10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

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

For the quarterly period ended June 30, 2007

OR

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

For the transition period from            to

Commission File Number 1-13232

Apartment Investment and Management Company

(Exact name of registrant as specified in its charter)

Maryland	84-1259577
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)
4582 South Ulster Street Parkway, Suite 1100	80237
Denver, Colorado	(Zip Code)
(Address of principal executive offices)

(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 þ No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition in Rule 12b-2 of the Exchange Act.

Large accelerated filer þ      Accelerated filer o      Non-accelerated filer o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

The number of shares of Class A Common Stock outstanding as of July 31, 2007: 96,740,114

APARTMENT INVESTMENT AND MANAGEMENT COMPANY

TABLE OF CONTENTS

FORM 10-Q

	Page
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
Consolidated Balance Sheets as of June 30, 2007 and December 31, 2006 (Unaudited)		2
Consolidated Statements of Income for the Three and Six Months Ended June 30, 2007 and 2006 (Unaudited)		3
Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2007 and 2006 (Unaudited)		4
Notes to Consolidated Financial Statements (Unaudited)		5
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		16
ITEM 3. Quantitative and Qualitative Disclosures about Market Risk		30
ITEM 4. Controls and Procedures		30
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings		31
ITEM 1A. Risk Factors		31
ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds		31
ITEM 4. Submission of Matters to a Vote of Security Holders		32
ITEM 5. Other Information		32
ITEM 6. Exhibits		34
Signatures		35
Amended and Restated Bylaws
Certification of CEO Pursuant to Section 302
Certification of CFO Pursuant to Section 302
Certification Pursuant to Section 906
Certification Pursuant to Section 906
Agreement Re: Disclosure of Long-Term Instruments

1

PART I. FINANCIAL INFORMATION

ITEM 1. Financial Statements

APARTMENT INVESTMENT AND MANAGEMENT COMPANY

CONSOLIDATED BALANCE SHEETS

(In Thousands, Except Share Data)

	June 30,			December 31,
	2007			2006
	(Unaudited)
ASSETS
Real estate:
Land	$	2,608,316		$	2,384,926
Buildings and improvements		9,486,611			9,301,769
Total real estate		12,094,927			11,686,695
Less accumulated depreciation		(2,905,219	)		(2,778,355	)
Net real estate		9,189,708			8,908,340
Cash and cash equivalents		258,027			229,824
Restricted cash		332,955			346,552
Accounts receivable		76,347			85,772
Accounts receivable from affiliates		33,680			20,763
Deferred financing costs		73,136			72,214
Notes receivable from unconsolidated real estate partnerships		43,106			40,641
Notes receivable from non-affiliates		138,678			139,352
Investment in unconsolidated real estate partnerships		37,124			39,000
Other assets		199,321			202,760
Deferred income tax assets, net		5,139			—
Assets held for sale		12,420			204,557
Total assets	$	10,399,641		$	10,289,775
LIABILITIES AND STOCKHOLDERS’ EQUITY
Property tax-exempt bond financing	$	949,692		$	926,952
Property loans payable		5,595,153			5,198,010
Term loans		400,000			400,000
Credit facility		154,000			140,000
Other borrowings		59,786			67,660
Total indebtedness		7,158,631			6,732,622
Accounts payable		42,096			54,972
Accrued liabilities and other		300,373			409,991
Deferred income		150,326			142,442
Security deposits		48,038			43,325
Deferred income tax liabilities, net		—			4,379
Liabilities related to assets held for sale		8,546			164,556
Total liabilities		7,708,010			7,552,287
Minority interest in consolidated real estate partnerships		262,608			212,149
Minority interest in Aimco Operating Partnership		155,564			185,447
Stockholders’ equity:
Preferred Stock, perpetual		723,500			723,500
Preferred Stock, convertible		100,000			100,000
Class A Common Stock, $0.01 par value, 426,157,976 shares authorized, 96,717,908 and 96,820,252 shares issued and outstanding, at June 30, 2007 and December 31, 2006, respectively		967			968
Additional paid-in capital		3,060,683			3,095,430
Notes due on common stock purchases		(3,760	)		(4,714	)
Distributions in excess of earnings		(1,607,931	)		(1,575,292	)
Total stockholders’ equity		2,273,459			2,339,892
Total liabilities and stockholders’ equity	$	10,399,641		$	10,289,775

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						Six Months Ended
	June 30,						June 30,
	2007			2006			2007			2006
REVENUES:
Rental and other property revenues	$	421,864		$	392,499		$	832,363		$	776,894
Property management revenues, primarily from affiliates		1,271			3,592			3,367			6,622
Activity fees and asset management revenues		15,178			12,133			26,808			21,673
Total revenues		438,313			408,224			862,538			805,189
OPERATING EXPENSES:
Property operating expenses		192,681			173,506			385,924			353,571
Property management expenses		2,072			2,151			3,278			2,643
Activity and asset management expenses		6,076			4,946			11,351			9,134
Depreciation and amortization		121,807			112,272			244,195			219,461
General and administrative expenses		24,606			23,207			46,683			44,236
Other expenses (income), net		(4,272	)		1,615			(2,266	)		1,994
Total operating expenses		342,970			317,697			689,165			631,039
Operating income		95,343			90,527			173,373			174,150
Interest income		9,242			5,437			18,810			12,368
Recoveries of (provision) for losses on notes receivable, net		(735	)		(502	)		(2,278	)		(764	)
Interest expense		(104,875	)		(98,157	)		(209,615	)		(193,971	)
Deficit distributions to minority partners, net		(2,028	)		(3,935	)		(3,221	)		(6,011	)
Equity in earnings (losses) of unconsolidated real estate partnerships		930			(574	)		(2,055	)		(2,436	)
Provision for real estate impairment losses, net		—			(15	)		—			971
Gain on dispositions of unconsolidated real estate and other		639			1,059			21,061			10,757
Loss before minority interests and discontinued operations		(1,484	)		(6,160	)		(3,925	)		(4,936	)
Minority interests:
Minority interest in consolidated real estate partnerships		(265	)		1,522			(6,182	)		6,636
Minority interest in Aimco Operating Partnership, preferred		(1,782	)		(1,785	)		(3,564	)		(3,583	)
Minority interest in Aimco Operating Partnership, common		1,821			2,238			4,342			4,171
Total minority interests		(226	)		1,975			(5,404	)		7,224
Income (loss) from continuing operations		(1,710	)		(4,185	)		(9,329	)		2,288
Income from discontinued operations, net		21,039			39,277			53,866			116,874
Net income		19,329			35,092			44,537			119,162
Net income attributable to preferred stockholders		16,346			19,034			32,694			43,088
Net income attributable to common stockholders	$	2,983		$	16,058		$	11,843		$	76,074
Earnings (loss) per common share — basic:
Loss from continuing operations (net of preferred dividends)	$	(0.19	)	$	(0.24	)	$	(0.44	)	$	(0.43	)
Income from discontinued operations		0.22			0.41			0.56			1.23
Net income attributable to common stockholders	$	0.03		$	0.17		$	0.12		$	0.80
Earnings (loss) per common share — diluted:
Loss from continuing operations (net of preferred dividends)	$	(0.19	)	$	(0.24	)	$	(0.44	)	$	(0.43	)
Income from discontinued operations		0.22			0.41			0.56			1.23
Net income attributable to common stockholders	$	0.03		$	0.17		$	0.12		$	0.80
Weighted average common shares outstanding		95,973			96,071			95,972			95,627
Weighted average common shares and equivalents outstanding		95,973			96,071			95,972			95,627
Dividends declared per common share	$	0.60		$	0.60		$	0.60		$	0.60

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,
	2007			2006
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	44,537		$	119,162
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		244,195			219,461
Discontinued operations		(53,121	)		(127,029	)
Other adjustments		(9,103	)		11,527
Net changes in operating assets and operating liabilities		(23,171	)		41,819
Net cash provided by operating activities		203,337			264,940
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of real estate		(174,991	)		(41,732	)
Capital expenditures		(268,608	)		(236,203	)
Proceeds from dispositions of real estate		259,631			544,815
Change in funds held in escrow from tax-free exchanges		9,975			—
Cash from newly consolidated properties		—			22,432
Purchases of general and limited partnership interests and other assets		(17,541	)		(10,932	)
Originations of notes receivable from unconsolidated real estate partnerships		(8,640	)		(7,820	)
Proceeds from repayment of notes receivable		14,152			5,318
Distributions received from investments in unconsolidated real estate partnerships		1,814			11,312
Other investing activities		(2,756	)		(21,255	)
Net cash provided by (used in) investing activities		(186,964	)		265,935
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from property loans		791,330			656,634
Principal repayments on property loans		(528,459	)		(599,870	)
Proceeds from tax exempt bonds		82,350			—
Principal repayments on tax-exempt bond financing		(58,659	)		(31,690	)
Net borrowings (repayments) on term loans and revolving credit facility		14,000			(217,000	)
Proceeds from issuance of preferred stock, net		—			97,537
Redemption of preferred stock		—			(113,250	)
Repurchases of Class A Common Stock		(136,603	)		—
Proceeds from Class A Common Stock option exercises		53,232			39,459
Principal repayments received on notes due on Class A Common Stock purchases		1,605			18,626
Payment of Class A Common Stock dividends		(116,363	)		(115,046	)
Payment of preferred stock dividends		(32,720	)		(41,879	)
Payment of distributions to minority interest		(52,877	)		(61,589	)
Other financing activities		(5,006	)		(1,074	)
Net cash provided by (used in) financing activities		11,830			(369,142	)
NET INCREASE IN CASH AND CASH EQUIVALENTS		28,203			161,733
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD		229,824			161,730
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	258,027		$	323,463

See notes to consolidated financial statements.

4

APARTMENT INVESTMENT AND MANAGEMENT COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2007

(Unaudited)

Note 1 — Organization

     Apartment Investment and Management Company, or Aimco, is a Maryland corporation incorporated on January 10, 1994. We are a self-administered and self-managed real estate investment trust, or REIT, engaged in the acquisition, ownership, management and redevelopment of apartment properties. As of June 30, 2007, we owned or managed a real estate portfolio of 1,216 apartment properties containing 209,507 apartment units located in 47 states, the District of Columbia and Puerto Rico. Based on apartment unit data compiled by the National Multi Housing Council, as of January 1, 2007, we were the largest owner and operator of apartment properties in the United States.

     As of June 30, 2007, we:

• owned an equity interest in and consolidated 156,958 units in 676 properties (which we refer to as “consolidated”), of which 156,240 units were also managed by us;

• owned an equity interest in and did not consolidate 11,741 units in 101 properties (which we refer to as “unconsolidated”), of which 5,465 units were also managed by us; and

• provided services or managed, for third-party owners, 40,808 units in 439 properties, primarily pursuant to long-term agreements (including 37,283 units in 399 properties for which we provide asset management services only, and not also property management services), although in certain cases we may indirectly own generally less than one percent of the operations of such properties through a partnership syndication or other fund.

     Through our wholly-owned subsidiaries, AIMCO-GP, Inc. and AIMCO-LP, Inc., we own a majority of the ownership interests in AIMCO Properties, L.P., which we refer to as the Aimco Operating Partnership. As of June 30, 2007, we held approximately a 91% interest in the common partnership units and equivalents of the Aimco Operating Partnership. We conduct substantially all of our business and own substantially all of our assets through the Aimco Operating Partnership. Interests in the Aimco Operating Partnership that are held by limited partners other than Aimco are referred to as “OP Units.” OP Units include common OP Units, partnership preferred units, or preferred OP Units, and high performance partnership units, or High Performance Units. The Aimco Operating Partnership’s income is allocated to holders of common OP Units based on the weighted average number of common OP Units outstanding during the period. The Aimco Operating Partnership records the issuance of common OP Units and the assets acquired in purchase transactions based on the market price of Aimco Class A Common Stock (which we refer to as Common Stock) at the date of execution of the purchase contract. The holders of the common OP Units receive distributions, prorated from the date of issuance, in an amount equivalent to the dividends paid to holders of Common Stock. Holders of common OP Units may redeem such units for cash or, at the Aimco Operating Partnership’s option, Common Stock. Preferred OP Units entitle the holders thereof to a preference with respect to distributions or upon liquidation. At June 30, 2007, 96,717,908 shares of our Common Stock were outstanding and the Aimco Operating Partnership had 9,714,777 common OP Units and equivalents outstanding for a combined total of 106,432,685 shares of Common Stock and OP Units outstanding (excluding preferred OP Units).

     Except as the context otherwise requires, “we,” “our,” “us” and the “Company” refer to Aimco, the Aimco Operating Partnership and their consolidated entities, collectively.

5

Note 2 — Basis of Presentation

     The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America, or GAAP, 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 disclosures required by GAAP 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, 2007, are not necessarily indicative of the results that may be expected for the year ending December 31, 2007.

     The balance sheet at December 31, 2006, has been derived from the audited financial statements at that date but does not include all of the information and disclosures required by GAAP for complete financial statements. For further information, refer to the financial statements and notes thereto included in Aimco’s Annual Report on Form 10-K for the year ended December 31, 2006. Certain 2006 financial statement amounts have been reclassified to conform to the 2007 presentation.

Principles of Consolidation

     The accompanying consolidated financial statements include the accounts of Aimco, the Aimco Operating Partnership, and their consolidated entities. Interests held in the Aimco Operating Partnership by partners other than Aimco are reflected as minority interest in Aimco Operating Partnership. As used herein, and except where the context otherwise requires, “partnership” refers to a limited partnership or a limited liability company and “partner” refers to a partner in a limited partnership or a member in a limited liability company. Interests held in consolidated real estate partnerships by partners other than us are reflected as minority interest in consolidated real estate partnerships. All significant intercompany balances and transactions have been eliminated in consolidation. The assets of consolidated real estate partnerships owned or controlled by Aimco or the Aimco Operating Partnership generally are not available to pay creditors of Aimco or the Aimco Operating Partnership.

     We consolidate all variable interest entities for which we are the primary beneficiary. Generally, we consolidate real estate partnerships and other entities that are not variable interest entities when we own, directly or indirectly, a majority voting interest in the entity or are otherwise able to control the entity.

Adoption of FIN 48

     In June 2006, the Financial Accounting Standards Board, or FASB, issued FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes – an Interpretation of FASB Statement No. 109, or FIN 48. FIN 48 prescribes a two-step process for the financial statement recognition and measurement of income tax positions taken or expected to be taken in a tax return. The first step involves evaluation of a tax position to determine whether it is more likely than not that the position will be sustained upon examination, based on the technical merits of the position. The second step involves measuring the benefit to recognize in the financial statements for those tax positions that meet the more-likely-than-not recognition threshold. FIN 48 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition.

     We adopted FIN 48 as of January 1, 2007. Upon adoption, we recorded a $0.8 million charge to distributions in excess of earnings to reflect our measurement in accordance with FIN 48 of uncertain income tax positions that affect net operating loss carryforwards recognized as deferred tax assets. As of January 1, 2007, our unrecognized tax benefits totaled approximately $3.1 million. To the extent these unrecognized tax benefits are ultimately recognized, they will affect the effective tax rates in future periods. There were no changes in unrecognized tax benefits during the six months ended June 30, 2007. We do not anticipate any material changes in existing unrecognized tax benefits during the next 12 months. Our federal and state income tax returns for the year ended December 31, 2003, and subsequent years are currently subject to examination by the Internal Revenue Service or other taxing authorities. Certain of our state income tax returns for the year ended December 31, 2002, also are currently subject to examination. Our policy is to include interest and penalties related to income taxes in other expenses (income), net.

Use of Estimates

     The preparation of our consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts included in the financial statements and accompanying notes thereto. Actual results could differ from those estimates.

6

     We test for the recoverability of real estate assets that do not currently meet all conditions to be classified as held for sale, but are expected to be disposed of prior to the end of their estimated useful lives. If events or circumstances indicate that the carrying amount of a property may not be recoverable, we make an assessment of its recoverability by comparing the carrying amount to our estimate of the undiscounted future cash flows of the property, excluding interest charges. If the carrying amount exceeds the estimated aggregate undiscounted future cash flows, we recognize an impairment loss to the extent the carrying amount exceeds the estimated fair value of the property.

     If an impairment loss is not required to be recorded under the provisions of Statement of Financial Accounting Standards No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, or SFAS 144, the recognition of depreciation is adjusted prospectively, as necessary, to reduce the carrying amount of the real estate to its estimated disposition value over the remaining period that the real estate is expected to be held and used. We also may adjust depreciation prospectively to reduce to zero the carrying amount of buildings that we plan to demolish in connection with a redevelopment project. These depreciation adjustments decreased net income by $9.9 million and $3.8 million, and resulted in a decrease in basic and diluted earnings per share of $0.10 and $0.04, for the three months ended June 30, 2007 and 2006, respectively. For the six months ended June 30, 2007 and 2006, these depreciation adjustments decreased net income by $20.8 million and $8.6 million, and resulted in a decrease in basic and diluted earnings per share of $0.22 and $0.09, respectively.

Note 3 — Commitments and Contingencies

Commitments

     In connection with our redevelopment and capital improvement activities, we have commitments of approximately $156.2 million related to construction projects, most of which we expect to incur within one year. Additionally, we enter into certain commitments for future purchases of goods and services in connection with the operations of our properties. Those commitments generally have terms of one year or less and reflect expenditure levels comparable to our historical expenditures.

     We have committed to fund an additional $9.9 million in second mortgage loans on certain properties in West Harlem, in New York City. In certain circumstances, we also could be required to acquire the properties for cash and/or assumption of first mortgage debt totaling approximately $139 million to $206 million, in addition to amounts funded and committed under the related loan agreement.

Tax Credit Arrangements

     We are required to manage certain consolidated real estate partnerships in compliance with various laws, regulations and contractual provisions that apply to our syndication of historic and low-income housing tax credits. In some instances, noncompliance with applicable requirements could result in projected tax benefits not being realized and require a refund or reduction of investor capital contributions, which are reported as deferred income in our consolidated balance sheet, until such time as our obligation to deliver tax benefits is relieved. The remaining compliance periods for our tax credit syndication arrangements range from less than one year to 15 years. At June 30, 2007, we do not anticipate that any material refunds or reductions of investor capital contributions will be required in connection with these arrangements.

Legal Matters

     In addition to the matters described below, we are a party to various legal actions and administrative proceedings arising in the ordinary course of business, some of which are covered by our general liability insurance program, and none of which we expect to have a material adverse effect on our consolidated financial condition or results of operations.

     Limited Partnerships

     In connection with our acquisitions of interests in real estate partnerships, we are sometimes subject to legal actions, including allegations that such activities may involve breaches of fiduciary duties to the partners of such real estate partnerships or violations of the relevant partnership agreements. We may incur costs in connection with the defense or settlement of such litigation. We believe that we comply with our fiduciary obligations and relevant partnership agreements. Although the outcome of any litigation is uncertain, we do not expect any such legal actions to have a material adverse effect on our consolidated financial condition or results of operations.

7

     Environmental

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

     We have determined that our legal obligations to remove or remediate hazardous substances may be conditional asset retirement obligations as defined in FASB Interpretation No. 47, Conditional Asset Retirement Obligations. Except in limited circumstances where the asset retirement activities are expected to be performed in connection with a planned construction project or property casualty, we believe that the fair value of our asset retirement obligations cannot be reasonably estimated due to significant uncertainties in the timing and manner of settlement of those obligations. Asset retirement obligations that are reasonably estimable as of June 30, 2007, are immaterial to our consolidated financial condition and results of operations.

     Mold

     We have been named as a defendant in lawsuits that have alleged personal injury and property damage as a result of the presence of mold. In addition, we are aware of lawsuits against owners and managers of multifamily properties asserting claims of personal injury and property damage caused by the presence of mold, some of which have resulted in substantial monetary judgments or settlements. We have only limited insurance coverage for property damage loss claims arising from the presence of mold and for personal injury claims related to mold exposure. We have implemented policies, procedures, third-party audits and training, and include a detailed moisture intrusion and mold assessment during acquisition due diligence. We believe these measures will prevent or eliminate mold exposure from our properties and will minimize the effects that mold may have on our residents. To date, we have not incurred any material costs or liabilities relating to claims of mold exposure or to abate mold conditions. Because the law regarding mold is unsettled and subject to change, we can make no assurance that liabilities resulting from the presence of or exposure to mold will not have a material adverse effect on our consolidated financial condition or results of operations.

     FLSA Litigation

     The Aimco Operating Partnership and NHP Management Company (“NHPMN”), our subsidiary, were defendants in a lawsuit, filed in August 2003 in the United States District Court for the District of Columbia, alleging that they willfully violated the Fair Labor Standards Act (“FLSA”) by failing to pay maintenance workers overtime for time worked in excess of 40 hours per week. The complaint, attempted to bring a collective action under the FLSA and sought to certify state subclasses in California, Maryland, and the District of Columbia. Specifically, the plaintiffs contended that the Aimco Operating Partnership and NHPMN failed to compensate maintenance workers for time that they were required to be “on-call.” Additionally, the complaint alleged the Aimco Operating Partnership and NHPMN failed to comply with the FLSA in compensating maintenance workers for time that they worked in excess of 40 hours in a week. In addition to the District of Columbia case, in 2005 the plaintiffs filed class actions with the same allegations in the Superior Court of California (Contra Costa County) and in Montgomery County Maryland Circuit Court. On March 28, 2007, the court in the District of Columbia issued an opinion decertifying the collective action on both the on-call and overtime issues. The court held that the 1,049 people who had opted into the collective action were not similarly situated and the case may not proceed as a collective action. On July 16, 2007, plaintiffs’ counsel filed individual cases on behalf of at least 700 individual plaintiffs in Federal court in 21 different jurisdictions: Northern District of Alabama; District of Arizona; Northern District of California; District of Colorado; Middle District of Florida; Northern District of Georgia; Northern District of Illinois; Southern District of Indiana; Western District of Kentucky; District of Maryland; Eastern District of Michigan; Western District of Missouri; District of New Jersey; Western District of North Carolina; Southern District of New York; Southern District of Ohio; Eastern District of Pennsylvania; District of South Carolina; Middle District of Tennessee; Eastern District of Texas; and Western District of Virginia. The cases in Illinois, New York and Texas were styled as class actions. Although the outcome of any litigation is uncertain, we do not believe that the ultimate outcome will have a material adverse effect on our consolidated financial condition or results of operations.

8

Note 4 — Stockholders’ Equity

     During the three and six months ended June 30, 2007, we repurchased 477,300 and 2,243,600 shares of Common Stock at an average price of $52.36 and $56.29 per share (including commissions) for cash totaling $25.0 million and $126.3 million, respectively. We also paid cash totaling $10.3 million in January 2007 to settle repurchases of Common Stock in December 2006.

     During the three and six months ended June 30, 2007, we issued approximately 19,000 and 461,000 shares of Common Stock, respectively, in exchange for common OP Units tendered for redemption. During the three and six months ended June 30, 2006, we issued approximately 6,000 and 35,000 shares of Common Stock, respectively, in exchange for common OP Units tendered for redemption. In addition, during the three and six months June 30, 2007, we issued to certain officers and employees approximately 28,000 and 274,000 restricted shares of Common Stock, compared to 50,000 and 452,000 restricted shares of Common Stock for the three and six months ended June 30, 2006. The restricted shares are subject to vesting over periods of predominantly four or five years. During the three and six months ended June 30, 2007, we issued to independent members of our Board of Directors 6,000 and 26,000 unrestricted shares of Common Stock, compared to zero and 15,000 unrestricted shares of Common Stock for the three and six months ended June 30, 2006.

     During the three and six months ended June 30, 2007, we issued approximately 5,000 and 13,000 shares of Common Stock to certain non-executive officers at fair value, compared to approximately 12,000 and 19,000 shares for the three and six months ended June 30, 2006, respectively. In exchange for common shares purchased, those non-executive officers executed promissory notes payable totaling $0.3 million and $0.7 million for the three and six months ended June 30, 2007, and $0.5 million and $0.8 million for the three and six months ended June 30, 2006, respectively. Total payments on all such notes from all officers for the three and six months ended June 30, 2007 were $0.3 million and $1.6 million, respectively. Total payments on such notes from all officers for the three and six months ended June 30, 2006 were $2.2 million and $18.6 million, respectively.

     During the three and six months ended June 30, 2007, we granted options to certain executive officers to purchase approximately 12,000 and 326,000 shares of Common Stock, respectively, compared to 11,000 and 647,000 shares of Common Stock during the three and six months ended June 30, 2006. The options all have exercise prices equal to the fair market value at the date of grant. During the three and six months ended June 30, 2007, stock option exercises resulted in the issuance of approximately 17,000 and 1,387,000 shares of Common Stock, respectively, and generated net proceeds of $0.7 million and $53.2 million, respectively. During the three and six months ended June 30, 2006, stock option exercises resulted in the issuance of approximately 22,000 and 1,071,000 shares of Common Stock, respectively, and generated net proceeds of $0.8 million and $39.5 million, respectively.

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Note 5 — Discontinued Operations and Assets Held for Sale

     At June 30, 2007, we had one property with an aggregate of 245 units classified as held for sale. During the six months ended June 30, 2007, we sold 40 properties with an aggregate of 6,535 units. During the year ended December 31, 2006, we sold 77 properties with an aggregate of 17,307 units and closed the sale of a portion of the Flamingo South Beach property, known as the South Tower, with an aggregate of 562 units. For the three and six months ended June 30, 2007 and 2006, discontinued operations included the results of operations of all of the above properties prior to the date of sale.

     The following is a summary of the components of income from discontinued operations for the three and six months ended June 30, 2007 and 2006 (in thousands):

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2007			2006			2007			2006
Rental and other property revenues	$	6,413		$	32,280		$	18,499		$	77,110
Property operating expenses		(3,309	)		(16,459	)		(9,775	)		(40,132	)
Depreciation and amortization		(1,598	)		(9,214	)		(4,711	)		(22,329	)
Other (expenses) income, net		(269	)		(2,115	)		(1,089	)		(3,154	)
Operating income		1,237			4,492			2,924			11,495
Interest income		32			224			120			537
Interest expense		(1,018	)		(6,898	)		(4,249	)		(16,530	)
Gain on extinguishment of debt		—			—			22,852			—
Minority interest in consolidated real estate partnerships		644			1,392			935			2,888
Income (loss) before gain on dispositions of real estate, impairment losses, deficit distributions to minority partners, income tax and minority interest in Aimco Operating Partnership		895			(790	)		22,582			(1,610	)
Gain on dispositions of real estate, net of minority partners’ interest		24,273			43,112			39,906			142,822
Recovery of real estate impairment losses (impairment losses)		60			195			(783	)		(8	)
Recovery of deficit distributions to minority partners		555			1,896			418			16,145
Income tax arising from dispositions		(2,597	)		(1,044	)		(2,761	)		(27,986	)
Minority interest in Aimco Operating Partnership		(2,147	)		(4,092	)		(5,496	)		(12,489	)
Income from discontinued operations	$	21,039		$	39,277		$	53,866		$	116,874

     Gain on disposition of real estate is reported net of incremental direct costs incurred in connection with the transaction, including any prepayment penalties incurred upon repayment of mortgage loans collateralized by the property being sold. Such prepayment penalties totaled $4.2 million and $5.3 million for the three and six months ended June 30, 2007, respectively, and $2.9 million and $30.3 million for the three and six months ended June 30, 2006, respectively.

     We are currently marketing for sale certain real estate properties that are inconsistent with our long-term investment strategy. We expect that all properties classified as held for sale will sell within one year from the date classified as held for sale. At June 30, 2007, assets classified as held for sale of $12.4 million included real estate net book value of $12.0 million, and liabilities related to assets classified as held for sale of $8.5 million consisted primarily of mortgage debt. At December 31, 2006, we had assets classified as held for sale of $204.6 million, including real estate with a net book value of $202.1 million, and liabilities related to assets classified as held for sale of $164.6 million, including $140.1 million of mortgage debt. We are also marketing for sale certain other properties that do not meet all criteria to be classified as held for sale.

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Note 6 — Earnings per Share

     We calculate earnings per share based on the weighted average number of shares of Common Stock, common stock equivalents and dilutive convertible securities outstanding during the period. The following table illustrates the calculation of basic and diluted earnings per share for the three and six months ended June 30, 2007 and 2006 (in thousands, except per share data):

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2007			2006			2007			2006
Numerator:
Income (loss) from continuing operations	$	(1,710	)	$	(4,185	)	$	(9,329	)	$	2,288
Less net income attributable to preferred stockholders		(16,346	)		(19,034	)		(32,694	)		(43,088	)
Numerator for basic and diluted earnings per share — Loss from continuing operations	$	(18,056	)	$	(23,219	)	$	(42,023	)	$	(40,800	)
Income from discontinued operations	$	21,039		$	39,277		$	53,866		$	116,874
Net income	$	19,329		$	35,092		$	44,537		$	119,162
Less net income attributable to preferred stockholders		(16,346	)		(19,034	)		(32,694	)		(43,088	)
Numerator for basic and diluted earnings per share — Net income attributable to common stockholders	$	2,983		$	16,058		$	11,843		$	76,074
Denominator:
Denominator for basic earnings per share — weighted average number of shares of Common Stock outstanding		95,973			96,071			95,972			95,627
Effect of dilutive securities:
Dilutive potential common shares		—			—			—			—
Denominator for diluted earnings per share		95,973			96,071			95,972			95,627
Earnings (loss) per common share:
Basic earnings (loss) per common share:
Loss from continuing operations (net of preferred dividends)	$	(0.19	)	$	(0.24	)	$	(0.44	)	$	(0.43	)
Income from discontinued operations		0.22			0.41			0.56			1.23
Net income attributable to common stockholders	$	0.03		$	0.17		$	0.12		$	0.80
Diluted earnings (loss) per common share:
Loss from continuing operations (net of preferred dividends)	$	(0.19	)	$	(0.24	)	$	(0.44	)	$	(0.43	)
Income from discontinued operations		0.22			0.41			0.56			1.23
Net income attributable to common stockholders	$	0.03		$	0.17		$	0.12		$	0.80

     All of our convertible preferred stock is anti-dilutive on an “if converted” basis. Therefore, we deduct all of the dividends payable on the convertible preferred stock to arrive at the numerator and no additional shares are included in the denominator when calculating basic and diluted earnings per common share. During the three and six months ended June 30, 2007 and 2006, securities that could potentially dilute basic earnings per share in future periods included stock options, restricted stock awards and non-recourse shares. As of June 30, 2007 and 2006, the common share equivalents for such potentially dilutive securities totaled 8.6 million and 11.5 million, respectively. These securities have been excluded from the earnings per share computations for the periods presented above because their effect would have been antidilutive. At June 30, 2007 and 2006, performance benchmarks for the Class VIII and Class IX High Performance Units of the Aimco Operating Partnership had been achieved that would result in the issuance of the equivalent of approximately 858,000 and 258,000 common OP Units, respectively, if the related measurement periods had ended on those dates. Those common OP Unit equivalents have been excluded in the calculation of diluted earnings per share because their effect would be antidilutive.

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Note 7 — Business Segments

     We have two reportable segments: real estate (owning and operating apartments) and asset management and transactions (providing asset management, investment and transaction services). Our reportable segments changed in 2007 as a result of the reorganization of certain departments and functions. These changes include a realignment of our property management services from the asset management and transactions segment to the real estate segment. In addition, the asset management and transactions segment was expanded to include certain departments involved in asset acquisitions, dispositions, and other transactional activities. Prior to the reorganization, those departments were considered to be general and administrative functions and were not associated with any operating segment.

     Our real estate segment owns and operates properties that generate rental and other property-related income through the leasing of apartment units to a diverse base of residents. We separately evaluate the performance of each of our properties. However, because the properties have similar economic characteristics, the properties are aggregated into a single real estate segment. All real estate revenues are from external customers and are not generated from transactions with other segments. No single resident or related group of residents contributed 10% or more of total revenues during the three and six months ended June 30, 2007 or 2006. Portions of the gross revenues earned in the asset management and transactions business are from transactions with affiliates in the real estate segment.

     Statement of Financial Accounting Standards No. 131, Disclosures about Segments of an Enterprise and Related Information, or SFAS 131, requires that segment disclosures present the measure(s) used by the chief operating decision maker for purposes of assessing such segments’ performance. Our chief operating decision maker is comprised of several members of our executive management team who use several generally accepted industry financial measures to assess the performance of the business, including net asset value, net operating income, free cash flow, funds from operations, and adjusted funds from operations. The chief operating decision maker emphasizes net operating income as a key measurement of segment profit or loss. Net operating income is generally defined as segment revenues less direct segment operating expenses. Real estate segment net operating income also reflects adjustments related to minority interest in consolidated real estate operations and our equity in unconsolidated real estate operations. Asset management and transactions segment net operating income is adjusted to reflect a portion of our interest income and certain other income, including gains on sale of non-depreciable assets. Segment net operating income for 2006 has been revised to conform to the 2007 presentation.

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     The following table presents the revenues and net operating income of our segments for the three and six months ended June 30, 2007 and 2006, and reconciles net operating income of our segments to income from continuing operations as reported in our consolidated statements of income (in thousands):

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2007			2006			2007			2006
Revenues:
Real estate segment	$	423,135		$	396,091		$	835,730		$	783,516
Asset management and transactions segment:
Gross revenues		20,785			12,661			34,438			22,758
Elimination of intersegment revenues		(5,607	)		(528	)		(7,630	)		(1,085	)
Net revenues after elimination		15,178			12,133			26,808			21,673
Total revenues of reportable segments	$	438,313		$	408,224		$	862,538		$	805,189
Net operating income:
Real estate segment	$	201,193		$	187,465		$	388,513		$	362,535
Asset management and transactions segment		11,614			7,775			20,257			18,965
Total net operating income of reportable segments		212,807			195,240			408,770			381,500
Income (expenses) generally excluded from segment net operating income:
Depreciation and amortization		(121,807	)		(112,272	)		(244,195	)		(219,461	)
General and administrative expenses		(24,606	)		(23,207	)		(46,683	)		(44,236	)
Other (expenses) income, net		4,272			(1,615	)		2,266			(1,994	)
Interest income		9,242			5,437			18,810			12,368
Provision for losses on notes receivable, net		(735	)		(502	)		(2,278	)		(764	)
Interest expense		(104,875	)		(98,157	)		(209,615	)		(193,971	)
Deficit distributions to minority partners		(2,028	)		(3,935	)		(3,221	)		(6,011	)
Equity in earnings (losses) of unconsolidated real estate partnerships		930			(574	)		(2,055	)		(2,436	)
Recoveries of (provision for) real estate impairment losses, net		—			(15	)		—			971
Gain on dispositions of unconsolidated real estate and other		639			1,059			21,061			10,757
Minority interests		(226	)		1,975			(5,404	)		7,224
Less portions of generally excluded items included in segment net operating income:
Other expenses (income), net		(2,615	)		(96	)		3,690			(2,131	)
Interest income		(802	)		84			(2,560	)		(54	)
Interest expense		409			—			409			—
Gain on sale of non-depreciable real estate assets		—			(671	)		—			(6,371	)
Minority interest in consolidated real estate operations		31,007			35,854			57,502			73,232
Equity in unconsolidated real estate operations		(3,322	)		(2,790	)		(5,826	)		(6,335	)
Income (loss) from continuing operations	$	(1,710	)	$	(4,185	)	$	(9,329	)	$	2,288

     The assets of our reportable segments are as follows (in thousands):

	June 30,		December 31,
	2007		2006
ASSETS:
Total assets for reportable segments (1)	$	10,128,710	$	10,004,701
Corporate and other assets		270,931		285,074
Total consolidated assets	$	10,399,641	$	10,289,775

(1) Total assets for reportable segments include assets associated with both the real estate and asset management and transactions business segments.

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Note 8 — Transactions Involving VMS National Properties Joint Venture

     In January 2007, VMS National Properties Joint Venture (“VMS”), a consolidated real estate partnership in which we hold a 22% equity interest, refinanced mortgage loans secured by its 15 apartment properties. The existing loans had an aggregate carrying amount of $110.0 million and an aggregate face amount of $152.2 million. The $42.2 million difference between the face amount and carrying amount resulted from a 1997 bankruptcy settlement in which the lender agreed to reduce the principal amount of the loans subject to VMS’s compliance with the terms of the restructured loans. Because the reduction in the loan amount was contingent on future compliance, recognition of the inherent debt extinguishment gain was deferred. Upon refinancing of the loans in January 2007, the existing lender accepted the reduced principal amount in full satisfaction of the loans, and we recognized the $42.2 million debt extinguishment gain in earnings.

     In January 2007, eight of VMS’s properties met all conditions necessary to be classified as held for sale and reported in discontinued operations in accordance with SFAS 144. Accordingly, the $22.8 million portion of the debt extinguishment gain related to the mortgage loans that were secured by such eight properties is reported in discontinued operations for the six months ended June 30, 2007. The $19.4 million portion of the debt extinguishment gain related to the mortgage loans that were secured by the seven VMS properties that are not held for sale is reported in our continuing operations as gain on dispositions of unconsolidated real estate and other for the six months ended June 30, 2007. The eight properties reported in discontinued operations were sold during the six months ended June 30, 2007, at an aggregate gain of $22.7 million. Although 78% of the equity interests in VMS are held by unrelated minority partners, no minority interest share of the gains on debt extinguishment and sale of the properties was recognized in our earnings for the three and six months ended June 30, 2007. As required by GAAP, we had in prior years recognized the minority partners’ share of VMS losses in excess of the minority partners’ capital contributions. The amounts of those previously recognized losses exceeded the minority partners’ share of the gains on debt extinguishment and sale of the properties; accordingly, the minority interest in such gains recognized in our earnings is limited to the minority interest in the Aimco Operating Partnership. For the three months ended June 30, 2007, the aggregate effect of the gains on extinguishment of VMS debt and sale of VMS properties had no impact on loss from continuing operations and increased net income by $6.5 million, or $0.07 per share. For the six months ended June 30, 2007, the aggregate effect of the gains on extinguishment of VMS debt and sale of VMS properties was to decrease loss from continuing operations by $17.6 million, or $0.18 per share, and increase net income by $59.0 million, or $0.61 per share.

     During the second quarter, VMS contributed its seven remaining properties to wholly-owned subsidiaries of Aimco in exchange for consideration totaling $230.1 million, consisting primarily of cash of $21.3 million, common OP Units with a fair value of $9.8 million, the assumption of $168.0 million in mortgage debt, and the assumption of $30.9 million in mortgage participation liabilities. This total consideration included $50.7 million related to our 22% equity interest in VMS. Exclusive of our share, the consideration paid for the seven properties exceeded the carrying amount of the minority interest in such properties by $44.9 million. This excess consideration is reflected in our consolidated balance sheet as an increase in the carrying amount of the seven properties.

     At June 30, 2007, VMS held cash of $46.6 million, consisting primarily of undistributed proceeds from the sale of its 15 properties (including properties sold to us). Substantially all of this cash is expected to be distributed to VMS’s partners, including us, during the second half of 2007. Our consolidated balance sheet at June 30, 2007, reflects a minority interest liability of $41.9 million for the portion of VMS’s cash balance that is expected to be distributed to unrelated limited partners.

Note 9 — Asset Impairments

     During the three months ended March 31, 2007, we evaluated the recoverability of our $6.3 million equity investment in a group purchasing organization and a related $3.4 million note receivable. We initiated our evaluation as a result of information concerning its relationships with significant vendors. Based on our evaluation, we recorded impairments of $2.5 million in equity in losses of real estate partnerships and $1.4 million in provision for losses on notes receivable to adjust the carrying amounts of our equity investment and note receivable, respectively, to their estimated fair values.

     During the three months ended March 31, 2007, we abandoned certain internal-use software development projects and recorded a $1.8 million write-off of the capitalized costs of such projects in depreciation and amortization.

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Note 10 — Real Estate Acquisitions

     During the six months ended June 30, 2007, we completed the acquisition of 14 conventional properties with a total of 1,187 units, including nine properties in New York City; two properties in Daytona Beach, Florida; one property in Park Forest, Illinois; one property in Poughkeepsie, New York; and one property in Redwood City, California. The aggregate purchase price for these properties, including transaction costs, was approximately $191.0 million including the assumption of mortgage debt of $16.0 million. The remainder of the purchase price was funded using cash of $149.3 million and tax-free exchange proceeds of $25.7 million.

Note 11 — Recent Accounting Developments

     In September 2006, the FASB issued Statement of Financial Accounting Standards No. 157, Fair Value Measurements, or SFAS 157. SFAS 157 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants in the market in which the reporting entity transacts. SFAS 157 applies whenever other standards require assets or liabilities to be measured at fair value and does not expand the use of fair value in any new circumstances. SFAS 157 establishes a hierarchy that prioritizes the information used in developing fair value estimates. The hierarchy gives the highest priority to quoted prices in active markets and the lowest priority to unobservable data, such as the reporting entity’s own data. SFAS 157 requires fair value measurements to be disclosed by level within the fair value hierarchy. SFAS 157 is effective for fiscal years beginning after November 15, 2007. We have not yet determined the effects that SFAS 157 will have on our financial statements.

     In February 2007, the FASB issued Statement of Financial Accounting Standards No. 159, The Fair Value Option for Financial Asset and Financial Liabilities, or SFAS 159. SFAS 159 permits entities to choose to measure many financial instruments and certain other items at fair value that are not currently required to be measured at fair value. The objective is to improve financial reporting by providing entities with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. SFAS 159 also establishes presentation and disclosure requirements designed to facilitate comparisons between entities that choose different measurement attributes for similar types of assets and liabilities. SFAS 159 is effective for fiscal years beginning after November 15, 2007. We have not yet determined whether we will elect the fair value option for any of our financial instruments.

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

Forward Looking Statements

The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for forward-looking statements in certain circumstances. Certain information included in this Report contains or may contain information that is forward-looking, including, without limitation, statements regarding the effect of acquisitions and redevelopments, our future financial performance, including our ability to maintain current or meet projected occupancy levels, rent levels and same store results, and the effect of government regulations. Actual results may differ materially from those described in the forward-looking statements and will be affected by a variety of risks and factors that are beyond our control including, without limitation: natural disasters such as hurricanes; national and local economic conditions; the general level of interest rates; energy costs; the terms of governmental regulations that affect us and interpretations of those regulations; the competitive environment in which we operate; financing risks, including the risk that our cash flows from operations may be insufficient to meet required payments of principal and interest; real estate risks, including variations of real estate values and the general economic climate in local markets and competition for residents in such markets; acquisition and development risks, including failure of such acquisitions to perform in accordance with projections; the timing of acquisitions and dispositions; litigation, including costs associated with prosecuting or defending claims and any adverse outcomes; and possible environmental liabilities, including costs, fines or penalties that may be incurred due to necessary remediation of contamination of properties presently owned or previously owned by us. In addition, our current and continuing qualification as a real estate investment trust involves the application of highly technical and complex provisions of the Internal Revenue Code and depends on our ability to meet the various requirements imposed by the Internal Revenue Code, through actual operating results, distribution levels and diversity of stock ownership. Readers should carefully review our financial statements and the notes thereto, as well as the risk factors described in our Annual Report on Form 10-K for the year ended December 31, 2006, and the other documents we file from time to time with the Securities and Exchange Commission. As used herein and except as the context otherwise requires, “we,” “our,” “us” and the “Company” refer to Aimco, AIMCO Properties, L.P. (which we refer to as the Aimco Operating Partnership) and Aimco’s consolidated corporate subsidiaries and consolidated real estate partnerships, collectively.

Executive Overview

     We are a self-administered and self-managed real estate investment trust, or REIT, engaged in the ownership, acquisition, management and redevelopment of apartment properties. Our property operations are characterized by diversification of product, location and price point. As of June 30, 2007, we owned or managed 1,216 apartment properties containing 209,507 apartment units located in 47 states, the District of Columbia and Puerto Rico. Our primary sources of income and cash are rents associated with apartment leases.

     The key financial indicators that we use in managing our business and in evaluating our financial condition and operating performance are: Net Asset Value, or NAV; Funds From Operations, or FFO; FFO less spending for Capital Replacements, or AFFO; same store property operating results; net operating income; net operating income less spending for Capital Replacements, or Free Cash Flow; financial coverage ratios; and leverage as shown on our balance sheet. These terms are defined and described in the sections captioned “Funds From Operations” and “Capital Expenditures” below. The key macro-economic factors and non-financial indicators that affect our financial condition and operating performance are: rates of job growth; single-family and multifamily housing starts; and interest rates.

     Because our operating results depend primarily on income from our properties, the supply and demand for apartments influences our operating results. Additionally, the level of expenses required to operate and maintain our properties, the pace and price at which we redevelop, acquire and dispose of our apartment properties, and the volume and timing of fee transactions affect our operating results. Our cost of capital is affected by the conditions in the capital and credit markets and the terms that we negotiate for our equity and debt financings.

     For 2007, our focus includes the following: enhance operations to improve and sustain customer satisfaction; obtain rate and occupancy increases to bring improved profitability; upgrade the quality of our portfolio through portfolio management, capital replacement, capital improvement and redevelopment; increase efficiency through improved business processes and automation; improve balance sheet flexibility; expand the use of tax credit equity to finance redevelopment of affordable properties; minimize our cost of capital; and monetize a portion of the value inherent in our properties with increased entitlements.

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     The following discussion and analysis of the results of our operations and financial condition should be read in conjunction with the financial statements.

Results of Operations

Overview

Three months ended June 30, 2007 compared to three months ended June 30, 2006

     We reported net income of $19.3 million and net income attributable to common stockholders of $3.0 million for the three months ended June 30, 2007, compared to net income of $35.1 million and net income attributable to common stockholders of $16.1 million for the three months ended June 30, 2006, which were decreases of $15.8 million and $13.1 million, respectively. These decreases were principally due to the following items:

• a decrease in income from discontinued operations, primarily related to lower net gains on sales of real estate;

• an increase in depreciation expense, reflecting depreciation on newly acquired properties and recent capital projects; and

• an increase in interest expense, reflecting higher loan principal balances resulting from refinancings and acquisitions.

The effects of these items on our operating results were partially offset by:

• an increase in net operating income from property operations, which is attributable to improved operating results of same store properties and the addition of net operating income from acquired properties; and

• a net favorable change in other expenses (income), net and an increase in interest income.

Six months ended June 30, 2007 compared to six months ended June 30, 2006

     We reported net income of $44.5 million and net income attributable to common stockholders of $11.8 million for the six months ended June 30, 2007, compared to net income of $119.2 million and net income attributable to common stockholders of $76.1 million for the six months ended June 30, 2006, which were decreases of $74.7 million and $64.3 million, respectively. These decreases were principally due to the following items:

• a decrease in income from discontinued operations, primarily related to lower net gains on sales of real estate;

• an increase in depreciation expense, reflecting depreciation on newly acquired properties and recent capital projects;

• a decrease in gains on sales of non-depreciable real estate;

• a net unfavorable change in allocations to minority interests of earnings and losses in our consolidated real estate partnerships; and

• an increase in interest expense, reflecting higher loan principal balances resulting from refinancings and acquisitions.

The effects of these items on our operating results were partially offset by:

• an increase in net operating income from property operations, which is attributable to improved operating results of same store properties and the addition of net operating income from acquired properties;

• an increase in interest income resulting primarily from loans collateralized by properties in West Harlem in New York City; and

• recognition of deferred debt extinguishment gains in connection with the refinancing of certain mortgage loans that had been restructured in a 1997 bankruptcy settlement.

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The following paragraphs discuss these and other items affecting the results of our operations in more detail.

Rental Property Operations

     Our operating income is primarily generated from the operations of our consolidated properties. The principal components within our total consolidated property operations are: consolidated same store properties, which consist of all conventional properties that were owned (and not classified as held for sale) and managed by us, stabilized and consolidated for all comparable periods presented, and other consolidated properties, which primarily include newly consolidated, acquisition, affordable and redevelopment properties.

     The following table summarizes the overall performance of our consolidated properties for the three and six months ended June 30, 2007 and 2006 (in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2007		2006		2007		2006
Rental and other property revenues	$	421,864	$	392,499	$	832,363	$	776,894
Property operating expenses		192,681		173,506		385,924		353,571
Net operating income	$	229,183	$	218,993	$	446,439	$	423,323

     For the three months ended June 30, 2007, compared to the three months ended June 30, 2006, net operating income for our consolidated property operations increased by $10.2 million, or 4.7%. This increase was primarily attributable to a $7.4 million increase in consolidated same store net operating income, which is discussed further below under “Consolidated Conventional Same Store Property Operating Results.” The operations of properties acquired resulted in increases in net operating income of $4.1 million and affordable properties and properties undergoing redevelopment each contributed increases in net operating income of $0.8 million. These increases were partially offset by a $3.6 million increase in net casualty losses.

     For the six months ended June 30, 2007, compared to the six months ended June 30, 2006, net operating income for our consolidated property operations increased by $23.1 million, or 5.5%. This increase was primarily attributable to a $16.6 million increase in consolidated same store net operating income, which is discussed further below under “Consolidated Conventional Same Store Property Operating Results.” The operations of properties acquired resulted in increases in net operating income of $8.0 million and affordable properties and properties undergoing redevelopment contributed increases in net operating income of $2.5 million and $2.8 million, respectively. These increases were partially offset by a $6.8 million increase in net casualty losses.

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Consolidated Conventional Same Store Property Operating Results

     Same store operating results is a key indicator we use to assess the performance of our property operations and to understand the period over period operations of a consistent portfolio of properties. We define “consolidated same store” properties as conventional properties (i) that we manage, (ii) in which our ownership interest exceeds 10%, (iii) the operations of which have been stabilized and consolidated for all periods presented and (iv) that have not been classified as held for sale. The rental property operations of our consolidated same store properties are as follows for the three and six months ended June 30, 2007 and 2006 (dollars in thousands):

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2007			2006			2007			2006
Consolidated same store revenues	$	300,949		$	284,833		$	583,743		$	554,660
Consolidated same store property operating expenses		126,437			117,685			246,123			233,653
Consolidated same store net operating income	$	174,512		$	167,148		$	337,620		$	321,007
Consolidated Same Store Measures:
Properties		375			375			373			373
Apartment units		111,213			111,213			110,538			110,538
Average physical occupancy		94.7	%		94.4	%		94.6	%		94.6	%
Average rent/unit/month		$864			$830			$862			$824

     For the three months ended June 30, 2007, compared to the three months ended June 30, 2006, consolidated same store net operating income increased by $7.4 million, or 4.4%. Revenues increased by $16.1 million, or 5.7%, primarily due to higher average rent (up $34 per unit) and higher utility reimbursements. Property operating expenses increased by $8.8 million, or 7.4%, primarily due to increases in utilities, personnel, marketing and administrative expenses.

     For the six months ended June 30, 2007, compared to the six months ended June 30, 2006, consolidated same store net operating income increased by $16.6 million, or 5.2%. Revenues increased by $29.1 million, or 5.2%, primarily due to higher average rent (up $38 per unit), higher utility reimbursements and higher miscellaneous income. Expenses increased by $12.5 million, or 5.3%, primarily due to increases in utilities, personnel, and contract services expenses.

Activity Fees and Asset Management

     Activity fees are generated from transactions, including dispositions, refinancings, and tax credit syndications and redevelopments. These transactions occur on varying timetables; thus, the income varies from period to period. We have affiliated real estate partnerships for which we have identified a pipeline of transactional opportunities. As a result, we view activity fees as a predictable part of our core business strategy. Asset management revenue is from the financial management of partnerships, rather than management of day-to-day property operations. Asset management revenue includes certain fees that were earned in a prior period, but not recognized at that time because collectibility was not reasonably assured. Those fees may be recognized in a subsequent period upon occurrence of a transaction or improvement in operations that generates sufficient cash to pay the fees. Activity and asset management expenses consist primarily of the costs of departments that perform transactional activities and asset management services. These activities are conducted primarily by our taxable subsidiaries, and the related operating income is generally subject to income taxes.

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     The following table summarizes the operating results of our transactional and asset management activities for the three and six months ended June 30, 2007 and 2006 (in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2007		2006		2007		2006
Activity fees and asset management revenues	$	15,178	$	12,133	$	26,808	$	21,673
Activity and asset management expenses		6,076		4,946		11,351		9,134
Net operating income from activity fees and asset management	$	9,102	$	7,187	$	15,457	$	12,539

     For the three months ended June 30, 2007, compared to the three months ended June 30, 2006, net operating income from activity fees and asset management increased by $1.9 million, or 26.6%. This increase is primarily attributable to a $3.6 million increase in revenues from tax credit arrangements and a $1.4 million increase in promote income and fees earned in connection with property dispositions. These increases were partially offset by a decrease in other transaction fee income of $1.7 million. Expenses associated with these activities increased by $1.1 million.

     For the six months ended June 30, 2007, compared to the six months ended June 30, 2006, net operating income from activity fees and asset management increased by $2.9 million, or 23.3%. This increase is primarily attributable to a $5.6 million increase in revenues from tax credit arrangements and increases totaling $1.0 million in promote income, disposition fees and previously deferred asset management fees realized in connection with property dispositions. These increases were partially offset by a decrease in other transaction fee income of $1.4 million. Expenses associated with these activities increased by $2.2 million.

Depreciation and Amortization

     For the three months ended June 30, 2007, compared to the three months ended June 30, 2006, depreciation and amortization increased $9.5 million, or 8.5%. This increase reflects depreciation of $2.1 million for newly acquired properties, completed redevelopments, and other capital projects recently placed in service. Depreciation also increased by $7.4 million as a result of depreciation adjustments necessary to reduce the carrying amount of buildings and improvements to their estimated disposition value or to zero in connection with a planned demolition (see Use of Estimates in Note 2 to the consolidated financial statements in Item 1).

     For the six months ended June 30, 2007, compared to the six months ended June 30, 2006, depreciation and amortization increased $24.7 million, or 11.3%. This increase reflects depreciation of $7.4 million for newly acquired properties, completed redevelopments, and other capital projects recently placed in service. Depreciation also increased by $15.5 million as a result of depreciation adjustments necessary to reduce the carrying amount of buildings and improvements to their estimated disposition value or to zero in connection with a planned demolition (see Use of Estimates in Note 2 to the consolidated financial statements in Item 1) and by $1.8 million as a result of the write-off of certain capitalized software costs (see Note 9 to the consolidated financial statements in Item 1).

General and Administrative Expenses

     For the three months ended June 30, 2007, compared to the three months ended June 30, 2006, general and administrative expenses increased $1.4 million, or 6.0%. This increase was principally due to higher compensation related expenses, including higher accrued bonus compensation reflecting improved performance in relation to established targets. The increase was partially offset by a $0.9 million decrease in fees for certain professional services.

     For the six months ended June 30, 2007, compared to the six months ended June 30, 2006, general and administrative expenses increased $2.4 million, or 5.5%. This increase was principally due to higher compensation related expenses, including higher accrued bonus compensation reflecting improved performance in relation to established targets. The increase was partially offset by a $1.1 million decrease in fees for certain professional services.

Other Expenses (Income), Net

     Other expenses (income), net includes income tax provision/benefit, franchise taxes, risk management activities, partnership administration expenses and certain non-recurring items.

     For the three months ended June 30, 2007, compared to the three months ended June 30, 2006, other expenses (income), net changed favorably by $5.9 million. The net favorable change reflects a $2.5 million increase in income tax benefits related to losses of our taxable subsidiaries and a $1.5 million net reduction of partnership and asset management expenses.

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Other expenses (income), net for the three months ended June 30, 2007, also includes income of $1.3 million related to the transfer of certain property rights to an unrelated third party.

     For the six months ended June 30, 2007, compared to the six months ended June 30, 2006, other expenses (income), net changed favorably by $4.3 million. The net favorable change reflects a $5.0 million increase in income tax benefits related to losses of our taxable subsidiaries, a $3.2 million net reduction of partnership and asset management expenses and a $1.7 million charge for one-time benefits to certain employees terminated in 2006 that did not recur in 2007. Other expenses (income), net for the six months ended June 30, 2007, also includes $1.8 million related to the transfer of certain property rights to an unrelated third party. These favorable changes were partially offset by unfavorable changes related to the settlement of certain litigation matters, including a $3.8 million loss during the six months ended June 30, 2007 and $2.9 million of net gains during the six months ended June 30, 2006.

Interest Income

     Interest income consists primarily of interest on notes receivable from non-affiliates and unconsolidated real estate partnerships, and interest earned on restricted and unrestricted cash balances.

     For the three months ended June 30, 2007, compared to the three months ended June 30, 2006, interest income increased $3.8 million, or 70.0%. This increase reflects $1.7 million in 2007 related to loans collateralized by properties in West Harlem in New York City, which were funded in November 2006. Accretion of loan discounts in connection with property sales and an increase in interest income earned on escrowed funds related to a tax exempt bond financing transaction also contributed to the increased interest income.

     For the six months ended June 30, 2007, compared to the six months ended June 30, 2006, interest income increased $6.4 million, or 52.1%. This increase reflects $4.8 million in 2007 related to loans collateralized by properties in West Harlem in New York City, which were funded in November 2006, including accretion of loan discounts in connection with the prepayment of principal on such loans. An increase in interest income earned on escrowed funds related to a tax exempt bond financing transaction also contributed to the increased interest income.

Interest Expense

     For the three months ended June 30, 2007, compared to the three months ended June 30, 2006, interest expense which includes the amortization of deferred financing costs, increased $6.7 million, or 6.8%. Interest on property debt increased $8.3 million primarily due to higher balances resulting from refinancing activities and mortgage loans on newly acquired properties, offset by a $0.4 million reduction due to lower weighted average rates. Corporate interest increased by $2.1 million as a result of a higher average balance in 2007. These increases were partially offset by a $1.6 million increase in capitalized interest related to higher levels of redevelopment and entitlement activities and a $1.4 million adjustment to amortization of deferred financing costs.

     For the six months ended June 30, 2007, compared to the six months ended June 30, 2006, interest expense, increased $15.6 million, or 8.1%. Interest on property debt increased $19.3 million primarily due to higher balances resulting from refinancing activities and mortgage loans on newly acquired properties, offset by a $0.4 million reduction due to lower weighted average rates. Corporate interest increased by $1.4 million as a result of a higher average balance in 2007. These increases were partially offset by a $1.9 million increase in capitalized interest related to higher levels of redevelopment and entitlement activities and a $1.4 million adjustment to amortization of deferred financing costs.

Gain on Dispositions of Unconsolidated Real Estate and Other

     Gain on dispositions of unconsolidated real estate and other includes our share of gain related to dispositions of real estate by unconsolidated real estate partnerships, gain on dispositions of land and other non-depreciable assets and costs related to asset disposal activities. Changes in the level of gains recognized from period to period reflect the changing level of disposition activity from period to period. Additionally, gains on properties sold are determined on an individual property basis or in the aggregate for a group of properties that are sold in a single transaction, and are not comparable period to period. For the six months ended June 30, 2007, gain on dispositions of unconsolidated real estate and other also includes gains on extinguishment of debt.

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     For the six months ended June 30, 2007, compared to the six months ended June 30, 2006, gain on dispositions of unconsolidated real estate and other increased $10.3 million. The increase is primarily attributed to a $19.4 million gain on debt extinguishment related to seven properties in the VMS partnership (see Note 8 to the consolidated financial statements in Item 1). This increase was partially offset by $5.7 million in gains on sale of land and other non-depreciable assets in 2006.

Minority Interest in Consolidated Real Estate Partnerships

     Minority interest in consolidated real estate partnerships reflects minority partners’ share of operating results of consolidated real estate partnerships. This includes the minority partners’ share of property management fees, interest on notes and other amounts eliminated in consolidation that we charge to such partnerships. However, we generally do not recognize a benefit for the minority interest share of partnership losses, which are typically attributable to real estate depreciation, for partnerships that have deficits in partners’ capital.

     For the six months ended June 30, 2007, compared to the six months ended June 30, 2006, the net unfavorable effect of minority interests increased $12.8 million. This change is primarily attributable to the effects of a revision in our accounting treatment for tax credit arrangements effective in the third quarter of 2006, pursuant to which we now consider our tax credit partnerships to be wholly owned subsidiaries. For the six months ended June 30, 2006, minority interest in consolidated real estate partnerships included a $10.5 million benefit for the minority partners’ share of losses of tax credit partnerships. No comparable minority interest benefit was recognized for the six months ended June 30, 2007, under our revised accounting treatment. An increase in the minority partners’ share of income of other consolidated real estate partnerships also contributed to the total unfavorable change.

Income from Discontinued Operations, Net

     The results of operations for properties sold during the period or designated as held for sale at the end of the period are generally required to be classified as discontinued operations for all periods presented. The property-specific components of net earnings that are classified as discontinued operations include all property-related revenues and operating expenses, depreciation expense recognized prior to the classification as held for sale, property-specific interest expense and debt extinguishment gains and losses to the extent there is secured debt on the property, and the associated minority interest. In addition, any impairment losses on assets held for sale and the net gain on the eventual disposal of properties held for sale are reported as discontinued operations.

     For the three months ended June 30, 2007 and 2006, income from discontinued operations, net totaled $21.0 million and $39.3 million, respectively, which includes income from operations after interest income, interest expense and minority interest of $0.9 million in 2007 and a loss of $0.8 million in 2006. For the six months ended June 30, 2007 and 2006, income from discontinued operations, net totaled $53.9 million and $116.9 million, respectively, which includes income from operations after interest income, interest expense, gain on extinguishment of debt and minority interest of $22.6 million in 2007 and a loss of $1.6 million in 2006. For the six months ended June 30, 2007, income from discontinued operations also included a $22.9 million gain on debt extinguishment related to eight properties that were sold during the six months ended June 30, 2007 (see Note 8 to the consolidated financial statements in Item 1). For 2007, income from discontinued operations included the operating results of 41 properties that were sold or classified as held for sale during 2007. For 2006, income from discontinued operations included the operating results of 118 properties and the South Tower of the Flamingo South Beach property that were sold or classified as held for sale in 2006 or 2007. Due to the varying number of properties and the timing of sales, the income from operations is not comparable from period to period.

     During the three months ended June 30, 2007, we sold 28 properties, resulting in a net gain on sale of approximately $21.7 million, net of $2.6 million of related income taxes. Additionally, in 2007 we recognized a $0.1 million recovery of previously recognized impairment losses on assets sold or held for sale and a $0.6 million recovery of deficit distributions to minority partners. During the three months ended June 30, 2006, we sold 19 properties, resulting in a net gain on sale of approximately $42.1 million, net of $1.0 million of related income taxes. Additionally, in 2006 we recognized a $0.2 million recovery of previously recognized impairment losses on assets sold or held for sale and a $1.9 million recovery of deficit distributions to minority partners.

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     During the six months ended June 30, 2007, we sold 40 properties, resulting in a net gain on sale of approximately $37.1 million, net of $2.8 million of related income taxes. Additionally, in 2007 we recognized $0.8 million of impairment losses on assets sold or held for sale and a $0.4 million recovery of deficit distributions to minority partners. During the six months ended June 30, 2006, we sold 38 properties and the South Tower, resulting in a net gain on sale of approximately $114.8 million, net of $28.0 million of related taxes. Additionally, we recognized a $16.1 million recovery of deficit distributions to minority partners during the six months ended June 30, 2006.

     Changes in gains recognized from period to period reflect the changing level of our disposition activity from period to period. Additionally, gains on properties sold are determined on an individual property basis or in the aggregate for a group of properties that are sold in a single transaction, and are not comparable period to period. See Note 5 to the consolidated financial statements in Item 1 for more information on discontinued operations.

Business Segment Operating Results

     We have two reportable segments: real estate (owning and operating apartments) and asset management and transactions (providing asset management, investment and transaction services). Our reportable segments changed in 2007 as a result of the reorganization of certain departments and functions. These changes include a realignment of our property management services from the asset management and transactions segment to the real estate segment. In addition, the asset management and transactions segment was expanded to include certain departments involved in asset acquisitions, dispositions, and other transactional activities. Prior to the reorganization, those departments were considered to be general and administrative functions and were not associated with any operating segment. See Note 7 to the consolidated financial statements in Item 1 for additional information about our business segments.

Real Estate Segment

     Our real estate segment owns and operates properties that generate rental and other property-related income through the leasing of apartment units to a diverse base of residents. Net operating income from our rental property operations is the primary component of real estate segment net operating income. Our real estate segment operating results also include income from property management services performed for unconsolidated partnerships, and reflects adjustments for minority interests in consolidated real estate partnerships and our share of unconsolidated real estate operations.

     For the three months ended June 30, 2007, net operating income of our real estate segment was $201.2 million, compared to $187.5 million for the three months ended June 30, 2006, representing an increase of $13.7 million, or 7.3%. This increase is primarily attributable to a $10.2 million increase in the net operating income of our consolidated property operations, as discussed above under “Rental Property Operations.”

     For the six months ended June 30, 2007, net operating income of our real estate segment was $388.5 million, compared to $362.5 million for the six months ended June 30, 2006, representing an increase of $26.0 million, or 7.2%. This increase is primarily attributable to a $23.1 million increase in the net operating income of our consolidated property operations, as discussed above under “Rental Property Operations.”

Asset Management and Transaction Segment

     Our asset management and transaction segment generates income from fees associated with real estate transactions, such as dispositions, refinancings, tax credit syndications and redevelopments, and from asset management fees associated with the financial management of partnerships. The income of this segment also includes gains on dispositions of non-depreciable assets, accretion of loan discounts resulting from transactional activities and certain other income. The expenses of this segment consist primarily of the costs of departments that perform transactional activities and asset management services.

     For the three months ended June 30, 2007, net operating income of our asset management and transactions segment was $11.6 million, compared to $7.8 million for the three months ended June 30, 2006, representing an increase of $3.8 million, or 49.4%. This increase is primarily attributable to a $1.9 million increase in net operating income from activity fees and asset management (see “Activity Fees and Asset Management” above), a $0.9 million increase in accretion income, and $1.3 million in 2007 related to the transfer of certain property rights.

     For the six months ended June 30, 2007, net operating income of our asset management and transactions segment was $20.3 million, compared to $19.0 million for the six months ended June 30, 2006, representing an increase of $1.3 million, or 6.8%. This increase reflects a $2.9 million increase in net operating income from activity fees and asset management (see “Activity Fees and Asset Management” above), a $2.5 million increase in accretion income, and $1.8 million in 2007 related to the transfer of certain property rights. These increases were partially offset by the effects of $6.4 million in gains on disposition of non-depreciable assets in 2006 that did not recur in 2007.

Critical Accounting Policies and Estimates

     We prepare our consolidated financial statements in accordance with GAAP, which require us to make estimates and assumptions. We believe that the following critical accounting policies involve our more significant judgments and estimates used in the preparation of our consolidated financial statements.

Impairment of Long-Lived Assets

     Real estate and other long-lived assets to be held and used are stated at cost, less accumulated depreciation and amortization, unless the carrying amount of the asset is not recoverable. If events or circumstances indicate that the carrying amount of a property may not be recoverable, we make an assessment of its recoverability by comparing the carrying amount to our estimate of the undiscounted future cash flows of the property, excluding interest charges. If the carrying amount exceeds the estimated aggregate undiscounted future cash flows, we recognize an impairment loss to the extent the carrying amount exceeds the estimated fair value of the property.

     Real estate investments are subject to varying degrees of risk. Several factors may adversely affect the economic performance and value of our real estate investments. These factors include:

• the general economic climate;

• competition from other apartment communities and other housing options;

• local conditions, such as loss of jobs or an increase in the supply of apartments, that might adversely affect apartment occupancy or rental rates;

• changes in governmental regulations and the related cost of compliance;

• increases in operating costs (including real estate taxes) due to inflation and other factors, which may not be offset by increased rents;

• changes in tax laws and housing laws, including the enactment of rent control laws or other laws regulating multifamily housing;

• changes in market capitalization rates; and

• the relative illiquidity of such investments.

     Any adverse changes in these and other factors could cause an impairment in our long-lived assets, including real estate and investments in unconsolidated real estate partnerships. Based on periodic tests of recoverability of long-lived assets, we determined that the carrying amount for our properties to be held and used was recoverable and, therefore, we did not record any impairment losses related to such properties during the three or six months ended June 30, 2007 or 2006.

Notes Receivable and Interest Income Recognition

     Notes receivable from unconsolidated real estate partnerships consist primarily of notes receivable from partnerships in which we are the general partner. The ultimate repayment of these notes is subject to a number of variables, including the performance and value of the underlying real estate and the claims of unaffiliated mortgage lenders. Our notes receivable include loans extended by us that we carry at the face amount plus accrued interest, which we refer to as “par value notes,” and loans extended by predecessors whose positions we generally acquired at a discount, which we refer to as “discounted notes.”

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     We record interest income on par value notes as earned in accordance with the terms of the related loan agreements. We discontinue the accrual of interest on such notes when the notes are impaired, as discussed below, or when there is otherwise significant uncertainty as to the collection of interest. We record income on such nonaccrual loans using the cost recovery method, under which we apply cash receipts first to the recorded amount of the loan; thereafter, any additional receipts are recognized as income.

     We recognize interest income on discounted notes receivable based upon whether the amount and timing of collections are both probable and reasonably estimable. We consider collections to be probable and reasonably estimable when the borrower has entered into certain closed or pending transactions (which include real estate sales, refinancings, foreclosures and rights offerings) that provide a reliable source of repayment. In such instances, we recognize accretion income, on a prospective basis using the effective interest method over the estimated remaining term of the loans, equal to the difference between the carrying amount of the discounted notes and the estimated collectible value. We record income on all other discounted notes using the cost recovery method. Accretion income recognized in any given period is based on our ability to complete transactions to monetize the notes receivable and the difference between the carrying amount and the estimated collectible amount of the notes; therefore, accretion income varies on a period-by-period basis and could be lower or higher than in prior periods.

Allowance for Losses on Notes Receivable

     We assess the collectibility of notes receivable on a periodic basis, which assessment consists primarily of an evaluation of cash flow projections of the borrower to determine whether estimated cash flows are sufficient to repay principal and interest in accordance with the contractual terms of the note. We recognize impairments on notes receivable when it is probable that principal and interest will not be received in accordance with the contractual terms of the loan. The amount of the impairment to be recognized generally is based on the fair value of the partnership’s real estate that represents the primary source of loan repayment. In certain instances where other sources of cash flow are available to repay the loan, the impairment is measured by discounting the estimated cash flows at the loan’s original effective interest rate.

     We recorded provisions for impairment losses on notes receivable of $0.7 million and $2.3 million for the three and six months ended June 30, 2007, respectively, and $0.5 million and $0.8 million for the three and six months ended June 30, 2006, respectively. We will continue to evaluate the collectibility of these notes, and we will adjust related allowances in the future due to changes in market conditions and other factors.

Capitalized Costs

     We capitalize costs, including certain indirect costs, incurred in connection with our capital expenditure activities, including redevelopment and construction projects, other tangible property improvements, and replacements of existing property components. Included in these capitalized costs are payroll costs associated with time spent by site employees in connection with the planning, execution and control of all capital expenditure activities at the property level. Capitalized “indirect costs” represent an allocation of certain regional operating center and corporate level department costs, including payroll costs, which clearly relate to capital expenditure activities. We capitalize interest, property taxes and insurance during periods in which redevelopment and construction projects are in progress. Costs incurred in connection with capital expenditure activities are capitalized where the costs of the improvements or replacements exceed $250. We charge to expense as incurred costs that do not relate to capital expenditure activities, including ordinary repairs, maintenance, resident turnover costs and general and administrative expenses.

     For the three months ended June 30, 2007 and 2006, for continuing and discontinued operations, we capitalized $7.4 million and $5.8 million of interest costs, respectively, and $19.2 million and $16.7 million of site payroll and indirect costs, respectively. For the six months ended June 30, 2007 and 2006, for continuing and discontinued operations, we capitalized $13.9 million and $12.0 million of interest costs, respectively, and $39.1 million and $32.1 million of site payroll and indirect costs, respectively.

Funds From Operations

     Funds From Operations, or FFO, is a non-GAAP financial measure that we believe, when considered with the financial statements determined in accordance with GAAP, is helpful to investors in understanding our performance because it captures features particular to real estate performance by recognizing that real estate generally appreciates over time or maintains residual value to a much greater extent than do other depreciable assets such as machinery, computers or other personal property. The Board of Governors of the National Association of Real Estate Investment Trusts, or NAREIT, defines FFO as net income (loss), computed in accordance with GAAP, excluding gains from sales of depreciable property, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. Adjustments

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for unconsolidated partnerships and joint ventures are calculated to reflect FFO on the same basis. We compute FFO for all periods presented in accordance with the guidance set forth by NAREIT’s April 1, 2002 White Paper, which we refer to as the White Paper. We calculate FFO (diluted) by subtracting redemption related preferred stock issuance costs and dividends on preferred stock and adding back dividends/distributions on dilutive preferred securities. FFO should not be considered an alternative to net income or net cash flows from operating activities, as determined in accordance with GAAP, as an indication of our performance or as a measure of liquidity. FFO is not necessarily indicative of cash available to fund future cash needs. In addition, although FFO is a measure used for comparability in assessing the performance of real estate investment trusts, there can be no assurance that our basis for computing FFO is comparable with that of other real estate investment trusts.

     For the three and six months ended June 30, 2007 and 2006, our FFO is calculated as follows (in thousands):

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2007			2006			2007			2006
Net income attributable to common stockholders (1)	$	2,983		$	16,058		$	11,843		$	76,074
Adjustments:
Depreciation and amortization (2)		121,807			112,272			244,195			219,461
Depreciation and amortization related to non-real estate assets		(4,866	)		(7,682	)		(11,480	)		(15,765	)
Depreciation of rental property related to minority partners’ interest and unconsolidated entities(3) (4)		(4,434	)		(9,552	)		(18,049	)		(23,043	)
Gain on dispositions of unconsolidated real estate and other		(639	)		(1,059	)		(21,061	)		(10,757	)
Gain on dispositions of non-depreciable assets and other		—			671			19,373			6,371
Deficit distributions to minority partners, net (5)		2,028			3,935			3,221			6,011
Discontinued operations:
Gain on dispositions of real estate, net of minority partners’ interest (3)		(24,273	)		(43,112	)		(39,906	)		(142,822	)
Depreciation of rental property, net of minority partners’ interest (3) (4)		1,152			6,724			(13,829	)		16,608
Recovery of deficit distributions to minority partners, net (5)		(555	)		(1,896	)		(418	)		(16,145	)
Income tax arising from disposals		2,597			1,044			2,761			27,986
Minority interest in Aimco Operating Partnership’s share of above adjustments		(8,525	)		(6,055	)		(15,259	)		(6,699	)
Preferred stock dividends		16,346			19,034			32,694			40,514
Redemption related preferred stock issuance costs		—			—			—			2,574
Funds From Operations	$	103,621		$	90,382		$	194,085		$	180,368
Preferred stock dividends		(16,346	)		(19,034	)		(32,694	)		(40,514	)
Redemption related preferred stock issuance costs		—			—			—			(2,574	)
Dividends/distributions on dilutive preferred securities		58			61			58			123
Funds From Operations attributable to common stockholders – diluted	$	87,333		$	71,409		$	161,449		$	137,403
Weighted average number of common shares, common share equivalents and dilutive preferred securities outstanding:
Common shares and equivalents (6)		99,128			97,475			99,572			97,007
Dilutive preferred securities		72			91			36			93
Total		99,200			97,566			99,608			97,100

Notes:
(1)	Represents the numerator for earnings per common share (see Note 6 to the consolidated financial statements in Item 1).
(2)	Includes amortization of management contracts where we are the general partner. Such management contracts were established in certain instances where we acquired a general partner interest in either a consolidated or an unconsolidated partnership. Because the recoverability of these management contracts depends primarily on the operations of the real estate owned by the limited partnerships, we believe it is consistent with the White Paper to add back such amortization, as the White Paper directs the add-back of amortization of assets uniquely significant to the real estate industry.
(3)	“Minority partners’ interest” means minority interest in our consolidated real estate partnerships.

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(4)	Adjustments related to minority partners’ share of depreciation of rental property for the six months ended June 30, 2007 include the subtraction of $15.1 million and $17.8 million for continuing operations and discontinued operations, respectively, related to the VMS debt extinguishment gains (see Note 8 to the consolidated financial statements in Item 1). These subtractions are required because we added back the minority partners’ share of depreciation related to rental property in determining FFO in prior periods. Accordingly, the net effect of the VMS debt extinguishment gains on our FFO for the six months ended June 30, 2007 was an increase of $9.3 million ($8.4 million after Minority Interest in Aimco Operating Partnership).
(5)	In accordance with GAAP, deficit distributions to minority partners are charges recognized in our income statement when cash is distributed to a non-controlling partner in a consolidated real estate partnership in excess of the positive balance in such partner’s capital account, which is classified as minority interest on our balance sheet. We record these charges for GAAP purposes even though there is no economic effect or cost. Deficit distributions to minority partners occur when the fair value of the underlying real estate exceeds its depreciated net book value because the underlying real estate has appreciated or maintained its value. As a result, the recognition of expense for deficit distributions to minority partners represents, in substance, either (a) our recognition of depreciation previously allocated to the non-controlling partner or (b) a payment related to the non-controlling partner’s share of real estate appreciation. Based on White Paper guidance that requires real estate depreciation and gains to be excluded from FFO, we add back deficit distributions and subtract related recoveries in our reconciliation of net income to FFO.
(6)	Represents the denominator for earnings per common share – diluted, calculated in accordance with GAAP, plus additional common share equivalents that are dilutive for FFO.

Liquidity and Capital Resources

     Liquidity is the ability to meet present and future financial obligations either through the sale or maturity of existing assets or by the acquisition of additional funds through working capital management. Both the coordination of asset and liability maturities and effective working capital management are important to the maintenance of liquidity. Our primary source of liquidity is cash flow from our operations. Additional sources are proceeds from property sales and proceeds from refinancings of existing mortgage loans and borrowings under new mortgage loans.

     Our principal uses for liquidity include normal operating activities, payments of principal and interest on outstanding debt, capital expenditures, dividends paid to stockholders and distributions paid to partners, and acquisitions of and investments in properties. We use our cash provided by operating activities to meet short-term liquidity needs. In the event that the cash provided by operating activities is not sufficient to cover our short-term liquidity demands, we have additional means, such as short-term borrowing availability and proceeds from property sales and refinancings, to help us meet our short-term liquidity demands. We use our revolving credit facility for general corporate purposes and to fund investments on an interim basis. We expect to meet our long-term liquidity requirements, such as debt maturities and property acquisitions, through long-term borrowings, both secured and unsecured, the issuance of debt or equity securities (including OP Units), the sale of properties and cash generated from operations.

     At June 30, 2007, we had $258.0 million in cash and cash equivalents, an increase of $28.2 million from December 31, 2006. As discussed in Note 8 to the consolidated financial statements in Item 1, at June 30, 2007, cash and cash equivalents included approximately $46.6 million in undistributed proceeds from the VMS partnership’s sale of its properties, of which $41.9 million is expected to be distributed to unrelated limited partners in VMS during the second half of 2007. At June 30, 2007, we had $333.0 million of restricted cash primarily consisting of reserves and escrows held by lenders for bond sinking funds, capital expenditures, property taxes and insurance. In addition, cash, cash equivalents and restricted cash are held by unconsolidated partnerships. The following discussion relates to changes in cash due to operating, investing and financing activities, which are presented in our consolidated statements of cash flows.

Operating Activities

     For the six months ended June 30, 2007, our net cash provided by operating activities of $203.3 million was primarily from operating income from our consolidated properties, which is affected primarily by rental rates, occupancy levels and operating expenses related to our portfolio of properties. Cash provided by operating activities decreased $61.6 million compared with the six months ended June 30, 2006, primarily reflecting unfavorable changes in restricted cash and accrued liabilities during the six months ended June 30, 2007, as compared to the six months ended June 30, 2006.

Investing Activities

     For the six months ended June 30, 2007, net cash used in our investing activities of $187.0 million consisted primarily of capital expenditures and acquisitions of real estate, partially offset by proceeds from disposition of real estate.

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     Although we hold all of our properties for investment, we may sell properties when they do not meet our investment criteria or are located in areas that we believe do not justify our continued investment when compared to alternative uses for our capital. During the six months ended June 30, 2007, we sold 40 consolidated properties. These properties were sold for an aggregate sales price of $282.1 million and generated proceeds totaling $259.6 million, after the payment of transaction costs and the assumption of debt. Sales proceeds were used to repay borrowings under our revolving credit facility and for other corporate purposes.

     We are currently marketing for sale certain properties that are inconsistent with our long-term investment strategy. Additionally, from time to time, we may market certain properties that are consistent with our long-term investment strategy but offer attractive returns, such as sales to buyers who intend to convert the properties to condominiums. Gross sales proceeds from 2007 dispositions are expected to be $400 million to $600 million, and we plan to use our share of the net proceeds from such dispositions to reduce debt, fund capital expenditures on existing assets, fund property and partnership acquisitions and for other operating needs and corporate purposes.

Capital Expenditures

     We classify all capital spending as Capital Replacements (which we refer to as CR), Capital Improvements (which we refer to as CI), casualties, redevelopment or entitlement. Expenditures other than casualty, redevelopment and entitlement capital expenditures are apportioned between CR and CI based on the useful life of the capital item under consideration and the period we have owned the property.

     CR represents the share of capital expenditures that are deemed to replace the portion of acquired capital assets that was consumed during the period we have owned the asset. CI represents the share of expenditures that are made to enhance the value, profitability or useful life of an asset as compared to its original purchase condition. CI excludes capital expenditures for casualties, redevelopment and entitlements. Casualty expenditures represent capitalized costs incurred in connection with casualty losses and are associated with the restoration of the asset. A portion of the restoration costs may be reimbursed by insurance carriers subject to deductibles associated with each loss. Redevelopment expenditures represent expenditures that substantially upgrade the property. Entitlement expenditures represent costs incurred in connection with obtaining local governmental approvals to increase density and add residential units to a site. For the six months ended June 30, 2007, we spent a total of $44.7 million, $42.8 million, $8.4 million, $128.8 million and $12.6 million on CR, CI, casualties, redevelopment and entitlement, respectively.

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     The table below details our share of actual spending, on both consolidated and unconsolidated real estate partnerships, for CR, CI, casualties, redevelopment and entitlements for the six months ended June 30, 2007, on a per unit and total dollar basis. Per unit numbers are based on approximately 132,088 average units in the quarter including 114,057 conventional and 18,031 affordable units. Average units are weighted for the portion of the period that we owned an interest in the property, represent ownership-adjusted effective units, and exclude non-managed units. Total capital expenditures are reconciled to our consolidated statement of cash flows for the same period (in thousands, except per unit amounts).

	Our Share of
	Expenditures			Cost Per Unit
Capital Replacements Detail:
Building and grounds	$	18,206		$	138
Turnover related		20,971			159
Capitalized site payroll and indirect costs and other		5,476			41
Our share of Capital Replacements	$	44,653		$	338
Capital Replacements:
Conventional	$	41,554		$	364
Affordable		3,099			172
Our share of Capital Replacements		44,653		$	338
Capital Improvements:
Conventional		38,634		$	339
Affordable		4,180			232
Our share of Capital Improvements		42,814		$	324
Casualties:
Conventional		6,820
Affordable		1,590
Our share of casualties		8,410
Redevelopment:
Active Conventional		105,389
Active tax credit projects		10,637
Pre-construction and other activities		12,753
Our share of redevelopment		128,779
Entitlements		12,560
Our share of total capital expenditures		237,216
Plus minority partners’ share of consolidated spending		31,680
Less our share of unconsolidated spending		(288	)
Capital expenditures per consolidated statement of cash flows	$	268,608

     Our share of capitalized site payroll and indirect costs related to CI, casualties, redevelopment and entitlements totaled approximately $33.1 million for the six months ended June 30, 2007.

     We funded all of the above capital expenditures with cash provided by operating activities, working capital, property sales and borrowings under the revolving credit facility.

Financing Activities

     For the six months ended June 30, 2007, net cash provided by financing activities of $11.8 million primarily related to net proceeds from property loans and proceeds from stock option exercises, offset by repurchases of Common Stock, the payment of dividends to common and preferred stockholders and payment of distributions to minority interests.

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     Mortgage Debt

     At June 30, 2007, we had $6.6 billion in consolidated mortgage debt outstanding (including amounts classified as liabilities related to assets held for sale) as compared to $6.3 billion outstanding at December 31, 2006. During the six months ended June 30, 2007, we refinanced or closed mortgage loans on 61 consolidated properties, generating $873.7 million of proceeds from borrowings with a weighted average interest rate of 5.91%. Our share of the net proceeds after repayment of existing debt, payment of transaction costs and distributions to minority interests, was $357.0 million. We used these total net proceeds for capital expenditures and other corporate purposes. We intend to continue to refinance mortgage debt to generate proceeds in amounts exceeding our scheduled amortizations and maturities.

     Revolving Credit Facility and Term Loans

     We have an Amended and Restated Senior Secured Credit Agreement with a syndicate of financial institutions, which we refer to as the Credit Agreement. The aggregate amount of commitments and loans under the Credit Agreement is $850.0 million, comprised of a $400.0 million term loan and $450.0 million of revolving loan commitments. The term loan matures on March 22, 2011, and the revolving loan commitments mature on May 1, 2009. At June 30, 2007, the term loan had an outstanding principal balance of $400.0 million and an interest rate of 6.86%. At June 30, 2007, the revolving loans had an outstanding principal balance of $154.0 million and a weighted average interest rate of 6.70% (based on various LIBOR borrowings outstanding with various maturities and rates). The amount available under the revolving credit facility at June 30, 2007, was $256.2 million (after giving effect to $39.8 million outstanding for undrawn letters of credit issued under the revolving credit facility). The proceeds of revolving loans are generally permitted to be used to fund working capital and for other corporate purposes.

     Equity Transactions

     Under our shelf registration statement, we had available for issuance approximately $877 million of debt and equity securities, and the Aimco Operating Partnership had available for issuance $500 million of debt securities as of June 30, 2007.

     Our Board of Directors has, from time to time, authorized us to repurchase shares of our outstanding capital stock. During the six months ended June 30, 2007, we repurchased approximately 2.24 million shares of Common Stock for cash totaling $126.3 million. We also paid cash totaling $10.3 million in January 2007 to settle repurchases of Common Stock in December 2006. In April 2005, our Board of Directors authorized us to repurchase up to a total of eight million shares of Common Stock, and on July 31, 2007, our Board of Directors increased that authorization by an additional ten million shares. These repurchases may be made from time to time in the open market or in privately negotiated transactions.

     During the six months ended June 30, 2007, we issued approximately 1.39 million shares of Common Stock and received proceeds of $53.2 million in connection with the exercise of stock options.

Future Capital Needs

     We expect to fund any future acquisitions, additional redevelopment projects and capital improvements principally with proceeds from property sales (including tax-free exchange proceeds), short-term borrowings, debt and equity financings and operating cash flows.

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ITEM 3. Quantitative and Qualitative Disclosures About Market Risk

     Our primary market risk exposure relates to changes in interest rates. We are not subject to any material foreign currency exchange rate risk or any other material market rate or price risks.

     Our capital structure includes the use of fixed-rate and variable rate indebtedness. As such, we are exposed to the impact of changes in interest rates. We use predominantly long-term, fixed-rate and self-amortizing non-recourse mortgage debt in order to avoid the refunding and repricing risks of short-term borrowings. We use short-term debt financing primarily to fund short-term uses and acquisitions and generally expect to refinance such borrowings with cash from operating activities, property sales proceeds, long-term debt or equity financings. We make limited use of derivative financial instruments and we do not use them for trading or other speculative purposes. From time to time, we are required by mortgage lenders to use interest rate caps or swaps to limit our exposure to market interest rate risk. Additionally, we utilize total rate-of-return swaps on a limited basis to effectively convert certain of our tax-exempt fixed rate debt to variable rate debt.

     See “Item 7A. Quantitative and Qualitative Disclosures About Market Risk” in our Annual Report on Form 10-K for the year ended December 31, 2006 for a more detailed discussion of interest rate sensitivity. As of June 30, 2007, our market risk had not changed materially from the amounts reported in our Annual Report on Form 10-K for the year ended December 31, 2006.

ITEM 4. Controls and Procedures

     Disclosure Controls and Procedures

     Our management, with the participation of our chief executive officer and chief financial officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report. Based on such evaluation, our chief executive officer and chief financial officer have concluded that, as of the end of such period, our disclosure controls and procedures are effective.

     Changes in Internal Control over Financial Reporting

     There have been no significant changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f)) under the Exchange Act) during second quarter of 2007 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

ITEM 1. Legal Proceedings

     See the information under the heading “Legal Matters” in Note 3 to the consolidated financial statements in this Quarterly Report on Form 10-Q for information regarding legal proceedings, which information is incorporated by reference in this Item 1.

ITEM 1A. Risk Factors

     As of the date of this report, there have been no material changes from the risk factors in the Company’s Annual Report on Form 10-K for the year ended December 31, 2006.

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds

     (a) Unregistered Sales of Equity Securities. From time to time during the three months ended June 30, 2007, we issued shares of Common Stock in exchange for common and preferred OP Units tendered to the Aimco Operating Partnership for redemption in accordance with the terms and provisions of the agreement of limited partnership of the Aimco Operating Partnership. Such shares are issued based on an exchange ratio of one share for each common OP Unit or the applicable conversion ratio for preferred OP Units. During the three months ended June 30, 2007, approximately 19,000 shares of Common Stock were issued in exchange for OP Units in these transactions. All of the foregoing issuances were made in private placement transactions exempt from registration pursuant to Section 4(2) of the Securities Act of 1933, as amended.

     (c) Repurchases of Equity Securities. The following table summarizes repurchases of our equity securities for the three months ended June 30, 2007:

							Maximum Number
					Total Number of		of Shares that
			Average		Shares Purchased		May Yet Be
	Total		Price		as Part of Publicly		Purchased Under the
	Number		Paid		Announced Plans		Plans or Programs
Period	of Shares Purchased		per Share		or Programs		(1)
April 1 – April 30, 2007		0		N/A		0		3,932,780
May 1 – May 31, 2007		0		N/A		0		3,932,780
June 1 – June 30, 2007		477,300	$	52.36		477,300		3,455,480
Total		477,300	$	52.36		477,300

(1) Our Board of Directors has, from time to time, authorized us to repurchase shares of our outstanding capital stock. In April 2005, our Board of Directors authorized us to repurchase up to a total of eight million shares of our Common Stock, and on July 31, 2007, our Board of Directors increased that authorization by an additional ten million shares. We are currently authorized to repurchase 13.46 million shares. This authorization has no expiration date. These repurchases may be made from time to time in the open market or in privately negotiated transactions.

     Dividend Payments. Our Credit Agreement includes customary covenants, including a restriction on dividends and other restricted payments, but permits dividends during any 12-month period in an aggregate amount of up to 95% of our Funds From Operations for such period or such amount as may be necessary to maintain our REIT status.

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

     We held our annual meeting of stockholders on April 30, 2007. At the meeting, the stockholders elected the following eight directors by the votes indicated below:

	Votes For		Votes Withheld
Terry Considine		81,580,987		1,388,358
James N. Bailey		81,659,930		1,309,415
Richard S. Ellwood		81,143,477		1,825,868
Thomas L. Keltner		81,688,346		1,280,999
J. Landis Martin		81,156,522		1,812,823
Robert A. Miller		81,688,027		1,281,318
Thomas L. Rhodes		81,125,813		1,843,532
Michael A. Stein		81,685,292		1,284,053

     There were no abstentions or broker non-votes.

     At the meeting, the stockholders approved the following proposals by the votes indicated below:

1. Proposal to ratify the selection of Ernst & Young LLP, to serve as our independent registered public accounting firm for the fiscal year ending December 31, 2007:

Votes For	Votes Against	Abstentions	Broker Non-Votes
80,910,360	1,574,806	484,179	—

2. Proposal to approve the Aimco 2007 Stock Award and Incentive Plan:

Votes For	Votes Against	Abstentions	Broker Non-Votes
65,787,256	8,989,403	527,254	7,665,432

3. Proposal to approve the Aimco 2007 Employee Stock Purchase Plan:

Votes For	Votes Against	Abstentions	Broker Non-Votes
74,535,735	259,997	508,181	7,665,432

ITEM 5. Other Information

Amendments of Bylaws

     On July 31, 2007, our Board of Directors adopted amended and restated Bylaws. The amendments are as follows:

Annual Meeting Date

The Board amended Article I, Section 1.01 of the Bylaws to set the annual meeting of stockholders on the last Monday of April each year or such other time or day falling within 15 days before or after such date.

Adjournments

The Board amended Article I, Section 1.07 of the Bylaws to give the power of adjournment to the chairman of the meeting.

Advance Notice Provision

The Board amended Article I of the Bylaws by adding Sections 1.10, 1.11 and 1.12. Pursuant to this amendment, if a stockholder wishes to present either (1) a proposal relating to director nominations or (2) a proposal relating to a matter other than director nominations, other than pursuant to Rule 14a-8 of the proxy rules of the Securities and Exchange Commission, the stockholder must comply with the procedures contained in the applicable section. These procedures include timely notice to Aimco’s Secretary of such proposal and specific requirements as to the content of the proposal.

32

For a notice to be timely, any such proposal must be delivered to Aimco’s Secretary not earlier than the close of business on the 120th day, and not later than the close of business on the 90th day, prior to the anniversary date of the most recent annual meeting of stockholders. If the date of the annual meeting of stockholders is advanced by more than 30 days or delayed by more than 60 days from the anniversary date of the preceding year’s annual meeting, then the notice must be delivered not earlier than the 90th day prior to such annual meeting and not later than the close of business on the later of the 60th day prior to such annual meeting or the tenth day following the day on which public announcement of the date of such annual meeting is first made. The amended Bylaws include a similar provision for special meetings at which directors are elected.

A nomination for a director must be in writing and must:

(1)	Set forth, as to each person being nominated, all of the information relating to such person that is required to be disclosed in connection with solicitations of proxies for election of directors pursuant to Regulation 14A of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and the rules and regulations promulgated thereunder.
(2)	Set forth, as to the stockholder giving the notice:

a.	the name and address of the stockholder as they appear on Aimco’s records and the beneficial owner, if any, on whose behalf the nomination is made
b.	the class or series and number of shares of Aimco’s capital stock owned beneficially or of record by such stockholder and such beneficial owner
c.	a description of all arrangements or understandings between such stockholder and each proposed nominee
d.	a representation that the stockholder intends to appear in person or by proxy at the meeting to nominate such persons named in the notice and
e.	any other information relating to such stockholder that would be required to be disclosed in a proxy statement or other filings required to be made pursuant to Regulation 14A of the Exchange Act and the rules and regulations promulgated thereunder.

(3) Include a written consent of each proposed nominee to be named as a nominee and to serve as a director if elected.

Similar requirements apply to proposals relating to matters other than the nomination of directors.

Stockholder Proposals for the 2008 Annual Stockholders’ Meeting

The amended and restated Bylaws change the notice provisions for proposals by stockholders concerning business to be transacted at future Aimco stockholder meetings.

Proposals of stockholders intended to be presented at Aimco’s Annual Meeting of Stockholders to be held in 2008 must be received by Aimco, marked to the attention of the Secretary, no later than November 28, 2007, to be included in Aimco’s Proxy Statement and form of proxy for that meeting. Proposals must comply with the requirements as to form and substance established by the SEC for proposals in order to be included in the proxy statement.

Proposals of stockholders submitted to Aimco for consideration at Aimco’s Annual Meeting of Stockholders to be held in 2008 outside the processes of Rule 14a-8 (i.e., the procedures for placing a stockholder’s proposal in Aimco’s proxy materials) will be considered untimely if received by the Company before January 1, 2008, or after January 31, 2008.

Director Resignations

The Board amended Article II, Section 2.12 to provide that a resignation from the Board may be conditioned to be effective on some future date, the occurrence of some future event or the acceptance of such resignation by certain designated parties.

Vice Chairman

The Board amended Article IV, Section 4.03 to clarify that the position of Vice Chairman of the Board is not a required position. The Board currently has a Chairman of the Board and a Lead Independent Director.

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Uncertificated Shares

The Board amended Article VI, Section 6.01 to clarify that the Board can authorize uncertificated shares.

Notice and Consents by Electronic Transmission, Meetings by Remote Communication, Householding of Notices

The Board amended various Sections within Articles I, II and III to provide for the giving of notices and consents by electronic transmission, holding meetings by remote communication, and householding of notices to stockholders.

Indemnification and Insurance

The Board clarified Article VIII with respect to indemnification and insurance for directors, officers and other parties.

Other Changes

Other non-material changes were made to the Bylaws for purposes of improving clarity or consistency.

The foregoing descriptions of the Bylaws are qualified in their entirety by reference to Aimco’s Amended and Restated Bylaws, which are filed as Exhibit 3.2 to this Form 10-Q and are hereby incorporated by reference.

ITEM 6. Exhibits

     The following exhibits are filed with this report:

EXHIBIT NO.
3.1	Charter (Exhibit 3.1 to Aimco’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2006, is incorporated herein by reference)
3.2	Amended and Restated Bylaws
31.1	Certification of Chief Executive Officer pursuant to Securities Exchange Act Rules 13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of Chief Financial Officer pursuant to Securities Exchange Act Rules 13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
99.1	Agreement re: disclosure of long-term debt instruments

34

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/ THOMAS M. HERZOG
	Thomas M. Herzog
	Executive Vice President and Chief Financial Officer (duly authorized officer and principal financial officer)
By:	/s/ SCOTT W. FORDHAM
	Scott W. Fordham
	Senior Vice President and Chief Accounting Officer

Date: August 3, 2007

35

EXHIBIT INDEX

Exhibit No.	Description
3.1	Charter (Exhibit 3.1 to Aimco’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2006, is incorporated herein by reference)
3.2	Amended and restated Bylaws
31.1	Certification of Chief Executive Officer pursuant to Securities Exchange Act Rules 13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of Chief Financial Officer pursuant to Securities Exchange Act Rules 13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
99.1	Agreement re: disclosure of long-term debt instruments

EX-3.2

EXHIBIT 3.2

As Adopted on July 31, 2007

AMENDED AND RESTATED BY-LAWS

OF

APARTMENT INVESTMENT AND MANAGEMENT COMPANY

TABLE OF CONTENTS

	Page
ARTICLE I. STOCKHOLDERS		1
SECTION 1.01. Annual Meeting		1
SECTION 1.02. Special Meeting		1
SECTION 1.03. Place of Meetings		1
SECTION 1.04. Meetings by Remote Communication		1
SECTION 1.05. Notice of Meetings; Waiver of Notice		2
SECTION 1.06. Quorum; Voting		2
SECTION 1.07. Adjournments		3
SECTION 1.08. General Right to Vote; Proxies		3
SECTION 1.09. List of Stockholders		3
SECTION 1.10. Conduct of Voting		3
SECTION 1.11. Conduct of Business		4
SECTION 1.12. Advance Notice Provisions for Election of Directors		4
SECTION 1.13. Advance Notice Provisions for Business to be Transacted at Annual Meeting		5
ARTICLE II. BOARD OF DIRECTORS		6
SECTION 2.01. Function of Directors		6
SECTION 2.02. Qualification and Number of Directors		6
SECTION 2.03. Election and Tenure of Directors		6
SECTION 2.04. Removal of Director		7
SECTION 2.05. Vacancy on Board of Directors		7
SECTION 2.06. Regular Meetings		7
SECTION 2.07. Special Meetings		7
SECTION 2.08. Notice of Meeting		7
SECTION 2.09. Quorum; Action by Directors		8
SECTION 2.10. Meeting by Conference Telephone		8
SECTION 2.11. Compensation		8
SECTION 2.12. Resignation		8
SECTION 2.13. Presumption of Assent		9
ARTICLE III. COMMITTEES		9

-i-

	Page
SECTION 3.01. Committees		9
SECTION 3.02. Committee Procedure		9
ARTICLE IV. OFFICERS		9
SECTION 4.01. Executive and Other Officers		9
SECTION 4.02. Chairman of the Board		10
SECTION 4.03. Vice Chairman of the Board		10
SECTION 4.04. President		10
SECTION 4.05. Vice-Presidents		10
SECTION 4.06. Secretary		11
SECTION 4.07. Treasurer		11
SECTION 4.08. Assistant and Subordinate Officers		11
SECTION 4.09. Election, Tenure and Removal of Officers		11
SECTION 4.10. Compensation		11
ARTICLE V. DIVISIONAL TITLES		12
SECTION 5.01. Conferring Divisional Titles		12
SECTION 5.02. Effect of Divisional Titles		12
ARTICLE VI. STOCK		12
SECTION 6.01. Certificates for Stock		12
SECTION 6.02. Transfers		13
SECTION 6.03. Record Dates or Closing of Transfer Books		13
SECTION 6.04. Stock Ledger		13
SECTION 6.05. Certification of Beneficial Owners		13
SECTION 6.06. Lost Stock Certificates		14
SECTION 6.07. Fractional Share Interests or Scrip		14
ARTICLE VII. FINANCE		14
SECTION 7.01. Checks, Drafts, Etc		14
SECTION 7.02. Annual Statement of Affairs		14
SECTION 7.03. Fiscal Year		14
SECTION 7.04. Dividends		15
SECTION 7.05. Bonds		15
ARTICLE VIII. INDEMNIFICATION		15
SECTION 8.01. Procedure		15
SECTION 8.02. Exclusivity, Etc		15

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	Page
SECTION 8.03. Insurance		16
SECTION 8.04. Severability; Definitions		16
ARTICLE IX. SUNDRY PROVISIONS		16
SECTION 9.01. Books and Records		16
SECTION 9.02. Corporate Seal		16
SECTION 9.03. Voting Stock in Other Corporations		16
SECTION 9.04. Mail		16
SECTION 9.05. Contracts and Agreements		16
SECTION 9.06. Resident Agent; Principal Office		17
SECTION 9.07. Amendments		17
SECTION 9.08. Reliance		17

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AMENDED AND RESTATED BY-LAWS

OF

APARTMENT INVESTMENT AND MANAGEMENT COMPANY

ARTICLE I.
STOCKHOLDERS

     SECTION 1.01. Annual Meeting. The Corporation shall hold an annual meeting of its stockholders to elect directors and transact any other business within its powers, either at 9:00 a.m. on the last Monday of April each year if not a legal holiday, or at such other time on such other day falling within 15 days before or after such date as shall be set by the board of directors. Except as the Charter, these By-laws or statute provides otherwise, any business may be considered at an annual meeting without the purpose of the meeting having been specified in the notice. Failure to hold an annual meeting does not invalidate the Corporation’s existence or affect any otherwise valid corporate acts.

     SECTION 1.02. Special Meeting. At any time in the interval between annual meetings, a special meeting of the stockholders may be called by the Chairman of the Board, the Vice Chairman of the Board or the President or by a majority of the Board of Directors by vote at a meeting or in writing (addressed to the Secretary of the Corporation) with or without a meeting. Special meetings of the stockholders shall be called by the Secretary at the request of stockholders only on the written request of stockholders entitled to cast at least 25% of all the votes entitled to be cast at the meeting. A request for a special meeting shall state the purpose of the meeting and the matters proposed to be acted on at it. The Secretary shall inform the stockholders who make the request of the reasonably estimated costs of preparing and mailing a notice of the meeting and, on payment of these costs to the Corporation, notify each stockholder entitled to notice of the meeting. The Board of Directors shall have sole power to fix the date and time of the special meeting. Unless requested by stockholders entitled to cast a majority of all the votes entitled to be cast at the meeting, a special meeting need not be called to consider any matter which is substantially the same as a matter voted on at any special meeting of stockholders held in the preceding 12 months.

     SECTION 1.03. Place of Meetings. Unless the Charter provides otherwise, meetings of stockholders shall be held at such place as is set from time to time by the Board of Directors or the Board of Directors may determine that the meeting not be held at any place but instead be held by means of remote communication. At the request of a stockholder, the Board of Directors shall provide a place for the meeting of the stockholders.

     SECTION 1.04. Meetings by Remote Communication. At the discretion of the Board of Directors and subject to any guidelines and procedures that the Board of Directors may adopt from time to time, stockholders and proxy holders not physically present at a meeting of the stockholders, by means of remote communication may participate in the meeting of the stockholders and may be considered present in person and may vote at the meeting of the stockholders, whether the meeting is held at a designated place or solely by means of remote communication. The Corporation shall implement reasonable measures to verify that each

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person considered present and authorized to vote at the meeting by means of remote communication is a stockholder or proxy holder, the Corporation shall implement reasonable measures to provide the stockholders and proxy holders a reasonable opportunity to participate in the meeting and to vote on matters submitted to the stockholders, including an opportunity to read or hear the proceedings of the meeting substantially concurrently with the proceedings and in the event any stockholder or proxy holder votes or takes other action at the meeting by means of remote communication, a record of the vote or other action shall be maintained by the Corporation.

     SECTION 1.05. Notice of Meetings; Waiver of Notice. Not less than ten nor more than 90 days before each stockholders’ meeting, the Secretary shall give notice in writing or by electronic transmission of the meeting to each stockholder entitled to vote at the meeting and each other stockholder entitled to notice of the meeting. Any notice given by the Corporation to a stockholder is effective if given by a single notice, in writing or by electronic transmission, to all stockholders who share an address if the Corporation gives notice, in writing or by electronic transmission, to the stockholder of its intent to give a single notice and the stockholder consents to receiving a single notice or fails to object in writing within 60 days after the Corporation gives notice to the stockholder of its intent to give a single notice. A stockholder may revoke consent given, whether affirmative or implied, by written notice to the Corporation. The notice shall state the time of the meeting, the place of the meeting, if any, and the means of remote communication, if any, by which stockholders and proxy holders may be deemed to be present in person and may vote at the meeting and, if the meeting is a special meeting or notice of the purpose is required by statute, the purpose of the meeting. Notice is given to a stockholder when it is personally delivered to the stockholder, left at the stockholder’s residence or usual place of business, mailed to the stockholder at the stockholder’s address as it appears on the records of the Corporation or transmitted to the stockholder by an electronic transmission to any address or number of the stockholder at which the stockholder receives electronic transmissions. If the Corporation has received a request from a stockholder that notice not be sent by electronic transmission, the Corporation may not provide notice to the stockholder by electronic transmission. Notice given by electronic transmission shall be considered ineffective if the Corporation is unable to deliver two consecutive notices and the inability to deliver the notices becomes known to the Secretary, an Assistant Secretary, the transfer agent or other person responsible for giving the notice. The inadvertent failure to deliver any notice by electronic transmission does not invalidate any meeting or other action. An affidavit of the Secretary, an Assistant Secretary, the transfer agent or other agent of the Corporation that notice has been given by a form of electronic transmission, in the absence of actual fraud, shall be prima facie evidence of the facts stated in the affidavit. Notwithstanding the foregoing provisions, each person who is entitled to notice waives notice if the person before or after the meeting delivers a written waiver or a waiver by electronic transmission which is filed with the records of stockholders’ meetings, or is present at the meeting in person or by proxy.

     SECTION 1.06. Quorum; Voting. Unless any statute or the Charter provides otherwise, at a meeting of stockholders the presence in person or by proxy of stockholders entitled to cast a majority of all the votes entitled to be cast at the meeting constitutes a quorum, and a majority of all the votes cast at a meeting at which a quorum is present is sufficient to approve any matter which properly comes before the meeting, except that a plurality of all the votes cast at a meeting at which a quorum is present is sufficient to elect a director.

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     SECTION 1.07. Adjournments. Whether or not a quorum is present, a meeting of stockholders convened on the date for which it was called may be adjourned from time to time without further notice by chairman of the meeting to a date not more than 120 days after the original record date. Any business which might have been transacted at the meeting as originally notified may be deferred and transacted at any such adjourned meeting at which a quorum shall be present.

     SECTION 1.08. General Right to Vote; Proxies. Unless the Charter provides for a greater or lesser number of votes per share or limits or denies voting rights, each outstanding share of stock, regardless of class, is entitled to one vote on each matter submitted to a vote at a meeting of stockholders; however, a share is not entitled to be voted if any installment payable on it is overdue and unpaid. In all elections for directors, each share of stock may be voted for as many individuals as there are directors to be elected and for whose election the share is entitled to be voted. A stockholder may vote the stock the stockholder owns of record either in person or by proxy. A stockholder may sign a writing authorizing another person to act as proxy. Signing may be accomplished by the stockholder or the stockholder’s authorized agent signing the writing or causing the stockholder’s signature to be affixed to the writing by any reasonable means, including facsimile signature. A stockholder may authorize another person to act as proxy by transmitting, or authorizing the transmission of, an authorization by a telegram, cablegram, datagram, electronic mail or any other electronic or telephonic means to the person authorized to act as proxy or to any other person authorized to receive the proxy authorization on behalf of the person authorized to act as the proxy, including a proxy solicitation firm or proxy support service organization. Unless a proxy provides otherwise, it is not valid more than 11 months after its date. A proxy is revocable by a stockholder at any time without condition or qualification unless the proxy states that it is irrevocable and the proxy is coupled with an interest. A proxy may be made irrevocable for so long as it is coupled with an interest. The interest with which a proxy may be coupled includes an interest in the stock to be voted under the proxy or another general interest in the Corporation or its assets or liabilities.

     SECTION 1.09. List of Stockholders. At each meeting of stockholders, a full, true and complete list of all stockholders entitled to vote at such meeting, showing the number and class of shares held by each and certified by the transfer agent for such class or by the Secretary, shall be furnished by the Secretary.

     SECTION 1.10. Conduct of Voting. At all meetings of stockholders, unless the voting is conducted by inspectors, the proxies and ballots shall be received, and all questions touching the qualification of voters and the validity of proxies, the acceptance or rejection of votes and procedures for the conduct of business not otherwise specified by these By-Laws, the Charter or law, shall be decided or determined by the chairman of the meeting. If demanded by stockholders, present in person or by proxy, entitled to cast 10% in number of votes entitled to be cast, or if ordered by the chairman of the meeting, the vote upon any election or question shall be taken by ballot. Before any meeting of the stockholders, the Board of Directors may, and on the request of stockholders, present in person or by proxy, entitled to cast 10% in number of votes entitled to be cast, shall, appoint persons to act as inspectors of election at the meeting and any adjournment thereof. If no inspectors of election are so appointed, the chairman of the meeting may appoint inspectors of election at the meeting. The number of inspectors shall be either one or three. If inspectors are appointed at a meeting on the request of stockholders, the holders of a

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majority of shares present in person or by proxy shall determine whether one or three inspectors are to be appointed. No candidate for election as a director at a meeting shall serve as an inspector thereat. If any person appointed as inspector fails to appear or fails or refuses to act, the chairman of the meeting may, and upon the request of any stockholder shall, appoint a person to fill that vacancy. The inspectors shall determine the number of shares outstanding and the voting power of each, the shares represented at the meeting, the existence of a quorum, and the authenticity, validity and effect of proxies; receive votes, ballots or consents; hear and determine all challenges and questions in any way arising in connection with the right to vote; count and tabulate all votes or consents; determine when polls shall close; determine the result; and do any other acts that may be proper to conduct the election or vote with fairness to all stockholders. Unless so demanded or ordered, no vote need be by ballot and voting need not be conducted by inspectors.

     SECTION 1.11. Conduct of Business. Nominations of persons for election to the Board of Directors and the proposal of business to be considered by the stockholders may be made at an annual meeting of stockholders (a) pursuant to the Corporation’s notice of meeting, (b) by or at the direction of the Board of Directors or (c) by any stockholder of the Corporation (i) who was a stockholder of record at the time of giving notice(s) provided for in Section 1.12 and Section 1.13, (ii) who is entitled to vote for the election of directors at the meeting and (iii) who complied with the notice(s) procedures set forth in Section 1.12 and Section 1.13. Nominations of persons for election to the Board of Directors and the proposal of business to be considered by the stockholders may be made at a special meeting of stockholders (a) only pursuant to the Corporation’s notice of meeting and (b), in the case of nominations of persons for election to the Board of Directors, (i) by or at the direction of the Board of Directors or (ii) by any stockholder of the Corporation (A) who was a stockholder of record at the time of giving notice provided for in Section 1.12, (B) who is entitled to vote for the election of directors at the meeting and (C) who complied with the notice procedures set forth in Section 1.12. The chairman of the meeting shall have the power and duty to determine whether a nomination or any business proposed to be brought before the meeting was made in accordance with the procedures set forth in Section 1.12, Section 1.13 and this Section and, if any proposed nomination or business is not in compliance with Section 1.12, Section 1.13 and this Section, to declare that such defective nomination or proposal be disregarded.

     SECTION 1.12. Advance Notice Provisions for Election of Directors. Only persons who are nominated in accordance with the following procedures shall be eligible for election as directors of the Corporation. Nominations of persons for election to the Board of Directors may be made at any annual meeting of stockholders, or at any special meeting of stockholders called for the purpose of electing directors, (a) by or at the direction of the Board of Directors (or any duly authorized committee thereof) or (b) by any stockholder of the Corporation (i) who is a stockholder of record on the date of the giving of the notice provided for in this Section and on the record date for the determination of stockholders entitled to vote at such meeting and (ii) who complies with the notice procedures set forth in this Section. A stockholder’s notice must be delivered to or mailed and received by the Secretary at the principal executive offices of the Corporation (a) in the case of an annual meeting, not less than 90 days nor more than 120 days prior to the first anniversary of the preceding year’s annual meeting; provided, however, that in the event that the date of the annual meeting is advanced by more than 30 days or delayed by more than 60 days from the anniversary date of the preceding year’s

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annual meeting, notice by the stockholder must be so delivered not earlier than the 90^th day prior to such annual meeting and not later than the close of business on the later of the 60^th day prior to such annual meeting or the tenth day following the day on which public announcement of the date of such annual meeting is first made; and (b) in the case of a special meeting of stockholders called for the purpose of electing directors, not later than the close of business on the tenth day following the day on which notice of the date of the special meeting was mailed or public announcement of the date of the special meeting was made, whichever first occurs. A stockholder’s notice to the Secretary must be in writing and set forth (a) as to each person whom the stockholder proposes to nominate for election as a director, all information relating to such person that is required to be disclosed in connection with solicitations of proxies for election of directors pursuant to Regulation 14A of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the rules and regulations promulgated thereunder; and (b) as to the stockholder giving the notice (i) the name and address of such stockholder as they appear on the Corporation’s books and of the beneficial owner, if any, on whose behalf the nomination is made, (ii) the class or series and number of shares of capital stock of the Corporation which are owned beneficially or of record by such stockholder and such beneficial owner, (iii) a description of all arrangements or understandings between such stockholder and each proposed nominee and any other person or persons (including their names) pursuant to which the nomination(s) are to be made by such stockholder, (iv) a representation that such stockholder intends to appear in person or by proxy at the meeting to nominate the persons named in its notice and (v) any other information relating to such stockholder that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors pursuant to Regulation 14A of the Exchange Act and the rules and regulations promulgated thereunder. Such notice must be accompanied by a written consent of each proposed nominee to be named as a nominee and to serve as a director if elected. No person shall be eligible for election as a director of the Corporation unless nominated in accordance with the procedures set forth in this Section. If the chairman of the meeting determines that a nomination was not made in accordance with the foregoing procedures, the chairman of the meeting shall declare to the meeting that the nomination was defective and such defective nomination shall be disregarded. No adjournment or postponement of a meeting of stockholders shall commence a new period for the giving of notice of a stockholder proposal hereunder.

     SECTION 1.13. Advance Notice Provisions for Business to be Transacted at Annual Meeting. No business may be transacted at an annual meeting of stockholders, other than business that is either (a) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors (or any duly authorized committee thereof), (b) otherwise properly brought before the annual meeting by or at the direction of the Board of Directors (or any duly authorized committee thereof) or (c) otherwise properly brought before the annual meeting by any stockholder of the Corporation (i) who is stockholder of record on the date of the giving of the notice provided for in this Section and on the record date for the determination of stockholders entitled to vote at such annual meeting and (ii) who complies with the notice procedures set forth in this Section. A stockholder’s notice must be delivered to or mailed and received by the Secretary at the principal executive offices of the Corporation not less than 90 days nor more than 120 days prior to the first anniversary of the preceding year’s annual meeting; provided, however, that in the event that the date of the annual meeting is advanced by more than 30 days or delayed by more than 60 days from the anniversary date of the

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preceding year’s annual meeting, notice by the stockholder must be so delivered not earlier than the 90^th day prior to such annual meeting and not later than the close of business on the later of the 60^th day prior to such annual meeting or the tenth day following the day on which public announcement of the date of such meeting is first made. A stockholder’s notice to the Secretary must in writing and set forth as to each matter such stockholder proposes to bring before the annual meeting (i) a brief description of the business desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting, (ii) the name and address of such stockholder as they appear on the Corporation’s books and of the beneficial owner, if any, on whose behalf the proposal is made, (iii) the class or series and number of shares of capital stock of the Corporation which are owned beneficially or of record by such stockholder and such beneficial owner, (iv) a description of all arrangements or understandings between such stockholder and any other person or persons (including their names) in connection with the proposal of such business by such stockholder and any material interest of such stockholder in such business and (v) a representation that such stockholder intends to appear in person or by proxy at the annual meeting to bring such business before the meeting. No business shall be conducted at the annual meeting of stockholders except business brought before the annual meeting in accordance with the procedures set forth in Section 1.12 or in this Section, provided, however, that once business has been properly brought before the annual meeting in accordance with such procedures, nothing in Section 1.12 nor in this Section shall be deemed to preclude discussion by any stockholder of any such business. If the chairman of an annual meeting determines that business was not properly brought before the annual meeting in accordance with the foregoing procedures, the chairman of the meeting shall declare to the meeting that the business was not properly brought before the meeting and such business shall not be transacted. No adjournment or postponement of a meeting of stockholders shall commence a new period for the giving of notice of a stockholder proposal hereunder.

ARTICLE II.
BOARD OF DIRECTORS

     SECTION 2.01. Function of Directors. The business and affairs of the Corporation shall be managed under the direction of its Board of Directors. All powers of the Corporation may be exercised by or under authority of the Board of Directors, except as conferred on or reserved to the stockholders by statute or by the Charter or By-Laws.

     SECTION 2.02. Qualification and Number of Directors. Each director shall be a natural person at least 18 years of age. The Corporation shall have at least three directors. The Corporation shall have the number of directors provided in the Charter until changed as herein provided. A majority of the entire Board of Directors may alter the number of directors set by the Charter to not exceeding 9 (plus such additional number as may needed to satisfy the right of the holders of any class of stock of the Corporation to demand nomination of a director) nor less than the minimum number then permitted herein, but the action may not affect the tenure of office of any director.

     SECTION 2.03. Election and Tenure of Directors. Subject to the rights of the holders of any class of stock separately entitled to elect one or more directors, at each annual meeting, the stockholders shall elect directors to hold office until the next annual meeting and until their successors are elected and qualify.

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     SECTION 2.04. Removal of Director. Any or all of the directors may be removed, with or without cause by the affirmative vote of a majority of all the votes entitled to be cast for the election of directors.¹

     SECTION 2.05. Vacancy on Board of Directors. Subject to the rights of the holders of any class of stock separately entitled to elect one or more directors, the stockholders may elect a successor to fill a vacancy on the Board of Directors which results from the removal of a director. A director elected by the stockholders to fill a vacancy which results from the removal of a director serves for the balance of the term of the removed director. Subject to the rights of the holders of any class of stock separately entitled to elect one or more directors, a majority of the remaining directors, whether or not sufficient to constitute a quorum, may fill a vacancy on the Board of Directors which results from any cause except an increase in the number of directors, and a majority of the entire Board of Directors may fill a vacancy which results from an increase in the number of directors. A director elected by the Board of Directors to fill a vacancy serves until the next annual meeting of stockholders and until his or her successor is elected and qualifies.

     SECTION 2.06. Regular Meetings. After each meeting of stockholders at which directors shall have been elected, the Board of Directors shall meet as soon thereafter as practicable for the purpose of organization and the transaction of other business. In the event that no other time and place are specified by resolution of the Board of Directors or announced by the President or the Chairman of the Board at such stockholders meeting, the Board of Directors shall meet immediately following the close of and at the place of such stockholders meeting or by means of remote communication. Any other regular meeting of the Board of Directors shall be held on such date and time, and at such place or by means of remote communication, as may be designated from time to time by the Board of Directors. No notice of such meeting following a stockholders meeting or any other regular meeting shall be necessary if held as hereinabove provided.

     SECTION 2.07. Special Meetings. Special meetings of the Board of Directors may be called at any time by the Chairman of the Board or the President or by a majority of the Board of Directors by vote at a meeting, or in writing or delivered by electronic transmission with or without a meeting. A special meeting of the Board of Directors shall be held on such date, at any place or by means of remote communication, as may be designated from time to time by the Board of Directors. In the absence of designation such meeting shall be held at such place or means of remote communication as may be designated in the call.

     SECTION 2.08. Notice of Meeting. Except as provided in Section 2.06, the Secretary shall give notice to each director of each regular and special meeting of the Board of Directors. The notice shall state the time of the meeting and place or that the meeting is being held by means of remote communication. Notice is given to a director when it is delivered personally to him or her, left at his or her residence or usual place of business, or sent by

¹ Under Article VI, Section 6 of the Charter, this section of the By-Laws may not be amended without the approval of 2/3 of the stockholders.

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electronic transmission, telegraph, facsimile transmission, or telephone, at least 24 hours before the time of the meeting or, in the alternative by mail to his or her address as it shall appear on the records of the Corporation, at least 72 hours before the time of the meeting. Unless these By-Laws or a resolution of the Board of Directors provides otherwise, the notice need not state the business to be transacted at or the purposes of any regular or special meeting of the Board of Directors. No notice of any meeting of the Board of Directors need be given to any director who attends except where a director attends a meeting for the express purpose of objecting to the transaction of any business because the meeting is not lawfully called or convened, or to any director who delivers a written waiver or a waiver by electronic transmission which is filed with the records of the meeting either before or after the holding thereof, waiving such notice. Any meeting of the Board of Directors, regular or special, may adjourn from time to time to reconvene at the same or some other place, and no notice need be given of any such adjourned meeting other than by announcement.

     SECTION 2.09. Quorum; Action by Directors. A majority of the entire Board of Directors shall constitute a quorum for the transaction of business. In the absence of a quorum, the directors present by majority vote and without notice other than by announcement may adjourn the meeting from time to time until a quorum shall attend. At any such adjourned meeting at which a quorum shall be present, any business may be transacted which might have been transacted at the meeting as originally notified. Unless statute or the Charter or By-Laws requires a greater proportion, the action of a majority of the directors present at a meeting at which a quorum is present is action of the Board of Directors. . Any action required or permitted to be taken at a meeting of the Board of Directors may be taken without a meeting if a unanimous consent which sets forth the action is given in writing or by electronic transmission by each member of the Board of Directors and filed in paper or electronic form with the minutes of proceedings of the Board of Directors.

     SECTION 2.10. Meeting by Conference Telephone. Members of the Board of Directors may participate in a meeting by means of a conference telephone or other communications equipment if all persons participating in the meeting can hear each other at the same time. Participation in a meeting by these means constitutes presence in person at a meeting.

     SECTION 2.11. Compensation. By resolution of the Board of Directors a fixed sum and expenses, if any, for attendance at each regular or special meeting of the Board of Directors or of committees thereof, and other compensation for their services as such or on committees of the Board of Directors, may be paid to directors. Directors who are full-time employees of the Corporation need not be paid for attendance at meetings of the Board of Directors or committees thereof for which fees are paid to other directors. A director who serves the Corporation in any other capacity also may receive compensation for such other services, pursuant to a resolution of the directors.

     SECTION 2.12. Resignation. Any director may resign at any time by sending a notice of such resignation in writing or by electronic transmission to the home office of the Corporation addressed to the Chairman of the Board or the President. Unless otherwise specified therein such resignation shall take effect upon receipt thereof by the Chairman of the Board or the President. Such resignation may provide that it becomes effective on some future date, the

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occurrence of a certain future event or the acceptance of such resignation by the Board of Directors, the Chairman of the Board or other specified officer.

     SECTION 2.13. Presumption of Assent. A director of the Corporation who is present at a meeting of the Board of Directors at which action on any corporate matter is taken shall be presumed to have assented to the action taken unless his or her dissent or abstention shall be entered in the minutes of the meeting or unless he or she shall file his or her written dissent to such action with the person acting as the secretary of the meeting before the adjournment thereof or shall forward such dissent by registered mail to the Secretary of the Corporation immediately after the adjournment of the meeting. Such right to dissent shall not apply to a director who votes in favor of such action or fails to make his dissent known at the meeting.

ARTICLE III.
COMMITTEES

     SECTION 3.01. Committees. The Board of Directors may appoint from among its members an Executive Committee and other committees composed of one or more directors and delegate to these committees any of the powers of the Board of Directors, except the power to authorize dividends on stock, elect directors, issue stock other than as provided in the next sentence, recommend to the stockholders any action which requires stockholder approval, amend these By-Laws, or approve any merger or share exchange which does not require stockholder approval. If the Board of Directors has given general authorization for the issuance of stock providing for or establishing a method or procedure for determining the maximum number of shares to be issued, a committee of the Board of Directors, in accordance with that general authorization or any stock option or other plan or program adopted by the Board of Directors, may authorize or fix the terms of stock subject to classification or reclassification and the terms on which any stock may be issued, including all terms and conditions required or permitted to be established or authorized by the Board of Directors.

     SECTION 3.02. Committee Procedure. Each committee may fix rules of procedure for its business. A majority of the members of a committee shall constitute a quorum for the transaction of business and the act of a majority of those present at a meeting at which a quorum is present shall be the act of the committee. The members of a committee present at any meeting, whether or not they constitute a quorum, may appoint a director to act in the place of an absent member. Any action required or permitted to be taken at a meeting of a committee may be taken without a meeting if a unanimous consent which sets forth the action is given in writing or by electronic transmission by each member of the committee and filed in paper or electronic form with the minutes of the committee. The members of a committee may conduct any meeting thereof by conference telephone or other means of communication in accordance with the provisions of Section 2.10.

ARTICLE IV.
OFFICERS

     SECTION 4.01. Executive and Other Officers. The Corporation shall have a President, a Secretary, and a Treasurer. It may also have a Chairman of the Board and a Vice

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Chairman of the Board. The Board of Directors shall designate who shall serve as chief executive officer, who shall have general supervision of the business and affairs of the Corporation, and may designate a chief operating officer, who shall have supervision of the operations of the Corporation. In the absence of any designation the Chairman of the Board, if there be one, shall serve as chief executive officer, and the President shall serve as chief operating officer. In the absence of the Chairman of the Board, or if there be none, the President shall be the chief executive officer. The same person may hold both offices. The Corporation may also have one or more Vice-Presidents, assistant officers, and subordinate officers as may be established by the Board of Directors. A person may hold more than one office in the Corporation except that no person may serve concurrently as both President and Vice-President of the Corporation. The Chairman of the Board and the Vice Chairman of the Board shall be directors, and the other officers may be directors.

     SECTION 4.02. Chairman of the Board. The Chairman of the Board, if one be elected, shall preside at all meetings of the Board of Directors and of the stockholders at which he or she shall be present. Unless otherwise specified by the Board of Directors, he or she shall be the chief executive officer of the Corporation. In general, he or she shall perform such duties as are customarily performed by the chief executive officer of a corporation, may perform any duties of the President and shall perform such other duties and have such other powers as are from time to time assigned to him or her by the Board of Directors.

     SECTION 4.03. Vice Chairman of the Board. The Vice Chairman of the Board, if one be elected, in the absence of the Chairman of the Board, shall preside at all meetings of the Board of Directors and of the stockholders at which he or she shall be present, unless otherwise provided by resolution of the Board of Directors, and shall perform such other duties and have such other powers as are from time to time assigned to him or her by the Board of Directors.

     SECTION 4.04. President. Unless otherwise specified by the Board of Directors, the President shall be the chief operating officer of the Corporation and perform the duties customarily performed by chief operating officers. He or she may execute, in the name of the Corporation, all authorized deeds, mortgages, bonds, contracts or other instruments, except in cases in which the signing and execution thereof shall have been expressly delegated to some other officer or agent of the Corporation. In general, he or she shall perform such other duties customarily performed by a president of a corporation and shall perform such other duties and have such other powers as are from time to time assigned to him or her by the Board of Directors or the chief executive officer of the Corporation.

     SECTION 4.05. Vice-Presidents. The Vice-President or Vice-Presidents, at the request of the chief executive officer or the President, or in the President’s absence or during his or her inability to act, shall perform the duties and exercise the functions of the President, and when so acting shall have the powers of the President. If there be more than one Vice-President, the Board of Directors may determine which one or more of the Vice-Presidents shall perform any of such duties or exercise any of such functions, or if such determination is not made by the Board of Directors, the chief executive officer, or the President may make such determination; otherwise any of the Vice-Presidents may perform any of such duties or exercise any of such functions. Each Vice-President shall perform such other duties and have such other powers, and

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have such additional descriptive designations in their titles (if any), as are from time to time assigned to them by the Board of Directors, the chief executive officer, or the President.

     SECTION 4.06. Secretary. The Secretary shall keep the minutes of the meetings of the stockholders, of the Board of Directors and of any committees, in books provided for the purpose; he or she shall see that all notices are duly given in accordance with the provisions of these By-Laws or as required by law; he or she shall be custodian of the records of the Corporation; he or she may witness any document on behalf of the Corporation, the execution of which is duly authorized, see that the corporate seal is affixed where such document is required or desired to be under its seal, and, when so affixed, may attest the same. In general, he or she shall perform such other duties customarily performed by a secretary of a corporation, and shall perform such other duties and have such other powers as are from time to time assigned to him or her by the Board of Directors, the chief executive officer, or the President.

     SECTION 4.07. Treasurer. The Treasurer shall have charge of and be responsible for all funds, securities, receipts and disbursements of the Corporation, and shall deposit, or cause to be deposited, in the name of the Corporation, all moneys or other valuable effects in such banks, trust companies or other depositories as shall, from time to time, be selected by the Board of Directors; he or she shall render to the President and to the Board of Directors, whenever requested, an account of the financial condition of the Corporation. In general, he or she shall perform such other duties customarily performed by a treasurer of a corporation, and shall perform such other duties and have such other powers as are from time to time assigned to him or her by the Board of Directors, the chief executive officer, or the President.

     SECTION 4.08. Assistant and Subordinate Officers. The assistant and subordinate officers of the Corporation are all officers below the office of Vice-President, Secretary, or Treasurer. The assistant or subordinate officers shall have such duties as are from time to time assigned to them by the Board of Directors, the chief executive officer, or the President.

     SECTION 4.09. Election, Tenure and Removal of Officers. The Board of Directors shall elect the officers of the Corporation. The Board of Directors may from time to time authorize any committee or officer to appoint assistant and subordinate officers. Election or appointment of an officer, employee or agent shall not of itself create contract rights. All officers shall be appointed to hold their offices, respectively, during the pleasure of the Board of Directors. The Board of Directors (or, as to any assistant or subordinate officer, any committee or officer authorized by the Board of Directors) may remove an officer at any time. The removal of an officer does not prejudice any of his or her contract rights. The Board of Directors (or, as to any assistant or subordinate officer, any committee or officer authorized by the Board of Directors) may fill a vacancy which occurs in any office for the unexpired portion of the term.

     SECTION 4.10. Compensation. The Board of Directors shall have power to fix the salaries and other compensation and remuneration, of whatever kind, of all officers of the Corporation. No officer shall be prevented from receiving such salary by reason of the fact that he or she is also a director of the Corporation. The Board of Directors may authorize any committee or officer, upon whom the power of appointing assistant and subordinate officers may have been conferred, to fix the salaries, compensation and remuneration of such assistant and subordinate officers.

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ARTICLE V.
DIVISIONAL TITLES

     SECTION 5.01. Conferring Divisional Titles. The Board of Directors may from time to time confer upon any employee of a division of the Corporation the title of President, Vice President, Treasurer or Controller of such division or any other title or titles deemed appropriate, or may authorize the Chairman of the Board or the President to do so. Any such titles so conferred may be discontinued and withdrawn at any time by the Board of Directors, or by the Chairman of the Board or the President if so authorized by the Board of Directors. Any employee of a division designated by such a divisional title shall have the powers and duties with respect to such division as shall be prescribed by the Board of Directors, the Chairman of the Board or the President.

     SECTION 5.02. Effect of Divisional Titles. The conferring of divisional titles shall not create an office of the Corporation under Article IV unless specifically designated as such by the Board of Directors; but any person who is an officer of the Corporation may also have a divisional title.

ARTICLE VI.
STOCK

     SECTION 6.01. Certificates for Stock. The Board of Directors may determine to issue certificated or uncertificated shares of capital stock and other securities of the Corporation. For certificated stock, each stockholder is entitled to certificates which represent and certify the shares of stock he or she holds in the Corporation. Each stock certificate shall include on its face the name of the Corporation, the name of the stockholder or other person to whom it is issued, and the class of stock and number of shares it represents. It shall also include on its face or back (a) a statement of any restrictions on transferability and a statement of the designations and any preferences, conversion and other rights, voting powers, restrictions, limitations as to dividends, qualifications, and terms and conditions of redemption of the stock of each class which the Corporation is authorized to issue, of the differences in the relative rights and preferences between the shares of each series of a preferred or special class in series which the Corporation is authorized to issue, to the extent they have been set, and of the authority of the Board of Directors to set the relative rights and preferences of subsequent series of a preferred or special class of stock or (b) a statement which provides in substance that the Corporation will furnish a full statement of such information to any stockholder on request and without charge. Such request may be made to the Secretary or to its transfer agent. Except as provided in the Maryland Uniform Commercial Code — Investment Securities, the fact that a stock certificate does not contain or refer to a restriction on transferability that is adopted after the date of issuance does not mean that the restriction is invalid or unenforceable. It shall be in such form, not inconsistent with law or with the Charter, as shall be approved by the Board of Directors or any officer or officers designated for such purpose by resolution of the Board of Directors. Each stock certificate shall be signed by the Chairman of the Board, the President, or a Vice-President, and countersigned by the Secretary, an Assistant Secretary, the Treasurer, or an Assistant Treasurer. Each certificate may be sealed with the actual corporate seal or a facsimile of it or in any other form and the signatures may be either manual or facsimile signatures. A certificate is

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valid and may be issued whether or not an officer who signed it is still an officer when it is issued. A certificate may not be issued until the stock represented by it is fully paid.

     SECTION 6.02. Transfers. The Board of Directors shall have power and authority to make such rules and regulations as it may deem expedient concerning the issue, transfer and registration of certificates of stock; and may appoint transfer agents and registrars thereof. The duties of transfer agent and registrar may be combined.

     SECTION 6.03. Record Dates or Closing of Transfer Books. The Board of Directors may, and shall have the sole power to, set a record date or direct that the stock transfer books be closed for a stated period for the purpose of making any proper determination with respect to stockholders, including which stockholders are entitled to request a special meeting of stockholders, notice of a meeting of stockholders, vote at a meeting of stockholders, receive a dividend, or be allotted other rights. The record date may not be prior to the close of business on the day the record date is fixed nor, subject to Section 1.06, more than 90 days before the date on which the action requiring the determination will be taken; the transfer books may not be closed for a period longer than 20 days; and, in the case of a meeting of stockholders, the record date or the closing of the transfer books shall be at least ten days before the date of the meeting. Any shares of the Corporation’s own stock acquired by the Corporation between the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders and the time of the meeting may be voted at the meeting by the holder of record as of the record date and shall be counted in determining the total number of outstanding shares entitled to be voted at the meeting.

     SECTION 6.04. Stock Ledger. The Corporation shall maintain a stock ledger which contains the name and address of each stockholder and the number of shares of stock of each class which the stockholder holds. The stock ledger may be in written form or in any other form which can be converted within a reasonable time into written form for visual inspection. The original or a duplicate of the stock ledger shall be kept at the offices of a transfer agent for the particular class of stock, or, if none, at the principal office in the State of Maryland or the principal executive offices of the Corporation.

     SECTION 6.05. Certification of Beneficial Owners. The Board of Directors may adopt by resolution a procedure by which a stockholder of the Corporation may certify in writing to the Corporation that any shares of stock registered in the name of the stockholder are held for the account of a specified person other than the stockholder. The resolution shall set forth the class of stockholders who may certify; the purpose for which the certification may be made; the form of certification and the information to be contained in it; if the certification is with respect to a record date or closing of the stock transfer books, the time after the record date or closing of the stock transfer books within which the certification must be received by the Corporation; and any other provisions with respect to the procedure which the Board of Directors considers necessary or desirable. On receipt of a certification which complies with the procedure adopted by the Board of Directors in accordance with this Section, the person specified in the certification is, for the purpose set forth in the certification, the holder of record of the specified stock in place of the stockholder who makes the certification.

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     SECTION 6.06. Lost Stock Certificates. The Board of Directors may determine the conditions for issuing a new stock certificate in place of one which is alleged to have been lost, stolen, or destroyed, or the Board of Directors may delegate such power to any officer or officers of the Corporation. In their discretion, the Board of Directors or such officer or officers may require the owner of the certificate to give bond, with sufficient surety, to indemnify the Corporation against any loss or claim arising as a result of the issuance of a new certificate. In their discretion, the Board of Directors or such officer or officers may refuse to issue such new certificate save upon the order of some court having jurisdiction in the premises.

     SECTION 6.07. Fractional Share Interests or Scrip. The Corporation may, but shall not be obliged to, issue fractional shares of stock, eliminate a fractional interest by rounding off to a full share of stock, arrange for the disposition of a fractional interest by the person entitled to it, pay cash for the fair value of a fractional share of stock determined as of the time when the person entitled to receive it is determined, or issue scrip or other evidence of ownership aggregating a full share for a certificate which represents the share; but such scrip or other evidence of ownership shall not, unless otherwise provided, entitle the holder to exercise any voting rights, to receive dividends thereon or to participate in any of the assets of the Corporation in the event of liquidation. The Board of Directors may impose any reasonable condition on the issuance of scrip or other evidence of ownership, and may cause such scrip or other evidence of ownership to be issued subject to the condition that it shall become void if not exchanged for a certificate representing a full share of stock before a specified date or subject to the condition that the shares for which such scrip or other evidence of indebtedness is exchangeable may be sold by the Corporation and the proceeds thereof distributed to the holders of such scrip or other evidence of indebtedness, or subject to a provision of forfeiture of such proceeds to the Corporation if not claimed within a period of not less than three years from the date the scrip or other evidence of ownership was originally issued.

ARTICLE VII.
FINANCE

     SECTION 7.01. Checks, Drafts, Etc. All checks, drafts and orders for the payment of money, notes and other evidences of indebtedness, issued in the name of the Corporation, shall, unless otherwise provided by resolution of the Board of Directors, be signed by the Chairman of the Board, the President, a Vice-President, an Assistant Vice-President, the Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary.

     SECTION 7.02. Annual Statement of Affairs. The President, chief accounting officer or such other executive officer designated by the Board of Directors by resolution shall prepare annually a full and correct statement of the affairs of the Corporation, to include a balance sheet and a financial statement of operations for the preceding fiscal year. The statement of affairs shall be submitted at the annual meeting of the stockholders and, within 20 days after the meeting, placed on file at the Corporation’s principal office.

     SECTION 7.03. Fiscal Year. The fiscal year of the Corporation shall be the 12 calendar months period ending December 31 in each year, unless otherwise provided by the Board of Directors.

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     SECTION 7.04. Dividends. If declared by the Board of Directors at any meeting thereof, the Corporation may pay dividends on its shares in cash, property, or in shares of the capital stock of the Corporation, unless such dividend is contrary to law or to a restriction contained in the Charter.

     SECTION 7.05. Bonds. The Board of Directors may require any officer, agent or employee of the Corporation to give a bond to the Corporation, conditioned upon the faithful discharge of his or her duties, with one or more sureties and in such amount as may be satisfactory to the Board of Directors.

ARTICLE VIII.
INDEMNIFICATION

     SECTION 8.01. Procedure. Any indemnification or payment of costs and expenses in advance of the final disposition of any proceeding, shall be made promptly, and in any event within 60 days, upon the written request of the director or officer entitled to seek indemnification (the “Indemnified Party”). The right to indemnification and advances hereunder shall be enforceable by the Indemnified Party in any court of competent jurisdiction, if (i) the Corporation denies such request, in whole or in part, or (ii) no disposition thereof is made within 60 days. The Indemnified Party’s costs and expenses (including attorney’s fees) incurred in connection with successfully establishing his or her right to indemnification, in whole or in part, in any such action shall also be paid or reimbursed by the Corporation. It shall be a defense to any action for advance for expenses that (a) a determination has been made that the facts then known to those making the determination would preclude indemnification or (b) the Corporation has not received both (i) an undertaking as required by law to repay such advances in the event it shall ultimately be determined that the standard of conduct has not been met and (ii) a written affirmation by the Indemnified Party of such Indemnified Party’s good faith belief that the standard of conduct necessary for indemnification by the Corporation has been met.

     SECTION 8.02. Exclusivity, Etc. The indemnification and advance of expenses provided by the Charter and these By-Laws shall not be deemed exclusive of any other rights to which a person seeking indemnification or advance of expenses may be entitled under any law (common or statutory), or any agreement, vote of stockholders or disinterested directors or other provision that is consistent with law, both as to action in his or her official capacity and as to action in another capacity while holding office or while employed by or acting as agent for the Corporation, shall continue in respect of all events occurring while a person was a director or officer after such person has ceased to be a director or officer, and shall inure to the benefit of the estate, heirs, executors and administrators of such person. The Corporation shall not be liable for any payment under this By-Law in connection with a claim made by a director or officer to the extent such director or officer has otherwise actually received payment under insurance policy, agreement, vote or otherwise, of the amounts otherwise indemnifiable hereunder. All rights to indemnification and advance of expenses under the Charter of the Corporation and hereunder shall be deemed to be a contract between the Corporation and each director or officer of the Corporation who serves or served in such capacity at any time while this By-Law is in effect. Nothing herein shall prevent the amendment of this By-Law, provided that no such amendment shall diminish the rights of any person hereunder with respect to events occurring or claims made before its adoption or as to claims made after its adoption in respect of events occurring before

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its adoption. Any repeal or modification of this By-Law shall not in any way diminish any rights to indemnification or advance of expenses of such director or officer or the obligations of the Corporation arising hereunder with respect to events occurring, or claims made, while this By-Law or any provision hereof is in force.

     SECTION 8.03. Insurance. The Corporation may purchase and maintain insurance on behalf of any Indemnified Party against any liability asserted against and incurred by any Indemnified Party in any protected capacity or arising out of his or her position. The Corporation may purchase and maintain insurance on its behalf in respect of any liability it may incur to provide indemnification under the Charter, this By-Law, or law.

     SECTION 8.04. Severability; Definitions. The invalidity or unenforceability of any provision of this Article VIII shall not affect the validity or enforceability of any other provision hereof. The phrase “this By-Law” in this Article VIII means this Article VIII in its entirety.

ARTICLE IX.
SUNDRY PROVISIONS

     SECTION 9.01. Books and Records. The Corporation shall keep correct and complete books and records of its accounts and transactions and minutes of the proceedings of its stockholders and Board of Directors and of any executive or other committee when exercising any of the powers of the Board of Directors. The books and records of the Corporation may be in written form or in any other form which can be converted within a reasonable time into written form for visual inspection. Minutes shall be recorded in written form but may be maintained in the form of a reproduction. The original or a certified copy of these By-Laws shall be kept at the principal office of the Corporation.

     SECTION 9.02. Corporate Seal. The Board of Directors shall provide a suitable seal, bearing the name of the Corporation, which shall be in the charge of the Secretary. The Board of Directors may authorize one or more duplicate seals and provide for the custody thereof. If the Corporation is required to place its corporate seal to a document, it is sufficient to meet the requirement of any law, rule, or regulation relating to a corporate seal to place the word “(seal)” adjacent to the signature of the person authorized to sign the document on behalf of the Corporation.

     SECTION 9.03. Voting Stock in Other Corporations. Stock of other corporations or associations, registered in the name of the Corporation, may be voted by the Chairman of the Board, the President, a Vice-President, or a proxy appointed by either of them. The Board of Directors, however, may by resolution appoint some other person to vote such shares, in which case such person shall be entitled to vote such shares upon the production of a certified copy of such resolution.

     SECTION 9.04. Mail. Any notice or other document which is required by these By-Laws to be mailed shall be deposited in the United States mails, postage prepaid.

     SECTION 9.05. Contracts and Agreements. To the extent permitted by applicable law, and except as otherwise prescribed by the Charter or these By-Laws, the Board of Directors

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may authorize any officer, employee or agent of the Corporation to enter into any contract or execute and deliver any instrument in the name of and on behalf of the Corporation. Such authority may be general or confined to specific instances. A person who holds more than one office in the Corporation may not act in more than one capacity to execute, acknowledge, or verify an instrument required by law to be executed, acknowledged, or verified by more than one officer.

     SECTION 9.06. Resident Agent; Principal Office. The initial name and address of the resident agent of the Corporation and the initial address of the principal office of the Corporation in the State of Maryland shall be as set forth in the Charter. The Corporation may change its resident agent or principal office from time to time by filing with the Maryland State Department of Assessments and Taxation (the “Department”) a resolution of the Board of Directors authorizing the change, and the Corporation may change from time to time the address of its resident agent by filing with the Department a statement of the change executed by the President or any Vice-President.

     SECTION 9.07. Amendments. These By-Laws may be altered, amended or repealed or new By-Laws may be adopted by the stockholders or by the Board of Directors, when such power is conferred upon the Board of Directors by the Charter, at any regular meeting of the stockholders or of the Board of Directors or at any special meeting of the stockholders or of the Board of Directors if notice of such alteration, amendment, repeal or adoption of new By-Laws be contained in the notice of such special meeting. If the power to adopt, amend or repeal By-Laws is conferred upon the Board of Directors by the Charter it shall not divest or limit the power of the stockholders to adopt, amend or repeal By-Laws.²

     SECTION 9.08. Reliance. Each director of the Corporation shall, in the performance of his or her duties with respect to the Corporation, be entitled to rely on any information, opinion report or statement, including financial statement or other financial data, prepared or presented by an officer or employee of the Corporation whom the director reasonably believes to be reliable and competent in the matters presented, by a lawyer, certified public accountant or other person as to a matter which the director reasonably believes to be within the person’s professional or expert competence or by a committee of the Board of Directors on which the director does not serve, as to a matter within its designated authority, if the director believes the committee to merit confidence.

² Under Article VI, Section 6 of the Charter, this section of the By-Laws may not be amended without the approval of 2/3 of the stockholders.

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CERTIFICATE OF SECRETARY

     I HEREBY CERTIFY that the foregoing is a full, true and correct copy of the Amended and Restated By-Laws of Apartment Investment and Management Company, a Maryland corporation, as in effect on the date hereof.

     WITNESS my hand and seal of the Corporation.

     Date: July 31, 2007

/s/ Miles Cortez  

Miles Cortez 

Executive Vice President, General
Counsel and Secretary 

(SEAL)

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EX-31.1

Exhibit 31.1

CHIEF EXECUTIVE OFFICER CERTIFICATION

I, Terry Considine, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Apartment Investment and Management Company;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 3, 2007

/s/ Terry Considine  

Terry Considine 

Chairman and Chief Executive Officer 

EX-31.2

Exhibit 31.2

CHIEF FINANCIAL OFFICER CERTIFICATION

I, Thomas M. Herzog, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Apartment Investment and Management Company;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 3, 2007

/s/ Thomas M. Herzog  

Thomas M. Herzog 

Executive Vice President and Chief Financial Officer 

EX-32.1

Exhibit 32.1

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 quarterly period ended June 30, 2007 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Terry Considine, as Chief Executive Officer of the Company hereby certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, to the best of my knowledge, that:

(1)	The Report fully complies with the requirements of section 13(a) or 15(d) 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
Chairman and Chief Executive Officer
August 3, 2007

EX-32.2

Exhibit 32.2

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 quarterly period ended June 30, 2007 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Thomas M. Herzog, as Chief Financial Officer of the Company hereby certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, to the best of my knowledge, that:

(1)	The Report fully complies with the requirements of section 13(a) or 15(d) 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/ Thomas M. Herzog
Thomas M. Herzog
Executive Vice President and Chief Financial Officer
August 3, 2007

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, 2007, any instrument with respect to long-term debt not being registered where the total amount of securities authorized thereunder does not exceed ten 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/ Thomas M. Herzog
	Thomas M. Herzog
	Executive Vice President and Chief Financial Officer