting related to the Oxford acquisition contributed to 24.3% of the decrease.

• The disposition of 16 apartment properties in 2001 contributed 3.3% of the decrease.

• The acquisition of properties offset 34.1% of the decrease. These acquisitions include properties acquired in the Casden Merger and two properties acquired in 2001.

• The purchase of controlling interests in, and the subsequent consolidation of, partnerships offset 5.1% of the decrease. These partnerships included six properties that were first consolidated at the end of 2001 and one property that was first consolidated in second quarter of 2002.

Consolidated Interest Expense

     Consolidated interest expense, which includes the amortization of deferred financing costs, totaled $86.8 million for the three months ended June 30, 2002, compared with $78.5 million for the three months ended June 30, 2001, an increase of $8.3 million, or 10.6%. The increase was a result of the following:

• $9.3 million increase resulting from the acquisition of properties. These acquisitions include properties acquired in the Casden Merger and two properties acquired in 2001.

• $2.2 million increase resulting from the purchase of controlling interests in, and the subsequent consolidation of, partnerships owning six properties that were first consolidated at the end of 2001 and one property that was first consolidated in second quarter of 2002.

28

• $1.4 million increase resulting from the accelerated write-off of the deferred financing fees related to the early paydown of the term loan the Company borrowed for the Casden Merger.

• $0.7 million increase on the Company’s line of credit and term loan, as the Company had higher average balances outstanding during the three months ended June 30, 2002 than it had for the three months ended June 30, 2001, with the cost of such borrowings at a weighted average interest rate of 4.67% compared to 6.82%, respectively. The average balance outstanding during the three months ended June 30, 2002 was $450.6 million (including the term loan the Company borrowed for the Casden Merger), and the average balance outstanding for the three months ended June 30, 2001 was $220.1 million.

• $4.8 million decrease related to an over-accrual of interest expense in the three months ended June 30, 2001 related to the Oxford acquisition.

• The disposition of 16 apartment properties in 2001 offset the increase by $0.5 million.

Consolidated Interest and Other Income

     Consolidated interest and other income increased $5.3 million, or 30.5%, to $22.7 million for the three months ended June 30, 2002, compared with $17.4 million for the three months ended June 30, 2001. This increase was a result of the following:

• $4.7 million increase in transactional income from $8.5 million for the three months ended June 30, 2001 to $13.2 million for the three months ended June 30, 2002. Transactional income was up $8.7 million due to an increase in accretion on discounted loans, offset by a $4.0 million decrease in the accretion on certain tax-exempt bonds.

• $0.8 million increase in interest from general partner notes receivable, as a result of increased general partner loans outstanding.

• $0.2 million decrease in interest from money market and interest bearing accounts, as interest rates on deposit accounts have decreased approximately 200 basis points from the prior year, while the average cash balances outstanding for both periods remained consistent.

Equity in Earnings (Losses) of Unconsolidated Real Estate Partnerships

     Equity in losses of unconsolidated real estate partnerships totaled $0.9 million for the three months ended June 30, 2002, compared with a loss of $4.7 million for the three months ended June 30, 2001, a decrease of $3.8 million. The primary reason for this decrease was the change in estimate of useful lives completed by the Company in 2001, which resulted in lower depreciation expense. See previous discussion on the change in estimate of useful lives under the heading “Consolidated Depreciation of Rental Property.”

Minority Interest in Consolidated Real Estate Partnerships

     Minority interest in consolidated real estate partnerships totaled $0.8 million for the three months ended June 30, 2002, compared to $5.5 million for the three months ended June 30, 2001, a decrease of $4.7 million. This decrease is a result of the Company’s purchase of additional interests in consolidated partnerships and a reduction in net income, thereby reducing the minority interest allocation.

Distributions to Minority Partners in Excess of Income

     Distributions to minority partners in excess of income was $12.6 million for the three months ended June 30, 2002 compared to distributions to minority interest partners of ($0.1) million for the three months ended June 30, 2001, an increase of $12.7 million. When partnerships consolidated in the Company’s financial statements make cash distributions in excess of net income, generally accepted accounting principles require the Company, as the majority partner, to record a charge equal to the minority partners’ excess of distribution over net income, even

29

though there is no economic effect, cost or risk to the Company. This increase was due to an increased level of distributions being made by the consolidated partnerships from refinancing and sales activity.

Discontinued Operations

     Discontinued operations totaled ($7.1) million for the three months ended June 30, 2002, compared to income of $2.9 million for the three months ended June 30, 2001, a change of $10.0 million. The change is primarily related to the loss on disposals of $5.9 million for the three months ended June 30, 2002 compared to a gain of $1.5 million for the three months ended June 30, 2001, a change of $7.4 million. The Company incurred losses from the sale of certain assets of approximately $23.9 million, principally from the sale of senior living facilities, which were deemed as non-strategic assets of the Company. This loss was partially offset as discussed below for a net loss on disposals of $5.9 million. As a result of the adoption of SFAS 144, effective January 1, 2002, the Company now reports assets held for sale (as defined by SFAS 144) and assets sold in the current period, as discontinued operations. In both periods the properties sold, as well as the properties held for sale, were considered by management to be inconsistent with the Company’s long-term investment strategy.

     Included in discontinued operations, as part of the net loss from the disposition of properties in the second quarter of 2002, the Company has recorded income of approximately $18.0 million. This adjustment resulted from the Company’s historical estimation process in determining the carrying value of assets sold. The recognition of this amount in the current period is considered to be a change in estimate associated with the historical estimated gain or loss on the sale of these properties. The amount of the change in estimate was identified based upon better insight to information in connection with the finalization of the recording of the purchase price accounting (to appropriate entities), of the Company’s historical acquisitions. The recognition of this change in estimate results in an increase in basic earnings per share of $0.19 for the three months ended June 30, 2002, and an increase in diluted earnings per share of $0.18 for the three months ended June 30, 2002.

       Comparison of the Six Months Ended June 30, 2002 to the Six Months Ended June 30, 2001

Net Income

     The Company recognized net income of $116.1 million for the six months ended June 31, 2002, compared with $44.5 million for the six months ended June 30, 2001. The following paragraphs discuss the results of operations in detail.

Consolidated Rental Property Operations

     Consolidated rental and other property revenues from the consolidated Owned Properties totaled $688.7 million for the six months ended June 30, 2002, compared with $631.3 million for the six months ended June 30, 2001, an increase of $57.4 million, or 9.1%. This increase in consolidated rental and other property revenues was a result of the following:

• The acquisition of properties contributed 88.6% of the increase. These contributing acquisitions include properties acquired in the Casden Merger and three properties acquired in 2001.

• The purchase of controlling interests in, and the subsequent consolidation of, partnerships contributed 24.4% of the increase. These partnerships included six properties that were first consolidated at the end of 2001 and one that was first consolidated in the second quarter of 2002.

• A 0.5% increase in same store revenues contributed 5.5% of the total increase. See further discussion of same store results under the heading “Conventional Same Store Property Operating Results.”

• The effect of the foregoing was offset 18.5% by the sale of 19 apartment properties in 2001.

     Consolidated property operating expenses for the consolidated Owned Properties, consisting of on-site payroll costs, utilities (net of reimbursements received from residents), contract services, property management fees, turnover costs, repairs and maintenance, advertising and marketing, property taxes and insurance, totaled $273.3

30

million for the six months ended June 30, 2002, compared with $243.1 million for the six months ended June 30, 2001, an increase of $30.2 million or 12.4%. This increase in property operating expenses was a result of the following:

• The acquisition of properties contributed 72.5% of the increase. These contributing acquisitions include properties acquired in the Casden Merger and three properties acquired in 2001.

• The purchase of controlling interests in, and the subsequent consolidation of, partnerships contributed 15.1% of the increase. These partnerships included six properties that were first consolidated at the end of 2001 and one that was first consolidated in the second quarter of 2002.

• A 1.4% increase in same store expenses contributed 11.3% of the total increase. See further discussion of same store results under the heading “Conventional Same Store Property Operating Results.”

• An increase of 6.6% as a result of a reduction in the level of certain direct and indirect costs being capitalized due to the refinement of management’s estimates based on the initial results of a detailed time reporting system to capture such activities. See further discussion under the heading "Capital Expenditures."

• Properties in the redevelopment portfolio coming on-line contributed 5.9% of the increase.

• The disposition of 19 apartment properties in 2001 offset the above increases by 11.4%.

Consolidated Investment Management Business

     Income from the consolidated investment management business, which is primarily earned from affiliated unconsolidated real estate partnerships in which the Company is the general partner, was $15.8 million for the six months ended June 30, 2002, compared to $14.1 million for the six months ended June 30, 2001, an increase of $1.7 million or 12.1%. This increase in consolidated investment management business was a result of the following:

• $7.2 million increase related to reduced amortization of intangibles, of which $3.8 million was due to property management and asset management contract intangibles that were fully amortized in 2001, and $3.4 million was due to the elimination of goodwill amortization in accordance with the adoption of SFAS 142.

• $3.4 million increase in accounting and reporting fees and partnership reimbursements due to the identified collectibility of fees previously reserved.

• $3.1 million increase related to a decrease in compensation expense due to a reduction in work force, in part due to planned reduction in third party property management.

• $2.8 million increase in deferred asset management and developer fees (net of $1.0 million in related expenses) earned through the National Partnership Investments Corporation, which was acquired in the first quarter of 2002 in connection with the Casden Merger.

• $6.6 million decrease in activity based fees, due to lower refinancing and disposition transactions.

• $3.3 million decrease in fees for services provided to third parties, due to a planned reduction in third party asset management.

• $2.8 million decrease in insurance operations due to a $5.9 million increase in estimates for prior period losses.

• $1.2 million decrease due to increased ownership in controlled, consolidated partnerships, which requires additional elimination of management fee income and the associated property management expense.

• $0.9 million decrease due to costs incurred in connection with the Company’s business process improvement effort, which included $0.6 in consulting fees and $0.3 in abandoned software costs.

31

Consolidated General and Administrative Expenses

     Consolidated general and administrative expenses remained consistent with $8.0 million for the six months ended June 30, 2002 compared to $8.5 million for the six months ended June 30, 2001.

Consolidated Other Expenses

     Consolidated other expenses were $5.0 million for the six months ended June 30, 2002 compared to none for the six months ended June 30, 2001. These expenses included the following:

• $2.0 million increase relating to payments in settlements of claims asserted against the Company, including litigation and arbitration.

• $1.1 million increase in legal reserves against contingent liabilities presented by pending litigation matters.

• $1.0 million increase due to the write-off of pursuit costs related to potential acquisitions that were not completed.

• $0.9 million increase primarily related to severance, hiring and transition of certain accounting functions from Greenville, South Carolina to the Company’s headquarters in Denver, Colorado.

Consolidated Provision for Losses on Notes Receivable

     Consolidated provision for losses on notes receivable was $3.2 million for the six months ended June 30, 2002, compared to no losses for the six months ended June 30, 2001. The Company continues to monitor and monetize its loans made to affiliated partnerships, of which it is typically the general partner, and assesses the collectibility of each note on a periodic basis. During the second quarter of 2002, the Company identified and recorded $3.2 million in impairments. The Company will continue to monitor and assess these notes and expects to identify both recoveries and impairments, but does not expect any net impairments to be material to the Company’s financial position or results of operations.

Consolidated Depreciation of Rental Property

     Consolidated depreciation of rental property decreased $45.9 million to $139.9 million for the six months ended June 30, 2002, compared to $185.8 million for the six months ended June 30, 2001. This decrease was a result of the following:

• A decrease of $52.0 million, or 113.4%, due to the change in useful lives, which was consistent with management’s expectations. During 2001, the Company completed a comprehensive review of its real estate related depreciation. As a result of this review, the Company changed its estimate of the remaining useful lives for its buildings and improvements. The Company believes the change reflects the remaining useful lives of the assets and is consistent with prevailing industry practice. The Company expects this change in useful lives to increase net income by approximately $65.0 million to $70.0 million in 2002 over 2001, of which a portion, approximately $10.0 million to $15.0 million, will be recognized as an increase to equity in earnings of unconsolidated real estate partnerships.

• An adjustment to depreciation expense based on additional insight and new information obtained in connection with the finalization of the recording of the purchase price accounting related to the Oxford acquisition contributed to 8.7% of the decrease.

• The disposition of 19 apartment properties in 2001 contributed 4.0% to the decrease.

• The acquisition of properties offset 21.9% of the decrease. These acquisitions include properties acquired in the Casden Merger and three properties acquired in 2001.

32

• The purchase of controlling interests in, and the subsequent consolidation of, partnerships offset 4.2% of the decrease. These partnerships included six properties that were first consolidated at the end of 2001 and one property that was first consolidated in second quarter 2002.

Consolidated Interest Expense

     Consolidated interest expense, which includes the amortization of deferred financing costs, totaled $168.4 million for the six months ended June 30, 2002, compared with $162.8 million for the six months ended June 30, 2001, an increase of $5.6 million, or 3.4%. The increase was a result of the following:

• $11.5 million increase resulting from the acquisition of properties. These acquisitions include properties acquired in the Casden Merger and three properties acquired in 2001.

• $4.2 million increase was due to the purchase of controlling interests in, and the subsequent consolidation of, partnerships owning six properties that were first consolidated at the end of 2001 and one property that was first consolidated in second quarter 2002.

• $5.2 million decrease related to an over-accrual of interest expense in the six months ended June 30, 2001 related to the Oxford acquisition.

• $1.7 million decrease on the Company’s line of credit and term loan, as the Company had slightly higher average balances outstanding during the six months ended June 30, 2002 than it had for the six months ended June 30, 2001, however, the cost of such borrowings was at a weighted average interest rate of 4.61% compared to 7.76%, respectively. The average balance outstanding during the six months ended June 30, 2002 was $386.4 million (including the term loan the Company borrowed for the Casden Merger), and the average balance outstanding for the six months ended June 30, 2001 was $305.0 million (including the term loan the Company borrowed for the acquisition of interests in the Oxford properties).

• $1.0 million decrease due to increased capitalized interest as a result of additional redevelopment projects underway in 2002 over 2001.

• $0.8 million decrease related to the accelerated write-off of deferred financing fees. In the six months ended June 30, 2002, the Company wrote off $1.4 million of deferred financing costs related to the early paydown of the term loan the Company borrowed for the Casden Merger as compared to $2.2 million written off in the six months ended June 30, 2001 relating to the early payoff of the term loan the Company borrowed for the acquisition of interest in the Oxford properties.

• The disposition of 19 apartment properties in 2001 offset the increase by $1.4 million.

Consolidated Interest and Other Income

     Consolidated interest and other income increased $9.4 million, or 29.4%, to $41.4 million for the six months ended June 30, 2002, compared with $32.0 million for the six months ended June 30, 2001. This increase was a result of the following:

• An increase in transactional income of $10.0 million, from $13.3 million for the six months ended June 30, 2001 to $23.3 million for the six months ended June 30, 2002. Transactional income was up $11.5 million due to an increase in accretion on discounted loans offset by a decrease of $1.5 million in the accretion on certain tax-exempt bonds.

• An increase of $2.2 million in interest from general partner notes receivable, as a result of increased general partner loans outstanding.

33

• A decrease of $2.8 million in interest from money market and interest bearing accounts, as interest rates on deposit accounts have decreased approximately 200 basis points from the prior year, while the average cash balances outstanding for both periods remained consistent.

Equity in Earnings (Losses) of Unconsolidated Real Estate Partnerships

     Equity in earnings of unconsolidated real estate partnerships totaled $2.6 million for the six months ended June 30, 2002, compared with a loss of $9.2 million for the six months ended June 30, 2001, a change of $11.8 million. The reason for this change was the change in estimate of useful lives completed by the Company in 2001, which resulted in lower depreciation expense. See previous discussion on the change in estimate of useful lives under the heading “Consolidated Depreciation of Rental Property.”

Minority Interest in Consolidated Real Estate Partnerships

     Minority interest in consolidated real estate partnerships totaled $4.2 million for the six months ended June 30, 2002, compared to $10.8 million for the six months ended June 30, 2001, a decrease of $6.6 million. This decrease is a result of the Company’s purchase of additional interests in consolidated partnerships and a reduction in net income, thereby reducing the minority interest allocation.

Distributions to Minority Partners in Excess of Income

     Distributions to minority partners in excess of income remained relatively consistent with $11.0 million for the six months ended June 30, 2002 compared to $10.8 million for the six months ended June 30, 2001. When partnerships consolidated in the Company’s financial statements make cash distributions in excess of net income, generally accepted accounting principles require the Company, as the majority partner, to record a charge equal to the minority partners’ excess of distribution over net income, even though there is no economic effect, cost or risk to the Company.

Discontinued Operations

     Discontinued operations totaled ($2.0) million for the six months ended June 30, 2002, compared to income of $2.8 million for the six months ended June 30, 2001, a change of $4.8 million. The change is primarily related to the loss on disposals of $1.9 million for the six months ended June 30, 2002 compared to a gain of $1.6 million for the six months ended June 30, 2001, a change of $3.5 million. The Company incurred losses from the sale of certain assets of approximately $19.9 million, principally from the sale of senior living facilities, which were deemed as non-strategic assets of the Company. This loss was partially offset as discussed below for a net loss on disposals of $1.9 million. As a result of the adoption of SFAS 144, effective January 1, 2002, the Company now reports assets held for sale (as defined by SFAS 144) and assets sold in the current period, as discontinued operations. In both periods the properties sold, as well as the properties held for sale, were considered by management to be inconsistent with the Company’s long-term investment strategy.

     Included in discontinued operations, as part of the net loss from the disposition of properties in the second quarter of 2002, the Company has recorded income of approximately $18.0 million. This adjustment resulted from the Company’s historical estimation process in determining the carrying value of assets sold. The recognition of this amount in the current period is considered to be a change in estimate associated with the historical estimated gain or loss on the sale of these properties. The amount of the change in estimate was identified based upon better insight to information in connection with the finalization of the recording of the purchase price accounting (to appropriate entities), of the Company’s historical acquisitions. The recognition of change in estimate results in an increase in basic earnings per share of $0.20 for the six months ended June 30, 2002, and an increase in diluted earnings per share of $0.19 for the six months ended June 30, 2002.

34

Conventional Same Store Property Operating Results

     The Company defines “same store” properties as conventional apartment communities in which the Company’s ownership interest exceeded 10% in the comparable periods of 2002 and 2001. “Total portfolio” includes same store properties plus conventional acquisition and redevelopment properties. The following table summarizes the unaudited conventional rental property operations on a “same store” and a “total portfolio” basis (dollars in thousands):

	Conventional Same Store
	Three Months Ended June 30,						Six Months Ended June 30,
	2002			2001			2002			2001
Properties		638			638			638			638
Apartment units		175,341			175,341			175,341			175,341
Average physical occupancy		93.3	%		93.9	%		92.8	%		93.7	%
Average rent collected/unit/month	$	692		$	692		$	694		$	689
Revenues	$	285,894		$	286,064		$	571,499		$	568,410
Expenses		106,277			106,299			208,909			206,028
Net operating income	$	179,617		$	179,765		$	362,590		$	362,382

	Conventional Total Portfolio
	Three Months Ended June 30,						Six Months Ended June 30,
	2002			2001			2002			2001
Properties		681			664			681			664
Apartment units		190,354			185,379			190,354			185,379
Average physical occupancy		91.8	%		91.6	%		91.2	%		91.3	%
Average rent collected/unit/month	$	710		$	692		$	701		$	694
Revenues	$	319,623		$	300,188		$	624,215		$	595,831
Expenses		121,435			112,856			232,957			219,106
Net operating income	$	198,188		$	187,332		$	391,258		$	376,725

     Same store net operating income had a slight decrease of 0.1% or $0.2 million from the three months ended June 30, 2001 to the three months ended June 30, 2002. Revenues decreased as a result of lower occupancies, which was partially offset by ancillary income. Insurance expense increased 26.0% or $1.3 million as the full impact of the March 2002 renewal of property hazard coverage was in effect for the full quarter. Same store expenses for both periods presented above are net of capitalized costs.

     Same store net operating income had a slight increase of 0.1% or $0.2 million from the six months ended June 30, 2001 to the six months ended June 30, 2002. Revenues decreased as a result of lower occupancies, which was partially offset by ancillary income. Turnover cost rose by $2.4 million as more apartments were made ready for occupancy in the second quarter of 2002 for the upcoming high leasing season. Insurance expense increased by $3.6 million or 42.4% as property hazard insurance coverage rose in March of 2002. Same store expenses for both periods presented above are net of capitalized costs.

35

Funds From Operations

     For the three and six months ended June 30, 2002 and 2001, the Company’s Funds From Operations or “FFO”, as defined in Note 7 to the consolidated financial statements, on a fully diluted basis were as follows (dollars in thousands):

				Three Months Ended						Six Months Ended
				June 30,						June 30,
				2002			2001			2002			2001
Net Income				$	46,033		$	30,435		$	116,092		$	44,453
	Adjustments:
		Real estate depreciation, net of minority interest			61,998			92,224			123,921			176,079
		Real estate depreciation related to unconsolidated entities			9,241			13,861			17,202			28,867
		Discontinued operations:
			Depreciation, net of minority interest		1,095			847			1,902			3,863
			Distributions to minority partners in excess of income		1,321			—			1,321			—
			Loss (gain) on disposals		5,858			(1,490	)		1,902			(1,556	)
			Income tax arising from disposals		—			—			768			—
		Distributions to minority partners in excess of income			12,558			(126	)		10,972			10,814
		Amortization of intangibles			916			4,332			2,040			9,233
	Other items:
		Preferred stock dividends and distributions			(13,143	)		(8,126	)		(24,979	)		(14,861	)
		Interest expense on mandatorily redeemable convertible preferred Securities			257			489			517			1,014
		Minority interest in AIMCO Operating Partnership			6,951			3,415			16,665			4,734
Diluted Funds From Operations (FFO) available to common shares and equivalents				$	133,085		$	135,861		$	268,323		$	262,640
Weighted average number of common shares and equivalents:
		Common share and equivalents			85,552			74,354			80,896			73,243
		Preferred stock, preferred OP Units, and other securities convertible into common shares			12,469			16,778			14,314			16,046
		Common OP Units and equivalents			12,621			12,156			12,316			11,643
			Total		110,642			103,288			107,526			100,932

36

Liquidity and Capital Resources

     For the six months ended June 30, 2002 and 2001, net cash flows were as follows (dollars in thousands):

	2002			2001
Cash flow provided by operating activities	$	266,892		$	241,023
Cash flow (used in) provided by investing activities		(253,462	)		64,563
Cash flow used in financing activities		(32,691	)		(327,308	)

    Investment and Disposition Activities

     From time to time, the Company has offered to acquire and, in the future, may offer to acquire the interests held by third party investors in certain limited partnerships for which the Company acts as general partner. Any such acquisitions will require funds to pay the cash purchase price for such interests. During the six months ended June 30, 2002, the Company made separate offers to the limited partners of 239 partnerships to acquire their limited partnership interests, and purchased limited partnership interests for an aggregate of approximately $12.3 million, of which $11.9 million was in cash. This compares to separate offers to the limited partners of 187 partnerships to acquire their limited partnership interests, and the purchase of approximately $111 million of limited partnership interests during the six months ended June 30, 2001. Although the reason for this decline is uncertain, the Company believes three primary factors contributed to this decline: improved partnership results (including cash distributions to partners at increasing levels); the relative attractiveness of investments in real estate as compared to other investment opportunities; and greater sensitivity on the part of investors to tax liabilities attendant to such sales in the current volatile investment marketplace.

     The Company is currently marketing for sale certain real estate properties that are inconsistent with the Company’s long-term investment strategies (as determined by management from time to time). During the six months ended June 30, 2002, the Company sold 31 apartment communities, 7 senior living facilities and one commercial property for a total of $280.1 million, with debt payoff of $201.6 million. These sales resulted in net proceeds of $78.5 million, of which the Company’s share was $46.2 million.

    Mortgage Financing

     During the six months ended June 30, 2002, the Company refinanced 44 mortgage loans generating $465.7 million of total proceeds at a weighted average interest rate of 4.54%, of which approximately $379.5 million related to consolidated properties. Each note and bond is individually secured by one of 44 properties with no cross-collateralization. After repayment of existing debt and transaction costs totaling $427.0 million, the Company’s share of the total $38.7 million in proceeds was $31.7 million, which was used to repay existing debt and for working capital. Further details on these mortgage loans are shown in the table below:

	Loan Amount
Mortgage Type	(in millions)		Term	Non-Recourse		Rate
Conventional Fixed Rate	$	83.0	20 yr, fully amortizing		X		7.14	%
Conventional Fixed Rate	$	76.3	10 yr, 20 yr amortization		X		7.07	%
Tax-Exempt Variable Rate	$	244.8	5-10 yrs		X		2.22	%
Affordable Fixed Rate	$	61.6	18-30 yrs, HUD, fully		X		7.09	%
			amortizing
	$	465.7					4.54	%

    Credit Facility and Term Loan

     On March 11, 2002, the Company amended and restated its revolving credit facility as necessitated by the execution of the Casden Loan, in order to conform certain provisions of the loans. The commitment remains $400 million, and there are ten lender participants in the facility’s syndicate. The obligations under the amended and restated credit facility are secured by a first priority pledge of certain non-real estate assets of the Company and a second priority pledge of the equity owned by the Company and certain subsidiaries of AIMCO in other subsidiaries of AIMCO. Borrowings under the amended and restated credit facility are available for general corporate purposes. The amended and restated credit facility matures in July 2004 and can be extended once at AIMCO’s option, for a term of one year. The annual interest rate under the credit facility is based either on LIBOR or a base rate which is the higher of Bank of America, N.A.’s reference rate or 0.5% over the federal funds rate, plus, in either case, an applicable margin. From March 11, 2002 through the later of June 30, 2004 or the date on which the Casden Loan is paid in full, the margin ranges between 2.05% and 2.55%, in the case of LIBOR-based loans, and between 0.55% and 1.05%, in the case of base rate loans, based upon a fixed charge coverage ratio. There was no outstanding balance at June 30, 2002. The amount available under the credit facility at June 30, 2002 was $400 million.

     On March 11, 2002, the Company borrowed $287 million from Lehman Commercial Paper Inc. and other participating lenders, pursuant to a term loan to pay the cash required to complete the Casden Merger. The borrowers under the Casden Loan are the Company, the AIMCO Operating Partnership and NHP Management Company, and all obligations thereunder are guaranteed by certain of AIMCO’s subsidiaries. The obligations under the Casden Loan are secured by a first priority pledge of the equity owned by the Company and certain subsidiaries of AIMCO in other subsidiaries of AIMCO and a second priority pledge of certain non-real estate assets of the Company. The annual interest rate under the Casden Loan is based either on LIBOR or a base rate that is the higher of Lehman Commercial Paper Inc.’s reference rate or 0.5% over the federal funds rate, plus, in either case, an applicable margin. On June 12, 2002, the Casden Loan was amended to reduce the margin to 2.55% in the case of LIBOR-based loans and 1.55% in the case of base rate loans. The margin may increase to 2.80% in the case of LIBOR-based loans and 1.80% in the case of base rate loans if the rating of the Company’s or the AIMCO

37

Operating Partnership’s senior unsecured debt is downgraded, the Company’s or the AIMCO Operating Partnership’s corporate credit rating is downgraded or the rating, if any, of the Casden Loan is downgraded. The Casden Loan matures in March 2004 and can be extended once at AIMCO’s option, for a term of one year. The Casden Loan imposes minimum net worth requirements and provides other financial covenants related to certain of AIMCO’s assets and obligations. These borrowings are expected to be repaid with internal operating cash flow, proceeds from property sales or proceeds from equity issuances. The weighted average interest rate at June 30, 2002 was 4.39% and the balance outstanding was $150 million. All required amortization for the first year has been paid.

     The financial covenants contained in the amended and restated revolving credit facility and the Casden Loan require the Company to maintain a ratio of debt to gross asset value of no more than 0.55 to 1.0, and an interest coverage ratio of 2.25 to 1.0, and a fixed charge coverage ratio of at least 1.70 to 1.0. In addition, the amended and restated revolving credit facility and the Casden Loan limit AIMCO from distributing more than 80% of its Funds From Operations (or such amounts as may be necessary for AIMCO to maintain its status as a REIT). On August 2, 2002, the Company and its lenders amended the amended and restated revolving credit facility and the Casden Loan, to accommodate expected changes in FFO, AFFO, conversions of convertible securities and property sales. The amendment reduced the fixed charge coverage ratio requirement from 1.70 to 1.0 to 1.60 to 1.0 effective for the quarter ending June 30, 2002 through the quarter ended June 30, 2003, 1.65 to 1.0 through the quarter ending December 31, 2003 and 1.70 to 1.0 thereafter.

    Equity Transactions

     On March 25, 2002, the Company completed the sale of 1,000,000 shares of Class R Preferred Stock, par value $0.01 per share in a registered public offering. The total net proceeds of approximately $25 million were used to repay short-term indebtedness.

     On April 11, 2002, the Company completed the sale of 1,000,000 shares of Class R Preferred Stock, par value $0.01 per share in a registered public offering. The total net proceeds of approximately $25 million were used to repay short-term indebtedness.

     On June 5, 2002, the Company completed the sale of 8,000,000 shares of Common Stock in a registered public offering at a net price of $46.17 per share. The total net proceeds of approximately $369 million were used to repay outstanding indebtedness on the Company’s revolving credit facility and the Casden Loan.

     The Company distributed 65.6% of FFO and 78.1% of AFFO to holders of Common Stock for the six months ended June 30, 2002. It has been the policy of the Company’s Board of Directors to increase the dividend annually in an amount equal to one-half of the projected increase in AFFO (which is FFO, adjusted for Capital Replacement spending) subject to minimum distribution requirements to maintain its REIT status. For the six months ended June 30, 2002, AFFO now includes a deduction for Capital Enhancements, a discretionary spending item as well as a deduction for Capital Replacements. The Company’s Board of Directors will consider the discretionary nature of Capital Enhancement spending in its consideration of AFFO as it relates to dividend policy.

     At June 30, 2002, the Company had $60.7 million in cash and cash equivalents. In addition, the Company had $195.4 million of restricted cash ($70 million of which was acquired in the Casden Merger), primarily consisting of reserves and impounds held by lenders for capital replacements, property taxes and insurance. The Company’s principal demands for liquidity include normal operating activities, payments of principal and interest on outstanding debt, capital improvements, acquisitions of and investments in properties, dividends paid to stockholders and distributions paid to limited partners. The Company considers its cash provided by operating activities to be adequate to meet short-term liquidity demands. In the event that there continues to be an economic downturn or the national economy continues to deteriorate and the cash provided by operating activities is no longer adequate, the Company has additional means, such as short-term borrowing availability, to be able to meet its short-term liquidity demands. The Company uses its revolving credit facility for general corporate purposes and to fund investments on an interim basis.

     The Company expects to meet its long-term liquidity requirements, such as refinancing debt and property acquisitions, through long-term borrowings, both secured and unsecured, the issuance of debt or equity securities (including OP Units) and cash generated from operations.

38

Capital Expenditures

     For the six months ended June 30, 2002, the Company spent a total of $95.0 million for initial capital expenditures or “ICE” (expenditures at a property that have been identified at the time the property is acquired, as expenditures to be incurred within one year of the acquisition) and redevelopment (expenditures that substantially upgrade the related property). The following table reconciles the Company’s share of those expenditures to the Company’s six month Consolidated Statement of Cash Flows (in millions):

	Six Months Ended June 30, 2002
	ICE			Redevelopment			Total
Conventional Assets	$	15.2		$	78.8		$	94.0
Affordable Assets		—			1.0			1.0
Total Company’s share	$	15.2		$	79.8		$	95.0
Plus Minority partners’ share of consolidated spending	$	0.7		$	11.3		$	12.0
Less Company’s share of unconsolidated spending		(2.3	)		(6.2	)		(8.5	)
Total ICE and redevelopment spending per Consolidated Statement of Cash Flows	$	13.6		$	84.9		$	98.5

     In addition, the Company capitalized approximately $9.1 million of the Company’s share of direct and indirect costs related to these activities for the six months ended June 30, 2002, increasing the Company’s share of ICE and redevelopment spending to $104.1 million. These expenditures were funded by net cash provided by operating activities, working capital reserves, and borrowings under the Company’s credit facility.

     For the six months ended June 30, 2002, the Company spent a total of $36.5 million and $4.9 million, respectively, on Capital Replacements (expenditures required to maintain the related asset) and Capital Enhancements (expenditures that add a new feature or revenue source at a property).

     Capital Replacements have increased over the prior year for two primary reasons: a general increase in spending to maintain the Company’s assets; and an increase in capitalized costs. In addition to accounting for Capital Replacements, the Company monitors Capital Enhancements, which the Company distinguishes from Capital Replacements. Because the distinction between Capital Replacements and Capital Enhancements is not consistently applied across real estate investment trusts and because there is a risk of partial substitution between Capital Replacements and Capital Enhancements, the Company will monitor and report both Capital Replacements and Capital Enhancements and will deduct both from its calculation of AFFO.

     The table below details the Company’s actual spending on Capital Replacements and Capital Enhancements on a per unit and total dollar basis for the six months ending June 30, 2002 and reconciles it to the Company’s six month Consolidated Statement of Cash Flows (dollars in thousands):

			Capital		Capital				Capital			Capital
	Useful		Replacements		Enhancements		Total CR/CE		Replacements			Enhancements			Total CR/CE
	Life		Actual Cost		Actual Cost		Annual Cost		Actual Cost			Actual Cost			Annual Cost
	in Yrs		Per Unit YTD		Per Unit YTD(1)		Per Unit YTD		Year to Date			Year to Date			Year to Date
Carpets		5	$	50	$	—	$	50	$	9,003		$	43		$	9,046
Flooring		5		11		1		12		1,933			70			2,003
Appliances		5		15		—		15		2,686			248			2,934
Blinds/shades		5		3		—		3		443			4			447
Furnace/air		5		13		—		13		2,243			6			2,249
Hot water heater		5		5		—		5		861			21			882
Kitchen/bath		5		6		—		6		1,044			54			1,098
Exterior painting		5		6		1		7		305			108			413
Landscaping		5		5		—		5		995			43			1,038
Pool/exercise facilities		5		8		1		9		1,392			103			1,495
Computers, misc		5		8		2		10		1,427			277			1,704
Roofs		15		10		—		10		1,689			—			1,689
Parking lot		15		4		—		4		627			—			627
Building (electrical, elevator, plumbing)		15		33		5		38		6,102			817			6,919
Submetering		15		—		15		15		—			2,652			2,652
Capitalized payroll		5		37		3		40		5,773			496			6,269
Total Company’s share			$	214	$	28	$	242	$	36,523		$	4,942		$	41,465
Plus Minority partners’ share of consolidated spending										4,034			281			4,315
Less Company’s share of unconsolidated spending										(5,043	)		(678	)		(5,721	)
Total spending per Consolidated Statement of Cash Flows									$	35,514		$	4,545		$	40,059

(1) All Capital Enhancement spending is specific to capital enhancement projects approved on an individual basis by the Company's Chief Investment Officer.

39

     In addition, the Company capitalized approximately $8.2 million of the Company’s share of indirect costs related to these activities for the six months ended June 30, 2002, increasing the Company’s share of Capital Replacement ($43.6 million) and Capital Enhancement ($6.0 million) spending to $49.6 million. These expenditures were funded by net cash provided by operating activities, working capital reserves, and borrowings under the Company’s credit facility.

     The Company continues to refine its methodology and process for identifying and capitalizing certain indirect costs, and as a result, reduced such capitalized costs by approximately $2.0 million in the six months ended June 30, 2002 compared to the same period in 2001 due to the refinement of management’s estimates based on the initial results of a detailed time reporting system to capture such activities.

40

ITEM 3. Quantitative and Qualitative Disclosures about Market Risk

     The Company’s primary market risk exposure relates to changes in interest rates. The Company is not subject to any foreign currency exchange rate risk or to any significant commodity price risk, or any other material market rate or price risks. The Company uses predominantly long-term, fixed-rate and self-amortizing non-recourse debt in order to avoid the refunding and repricing risks of short-term borrowings. The Company uses short-term debt financing and working capital primarily to fund acquisitions and generally expects to refinance such borrowings with cash from operating activities, property sales proceeds or long-term debt financings.

     The Company had $1,018.8 million of variable rate debt outstanding at June 30, 2002, which represented 19.6% of the Company’s total outstanding debt. Of the total variable debt, the major components were floating rate tax-exempt bond financing ($780.4 million), floating rate secured notes ($88.4 million), and the Casden Loan ($150.0 million). Based on this level of debt, an increase in interest rates of 1% would result in the Company’s income and cash flows being reduced by $10.2 million on an annual basis. Historically, changes in tax-exempt interest rates have been at a ratio less than 1:1 with changes in taxable interest rates. Variable rate tax-exempt bond financing is benchmarked against the Bond Market Association Municipal Swap Index (the “BMA Index”). Since 1981, the BMA Index has averaged 56.2% of the 10-year Treasury Yield.

     The estimated aggregate fair value of the Company’s cash and cash equivalents, receivables, payables and short-term secured and unsecured debt as of June 30, 2002 approximates their carrying value due to their relatively short term nature. Management further believes that, after consideration of interest rate agreements, the fair market value of the Company’s secured tax-exempt bond debt and secured long-term debt approximates their carrying value, based on market comparisons to similar types of debt instruments having similar maturities.

41

PART II. OTHER INFORMATION

ITEM 1. Legal Proceedings

     On January 30, 2002, AIMCO and four of its affiliated partnerships were named as defendants in a lawsuit brought by the City Attorney for the City and County of San Francisco in the Superior Court, County of San Francisco. The City Attorney asserts that the defendants have violated certain state and local residential housing codes, and engaged in unlawful business practices and unfair competition, in connection with four properties owned and operated by the affiliated partnerships. The City Attorney asserts civil penalties from $500 to $1,000 per day for each affected unit, as well as other statutory and equitable relief. The Company has engaged in preliminary discussions with the City Attorney to resolve the lawsuit. In the event it is unable to resolve the lawsuit, the Company believes it has meritorious defenses to assert and will vigorously defend itself. The matter has been set for trial on December 30, 2002. While the outcome of any litigation is uncertain, the Company does not believe that the ultimate outcome will have a material adverse effect on the consolidated financial condition or results of operations of the Company and its subsidiaries taken as a whole.

      National Program Services, Inc. and Vito Gruppuso (collectively “NPS”) are insurance agents who in 2000 sold to AIMCO and its affiliates property insurance issued by National Union Fire Insurance Company of Pittsburgh, PA (“National Union”). The financial failure of NPS has resulted in defaults in June 2002 under two agreements by which NPS indemnified AIMCO from losses relating to the matters described below. As a result of such defaults, the Company faces the risk of impairment of a $16.7 million insurance-related receivable as well as a contingent liability of $5.7 million. The Company’s receivable arose from the improper and premature cancellation by National Union of the Company’s property insurance coverage in April 2001. The Company had paid to National Union amounts in excess of $10 million in prepaid premiums for property insurance coverage that was to continue through at least April 2002. In addition, the Company has a $6.7 million receivable from NPS to reimburse the Company for payments on a premium finance agreement, proceeds of which were to pay premiums to National Union. The Company holds two $5 million surety bonds issued by Lumberman’s Mutual Insurance Company to secure the NPS indemnities. In addition, the Company has pending litigation in the U.S. District Court for the District of Colorado against National Union, First Capital Group, a New York based insurance wholesaler, NPS and other agents of National Union, for refund of at least $10 million of prepaid premium plus other damages resulting from the cancellation of the coverage. The cancellation of the property insurance coverage in 2001 has no effect on AIMCO’s present property insurance coverage or on coverage that existed through April 2001. With respect to the contingent liability arising from the NPS defaults, the Company received in July 2002 a demand for payment of $5.7 million from Cananwill, Inc., a premium funding company, allegedly due for premium payments made to National Union. The Company believes it has meritorious defenses to assert, and the Company will vigorously defend itself in the event Cananwill commences any litigation. In the event of litigation and an adverse determination, the Company will seek reimbursement of any loss from the bonds securing the NPS indemnification agreements as well as from all third parties responsible for the misapplication of AIMCO’s payments. While the outcome of any claim or matter in litigation is uncertain, the Company does not believe that it will incur any material loss in connection with the receivable or that the ultimate outcome of these separate but related matters will have a material adverse effect on the financial condition or results of operations of the Company and its subsidiaries taken as a whole.

     There have been recent reports of lawsuits against owners and managers of multifamily properties asserting claims of personal injury and property damage caused by the presence of mold in residential units. Some of these lawsuits have resulted in substantial monetary judgments or settlements. The Company has been named as a defendant in suits that have alleged the presence of mold. Prior to March 31, 2002, the Company was insured against claims arising from the presence of mold due to water intrusion. However, since March 31, 2002, certain of the Company’s insurance carriers have excluded from insurance coverage property damage loss claims arising from the presence of mold although certain of the Company’s insurance carriers do provide some coverage for personal injury claims. The Company has implemented protocols and procedures to prevent or eliminate mold from its properties and believes that its measures will eliminate, or at least minimize, the effects that mold could have on its residents. To date, the Company has not incurred any material costs or liabilities relating to claims of mold exposure or to abate mold conditions. Because the law regarding mold is unsettled and subject to change, however, the Company can make no assurance that liabilities resulting from the presence of or exposure to mold will not have a material adverse effect on the consolidated financial condition or results of operations of the Company and its subsidiaries taken as a whole.

ITEM 2. Changes in Securities and Use of Proceeds

     From time to time during the quarter, AIMCO issued shares of Common Stock in exchange for common OP Units tendered to the AIMCO Operating Partnership for redemption in accordance with the terms and provisions of the agreement of limited partnership of the AIMCO Operating Partnership. Such shares are issued based on an exchange ratio of one share for each common OP Unit. The shares are issued in exchange for common OP Units in private transactions exempt from registration pursuant to Section 4(2) of the Securities Act of 1933, as amended (the

42

“Securities Act”). During the three months ended June 30, 2002, approximately 262,000 shares of Class A Common Stock were issued in exchange for common OP Units in these transactions.

     On May 6, 2002, the holder of AIMCO Class L Convertible Cumulative Preferred Stock (the “Class L Preferred Stock”) converted 2,500,000 shares of Class L Preferred Stock, with a face value of $62.5 million, into 1,344,664 shares of AIMCO Class A Common Stock. The shares were issued in exchange for Class L Preferred Stock in private transactions exempt from registration pursuant to Section 3(a)(9) of the Securities Act. The Class L Preferred Stock has a conversion price of $46.48 per share, based on a liquidation preference of $25, resulting in the issuance of .5379 shares of Common Stock for each preferred share converted.

ITEM 3. Defaults Upon Senior Securities

     None.

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

     The Company held its annual meeting of stockholders on April 26, 2002. At the meeting, the stockholders approved the proposals set forth below:

1. Proposal to elect six directors, for a term of one year each, until the next annual meeting of stockholders and until their successors are elected and qualify.

Votes Cast For Each Director

	Votes		Votes
	For		Withheld
Terry Considine		62,353,644		241,819
Peter K. Kompaniez		62,354,132		241,331
James N. Bailey		61,613,176		982,287
Richard S. Ellwood		61,606,173		989,290
J. Landis Martin		61,613,463		982,000
Thomas L. Rhodes		61,606,449		989,014

There were no abstentions or broker non votes.

2. Proposal to ratify the selection of Ernst & Young LLP, to serve as independent auditors for the Company for the fiscal year ending December 31, 2002:

Votes For	Votes Against		Abstentions		Broker Non Votes
60,805,192		1,722,858		67,413		—

3. To approve the sale of an aggregate of 5,000 High Performance Partnership Units of the AIMCO Operating Partnership:

Votes For	Votes Against		Abstentions		Broker Non Votes
53,505,672		3,364,342		159,546		5,565,903

ITEM 5. Other Information

     None.

43

ITEM 6. Exhibits and Reports on Form 8-K

(a) Exhibits. The following exhibits are filed with this report¹:

EXHIBIT NO.
3.1	Charter
	(Exhibit 3.1 to AIMCO’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2002, is incorporated herein by this reference)
3.2	Bylaws
	(Exhibit 3.2 to AIMCO’s Annual Report on Form 10-K for the fiscal year ended December 31, 1999, is incorporated herein by this reference)
10.1	Thirty-second Amendment to the Third Amended and Restated Agreement of Limited Partnership of AIMCO Properties, L.P., dated as of May 14, 2002
10.2	Second Amendment to Fourth Amended and Restated Credit Agreement, dated as of August 2, 2002, by Apartment Investment and Management Company, AIMCO Properties, L.P., AIMCO/Bethesda Holdings, Inc., NHP Management Company, Bank of America, N.A. and the lenders listed therein
10.3	Second Amendment, dated as of August 2, 2002, to the Interim Credit Agreement, by and among AIMCO Properties, L.P., NHP Management Company, Apartment Investment and Management Company, Lehman Commercial Paper, Inc., Lehman Brothers Inc., and each lender from time to time party thereto
99.1	Agreement re: disclosure of long-term debt instruments
99.2	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
99.3	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

(b) Reports on Form 8-K filed during the quarter ended June 30, 2002:

(i)	Current Report on Form 8-K, dated April 11, 2002, relating to the sale of an aggregate of 1,000,000 shares of Class R Cumulative Preferred Stock;
(ii)	Current Report on Form 8-K, dated May 2, 2002, relating to financial results for the quarter ended March 31, 2002, and Amendment No. 1 thereto, filed May 3, 2002;
(iii)	Current Report on Form 8-K, dated May 15, 2002, relating to Regulation FD disclosure of materials to be presented in an address by certain executive officers to a group of investors and analysts, and Amendment No. 1 thereto, filed May 28, 2002; and
(iv)	Current Report on Form 8-K, dated June 5, 2002, relating to the sale of an aggregate of 8,000,000 shares of Class A Common Stock.

¹ Schedules and supplemental materials to the exhibits have been omitted but will be provided to the Securities and Exchange Commission upon request.

44

APARTMENT INVESTMENT AND MANAGEMENT COMPANY

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 thereunto duly authorized.

	APARTMENT INVESTMENT AND MANAGEMENT COMPANY
By:	/s/ PAUL J. McAULIFFE
	Paul J. McAuliffe Executive Vice President, Chief Financial Officer (duly authorized officer and principal financial officer)
By:	/s/ THOMAS C. NOVOSEL
	Thomas C. Novosel Senior Vice President, Chief Accounting Officer

Date: August 14, 2002

45

EXHIBIT INDEX(1)

EXHIBIT NO.
3.1	Charter
	(Exhibit 3.1 to AIMCO’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2002, is incorporated herein by this reference)
3.2	Bylaws
	(Exhibit 3.2 to AIMCO’s Annual Report on Form 10-K for the fiscal year ended December 31, 1999, is incorporated herein by this reference)
10.1	Thirty-second Amendment to the Third Amended and Restated Agreement of Limited Partnership of AIMCO Properties, L.P., dated as of May 14, 2002
10.2	Second Amendment to Fourth Amended and Restated Credit Agreement, dated as of August 2, 2002, by Apartment Investment and Management Company, AIMCO Properties, L.P., AIMCO/Bethesda Holdings, Inc., NHP Management Company, Bank of America, N.A. and the lenders listed therein
10.3	Second Amendment, dated as of August 2, 2002, to the Interim Credit Agreement, by and among AIMCO Properties, L.P., NHP Management Company, Apartment Investment and Management Company, Lehman Commercial Paper, Inc., Lehman Brothers Inc., and each lender from time to time party thereto
99.1	Agreement re: disclosure of long-term debt instruments
99.2	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
99.3	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

(1) Schedules and supplemental materials to the exhibits have been omitted but will be provided to the Securities and Exchange Commission upon request.

EX-10.1

                                                                    EXHIBIT 10.1


                      THIRTY-SECOND AMENDMENT TO THE THIRD
                        AMENDED AND RESTATED AGREEMENT OF
                  LIMITED PARTNERSHIP OF AIMCO PROPERTIES, L.P.

         This THIRTY-SECOND AMENDMENT TO THE THIRD AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP OF AIMCO PROPERTIES, L.P., dated as of May 14,
2002 (this "Amendment"), is being executed by AIMCO-GP, Inc., a Delaware
corporation (the "General Partner"), as the general partner of AIMCO Properties,
L.P., a Delaware limited partnership (the "Partnership"), pursuant to the
authority conferred on the General Partner by Section 7.3.C(7) of the Third
Amended and Restated Agreement of Limited Partnership of AIMCO Properties, L.P.,
dated as of July 29, 1994 (the "Agreement"). Capitalized terms used, but not
otherwise defined herein, shall have the respective meanings ascribed thereto in
the Agreement.

         WHEREAS, pursuant to Section 4.2.A of the Agreement, the General
Partner is authorized to cause the Partnership to issue Partnership Units with
such designations, preferences and relative, participating, optional or other
special rights, powers and duties as the General Partner shall determine and as
shall be set forth in a written document attached to and made an exhibit to the
Agreement; and

         WHEREAS, the General Partner has determined that it is in the best
interests of the Partnership to issue 5,000 units of a new class of Partnership
Units in consideration of capital contributions to the Partnership in the
aggregate amount of $1,066,000.

         NOW, THEREFORE, in consideration of the foregoing, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:

         1. The Agreement is hereby amended by the addition of a new exhibit,
entitled "Exhibit KK," in the form attached hereto, which shall be attached to
and made a part of the Agreement.

         2. Each Person to whom the General Partner shall initially cause the
Partnership to issue any of the Partnership Units described on Exhibit KK shall
be admitted to the Partnership as a Limited Partner with the rights of holders
of the Partnership Units set forth on Exhibit KK. The General Partner shall
amend Exhibit A to the Agreement to reflect the admittance of each such Person
as a Limited Partner and the issuance of such Partnership Units to each such
Person.

         3. Except as specifically amended hereby, the terms, covenants,
provisions and conditions of the Agreement shall remain unmodified and continue
in full force and effect and, except as amended hereby, all of the terms,
covenants, provisions and conditions of the Agreement are hereby ratified and
confirmed in all respects.




         IN WITNESS WHEREOF, this Amendment has been executed as of the date
first written above.

                                       GENERAL PARTNER:

                                       AIMCO-GP, INC.



                                       By /s/ MILES CORTEZ
                                          --------------------------------------
                                          Name:  Miles Cortez
                                          Title: Executive Vice President and
                                                   General Counsel


                                        2


                                   EXHIBIT KK

                          PARTNERSHIP UNIT DESIGNATION
                                     OF THE
                   CLASS V HIGH PERFORMANCE PARTNERSHIP UNITS
                            OF AIMCO PROPERTIES, L.P.

         1. NUMBER OF UNITS AND DESIGNATION.

         A class of Partnership Units is hereby designated as "Class V High
Performance Partnership Units," and the number of Partnership Units initially
constituting such class shall be five thousand (5,000), subject to adjustment at
the Class V High Performance Valuation Date, as provided in Section 3 hereof.

         2. DEFINITIONS.

         For purposes of this Partnership Unit Designation, the following terms
shall have the meanings indicated in this Section 2. Capitalized terms used and
not otherwise defined herein shall have the meanings assigned thereto in the
Agreement.

         "AIMCO EQUITY CAPITALIZATION" shall mean the quotient obtained by
dividing (i) the sum of the AIMCO Market Values for each trading day included in
the Measurement Period, by (ii) the number of trading days included in the
Measurement Period.

         "AIMCO MARKET VALUE" shall mean, for any date, the product of (i) the
number of REIT Shares and Partnership Units (other than Partnership Preferred
Units) outstanding as of the close of business on such date, multiplied by (ii)
the Value of a REIT Share on such date.

         "AIMCO TOTAL RETURN" shall mean the Total Return of the REIT Shares for
the Measurement Period; provided, however, that, for purposes of calculating the
security price of the REIT Shares (i) at the beginning of the Measurement
Period, such price shall be $45.19 and (ii) at the end of the Measurement
Period, such price shall be the average of the daily market prices for twenty
(20) consecutive trading days ending immediately prior to the Class V High
Performance Valuation Date. The market price for any such trading day shall be:

                  (a) if the REIT Shares are listed or admitted to trading on
         any securities exchange or The Nasdaq Stock Market's National Market
         System, the volume-weighted average of trading prices on such day, as
         reported by Bloomberg Financial Markets (or another reliable source
         selected by the General Partner), or if no trade takes place on such
         day, the average of the closing bid


                                      KK-1


         and asked prices on such day, as reported in the principal consolidated
         transaction reporting system;

                  (b) if the REIT Shares are not listed or admitted to trading
         on any securities exchange or The Nasdaq Stock Market's National Market
         System, the last reported sale price on such day or, if no sale takes
         place on such day, the average of the closing bid and asked prices on
         such day, as reported by a reliable quotation source designated by the
         General Partner; or

                  (c) if the REIT Shares are not listed or admitted to trading
         on any securities exchange or The Nasdaq Stock Market's National Market
         System and no such last reported sale price or closing bid and asked
         prices are available, the average of the reported high bid and low
         asked prices on such day, as reported by a reliable quotation source
         designated by the General Partner, or if there shall be no bid and
         asked prices on such day, the average of the high bid and low asked
         prices, as so reported, on the most recent day (not more than ten (10)
         days prior to the date in question) for which prices have been so
         reported;

provided, however, that, if there are no bid and asked prices reported during
the ten (10) days prior to the date in question, the market price of the REIT
Shares shall be determined by the General Partner acting in good faith on the
basis of such quotations and other information as it considers, in its
reasonable judgment, appropriate.

         "AGREEMENT" shall mean the Third Amended and Restated Agreement of
Limited Partnership of the Partnership, as amended from time to time.

         "CHANGE OF CONTROL" shall mean the occurrence of any of the following
events:

                  (i) an acquisition (other than directly from the Previous
General Partner) of any voting securities of the Previous General Partner (the
"VOTING SECURITIES") by any "person" (as the term "person" is used for purposes
of Section 13(d) or Section 14(d) of the Securities Exchange Act of 1934, as
amended (the "EXCHANGE ACT")) immediately after which such person has
"beneficial ownership" (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) ("BENEFICIAL OWNERSHIP") of 20% or more of the combined voting
power of the Previous General Partner's then outstanding Voting Securities;
provided, however, in determining whether a Change in Control has occurred,
Voting Securities that are acquired in a Non-Control Acquisition (as hereinafter
defined) shall not constitute an acquisition that would cause a Change in
Control. "NON-CONTROL ACQUISITION" shall mean an acquisition by (A) an employee
benefit plan (or a trust forming a part thereof) maintained by (1) the Previous
General Partner or (2) any corporation, partnership or other person of which a
majority of its voting power or its equity securities or equity interest is
owned directly or indirectly by the Previous General Partner or in which the
Previous General Partner serves as a general


                                      KK-2


partner or manager (a "SUBSIDIARY"), (B) the Previous General Partner or any
Subsidiary, or (C) any person in connection with a Non-Control Transaction (as
hereinafter defined);

                  (ii) the individuals who constitute the Board of Directors of
the Previous General Partner as of January 1, 2002 (the "INCUMBENT BOARD") cease
for any reason to constitute at least two-thirds (2/3) of the Board of
Directors; provided, however, that if the election, or nomination for election
by the Previous General Partner's stockholders, of any new director was approved
by a vote of at least two-thirds (2/3) of the Incumbent Board, such new director
shall be considered as a member of the Incumbent Board; provided, further, that
no individual shall be considered a member of the Incumbent Board if such
individual initially assumed office as a result of either an actual or
threatened "election contest" (as described in Rule 14a-11 promulgated under the
Exchange Act) (an "ELECTION CONTEST") or other actual or threatened solicitation
of proxies or consents by or on behalf of a person other than the Board of
Directors (a "PROXY CONTEST") including by reason of any agreement intended to
avoid or settle any Election Contest or Proxy Contest; or

                  (iii) approval by stockholders of the Previous General Partner
of: (A) a merger, consolidation, share exchange or reorganization involving the
Previous General Partner, unless (1) the stockholders of the Previous General
Partner, immediately before such merger, consolidation, share exchange or
reorganization, own, directly or indirectly immediately following such merger,
consolidation, share exchange or reorganization, at least 80% of the combined
voting power of the outstanding voting securities of the corporation that is the
successor in such merger, consolidation, share exchange or reorganization (the
"SURVIVING COMPANY") in substantially the same proportion as their ownership of
the Voting Securities immediately before such merger, consolidation, share
exchange or reorganization, (2) the individuals who were members of the
Incumbent Board immediately prior to the execution of the agreement providing
for such merger, consolidation, share exchange or reorganization constitute at
least two-thirds (2/3) of the members of the board of directors of the Surviving
Company, and (3) no persons (other than the Previous General Partner or any
Subsidiary, any employee benefit plan (or any trust forming a part thereof)
maintained by the Previous General Partner, the Surviving Company or any
Subsidiary, or any person who, immediately prior to such merger, consolidation,
share exchange or reorganization had Beneficial Ownership of 15% or more of the
then outstanding Voting Securities has Beneficial Ownership of 15% or more of
the combined voting power of the Surviving Company's then outstanding voting
securities (a transaction described in clauses (1) through (3) is referred to
herein as a "NON-CONTROL TRANSACTION"); (B) a complete liquidation or
dissolution of the Previous General Partner; or (C) an agreement for the sale or
other disposition of all or substantially all of the assets of the Previous
General Partner to any person (other than a transfer to a Subsidiary).


                                      KK-3


         Notwithstanding the foregoing, a Change of Control shall not be deemed
to occur solely because any person (a "SUBJECT PERSON") acquired Beneficial
Ownership of more than the permitted amount of the outstanding Voting Securities
as a result of the acquisition of Voting Securities by the Previous General
Partner that, by reducing the number of Voting Securities outstanding, increases
the proportional number of shares Beneficially Owned by such Subject Person,
provided that if a Change of Control would occur (but for the operation of this
sentence) as a result of the acquisition of Voting Securities by the Previous
General Partner, and after such share acquisition by the Previous General
Partner, such Subject Person becomes the Beneficial Owner of any additional
Voting Securities that increases the percentage of the then outstanding Voting
Securities Beneficially Owned by such Subject Person, then a Change of Control
shall occur.

         "CLASS V HIGH PERFORMANCE CASH AMOUNT" shall mean, as of any date, the
lesser of (i) an amount of cash equal to the product of the amount that a Holder
would receive in respect of each Class V High Performance Partnership Unit if
the Partnership sold all of its properties at their fair market value (which may
be determined by reference to the Value of a REIT Share), paid all of its debts
and distributed the remaining proceeds to the Partners as provided in Section
13.2 of the Agreement, determined as of the applicable Valuation Date, or (ii)
in the case of a Declination followed by a Public Offering Funding, the Public
Offering Funding Amount.

         "CLASS V HIGH PERFORMANCE PARTNERSHIP UNIT" shall mean a Partnership
Unit with the designations, preferences and relative, participating, optional or
other special rights, powers and duties as are set forth in this Exhibit KK.

         "CLASS V HIGH PERFORMANCE VALUATION DATE" shall mean the earlier to
occur of (i) January 1, 2005, or (ii) the date on which a Change of Control
occurs.

         "DETERMINATION DATE" shall mean (i) when used with respect to any
dividend or other distribution, the date fixed for the determination of the
holders of the securities entitled to receive such dividend or distribution, or,
if a dividend or distribution is paid or made without fixing such a date, the
date of such dividend or distribution, and (ii) when used with respect to any
split, subdivision, reverse stock split, combination or reclassification of
securities, the date upon which such split, subdivision, reverse stock split,
combination or reclassification becomes effective.

         "DILUTION LIMIT" shall mean an amount equal to 1.0% of the total number
of REIT Shares and Partnership Common Units outstanding on the Class V High
Performance Valuation Date, on a fully diluted basis (excluding any Partnership
Common Units held by the Previous General Partner or any of its wholly owned
subsidiaries).


                                      KK-4


         "EX-DATE" shall mean (i) when used with respect to any dividend or
distribution, the first date on which the securities on which the dividend or
distribution is payable trade regular way on the relevant exchange or in the
relevant market without the right to receive such dividend or distribution, and
(ii) when used with respect to any split, subdivision, reverse stock split,
combination or reclassification of securities, the first date on which the
securities trade regular way on such exchange or in such market to reflect such
split, subdivision, reverse stock split, combination or reclassification
becoming effective.

         "EXTRAORDINARY DISTRIBUTION" shall mean the distribution by the
Previous General Partner, by dividend or otherwise, to all holders of its REIT
Shares of evidences of its indebtedness or assets (including securities) other
than cash.

         "HURDLE RATE OF RETURN" shall mean the greater of (i) 36.8% (or if the
Measurement Period is less than three years, a percentage equal to the return
over the Measurement Period that would result in a cumulative return of 36.8%
over a three year period with annual compounding) or (ii) 115% of the Industry
Total Return.

         "INDUSTRY TOTAL RETURN" shall mean the Total Return of the securities
included in the Industry Peer Group Index for the Measurement Period, with such
average determined in a manner consistent with the manner in which such index is
calculated; provided, however, that if such Total Return would be less than zero
without giving effect to the reinvestment of dividends, then the "Industry Total
Return" shall be equal to zero.

         "INDUSTRY PEER GROUP INDEX" shall mean the Morgan Stanley Dean Witter
REIT Index or any other similar industry index approved by the Board of
Directors of the Previous General Partner.

         "MEASUREMENT PERIOD" shall mean the period from and including January
1, 2002 to but excluding the Class V High Performance Valuation Date.

         "OUTPERFORMANCE RETURN" shall mean the amount (measured as a
percentage), if any, by which the AIMCO Total Return exceeds the Hurdle Rate of
Return. If the AIMCO Total Return does not exceed the Hurdle Rate of Return,
"Outperformance Return" shall be 0%.

         "PARTNERSHIP" shall mean AIMCO Properties, L.P., a Delaware limited
partnership.

         "TOTAL RETURN" shall mean, for any security and for any period, the
cumulative total return for such security over such period, as measured by (i)
the sum of (A) the cumulative amount of dividends paid in respect of such
security for such period


                                      KK-5


(assuming that all dividends other than Extraordinary Distributions are
reinvested in such security as of the payment date for such dividend based on
the security price on the dividend payment date), and (B) an amount equal to (1)
the security price at the end of such period, minus (2) the security price at
the beginning of such period, divided by (ii) the security price at the
beginning of the measurement period; provided, however, that if the foregoing
calculation results in a negative number, the "Total Return" shall be equal to
zero.

         "VALUE" shall have the meaning set forth in the Agreement, except that
Value shall be determined by reference to the average of the daily market prices
for twenty (20) consecutive trading days rather than ten (10) consecutive
trading days.

         3. ADJUSTMENT OF UNITS AT CLASS V HIGH PERFORMANCE VALUATION DATE.

            On the Class V High Performance Valuation Date, without any action
on the part of the Partnership, the General Partner or the Holder of any Class V
High Performance Partnership Unit, each Class V High Performance Partnership
Unit shall automatically be adjusted to equal (a) if the Outperformance Return
is 0%, 1/100 of a Class V High Performance Partnership Unit, or (b) if the
Outperformance Return is greater than 0%, the lesser of (i) the Dilution Limit
divided by 5,000, or (ii) the quotient obtained by dividing (x) the product of
(A) 5% of the Outperformance Return, multiplied by (B) the AIMCO Equity
Capitalization, by (y) the product of (A) 5,000 and (B) the Value of a REIT
Share on the Class V High Performance Valuation Date. For illustrative purposes,
examples of the calculation of adjustments to the number Class V High
Performance Partnership Units are set forth in Annex I hereto.

         4. DISTRIBUTIONS.

            (a) Prior to the Class V High Performance Valuation Date, Holders of
Class V High Performance Partnership Units shall be entitled to receive
distributions (other than distributions upon liquidation) if, as, when and in
the same amounts and of the same type as may be paid to Holders of Partnership
Common Units as if each Holder of Class V High Performance Partnership Units
held 1/100 of a Partnership Common Unit.

            (b) On and after the Class V High Performance Valuation Date, the
Holders of Class V High Performance Partnership Units shall be entitled to
receive distributions (other than distributions upon liquidation) if, as, when
and in the same amounts and of the same type as may be paid to Holders of
Partnership Common Units as if each Holder of Class V High Performance
Partnership Units held an equal number of Partnership Common Units originally
issued on the Class V High Performance Valuation Date.


                                      KK-6


         5. ALLOCATIONS.

         (a) Prior to the Class V High Performance Valuation Date, Net Income
and Net Loss shall be allocated to the Holders of Class V High Performance
Partnership Units as if each such Holder was the Holder of 1/100 of a
Partnership Common Unit.

         (b) On and after the Class V High Performance Valuation Date, Net
Income and Net Loss shall be allocated to each of the Holders of Class V High
Performance Partnership Units as if each such Holder was the Holder of an equal
number of Partnership Common Units originally issued on the Class V High
Performance Valuation Date; provided, however, that if the Outperformance Return
is 0% on the Class V High Performance Valuation Date, then as of the last day of
the Measurement Period, each of the Holders of Class V High Performance
Partnership Units shall be specially allocated Net Loss or deduction in an
amount equal to (i) the excess of (x) the aggregate Class V High Performance
Partnership Unit capital contributions over (y) the fair market value of the
Class V High Performance Partnership Units as of such date, after applying the
adjustments required by Section 3 of this Partnership Unit Designation, divided
by (ii) the number of Class V High Performance Partnership Units held by such
Holder.

         (c) In the event that the Partnership disposes of all or substantially
all of its assets in a transaction that will lead to a liquidation of the
Partnership pursuant to Article XIII of the Agreement, then, notwithstanding
Section 6.3.C of the Agreement, each Holder of Class V High Performance
Partnership Units shall be specifically allocated items of Partnership income
and gain in an amount sufficient to cause the Capital Account of such Holder to
be equal to that of a Holder of an equal number of Partnership Common Units.

         6. REDEMPTION.

         Upon the occurrence of a Change of Control, and subject to the
applicable requirements of Federal securities laws and any securities exchange
of quotation system rules or regulations, each Holder of Class V High
Performance Partnership Units shall have the redemption rights of Qualifying
Parties set forth in Section 8.6 of the Agreement, except that (i) all
references therein to "Redeemable Units" or "Partnership Common Units" shall be
deemed to be references to Class V High Performance Partnership Units, (ii) the
first Twelve-Month Period applicable to all Class V High Performance Partnership
Units shall be deemed to have passed, (iii) all references therein to "Cash
Amount" shall be deemed to be references to the Class V High Performance Cash
Amount, and (iv) in the event that the Previous General Partner elects to
acquire Class V High Performance Partnership Units that have been tendered for
Redemption, the Previous General Partner shall acquire each such Class V High
Performance Partnership Unit in exchange for a number of REIT Shares equal to
the quotient obtained


                                      KK-7


by dividing the Class V High Performance Cash Amount by the Value of a REIT
Share, determined as of the applicable Valuation Date.

         7. STATUS OF REACQUIRED UNITS.

         All Class V High Performance Partnership Units which shall have been
issued and reacquired in any manner by the Partnership shall be deemed cancelled
and no longer outstanding.

         8. RESTRICTIONS ON OWNERSHIP AND TRANSFER.

         The restrictions on Transfer set forth in Sections 11.1.B and 11.3.A of
the Agreement shall not apply to Transfers of Class V High Performance
Partnership Units. Prior to the Class V High Performance Valuation Date, the
Class V High Performance Partnership Units shall be owned and held solely by SMP
2005, L.L.C., a Delaware limited liability company (the "SMP"). On or after the
Class V High Performance Valuation Date, the Class V High Performance
Partnership Units may be Transferred (i) by the SMP to (a) any Person who is a
member (a "MEMBER") of the SMP immediately prior to such transfer, (b) a Family
Member of a Member, (c) a Controlled Entity of a Member, (c) any Person with
respect to whom the Member constitutes a Controlled Entity, (d) upon the death
of a Member, by will or by the laws of descent and distribution to any Qualified
Transferee, and (ii) by any other Person to (a) a Family Member of a such
Person, (b) a Controlled Entity of such Person, (c) any other Person with
respect to whom such Person constitutes a Controlled Entity, (d) upon the death
of such Person, by will or by the laws of descent and distribution to any
Qualified Transferee.

         9. VOTING RIGHTS.

         Each Holder of Class V High Performance Partnership Units shall have
the same voting and approval rights as a Holder of an equal number of
Partnership Common Units.

         10. ADJUSTMENTS.

             (a) In the event of any Extraordinary Distribution occurring on or
after January 1, 2002, for purposes of determining the Value of a REIT Share or
the AIMCO Total Return, each price of a REIT Share determined as of a date on or
after the Ex-Date for such Extraordinary Distribution shall be adjusted by
multiplying such price by a fraction (i) the numerator of which shall be the
price of a REIT Share on the date immediately prior to such Ex-Date, and (ii)
the denominator of which shall be (A) the price of a REIT Share on the date
immediately prior to such Ex-Date, minus (B) the fair market value on the date
fixed for such determination of the portion of the evidences of indebtedness or
assets so distributed applicable to one REIT Share (as determined by the General
Partner, whose determination shall be conclusive); provided further, that such


                                      KK-8


amount shall be so adjusted for each such Extraordinary Distribution occurring
on or after January 1, 2002.

             (b) In the event that, on or after January 1, 2002, the Previous
General Partner (i) declares or pays a dividend on its outstanding REIT Shares
in REIT Shares or makes a distribution to all holders of its outstanding REIT
Shares in REIT Shares, (ii) splits or subdivides its outstanding REIT Shares,
(iii) effects a reverse stock split or otherwise combines its outstanding REIT
Shares into a smaller number of REIT Shares, or (iv) otherwise reclassifies its
outstanding REIT Shares, then, for purposes of determining the Value of a REIT
Share or the AIMCO Total Return, each price of a REIT Share determined as of a
date on or after the Ex-Date for such transaction shall be adjusted by
multiplying such price by a fraction (x) the numerator of which shall be the
number of REIT Shares issued and outstanding on the Determination Date for such
dividend, distribution, split, subdivision, reverse stock split, combination or
reclassification (assuming for such purposes that such dividend, distribution,
split, subdivision, reverse split or combination has occurred as of such time)
and (y) the denominator of which shall be the actual number of REIT Shares
(determined without the above assumption) issued and outstanding on the
Determination Date for such dividend, distribution, split, subdivision, reverse
stock split, combination or reclassification.

             (c) The General Partner shall have authority to appropriately
adjust the AIMCO Market Value, the AIMCO Total Return or the Value of a REIT
Share if any other transaction or circumstance occurs or arises that would have
an inequitable result.

         11. GENERAL.

         Class V High Performance Partnership Units shall be evidenced by
certificates in the form of Annex II hereto, or in such other form as the
General Partner shall specify from time to time. The Class V High Performance
Partnership Units shall be securities governed by Article 8 of the Uniform
Commercial Code. Each certificate evidencing a Class V High Performance
Partnership Unit shall bear the following legend: "This certificate evidences an
interest in AIMCO Properties, L.P. and shall be a security for purposes of the
Uniform Commercial Code." This provision shall not be amended, and any purported
amendment to this provision shall not take effect until all outstanding
certificates have been surrendered for cancellation. The General Partner shall
amend Exhibit A to the Agreement from time to time to the extent necessary to
reflect accurately the issuance of, and subsequent conversion, redemption, or
any other event having an effect on the ownership of, Class V High Performance
Partnership Units.


                                     KK-9


                                                                      ANNEX I TO
                                                                      EXHIBIT KK

    Numerical Examples of the Calculation of the Adjustment to the Number of
   Class V High Performance Partnership Units on the Class V High Performance
                                 Valuation Date

         The following table illustrates the adjustment that would be made to
the number of Class V High Performance Partnership Units on the Class V High
Performance Valuation Date under different circumstances. Except as otherwise
indicated, it is assumed, for purposes of the illustration, that: (i) the Class
V High Performance Valuation Date is January 1, 2005; (ii) the Industry Total
Return is 36.8%, resulting in a Hurdle Rate of Return of 42.3%; and (iii) the
AIMCO market capitalization is $3.965 billion.






                                          AIMCO
             AIMCO                        Equity
    Stock    Total   Outperformance   Capitalization   Number of
    Price    Return      Return         (thousands)      HPUs
    -----    ------  --------------   --------------  ----------
                                          
   $50.00    33.57%       0.00%         $3,964,537            50

    53.00    40.21%       3.41%          3,964,537       127,538

    56.00    46.85%      10.05%          3,964,537       355,746

    59.00    53.49%      16.69%          3,964,537       560,746

    62.00    60.12%      23.32%          3,964,537       745,589

    65.00    66.76%      29.96%          3,964,537       913,673

    68.00    73.40%      36.60%          3,964,537     1,045,000*

    71.00    80.04%      43.24%          3,964,537     1,045,000*


- ----------

* The number of HPUs has been restricted based on the Dilution Limit.


                                     KK-10


                                                                     ANNEX II TO
                                                                      EXHIBIT KK


THE SECURITY EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "ACT"), OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT
BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
REGISTRATION, UNLESS THE TRANSFEROR DELIVERS TO AIMCO PROPERTIES, L.P. AN
OPINION OF COUNSEL, IN FORM AND SUBSTANCE SATISFACTORY TO THE PARTNERSHIP, TO
THE EFFECT THAT THE PROPOSED SALE, TRANSFER OR OTHER DISPOSITION MAY BE EFFECTED
WITHOUT REGISTRATION UNDER THE ACT AND UNDER APPLICABLE STATE SECURITIES OR
"BLUE SKY" LAWS. IN ADDITION, THE LIMITED PARTNERSHIP INTEREST EVIDENCED BY THIS
CERTIFICATE MAY BE SOLD OR OTHERWISE TRANSFERRED ONLY IN COMPLIANCE WITH THE
RESTRICTIONS ON TRANSFER SET FORTH IN THE THIRD AMENDED AND RESTATED AGREEMENT
OF LIMITED PARTNERSHIP OF AIMCO PROPERTIES, L.P., DATED AS OF JULY 29, 1994, AS
AMENDED, A COPY OF WHICH MAY BE OBTAINED FROM AIMCO-GP, INC., THE GENERAL
PARTNER, AT ITS PRINCIPAL EXECUTIVE OFFICE.

THIS CERTIFICATE EVIDENCES AN INTEREST IN AIMCO PROPERTIES, L.P. AND SHALL BE A
SECURITY FOR PURPOSES OF ARTICLE 8 OF THE UNIFORM COMMERCIAL CODE.

      Units                                           Certificate Number
- -----                                                                    -------

                             AIMCO PROPERTIES, L.P.
                 FORMED UNDER THE LAWS OF THE STATE OF DELAWARE
                   CLASS V HIGH PERFORMANCE PARTNERSHIP UNITS

         This certifies that _________________ is the owner of _______ Class V
High Performance Partnership Units of AIMCO Properties, L.P., a Delaware limited
partnership. This Certificate and the Class V High Performance Partnership Units
represented hereby are issued and shall be held subject to all of the provisions
of the Agreement of Limited Partnership of AIMCO Properties, L.P., as amended
and/or supplemented from time to time.

         IN WITNESS WHEREOF, the General Partner of AIMCO Properties, L.P. has
caused this Certificate to be signed by an authorized person on this __ day of
______, ____.


                                       By:  AIMCO-GP, Inc.,



                                       By:
                                           -------------------------------------
                                       Name:
                                       Title:


                                     KK-11


                            [REVERSE OF CERTIFICATE]

         For Value Received, __________________________ hereby sells, assigns
and transfers unto _____________________________________________________________
________________________________________________________________________________

Class V High Performance Partnership Units represented by the within
Certificate, and does hereby irrevocably constitute and appoint the General
Partner of AIMCO Properties, L.P. as its Attorney to transfer said Class V High
Performance Partnership Units on the books of AIMCO Properties, L.P. with full
power of substitution in the premises.


Dated:
       -----------------

                                       By:
                                           -------------------------------------
                                       Name:


                                     KK-12

EX-10.2

                                                                    EXHIBIT 10.2


                               SECOND AMENDMENT TO
                           FOURTH AMENDED AND RESTATED
                                CREDIT AGREEMENT



                            DATED AS OF AUGUST 2, 2002



                                  BY AND AMONG


                  APARTMENT INVESTMENT AND MANAGEMENT COMPANY,
                             AIMCO PROPERTIES, L.P.,
                       AIMCO/BETHESDA HOLDINGS, INC., AND
                             NHP MANAGEMENT COMPANY
                                  as Borrowers,


                             BANK OF AMERICA, N.A.,
                            as Administrative Agent,

                                       and

                             LENDERS LISTED HEREIN,
                                   as Lenders.



                               SECOND AMENDMENT TO
                  FOURTH AMENDED AND RESTATED CREDIT AGREEMENT

         This SECOND AMENDMENT TO FOURTH AMENDED AND RESTATED CREDIT AGREEMENT
(this "Amendment") is dated as of August 2, 2002 (the "Amendment Effective
Date") and entered into by and among APARTMENT INVESTMENT AND MANAGEMENT
COMPANY, a Maryland corporation (the "REIT"), AIMCO PROPERTIES, L.P., a Delaware
limited partnership ("AIMCO"), AIMCO/Bethesda Holdings, Inc., a Delaware
corporation ("AIMCO/Bethesda") and NHP Management Company, a District of
Columbia corporation ("NHP Management") (the REIT, AIMCO, AIMCO/Bethesda and NHP
Management collectively referred to herein as "Borrowers"), BANK OF AMERICA,
N.A. ("Bank of America"), as Administrative Agent (in such capacity,
"Administrative Agent"), and Lenders party hereto, and is made with reference to
that certain Fourth Amended and Restated Credit Agreement dated as of March 11,
2002 by and among Borrowers, each lender from time to time party thereto, BANK
OF AMERICA, as Administrative Agent, Issuing Lender and a Co-Lead Agent, FLEET
NATIONAL BANK, as a Lender, a Co-Lead Agent, and Syndication Agent, and WACHOVIA
BANK NA (formerly known as First Union National Bank), as a Lender and
Documentation Agent, as amended by that certain First Amendment to Fourth
Amended and Restated Credit Agreement dated as of June 12, 2002 by and between
the parties thereto (as so amended, the "Credit Agreement") (the Credit
Agreement as amended by this Amendment, the "Amended Agreement"). Capitalized
terms used in this Amendment shall have the meanings set forth in the Credit
Agreement unless otherwise defined.

                                    RECITALS

         WHEREAS, Borrowers desire to amend the Credit Agreement as more
particularly set forth below;

         WHEREAS, pursuant to the Credit Agreement, such amendment requires the
consent of Supermajority Lenders, and Supermajority Lenders hereby consent
thereto;

         NOW, THEREFORE, in consideration of the agreements, provisions and
covenants contained herein, the parties agree as follows:

SECTION 1. AMENDMENTS TO THE CREDIT AGREEMENT

1.1  AMENDMENT TO SUBSECTION 1.01: DEFINED TERMS.

     A. The defined term "Applicable Margin" is deleted in its entirety and
replaced with the following:

         "Applicable Margin" means, (i) during the period from the Closing Date
to and including the later to occur of (a) the Fixed Charge Coverage Date, or
(b) the date upon which the Casden Loan has been indefeasibly paid in full, the
following amounts per annum, based upon the Fixed Charge Coverage Ratio as set
forth in the most recent Compliance Certificate received by Administrative Agent
pursuant to Section 6.02(b):

                                       1



                                APPLICABLE MARGIN
                           (IN BASIS POINTS PER ANNUM)
- --------------------------------------------------------------------------------
PRICING LEVEL      FIXED CHARGE COVERAGE RATIO      OFFSHORE RATE +  BASE RATE +
- -------------   ----------------------------------  ---------------  -----------
                                                            

      1             > than or = to 2.00:1                  205           55

      2         > than or = to 1.85:1 but < 2.00:1         230           80

      3                    < 1.85:1                        255          105



         (ii) during the period from and including the later of (a) the day
after the Fixed Charge Coverage Date, or (b) the day after the date upon which
the Casden Loan has been indefeasibly paid in full, to the Revolving Commitment
Termination Date, the following amounts per annum, based upon the Fixed Charge
Coverage Ratio as set forth in the most recent Compliance Certificate received
by Administrative Agent pursuant to Section 6.02(b) and the Credit Rating in
effect on such date (if applicable):



                                APPLICABLE MARGIN
                           (IN BASIS POINTS PER ANNUM)
- --------------------------------------------------------------------------------
                FIXED CHARGE COVERAGE RATIO AND
PRICING LEVEL             CREDIT RATING             OFFSHORE RATE +  BASE RATE +
- -------------  -----------------------------------  ---------------  -----------
                                                            
      1        > than or = to 2.00:1 and Threshold
                          Rating achieved                 160            20

      2                 > than or = to 2.00:1             190            45

      3        > than or = to 1.85:1 but < 2.00:1         210            70

      4                        < 1.85:1                   235            95


         The Applicable Margin for all periods prior to the Revolving Commitment
Termination Date shall be in effect from the date the most recent Compliance
Certificate is received by Administrative Agent to but excluding the date the
next Compliance Certificate is


                                       2


received; provided, however, that if Borrowers fail to timely deliver the next
Compliance Certificate, the Applicable Margin from the date such Compliance
Certificate was due to but excluding the date such Compliance Certificate is
received by Administrative Agent shall be the highest pricing level set forth
above, and, thereafter, the pricing level indicated by such Compliance
Certificate when received.

         In the event that the Maturity Date is extended past the Revolving
Commitment Termination Date pursuant to Section 2.13, for all periods after the
Revolving Commitment Termination Date, the Applicable Margin for Base Rate Loans
shall be 115 basis points per annum and the Applicable Margin for Offshore Rate
Loans shall be 255 basis points per annum.


     B. The defined term "Fixed Charge Coverage Date" shall be inserted in the
correct alphabetical location as follows:

     "Fixed Charge Coverage Date" means the last day of any period consisting of
2 consecutive fiscal quarters in which the Credit Agreement requires that the
Fixed Charge Coverage Ratio at the end of each such consecutive fiscal quarter
equals or exceeds 1.70:1.00.

1.2  AMENDMENT TO SUBSECTION 7.14: FINANCIAL COVENANTS.

     A. Subsection 7.14(a) shall be deleted in its entirety and replaced with
the following:

          (a) Permit the Fixed Charge Coverage Ratio as of the end of any fiscal
     quarter ending during any period set forth below to be less than the
     following ratios during the applicable periods:



                     APPLICABLE PERIOD                           RATIO
      -----------------------------------------------          ---------
                                                            
      Closing Date to and including March 31, 2002             1.70:1.00

      April 1 2002 to and including June 30, 2003              1.60:1.00

      July 1, 2003 to and including December 31, 2003          1.65:1.00

      January 1, 2004 and thereafter                           1.70:1.00


SECTION 2. CONDITIONS TO EFFECTIVENESS

This Amendment shall become effective on the Amendment Effective Date, if all of
the following conditions are satisfied:

     A. Guarantors and Pledgors have executed this Amendment with respect to
Section 5;


                                       3


     B. On or before the Amendment Effective Date, Borrowers have paid to
Administrative Agent an amendment fee in an aggregate amount equal to the sum of
20 basis points times the Pro Rata Shares of Combined Commitments of each Lender
who is party to this Amendment. The amendment fee will be distributed to each
Lender who is a party to this Amendment in accordance with the foregoing;

     C. If required by Administrative Agent, Lenders and their respective
counsel shall have received originally executed copies of one or more favorable
written opinions of counsel for Borrowers, Guarantors and Pledgors in form and
substance satisfactory to Administrative Agent and its counsel, dated as of the
Amendment Effective Date, with respect to the validity, binding effect and
enforceability of this Amendment, and due authorization, execution and delivery
thereof, and as to such other matters as Administrative Agent acting on behalf
of Lenders may request;

     D. Lenders and their respective counsel shall have received executed
resolutions from Borrowers, Guarantors and Pledgors authorizing the entry into
and performance of this Amendment and the Credit Agreement as amended, all in
form and substance satisfactory to Administrative Agent and its counsel;

     E. Borrowers shall have paid the fees, costs and expenses of Administrative
Agent's counsel in connection with this Amendment; and

     F. Administrative Agent shall have received evidence satisfactory to it and
its counsel that the Casden Agent and the Casden Lenders (i) have modified, or
concurrently with the Amendment Effective Date will modify, the Casden Loan and
the Casden Credit Agreement in a manner satisfactory to Administrative Agent and
the Lenders and Administrative Agent shall have been provided with true, correct
and complete copies of the documents effecting such modifications to the Casden
Loan and Casden Credit Agreement and (ii) have consented to or waived their
right to consent to the Borrowers', Guarantors' and Pledgors' execution and
delivery of this Amendment.

SECTION 3. BORROWERS' REPRESENTATIONS AND WARRANTIES

In order to induce Supermajority Lenders to enter into this Amendment and to
amend the Credit Agreement in the manner provided herein, Borrowers represent
and warrant to each Lender that the following statements are true, correct and
complete:

3.1 CORPORATE POWER AND AUTHORITY. Borrowers have all requisite corporate power
and authority to enter into this Amendment and any other agreements, guaranties
or other operative documents to be delivered pursuant to this Amendment, to
carry out the transactions contemplated by, and perform their obligations under,
the Amended Agreement. Each of the Borrowers, Pledgors and the Guarantors are in
good standing in the respective states of their organization on the Amendment
Effective Date.


                                       4


3.2 AUTHORIZATION OF AGREEMENTS. The execution and delivery of this Amendment
and the performance of the Amended Agreement have been duly authorized by all
necessary corporate action on the part of Borrowers and the other parties
delivering any of such documents, as the case may be. Except as disclosed on
Schedule 3.2, the organizational documents of the Borrowers, Pledgors and
Guarantors have not been modified in any material respect since March 11, 2002.

3.3 NO DEFAULT. After giving effect to this Amendment, no Default or Event of
Default exists under the Credit Agreement as of the Amendment Effective Date.
Further, after giving effect to this Amendment, no Default or Event of Default
would result under the Amended Agreement from the consummation of this
Amendment.

3.4 NO CONFLICT. The execution, delivery and performance by Borrowers, Pledgors
and Guarantors of this Amendment and the performance of the Amended Agreement by
Borrowers, Pledgors and Guarantors does not and will not (i) violate any
provision of any law or any governmental rule or regulation applicable to
Borrowers, Pledgors, Guarantors or any of their Subsidiaries, the Organizational
Documents of Borrowers, Pledgors, Guarantors or any of their Subsidiaries or any
order, judgment or decree of any court or other Government Authority binding on
Borrowers, Pledgors, Guarantors or any of their Subsidiaries, (ii) conflict
with, result in a breach of or constitute (with due notice or lapse of time or
both) a default under any Contractual Obligation of Borrowers, Pledgors,
Guarantors or any of their Subsidiaries, (iii) result in or require the creation
or imposition of any Lien upon any of the properties or assets of Borrowers,
Pledgors, Guarantors or any of their Subsidiaries not otherwise permitted by the
Amended Agreement, or (iv) require any approval of members or stockholders or
any approval or consent of any Person under any Contractual Obligation of
Borrowers, Pledgors, Guarantors or any of their Subsidiaries, except for such
approvals or consents which have been or will be obtained on or before the
Amendment Effective Date or have been disclosed in writing to Lenders in
accordance with Section 5.03 of the Credit Agreement.

3.5 GOVERNMENTAL CONSENTS. The execution and delivery by Borrowers, Guarantors
and Pledgors of this Amendment and the performance by Borrowers, Guarantors and
Pledgors under the Amended Agreement does not and will not require any
registration with, consent or approval of, or notice to, or other action to,
with or by, any federal, state or other governmental authority or regulatory
body.

3.6 BINDING OBLIGATION. The Credit Agreement, as amended by this Amendment, has
been duly executed and delivered by Borrowers, Pledgors and Guarantors and is
enforceable against Borrowers, Pledgors and Guarantors in accordance with its
respective terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or limiting creditors'
rights generally or by equitable principles relating to enforceability.

3.7 INCORPORATION OF REPRESENTATIONS AND WARRANTIES FROM CREDIT AGREEMENT. After
giving effect to this Amendment, the representations and warranties contained in
Section 5 of the Credit Agreement are and will be true, correct and complete in
all material respects on and as of the Amendment Effective Date to the same
extent as though made on and as of such date, except representations and
warranties solely to the extent such representations and warranties


                                       5


specifically relate to an earlier date, in which case they were true, correct
and complete in all material respects on and as of such earlier date.

SECTION 4. MISCELLANEOUS

4.1 REFERENCE TO AND EFFECT ON THE CREDIT AGREEMENT AND THE OTHER LOAN
DOCUMENTS.

     A. On and after the Amendment Effective Date, each reference in the Credit
Agreement to "this Agreement", "hereunder", "hereof", "herein" or words of like
import referring to the Credit Agreement, and each reference in the other Loan
Documents to the "Credit Agreement", "thereunder", "thereof" or words of like
import referring to the Credit Agreement shall mean and be a reference to the
Credit Agreement, as amended by this Amendment.

     B. Except as specifically amended by this Amendment, the Credit Agreement
and the other Loan Documents shall remain in full force and effect and are
hereby ratified and confirmed.

     C. The execution, delivery and performance of this Amendment shall not,
except as expressly provided herein, constitute a waiver of any provision of, or
operate as a waiver of any right, power or remedy of Administrative Agent or any
Lender under, the Credit Agreement or any of the other Loan Documents.

4.2 FEES AND EXPENSES. Borrowers acknowledge that all reasonable costs, fees and
expenses incurred by Administrative Agent and its counsel with respect to this
Amendment and the documents and transactions contemplated hereby shall be for
the account of Borrowers. On or before the Amendment Effective Date, Borrowers
hereby agree to pay the reasonable fees, cost and expenses of Administrative
Agent's counsel in connection with this Amendment.

4.3 HEADINGS. Section and subsection headings in this Amendment are included
herein for convenience of reference only and shall not constitute a part of this
Amendment for any other purpose or be given any substantive effect.

4.4 COUNTERPARTS; EFFECTIVENESS. This Amendment may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed an original, but all such
counterparts together shall constitute but one and the same instrument;
signature pages may be detached from multiple separate counterparts and attached
to a single counterpart so that all signature pages are physically attached to
the same document. This Amendment shall become effective upon the execution of a
counterpart hereof by each Borrower and each Supermajority Lender, and receipt
by Borrowers and Administrative Agent of written, facsimile or telephonic
notification of such execution and authorization of delivery thereof.


                                       6


SECTION 5. ACKNOWLEDGEMENT AND CONSENT

     A. Guarantors are party to either (i) that certain Payment Guaranty
(Revolver Guarantors) dated as of March 11, 2002 or (ii) that certain Payment
Guaranty (Casden Guarantors) dated as of March 11, 2002, in each case, to the
extent amended hereby, pursuant to which Guarantors have guarantied the
Obligations. Pledgors are party to that certain Borrowers Pledge Agreement dated
as of March 11, 2002, to the extent amended hereby, pursuant to which Pledgors
have pledged the Pledged Collateral as security for the Loan.

     B. Each Guarantor and each Pledgor hereby acknowledges that it has reviewed
the terms and provisions of the Credit Agreement and this Amendment and consents
to the amendment of the Credit Agreement effected pursuant to this Amendment.
Each Guarantor hereby confirms that each Guaranty to which it is a party or
otherwise bound, and each Pledgor hereby confirms that the Pledge Agreement to
which it is a party or otherwise bound, will continue to guaranty or secure, as
the case may be, to the fullest extent possible the payment and performance of
all of the "Indebtedness" (as defined in the applicable Guaranty) or the
"Secured Obligations", as the case may be, including without limitation the
payment and performance of all such "Indebtedness" or "Secured Obligation", as
the case may be, with respect to the Obligations of Borrowers now or hereafter
existing under or in respect of the Credit Agreement (as amended hereby) and the
Notes defined therein.

     C. Each Guarantor acknowledges and agrees that any Guaranty to which it is
a party or otherwise bound, and each Pledgor acknowledges and aggress that the
Pledge Agreement to which it is a party or otherwise bound, shall continue in
full force and effect and that all of its obligations thereunder shall be valid
and enforceable and shall not be impaired or limited by the execution or
effectiveness of this Amendment. Each Guarantor and each Pledgor represents and
warrants that all representations and warranties contained in the Credit
Agreement and the Guaranty and/or the Pledge Agreement, as the case may be, to
which it is a party or otherwise bound are true, correct and complete in all
material respects on and as of the Amendment Effective Date to the same extent
as though made on and as of that date, except to the extent such representations
and warranties specifically relate to an earlier date, in which case they were
true, correct and complete in all material respects on and as of such earlier
date.

     D. Each Guarantor and each Pledgor acknowledges and agrees that (i)
notwithstanding the conditions to effectiveness set forth in this Amendment,
such Guarantor or such Pledgor, as the case may be, is not required by the terms
of the Credit Agreement or any other Loan Document to consent to the amendments
to the Credit Agreement effected pursuant to this Amendment and (ii) nothing in
the Credit Agreement, this Amendment or any other Loan Document shall be deemed
to require the consent of such Guarantor or such Pledgor to any future
amendments to the Credit Agreement.

                            [SIGNATURES ON NEXT PAGE]


                                       7

         IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed and delivered as of the day and year first written above.


BORROWERS:                          APARTMENT INVESTMENT AND MANAGEMENT COMPANY,
                                    a Maryland corporation

                                    By: /s/ PETER K. KOMPANIEZ
                                        ----------------------------------------
                                        Peter K. Kompaniez
                                        President


                                    AIMCO PROPERTIES, L.P.,
                                    a Delaware limited partnership

                                    By:  AIMCO-GP, INC., a Delaware corporation
                                    Its: General Partner

                                    By: /s/ PETER K. KOMPANIEZ
                                        ----------------------------------------
                                        Peter K. Kompaniez
                                        President


                                    AIMCO/BETHESDA HOLDINGS INC.,
                                    a Delaware corporation


                                    By: /s/ PETER K. KOMPANIEZ
                                        ----------------------------------------
                                        Peter K. Kompaniez
                                        President


                                    NHP MANAGEMENT COMPANY,
                                    a District of Columbia corporation


                                    By: /s/ PATRICK FOYE
                                        ----------------------------------------
                                        Patrick Foye
                                        Executive Vice President


                                       8


PLEDGORS (FOR PURPOSES OF SECTION 5 ONLY):


                                    APARTMENT INVESTMENT AND MANAGEMENT COMPANY,
                                    a Maryland corporation, as Pledgor

                                    By: /s/ PETER K. KOMPANIEZ
                                        ----------------------------------------
                                        Peter K. Kompaniez
                                        President


                                    AIMCO PROPERTIES, L.P., a Delaware limited
                                    partnership, as Pledgor

                                    By:  AIMCO-GP, INC.,
                                         a Delaware corporation
                                    Its: General Partner

                                         By: /s/ PETER K. KOMPANIEZ
                                             -----------------------------------
                                             Peter K. Kompaniez
                                             President


                                    AIMCO/BETHESDA HOLDINGS, INC.,
                                    a Delaware corporation, as Pledgor

                                    By: /s/ PETER K. KOMPANIEZ
                                        ----------------------------------------
                                        Peter K. Kompaniez
                                        President


                                    NHP MANAGEMENT COMPANY,
                                    a District of Columbia corporation
                                    as Pledgor

                                    By: /s/ PATRICK FOYE
                                        ----------------------------------------
                                        Patrick Foye
                                        Executive Vice President


                                    AIMCO GP LA, L.P.,
                                    a Delaware limited partnership

                                    By: AIMCO-GP, INC.,
                                        its General Partner

                                    By: /s/ PETER K. KOMPANIEZ
                                        ----------------------------------------
                                        Peter K. Kompaniez
                                        President


                                       9


                                    AIMCO LP LA, L.P.,
                                    a Delaware limited partnership

                                    By: AIMCO LA QRS, INC.,
                                        its General Partner

                                    By: /s/ PETER K. KOMPANIEZ
                                        ----------------------------------------
                                        Peter K. Kompaniez
                                        President


                                    AIMCO-GP, INC.,
                                    a Delaware corporation

                                    By: /s/ PETER K. KOMPANIEZ
                                        ----------------------------------------
                                        Peter K. Kompaniez
                                        President


                                    AIMCO-LA QRS, INC.,
                                    a Delaware corporation

                                    By: /s/ PETER K. KOMPANIEZ
                                        ----------------------------------------
                                        Peter K. Kompaniez
                                        President


                                    LAC PROPERTIES OPERATING PARTNERSHIP, L.P.,
                                    a Delaware limited partnership

                                    By:  AIMCO GP LA, L.P.,
                                    Its: General Partner

                                         By:  AIMCO-GP, INC.,
                                         Its: General Partner

                                              By: /s/ PATRICK FOYE
                                                  ------------------------------
                                                  Patrick Foye
                                                  Executive Vice President


                                       10


                                    AIMCO INVESTMENT SERVICES, INC.,
                                    a Delaware corporation

                                    By: /s/ PATRICIA K. HEATH
                                        ----------------------------------------
                                        Patricia K. Heath
                                        Senior Vice President


                                    AIC REIT PROPERTIES LLC,
                                    a Delaware limited liability company

                                    By:  AIMCO Properties L.P.
                                    Its: Managing Member

                                         By:  AIMCO-GP, INC.,
                                         Its: General Partner

                                              By: /s/ PATRICIA HEATH
                                                  ------------------------------
                                                  Name:  Patricia Heath
                                                  Title: Senior Vice President
                                                         and Treasurer


GUARANTORS (FOR PURPOSES OF SECTION 5 ONLY):

AIMCO/Bethesda Holdings Acquisitions, Inc.
AIMCO/Bethesda Holdings Acquisitions II, Inc.
AIMCO/NHP Holdings, Inc.
NHP A&R Services, Inc.
AIMCO/NHP Properties, Inc.
Oxford Holding Corporation
Oxford Realty Financial Group, Inc.

By: /s/ PETER K. KOMPANIEZ
    -----------------------------------------
    Peter K. Kompaniez
    President


                                       11


AIMCO/Colonel I, L.P.,
AIMCO/Bethesda GP, L.L.C.
AIMCO/Bethesda Employee, L.L.C.
AIMCO/Bethesda II, LLC
AIMCO/Akron One, L.L.C.
AIMCO/Allentown, L.L.C.
AIMCO/Allview, L.L.C.
AIMCO/Apollo, L.L.C.
AIMCO/Augusta, L.L.C.
AIMCO/Beach, L.L.C.
AIMCO/Beville, L.L.C.
AIMCO/Brandermill, L.L.C.
AIMCO/Brandon, L.L.C.
AIMCO/Casselberry, L.L.C.
AIMCO/Charleston, L.L.C.
AIMCO/Chickasaw, L.L.C.
AIMCO/Chimneytop, L.L.C.
AIMCO/Farmingdale, L.L.C.
AIMCO/Fox Valley, L.L.C.
AIMCO/Greensboro, L.L.C.
AIMCO/Greenville, L.L.C.
AIMCO/Kettering, L.L.C.
AIMCO/Kings, L.L.C.
AIMCO/Kirkman, L.L.C.
AIMCO/Lake Ridge, L.L.C.
AIMCO/Lakeridge California, L.L.C.
AIMCO/Lantana, L.L.C.
AIMCO/Laurel, L.L.C.
AIMCO/Lexington, L.L.C.
AIMCO/Middletown, L.L.C.
AIMCO/Nashua, L.L.C.
AIMCO/Newport, L.L.C.
AIMCO/North Woods, L.L.C.
AIMCO/Ocala, L.L.C.
AIMCO/Palm Aire, L.L.C.
AIMCO/Palm Beach, L.L.C.
AIMCO/Pinellas, L.L.C.
AIMCO/Runaway Bay, L.L.C.
AIMCO/Salem, L.L.C.
AIMCO/San Bruno, L.L.C.
AIMCO/Schaumburg, L.L.C.
AIMCO/Southridge, L.L.C.
AIMCO/Spartanburg, L.L.C.
AIMCO/Tidewater, L.L.C.
AIMCO/Travis One, L.P.


                                       12


AIMCO/Westridge, L.L.C.
AIMCO/Bethesda Williamsburg, L.L.C.


By: AIMCO Properties, L.P.,
    Its General Partner

    By: AIMCO GP LA, L.P,
        Its General Partner

        By: /s/ PETER K. KOMPANIEZ
            --------------------------------
            Peter K. Kompaniez
            President


AIMCO Anchorage, L.P.
AIMCO Bay Club, L.P.
AIMCO Bridgewater, L.P.
AIMCO Copperfield, L.P.
AIMCO Crows Nest, L.P.
AIMCO Group, L.P.
AIMCO Hampton Hill, L.P.
AIMCO Hastings Place, L.P.
AIMCO LT, L.P.
AIMCO Oak Falls, L.P.
AIMCO Park at Cedar Lawn, L.P.
AIMCO Peppermill Place, L.P.
AIMCO Recovery Fund, L.P.
AIMCO Seaside Point, L.P.
AIMCO Signature Point, L.P.
AIMCO Stirling Court, L.P.
AIMCO Sunbury, L.P.
AIMCO Township at Highlands, L.P.
AIMCO UT, L.P.
AIMCO West Trails, L.P.

By: AIMCO Holdings, L.P., as their general partner

    By: AIMCO Holdings QRS, Inc., its
        general partner

        By: /s/ PETER K. KOMPANIEZ
            --------------------------------
            Peter K. Kompaniez
            President


                                       13


AIMCO Bay Club II, L.P.

By: AIMCO Bay Club, L.P., its general partner

    By: AIMCO Holdings, L.P., as its general partner

        By: AIMCO Holdings QRS, Inc., its
            general partner

            By: /s/ PETER K. KOMPANIEZ
                ----------------------------
                Peter K. Kompaniez
                President


AIMCO Holdings, L.P.

By: AIMCO Holdings QRS, Inc., its
    general partner

    By: /s/ PETER K. KOMPANIEZ
        ------------------------------------
        Peter K. Kompaniez
        President


Ambassador CRM Florida Partners, L.P.

By: Ambassador Apartments, L.P., as its
    general partner

    By: AIMCO Properties, L.P., as its
        general partner

        By: AIMCO-GP, Inc., as its
            general partner

            By: /s/ PETER K. KOMPANIEZ
                ----------------------------
                Peter K. Kompaniez
                President


                                       14


Ambassador I, L.P.

By: Ambassador I, Inc., its general partner

    By: /s/ PETER K. KOMPANIEZ
        ------------------------------------
        Peter K. Kompaniez
        President


Ambassador II, L.P.

By: Ambassador II, Inc., its general partner

    By: /s/ PETER K. KOMPANIEZ
        ------------------------------------
        Peter K. Kompaniez
        President


Ambassador VIII, L.P.

By: Ambassador VIII, Inc., its general partner

    By: /s/ PETER K. KOMPANIEZ
        ------------------------------------
        Peter K. Kompaniez
        President



Ambassador IX, L.P.

By: Ambassador IX, Inc., its general partner

    By: /s/ PETER K. KOMPANIEZ
        ------------------------------------
        Peter K. Kompaniez
        President


Ambassador Apartments, L.P.

By: AIMCO Properties, L.P., as its general partner

    By: AIMCO-GP, Inc., its general partner

        By: /s/ PETER K. KOMPANIEZ
            --------------------------------
            Peter K. Kompaniez
            President


                                       15


Property Asset Management Services, L.L.C.

By: NHP Management Company, as its Sole Member

    By: /s/ PATRICK FOYE
        ------------------------------------
        Patrick Foye
        Executive Vice President

Ambassador X, L.P.

By: Ambassador X, Inc., its general partner

    By: /s/ PETER K. KOMPANIEZ
        ------------------------------------
        Peter K. Kompaniez
        President


Williamsburg Limited Partnership

By: Ambassador IX, L.P., its general partner

    By: Ambassador IX, Inc., its general partner

        By: /s/ PETER K. KOMPANIEZ
            --------------------------------
            Peter K. Kompaniez
            President


Property Asset Management Services-California, LLC

By: Property Asset Management Services, L.L.C., its Sole Member

    By: NHP Management Company, its Sole Member

        By: /s/ PATRICK FOYE
            --------------------------------
            Patrick Foye
            Executive Vice President


                                       16


NHP/Congress Management L.P.

    By: NHP-HG Six, Inc., its general partner

        By: /s/ PATRICK FOYE
            --------------------------------
            Patrick Foye
            Executive Vice President


NPI-AP Management, L.P.

By: NPI Property Management Corporation, its
    general partner

    By: /s/ PATRICK FOYE
        ------------------------------------
        Patrick Foye
        Executive Vice President




AIMCO Residential Group, L.P.

By: NHP Management Company, its general partner

    By: /s/ PATRICK FOYE
        ------------------------------------
        Patrick Foye
        Executive Vice President


AIMCO IPLP, L.P.

By: AIMCO/IPT, Inc., its general partner

    By: /s/ PETER K. KOMPANIEZ
        ------------------------------------
        Peter K. Kompaniez
        President

AIMCO Calhoun, Inc.
AIMCO Colorado Residential Group, Inc.
AIMCO Investment Services, Inc.
AIMCO Holdings QRS, Inc.
AIMCO LJ Tucson, Inc.
AIMCO Properties Finance Corp.
AIMCO/Brant Rock, Inc.
AIMCO/Beacon Hill, Inc.


                                       17


AIMCO/Blossomtree, Inc.
AIMCO/Colonnade, Inc.
AIMCO/Foothills, Inc.
AIMCO/Foxtree, Inc.
AIMCO/Freedom Place, Inc.
AIMCO/Grovetree, Inc.
AIMCO/Hiddentree, Inc.
AIMCO/IPT, Inc.
AIMCO/Islandtree, Inc.
AIMCO/Olmos, Inc.
AIMCO/Orchidtree, Inc.
AIMCO/OTC QRS, Inc.
AIMCO/Pine Creek, Inc.
AIMCO/Polo Park, Inc.
AIMCO/Quailtree, Inc.
AIMCO/Rivercrest, Inc.
AIMCO/Sand Castles, Inc.
AIMCO/Sand Pebble, Inc.
AIMCO/Shadetree, Inc.
AIMCO/Shadow Lake, Inc.
AIMCO/Silktree, Inc.
AIMCO/Surrey Oaks, Inc.
AIMCO/Tall Timbers, Inc.
AIMCO/The Hills, Inc.
AIMCO/Timbertree, Inc.
AIMCO/Wickertree, Inc.
AIMCO/Wildflower, Inc.
AIMCO/Windsor Landing, Inc.
AIMCO/Woodhollow, Inc.
AIMCO/Wydewood, Inc.
AIMCO/Yorktree, Inc.
AIMCO-LP, Inc.
AIMCO-GP, Inc.
Ambassador I, Inc.
Ambassador II, Inc.
Ambassador IV, Inc.
Ambassador V, Inc.
Ambassador VIII, Inc.
Ambassador Texas, Inc.
Ambassador X, Inc.
Ambassador XI, Inc.
Ambassador Florida Partners Inc.
Angeles Realty Corporation II
NHP Multi-Family Capital Corporation
A.J. Two, Inc.
AIMCO Equity Services, Inc.


                                       18


NHP-HDV Ten, Inc.
NHP-HDV Fourteen, Inc.
NHP-HDV 20, Inc.
Broad Street Management, Inc.
DBL Properties Corporation
SF General, Inc.
CPF XIV/St. Charleston, Inc.
CPF XIV/Torrey Pines, Inc.
CPF XIV/Sun River, Inc.
CPF XV/Lakeside Place, Inc.
ConCap Equities, Inc.
ConCap Holdings, Inc.
PRA, Inc.
National Property Investors, Inc.

     By: /s/ PETER K. KOMPANIEZ
         -----------------------------------
         Peter K. Kompaniez
         President



AIMCO GP LA, L.P.

By:  AIMCO-GP, Inc., a Delaware corporation
Its: General Partner

By:  /s/ PETER K. KOMPANIEZ
     ---------------------------------------
     Name:  Peter K. Kompaniez
     Title: President


AIMCO LP LA, L.P.

By:  AIMCO LA QRS, Inc., a Delaware corporation
Its: General Partner

By:  /s/ PETER K. KOMPANIEZ
     ---------------------------------------
     Name:  Peter K. Kompaniez
     Title: President


                                       19


LAC PROPERTIES OPERATING PARTNERSHIP, L.P.

By:  AIMCO GP LA, L.P., a Delaware limited
     Partnership
Its: General Partner

     By:  AIMCO-GP, Inc., a Delaware
          Corporation
     Its: General Partner

          By: /s/ PETER K. KOMPANIEZ
              ------------------------------
              Name:  Peter K. Kompaniez
              Title: President


AIC REIT PROPERTIES LLC
a Delaware limited liability company

By:  AIMCO Properties, L.P.
Its: Managing Member

By:  AIMCO-GP, Inc.
Its: General Partner


By: /s/ PETER K. KOMPANIEZ
    ----------------------------------------
Name:  Peter K. Kompaniez
Title: President


                                       20


AIMCO LA QRS, INC.
HAPI MANAGEMENT, INC.
MAYER MANAGEMENT, INC.
MAYER PROPERTY SERVICES, INC.
AIMCO PARK LA BREA INC.
LA BROADCAST CENTER QRS INC.
LA CANYON TERRACE QRS INC.
LA CREEKSIDE QRS INC.
LA CRESCENT GARDENS QRS INC.
LA INDIAN OAKS QRS INC.
LA LAKES QRS INC.
LA MALIBU CANYON QRS INC.
LA HILLCRESTE QRS INC.
LA TOPANGA QRS INC.
LA CENTINELA QRS INC.
LAC PROPERTIES QRS II INC.
LAC PROPERTIES QRS III INC.

                                    By: /s/ PETER K. KOMPANIEZ
                                        ----------------------------------------
                                        Name:  Peter K. Kompaniez
                                        Title: President


                                       21

AIMCO Colorado Residential Group, Inc.

    By: /s/ PETER K. KOMPANIEZ
        ------------------------------------
        Peter K. Kompaniez
        President

                                       22

BANK OF AMERICA


                                    BANK OF AMERICA, N.A.,
                                    as Administrative Agent


                                    By:
                                        ----------------------------------------
                                        Name:
                                        Title:


                                       23


                                    BANK OF AMERICA, N.A., as
                                    Issuing Lender and a Lender


                                    By:
                                        ----------------------------------------
                                        Name:
                                        Title:


                                       24


                                    FLEET NATIONAL BANK, as a Lender


                                    By:
                                        ----------------------------------------
                                        Name:
                                        Title:


                                       25


                                    THE BANK OF NOVA SCOTIA, acting through its
                                    San Francisco Agency, as Lender


                                    By:
                                        ----------------------------------------
                                        Name:
                                        Title:


                                       26


                                    CALIFORNIA BANK & TRUST, a California
                                    banking corporation, as a Lender


                                    By:
                                        ----------------------------------------
                                        Name:
                                        Title:


                                       27


                                    JP MORGAN CHASE BANK (formerly known as
                                    The Chase Manhattan Bank), a New York
                                    banking corporation, as a Lender


                                    By:
                                        ----------------------------------------
                                        Name:
                                        Title:


                                       28


                                    WACHOVIA BANK NA (formerly known as First
                                    Union National Bank), as a Lender


                                    By:
                                        ----------------------------------------
                                        Name:
                                        Title:


                                       29


                                    KEYBANK NATIONAL ASSOCIATION, as a Lender


                                    By:
                                        ----------------------------------------
                                        Name:
                                        Title:


                                       30


                                    SOUTHTRUST BANK, N.A., as a Lender


                                    By:
                                        ----------------------------------------
                                        Name:
                                        Title:


                                       31


                                    U.S. BANK NATIONAL ASSOCIATION, as a Lender


                                    By:
                                        ----------------------------------------
                                        Name:
                                        Title:


                                       32


                                    NEW YORK LIFE INSURANCE CORP., as a Lender


                                    By:
                                        ----------------------------------------
                                        Name:
                                        Title:


                                       33

EX-10.3

                                                                    EXHIBIT 10.3


         SECOND AMENDMENT, dated as of August 2,2002 (this "Amendment", to the
INTERIM CREDIT AGREEMENT, dated as of March 11, 2002 (as amended by the First
Amendment and Waiver, dated as of June 12, 2002, and as further amended,
restated, extended, supplemented or otherwise modified in writing from time to
time, the "Credit Agreement"), among AIMCO PROPERTIES, L.P., a Delaware limited
partnership ("AIMCO"), NHP MANAGEMENT COMPANY, a District of Columbia
corporation ("NHP Management") and APARTMENT INVESTMENT AND MANAGEMENT COMPANY,
a Maryland corporation (the "REIT") (AIMCO, NHP Management and the REIT are
collectively referred to herein as "Borrowers"), LEHMAN COMMERCIAL PAPER INC.,
as Administrative Agent (in such capacity, the "Administrative Agent"), as
Syndication Agent and as a Lender, each lender from time to time party thereto
and LEHMAN BROTHERS INC., as Sole Lead Arranger and Bookrunner.

                                  WITNESSETH:

         WHEREAS, pursuant to the Credit Agreement, the Lenders have agreed to
make, and have made, certain Loans and other extensions of credit to the
Borrowers;

         WHEREAS, the Borrower has requested that the Lenders agree to amend
Section 7.14(a) of the Credit Agreement;

         WHEREAS, the Lenders have agreed to amend such Section solely upon the
terms and conditions provided for in this Amendment;

         NOW, THEREFORE, the parties hereto agree as follows:

         1. Defined Terms. Terms defined in the Credit Agreement and used herein
shall have the meanings given to them in the Credit Agreement.

         2. Amendment to Section 7.14(a) of the Credit Agreement. Section
7.14(a) of the Credit Agreement is hereby amended by deleting it in its entirety
and substituting in lieu therefor the following new Section:

          (a) Permit the Fixed Charge Coverage Ratio as at the end of any fiscal
     quarter set forth below to be less than the ratio set forth below opposite
     such fiscal quarter:



                                                             Fixed Charge
                     Fiscal Quarter Ended                   Coverage Ratio
           ---------------------------------------          --------------
                                                         
           Closing Date to March 31,2002                          1.70x

           June 30, 2002 to June 30, 2003                         1.60x

           September 30, 2003 to December 31, 2003                1.65x

           March 31, 2004 and thereafter                          1.70x




         3. Conditions to Effectiveness. This Amendment shall become effective
on the date on which all of the following conditions precedent have been
satisfied or waived (the "Effective Date"):

          (a) The Administrative Agent shall have received five counterparts
     hereof duly executed and delivered by each Borrower.

          (b) The Administrative Agent shall have received executed Lender
     Consent Letters, substantially in the form of Exhibit A hereto ("Lender
     Consent Letters") from each of the Supermajority Lenders.

          (c) The Administrative Agent shall have received an executed
     Acknowledgment and Consent, in the form of Exhibit B-1, B-2 or B-3, as
     applicable, from each Guarantor and each Pledgor other than the Borrowers.

          (d) The Administrative Agent shall have received for the account of
     each Lender that executes and delivers to the Administrative Agent a
     Consent Letter at or prior to 5:00 P.M., New York City time, on August
     2, 2002, a consent fee equal to 0.20% of the aggregate unpaid principal
     amount of such Lender's Loans on such date.

          (e) On or before the Effective Date, all corporate and other
     proceedings taken or to be taken in connection with this Amendment and all
     documents incidental thereto nor previously found acceptable by
     Administrative Agent, acting on behalf of Lenders, and its counsel shall be
     satisfactory in form and substance to Administrative Agent and such
     counsel, and Administrative Agent and such counsel shall have received all
     such counterpart originals or certified copies of such documents as
     Administrative Agent may reasonably request.

          (f) The Administrative Agent shall have received evidence satisfactory
     to it and its counsel that the Revolver Administrative Agent and the
     Lenders under the Revolving Credit Agreement (i) have modified, or
     concurrently with the Effective Date will modify, the Revolving Credit
     Agreement in a manner satisfactory to the Administrative Agent and the
     Lenders and the Administrative Agent shall have been provided with true,
     correct and complete copies of the documents effecting such modifications
     to the Revolving Credit Agreement and (ii) have consented to or waived
     their right to consent to the Borrowers' and the Guarantors' execution and
     delivery of this Amendment.

         4. Representations and Warranties. Each of the Borrowers hereby
represents and warrants to Administrative Agent and each Lender that (before and
after giving effect to this Amendment):

          (a) Each Borrower has all requisite corporate or other entity power
     and authority to enter into this Amendment and to carry out the
     transactions contemplated by, and perform its obligations under, the Credit
     Agreement as amended by this Amendment (the "Amended Agreement") and each
     Loan Document. Each Guarantor and each Pledgor has all requisite corporate
     or other entity power and authority to enter into the




     Acknowledgement and Consent, in the form of Exhibit B-1, B-2 or B-3, as
     applicab1e, and to carry out the transactions contemplated by, and perform
     its obligations under each Loan Document to which it is a party.

          (b) The execution and delivery of this Amendment and of each
     Acknowledgement and Consent and the performance of the Amended Agreement
     and of each other Loan Document have been duly authorized by all necessary
     corporate or other entity action on the part of each Borrower Party that is
     a party thereto.

          (c) The execution, delivery, and performance by each Borrower of this
     Amendment and of the Amended Agreement and by each Pledgor and Guarantor of
     each Acknowledgement and Consent to which it is a party and compliance with
     the provisions thereof do not and will not (i) violate or conflict with, or
     result in a breach of, or require any consent under (A) any Organization
     Documents of such Borrower Party or any of its Subsidiaries, (B) any
     applicable material Laws, rules, or regulations or any order, writ,
     injunction, or decree of any Governmental Authority or arbitrator, or (C)
     any Contractual Obligation of such Borrower Party or any of its
     Subsidiaries or by which any of them or any of their property is bound or
     subject, or (ii) constitute a default under any such agreement or
     instrument, or (iii) result in, or require, the creation or imposition of
     any Lien on any of the Properties of such Borrower Party or any of its
     Subsidiaries, except, in each case under this clause (c), as provided in
     Section 5.03 of the Credit Agreement.

          (d) The execution, delivery and performance by each Borrower Party of
     this Amendment and of the Amended Agreement and by each Pledgor and
     Guarantor of each Acknowledgment and Consent to which it is a party do not
     and will not require any authorization of a Governmental Authority (other
     than any authorizations of a Governmental Authority obtained on or before
     the Effective Date and disclosed in writing to the Lenders).

          (e) This Amendment and each Acknowledgment and Consent has been duly
     executed and delivered by each Borrower Party party thereto and this
     Amendment and each Acknowledgment and Consent are the legally valid and
     binding obligations of such Borrower Parties party thereto, enforceable
     against such Borrower Parties in accordance with their respective terms,
     except as may be limited by bankruptcy, insolvency, reorganization,
     moratorium or similar laws relating to or limiting creditors' rights
     generally or by equitable principles relating to enforceability.

          (f) The representations and warranties in Section V of the Credit
     Agreement are true correct and complete in all material respects on and as
     of the Effective Date to the same extent as though made on and as of that
     date (or, to the extent such representations and warranties specifically
     relate to an earlier date, were true, correct and complete in all material
     respects on and as of such earlier date).

          (g) Borrowers and the other Borrower Parties have performed in all
     material respects all agreements and satisfied all conditions which this
     Amendment, the Credit Agreement and the other Loan Documents provide shall
     be performed or satisfied by Borrowers or the other Borrower Parties on or
     before the Effective Date.




         (h) After giving effect to this Amendment, no Default or Event of
     Default has occurred and is continuing, or will result from the
     consummation of the transactions contemplated by this Amendment.

         5. Payment of Expenses. The Borrowers jointly and severally agree to
pay or reimburse the Administrative Agent for all of its out-of-pocket costs and
expenses incurred in connection with this Amendment, any other documents
prepared in connection herewith and the transactions contemplated hereby,
including, without limitation, the reasonable fees and disbursements of counsel
to the Administrative Agent.

         6. No Other Amendments or Waivers; Confirmation. Except as expressly
provided hereby, all of the terms and provisions of the Credit Agreement and the
other Loan Documents are and shall remain in full force and effect. The
amendment and waivers contained herein shall not be construed as an amendment or
waiver of any other provision of the Credit Agreement or the other Loan
Documents or for any purpose except as expressly set forth herein or a consent
to any further or future action on the part of the Borrowers that would require
the waiver or consent of the Administrative Agent or the Lenders.

         7. GOVERNING LAW; Miscellaneous. (a) THIS AMENDMENT AND THE RIGHTS
AND OBLIGATIONS OF THE PARTIES HERETO SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH ThE LAW OF ThE STATE OF NEW YORK.

         (b) On and after the Effective Date, each reference in the Credit
     Agreement to "this Agreement", "hereunder", "hereof" "herein", or words of
     like import referring to the Credit Agreement, and each reference in the
     other Loan Documents to the "Credit Agreement", "thereunder", "thereof",
     or words of like import referring to the Credit Agreement shall mean and be
     a reference to the Amended Agreement.

         (c) This Amendment may be executed by one or more of the parties to
     this Agreement on any number of separate counterparts, and all of said
     counterparts taken together shall be deemed to constitute one and the same
     instrument. A set of the copies of this Amendment, each Acknowledgment and
     Consent and the Lender Consent Letters signed by all the parties shall be
     lodged with the Borrowers and the Administrative Agent. This Amendment may
     be delivered by facsimile transmission of the relevant signature pages
     hereof.

         (d) The execution and delivery of the Lender Consent Letter by any
     Lender shall be binding upon each of its successors and assigns (including
     assignees of its Loans in whole or in part prior to effectiveness hereof).



         IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed and delivered by their respective proper and duly authorized
officers as of the day and year first above written.


                                       AIMCO PROPERTIES, L.P.

                                       By:  AIMCO-GP, INC.
                                       Its: General Partner


                                       By: /s/ PETER K. KOMPANIEZ
                                           -------------------------------------
                                           Name:  Peter K. Kompaniez
                                           Title: President


                                       APARTMENT INVESTMENT AND MANAGEMENT
                                        COMPANY


                                       By: /s/ PETER K. KOMPANIEZ
                                           -------------------------------------
                                           Name:  Peter K. Kompaniez
                                           Title: President


                                       NHP MANAGEMENT COMPANY

                                       By: /s/ PATRICK FOYE
                                           -------------------------------------
                                           Name:  Patrick Foye
                                           Title: Executive Vice President


                                       LEHMAN COMMERCIAL PAPER INC.,
                                        as Administrative Agent


                                       By: /s/
                                           -------------------------------------
                                           Name:
                                           Title: Authorized Signatory

EX-99.1

                                                                    EXHIBIT 99.1


          Agreement Regarding Disclosure of Long-Term Debt Instruments

         In reliance upon Item 601(b) (4)(iii)(A), of Regulation S-K, Apartment
Investment and Management Company, a Maryland corporation (the "Company") has
not filed as an exhibit to its Quarterly Report on Form 10-Q for the quarterly
period ended June 30, 2002, any instrument with respect to long-term debt not
being registered where the total amount of securities authorized thereunder does
not exceed 10 percent of the total assets of the Company and its subsidiaries on
a consolidated basis. Pursuant to Item 601(b)(4)(iii)(A), of Regulation S-K, the
Company hereby agrees to furnish a copy of any such agreement to the Securities
Exchange Commission upon request.


                                       APARTMENT INVESTMENT AND
                                       MANAGEMENT COMPANY


                                       By: /s/ PETER KOMPANIEZ
                                           ----------------------------------
                                           Peter Kompaniez
                                           President

EX-99.2

                                                                    EXHIBIT 99.2



                        CERTIFICATION OF CEO PURSUANT TO
                             18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Apartment Investment and Management
Company (the "Company") on Form 10-Q for the period ending June 30, 2002 as
filed with the Securities and Exchange Commission on the date hereof (the
"Report"), Terry Considine, as Chief Executive Officer of the Company hereby
certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002, to the best of his knowledge, that:

         (1) The Report fully complies with the requirements of section 13(a) of
the Securities Exchange Act of 1934; and

         (2) The information contained in the Report fairly presents, in all
material respects, the financial condition and result of operations of the
Company.

/s/ TERRY CONSIDINE
- ------------------------------
Terry Considine
Chief Executive Officer
August 14, 2002

This certification accompanies this Report pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 and shall not be deemed filed by the Company for
purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

EX-99.3

                                                                    EXHIBIT 99.3



                        CERTIFICATION OF CFO PURSUANT TO
                             18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Apartment Investment and Management
Company (the "Company") on Form 10-Q for the period ending June 30, 2002 as
filed with the Securities and Exchange Commission on the date hereof (the
"Report"), Paul J. McAuliffe, as Chief Financial Officer of the Company hereby
certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002, to the best of his knowledge, that:

         (1) The Report fully complies with the requirements of section 13(a) of
the Securities Exchange Act of 1934; and

         (2) The information contained in the Report fairly presents, in all
material respects, the financial condition and result of operations of the
Company.

/s/ PAUL J. MCAULIFFE
- ------------------------------
Paul J. McAuliffe
Chief Financial Officer
August 14, 2002

This certification accompanies this Report pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 and shall not be deemed filed by the Company for
purposes of Section 18 of the Securities Exchange Act of 1934, as amended.