10-Q

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APARTMENT INVESTMENT AND MANAGEMENT COMPANY FORM 10-Q INDEX

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 10-Q

(Mark One)
ý	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2003
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 (State or other jurisdiction of incorporation or organization)	84-1259577 (I.R.S. Employer Identification No.)
4582 South Ulster Street Parkway, Suite 1100 Denver, Colorado (Address of principal executive offices)	80237 (Zip Code)
(303) 757-8101 (Registrant's telephone number, including area code)
Not Applicable (Former name, former address, and former fiscal year, if changed since last report)

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

        Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes ý    No o

        The number of shares of Class A Common Stock outstanding as of October 31, 2003: 94,210,113

APARTMENT INVESTMENT AND MANAGEMENT COMPANY

FORM 10-Q

INDEX

	PART I.    FINANCIAL INFORMATION
ITEM 1.Financial Statements
		Consolidated Balance Sheets as of September 30, 2003 (unaudited) and December 31, 2002
		Consolidated Statements of Income for the Three and Nine Months Ended September 30, 2003 and 2002 (unaudited)
		Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2003 and 2002 (unaudited)
		Notes to Consolidated Financial Statements (unaudited)
ITEM 2.Management's Discussion and Analysis of Financial Condition and Results of Operations
ITEM 3.Quantitative and Qualitative Disclosures about Market Risk
ITEM 4.Controls and Procedures
	PART II.    OTHER INFORMATION
ITEM 1.Legal Proceedings
ITEM 2.Changes in Securities and Use of Proceeds
ITEM 5.Other Information
ITEM 6.Exhibits and Reports on Form 8-K
Signatures
Certifications

1

APARTMENT INVESTMENT AND MANAGEMENT COMPANY

CONSOLIDATED BALANCE SHEETS

(In Thousands, Except Share Data)

			September 30, 2003			December 31, 2002
			(Unaudited)
ASSETS
Real estate:
	Land		$	2,136,397		$	1,962,356
	Buildings and improvements			8,556,905			8,474,525
Total real estate				10,693,302			10,436,881
	Less accumulated depreciation			(1,806,667	)		(1,657,046	)
		Net real estate		8,886,635			8,779,835
Cash and cash equivalents				126,680			98,567
Restricted cash				211,200			220,164
Accounts receivable				62,380			84,967
Accounts receivable from affiliates				46,812			47,060
Deferred financing costs				74,434			69,862
Notes receivable, primarily from unconsolidated real estate partnerships				184,267			169,238
Investments in unconsolidated real estate partnerships				233,781			367,851
Other assets				286,188			258,953
Assets held for sale				70,552			220,104
		Total assets	$	10,182,929		$	10,316,601
LIABILITIES AND STOCKHOLDERS' EQUITY
Secured tax-exempt bond financing			$	1,201,572		$	1,171,557
Secured notes payable				4,505,657			4,543,566
Mandatorily redeemable preferred securities				113,169			15,169
Term loans				354,387			115,011
Credit facility				160,000			291,000
		Total indebtedness		6,334,785			6,136,303
Accounts payable				15,874			11,150
Accrued liabilities and other				386,494			294,769
Deferred income				24,129			15,283
Security deposits				41,967			39,903
Deferred income taxes payable				23,947			36,680
Liabilities related to assets held for sale				53,919			168,654
		Total liabilities		6,881,115			6,702,742
Minority interest in consolidated real estate partnerships				78,113			75,535
Minority interest in Aimco Operating Partnership				316,906			374,937
Stockholders' equity:
	Preferred Stock, perpetual			555,250			552,520
	Preferred Stock, convertible			299,992			392,492
	Class A Common Stock, $.01 par value, 444,962,738 and 454,962,738 shares authorized, 94,097,550 and 93,769,996 shares issued and outstanding, at September 30, 2003 and December 31, 2002, respectively			941			938
	Additional paid-in capital			3,066,172			3,050,057
	Unvested restricted stock			(11,744	)		(7,079	)
	Notes due on common stock purchases			(43,841	)		(48,964	)
	Distributions in excess of earnings			(959,975	)		(776,577	)
		Total stockholders' equity		2,906,795			3,163,387
		Total liabilities and stockholders' equity	$	10,182,929		$	10,316,601

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 September 30,						Nine Months Ended September 30,
		2003			2002			2003			2002
RENTAL PROPERTY OPERATIONS:
Rental and other property revenues		$	377,403		$	335,729		$	1,111,036		$	960,998
Property operating expense			(166,400	)		(137,292	)		(485,993	)		(378,327	)
Income from property operations			211,003			198,437			625,043			582,671
INVESTMENT MANAGEMENT BUSINESS:
Management fees and other income primarily from affiliates			14,930			22,135			47,577			66,850
Management and other expenses			(13,400	)		(18,642	)		(31,633	)		(48,304	)
Amortization of intangibles			(1,276	)		(1,154	)		(4,716	)		(3,194	)
Income from investment management business			254			2,339			11,228			15,352
General and administrative expenses			(7,638	)		(4,360	)		(19,538	)		(12,377	)
Other expenses			—			—			—			(5,000	)
Provision for losses on notes receivable			—			(1,682	)		(1,488	)		(4,838	)
Depreciation of rental property			(82,840	)		(67,639	)		(247,682	)		(195,127	)
Interest expense			(95,239	)		(76,810	)		(283,487	)		(234,922	)
Interest and other income			5,140			13,259			18,404			56,034
Equity in earnings (losses) of unconsolidated real estate partnerships			(1,767	)		(254	)		(6,581	)		2,357
Minority interest in consolidated real estate partnerships			(1,697	)		(2,129	)		(4,676	)		(5,730	)
Income from operations			27,216			61,161			91,223			198,420
Gain (loss) on dispositions of real estate			1,462			(4,307	)		2,738			4,467
Impairment loss on investment in unconsolidated real estate partnerships			—			(3,564	)		—			(3,816	)
Distributions to minority partners in excess of income			(11,861	)		(4,302	)		(21,503	)		(15,274	)
Income before minority interest in Aimco Operating Partnership and discontinued operations			16,817			48,988			72,458			183,797
Minority interest in Aimco Operating Partnership, preferred			(2,102	)		(2,713	)		(7,327	)		(8,141	)
Minority interest in Aimco Operating Partnership, common			(1,563	)		(4,266	)		(6,117	)		(15,503	)
Income from continuing operations			13,152			42,009			59,014			160,153
Discontinued operations:
	Income from discontinued operations		27,483			4,336			62,674			2,284
Net income			40,635			46,345			121,688			162,437
Net income attributable to preferred stockholders			26,930			22,092			74,032			71,466
Net income attributable to common stockholders		$	13,705		$	24,253		$	47,656		$	90,971
Earnings (loss) per common share—basic:
	Income (loss) from continuing operations (net of preferred dividends)	$	(0.15	)	$	0.21		$	(0.16	)	$	1.06
	Net income attributable to common stockholders	$	0.15		$	0.26		$	0.51		$	1.09
Earnings (loss) per common share—diluted:
	Income (loss) from continuing operations (net of preferred dividends)	$	(0.15	)	$	0.21		$	(0.16	)	$	1.04
	Net income attributable to common stockholders	$	0.15		$	0.26		$	0.51		$	1.07
Dividends declared per common share		$	0.60		$	0.82		$	2.24		$	2.46

See notes to consolidated financial statements.

3

APARTMENT INVESTMENT AND MANAGEMENT COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands)

(Unaudited)

					Nine Months Ended September 30,
					2003			2002
CASH FLOWS FROM OPERATING ACTIVITIES:
	Net income				$	121,688		$	162,437
	Adjustments to reconcile net income to net cash provided by operating activities:
		Depreciation and amortization of intangibles				252,398			198,321
		Distributions to minority partners in excess of income				21,503			15,274
		Gain on dispositions of real estate				(2,738	)		(4,467	)
		Impairment loss on investment in unconsolidated real estate partnerships				—			3,816
		Income from discontinued operations				(62,674	)		(2,284	)
		Minority interest in Aimco Operating Partnership				13,444			23,644
		Minority interest in consolidated real estate partnerships				4,676			5,730
		Equity in (earnings) losses of unconsolidated real estate partnerships				6,581			(2,357	)
		Changes in operating assets and liabilities:
			Deferred income taxes			(13,333	)		(109	)
			Other			39,592			4,238
				Total adjustments		259,449			241,806
				Net cash provided by operating activities		381,137			404,243
CASH FLOWS FROM INVESTING ACTIVITIES:
	Purchase of and additions to real estate					(117,907	)		(519,143	)
	Initial capital expenditures					(18,594	)		(23,165	)
	Capital enhancements					(2,765	)		(5,632	)
	Capital replacements					(70,620	)		(60,726	)
	Redevelopment additions to real estate					(79,785	)		(118,505	)
	Proceeds from dispositions of real estate					479,220			194,441
	Disposition capital expenditures					(15,991	)		—
	Proceeds from sale of investments and other assets					3,281			22,747
	Cash from newly consolidated properties					5,045			7,509
	Purchase of general and limited partnership interests and other assets					(32,457	)		(52,347	)
	Originations of notes receivable from unconsolidated real estate partnerships					(47,833	)		(74,547	)
	Proceeds from repayment of notes receivable					40,894			53,017
	Cash paid in connection with merger/acquisition related costs					(13,983	)		(249,220	)
	Distributions received from investments in unconsolidated real estate partnerships					51,106			15,662
				Net cash provided by (used in) investing activities		179,611			(809,909	)
CASH FLOWS FROM FINANCING ACTIVITIES:
	Proceeds from secured notes payable borrowings					351,964			651,824
	Principal repayments on secured notes payable					(553,020	)		(412,196	)
	Proceeds from tax-exempt bond financing					14,505			287,551
	Principal repayments on tax-exempt bond financing					(62,774	)		(395,271	)
	Net borrowings on term loans and revolving credit facility					108,376			206,492
	Payment of loan costs					(14,080	)		(9,448	)
	Proceeds from issuance of mandatorily redeemable preferred securities					97,250			—
	Proceeds from issuance of Class A Common Stock and preferred stock, exercise of options/warrants					145,248			425,730
	Principal repayments received on notes due on Class A Common Stock purchases					6,049			5,444
	Redemption of preferred stock					(239,770	)		—
	Redemption of OP Units					(1,177	)		(523	)
	Proceeds from issuance of High Performance Units					1,814			979
	Payment of Class A Common Stock dividends					(228,933	)		(202,706	)
	Payment of distributions to minority interest					(87,161	)		(72,236	)
	Payment of preferred stock dividends					(68,509	)		(72,499	)
				Net cash (used in) provided by financing activities		(530,218	)		413,141
NET INCREASE IN CASH AND CASH EQUIVALENTS						30,530			7,475
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD						98,567			75,456
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS INCLUDED WITHIN ASSETS HELD FOR SALE FROM BEGINNING TO END OF PERIOD						(2,417	)		2,960
CASH AND CASH EQUIVALENTS AT END OF PERIOD					$	126,680		$	85,891

See notes to consolidated financial statements.

4

APARTMENT INVESTMENT AND MANAGEMENT COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2003

(Unaudited)

NOTE 1—Organization

        Apartment Investment and Management Company ("Aimco"), a Maryland corporation incorporated on January 10, 1994, owns a majority of the ownership interests in AIMCO Properties, L.P. (the "Aimco Operating Partnership") through its wholly owned subsidiaries, AIMCO-GP, Inc. and AIMCO-LP, Inc. Aimco held approximately an 89% interest in the common partnership units and equivalents of the Aimco Operating Partnership as of September 30, 2003. AIMCO-GP, Inc. is the sole general partner of the Aimco Operating Partnership. Except where the context otherwise requires, "Company" refers to Aimco, the Aimco Operating Partnership and Aimco's consolidated corporate subsidiaries and consolidated real estate partnerships.

        As of September 30, 2003, the Company:

•

owned a controlling equity interest in 178,913 units in 697 properties (which the Company refers to as "consolidated");



•

owned a non-controlling equity interest in 67,157 units in 467 properties (which the Company refers to as "unconsolidated"), of which 58,634 units were also managed by the Company; and



•

provided services or managed, for third party owners, 51,847 units in 520 properties, primarily pursuant to long-term agreements (including 40,126 units in 418 properties that are asset managed only, and not property managed).

        At September 30, 2003, 94,097,550 shares of Aimco's Class A Common Stock ("Common Stock") were outstanding. Interests in the Aimco Operating Partnership that are held by limited partners other than the Company are referred to as "OP Units." Holders of common OP Units may redeem such units for cash or, at the Company's option, Common Stock. At September 30, 2003, the Aimco Operating Partnership had 11,791,486 common OP Units and equivalents outstanding. At September 30, 2003, a combined total of 105,889,036 shares of Common Stock and common OP Units and equivalents were outstanding.

NOTE 2—Basis of Presentation

        The accompanying unaudited consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and nine months ended September 30, 2003 are not necessarily indicative of the results that may be expected for the year ending December 31, 2003.

        The balance sheet at December 31, 2002 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.

        For further information, refer to the statements and notes thereto included in Aimco's Annual Report on Form 10-K for the year ended December 31, 2002. Certain 2002 financial statement amounts have been reclassified to conform to the 2003 presentation, including certain intercompany eliminations and the treatment of discontinued operations.

5

        The accompanying consolidated financial statements include the accounts of Aimco, the Aimco Operating Partnership, consolidated corporate subsidiaries and consolidated real estate partnerships. 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 limited partner in a limited partnership or a member in a limited liability company. All significant intercompany balances and transactions have been eliminated in consolidation. The assets of partnerships and subsidiaries owned or controlled by Aimco or the Aimco Operating Partnership generally are not available to pay creditors of Aimco or the Aimco Operating Partnership. In certain instances, including the revolving credit facility and term loans, Aimco has pledged as collateral, equity interests in certain consolidated real estate partnerships.

        Interests in consolidated real estate partnerships held by partners other than the Company are reflected as minority interest in consolidated real estate partnerships. Minority interest in consolidated real estate partnerships represents the minority partners' share of the underlying net assets of the Company's consolidated real estate partnerships. When these consolidated real estate partnerships make cash distributions in excess of net income, the Company, as the majority partner, records a charge equal to the minority partners' excess of distributions over net income, even though the Company does not suffer any economic effect, cost or risk. This charge is classified in the consolidated statements of income as distributions to minority partners in excess of income. For the three and nine months ended September 30, 2003, such charges were $11.9 million and $21.5 million, respectively, compared to charges of $4.3 million and $15.3 million for the three and nine months ended September 30, 2002, respectively. Losses are allocated to minority partners until such time as such losses exceed the minority partners' basis, in which case, the Company recognizes 100% of the losses in operating earnings when the partnership is in a deficit equity position, even though the Company does not suffer any economic effect, cost or risk. With regard to such consolidated real estate partnerships, approximately $0.4 million in depreciation related net recoveries and $1.3 million in depreciation related net losses were charged to minority interest in consolidated real estate partnerships for the three and nine months ended September 30, 2003, respectively, and $0.8 million and $1.5 million in depreciation related net losses were charged to minority interest in consolidated real estate partnerships for the three and nine months ended September 30, 2002, respectively.

NOTE 3—Notes Receivable Primarily From Unconsolidated Real Estate Partnerships

        The following table summarizes the Company's notes receivable primarily from unconsolidated real estate partnerships at September 30, 2003 and 2002 (in thousands):

	Notes Receivable Primarily From Unconsolidated Real Estate Partnerships
	September 30, 2003			September 30, 2002
Par value notes	$	105,362		$	115,743
Discounted notes		83,850			133,445
Less: allowance for loan losses		(4,945	)		(1,682	)
Total	$	184,267		$	247,506

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

        As of September 30, 2003 and 2002, the Company held, primarily through its consolidated corporate subsidiaries, $105.4 million and $115.7 million, respectively, of par value notes receivable from unconsolidated real estate partnerships, including accrued interest, for which the Company believes the collectibility of such amounts is both probable and estimable. As such, interest income from par value notes for the three and nine months ended September 30, 2003 totaled $3.5 million and $11.0 million, respectively, and for the three and nine months ended September 30, 2002 totaled $7.3 million and $24.2 million, respectively.

        As of September 30, 2003 and 2002, the Company held discounted notes, including accrued interest, with a carrying value of $83.9 million and $133.4 million, respectively. The total face value plus accrued interest of these notes was $147.6 million and $221.7 million at September 30, 2003 and 2002, respectively.

6

        The discounted notes are accounted for under the cost recovery method, which results in the discounted notes being carried at the acquisition amount, less subsequent cash collections, until such time as collectibility of principal and interest is probable and the timing and amounts are estimable. Based upon closed or pending transactions (which include sales, refinancings, foreclosures and rights offerings), the Company has determined that certain notes are collectible for amounts greater than their carrying value. Accordingly, the Company recognizes accretion income, on a prospective basis over the estimated remaining life of the loans, equal to the difference between the carrying value of the discounted notes and the estimated collectible value. For the three and nine months ended September 30, 2003, the Company recognized accretion income of approximately $0.05 million ($0.00 per basic and diluted share) and $2.6 million ($0.02 per basic share and diluted share), respectively, and for the three and nine months ended September 30, 2002, the Company recognized accretion income of approximately $3.8 million ($0.04 per basic and diluted share) and $19.3 million ($0.20 per basic and diluted share), respectively. The Company generally realizes the notes receivable through collection of cash or increasing ownership of the property or of an additional equity interest in the partnership owning the property that serves as collateral for the loan.

        Included in the above total notes receivable balances, as of September 30, 2003 and 2002, are $57.2 million and $67.2 million, respectively, in notes that were secured by interests in real estate or interests in real estate partnerships. The Company earns interest on these notes receivable at various annual interest rates ranging between 5.5% and 12.0% and averaging 8.4%.

        The activity in the allowance for loan losses in total for both par value and discounted notes for the nine months ended September 30, 2003, is as follows (in thousands):

Balance at December 31, 2002	$	5,413
Provision for losses on notes receivable		1,488
Net reductions due to property sales		(1,956	)
Balance at September 30, 2003	$	4,945

        The Company will continue to monitor the collectibility or impairment of each note on a periodic basis, and changes in the allowance may occur due to changes in the market environment that affect operating cash flows.

NOTE 4—Commitments and Contingencies

Commitments

        In connection with the March 2002 acquisition of Casden Properties Inc. ("Casden"), which included the merger of Casden into Aimco, and the merger of a subsidiary of Aimco into another real estate investment trust ("REIT") affiliated with Casden (collectively, the "Casden Merger") the Company has the following commitments to:

•

purchase two properties currently under development, upon satisfactory completion and attainment of 60% occupancy, as follows:

•

Park La Brea

•

Phase 2—comprised of a total of 521 units for a minimum consideration of approximately $163 million, expected to close in late 2003 or early 2004;



•

Phase 3—comprised of a total of 610 units for a minimum consideration of approximately $199 million, expected to close in late 2004 or early 2005; and

•

Westwood—comprised of a total of 350 units for a minimum consideration of approximately $201 million, for which construction has not yet commenced.



•

provide a stand-by facility of $70 million in debt financing associated with the development of Park La Brea and Westwood (as of September 30, 2003, no funds have been drawn on this stand-by facility);



•

invest up to $50 million for a 20% limited liability company interest in Casden Properties, LLC. As of September 30, 2003, the Company had invested $20.9 million. Casden Properties, LLC acts as general contractor for the entity that is developing Park La Brea and Westwood. In addition, Casden Properties, LLC intends to pursue new development opportunities in Southern California and other markets. Aimco

7

will have an option, but not an obligation, to purchase at completion all multifamily rental projects developed by Casden Properties, LLC; and

•

pay $2.5 million per quarter for five years (up to an aggregate amount of $50 million) to Casden Development Company, LLC as a retainer on account for redevelopment services on the Company's assets (as of September 30, 2003, $15.0 million has been paid).

Legal

        In addition to the matters described below, the Company is a party to various legal actions and administrative proceedings arising in the ordinary course of business, some of which are covered by liability insurance, and none of which are expected to have a material adverse effect on the Company's consolidated financial condition or results of operations taken as a whole.

Limited Partnerships

        In connection with the Company's acquisitions of interests in real estate partnerships, it is 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.

        The Company may incur costs in connection with the defense or settlement of such litigation. The Company believes it complies with its fiduciary obligations and relevant partnership agreements. Although the outcome of any litigation is uncertain, the Company does not expect any such legal actions to have a material adverse affect on the Company's consolidated financial condition or results of operations taken as a whole.

        Environmental

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

        As previously disclosed, the Company has been named as a defendant in lawsuits that have alleged personal injury as a result of the presence of mold. In addition, the Company is 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. The Company has only limited insurance coverage for property damage loss claims arising from the presence of mold and for personal injury claims related to mold exposure.

        The Company has implemented protocols and procedures to prevent or eliminate mold from its properties and believes that its measures will eliminate, or at least minimize, the effects that mold could have on its residents. To date, the Company has not incurred any material costs or liabilities relating to claims of mold exposure or to abate mold conditions. Because the law regarding mold is unsettled and subject to change, however, the Company can make no assurance that liabilities resulting from the presence of or exposure to mold will not have a material adverse effect on the Company's consolidated financial condition or results of operations taken as a whole.

8

        Other Legal Matters

        As previously disclosed, Aimco and four of its affiliated partnerships are defendants in a lawsuit brought by the City Attorney for the City and County of San Francisco ("CCSF") alleging violations of residential housing codes, unlawful business practices and unfair competition. The City Attorney asserts civil penalties from $500 to $1,000 per day for each affected unit, as well as other statutory and equitable relief. The Company has filed a cross-complaint against CCSF, its Department of Building Inspections and certain of its employees, alleging constitutional violations arising out of its arbitrary and discriminatory application of its codes, and other tortious conduct. The matter is not presently set for trial. The Company has engaged in preliminary discussions with the City Attorney to resolve the lawsuit. In the event it is unable to resolve the lawsuit, the Company believes it has meritorious defenses to assert, will vigorously defend itself against CCSF's claims, and vigorously prosecute its own claims. Although the outcome of any litigation is uncertain, the Company does not believe that the ultimate outcome will have a material adverse effect on the Company's consolidated financial condition or results of operations taken as a whole.

        As previously disclosed, National Program Services, Inc. and Vito Gruppuso (collectively "NPS") are insurance agents who in 2000 sold to the Company property insurance issued by National Union Fire Insurance Company of Pittsburgh, Pennsylvania ("National Union"). The financial failure of NPS resulted in defaults in June 2002 under two agreements by which NPS indemnified the Company from losses relating to the matters described below. As a result of such defaults, the Company faced the risk of impairment of a $16.7 million insurance-related receivable as well as certain contingent liabilities as more fully described below. The Company has settled its litigation with Lumbermens Mutual Casualty Company ("Lumbermens") and potential claims against an insurance agency with the result that it has received $10 million and reduced its insurance related receivable to $6.7 million. In addition, the Company has pending litigation against National Union, First Capital Group, a New York based insurance wholesaler, NPS and other agents of National Union, for a refund of at least $10 million of the prepaid premium plus other damages resulting from the cancellation of the coverage.

        As previously disclosed, with respect to the contingent liabilities arising from the NPS defaults, in November 2002, Cananwill, Inc., a premium funding company, commenced litigation against the Company and others, alleging a balance due of $5.7 million, plus interest and attorney's fees, on a premium finance agreement that funded premium payments made to National Union. The Company denies liability to Cananwill, believes it has meritorious defenses to assert, and it will vigorously defend itself. In the event of an adverse determination, the Company will seek reimbursement of any loss from all third parties responsible for any such liability. In April 2003, the Company filed suit against Cananwill and Combined Specialty Insurance Company, formerly known as Virginia Surety Company, Inc., in the United States District Court for the District of Colorado alleging Cananwill's conversion of $1.6 million of unearned premium belonging to the Company and misapplication of such funds to the alleged debt asserted in the first Cananwill lawsuit. In addition, WestRM—West Risk Markets, Ltd. ("WestRM") has sued XL Reinsurance America, Inc. ("XL"), Greenwich Insurance Company ("Greenwich") and Lumbermens to collect on surety bonds issued by the three allegedly to secure payment obligations due on a premium funding made by WestRM. XL and Greenwich have made the Company a third party defendant in this action, asserting that if they have any liability to WestRM, then the Company is liable to XL and Greenwich pursuant to an alleged indemnification agreement. Finally, on July 11, 2003, Highlands Insurance Company ("Highlands") filed suit in a New Jersey state court against Cananwill, the Company, XL and Greenwich asserting the liability of the Company as a principal on surety bonds issued by Highlands in the event Highlands has any liability to Cananwill on the aforementioned Cananwill claim. The Company believes it has meritorious defenses to assert, will vigorously defend itself against claims brought against it, and will vigorously prosecute its own claims. Although the outcome of any claim or matter in litigation is uncertain, the Company does not believe that it will incur any material loss in connection with the insurance-related receivable or that the ultimate outcome of these separate but related matters will have a material adverse effect on the Company's consolidated financial condition or results of operations taken as a whole.

        As previously disclosed, in 1998 and 1999, prior to the March 2002 Casden Merger in which Aimco acquired National Partnership Investments Corp. ("NAPICO"), investors holding limited partnership units in various limited partnerships of which NAPICO is the corporate general partner commenced an action against NAPICO and certain other defendants. The claims related to activities that pre-dated the Casden Merger and included, but were not limited to, claims for breaches of fiduciary duty to the limited partners of certain NAPICO-managed partnerships and violations of securities laws by making materially false and misleading statements in the consent solicitation

9

statements sent to the limited partners of such partnerships. On April 29, 2003, the court entered judgment against NAPICO and certain other defendants in the amount of approximately $25.2 million for violations of securities laws and against NAPICO for approximately $67.3 million for breaches of fiduciary duty, both amounts plus interest of approximately $25.6 million, and for punitive damages against NAPICO in the amount of $2.6 million.

        On August 11, 2003, Aimco and NAPICO entered into a Stipulation of Settlement (the "Stipulation of Settlement") with the plaintiff class (the "Plaintiffs") and their counsel relating to the settlement of the litigation. On August 25, 2003, the court granted preliminary approval of the Stipulation of Settlement. The Stipulation of Settlement remains subject to the final approval of the court, as well as the approval of the Plaintiffs, which hearing is currently scheduled for November 24, 2003. The principal terms of the Stipulation of Settlement include, among other things (1) payments in both cash ($29 million) and stock ($19 million) by Alan I. Casden, on behalf of himself, NAPICO and other defendants, to the Plaintiffs, (2) guaranteed payments in an aggregate amount of $35 million ($7 million per year for 5 years), plus interest, by NAPICO to the Plaintiffs, (3) a release of claims of all parties associated with the litigation and (4) joint agreement by the parties to request that a new judgment be entered in the litigation to, among other things, expunge the judgment originally entered against NAPICO and the other defendants. On September 24, 2003, BattleFowler, LLP filed a request to intervene to challenge the portion of the Stipulation of Settlement that would lead to expungement of the judgment originally entered on April 29, 2003 against NAPICO and the other defendants. All parties to the Stipulation of Settlement have opposed this request to intervene. A hearing regarding the request occurred November 10, 2003; however the court has not yet ruled on the matter.

        On August 12, 2003, in connection with the Stipulation of Settlement, NAPICO and Aimco executed a Settlement Agreement (the "Settlement Agreement") with the prior shareholders of Casden Properties Inc. The principal terms of the Settlement Agreement include, among other things, that (1) NAPICO will voluntarily discontinue the action it commenced on May 13, 2003 against the former shareholders of Casden Properties Inc. and other indemnitors in the Casden Merger, (2) Alan I. Casden and certain related entities will resolve certain pending claims for indemnification made by NAPICO, Aimco and their affiliates, (3) Aimco or an affiliate will provide $25 million of the $29 million in cash that Alan I. Casden is obligated to provide under the Stipulation of Settlement in exchange for 531,915 shares of Common Stock owned by The Casden Company, and (4) The Casden Company will promise to pay to NAPICO an aggregate amount of $35 million ($7 million per year for 5 years), plus interest, on a secured, nonrecourse basis. The Casden Company can prepay its obligation set forth in Item (4) in shares of Common Stock having a value based on the greater of $47 per share or the market value of such shares at the time of payment.

        The Company does not believe that the ultimate outcome of the litigation involving NAPICO and certain other defendants will have a material adverse effect on the Company's consolidated financial condition or results of operations taken as a whole.

        On August 8, 2003 the Aimco Operating Partnership was served with a complaint in the United States District Court, District of Columbia alleging that it willfully violated the Fair Labor Standards Act ("FLSA") by failing to pay maintenance workers overtime for all hours worked in excess of forty hours per week. The complaint attempts to bring a collective action under the FLSA and seeks to certify state subclasses in California, Maryland, and the District of Columbia. Specifically, the plaintiffs contend that the Aimco Operating Partnership failed to compensate maintenance workers for time that they were required to be "on-call." Additionally, the complaint alleges that the Aimco Operating Partnership failed to comply with the FLSA in compensating maintenance workers for time that they worked in responding to a call while "on-call." The complaint also attempts to certify a subclass for salaried service directors who are challenging their classification as exempt from the overtime provisions of the FLSA. The Aimco Operating Partnership has filed an answer to the complaint denying the substantive allegations. Although the outcome of any litigation is uncertain, the Company does not believe that the ultimate outcome will have a material adverse effect on the Company's consolidated financial condition or results of operations taken as a whole.

NOTE 5—Mandatorily Redeemable Preferred Securities

        Effective July 1, 2003, the Company, as a result of Statement of Financial Accounting Standard No. 150, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity ("SFAS 150") was required to reclassify the Class S Cumulative Redeemable Preferred Stock (the "Class S Preferred Stock") and Trust Based Convertible Preferred Securities ("TOPRS") from between the liabilities and equity section of the consolidated balance sheet to liabilities (see Note 16 for further details on SFAS 150).

        On April 30, 2003, the Company sold 4,000,000 shares ($100 million) of Class S Preferred Stock, par value $0.01 per share through a private placement to an institutional investor. The Company used the net proceeds of approximately $97 million to redeem $60 million of Class C Cumulative Preferred Stock (the "Class C Preferred Stock") (see Note 6) and to pay

10

down borrowings on the Company's revolving credit facility. The initial dividend rate on the Class S Preferred Stock is based on three-month LIBOR plus 2.75%. These dividends are cumulative from the date of original issuance and are payable quarterly. From the first anniversary of the date of original issuance through October 31, 2004, the dividend rate on the Class S Preferred Stock increases to the three-month LIBOR plus 6.0% with additional increases thereafter. Under SFAS 150, the dividends paid on the Class S Preferred Stock are recorded to interest expense in the amount of $1.0 million for the three months ended September 30, 2003. Class S Preferred Stock is senior to Common Stock as to dividends and liquidation. Upon any liquidation, dissolution or winding up of Aimco, before payments of distributions by Aimco are made to any holders of Common Stock, the holders of Class S Preferred Stock are entitled to receive a liquidation preference of $25 per share, plus accumulated, accrued and unpaid dividends. Each share of Class S Preferred Stock is redeemable for a maximum amount of $25 per share, plus all accrued and unpaid dividends, if any, to the date fixed for redemption, as follows: (i) at the option of the holder, upon the occurrence of certain events or (ii) at the option of the Company, at any time, with a mandatory redemption date of April 30, 2043. Depending on the date fixed for redemption, the Class S Preferred Stock is redeemable at varying per share amounts as follows: (i) on or before October 31, 2003, $24.50; (ii) on or before January 31, 2004, $24.63; (iii) on or before April 30, 2004, $24.75; or (iv) any time after April 30, 2004, $25.00. The Company intends to redeem the Class S Preferred Stock within one year of its issuance with proceeds from property sales. The redemption value of the Class S Preferred Stock at the date of adoption of SFAS 150 was $97.75 million. As a result, the Company reclassified this amount as a liability as of July 1, 2003. Based on the redemption terms of the Class S Preferred Stock, as described above, the redemption price at September 30, 2003 was $98.0 million. Therefore, in accordance with SFAS 150, the Company recognized an additional liability and incurred interest expense in the amount of $0.25 million in the three months ended September 30, 2003.

        The Company also includes TOPRS, which it assumed in connection with the Insignia merger in 1998, in mandatorily redeemable preferred securities. As of September 30, 2003, $15.2 million was outstanding of the $149.5 million that was originally assumed. The redemption value of the TOPRS at the date of adoption of SFAS 150 was $15.2 million and therefore the Company reclassified this amount as a liability as of July 1, 2003. As of September 30, 2003, the redemption value of the TOPRS remains $15.2 million.

NOTE 6—Stockholders' Equity

Preferred Stock

        On June 30, 2003, using proceeds from the issuance of the Class S Preferred Stock, the Company redeemed for cash all 2,400,000 outstanding shares of its Class C Preferred Stock at a redemption price per share of $25.00 plus an amount equal to accumulated and unpaid dividends through June 30, 2003, for a total of $25.475 per share.

        On July 31, 2003, the Company sold 6,000,000 shares ($150 million) of Class T Cumulative Preferred Stock, par value $0.01 per share (the "Class T Preferred Stock") in a registered public offering. The Company used the net proceeds of approximately $145 million to redeem other preferred securities as described below. Holders of the Class T Preferred Stock are entitled to receive quarterly dividend payments of $0.50 per share, equivalent to $2.00 per share on an annual basis, or 8% of the $25 per share liquidation preference, beginning on October 15, 2003. Class T Preferred Stock is senior to Common Stock as to dividends and liquidation. Upon any liquidation, dissolution or winding up of Aimco, before payments of distributions by Aimco are made to any holders of Common Stock, the holders of Class T Preferred Stock are entitled to receive a liquidation preference of $25 per share, plus accumulated, accrued and unpaid dividends. Each share of Class T Preferred Stock is redeemable at the option of the Company beginning July 31, 2008 for cash in the amount of $25 per share, plus all accrued and unpaid dividends, if any, to the date fixed for redemption.

        On August 18, 2003, the Company redeemed 1,500,000 shares of its Class D Cumulative Preferred Stock, par value $0.01 per share (the "Class D Preferred Stock") at a redemption price of $25 per share plus an amount equal to accumulated and unpaid dividends through August 18, 2003, for a total of $25.2066 per share. Following this redemption, as of September 30, 2003, 2,700,000 shares of Class D Preferred Stock remained outstanding.

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        On August 18, 2003, the Company redeemed all 2,000,000 outstanding shares of its Class H Cumulative Preferred Stock, par value $0.01 per share (the "Class H Preferred Stock") at a redemption price of $25 per share plus an amount equal to accumulated and unpaid dividends through August 18, 2003, for a total of $25.2243 per share.

        On August 18, 2003, the Company redeemed for cash all 2,500,000 outstanding shares of its Class L Convertible Cumulative Preferred Stock, par value $0.01 per share (the "Class L Preferred Stock") at a redemption price of $25 per share. Accumulated and unpaid dividends of $0.5625 per share were paid on August 28, 2003, the scheduled dividend payment date.

        On August 18, 2003, the Company redeemed for cash all 1,200,000 outstanding shares of its Class M Convertible Cumulative Preferred Stock, par value $0.01 per share (the "Class M Preferred Stock") for a total redemption price of $25.7313 per share, which included $0.2313 of accumulated and unpaid dividends through August 18, 2003 and a 2%, or $0.50 per share, redemption premium. The redemption premium was included in preferred dividends for the three and nine months ended September 30, 2003.

        On July 31, 2003, the Securities and Exchange Commission ("SEC") clarified Emerging Issues Task Force, Topic No. D-42, The Effect on the Calculation of Earnings Per Share for the Redemption or Induced Conversion of Preferred Stock ("Topic D-42"). See Note 16 for further information on Topic D-42. The redemption of the Class C Preferred Stock in second quarter 2003 resulted in $2.2 million of redemption related preferred stock issuance costs retroactively deducted from net income to arrive at net income attributable to common stockholders and thereby reduced by $0.02 the Company's previously reported earnings per basic and diluted common share for the three months ended June 30, 2003. Additionally, the redemptions in third quarter 2003 of the Class H Preferred Stock, the Class L Preferred Stock, and the Class M Preferred Stock and the partial redemption in third quarter 2003 of the Class D Preferred Stock resulted in $5.5 million of redemption related preferred stock issuance costs being deducted from net income to arrive at net income attributable to common stockholders and thereby reduced by $0.06 the Company's earnings per basic and diluted common share for the three months ended September 30, 2003. All of these redemption related preferred stock issuance costs have thereby reduced earnings per basic and diluted common share for the nine months ended September 30, 2003.

Common Stock

        During the three and nine months ended September 30, 2003, approximately 35,000 and 119,000 shares of Common Stock, respectively, were issued in exchange for common OP Units tendered for redemption. During the three months ended September 30, 2003, approximately 8,000 shares of Common Stock were issued in exchange for preferred OP Units tendered for redemption.

NOTE 7—Stock-Based Compensation

        Effective January 1, 2003, the Company adopted the accounting provisions of Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation" ("SFAS 123"), as amended by Statement of Financial Accounting Standards No. 148, "Accounting for Stock-Based Compensation—Transition and Disclosure—an amendment of FASB Statement No. 123" ("SFAS 148"), and applied the prospective method set forth in SFAS 148 with respect to the transition. Under this method, the Company now applies the fair value recognition provisions of SFAS 123 to all employee awards granted, modified, or settled on or after January 1, 2003, which has resulted in compensation expense being recorded based on the fair value of the stock options. For purposes of the pro forma disclosures below, the estimated fair values for all awards made prior to January 1, 2003 are amortized over the respective vesting period for each such option and are shown as expense as if SFAS 123 had been applied to all such awards.

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        The following table illustrates the effect on net income and earnings per share if the fair value based method had been applied to all outstanding and unvested awards in each period presented (in thousands, except per share data):

		Three Months Ended September 30,						Nine Months Ended September 30,
		2003			2002			2003			2002
Net income attributable to common stockholders, as reported		$	13,705		$	24,253		$	47,656		$	90,971
Add: Stock-based employee compensation expense included in reported net income
	Restricted stock awards		1,390			1,283			3,829			3,563
	Stock options		251			—			669			—
Deduct: Total stock-based employee compensation expense determined under fair value based method for all awards:
	Restricted stock awards		(1,390	)		(1,283	)		(3,829	)		(3,563	)
	Stock options		(1,061	)		(1,897	)		(3,637	)		(5,691	)
Add: Minority interest in Aimco Operating Partnership			93			247			341			740
Pro forma net income attributable to common stockholders		$	12,988		$	22,603		$	45,029		$	86,020
Basic earnings per common share:
	Reported	$	0.15		$	0.26		$	0.51		$	1.09
	Pro forma	$	0.14		$	0.25		$	0.49		$	1.03
Diluted earnings per common share:
	Reported	$	0.15		$	0.26		$	0.51		$	1.07
	Pro forma	$	0.14		$	0.24		$	0.48		$	1.01

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NOTE 8—Earnings Per Share

        Earnings per share is calculated based on the weighted average number of shares of Common Stock, common stock equivalents and dilutive convertible securities outstanding during the period. The following table illustrates the calculation of basic and diluted earnings per share for the three and nine months ended September 30, 2003 and 2002 (in thousands, except per share data):

		Three Months Ended September 30,						Nine Months Ended September 30,
		2003			2002			2003			2002
Numerator:
Income from continuing operations		$	13,152		$	42,009		$	59,014		$	160,153
Less: Net income attributable to preferred stockholders			(26,930	)		(22,092	)		(74,032	)		(71,466	)
Numerator for basic and diluted earnings per share—Income (loss) from continuing operations		$	(13,778	)	$	19,917		$	(15,018	)	$	88,687
Net income		$	40,635		$	46,345		$	121,688		$	162,437
Less: Net income attributable to preferred stockholders			(26,930	)		(22,092	)		(74,032	)		(71,466	)
Numerator for basic and diluted earnings per share—Net income attributable to common stockholders		$	13,705		$	24,253		$	47,656		$	90,971
Denominator:
Denominator for basic earnings per share—weighted average number of shares of common stock outstanding			92,839			91,831			92,759			83,443
Effect of dilutive securities:
Dilutive potential common shares			210			904			130			1,399
Denominator for diluted earnings per share			93,049			92,735			92,889			84,842
Earnings (loss) per common share:
Basic earnings (loss) per common share:
	Income (loss) from continuing operations (net of preferred dividends)	$	(0.15	)	$	0.21		$	(0.16	)	$	1.06
	Income from discontinued operations	$	0.30		$	0.05		$	0.67		$	0.03
	Net income attributable to common stockholders	$	0.15		$	0.26		$	0.51		$	1.09
Diluted earnings (loss) per common share:
	Income (loss) from continuing operations (net of preferred dividends)	$	(0.15	)	$	0.21		$	(0.16	)	$	1.04
	Income from discontinued operations	$	0.30		$	0.05		$	0.67		$	0.03
	Net income attributable to common stockholders	$	0.15		$	0.26		$	0.51		$	1.07

        All of the Company's convertible preferred stock is anti-dilutive on an "as converted" basis, therefore, all of the dividends payable on the convertible preferred stock are deducted to arrive at the numerator and no additional shares are included in the denominator. The common share equivalents related to approximately 5.6 million and 9.0 million of vested and unvested stock options, shares issued for non-recourse notes receivable, and restricted stock awards for the three and nine months ended September 30, 2003, respectively, have been excluded from diluted earnings per share as their effect would be anti-dilutive. Similarly, the common share equivalents related to approximately 3.5 million and 1.6 million of vested and unvested stock options, shares issued for non-recourse notes receivable, and restricted stock awards have been excluded for the three and nine months ended September 30, 2002, respectively.

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NOTE 9—Business Segments

        The Company has two reportable segments: real estate (owning and operating apartments) and investment management business (providing property management and other services relating to the apartment business to third parties and affiliates). The Company owns and operates properties throughout the United States and Puerto Rico that generate rental and other property related income through the leasing of apartment units to a diverse base of residents. The Company separately evaluates the performance of each of its properties. However, because each of its properties has similar economic characteristics, the properties have been aggregated into a single apartment communities, or real estate, segment. The Company considers disclosure of different components of the multifamily housing business to be useful.

        All real estate revenues are from external customers and no revenues are generated from transactions with other segments. A significant portion of the revenues earned in the investment management business are from transactions with affiliates in the real estate segment. No single resident or related group of residents contributed 10% or more of total revenues during the three and nine months ended September 30, 2003 or 2002.

        Statement of Financial Accounting Standard No. 131, Disclosures about Segments of an Enterprise and Related Information ("SFAS 131") requires that segment disclosures present the measure(s) used by the chief operating decision maker for purposes of assessing such segments' performance. The Company's chief operating decision maker is comprised of several members of its executive management team who use several generally accepted industry financial measures to assess the performance of the business. Specifically, the Company's chief operating decision makers use free cash flow, funds from operations and adjusted funds from operations to assess the financial performance of its business. See note (3) below for an explanation of these measures.

        Certain reclassifications have been made to 2002 amounts to conform to the 2003 presentation. These reclassifications primarily represent presentation changes related to discontinued operations resulting from the requirements of Statement of Financial Accounting Standard No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets ("SFAS 144") and intercompany eliminations. In addition, on October 1, 2003, the National Association of Real Estate Investment Trusts ("NAREIT") clarified its definition of funds from operations to include impairment losses, which previously had been added back to calculate funds from operations. In the three months ended September 30, 2003, and effective for all prior periods presented, in accordance with this clarification the Company no longer adds back impairment losses when computing funds from operations. As a result, funds from operations for the three months ended September 30, 2003 includes impairment losses of $0.6 million, and for the nine months ended September 30, 2003, includes an adjustment of $7.9 million to reflect this change. Funds from operations for the three and nine months ended September 30, 2002 includes an adjustment of $3.6 million and $4.0 million, respectively, to reflect this change. Finally, as a result of the SEC's interpretation of Topic D-42, the Company included in funds from operations redemption related preferred stock issuance costs in the three months ended September 30, 2003, and effective for all prior periods. Therefore, funds from operations for the three months ended September 30, 2003 includes issuance costs of $5.5 million and funds from operations for the nine months ended September 30, 2003 includes an adjustment of $2.2 million to reflect this change.

        The following tables present the contribution (separated between consolidated and unconsolidated activity) to the Company's free cash flow for the three and nine months ended September 30, 2003 and 2002, from these segments, and a reconciliation of free cash flow, funds from operations, and adjusted funds from operations, to net income (in thousands, except ownership equivalent units and monthly rents):

15

FREE CASH FLOW FROM BUSINESS SEGMENTS

For the Three Months Ended September 30, 2003 and 2002

(in thousands, except unit and monthly rents data)

				2003										2002
				Consolidated			Unconsolidated		Total			%		Consolidated			Unconsolidated		Total			%
Real Estate
	Conventional Apartments
		Average monthly rent greater than $1,200 per unit (equivalent units of 11,429 and 8,812 for 2003 and 2002)		$	26,958		$	727	$	27,685		15.1	%	$	19,907		$	1,100	$	21,007		11.5	%
		Average monthly rent $1,000 to $1,200 per unit (equivalent units of 10,167 and 9,543 for 2003 and 2002)			20,446			448		20,894		11.4	%		15,477			721		16,198		8.9	%
		Average monthly rent $900 to $1,000 per unit (equivalent units of 14,439 and 10,644 for 2003 and 2002)			26,871			461		27,332		15.0	%		19,866			588		20,454		11.2	%
		Average monthly rent $800 to $900 per unit (equivalent units of 6,636 and 13,089 for 2003 and 2002)			12,105			339		12,444		6.8	%		21,351			235		21,586		11.8	%
		Average monthly rent $700 to $800 per unit (equivalent units of 15,712 and 14,881 for 2003 and 2002)			20,474			610		21,084		11.5	%		18,789			1,863		20,652		11.3	%
		Average monthly rent $600 to $700 per unit (equivalent units of 33,582 and 34,444 for 2003 and 2002)			33,684			952		34,636		19.0	%		33,718			3,207		36,925		20.3	%
		Average monthly rent $500 to $600 per unit (equivalent units of 37,159 and 31,083 for 2003 and 2002)			27,055			1,173		28,228		15.4	%		23,973			2,773		26,746		14.7	%
		Average monthly rent less than $500 per unit (equivalent units of 15,134 and 15,596 for 2003 and 2002)			6,636			412		7,048		3.9	%		6,807			793		7,600		4.2	%
			Subtotal conventional real estate contribution to Free Cash Flow (equivalent units of 144,258 and 138,092 for 2003 and 2002)		174,229			5,122		179,351		98.1	%		159,888			11,280		171,168		93.9	%
	Affordable Apartments (equivalent units of 22,538 and 23,041 for 2003 and 2002)				13,857			5,662		19,519		10.7	%		13,139			5,362		18,501		10.1	%
	College housing (equivalent units of 2,403 and 2,489 for 2003 and 2002)				1,827			35		1,862		1.0	%		2,192			68		2,260		1.2	%
	Other real estate				736			1		737		0.4	%		841			37		878		0.5	%
	Minority interest				(17,737	)		—		(17,737	)	(9.7	)%		(21,181	)		—		(21,181	)	(11.6	)%
		Total real estate contribution to Free Cash Flow			172,912	(1)		10,820		183,732		100.5	%		154,879	(1)		16,747		171,626		94.1	%
Investment Management Business
	Management contracts (property, risk and asset management)
		Controlled properties			690			—		690		0.4	%		3,029			—		3,029		1.7	%
		Third party with terms in excess of one year			466			—		466		0.3	%		529			—		529		0.3	%
		Third party cancelable in 30 days			299			—		299		0.2	%		271			—		271		0.1	%
	Insurance claim losses				(793	)		—		(793	)	(0.5	)%		(1,101	)		—		(1,101	)	(0.6	)%
			Investment management business contribution to Free Cash Flow before activity based fees		662			—		662		0.4	%		2,728			—		2,728		1.5	%
	Activity based fees				868			—		868		0.5	%		765			—		765		0.4	%
		Total investment management business contribution to Free Cash Flow			1,530	(2)		—		1,530		0.9	%		3,493	(2)		—		3,493		1.9	%
Interest and other income
	General partner loan interest				3,507			—		3,507		1.9	%		7,260			—		7,260		4.0	%
	Transactional income				46			—		46		0.0	%		3,791			—		3,791		2.1	%
	Money market and interest bearing accounts				1,587			—		1,587		0.9	%		2,208			—		2,208		1.2	%
		Total interest and other income contribution to Free Cash Flow			5,140			—		5,140		2.8	%		13,259			—		13,259		7.3	%
General and administrative expenses					(7,638	)		—		(7,638	)	(4.2	)%		(4,360	)		—		(4,360	)	(2.4	)%
Provision for losses on notes receivable					—			—		—		(0.0	)%		(1,682	)		—		(1,682	)	(0.9	)%
Free Cash Flow (FCF)(3)				$	171,944		$	10,820	$	182,764		100.0	%	$	165,589		$	16,747	$	182,336		100.0	%

16

FREE CASH FLOW FROM BUSINESS SEGMENTS

For the Three Months Ended September 30, 2003 and 2002

(in thousands, except per share/unit data)

				2003									2002
				Consolidated			Unconsolidated			Total			Consolidated			Unconsolidated			Total
Free Cash Flow (FCF)(3)				$	171,944		$	10,820		$	182,764		$	165,589		$	16,747		$	182,336
Cost of Senior Capital:
	Interest expense:
		Secured debt:
			Long-term, fixed rate		(80,054	)		(7,132	)		(87,186	)		(69,508	)		(11,657	)		(81,165	)
			Long-term, floating rate		(8,577	)		(73	)		(8,650	)		(4,866	)		(353	)		(5,219	)
			Short-term		(2,845	)		(11	)		(2,856	)		(2,496	)		—			(2,496	)
		Lines of credit and other unsecured debt			(6,168	)		—			(6,168	)		(4,252	)		—			(4,252	)
		Interest expense on mandatorily redeemable preferred securities			(1,288	)		—			(1,288	)		—			—			—
		Interest expense on mandatorily redeemable convertible preferred securities			(247	)		—			(247	)		(365	)		—			(365	)
		Interest capitalized			3,940			102			4,042			4,677			515			5,192
			Total interest expense before minority interest		(95,239	)		(7,114	)		(102,353	)		(76,810	)		(11,495	)		(88,305	)
		Minority interest share of interest expense			8,494			—			8,494			10,932			—			10,932
			Total interest expense after minority interest		(86,745	)		(7,114	)		(93,859	)		(65,878	)		(11,495	)		(77,373	)
Distributions on preferred OP Units					(2,102	)		—			(2,102	)		(2,713	)		—			(2,713	)
Dividends on preferred stock					(26,930	)		—			(26,930	)		(22,092	)		—			(22,092	)
	Total dividends/distributions on preferred OP Units and securities				(29,032	)		—			(29,032	)		(24,805	)		—			(24,805	)
Capital Replacements/Enhancements					20,354			816			21,170			22,377			3,309			25,686
Amortization of intangibles					(1,276	)		—			(1,276	)		(1,154	)		—			(1,154	)
Gain (loss) on dispositions of real estate					1,462			—			1,462			(4,307	)		—			(4,307	)
Impairment loss on investment in unconsolidated real estate partnerships					—			—			—			(3,564	)		—			(3,564	)
Income from discontinued operations					27,483			—			27,483			4,336			—			4,336
Real estate depreciation, net of minority interest					(75,294	)		(6,289	)		(81,583	)		(59,519	)		(8,815	)		(68,334	)
Distributions to minority partners in excess of income					(11,861	)		—			(11,861	)		(4,302	)		—			(4,302	)
			Net income (loss) attributable to common OP Unitholders and stockholders		17,035			(1,767	)		15,268			28,773			(254	)		28,519
(Gain) loss on dispositions of real estate					(1,462	)		—			(1,462	)		4,307			—			4,307
Discontinued operations:
	Loss (gain) on dispositions of real estate, net of minority interest				(22,908	)		—			(22,908	)		129			—			129
	Real estate depreciation, net of minority interest				1,208			—			1,208			5,530			—			5,530
	Distributions to minority partners in excess of income				(3,613	)		—			(3,613	)		—			—			—
	Income tax arising from disposals				806			—			806			(127	)		—			(127	)
Real estate depreciation, net of minority interest					75,294			6,289			81,583			59,519			8,815			68,334
Distributions to minority partners in excess of income					11,861			—			11,861			4,302			—			4,302
Amortization of intangibles					1,276			—			1,276			1,154			—			1,154
		Funds From Operations (FFO) attributable to common OP Unitholders and stockholders(3)			79,497			4,522			84,019			103,587			8,561			112,148
Capital Replacements(4)					(20,141	)		(816	)		(20,957	)		(21,204	)		(3,274	)		(24,478	)
Capital Enhancements(4)					(213	)		—			(213	)		(1,173	)		(35	)		(1,208	)
Impairment loss on investment in unconsolidated real estate partnerships					—			—			—			3,564			—			3,564
Impairment loss on real estate assets sold or held for sale, net of minority interest					619			—			619			—			—			—
Redemption related preferred stock issuance costs					5,490			—			5,490			—			—			—
		Adjusted Funds From Operations (AFFO) attributable to common OP Unitholders and stockholders(3)		$	65,252		$	3,706		$	68,958		$	84,774		$	5,252		$	90,026

		Earnings	Shares/Units	Earnings Per Share/Unit		Earnings	Shares/Units	Earnings Per Share/Unit
Net Income
	Basic	15,268	104,684	$	0.15	28,519	104,589	$	0.27
	Diluted	15,268	104,894	$	0.15	28,519	105,493	$	0.27
FFO
	Basic	84,019	104,684			112,148	104,589
	Diluted	86,363	107,889			121,921	114,518
AFFO
	Basic	68,958	104,684			90,026	104,589
	Diluted	71,302	107,889			92,443	108,132

17

FREE CASH FLOW FROM BUSINESS SEGMENTS

For the Nine Months Ended September 30, 2003 and 2002

(in thousands, except unit and monthly rents data)

					2003											2002
					Consolidated			Unconsolidated			Total			%		Consolidated			Unconsolidated		Total			%
Real Estate
	Conventional Apartments
		Average monthly rent greater than $1,200 per unit (equivalent units of 10,169 and 9,229 for 2003 and 2002)			$	74,187		$	2,738		$	76,925		14.1	%	$	61,444		$	2,830	$	64,274		11.2	%
		Average monthly rent $1,000 to $1,200 per unit (equivalent units of 9,421 and 6,644 for 2003 and 2002)				58,093			1,093			59,186		10.8	%		34,752			2,372		37,124		6.5	%
		Average monthly rent $900 to $1,000 per unit (equivalent units of 13,244 and 10,760 for 2003 and 2002)				69,705			1,481			71,186		13.0	%		60,625			2,694		63,319		11.0	%
		Average monthly rent $800 to $900 per unit (equivalent units of 8,767 and 13,517 for 2003 and 2002)				40,454			997			41,451		7.6	%		64,585			1,992		66,577		11.6	%
		Average monthly rent $700 to $800 per unit (equivalent units of 15,123 and 18,229 for 2003 and 2002)				56,062			2,074			58,136		10.6	%		69,658			5,681		75,339		13.1	%
		Average monthly rent $600 to $700 per unit (equivalent units of 32,872 and 32,896 for 2003 and 2002)				101,525			3,190			104,715		19.2	%		101,399			10,381		111,780		19.5	%
		Average monthly rent $500 to $600 per unit (equivalent units of 36,806 and 30,362 for 2003 and 2002)				84,115			3,262			87,377		16.0	%		71,428			8,687		80,115		14.0	%
		Average monthly rent less than $500 per unit (equivalent units of 17,197 and 13,499 for 2003 and 2002)				26,656			1,298			27,954		5.1	%		17,760			869		18,629		3.2	%
			Subtotal conventional real estate contribution to Free Cash Flow (equivalent units of 143,599 and 135,136 for 2003 and 2002)			510,797			16,133			526,930		96.4	%		481,651			35,506		517,157		90.1	%
	Affordable Apartments (equivalent units of 22,491 and 22,511 for 2003 and 2002)					40,503			13,999			54,502		10.0	%		32,180			17,448		49,628		8.7	%
	College housing (equivalent units of 2,455 and 2,510 for 2003 and 2002)					6,312			190			6,502		1.2	%		7,527			224		7,751		1.4	%
	Other real estate					2,303			(1	)		2,302		0.4	%		3,192			106		3,298		0.6	%
	Minority interest					(56,943	)		—			(56,943	)	(10.4	)%		(56,675	)		—		(56,675	)	(9.9	)%
		Total real estate contribution to Free Cash Flow				502,972	(1)		30,321			533,293		97.6	%		467,875	(1)		53,284		521,159		90.9	%
Investment Management Business
	Management contracts (property, risk and asset management)
		Controlled properties				10,518			—			10,518		1.9	%		17,862			—		17,862		3.1	%
		Third party with terms in excess of one year				844			—			844		0.2	%		1,636			—		1,636		0.3	%
		Third party cancelable in 30 days				475			—			475		0.1	%		799			—		799		0.1	%
	Insurance claim losses					(3,074	)		—			(3,074	)	(0.6	)%		(7,021	)		—		(7,021	)	(1.2	)%
				Investment management business contribution to Free Cash Flow before activity based fees		8,763			—			8,763		1.6	%		13,276			—		13,276		2.3	%
	Activity based fees					7,181			—			7,181		1.3	%		5,270			—		5,270		0.9	%
		Total investment management business contribution to Free Cash Flow				15,944	(2)		—			15,944		2.9	%		18,546	(2)		—		18,546		3.2	%
Interest and other income
	General partner loan interest					11,033			—			11,033		2.0	%		24,164			—		24,164		4.2	%
	Transactional income					2,585			—			2,585		0.5	%		27,071			—		27,071		4.7	%
	Money market and interest bearing accounts					4,786			—			4,786		0.9	%		4,799			—		4,799		0.8	%
		Total interest and other income contribution to Free Cash Flow				18,404			—			18,404		3.4	%		56,034			—		56,034		9.7	%
General and administrative expenses						(19,538	)		—			(19,538	)	(3.6	)%		(12,377	)		—		(12,377	)	(2.1	)%
Other expenses						—			—			—		(0.0	)%		(5,000	)		—		(5,000	)	(0.9	)%
Provision for losses on notes receivable						(1,488	)		—			(1,488	)	(0.3	)%		(4,838	)		—		(4,838	)	(0.8	)%
Free Cash Flow (FCF)(3)					$	516,294		$	30,321		$	546,615		100.0	%	$	520,240		$	53,284	$	573,524		100.0	%

18

FREE CASH FLOW FROM BUSINESS SEGMENTS

For the Nine Months Ended September 30, 2003 and 2002

(in thousands, except per share/unit data)

				2003									2002
				Consolidated			Unconsolidated			Total			Consolidated			Unconsolidated			Total
Free Cash Flow (FCF)(3)				$	516,294		$	30,321		$	546,615		$	520,240		$	53,284		$	573,524
Cost of Senior Capital:
	Interest expense:
		Secured debt:
			Long-term, fixed rate		(241,076	)		(22,127	)		(263,203	)		(205,576	)		(33,664	)		(239,240	)
			Long-term, floating rate		(17,896	)		(981	)		(18,877	)		(15,842	)		(1,870	)		(17,712	)
			Short-term		(17,456	)		(126	)		(17,582	)		(8,738	)		—			(8,738	)
		Lines of credit and other unsecured debt			(17,433	)		—			(17,433	)		(16,488	)		—			(16,488	)
		Interest expense on mandatorily redeemable preferred securities			(1,288	)		—			(1,288	)		—			—			—
		Interest expense on mandatorily redeemable convertible preferred securities			(741	)		—			(741	)		(882	)		—			(882	)
		Interest capitalized			12,403			485			12,888			12,604			1,599			14,203
			Total interest expense before minority interest		(283,487	)		(22,749	)		(306,236	)		(234,922	)		(33,935	)		(268,857	)
		Minority interest share of interest expense			28,318			—			28,318			28,141			—			28,141
			Total interest expense after minority interest		(255,169	)		(22,749	)		(277,918	)		(206,781	)		(33,935	)		(240,716	)
Distributions on preferred OP Units					(7,327	)		—			(7,327	)		(8,141	)		—			(8,141	)
Dividends on preferred securities owned by minority interest					—			—			—			(98	)		—			(98	)
Dividends on preferred stock					(74,032	)		—			(74,032	)		(71,466	)		—			(71,466	)
	Total dividends/distributions on preferred OP Units and securities				(81,359	)		—			(81,359	)		(79,705	)		—			(79,705	)
Capital Replacements/Enhancements					65,128			5,178			70,306			58,121			9,030			67,151
Amortization of intangibles					(4,716	)		—			(4,716	)		(3,194	)		—			(3,194	)
Gain on dispositions of real estate					2,738			—			2,738			4,467			—			4,467
Impairment loss on investment in unconsolidated real estate partnerships					—			—			—			(3,816	)		—			(3,816	)
Income from discontinued operations					62,674			—			62,674			2,284			—			2,284
Real estate depreciation, net of minority interest					(223,733	)		(19,331	)		(243,064	)		(172,225	)		(26,022	)		(198,247	)
Distributions to minority partners in excess of income					(21,503	)		—			(21,503	)		(15,274	)		—			(15,274	)
		Net income (loss) attributable to common OP Unitholders and stockholders			60,354			(6,581	)		53,773			104,117			2,357			106,474
Gain on dispositions of real estate					(2,738	)		—			(2,738	)		(4,467	)		—			(4,467	)
Discontinued operations:
	Loss (gain) on dispositions of real estate, net of minority interest				(66,930	)		—			(66,930	)		10,432			—			10,432
	Real estate depreciation, net of minority interest				9,712			—			9,712			18,642			—			18,642
	Distributions to minority partners in excess of income				(4,650	)		—			(4,650	)		1,321			—			1,321
	Income tax arising from disposals				5,112			—			5,112			552			—			552
Real estate depreciation, net of minority interest					223,733			19,331			243,064			172,225			26,022			198,247
Distributions to minority partners in excess of income					21,503			—			21,503			15,274			—			15,274
Amortization of intangibles					4,716			—			4,716			3,194			—			3,194
			Funds From Operations (FFO) attributable to common OP Unitholders and stockholders(3)		250,812			12,750			263,562			321,290			28,379			349,669
Capital Replacements(4)					(62,788	)		(5,141	)		(67,929	)		(52,684	)		(8,317	)		(61,001	)
Capital Enhancements(4)					(2,340	)		(37	)		(2,377	)		(5,437	)		(713	)		(6,150	)
Impairment loss on investment in unconsolidated real estate partnerships					—			—			—			3,816			—			3,816
Impairment loss on real estate assets sold or held for sale, net of minority interest					8,560			—			8,560			210			—			210
Redemption related preferred stock issuance costs					7,645			—			7,645			—			—			—
			Adjusted Funds From Operations (AFFO) attributable to common OP Unitholders and stockholders(3)	$	201,889		$	7,572		$	209,461		$	267,195		$	19,349		$	286,544

		Earnings	Shares/Units	Earnings Per Share/Unit		Earnings	Shares/Units	Earnings Per Share/Unit
Net Income
	Basic	53,773	104,714	$	0.51	106,474	95,906	$	1.11
	Diluted	53,773	104,844	$	0.51	106,474	97,305	$	1.09
FFO
	Basic	263,562	104,714			349,669	95,906
	Diluted	274,558	109,117			389,782	109,856
AFFO
	Basic	209,461	104,714			286,544	95,906
	Diluted	216,392	107,723			308,684	104,759

19

(1)

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

		Three Months Ended September 30,				Nine Months Ended September 30,
		2003		2002		2003		2002
Consolidated real estate contribution to Free Cash Flow		$	172,912	$	154,879	$	502,972	$	467,875
Plus: Minority Interest			17,737		21,181		56,943		56,675
Plus: Capital Replacements			20,141		21,204		62,788		52,684
Plus: Capital Enhancements			213		1,173		2,340		5,437
Plus: Property operating expenses			166,400		137,292		485,993		378,327
	Rental and other property revenues	$	377,403	$	335,729	$	1,111,036	$	960,998

(2)

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

		Three Months Ended September 30,				Nine Months Ended September 30,
		2003		2002		2003		2002
Consolidated investment management business contribution to Free Cash Flow		$	1,530	$	3,493	$	15,944	$	18,546
Plus: Management and other expenses			13,400		18,642		31,633		48,304
	Management fees and other income primarily from affiliates	$	14,930	$	22,135	$	47,577	$	66,850

(3)

In addition to reviewing financial measures determined in accordance with generally accepted accounting principles ("GAAP"), the Company's chief operating decision makers assess the performance of the business by using several generally accepted industry financial measures—free cash flow, funds from operations and adjusted funds from operations—which measures are defined below. Although these measures provide useful information regarding the Company's financial condition and results of operations, such measures should not be considered alternatives to net income or net cash flow from operating activities, as determined in accordance with GAAP.

•

"Free Cash Flow" or "FCF" is defined by the Company as net operating income less the Capital Replacement spending required to maintain, and the Capital Enhancement spending made to improve, the related assets. It also includes cash flows generated from the Investment Management Business, interest and other income, general and administrative expenses, provision for losses on notes receivable and other expenses incurred by the Company. FCF measures profitability prior to the cost of capital. Because the Company has substantial unconsolidated real estate interests, FCF is useful for management and investors to understand, in addition to consolidated cash flows, cash flows from the Company's unconsolidated real estate holdings.

•

"Funds From Operations" or "FFO" is a commonly used measure of REIT performance and is defined by the Board of Governors of NAREIT as net income (loss), computed in accordance with GAAP, excluding gains and losses from extraordinary items, dispositions of depreciable real estate property, dispositions of real estate from discontinued operations, net of related income taxes, plus real estate related depreciation and amortization (excluding amortization of financing costs), including depreciation for unconsolidated real estate partnerships, joint ventures and discontinued operations. The Company calculates FFO based on the NAREIT definition, as further adjusted for minority interest in the Aimco Operating Partnership, plus amortization of intangibles and distributions to minority partners in excess of income. The Company calculates FFO (diluted) by subtracting redemption related preferred stock issuance costs and dividends/distributions on preferred stock/partnership units (net of preferred dividends/distributions relating to convertible securities the conversion of which is dilutive to FFO) and adding back the interest expense

20

on mandatorily redeemable convertible preferred securities, the conversion of which is dilutive to FFO. FFO 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 depreciating assets such as machinery, computers or other personal property. The Company's basis for computing FFO may not be comparable with that of other real estate investment trusts.

•

"Adjusted Funds From Operations" or "AFFO" is defined by the Company as FFO less Capital Replacement spending and, for second quarter 2002 and subsequent periods, Capital Enhancement spending, plus non-cash charges for redemption related preferred stock issuance costs and impairment losses. Similar to FFO, AFFO captures real estate performance by recognizing that real estate generally appreciates over time or maintains residual value to a much greater extent than do other depreciating assets such as machinery, computers or other personal property, and AFFO also reflects that Capital Replacements are necessary to maintain, and Capital Enhancements are made to improve, the associated real estate assets. Capital Replacement spending was equal to $135 and $434 per unit for the three and nine months ended September 30, 2003, respectively, and $150 and $364 per unit for the three and nine months ended September 30, 2002, respectively. Capital Enhancement spending was equal to $1 and $15 per unit for the three and nine months ended September 30, 2003, respectively, and $9 and $37 per unit for the three and nine months ended September 30, 2002, respectively. In second quarter 2003, the Company began to account for a category of capital expenditures known as Disposition Capital Expenditures, which reports those capital expenditures made on properties sold, held for sale or identified as to be sold within one year. In third quarter 2003, the Company began to include in Disposition Capital Expenditures capital expenditures on certain of the Company's affordable properties that are expected to be sold upon completion of regulatory requirements. The Company believes that capital expenditures on such properties are appropriately included in Disposition Capital Expenditures because of the regulatory framework under which these properties are financed or operated. Specifically, the Company is limited in the amount of proceeds that the Company is permitted to receive in distribution from the properties' operations. Amounts in excess of that limitation must be reinvested in the property or forfeited to the applicable government agency. The Company typically elects to spend amounts in excess of the distribution limit on property improvements, and the Company expects that upon a sale of the property that the expenditures will be recovered. Prior to these changes, these expenditures were accounted for as Capital Replacements and deducted in calculating AFFO.

(4)

Beginning in second quarter 2002, the Company began deducting Capital Enhancement spending in determining AFFO. Beginning in second quarter 2003, the Company began excluding Disposition Capital Expenditures (see (3) above for further information) from Capital Replacements. The deduction of Capital Enhancements and the exclusion of Disposition Capital Expenditures are reflected on a prospective basis.

21

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

		For the Three Months Ended September 30, 2003									For the Three Months Ended September 30, 2002
		FCF			FFO			AFFO			FCF			FFO			AFFO
Amount per Free Cash Flow schedule		$	182,764		$	84,019		$	68,958		$	182,336		$	112,148		$	90,026
Total interest expense after minority interest			(93,859	)		—			—			(77,373	)		—			—
Distributions on preferred OP Units			—			2,102			2,102			—			2,713			2,713
Dividends on preferred stock			—			26,930			26,930			—			22,092			22,092
Redemption related preferred stock issuance costs			—			—			(5,490	)		—			—			—
Real estate depreciation, net of minority interest			(81,583	)		(81,583	)		(81,583	)		(68,334	)		(68,334	)		(68,334	)
Distributions to minority partners in excess of income			(11,861	)		(11,861	)		(11,861	)		(4,302	)		(4,302	)		(4,302	)
Discontinued operations:
	Income from operations		27,483			—			—			4,336			—			—
	Gain (loss) on dispositions of real estate, net of minority interest		—			22,908			22,908			—			(129	)		(129	)
	Impairment loss on real estate assets sold or held for sale, net of minority interest		—			—			(619	)		—			—			—
	Real estate depreciation, net of minority interest		—			(1,208	)		(1,208	)		—			(5,530	)		(5,530	)
	Distributions to minority partners in excess of income		—			3,613			3,613			—			—			—
	Income tax arising from disposals		—			(806	)		(806	)		—			127			127
Capital Replacements			20,957			—			20,957			24,478			—			24,478
Capital Enhancements			213			—			213			1,208			—			1,208
Amortization of intangibles			(1,276	)		(1,276	)		(1,276	)		(1,154	)		(1,154	)		(1,154	)
Gain (loss) on dispositions of real estate			1,462			1,462			1,462			(4,307	)		(4,307	)		(4,307	)
Impairment loss on investment in unconsolidated real estate partnerships			—			—			—			(3,564	)		—			(3,564	)
Minority interest in Aimco Operating Partnership			(3,665	)		(3,665	)		(3,665	)		(6,979	)		(6,979	)		(6,979	)
Net income		$	40,635		$	40,635		$	40,635		$	46,345		$	46,345		$	46,345

		For the Nine Months Ended September 30, 2003									For the Nine Months Ended September 30, 2002
		FCF			FFO			AFFO			FCF			FFO			AFFO
Amount per Free Cash Flow schedule		$	546,615		$	263,562		$	209,461		$	573,524		$	349,669		$	286,544
Total interest expense after minority interest			(277,918	)		—			—			(240,716	)		—			—
Dividends on preferred securities owned by minority interest			—			—			—			(98	)		—			—
Distributions on preferred OP Units			—			7,327			7,327			—			8,141			8,141
Redemption related preferred stock issuance costs			—			—			(7,645	)		—			—			—
Dividends on preferred stock			—			74,032			74,032			—			71,466			71,466
Real estate depreciation, net of minority interest			(243,064	)		(243,064	)		(243,064	)		(198,247	)		(198,247	)		(198,247	)
Distributions to minority partners in excess of income			(21,503	)		(21,503	)		(21,503	)		(15,274	)		(15,274	)		(15,274	)
Discontinued operations:
	Income from operations		62,674			—			—			2,284			—			—
	Gain (loss) on dispositions of real estate, net of minority interest		—			66,930			66,930			—			(10,432	)		(10,432	)
	Impairment loss on real estate assets sold or held for sale, net of minority interest		—			—			(8,560	)		—			—			(210	)
	Real estate depreciation, net of minority interest		—			(9,712	)		(9,712	)		—			(18,642	)		(18,642	)
	Distributions to minority partners in excess of income		—			4,650			4,650			—			(1,321	)		(1,321	)
	Income tax arising from disposals		—			(5,112	)		(5,112	)		—			(552	)		(552	)
Capital Replacements			67,929			—			67,929			61,001			—			61,001
Capital Enhancements			2,377			—			2,377			6,150			—			6,150
Amortization of intangibles			(4,716	)		(4,716	)		(4,716	)		(3,194	)		(3,194	)		(3,194	)
Impairment loss on investment in unconsolidated real estate partnerships			—			—			—			(3,816	)		—			(3,816	)
Gain on dispositions of real estate			2,738			2,738			2,738			4,467			4,467			4,467
Minority interest in Aimco Operating Partnership			(13,444	)		(13,444	)		(13,444	)		(23,644	)		(23,644	)		(23,644	)
Net income		$	121,688		$	121,688		$	121,688		$	162,437		$	162,437		$	162,437

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Assets (in thousands):		September 30, 2003		December 31, 2002
Total assets for reportable segments(1)		$	9,820,220	$	10,020,551
Corporate and other assets			362,709		296,050
	Total consolidated assets	$	10,182,929	$	10,316,601

(1)

Total assets for reportable segments include assets associated with both the real estate and investment management business segments.

NOTE 10—Dilutive Securities

        On April 25, 2003, Aimco shareholders approved the sale by the Aimco Operating Partnership of up to 5,000 of its Class VI High Performance Partnership Units (the "Class VI Units") to a limited liability company owned by a limited number of Aimco employees for an aggregate offering price of up to $985,000. The sale of all 5,000 Class VI Units for the aggregate offering price of $985,000 took place on May 9, 2003. The Class VI Units have identical characteristics to the Class V High Performance Partnership Units (the "Class V Units") sold in 2002, except for a different three-year measurement period. The valuation period of the Class VI Units began on January 1, 2003 and will end on December 31, 2005.

        Additionally, there are 5,000 Class IV High Performance Partnership Units of the Aimco Operating Partnership (the "Class IV Units") and 4,398 Class V Units of the Aimco Operating Partnership outstanding. The valuation period for the Class IV Units began on January 1, 2001 and will end on December 31, 2003. The valuation period of the Class V Units began on January 1, 2002 and will end on December 31, 2004.

        At September 30, 2003, the Company did not meet the required measurement benchmarks for the Class IV Units, Class V Units or Class VI Units. Therefore, the Company has not recorded any value to the Class IV Units, Class V Units or Class VI Units in the consolidated financial statements as of September 30, 2003, and such High Performance Units have had no dilutive effect.

        Aimco has additional dilutive securities, which include options, warrants, convertible preferred securities and convertible debt securities. The following table represents the total number of shares of Common Stock that would be outstanding if all dilutive securities were converted or exercised (not all of which are included in the fully diluted share count) as of September 30, 2003:

Type of Security		As of September 30, 2003
Common Stock		94,097,550
Common OP Units and equivalents		11,791,486
Vested options and warrants		5,893,088
Convertible preferred stock		5,595,087
Convertible preferred OP Units		2,457,913
Convertible debt securities (TOPRS)		305,782
	Total	120,140,906

NOTE 11—Discontinued Operations and Assets Held for Sale

        In October 2001, the Financial Accounting Standards Board ("FASB") issued SFAS 144. SFAS 144 establishes criteria beyond those previously specified in Statement of Financial Accounting Standard No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of ("SFAS 121"), to determine when a long-lived asset is classified as held for sale, and it provides a single accounting model for the disposal of long-lived assets. SFAS 144 was effective beginning January 1, 2002. Due to the adoption of SFAS 144, the Company now reports as discontinued operations real estate assets held for sale (as defined by SFAS 144) and real estate assets sold in the current period. All results of these discontinued operations, less applicable income taxes, are

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included in a separate component of income on the consolidated statements of income under the heading "discontinued operations." This change has resulted in certain reclassifications of 2002 financial statement amounts.

        At September 30, 2003, the Company had nine properties with an aggregate of 1,974 units classified as held for sale. The results of operations of these properties were included within discontinued operations for the three and nine months ended September 30, 2003 and 2002. During the nine months ended September 30, 2003, the Company sold 51 properties with an aggregate of 12,929 units. The results of operations of these 51 properties before the sale and the related gain/loss on sale were also included in discontinued operations for the three and nine months ended September 30, 2003 and 2002. During 2002, the Company sold 42 properties with an aggregate of 8,547 units. The results of operations of these 42 properties before the sale and the related gain/loss on sale were included in discontinued operations for the three and nine months ended September 30, 2002.

        The following is a summary of the components of income from discontinued operations for the three and nine months ended September 30, 2003 and 2002 (dollars in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2003			2002			2003			2002
RENTAL PROPERTY OPERATIONS:
Rental and other property revenues	$	10,421		$	33,242		$	51,167		$	106,629
Property operating expense		(5,848	)		(15,234	)		(25,210	)		(45,892	)
Income from property operations		4,573			18,008			25,957			60,737
Depreciation of rental property		(1,309	)		(6,227	)		(10,606	)		(20,635	)
Interest expense		(628	)		(7,767	)		(10,696	)		(25,250	)
Interest and other income		—			135			—			506
Minority interest in consolidated real estate partnerships		(249	)		189			111			(559	)
Income from operations		2,387			4,338			4,766			14,799
Gain (loss) on dispositions of real estate, net of minority interest		22,908			(129	)		66,930			(10,432	)
Impairment losses on real estate assets sold or held for sale		(619	)		—			(8,560	)		(210	)
Distributions to minority partners in excess of income		3,613			—			4,650			(1,321	)
Income tax arising from disposals		(806	)		127			(5,112	)		(552	)
Income from discontinued operations	$	27,483		$	4,336		$	62,674		$	2,284

        The Company is currently marketing for sale certain real estate properties that are inconsistent with its long-term investment strategies (as determined by management from time to time). The Company expects that all properties classified as held for sale will sell within one year from the date classified as held for sale. Assets classified as held for sale of $70.6 million at September 30, 2003 include real estate net book value of $61.1 million, cash and cash equivalents of $3.4 million and restricted cash of $2.9 million. The estimated proceeds, less anticipated costs to sell some of these assets, were less than the net book value, and therefore impairments of $0.6 million and $8.6 million were recorded for the three and nine months ended September 30, 2003, respectively. Liabilities related to assets classified as held for sale of $53.9 million at September 30, 2003 include mortgage debt of $49.6 million. The $220.1 million of assets held for sale at December 31, 2002, represented 31 properties with 7,312 units that were classified as assets held for sale during 2002 and 2003. Properties other than the above, both consolidated and unconsolidated, are being marketed for sale but are not accounted for as assets held for sale as they do not meet the criteria under SFAS 144.

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NOTE 12—Acquisitions and Mergers

        During 2001, the Company acquired an approximate 50% interest in the partnership that owns Lincoln Place, a 795-unit apartment community in Venice, California. This acquisition was funded through the payment of cash and the issuance of Class Nine Partnership Preferred Units (the "Class Nine Preferred Units"). In July 2003, the Company acquired the remaining 50% interest in Lincoln Place for a purchase price of approximately $63 million in cash and assumed non-recourse mortgage debt. In connection with this transaction, the Company repurchased for approximately $33 million all 1,077,485 outstanding Class Nine Preferred Units that were issued in connection with the 2001 purchase and approximately 147,000 common OP Units that had been issued upon conversion of Class Nine Preferred Units issued in the 2001 purchase.

        On August 25, 2003, the Company completed the acquisition of a certain New York City area property (the "New York Property Acquisition"). In this property acquisition, the Company acquired a property with five contiguous conventional mid-rise apartment buildings located in mid-Manhattan. These buildings include 58 residential units and 12 commercial spaces. The total cost of the acquisition included a purchase price of $37.6 million for the property and $0.5 million in transaction costs. The acquisition was funded through a combination of non-recourse property debt of $20 million of a long-term, fixed rate, non-fully amortizing note bearing interest at a rate of 5.25% per annum; and proceeds from property sales. The Company accounted for this transaction as a purchase, and as a result, the results of operations were included in the consolidated statements of income from the date of acquisition.

        On March 11, 2002, the Company completed the Casden Merger and accounted for this transaction as a purchase, and as a result, the results of operations were included in the consolidated statements of income from the date of acquisition. The allocation of the aggregate $1.1 billion purchase price of Casden was finalized in first quarter 2003 (including the Company's transaction costs of $15.0 million) and was recorded as follows (in thousands):

Real estate	$	1,175,941
Cash and cash equivalents		7,354
Restricted cash		52,727
Investment in unconsolidated real estate partnerships		40,546
Accounts receivable		6,732
Other assets		13,755
Secured tax-exempt bond financing		219,102
Secured notes payable		465,306
Short-term debt		243,242
Accounts payable and accrued liabilities		158,704
Security deposits and deferred income		4,328
Minority interest in Aimco Operating Partnership		41,491
Stockholders' equity		164,882

        Adjustments were made to the preliminary allocation of the purchase price related to certain contingent liabilities and final evaluations of fair value.

        On August 29, 2002, the Company completed the acquisition of certain New England area properties (the "New England Properties Acquisition"). The allocation of the aggregate $539.4 million purchase price of the New England Acquisition was finalized in third quarter 2003 (including the Company's transaction costs of $2.5 million and $34.2 million of initial capital expenditures). Adjustments were made to the preliminary allocation of the purchase price related to certain contingent liabilities and final evaluations of fair value.

NOTE 13—Income Taxes

        In an effort to streamline business processes and operational efficiencies of its property management and services businesses, the Company contributed all of the capital stock of NHP Management Company to AIMCO/Bethesda Holdings, Inc. (both of which are wholly-owned taxable REIT subsidiaries of the Company). In connection with this transaction, the Company reversed a valuation reserve related to future deductions and tax loss carryforwards of NHP Management Company and thereby recognized approximately $8.0 million of deferred tax benefits in first

25

quarter 2003, reducing management and other expenses. This deferred tax benefit increased net income by approximately $7.1 million, net of minority interest, for the nine months ended September 30, 2003 and resulted in an increase in basic and diluted earnings per share of $0.08 for the nine months ended September 30, 2003.

NOTE 14—Revolving Secured Notes Payable

        The Company has a revolving credit facility (the "Secured Facility") of up to $250 million primarily to be used for financing properties that the Company intends to sell, as well as properties that are under redevelopment. At September 30, 2003, the total amount of secured notes payable of $4,506 million included approximately $241 million of notes that are provided through the Secured Facility. The interest rate on the notes under the Secured Facility is the Fannie Mae Discounted Mortgage-Backed Security index plus 0.85%, which interest rate resets monthly. At September 30, 2003, the weighted average interest rate was 1.94%. Principal payments are required based on a 30-year amortization schedule, using the interest rate in effect during the first month that any property is on the Secured Facility. The Company selects properties to be financed pursuant to the Secured Facility, typically where such properties secure debt that has an upcoming maturity or is prepayable at par. Each such loan under the Secured Facility is treated as a separate borrowing and is collateralized by a specific property, and none of the loans is cross-collateralized or cross-defaulted. The Secured Facility matures in September 2007, but can be terminated and completely repaid without penalty after September 2005.

NOTE 15—Term Loans and Revolving Credit Facility Modification

        The Company has an outstanding revolving credit facility (the "Revolver") with a syndicate of financial institutions having aggregate lending commitments of $500 million (however, the commitments in excess of $445 million are not available until syndicated). At September 30, 2003, the Revolver had a weighted average interest rate of 3.77% and an outstanding principal balance of $160.0 million.

        In addition to the Revolver, the Company has two syndicated term loans. The Company entered into a term loan with a syndicate of financial institutions in connection with the Casden Merger in March 2002 (the "Casden Loan"). At September 30, 2003, the Casden Loan had a weighted average interest rate of 3.77% and an outstanding principal balance of $104.4 million. The Company entered into another term loan on May 30, 2003 whereby the Company borrowed $250 million from a syndicate of financial institutions (the "Term Loan"). Proceeds from the Term Loan were applied to reduce the outstanding amount of the Revolver. The Term Loan matures in five years and is repayable at the option of the Company at any time without penalty. At September 30, 2003, the Term Loan had a weighted average interest rate of 3.89% and an outstanding principal balance of $250 million.

        The borrowers under the Revolver and the Term Loan are Aimco, the Aimco Operating Partnership, AIMCO/Bethesda Holdings, Inc. and NHP Management Company. The borrowers under the Casden Loan are Aimco, the Aimco Operating Partnership and NHP Management Company. Each of the Revolver, the Casden Loan and the Term Loan are guaranteed by certain subsidiaries of Aimco. The obligations under each of the Revolver, the Casden Loan and the Term Loan are secured by certain subsidiaries and non-real estate assets of the Company.

        As of May 9, 2003, the Revolver and the Casden Loan were amended to permit the Company to redeem outstanding preferred stock with new issuances of common or preferred equity or up to 75% of proceeds from property sales.

        On October 30, 2003, the Company further modified the Revolver, the Casden Loan and the Term Loan. Modified terms are effective as of September 30, 2003. The modification included an increase in the percentage of Funds From Operations (as adjusted for (i) the add back of redemption related preferred stock issuance costs under Topic D-42 (see Note 16), (ii) interest expense charges (or benefits) for minority interest marked-to-market adjustments if required under GAAP and (iii) non-cash loan amortization costs) permitted to be distributed from 88% to 90% for all quarters until the maturity of the loan agreement. This quarterly covenant is calculated based on trailing four quarters consistent with all other covenant calculations. Upon the effective date of the amendment, the margin on the Revolver LIBOR-based loans was amended to a range between 2.15% to 2.85%, the margin on the Casden Loan LIBOR-based loans was amended to 2.85% and the margin on the Term Loan LIBOR-based loans was amended to 2.85%. Also, the Revolver base rate loans were amended to a range between 0.65% to 1.35% based on the fixed charge coverage ratio, and the margin on the

26

Casden Loan base rate loan was amended to 1.85% and the margin on the Term Loan base rate loan was amended to 1.15%. The amended financial covenants contained in the Revolver, the Casden Loan, and the Term Loan require the Company to maintain a ratio of debt to gross asset value of no more than 0.575:1.0 (which was increased from 0.55:1.0), a minimum interest coverage ratio of 2.0:1.0 (which was reduced from 2.25:1.0), a maximum total obligations to gross asset value ratio of 0.675:1.0 (which was increased from 0.65:1.0) and a minimum fixed charge coverage ratio of 1.40:1 (which was reduced from 1.50:1). With regard to these amended financial covenants, if the ratio of debt to gross asset value exceeds 0.55:1.0 for more than two consecutive fiscal quarters or if the ratio of total obligations to gross asset value exceeds 0.65:1.0 for more than two consecutive fiscal quarters, the applicable margin shall increase by 0.25%. Additionally, the modification allows (i) the add back of redemption related preferred stock issuance costs under Topic D-42, and (ii) interest expense charges (or benefits) from minority interest marked-to-market adjustments if required under GAAP to be excluded from interest expense and dividends when calculating coverage ratios. As of September 30, 2003, the Company was in compliance with all financial covenant requirements.

The affirmative and negative covenants, including financial covenants, contained in the Revolver, the Casden Loan and the Term Loan are substantially identical.

NOTE 16—Recent Accounting Developments

In January 2003, the FASB issued Interpretation No. 46 "Consolidation of Variable Interest Entities" ("FIN 46"). In general, a variable interest entity is a corporation, partnership, trust, or any other legal structure used for business purposes that either (a) does not have equity investors with voting rights or (b) has equity investors that do not provide sufficient financial resources for the entity to support its activities. A variable interest entity often holds financial assets, including loans or receivables, real estate or other property. A variable interest entity may be essentially passive or it may engage in activities on behalf of another company. Until now, a company generally has included an entity in its consolidated financial statements only if it controlled the entity through voting interests. FIN 46 changes the previous consolidation standards by requiring a variable interest entity to be consolidated by a company if that company is subject to a majority of the risk of loss from the variable interest entity's activities, entitled to receive a majority of the entity's residual returns, or both. FIN 46's consolidation requirements apply immediately to variable interest entities created or acquired after January 31, 2003. The Company elected to defer implementation of FIN 46 until fourth quarter 2003 for entities in existence on January 31, 2003. The Company adopted FIN 46 for entities created or acquired after January 31, 2003. On October 8, 2003, the FASB granted a deferral of FIN 46 until the end of the period ending after December 15, 2003 (for the Company December 31, 2003) for any entities in existence at January 31, 2003. The FASB has issued a number of FASB Staff Positions ("FSP") that address certain implementation issues that have arisen since the FASB issued FIN 46. Based on its understanding of FIN 46 and the related FSP issued as of September 30, 2003, the Company currently believes that it will consolidate approximately 400 additional real estate partnerships that are currently unconsolidated. The Company does not anticipate that FIN 46 will result in de-consolidation of any partnerships that are currently consolidated. The Company believes that implementation of FIN 46 will result in consolidation of approximately $2.7 billion in real estate and other assets and $2.1 billion in liabilities. The Company will consolidate entities in which the Company owns as little as 0.1% because the Company receives a majority of "expected residual returns," as defined in FIN 46. In addition to real estate partnerships that the Company will consolidate as a result of FIN 46, the Company currently consolidates a number of variable interest entities. The Company's investment in, and advances to (in the form of notes receivable), real estate partnerships that are considered variable interest entities that are to be consolidated is approximately $165 million and currently consolidated is approximately $98 million, which amounts together approximate the Company's maximum exposure to loss associated with these entities. On October 31, 2003, the FASB issued an FSP proposing modifications to FIN 46 related to certain implementation issues. The Company is in the process of quantifying the full impact of FIN 46 on its financial statements, however, the Company does not believe that the adoption of FIN 46 will have a material impact on the consolidated financial condition or results of operations taken as a whole.

In April 2003, the FASB issued Statement of Financial Accounting Standard No. 149, Amendment of Statement 133 on Derivative Instruments and Hedging Activities ("SFAS 149"). SFAS 149 amends and clarifies financial accounting and reporting for derivative instruments, including certain derivative instruments embedded in other contracts and for hedging activities under Statement of Financial Accounting Standard No. 133, Accounting for Derivative Instruments and Hedging Activities ("SFAS 133"). SFAS 149 clarifies the definition of a derivative and when special reporting is warranted, in addition to amending certain other existing pronouncements. SFAS 149 will result in more consistent reporting of contracts that are derivatives in their entirety or that contain embedded derivatives that

27

warrant separate accounting. SFAS 149 is effective for contracts entered into or modified after June 30, 2003, except for provisions that relate to SFAS 133 Implementation Issues, which should continue to be applied

in accordance with their respective effective dates, and for hedging relationships designated after June 30, 2003. In addition, certain provisions relating to forward purchases or sales of when-issued securities or other securities that do not yet exist, should be applied to existing contracts as well as new contracts entered into after June 30, 2003. The adoption of SFAS 149 did not have a material impact on the Company's consolidated financial condition or results of operations taken as a whole.

        In May 2003, the FASB issued SFAS 150, which establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. The requirements of SFAS 150 apply to the classification and measurement of freestanding financial instruments, including those that comprise more than one option or forward contract. SFAS 150 requires that certain financial instruments, such as mandatorily redeemable securities, put options, forward purchase contracts, and obligations that can be settled with shares, be classified as liabilities, where in some cases these have previously been classified as equity or between the liabilities and equity section of the consolidated balance sheet. SFAS 150 is effective for financial instruments entered into or modified after May 31, 2003, and otherwise is effective at the beginning of the first interim period beginning after June 15, 2003. The Company adopted SFAS 150 as of July 1, 2003 (see Note 5). In September 2003, financial statement issuers first became aware that the FASB intended for SFAS 150 to also apply to the non-controlling interests in consolidated finite life partnerships. However, on October 29, 2003, the FASB indefinitely deferred the provisions of SFAS 150 that were intended to apply to non-controlling interests in consolidated finite life partnerships. Because during the deferral period the FASB plans to reconsider implementation issues and, perhaps, classification or measurement guidance for non-controlling interests in consolidated finite life partnerships, the Company is not able to quantify the full impact to its financial statements of consolidating non-controlling interests in finite life partnerships. The adoption of SFAS 150 for portions that have not been deferred did not have a material impact on the Company's consolidated financial position or results of operations taken as a whole.

        On July 31, 2003, the SEC clarified Topic D-42, which provides that any excess of (1) the fair value of the consideration transferred to the holders of preferred stock redeemed over (2) the carrying amount of the preferred stock should be subtracted from net earnings to determine net earnings available to common stockholders in the calculation of earnings per share. The SEC interpreted Topic D-42 to require that the issuance costs of the preferred securities reduce the carrying amount of the preferred securities, regardless of where in the stockholders' equity section those costs were initially classified on issuance. The Company recorded issuance costs as a reduction to Additional Paid-in Capital on the Consolidated Balance Sheet at the time the related securities were issued and did not consider them as a reduction to the carrying value of the preferred stock at the time of redemption. Under the clarification, these issuance costs must be treated like a preferred dividend and deducted from net income to arrive at net income attributable to common stockholders. The July 2003 clarification of Topic D-42 is effective for the Company for the quarter ending September 30, 2003 and prior periods are required to be restated as they are presented in future filings. In the second and third quarters of 2003, the Company redeemed various classes of preferred stock, which redemption related preferred stock issuance costs were deducted in accordance with Topic D-42 (see Note 6 for impact on earnings per basic and diluted common share).

NOTE 17—Subsequent Events

Dividend Declared

        On November 6, 2003, the Company's Board of Directors declared a quarterly dividend of $0.60 per share for payment on November 28, 2003 to stockholders of record on November 20, 2003. The Board of Directors reduced the quarterly dividend from $0.82 to $0.60 per share to align the amount with the Company's current level of profitability.

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

Overview

The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for forward-looking statements in certain circumstances. Certain information included in this Report contains or may contain information that is forward-looking, including, without limitation, statements regarding the effect of acquisitions, our future financial performance and the effect of government regulations. Actual results may differ materially from those described in the forward-looking statements and will be affected by a variety of risks and factors including, without limitation: national and local economic conditions; the general level of interest rates; the terms of governmental regulations that affect 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 tenants in such markets; acquisition and development risks, including failure of such acquisitions to perform in accordance with projections; litigation, including costs associated with prosecuting or defending claims and any adverse outcomes; and possible environmental liabilities, including costs 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, 2002 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.

        We are a real estate investment trust with headquarters in Denver, Colorado and 19 regional operating centers around the United States, holding a geographically diversified portfolio of apartment properties. Our properties are located in 47 states, the District of Columbia and Puerto Rico.

        As of September 30, 2003, we:

•

owned a controlling equity interest in 178,913 units in 697 properties (which we refer to as "consolidated");



•

owned a non-controlling equity interest in 67,157 units in 467 properties (which we refer to as "unconsolidated"), of which 58,634 units were also managed by us; and



•

provided services or managed, for third party owners, 51,847 units in 520 properties, primarily pursuant to long term agreements (including 40,126 units in 418 properties that are asset managed only, and not property managed).

        In the nine months ended September 30, 2003, we:

•

issued $100 million of newly created variable rate Class S Cumulative Redeemable Preferred Stock, or the Class S Preferred Stock and issued $150 million of newly created 8.00% Class T Cumulative Preferred Stock;



•

redeemed $60 million of outstanding 9.00% Class C Cumulative Preferred Stock, $37.5 million of outstanding 8.75% Class D Cumulative Preferred Stock, $50 million of outstanding 9.50% Class H Cumulative Preferred Stock, $62.5 million of outstanding 10.00% Class L Cumulative Convertible Preferred Stock, and $30 million of outstanding 9.25% Class M Cumulative Convertible Preferred Stock;



•

completed the acquisition of Lincoln Place for approximately $63 million;

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•

completed the acquisition of a certain New York City area property, or the New York Property Acquisition for approximately $37.6 million;



•

purchased $10.5 million of partnership interests;



•

sold 55 conventional properties and one land parcel for gross proceeds of $567.2 million that, after repayment of existing debt and payment of transaction costs totaling $343.1 million, resulted in net proceeds of $224.1 million, of which our share was $201.9 million;



•

sold 19 affordable properties for gross proceeds of $71.5 million that, after repayment of existing debt and payment of transaction costs totaling $54.7 million, resulted in net proceeds of $16.8 million, of which our share was $13.6 million;



•

closed 72 mortgage loans, generating gross proceeds of $460.0 million that, after repayment of existing debt and payment of transaction costs totaling $316.1 million, resulted in $143.9 million of net proceeds, of which our share was $115.1 million; and



•

had our Common Stock added to the S&P 500.

        See further discussion on certain of the items above under the headings "Results of Operations" and "Liquidity and Capital Resources."

Critical Accounting Policies and Estimates

        Our consolidated financial statements are prepared in accordance with generally accepted accounting principles, or GAAP, which requires us to make estimates and assumptions. We believe that the following critical accounting policies, among others, 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 are recorded at cost, less accumulated depreciation, unless considered impaired. If events or circumstances indicate that the carrying amount of a property may be impaired, we will make an assessment of its recoverability by estimating the undiscounted future cash flows, excluding interest charges, of the property. If the carrying amount exceeds the aggregate undiscounted future cash flows, we would 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 an increase in unemployment 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; and



•

changes in market rental rates.

        Any adverse changes in these factors could cause an impairment in our assets, including real estate, goodwill and investments in unconsolidated real estate partnerships.

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Notes Receivable and Interest Income Recognition

        We generally recognize interest income earned from our investments in notes receivable when the collectibility of such amounts is both probable and estimable. The notes receivable were either extended by us and are carried at the face amount plus accrued interest ("par value notes") or were made by predecessors whose positions we acquired, usually at a discount ("discounted notes").

        We continue to assess the collectibility or impairment of each note on a periodic basis. Under the cost recovery method, we carry the discounted notes at the acquisition amount, less subsequent cash collections, until such time as collectibility of principal and interest is probable and the timing and amounts are estimable. Based upon closed or pending transactions (which include sales, refinancings, foreclosures and rights offerings), we have determined that certain notes are collectible for amounts greater than their carrying value. Accordingly, we are recognizing accretion income, on a prospective basis over the estimated remaining life of the loans, as the difference between the carrying value of the discounted notes and the estimated collectible value.

Allowance for Losses on Notes Receivable

        Management estimates the collectibility of notes receivable, by assessing the likelihood of ultimate realization of these receivables, including the current credit-worthiness of each borrower. Allowances are based on management's opinion of an amount that is adequate to absorb losses in the existing portfolio. The allowance for losses on notes receivable is established through a provision for loss based on management's evaluation of the risk inherent in the notes receivable portfolio, the composition of the portfolio, specific impaired notes receivable and current economic conditions. Such evaluation, which includes a review of notes receivable on which full collectibility may not be reasonably assured, considers among other matters, full realizable value or the fair value of the underlying collateral, economic conditions, historical loss experience, management's estimate of probable credit losses and other factors that warrant recognition in providing for an adequate allowance for losses on notes receivable. During the three and nine months ended September 30, 2003, we identified and recorded no losses and $1.5 million in losses on notes receivable, respectively, and during the three and nine months ended September 30, 2002, we identified and recorded $1.7 million and $4.8 million in losses on notes receivable, respectively. We will continue to monitor and assess these notes and changes in required reserves may occur in the future due to changes in the market environment.

Capitalized Costs

        We capitalize direct and indirect costs (including salaries, interest, real estate taxes and other costs) incurred in connection with redevelopment, initial capital expenditures, disposition capital expenditures, Capital Enhancement and Capital Replacement activities. Indirect costs that do not relate to the above activities, including general and administrative expenses, are charged to expense as incurred. The amounts capitalized depend on the volume, timing and costs of such activities. As a result, changes in volume, timing and costs of such activities may have a significant effect on our financial results if the costs being capitalized are not proportionately increased or reduced, as the case may be. Based on the level of capital spending during the nine months ended September 30, 2003, if capital activities had decreased during the period by 10%, we could have had additional operating expenses of between $1.6 million and $4.8 million. Additionally, if capital activities had increased during the period by 10%, we could have had lower operating expenses of between $1.6 million and $4.8 million. See further discussion under the heading "Capital Expenditures."

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Results of Operations

Comparison of the Three Months Ended September 30, 2003 to the Three Months Ended September 30, 2002

Net Income

        We recognized net income of $40.6 million and net income attributable to common stockholders of $13.7 million for the three months ended September 30, 2003, compared with net income of $46.3 million and net income attributable to common stockholders of $24.3 million for the three months ended September 30, 2002. The following paragraphs discuss our results of operations in detail.

Consolidated Rental Property Operations

        Our net income is primarily generated from the operations of our consolidated properties. The components within our total consolidated property operations are as follows:

Consolidated same store properties—consist of all conventional properties owned, stabilized and consolidated for at least one year as of the beginning of the most recent quarter and for the relevant comparable period.

Acquisition properties—consist of all consolidated properties owned less than one year as of the beginning of the most recent quarter. For purposes of this discussion, acquisition properties are principally comprised of those properties acquired in the August 2002 acquisition of certain New England area properties, or (the New England Properties Acquisition) and the August 2003 New York Property Acquisition.

Newly consolidated properties—consist of all properties consolidated for less than one year as of the beginning of the most recent quarter. We consolidate real estate partnerships once we have a controlling interest. For purposes of this discussion, newly consolidated properties include nine properties that were first consolidated in third quarter 2003, seven properties that were first consolidated in first quarter 2003 and 56 properties that were first consolidated in fourth quarter 2002.

Affordable properties—consist of all affordable properties (which are properties that benefit from governmental programs designed to provide housing for people with low or moderate incomes) owned, stabilized and consolidated for at least one year as of the beginning of the most recent quarter.

Redevelopment properties—consist of all consolidated properties where a substantial number of available units have been vacated for major renovations and have not been stabilized for at least one year as of the beginning of the most recent quarter and for the relevant comparable period.

Other properties—consist of all consolidated properties that are not multifamily properties (such as commercial properties, college housing, etc.).

Partnership expenses—consist of expenses incurred at the partnership level either directly or indirectly (such as partnership audit and tax expenses).

Property management expenses—consist of off-site expenses associated with the self-management of consolidated properties.

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        Consolidated rental and other property revenues from our consolidated properties totaled $377.4 million for the three months ended September 30, 2003, compared with $335.7 million for the three months ended September 30, 2002, an increase of $41.7 million, or 12.4%. The following table shows the components of consolidated rental and other property revenues for the three months ended September 30, 2003 and 2002 (in millions):

		Three Months Ended September 30, 2003		Three Months Ended September 30, 2002		Change 2003 vs 2002
Consolidated same store properties		$	286.4	$	291.2	$	(4.8	)
Acquisition properties			16.7		4.9		11.8
Newly consolidated properties			30.5		—		30.5
Affordable properties			27.3		27.9		(0.6	)
Redevelopment properties			11.7		8.1		3.6
Other properties			4.8		3.6		1.2
	Total	$	377.4	$	335.7	$	41.7

        As illustrated in the above table, the increase in consolidated rental and other property revenues was principally a result of the following:

•

$30.5 million of the increase related to operations of newly consolidated properties;



•

$11.8 million of the increase related to operations of acquisition properties; and



•

$4.8 million of an offsetting decrease related to a 1.7% decrease in consolidated same store revenues. See further discussion of same store results under the heading "Conventional Same Store Property Operating Results."

        Consolidated property operating expenses for our consolidated properties, consisting of on-site payroll costs, utilities, contract services, property management fees, turnover costs, repairs and maintenance, advertising and marketing, property taxes and insurance, totaled $166.4 million for the three months ended September 30, 2003, compared with $137.3 million for the three months ended September 30, 2002, an increase of $29.1 million or 21.2%. The following table shows the components of consolidated property operating expenses for the three months ended September 30, 2003 and 2002 (in millions):

		Three Months Ended September 30, 2003		Three Months Ended September 30, 2002		Change 2003 vs 2002
Consolidated same store properties		$	119.3	$	110.0	$	9.3
Acquisition properties			5.2		1.5		3.7
Newly consolidated properties			14.3		—		14.3
Affordable properties			13.6		12.1		1.5
Redevelopment properties			5.7		3.8		1.9
Other properties			3.4		2.5		0.9
Partnership expenses			0.8		3.2		(2.4	)
Property management expenses			4.1		4.2		(0.1	)
	Total	$	166.4	$	137.3	$	29.1

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        As seen from the above table, the increase in consolidated property operating expenses was principally a result of the following:

•

$14.3 million of the increase related to operations of newly consolidated properties;



•

$9.3 million of the increase related to a 8.5% increase in consolidated same store operating expense. See further discussion of same store results under the heading "Conventional Same Store Property Operating Results"; and



•

$3.7 million of the increase related to operations of acquisition properties.

Consolidated Investment Management Business

        Income from the consolidated investment management business, which is primarily earned from unconsolidated real estate partnerships of which we are the general partner, was $0.3 million for the three months ended September 30, 2003, compared to $2.3 million for the three months ended September 30, 2002, a decrease of $2.0 million or 87.0%. This decrease in income from the consolidated investment management business was principally a result of the following:

•

$3.7 million of the decrease related to insurance, of which $0.3 million was due to a reduction in claim losses in the property hazard program, offset by $4.0 million of an increase in general liability and worker's compensation premium expenses;



•

$2.8 million of the decrease related to an increase in the number of consolidated real estate partnerships, which required additional elimination of fee income and the associated property operating expense;



•

$3.1 million of an offsetting increase related to a surplus in health insurance program incurred but not reported claims liability charge as a result of an analysis of year-to-date claim activity; and



•

$0.9 million of an offsetting increase related to an income tax benefit resulting from losses recorded at our taxable REIT subsidiaries.

Consolidated General and Administrative Expenses

        Consolidated general and administrative expenses of $7.6 million for the three months ended September 30, 2003 increased $3.2 million, or 72.7%, compared to the $4.4 million of such expenses for the three months ended September 30, 2002. This increase was principally a result of the following:

•

$1.7 million of the increase related to increased professional fees for compliance with increasing and changing government and accounting requirements; and



•

$1.4 million of the increase primarily related to increased employee compensation and benefits.

Consolidated Provision for Losses on Notes Receivable

        Consolidated provision for losses on notes receivable was $1.7 million for the three months ended September 30, 2002 compared to no such losses for the three months ended September 30, 2003, a decrease of $1.7 million, or 100%. We continue to monitor loans made to affiliated partnerships, of which we are typically the general partner, and assess the collectibility of each note on a periodic basis.

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Consolidated Depreciation of Rental Property

•

Consolidated depreciation of rental property increased $15.2 million, or 22.5%, to $82.8 million for the three months ended September 30, 2003, compared to $67.6 million for the three months ended September 30, 2002. This increase was principally a result of the following:



•

$8.0 million of the increase related to depreciation of the newly consolidated properties;



•

$4.7 million of the increase related to depreciation of the acquisition properties; and



•

$1.7 million of the increase related to depreciable additions to same store properties.

Consolidated Interest Expense

        Consolidated interest expense, which includes the amortization of deferred financing costs, totaled $95.2 million for the three months ended September 30, 2003, compared with $76.8 million for the three months ended September 30, 2002, an increase of $18.4 million, or 24.0%. The increase was principally a result of the following:

•

$8.6 million of the increase related to interest on the debt of the newly consolidated properties;



•

$4.7 million of the increase related to the interest on additional property debt incurred in connection with the acquisition properties;



•

$2.5 million of the increase related to third quarter 2003 interest expense on the term loan entered into on May 30, 2003 whereby we borrowed $250 million from a syndicate of financial institutions (see Note 15 in the consolidated financial statements for additional information on this term Loan);



•

$1.4 million of the increase related to a refund of swap interest received in third quarter 2002 in connection with the sale of certain senior living facilities in second quarter 2002, which did not recur in 2003; and



•

$1.3 million of the increase related to the quarterly dividend payment on the Class S Preferred Stock issued on April 30, 2003, which is required to be classified as interest expense in accordance with Statement of Financial Accounting Standard No. 150, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity, or (SFAS 150). In addition, changes in the redemption value between reporting dates are required to be recorded as interest expense. In third quarter 2003, $0.25 million of interest expense was recorded for the change in the redemption value of the Class S Preferred Stock.

Consolidated Interest and Other Income

        Consolidated interest and other income decreased $8.2 million, or 61.7%, to $5.1 million for the three months ended September 30, 2003, compared with $13.3 million for the three months ended September 30, 2002. This decrease was principally a result of the following:

•

$3.8 million of the decrease related to a reduction in accretion income from $3.8 million for the three months ended September 30, 2002 to $0.05 million for the three months ended September 30, 2003, due to fewer completed transactions resulting in accretion in 2003 compared to 2002; and



•

$3.8 million of the decrease related to lower interest from general partner notes receivable, resulting from the consolidation of partnerships and therefore the elimination of interest income, as well as the collection of outstanding notes receivable.

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Equity in Losses of Unconsolidated Real Estate Partnerships

        Equity in losses of unconsolidated real estate partnerships totaled $1.8 million for the three months ended September 30, 2003, compared to $0.3 million for the three months ended September 30, 2002, an increase of $1.5 million. This increase in loss was principally the result of decreased earnings driven by lower property operating results than in the prior year, as well as the result of the purchase of equity interests in unconsolidated real estate partnerships owning better performing properties that resulted in these properties becoming consolidated and contributing to consolidated rental property revenues and expenses.

Minority Interest in Consolidated Real Estate Partnerships

        Minority interest in consolidated real estate partnerships totaled $1.7 million for the three months ended September 30, 2003, compared to $2.1 million for the three months ended September 30, 2002, a decrease of $0.4 million. This decrease was principally a result of decreased earnings driven by lower property operating results than in the prior year, thereby reducing the minority interest allocation, as well as a $1.2 million decrease related to minority partners' operating losses that we recognized (see Note 2 in the consolidated financial statements for further discussion).

Gain (loss) on Dispositions of Real Estate

        Gain on dispositions of real estate, primarily related to unconsolidated real estate partnerships, totaled $1.5 million for the three months ended September 30, 2003, compared to a loss of $4.3 million for the three months ended September 30, 2002, an increase of $5.8 million. Gains (losses) on properties sold are determined on a property by property basis and are not comparable year over year due to individual property differences. The sales in both periods are of properties that we consider to be inconsistent with our long-term investment strategy.

Impairment Loss on Investment in Unconsolidated Real Estate Partnerships

        Impairment loss on investment in unconsolidated real estate partnerships totaled $3.6 million for the three months ended September 30, 2002, compared to no such losses for the three months ended September 30, 2003, a decrease of $3.6 million. Impairment losses on properties held for sale or sold are determined on a property by property basis and are not comparable year over year due to individual property differences.

Distributions to Minority Partners in Excess of Income

        Distributions to minority partners in excess of income was $11.9 million for the three months ended September 30, 2003, compared to $4.3 million for the three months ended September 30, 2002, an increase of $7.6 million. When real estate partnerships consolidated in our financial statements make cash distributions in excess of net income, GAAP requires us, as the majority partner, to record a charge equal to the minority partners' excess of distribution over net income when the partnership is in a deficit equity position, even though we do not suffer any economic effect, cost or risk. This increase was principally a result of a higher level of distributions being made by the consolidated real estate partnerships as a result of increased refinancing activity, as well as the timing of operating distributions.

Discontinued Operations

        Income from discontinued operations was $27.5 million for the three months ended September 30, 2003, compared to $4.3 million for the three months ended September 30, 2002, a change of $23.2 million. The change in discontinued operations was primarily related to a net gain on disposals of $22.9 million for the three months ended September 30, 2003 compared to a net loss on disposals of $0.1 million for the three months ended September 30, 2002, a change of $23.0 million. Gains (losses) on properties sold are determined on a property by property basis and are not comparable year over year due to individual property differences. The properties sold, as well as the properties classified as held for sale, were considered by us to be inconsistent with our long-term investment strategy. See Note 11 in the consolidated financial statements for more details on discontinued operations.

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Comparison of the Nine Months Ended September 30, 2003 to the Nine Months Ended September 30, 2002

Net Income

        We recognized net income of $121.7 million and net income attributable to common stockholders of $47.7 million for the nine months ended September 30, 2003, compared with net income of $162.4 million and net income attributable to common stockholders of $91.0 million for the nine months ended September 30, 2002. The following paragraphs discuss our results of operations in detail.

Consolidated Rental Property Operations

        Our net income is primarily generated from the operations of our consolidated properties. The components within our total consolidated property operations are defined above. For purposes of this discussion:

Acquisition Properties are principally comprised of those properties acquired in the March 2002 acquisition of Casden Properties Inc. and certain related transactions, which we refer to collectively, as the Casden Merger, the properties acquired in the New England Properties Acquisition, and the property acquired in the New York Property Acquisition.

Newly Consolidated Properties include nine properties that were first consolidated in third quarter 2003, seven properties that were first consolidated in first quarter 2003 and 81 properties that were first consolidated in the second, third and fourth quarters 2002.

        Consolidated rental and other property revenues from our consolidated properties totaled $1,111.0 million for the nine months ended September 30, 2003, compared with $961.0 million for the nine months ended September 30, 2002, an increase of $150.0 million, or 15.6%. The following table shows the components of consolidated rental and other property revenues for the nine months ended September 30, 2003 and 2002 (in millions):

		Nine Months Ended September 30, 2003		Nine Months Ended September 30, 2002		Change 2003 vs 2002
Consolidated same store properties		$	778.9	$	816.0	$	(37.1	)
Acquisition properties			165.9		91.2		74.7
Newly consolidated properties			112.0		9.9		102.1
Affordable properties			13.1		13.0		0.1
Redevelopment properties			28.5		20.1		8.4
Other properties			12.6		10.8		1.8
	Total	$	1,111.0	$	961.0	$	150.0

        As illustrated in the above table, the increase in consolidated rental and other property revenues was principally a result of the following:

•

$102.1 million of the increase related to operations of newly consolidated properties;



•

$74.7 million of the increase related to operations of acquisition properties; and



•

$37.1 million of an offsetting decrease related to a 4.5% decrease in consolidated same store revenues. See further discussion of same store results under the heading "Conventional Same Store Property Operating Results."

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        Consolidated property operating expenses for our consolidated properties, consisting of on-site payroll costs, utilities, contract services, property management fees, turnover costs, repairs and maintenance, advertising and marketing, property taxes and insurance, totaled $486.0 million for the nine months ended September 30, 2003, compared with $378.3 million for the nine months ended September 30, 2002, an increase of $107.7 million or 28.5%. The following table shows the components of consolidated property operating expenses for the nine months ended September 30, 2003 and 2002 (in millions):

		Nine Months Ended September 30, 2003		Nine Months Ended September 30, 2002		Change 2003 vs 2002
Consolidated same store properties		$	320.9	$	295.7	$	25.2
Acquisition properties			61.8		34.2		27.6
Newly consolidated properties			54.4		4.9		49.5
Affordable properties			6.5		6.8		(0.3	)
Redevelopment properties			13.4		9.5		3.9
Other properties			9.7		7.0		2.7
Partnership expenses			6.0		8.7		(2.7	)
Property management expenses			13.3		11.5		1.8
	Total	$	486.0	$	378.3	$	107.7

        As seen from the above table, the increase in consolidated property operating expenses was principally a result of the following:

•

$49.5 million of the increase related to operations of newly consolidated properties;



•

$27.6 million of the increase related to operations of acquisition properties; and



•

$25.2 million of the increase related to a 8.5% increase in consolidated same store operating expense. See further discussion of same store results under the heading "Conventional Same Store Property Operating Results."

Consolidated Investment Management Business

        Income from the consolidated investment management business, which is primarily earned from unconsolidated real estate partnerships of which we are the general partner, was $11.2 million for the nine months ended September 30, 2003, compared to $15.4 million for the nine months ended September 30, 2002, a decrease of $4.2 million or 27.3%. This decrease in income from the consolidated investment management business was principally a result of the following:

•

$11.7 million of the decrease related to increased consolidated real estate partnerships, which required additional elimination of fee income and the associated property operating expense;



•

$3.0 million of the decrease related to insurance, of which $4.0 million was due to a reduction in claim losses in the property hazard program, offset by $7.0 million of an increase in general liability, worker's compensation and director and officer premium expenses;



•

$1.7 million of the decrease related to a net decrease in fees including: $3.3 million decrease in accounting and reporting fees due to a 2002 adjustment relating to identified collectibility of fees that had been previously reversed; $0.3 million decrease in fees earned for services provided to third parties due to a planned reduction in third party property management; offset by a $1.9 million increase in activity based fees related to syndication, acquisition and deferred asset management fees from closed transactions in 2003;



•

$2.3 million of the decrease related to amortization of hardware and software. In accordance with Statement of Position 98-1, Accounting for Computer Software Developed for or Obtained for Internal-Use, or SOP 98-1, costs related to software developed and/or obtained for internal use are capitalized and amortized using the straight-line method over an estimated useful life of five years. For the nine months

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ended September 30, 2003 and 2002, software development costs aggregating approximately $9.7 million and $5.0 million, respectively, were capitalized in accordance with SOP 98-1;

•

$1.5 million of the decrease related to additional amortization primarily due to the termination of certain management contracts acquired in the Casden Merger;



•

$14.2 million of an offsetting increase related to income tax benefits including: $8.0 million of an income tax valuation reserve reversal in first quarter 2003 (see Note 13 in the consolidated financial statements); and $6.2 million of an income tax benefit resulting from losses recorded at our taxable REIT subsidiaries; and



•

$1.7 million of an offsetting increase related to a reduction in certain reserves in second quarter 2003 due to the identified collectibility of fees previously reserved.

Consolidated General and Administrative Expenses

        Consolidated general and administrative expenses of $19.5 million for the nine months ended September 30, 2003 increased $7.1 million, or 57.3%, compared to the $12.4 million of such expenses for the nine months ended September 30, 2002. This increase was principally a result of the following:

•

$3.2 million of the increase related to increased professional fees for compliance with increasing and changing government and accounting requirements;



•

$2.7 million of the increase related to increased employee compensation and benefits primarily related to an increase in personnel at the corporate level, as well as promotion-related increases;



•

$0.4 million of the increase related to increased amortization of stock based compensation that was related to our adoption of the accounting provisions of Statement of Financial Accounting Standards No. 123, Accounting for Stock-Based Compensation, or SFAS 123 (for further information see Note 7 in the consolidated financial statements); and



•

$0.5 million of the increase related to travel expenses resulting from a Company-wide program of intensive site inspections for our 400 largest properties.

Consolidated Other Expenses

        Consolidated other expenses were $5.0 million for the nine months ended September 30, 2002 compared to no such expenses for the nine months ended September 30, 2003. For 2002, these expenses included the following:

•

$2.0 million relating to payments in settlement of claims asserted against us, including litigation and arbitration;



•

$1.1 million in legal reserves against contingent liabilities presented by pending litigation matters;



•

$1.0 million related to the write-off of costs related to potential acquisitions that were not completed; and



•

$0.9 million primarily related to severance and hiring costs, and costs associated with the transition of certain accounting functions from Greenville, South Carolina to our headquarters in Denver, Colorado.

Consolidated Provision for Losses on Notes Receivable

        Consolidated provision for losses on notes receivable was $1.5 million for the nine months ended September 30, 2003, compared to $4.8 million of such provision for losses for the nine months ended September 30, 2002, a decrease of $3.3 million, or 68.8%. We continue to monitor loans made to affiliated partnerships, of which we are typically the general partner, and assess the collectibility of each note on a periodic basis.

39

Consolidated Depreciation of Rental Property

        Consolidated depreciation of rental property increased $52.6 million, or 27.0%, to $247.7 million for the nine months ended September 30, 2003, compared to $195.1 million for the nine months ended September 30, 2002. This increase was principally a result of the following:

•

$22.9 million of the increase related to depreciation of the acquisition properties;



•

$24.0 million of the increase related to depreciation of the newly consolidated properties;



•

$2.8 million of the increase related to depreciable additions to same store properties; and



•

$2.8 million of the increase related to a second quarter 2002 adjustment to depreciation expense based on additional insight and new information obtained in connection with the finalization of the recording of the purchase price accounting related to the Oxford acquisition.

Consolidated Interest Expense

        Consolidated interest expense, which includes the amortization of deferred financing costs, totaled $283.5 million for the nine months ended September 30, 2003, compared with $234.9 million for the nine months ended September 30, 2002, an increase of $48.6 million, or 20.7%. The increase was principally a result of the following:

•

$25.8 million of the increase related to interest on the debt of the newly consolidated properties;



•

$20.2 million of the increase related to the interest on additional property debt incurred in connection with the acquisition properties; and



•

$1.3 million of the increase related to the quarterly dividend payment on the Class S Preferred Stock issued on April 30, 2003, which is required to be classified as interest expense in accordance with SFAS 150. In addition, changes in the redemption value between reporting dates are required to be recorded as interest expense. In third quarter 2003, $0.25 million of interest expense was recorded for the change in the redemption value of the Class S Preferred Stock.

Consolidated Interest and Other Income

        Consolidated interest and other income decreased $37.6 million, or 67.1%, to $18.4 million for the nine months ended September 30, 2003, compared with $56.0 million for the nine months ended September 30, 2002. This decrease was a result of the following:

•

$16.7 million of the decrease related to a reduction in accretion income from $19.3 million for the nine months ended September 30, 2002 to $2.6 million for the nine months ended September 30, 2003, due to fewer completed transactions resulting in accretion in 2003 compared to 2002;



•

$13.2 million of the decrease related to lower interest from general partner notes receivable, resulting from the consolidation of partnerships, and therefore the elimination of interest income, as well as the collection of outstanding notes receivable; and



•

$7.7 million of the decrease related to gain recognized in second quarter 2002 on the sale of certain tax-exempt bonds.

40

Equity in Earnings (Losses) of Unconsolidated Real Estate Partnerships

        Equity in losses of unconsolidated real estate partnerships totaled $6.6 million for the nine months ended September 30, 2003, compared to earnings of $2.4 million for the nine months ended September 30, 2002, a decrease of $9.0 million. This decrease was principally the result of the purchase of equity interests in unconsolidated real estate partnerships owning better performing properties that resulted in these properties becoming consolidated and contributing to consolidated rental revenues and expenses, as well as decreased earnings driven by lower property operating results than in the prior year.

Minority Interest in Consolidated Real Estate Partnerships

        Minority interest in consolidated real estate partnerships totaled $4.7 million for the nine months ended September 30, 2003, compared to $5.7 million for the nine months ended September 30, 2002, a decrease of $1.0 million. This decrease was principally a result of decreased earnings driven by lower property operating results than in the prior year, thereby reducing the minority interest allocation.

Gain on Dispositions of Real Estate

        Gain on dispositions of real estate, primarily related to unconsolidated real estate partnerships, totaled $2.7 million for the nine months ended September 30, 2003, compared to $4.5 million for the nine months ended September 30, 2002, a decrease of $1.8 million. Gains (losses) on properties sold are determined on a property by property basis and are not comparable year over year due to individual property differences. The sales in both periods are of properties that we consider to be inconsistent with our long-term investment strategy.

Impairment Loss on Investment in Unconsolidated Real Estate Partnerships

        Impairment loss on investment in unconsolidated real estate partnerships totaled $3.8 million for the nine months ended September 30, 2002, compared to no such losses for the nine months ended September 30, 2003, a decrease of $3.8 million. Impairment losses on properties held for sale or sold are determined on a property by property basis and are not comparable year over year due to individual property differences.

Distributions to Minority Partners in Excess of Income

        Distributions to minority partners in excess of income was $21.5 million for the nine months ended September 30, 2003, compared to $15.3 million for the nine months ended September 30, 2002, an increase of $6.2 million, or 40.5%. When real estate partnerships consolidated in our financial statements make cash distributions in excess of net income, GAAP requires us, as the majority partner, to record a charge equal to the minority partners' excess of distribution over net income when the partnership is in a deficit equity position, even though we do not suffer any economic effect, cost or risk. This increase was principally a result of a higher level of distributions being made by the consolidated real estate partnerships as a result of increased refinancing activity, as well as the timing of operating distributions.

41

Discontinued Operations

        Income from discontinued operations was $62.7 million for the nine months ended September 30, 2003, compared to $2.3 million for the nine months ended September 30, 2002, a change of $60.4 million. The change in discontinued operations was primarily related to a net gain on disposals of $66.9 million and $8.6 million of impairment loss on assets sold or held for sale in 2003, for a net total gain of $58.3 million for the nine months ended September 30, 2003 compared to a net loss on disposals of $10.4 million and $0.2 million of impairment loss on assets sold or held for sale in 2002, for a net total loss of $10.6 million for the nine months ended September 30, 2002, a change of $68.9 million. In second and third quarters of 2002, we incurred losses of approximately $16.6 million principally from the sale of certain senior living facilities, which we deemed as assets inconsistent with our long-term investment strategy. Gains (losses) on properties sold are determined on a property by property basis and are not comparable year over year due to individual property differences. The properties sold, as well as the properties classified as held for sale, were considered by us to be inconsistent with our long-term investment strategy. See Note 11 in the consolidated financial statements for more details on discontinued operations.

42

Conventional Same Store Property Operating Results

        We define "same store" properties as conventional properties in which our ownership interest exceeds 10% and operations are stabilized for over one year in the comparable periods of 2003 and 2002. To ensure comparability, the information for all periods shown is based on current period ownership. The following table summarizes the unaudited conventional rental property operations on a "same store" basis and reconciles them to "consolidated same store" operations, a component of consolidated rental property operations described in the above comparative discussions (dollars in thousands):

		Three Months Ended September 30,						Nine Months Ended September 30,
		2003			2002			2003			2002
Revenues:
	Our share of same store	$	284,793		$	288,673		$	790,532		$	823,701
	Minority partners' share of same store		30,143			31,226			83,874			89,237
	Our share of unconsolidated same store		(12,121	)		(28,672	)		(35,954	)		(84,334	)
	Newly consolidated properties		(16,395	)		—			(59,547	)		(12,638	)
Consolidated same store component of rental and other property revenues		$	286,420		$	291,227		$	778,905		$	815,966
Expenses:
	Our share of same store	$	118,846		$	109,813		$	329,157		$	302,747
	Minority partners' share of same store		12,637			11,923			33,823			32,294
	Our share of unconsolidated same store		(5,050	)		(11,734	)		(16,058	)		(34,527	)
	Newly consolidated properties		(7,130	)		—			(26,019	)		(4,799	)
Consolidated same store component of property operating expenses		$	119,303		$	110,002		$	320,903		$	295,715
Net Operating Income:
	Our share of same store	$	165,947		$	178,860		$	461,375		$	520,954
	Minority partners' share of same store		17,506			19,303			50,051			56,943
	Our share of unconsolidated same store		(7,071	)		(16,938	)		(19,896	)		(49,807	)
	Newly consolidated properties		(9,265	)		—			(33,528	)		(7,839	)
Consolidated same store component of Income from property operations		$	167,117		$	181,225		$	458,002		$	520,251
Same Store Statistics
	Properties		589			589			573			573
	Apartment units		164,578			164,578			159,810			159,810
	Average physical occupancy		93.0	%		93.5	%		91.9	%		93.2	%
	Average rent collected/unit/month	$	702		$	712		$	687		$	703

        Our share of same store net operating income decreased $12.9 million, or 7.2%, for the three months ended September 30, 2003 compared to the three months ended September 30, 2002. Revenues decreased $3.9 million, or 1.3%, primarily due to lower average rent (down $10 per unit) and lower occupancy (down 0.5%). Expenses increased by $9.0 million, or 8.2%, primarily due to: an increase of $3.0 million in expenses related to increasing occupancy, including marketing expenses, turnover and administration; $2.9 million in higher repairs and maintenance and landscaping services, in support of efforts to improve the physical appearance and condition of properties; and $1.5 million in higher utility expenses due to higher natural gas and water prices.

43

        Our share of same store net operating income decreased $59.6 million, or 11.4%, for the nine months ended September 30, 2003 compared to the nine months ended September 30, 2002. Revenues decreased $33.2 million, or 4.0%, primarily due to lower average rent (down $16 per unit), lower occupancy (down 1.3%), and increased bad debt due to higher resident default and eviction in 2003. Expenses increased by $26.4 million, or 8.7%, primarily due to: an increase of $10.3 million in turnover, marketing and administrative costs in 2003 related to focused efforts on making units ready to be occupied; $9.9 million in contract services and repairs and maintenance primarily driven by seasonal factors such as landscaping and snow removal due to more severe winter conditions in 2003 than in 2002; $5.4 million in utilities due to the increase in the cost of natural gas, electric and water and sewer; and $1.3 million in real estate tax expense due to increased rates and assessment values.

44

Funds From Operations

Funds From Operations, or FFO, is a non-GAAP financial measure that we believe, when considered with the financial data 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 and losses from extraordinary items, dispositions of depreciable real estate property, dispositions of real estate from discontinued operations, net of related income taxes, plus real estate related depreciation and amortization (excluding amortization of financing costs), including depreciation for unconsolidated real estate partnerships, joint ventures and discontinued operations. We calculate FFO based on the NAREIT definition, as further adjusted for minority interest in the Aimco Operating Partnership, plus amortization of intangibles and distributions to minority partners in excess of income. We calculate FFO (diluted) by subtracting redemption related preferred stock issuance costs and dividends/distributions on preferred stock/OP Units (net of preferred dividends/distributions relating to convertible securities the conversion of which is dilutive to FFO) and adding back the interest expense on mandatorily redeemable convertible preferred securities, the conversion of which is dilutive to FFO. FFO should not be considered an alternative to net income or net cash flows from operating activities, as calculated 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 nine months ended September 30, 2003 and 2002, our diluted FFO was as follows (dollars in thousands):

					Three Months Ended September 30,						Nine Months Ended September 30,
					2003(1)			2002(1)			2003(1)			2002(1)
Net Income					$	40,635		$	46,345		$	121,688		$	162,437
	Adjustments:
		Real estate depreciation, net of minority interest				75,294			59,519			223,733			172,225
		Real estate depreciation related to unconsolidated entities				6,289			8,815			19,331			26,022
		(Gain) loss on dispositions of real estate, net				(1,462	)		4,307			(2,738	)		(4,467	)
		Distributions to minority partners in excess of income				11,861			4,302			21,503			15,274
		Amortization of intangibles				1,276			1,154			4,716			3,194
		Discontinued operations:
			Real estate depreciation, net of minority interest			1,208			5,530			9,712			18,642
			(Gain) loss on dispositions of real estate, net of minority interest			(22,908	)		129			(66,930	)		10,432
			Distributions to minority partners in excess of income			(3,613	)		—			(4,650	)		1,321
			Income tax arising from disposals			806			(127	)		5,112			552
		Minority interest in Aimco Operating Partnership				3,665			6,979			13,444			23,644
Funds From Operations (FFO)					$	113,051		$	136,953		$	344,921		$	429,276
			Preferred stock dividends and distributions			(21,445	)		(15,397	)		(63,459	)		(40,376	)
			Redemption related preferred stock issuance costs			(5,490	)		—			(7,645	)		—
			Interest expense on mandatorily redeemable convertible preferred securities			247			365			741			882
Diluted Funds From Operations					$	86,363		$	121,921		$	274,558		$	389,782
Weighted average number of common shares and equivalents:
			Common shares and equivalents			93,049			92,735			92,889			84,842
			Preferred stock, preferred OP Units, and other securities convertible into common shares			2,995			9,025			4,273			12,551
			Common OP Units and equivalents			11,845			12,758			11,955			12,463
				Total		107,889			114,518			109,117			109,856

(1)

On October 1, 2003, NAREIT clarified its definition of FFO to include impairment losses, which previously had been added back to calculate

45

FFO. In the three months ended September 30, 2003, and effective for all prior periods presented, in accordance with this clarification we no longer add back impairment losses when computing FFO. As a result, FFO for the three months ended September 30, 2003 includes impairment losses of $0.6 million, and for the nine months ended September 30, 2003, includes an adjustment of $7.9 million to reflect this change. FFO for the three and nine months ended September 30, 2002 includes an adjustment of $3.6 million and $4.0 million, respectively, to reflect this change. Finally, as a result of the SEC's interpretation of Topic D-42, we have included in FFO redemption related preferred stock issuance costs in the three months ended September 30, 2003, and effective for all prior periods. Therefore, FFO for the three months ended September 30, 2003 includes issuance costs of $5.5 million and FFO for the nine months ended September 30, 2003 includes an adjustment of $2.2 million to reflect this change.

46

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 our cash flow from operations as determined by rental rates, occupancy levels and operating expenses related to our portfolio of properties, as well as cash flow from operations generated by our investment management business.

        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 economic recovery is slower than expected and the cash provided by operating activities no longer covers our short-term liquidity demands, we have additional means, such as short-term borrowing availability, proceeds from property sales and refinancing, 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 September 30, 2003, we had $130.1 million in cash and cash equivalents (including $3.4 million of cash and cash equivalents that is included within Assets Held for Sale), an increase of $30.5 million from December 31, 2002, which cash is principally from sales and refinancing transactions and has yet to be distributed or applied as paydown on our revolving credit facility. At September 30, 2003, we had $214.1 million of restricted cash (including $2.9 million of restricted cash that is included within Assets Held for Sale), primarily consisting of reserves and impounds held by lenders for bond sinking funds, capital expenditures, property taxes and insurance. In addition, cash, cash equivalents and restricted cash are held by partnerships that are not presented on a consolidated basis. 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 nine months ended September 30, 2003, our net cash provided by operating activities of $381.1 million was primarily due to operating income from our consolidated properties.

Investing Activities

        For the nine months ended September 30, 2003, our net cash provided by investing activities of $179.6 million related to proceeds received from the sales of properties, offset by investments in our existing real estate assets through capital expenditures and redevelopment (see further discussion on capital expenditures under the heading "Capital Expenditures").

        Although we hold all of our properties for investment, we sell properties when they do not meet our investment criteria or are located in areas that we believe do not justify our continued investment, in both cases, as compared to alternative uses for our capital. In the nine months ended September 30, 2003, we sold 51 consolidated properties and one consolidated land parcel for $479.2 million in proceeds. Additionally, we sold 23 unconsolidated properties for net proceeds of $6.3 million, which proceeds were included in our distributions received from investments in unconsolidated real estate partnerships.

        We are currently marketing for sale certain real estate properties that are inconsistent with our long-term investment strategies (as determined by management from time to time). Proceeds from 2003 dispositions are expected to be at levels above that of 2002, and are planned to be used to reduce debt and fund capital and other operating needs.

47

Financing Activities

        For the nine months ended September 30, 2003, net cash used in financing activities of $530.2 million related primarily to payments on our secured notes payable, payment of our dividends and redemptions of preferred stock (see Note 6 in the consolidated financial statements). These were offset by proceeds from mortgage refinancing, proceeds from the issuance of Class S Preferred Stock (see Note 5 in the consolidated financial statements) and Class T Preferred Stock (see Note 6 in the consolidated financial statements) and borrowings from a newly established term loan (see discussion below and Note 15 in the consolidated financial statements).

        During the nine months ended September 30, 2003, we refinanced or closed mortgage loans on 47 consolidated properties generating $346.5 million of proceeds from borrowings. With the proceeds from these loans we made repayments on the existing debt and paid transaction costs totaling $298.5 million. The remaining net proceeds of $48.0 million were used to repay existing short-term debt and for other corporate purposes. Each loan is non-recourse and is individually secured by one of 47 properties with no cross-collateralization. These mortgage loans do not include the $20.0 million mortgage loan related to the New York Property Acquisition. Further details on these mortgage loans are shown in the table below:

Mortgage Type	Loan Amount (in millions)		Term	Rate
Tax Exempt Variable Rate	$	23.6	30 year, non-fully amortizing bonds	3.44	%
Conventional Fixed Rate		26.2	Greater than 15 years, fully amortizing	5.24
Conventional Fixed Rate		205.6	5 - 15 years, partially amortizing	4.72
Conventional Floating Rate		43.7	5 year revolving credit facility(1)	2.82
Conventional Floating Rate		13.1	Less than 5 years	3.95
Affordable Fixed Rate		34.3	30 year, fully amortizing	2.55
Proceeds from borrowings	$	346.5		4.19	%

(1)

See Note 14 in the consolidated financial statements for further details on the revolving credit facility.

        In addition to the above, we closed mortgage loans on 25 unconsolidated properties for net proceeds of $10.5 million, which proceeds were included in our distributions received from investments in unconsolidated real estate partnerships, within investing activities, and were used to repay existing short-term debt and for other corporate purposes.

        On November 6, 2003, the Board of Directors declared a dividend of $0.60 per share for payment on November 28, 2003 to stockholders of record on November 20, 2003. This dividend represents a distribution of 91% of diluted AFFO (before deducting Capital Enhancements) and 70% of diluted FFO (before deducting the redemption related preferred stock issuance costs under Topic D-42 of $5.5 million) for the quarter ended September 30, 2003. The dividends paid or declared for the 12-month period ended September 30, 2003 total $3.06 per share, which represents a distribution of 107% of diluted AFFO (before deducting Capital Enhancements) and 85% of diluted FFO (before deducting the redemption related preferred stock issuance costs under Topic D-42 of $7.7 million) for that period. In November 2003, our Board of Directors reduced the quarterly cash divided to align the amount of the dividend with our current level of profitability.

48

Credit Facility and Term Loans

        On February 14, 2003, we and our lenders amended our revolving credit facility, which we refer to as the Revolver, to increase the available commitment, at our option, to $500 million (such commitment in excess of $445 million is not available until it has been syndicated) and extend the maturity date one year to July 31, 2005. In addition, we and our lenders amended the term loan that was entered into in March 2002 in connection with the acquisition of Casden Properties, Inc., which we refer to as the Casden Loan, to eliminate mandatory prepayments for the remainder of the term using proceeds from the issuance of equity securities, property sales or refinancing proceeds.

        On May 9, 2003, we and our lenders modified the Revolver and the Casden Loan. The modification permits us to redeem outstanding preferred stock with new issuances of common or preferred equity or with up to 75% of proceeds from property sales.

        On May 30, 2003, we borrowed $250 million from a syndicate of financial institutions pursuant to a term loan, which we refer to as the Term Loan. Proceeds were used to pay down the Revolver. All financial covenant requirements of the Term Loan are the same as the Revolver and the Casden Loan.

        On October 30, 2003, we and our lenders further modified the Revolver, the Casden Loan and the Term Loan. Modified terms are effective as of September 30, 2003. The modification included an increase in the percentage of Funds From Operations (as adjusted for (i) the add back of redemption related preferred stock issuance costs under Topic D-42 (see Note 16 in the consolidated financial statements), (ii) interest expense charges (or benefits) for minority interest marked-to-market adjustments if required under GAAP and (iii) non-cash loan amortization costs) permitted to be distributed from 88% to 90% for all quarters until the maturity of the loan agreement. This quarterly covenant is calculated based on trailing four quarters consistent with all other covenant calculations. See Note 15 in the consolidated financial statement for further details of the modifications on the Revolver, the Casden Loan, and the Term Loan. As of September 30, 2003, we were in compliance with all financial covenant requirements.

        At September 30, 2003 the weighted average interest rate of the Revolver was 3.77%, the balance outstanding was $160.0 million on the Revolver in addition to outstanding letters of credit of $12.0 million. The total commitment remained $445.0 million, as the additional commitment of $55.0 million was not yet syndicated at September 30, 2003. At September 30, 2003, the weighted average interest rate of the Casden Loan was 3.77% and the balance outstanding was $104.4 million. At September 30, 2003, the weighted average interest rate of the Term Loan was 3.89% and the balance outstanding was $250 million.

Future Capital Needs

        We expect to fund any future acquisitions, redevelopment and capital improvements principally with proceeds from property sales, short-term borrowings and operating cash flows. As of September 30, 2003, we had ten conventional properties with 5,327 units and two affordable properties with 467 units under redevelopment. Redevelopment expenditures for the ten conventional properties will require an estimated total investment (new redevelopment spending) of $428.0 million, of which approximately $51.7 million remains to be spent. Our share of the estimated total spending is $324.0 million, of which approximately $32.9 million remains to be spent.

        During the remainder of 2003, we have:

•

$19.1 million of scheduled maturities of property debt that we expect to refinance;



•

$31.2 million of scheduled principal amortization payments on property debt that we expect to pay with operating cash flows and proceeds from refinancing transactions and property sales; and



•

$264.4 million of short-term debt ($104.4 million on the Casden Loan and $160.0 million on the Revolver) that, although not required to be repaid, is expected to be repaid in part with operating cash flows and proceeds from refinancing transactions and property sales.

49

Capital Expenditures

        For the nine months ended September 30, 2003, we spent a total of $67.9 million on Capital Replacements (expenditures required to maintain the related asset) and $2.4 million on Capital Enhancements (expenditures that add a new feature or revenue source at a property). These amounts represent our share of the total spending on both consolidated and unconsolidated partnerships.

        Capital Replacements spending continued to increase over prior periods for two primary reasons: a general increase in spending to maintain our assets; and an increase in capitalized costs (both direct and indirect). In addition to Capital Replacements, we monitor Capital Enhancements, which we distinguish from Capital Replacements. Capital Enhancements are costs incurred to add additional rental square footage or a new revenue producing feature. For example, replacement of existing kitchen appliances is a Capital Replacement, however, if the same replacements are done in connection with an extensive remodeling project that is likely to generate higher rents, then they are characterized as a Capital Enhancement. Because the distinction between Capital Replacements and Capital Enhancements is not consistently applied across REITs and because there is a risk of partial substitution between Capital Replacements and Capital Enhancements, we monitor and report both Capital Replacements and Capital Enhancements and deduct both in our calculation of AFFO.

        The table below details our actual spending on Capital Replacements and Capital Enhancements based on a per unit and total dollar basis (based on approximately 157,000 ownership equivalent units) for the nine months ended September 30, 2003 and reconciles it to our Consolidated Statement of Cash Flows for the same period (in thousands, except per unit data).

		Capital Replacements Actual Cost Per Unit		Capital Enhancements Actual Cost Per Unit		Total Cost Per Unit		Capital Replacements Actual Cost			Capital Enhancements Actual Cost			Total Cost
Carpets		$	92	$	—	$	92	$	14,356		$	11		$	14,367
Flooring			23		—		23		3,650			—			3,650
Appliances			27		1		28		4,161			151			4,312
Blinds/shades			4		—		4		658			—			658
Furnace/air			28		—		28		4,328			11			4,339
Hot water heaters			6		—		6		993			—			993
Kitchen/bath			9		—		9		1,340			3			1,343
Exterior painting			20		—		20		3,213			9			3,222
Landscaping			16		1		17		2,550			144			2,694
Pool/exercise facilities			13		—		13		2,048			50			2,098
Computers, miscellaneous			19		3		22		3,038			370			3,408
Roofs			13		—		13		1,964			2			1,966
Parking lot			9		—		9		1,381			6			1,387
Building (electrical, elevator, plumbing)			55		—		55		8,643			—			8,643
Submetering			—		7		7		—			1,109			1,109
Capitalized payroll and other indirect costs			100		3		103		15,606			511			16,117
Total our share		$	434	$	15	$	449	$	67,929		$	2,377		$	70,306
	Plus minority partners' share of consolidated spending								7,832			425			8,257
	Less our share of unconsolidated spending								(5,141	)		(37	)		(5,178	)
Total spending per Consolidated Statement of Cash Flows								$	70,620		$	2,765		$	73,385

        For the nine months ended September 30, 2003, we spent a total of $18.6 million for initial capital expenditures, or ICE, which are expenditures at a property that have been identified, at the time the property is acquired, as expenditures to be incurred within a specified period of time following the acquisition, typically one year. In this period ICE relates primarily to the properties acquired in the Casden Merger and the New England Properties Acquisition. For the nine months ended September 30, 2003, we spent a total of $16.0 million for disposition capital

50

expenditures (see discussion below) and $66.3 million for redevelopment, which are expenditures that substantially upgrade the property. The following table reconciles our share of the total spending on both consolidated and unconsolidated partnerships to our Consolidated Statement of Cash Flows for the nine months ended September 30, 2003 (in millions):

		ICE			Disposition Capital Expenditures			Redevelopment			Total
Conventional Assets		$	10.4		$	11.4		$	59.7		$	81.5
Affordable Assets			8.2			4.6			6.6			19.4
Total our share			18.6			16.0			66.3			100.9
	Plus minority partners' share of consolidated spending		0.2			2.0			19.8			22.0
	Less our share of unconsolidated spending		(0.2	)		(2.0	)		(6.3	)		(8.5	)
Total spending per Consolidated Statement of Cash Flows		$	18.6		$	16.0		$	79.8		$	114.4

        In second quarter 2003, we began to account for a category of capital expenditures known as Disposition Capital Expenditures, which reports those capital expenditures made on properties sold, held for sale or identified as to be sold within one year. In third quarter 2003, we began to include in Disposition Capital Expenditures capital expenditures on certain of our affordable properties that are expected to be sold upon completion of regulatory requirements. We believe that capital expenditures on such properties are appropriately included in Disposition Capital Expenditures because of the regulatory framework under which these properties are financed or operated. Specifically, we are limited in the amount of proceeds that we are permitted to receive in distribution from the properties' operations. Amounts in excess of that limitation must be reinvested in the property or forfeited to the applicable government agency. We typically elect to spend amounts in excess of the distribution limit on property improvements, and we expect that upon a sale of the property that the expenditures will be recovered. Prior to these changes, these expenditures were accounted for as Capital Replacements and deducted in calculating AFFO. We believe that because these expenditures on sale and affordable properties are incurred to support the sale of these properties and are not part of our ongoing Capital Replacements, it is inappropriate for our AFFO to be diminished as a result. In the second and third quarters, a total of $16.0 million of capital expenditures on sale and affordable properties were eliminated from Capital Replacements and shown as Disposition Capital Expenditures. We will review this allocation each quarter and will re-allocate to Capital Replacements any items for those properties not sold or no longer identified as to be sold. In third quarter 2003 no amounts were reallocated to Capital Replacements.

        We funded the above capital expenditures with cash provided by operating activities, working capital reserves, and borrowings under our credit facility.

Off-Balance Sheet Arrangements

        We own general and limited partner interests in unconsolidated real estate partnerships, which interests were acquired through acquisitions, direct purchases and separate offers to other limited partners. Our total ownership interests in these unconsolidated real estate partnerships range from 1% to 50%. However, based on the provisions of the related partnership agreements, which grant varying degrees of control, we are not deemed to have control of these partnerships sufficient to require or permit consolidation for accounting purposes. Financial Accounting Standards Board issued Interpretation No. 46 "Consolidation of Variable Interest Entities," or FIN 46, that changes the criteria for consolidating entities. We are currently evaluating our treatment of these unconsolidated real estate partnerships under FIN 46, which we will adopt in fourth quarter 2003 (see Note 16 in the consolidated financial statements). There are no lines of credit, side agreements, financial guarantees, or any other derivative financial instruments related to or between our unconsolidated real estate partnerships and us. Accordingly, our maximum risk of loss related to these unconsolidated real estate partnerships is limited to the aggregate carrying amount of our investment in the unconsolidated real estate partnerships and any outstanding notes receivable as reported in our consolidated financial statements.

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Contractual Obligations

        This table summarizes information regarding contractual obligations and commitments (amounts in thousands):

	Remainder of 2003		2004		2005		2006 and 2007		2008 and thereafter		Total
Scheduled long-term debt maturities	$	50,333	$	182,547	$	277,037	$	877,308	$	4,320,004	$	5,707,229
Secured credit facility and term loans		—		104,387		160,000		—		250,000		514,387
Leases		1,305		5,181		4,130		7,583		—		18,199
Development fee payments(1)		2,500		10,000		10,000		12,500		—		35,000
Total	$	54,138	$	302,115	$	451,167	$	897,391	$	4,570,004	$	6,274,815

(1)

The development fee payments above were established in connection with the Casden Merger and our commitment as it relates to the Casden Development Company, LLC. We agreed to pay $2.5 million per quarter for five years (up to an aggregate amount of $50.0 million) to Casden Development Company, LLC as a retainer on account for redevelopment services on our assets.

        Additionally, we have made commitments in connection with the Casden Merger, for which the timing is not yet definite. These commitments are to:

•

purchase two properties currently under development, upon satisfactory completion and attainment of 60% occupancy, as follows:



•

Park La Brea



•

Phase 2—comprised of a total of 521 units for a minimum consideration of approximately $163 million, expected to close in late 2003 or early 2004;



•

Phase 3—comprised of a total of 610 units for a minimum consideration of approximately $199 million, expected to close in late 2004 or early 2005; and



•

Westwood—comprised of a total of 350 units for a minimum consideration of approximately $201 million, for which construction has not yet commenced.



•

provide a stand-by facility of $70 million in debt financing associated with the development of Park La Brea and Westwood (as of September 30, 2003, no funds have been drawn on this stand-by facility); and



•

invest up to $50 million for a 20% limited liability company interest in Casden Properties, LLC. As of September 30, 2003, we had invested $20.9 million. Casden Properties, LLC acts as general contractor for the entity that is developing Park La Brea and Westwood. In addition, Casden Properties, LLC intends to pursue new development opportunities in Southern California and other markets. We will have an option, but not an obligation, to purchase at completion all multifamily rental projects developed by Casden Properties, LLC.

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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 foreign currency exchange rate risk or commodity price risk, or any other material market rate or price risks. 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 and working capital primarily to fund short-term uses and acquisitions and generally expect to refinance such borrowings with cash from operating activities, property sales proceeds or long-term debt financings.

        We had $1,677.4 million of floating rate debt outstanding at September 30, 2003, which represented 26.5% of our total outstanding debt. Of the total floating debt, the major components were floating rate tax-exempt bond financing ($785.3 million), floating rate secured notes ($279.7 million), the Revolver ($160.0 million), the Casden Loan ($104.4 million), the Term Loan ($250.0 million), and the Class S Preferred Stock ($98.0 million). Based on this level of debt, an increase in interest rates of 1% would result in our income before minority interests and cash flows being reduced by $16.8 million on an annual basis. Historically, changes in tax-exempt interest rates have been at a ratio less than 1:1 with changes in taxable interest rates. Floating rate tax-exempt bond financing is benchmarked against the Bond Market Association Municipal Swap Index, or the BMA Index. Since 1981, the BMA Index has averaged 54.0% of the 10-year Treasury Yield. If this relationship continues, an increase in interest rates of 1% (0.54% in tax-exempt interest rates) would result in our income before minority interests and cash flows being reduced by only $13.2 million on an annual basis. As of September 30, 2002, based on our level of floating rate debt of $1,291.3 million, an increase in interest rates of 1% would have resulted in our income before minority interests and cash flows being reduced by $12.9 million on an annual basis. The potential reduction of income before minority interests and cash flows due to an increase in interest rates increased $3.9 million for the nine months ended September 30, 2003 compared to the nine months ended September 30, 2002, as a result of the additional debt related to our acquisitions and newly consolidated properties.

        The estimated aggregate fair value of our cash and cash equivalents, receivables, payables and short-term secured debt as of September 30, 2003 approximate their carrying value due to their relatively short-term nature. Management further believes that the fair value of our floating rate secured tax-exempt bond debt and floating rate secured long-term debt approximate their carrying values.

ITEM 4. Controls and Procedures

        (a)   Disclosure Controls and Procedures. The Company's management, with the participation of the Company's Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company's disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or (the Exchange Act)) as of the end of the period covered by this report. Based on such evaluation, the Company's Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, the Company's disclosure controls and procedures are effective.

        (b)   Internal Control Over Financial Reporting. There have not been any changes in the Company's internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

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PART II. OTHER INFORMATION

ITEM 1. Legal Proceedings

        See Note 4 in the consolidated financial statements in this Form 10-Q for information regarding legal proceedings, which information is incorporated by reference in this Item 1.

ITEM 2. Changes in Securities and Use of Proceeds

        From time to time during the quarter, 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 applicable conversion ratio for preferred OP Units. During the three months ended September 30, 2003, approximately 43,000 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.

ITEM 5. Other Information

        On October 30, 2003, we further modified the Revolver, the Casden Loan and the Term Loan. Modified terms are effective as of September 30, 2003. The modification included an increase in the percentage of Funds From Operations (as adjusted for (i) the add back of redemption related preferred stock issuance costs under Topic D-42, (ii) interest expense charges (or benefits) for minority interest marked-to-market adjustments if required under GAAP and (iii) non-cash loan amortization costs) permitted to be distributed from 88% to 90% for all quarters until the maturity of the loan agreement. This quarterly covenant is calculated based on trailing four quarters consistent with all other covenant calculations. Upon the effective date of the amendment, the margin on the Revolver LIBOR-based loans was amended to a range between 2.15% to 2.85%, the margin on the Casden Loan LIBOR-based loans was amended to 2.85% and the margin on the Term Loan LIBOR-based loans was amended to 2.85%. Also, the Revolver base rate loans were amended to a range between 0.65% to 1.35% based on the fixed charge coverage ratio, and the margin on the Casden Loan base rate loan was amended to 1.85% and the margin on the Term Loan base rate loan was amended to 1.15%. The amended financial covenants contained in the Revolver, the Casden Loan, and the Term Loan require us to maintain a ratio of debt to gross asset value of no more than 0.575:1.0 (which was increased from 0.55:1.0), a minimum interest coverage ratio of 2.0:1.0 (which was reduced from 2.25:1.0), a maximum total obligations to gross asset value ratio of 0.675:1.0 (which was increased from 0.65:1.0) and a minimum fixed charge coverage ratio of 1.40:1 (which was reduced from 1.50:1). With regard to the amended financial covenants, if the ratio of debt to gross asset value exceeds 0.55:1.0 for more than two consecutive fiscal quarters or if the ratio of total obligations to gross asset value exceeds 0.65:1.0 for more than two consecutive fiscal quarters, the applicable margin shall increase by 0.25%. Additionally, the modification allows (i) the add back of redemption related preferred stock issuance costs under Topic D-42 and (ii) interest expense charges (or benefits) from minority interest marked-to-market adjustments if required under GAAP to be excluded from interest expense and dividends when calculating coverage ratios.

        On November 6, 2003, our Board of Directors declared a quarterly dividend of $0.60 per share for payment on November 28, 2003 to stockholders of record on November 20, 2003. The Board of Directors reduced the quarterly dividend from $0.82 to $0.60 per share to align the amount with our current level of profitability.

54

ITEM 6. Exhibits and Reports on Form 8-K

(a)

Exhibits. The following exhibits are filed with this report¹:

EXHIBIT NO.
3.1	Charter (Exhibit 3.1 to Aimco's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2003, is incorporated herein by this reference)
3.2	Bylaws (Exhibit 3.2 to Aimco's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2001, is incorporated herein by this reference)
10.1	Form of First Amendment to Fifth Amended and Restated Credit Agreement, dated as of May 9, 2003, by and among Apartment Investment and Management Company, AIMCO Properties, L.P., AIMCO/Bethesda Holdings, Inc., NHP Management Company, Bank of America, N.A. and the Lenders listed therein
10.2	Form of Third Amendment to Fifth Amended and Restated Credit Agreement, dated as of September 30, 2003, by and among Apartment Investment and Management Company, AIMCO Properties, L.P., AIMCO/Bethesda Holdings, Inc., NHP Management Company, Bank of America, N.A. and the Lenders listed therein
10.3	Form of Fourth Amendment, dated as of May 9, 2003 to the Interim Credit Agreement, dated as of March 11, 2002, by and among AIMCO Properties, L.P., NHP Management Company, Apartment Investment and Management Company, Lehman Commercial Paper Inc., Lehman Brothers Inc., and each lender from time to time party thereto
10.4	Form of Sixth Amendment, dated as of September 30, 2003 to the Interim Credit Agreement, dated as of March 11, 2002, by and among AIMCO Properties, L.P., NHP Management Company, Apartment Investment and Management Company, Lehman Commercial Paper Inc., Lehman Brothers Inc., and each lender from time to time party thereto
10.5	Form of First Amendment to Term Loan Agreement, dated as of September 30, 2003, by and among Apartment Investment and Management Company, AIMCO Properties, L.P., AIMCO/Bethesda Holdings, Inc. and NHP Management Company, Bank of America, N.A., as Administrative Agent and the Lenders party thereto
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

(b)

Reports on Form 8-K filed during the quarter ended September 30, 2003:

¹

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

55

i.

Current Report on Form 8-K, dated July 22, 2003, relating to the sale of 6,000,000 shares of Class T Cumulative Preferred Stock;



ii.

Current Report on Form 8-K, dated August 13, 2003, relating to the litigation known as In Re Real Estate Associates Limited Partnership v Casden etal; and



iii.

Current Report on Form 8-K, dated August 20, 2003, relating to the borrowing of $250 million pursuant to a term loan.

56

APARTMENT INVESTMENT AND MANAGEMENT COMPANY

SIGNATURES

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

APARTMENT INVESTMENT AND MANAGEMENT COMPANY
By:	/s/  PAUL J. MCAULIFFE Paul J. McAuliffe Executive Vice President and Chief Financial Officer (duly authorized officer and principal financial officer)

Date: November 12, 2003

57

EX-10.1

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Exhibit 10.1

FIRST AMENDMENT TO
FIFTH AMENDED AND RESTATED
CREDIT AGREEMENT

Dated as of May 9, 2003

By and Among

Apartment Investment and Management Company,
AIMCO Properties, L.P.,
AIMCO/Bethesda Holdings, Inc., and
NHP Management Company,

as Borrowers,

Bank of America, N.A.,
as Administrative Agent and Letter of Credit Issuing Lender,

and
Lenders Listed Herein,
as Lenders

FIRST AMENDMENT TO
FIFTH AMENDED AND RESTATED CREDIT AGREEMENT

        This FIRST AMENDMENT TO FIFTH AMENDED AND RESTATED CREDIT AGREEMENT (this "Amendment") is dated as of May 9, 2003 (the "Amendment Effective Date") and entered into by and among APARTMENT INVESTMENT AND MANAGEMENT COMPANY, a Maryland corporation (the "REIT"), AIMCO PROPERTIES, L.P., a Delaware limited partnership ("AIMCO"), AIMCO/BETHESDA HOLDINGS, INC., a Delaware corporation ("AIMCO/Bethesda") and NHP MANAGEMENT COMPANY, a District of Columbia corporation ("NHP Management") (the REIT, AIMCO, AIMCO/Bethesda and NHP Management collectively referred to herein as "Borrowers"), BANK OF AMERICA, N.A. ("Bank of America"), as Administrative Agent (in such capacity, "Administrative Agent"), and Lenders party hereto, and is made with reference to that certain Fourth Amended and Restated Credit Agreement, dated as of March 11, 2002, as amended to date, including as amended by that certain Fifth Amended and Restated Credit Agreement, dated as of February 14, 2003, by and among Borrowers, each lender from time to time party thereto, BANK OF AMERICA, N.A., as Administrative Agent and Issuing Lender, FLEET NATIONAL BANK, as a Lender and Syndication Agent, and WACHOVIA BANK NA (formerly known as First Union National Bank), as a Lender and Documentation Agent, (the "Credit Agreement") (the Credit Agreement as amended by this Amendment, the "Amended Agreement"). Capitalized terms used in this Amendment shall have the meanings set forth in the Credit Agreement unless otherwise defined herein.

RECITALS

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

WHEREAS, pursuant to the Credit Agreement, the amendment set forth in Section 1.14 hereof, the amendments set forth herein in connection with approving the 2003 Term Loan (as defined herein), and the consent set forth in Section 5.E hereof, requires the consent of all Lenders, and all Lenders hereby consent thereto;

WHEREAS, pursuant to the Credit Agreement, all other amendments set forth herein require the consent of the Requisite Lenders, and the Requisite Lenders hereby consent thereto;

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

Section 1. AMENDMENTS TO THE CREDIT AGREEMENT

1.1   Amendment to Subsection 1.01: Defined Terms.

        A.    The defined term "Indebtedness" shall be amended by deleting clause (h) thereof in its entirety and replacing it with the following:

2

        (h)   all obligations (other than, in the case of the REIT, the obligation to acquire Partnership Units in exchange for shares of common Stock of the REIT) to purchase, redeem, or acquire any Stock of such Person or its Affiliates that, by its terms or by the terms of any security into which it is convertible or exchangeable, (x) is, or upon the happening of any event (other than a change of control event as may be set forth in certain securities of the REIT and/or AIMCO and which has not occurred prior to the date of determination hereunder) or the passage of time would be, required to be redeemed or repurchased by such Person or its Affiliates, including at the option of the holder, in whole or in part, or (y) has, or upon the happening of an event (other than the above change of control event as may be set forth in certain securities of the REIT and/or AIMCO and which has not occurred prior to the date of determination hereunder) or passage of time would have, a redemption or similar payment due, in each case of clauses (x) and (y) before the date which is the one (1) year anniversary of the then effective Maturity Date (excluding, however, any such preferred Stock which is convertible only into common Stock of the REIT),

        B.    The defined term "Net Disposition Proceeds" is deleted in its entirety and replaced with the following:

        "Net Disposition Proceeds" means, with respect to any Disposition of any Property (including as a result of casualty or condemnation and any purchase price refund in respect of any acquisition), Subsidiary, Management Entity or material property management contract, Cash payments (including any Cash received by way of deferred payment pursuant to, or by monetization of, a note receivable or otherwise, but only as and when so received) or Cash Equivalents received from such Disposition (which, in the case of non-wholly owned Persons, shall be limited to the Borrowers', the Guarantors' or any of their Subsidiaries' respective pro-rata share of such Disposition proceeds), net of any bona fide direct costs incurred in connection with such Disposition, including (i) income taxes reasonably estimated to be actually payable within two years of the date of such Disposition as a result of any gain recognized in connection with such Disposition and (ii) payment of the outstanding principal amount of, premium or penalty, if any, and interest on any Indebtedness (other than the Loans) that is secured by a Lien on the Stock or assets in question and that is required to be repaid under the terms thereof as a result of such Disposition.

        C.    The defined term "Net Indebtedness Proceeds" is deleted in its entirety and replaced with the following:

        "Net Indebtedness Proceeds" means, in respect of the incurrence of any Indebtedness (other than Debt Securities, Refinancing Indebtedness, or proceeds of Indebtedness permitted pursuant to Section 7.01) by Borrowers or any of their respective Subsidiaries, the proceeds received in Cash or Cash Equivalents by Borrowers or any of their respective Subsidiaries upon or substantially simultaneously with such incurrence (which, in the case of non-wholly owned Persons, shall be limited to the Borrowers', the Guarantors' or any of their Subsidiaries' respective pro-rata share of such Indebtedness proceeds), net of (a) the direct costs of such Indebtedness then payable by the recipient of

3

such proceeds (excluding amounts payable to Borrowers or any Affiliate of Borrowers) and (b) fees, underwriting discounts, premiums, unpaid accrued interest and other costs and expenses incurred in connection with such.

        D.    The defined term "Net Issuance Proceeds" is deleted in its entirety and replaced with the following:

        "Net Issuance Proceeds" means, in respect of any issuance of Stock or Partnership Units or Debt Securities (other than proceeds of Debt Securities which are Indebtedness permitted pursuant to Section 7.01) by Borrowers or any of their respective Subsidiaries, the proceeds in Cash or Cash Equivalents (or, for purposes of Section 7.14(h), in the case of any issuance of Partnership Units in exchange for Property, the fair market value of the Property so acquired) received by Borrowers or any of their respective Subsidiaries upon or substantially simultaneously with such issuance (which, in the case of non-wholly owned Persons, shall be limited to the Borrowers', the Guarantors' or any of their Subsidiaries' respective pro-rata share of such issuance proceeds), net of (a) the direct costs of such issuance then payable by the recipient of such proceeds (excluding amounts payable to Borrowers or any Affiliate of Borrowers), (b) sales, use and other taxes paid or payable by such recipient as a result thereof, and (c) in the case of the issuance of Indebtedness secured by any Property, the portion of such proceeds used to repay Indebtedness previously incurred and secured by the same Property.

        E.    The defined term "Net Refinancing Proceeds" is deleted in its entirety and replaced with the following:

        "Net Refinancing Proceeds" means the aggregate amount of any Refinancing Indebtedness incurred in excess of the sum of the aggregate principal amount (or if issued with original issue discount, an aggregate issue price) then outstanding of the Indebtedness being refinanced by such Refinancing Indebtedness (including any amounts satisfying AIMCO's obligations under the Contingent Acquisition Note), plus fees, underwriting discounts, premiums, unpaid accrued interest and other costs and expenses incurred in connection with such Refinancing Indebtedness; provided, that, in the case of non-wholly owned Persons, Net Refinancing Proceeds shall be limited to the Borrowers', the Guarantors' or any of their Subsidiaries' respective pro-rata share of such excess Refinancing Indebtedness.

        F.    The defined term "Ordinary Course of Business" is deleted in its entirety and replaced with the following:

        "Ordinary Course of Business" means, in respect of any transaction involving a Person, (i) the ordinary course of such Person's business, substantially as intended to be conducted by any such Person as of the First Amendment Effective Date, and (ii) undertaken by such Person in good faith and not for purposes of evading any covenant or restriction in any Contractual Obligation of such Person or for purposes of defrauding its creditors; provided, that, with respect to any Person (other than the Borrowers, any Material Entity or any Institutional Joint Venture) which is disposing of

4

all or substantially all of its Property, Ordinary Course of Business shall also include any Disposition consistent with clauses (i) and (ii) above and which is not otherwise in violation of this Agreement and the proceeds thereof are applied as required under this Agreement; provided, further, that in all events the Institutional Joint Ventures described on Schedule 1.01F and similar Institutional Joint Ventures permitted hereunder, shall be deemed to be in the Ordinary Course of Business for all purposes under this Agreement.

        G.    The following defined terms shall be inserted in the correct alphabetical location as follows:

        (i)    "2003 Term Loan" means a term credit facility provided to the Borrowers by a group of financial institutions (which may include some or all of the Lenders) and administered by Bank of America, as administrative agent, in an original principal amount not to exceed $250,000,000. The Net Indebtedness Proceeds of the 2003 Term Loan shall be applied to prepay Loans outstanding under this Agreement (without any corresponding reduction of the Commitments). The collateral for the 2003 Term Loan may consist of Liens on the Pledged Collateral, which Liens shall rank pari passu with the Lenders' Liens on such Pledged Collateral and the lender's Liens on the Casden Pledged Collateral under the Casden Loan Documents. The representations, warranties, covenants, events of default, remedies and other material terms of the 2003 Term Loan shall be substantially similar to the representations, warranties, covenants, events of default, remedies, and other material terms contained in this Agreement. The intercreditor relationship between the lenders under the 2003 Term Loan, the lenders under the Casden Loan and the Lenders shall be governed by an intercreditor agreement which shall be satisfactory to the Administrative Agent and the Requisite Lenders.

        (ii)   "First Amendment Effective Date" means the "Amendment Effective Date" as defined in that certain First Amendment to Fifth Amended and Restated Credit Agreement dated as of May 9, 2003, among Borrowers, Lenders and the Administrative Agent.

        (iii)  "Institutional Joint Venture" means a Permitted Joint Venture which either (a) involves a financial institution or sophisticated investor which is primarily contributing Cash to the Permitted Joint Venture in exchange for equity interests therein and the Borrowers, Guarantors or their Subsidiaries directly or indirectly contributing Property to the Permitted Joint Venture in exchange for equity interests therein, or (b) involves the Borrowers, Guarantors or their Subsidiaries and one or more other Persons and where the Permitted Joint Venture's Organization Documents provide at any time that such other Persons may receive preferential returns or distributions with respect to the assets and/or cash flow of such Permitted Joint Venture, or (c) is set forth on Schedule 1.01F attached hereto. Before (but in no event later than 10 Business Days before) the consummation of the formation of any new Institutional Joint Venture, Borrower shall provide the Administrative Agent with copies of the proposed Organization Documents and promptly after such formation provide Administrative Agent with executed copies of the final Organization Documents. Schedule 1.01F

5

attached hereto sets forth all entities which are Institutional Joint Ventures in existence or in negotiation on the First Amendment Effective Date.

        (iv)  "Permitted Joint Venture" means a joint venture, partnership, limited liability company or other similar arrangement, whether in corporate, partnership or other legal form (i) which is formed by or an interest in which is acquired by any of the Borrowers or its Subsidiaries in the Ordinary Course of Business, (ii) which complies with Section 7.09, and (iii) in which any of the Borrowers' or their Subsidiaries' equity or other beneficial interests is held at all times, directly or indirectly, by a Borrower and/or Guarantor.

        (v)   "Permitted Preferred Stock Redemptions" means the (A) purchase, redemption, retirement or other acquisition for value of any Redeemable Preferred Stock, in an amount up to 100% of the Net Issuance Proceeds from any issuance of common or preferred Stock by the Borrowers, the Guarantors or their Subsidiaries occurring after April 15, 2003 including the transactions set forth on Schedule 1.01G attached hereto, (B) purchase, redemption, retirement or other acquisition for value of any Redeemable Preferred Stock in an amount up to not more than 75% of the Net Disposition Proceeds from Dispositions occurring after April 15, 2003 including the transactions set forth on Schedule 1.01G attached hereto; provided, that, all such purchases or redemptions of Redeemable Preferred Stock under this clause (B) may not exceed $250,000,000 in the aggregate in any one calendar year and $400,000,000 in the aggregate in any two consecutive calendar years, or (c) purchase, redemption, retirement or other acquisition for value of any Redeemable Preferred Stock with Free Corporate Cash Flow.

        (vi)  "Redeemable Preferred Stock" means (i) the preferred Partnership Units and (ii) the preferred Stock, in each case of the Borrowers, the Guarantors or their Subsidiaries which is redeemable in accordance with its terms.

        (vii) "Total Pro Rata NOI" means, for any period, and without double counting any item, the Borrowers', the Guarantors' and their respective downstream Affiliates' pro-rata share of Net Operating Income, including the Borrowers', the Guarantors' and their respective downstream Affiliates' pro-rata share of Net Operating Income from unconsolidated Persons.

        (viii)   "Total Corporate NOI" means, for any period, and without double counting any item, the sum of Net Operating Income of the Borrowers, the Guarantors, their respective Subsidiaries and any Person that owns an apartment Property and in which the Borrowers, the Guarantors or their respective Subsidiaries owns an equity or beneficial interest.

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1.2   Amendment to Section 2.06 Prepayments; Mandatory Amortization.

        A.    A new Subsection 2.06(e) shall be added which shall read as follows:

        (e)   Notwithstanding the contrary provisions of this Subsection 2.06, the Borrowers may, in lieu of prepaying the Loans and paying accrued and unpaid interest thereon per Subsections 2.06(b) (iii), (iv), (v) and (vi) hereof, retain any Net Disposition Proceeds, Net Issuance Proceeds, Net Refinancing Proceeds or Net Indebtedness Proceeds, as applicable, upon receipt by the Borrowers, Guarantors or any of their Subsidiaries; provided, that, the Borrowers submit a certificate to Administrative Agent in the form of Exhibit N attached hereto certifying, among other things, that the Borrowers are in compliance with all of the covenants in this Agreement, and that there does not exist any Default or Event of Default immediately before and after the receipt of such proceeds.

1.3   Amendment to Subsection 6.15 Solvency.

        A.    Subsection 6.15 shall be deleted in its entirety and replaced with the following:

        Remain Solvent; provided, that, this Section 6.15 shall apply only to Borrower Parties and any Material Entities.

1.4   Amendment to Subsection 6.16(c) Additional Guarantors.

        A.    Subsection 6.16(c) shall be deleted in its entirety and replaced with the following:

        (c)   Additional Guarantors. Promptly upon (i) the formation by the Borrowers of any Person which is a Material Entity, (ii) any Subsidiary becoming a Material Entity or (iii) the acquisition by the Borrowers of any Subsidiary which constitutes a Material Entity after giving effect to such acquisition, in each case after the Closing Date, Borrowers shall (A) indicate whether such Person is a Revolver Guarantor or a Casden Guarantor, and (B) cause such Person (so long as such Person is not prohibited from doing so by law, Organization Documents or Contractual Obligations not prohibited by this Agreement) to deliver to Administrative Agent for the ratable benefit of the Lenders a guaranty of the Obligations in the form attached hereto as Exhibit H-1 or H-2, as applicable. Concurrently with the delivery of such guaranty, Borrowers shall deliver to Administrative Agent with respect to such Person the same documents and other instruments required to be delivered pursuant to clauses (iii) and (iv) of Section 4.01(a) and an opinion of counsel, in form and substance satisfactory to Administrative Agent. In all events, if all such agreements, documents and other instruments required to be delivered to Administrative Agent pursuant to this Section 6.16(c) have not been delivered prior to the date of the next required Compliance Certificate, then such items shall be delivered collectively at the same time a Compliance Certificate is delivered to Administrative Agent pursuant to Section 6.02(b). Additionally and notwithstanding any provision of this Section 6.16(c) to the contrary, in all events and at all times, Borrowers

7

shall cause the Guarantors and Borrowers to collectively represent not less than 75% of Total Pro Rata NOI for the immediately preceding fiscal quarter.

1.5   Amendment to Subsection 6.17 Unconsolidated Partnership Distributions.

        A.    Subsection 6.17 shall be deleted in its entirety and replaced with the following:

        Use its reasonable best efforts to cause any Person in which any Borrower, any Guarantor or any of their respective Subsidiaries holds an equity interest to make regular distributions of Net Operating Income of such Person, subject to compliance with applicable law and such Person's Organization Documents and in the Ordinary Course of Business.

1.6   Amendment to Subsection 7.01 Indebtedness.

        A.    Subsection 7.01(d) shall be deleted in its entirety and replaced with the following:

        (d)   Indebtedness of Borrowers, the Guarantors and their Subsidiaries (whether secured or unsecured) which is Recourse to Borrowers, the Guarantors or any of their Subsidiaries (but excluding Indebtedness under the Loan Documents and the 2003 Term Loan and the outstanding Indebtedness under the Casden Loan on the First Amendment Effective Date) in an aggregate principal amount not to exceed at any time an amount equal to the sum of (x) $250,000,000, plus (y) while the Lincoln Place Construction Financing is outstanding, the lesser of $151,000,000 or any portion of the Lincoln Place Construction Financing which constitutes Recourse Indebtedness. Such Recourse Indebtedness outstanding on the Closing Date is listed on Schedule 7.01(d);

        B.    Subsection 7.01(n) shall be amended by deleting the word "and" at the end of such subsection.

        C.    Subsection 7.01(o) shall be amended by deleting the period at the end of such subsection and replacing it with "; and".

        D.    A new Subsection 7.01(p) shall be added which shall read as follows:

        (p)   Indebtedness pursuant to the 2003 Term Loan, including any Guaranty Obligations in connection therewith.

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1.7   Amendment to Subsection 7.02 Liens and Negative Pledges.

        A.    Subsection 7.02(i) shall be deleted in its entirety and replaced with the following:

        (i)    Liens and Negative Pledges pursuant to (x) the Casden Credit Agreement and the other Casden Loan Documents, including, without limitation, the Liens securing the Contingent Acquisition Note, and (y) the 2003 Term Loan, subject, in the case of clause (y), to the execution of an intercreditor agreement satisfactory to the Administrative Agent and Requisite Lenders; and

        B.    Subsection 7.02(j) shall be deleted in its entirety and replaced with the following:

        (j)    Liens and Negative Pledges (x) pursuant to the Organization Documents of the Institutional Joint Ventures listed on Schedule 1.01F attached hereto and permitted under Section 7.05(f) hereof; provided, that, the Liens and Negative Pledges only encumber or restrict Liens on the Property owned by such Institutional Joint Venture and/or the equity interests in such Institutional Joint Venture; and provided, further, in all cases such equity interests are owned directly or indirectly by a Guarantor and/or Borrower, and (y) pursuant to customary provisions in the Organization Documents of any other Permitted Joint Venture; provided, that, the Liens only encumber the Property owned by such Permitted Joint Venture and the Negative Pledges only restrict Liens on the Property owned by such Permitted Joint Venture and the transferability of the managing member or general partner interest in such Permitted Joint Venture.

1.8   Amendment to Subsection 7.03(c) Fundamental Changes.

        A.    Subsection 7.03(c) shall be deleted in its entirety and replaced with the following:

        (c)   Issue any preferred Stock or preferred Partnership Units; provided, however, the REIT or any of its Subsidiaries may issue preferred Stock and/or preferred Partnership Units so long as (i) if such preferred Stock or preferred Partnership Units has any mandatory redemption feature or has a redemption feature which is exercisable at the option of the holder thereof (other than a change of control put feature), then the face amount of such preferred Stock or preferred Partnership Units shall be deemed Unsecured Debt for all purposes of this Agreement; and (ii) any distributions with respect thereto shall comply with the provisions of this Agreement (including, without limitation, Section 7.07).

1.9   Amendment to Subsection 7.05(f) Investments.

        A.    Subsection 7.05(f) shall be deleted in its entirety and replaced with the following:

        (f)    Investments in multi-family apartment projects (including those with de minimis commercial aspects) in fee simple or leasehold interests therein or partnership, joint venture interests or other Investments (including capital contributions or partner loans) in Persons that own, directly or indirectly, multi-family apartment projects

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(including those with de minimis commercial aspects); provided, however, Investments in Institutional Joint Ventures in addition to those listed on Schedule 1.01G shall not be permitted if and to extent any such additional Institutional Joint Venture causes or is expected to cause all Institutional Joint Ventures to generate more than 15% of Total Corporate NOI;

1.10 Amendment to Subsection 7.07(a) Restricted Payments.

        A.    Subsection 7.07(a) shall be deleted in its entirety and replaced with the following:

        (a)   (i) Declare or make any Restricted Payment or any distribution of any Properties (including cash, rights, obligations, partnership interests or Partnership Units, on account of any partnership interests, Partnership Units or Stock) to any Person (other than Borrowers or a Wholly-Owned Subsidiary), or (ii) purchase, redeem or otherwise acquire for value any of its partnership interests, Partnership Units or Stock, now or hereafter outstanding, from any Person (other than Borrowers or a Wholly-Owned Subsidiary) (all of the foregoing set forth in clauses (i) and (ii), collectively, being "distributions"), except for the following: (A) the exchange of common Stock of the REIT for Partnership Units; (B) if no Default or Event of Default exists under Section 8.01(a), (b) or (c) as a result of a breach of Section 7.14, then the Borrowers and all such Subsidiaries may make "distributions" during any four consecutive fiscal quarter period in an amount in the aggregate which does not exceed the greater of (1) (x) 88% of Funds From Operations for each four consecutive fiscal quarter period ending on June 30, 2003, September 30, 2003, December 31, 2003 and March 31, 2004, (y) 85% of Funds From Operations for each four consecutive fiscal quarter period ending on June 30, 2004 and September 30, 2004, or (z) 80% of Funds From Operations for each four consecutive fiscal quarter period ending on the last day of each fiscal quarter thereafter, or (2) such amount as may be necessary to maintain REIT Status ("distributions" under this clause (B) shall not include any "distributions" under clauses (A) or (C)); and (C) that if no Default or Event of Default exists, the Borrowers and all such Subsidiaries may undertake Permitted Preferred Stock Redemptions; provided, that, prior to making any Permitted Preferred Stock Redemptions, Borrowers shall first certify in writing to Administrative Agent (i) that the Net Issuance Proceeds or Net Disposition Proceeds referred to in the definition of "Permitted Preferred Stock Redemptions" have been, or will be, applied as and to the extent required under Section 2.06, and (ii) that the use of funds to make such Permitted Preferred Stock Redemptions shall not cause a Default or an Event of Default under this Agreement; provided, however, that nothing in this Section 7.07 shall prohibit (A) any Borrower or any Subsidiary of Borrower from making tenders for or otherwise acquiring for value any partnership interest, Partnership Units or Stock, now or hereafter outstanding, of any Borrower or any Subsidiary of any Borrower which were not issued by such acquiring Borrower or Subsidiary or (B) any distribution of Property by any Borrower Party, or any Affiliate thereof, in the Ordinary Course of Business and pursuant to such Borrower Party's or Affiliate's Organization Documents, including (x) any distribution of proceeds from Dispositions permitted under Section 7.04, (y) any distribution of proceeds from Dispositions in the Ordinary Course of Business and (z) any distribution by a non-Wholly-Owned Subsidiary to any

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Borrower, any of Borrowers' Subsidiaries or to any other Person holding an equity interest in such non-Wholly-Owned Subsidiary.

1.11 Amendment to Subsection 7.13 Limitations on Upstreaming.

        A.    Subsection 7.13 shall be deleted in its entirety and replaced with the following:

        7.13Limitations on Upstreaming.

        Agree to any restriction or limitation on the making of Restricted Payments from any Subsidiary of Borrower to a Borrower, the making of any loans or advances to Borrowers or any other Subsidiary of Borrowers, the repayment or prepayment of any Indebtedness owed by any Subsidiary of Borrowers to any Borrower or any other Subsidiary of Borrowers, or the transferring of assets from any Subsidiary of Borrowers to any Borrower or any other Subsidiary of Borrowers, except for such restrictions existing or by reason of (a) any restrictions existing under the Loan Documents or the Casden Loan Documents or any other Indebtedness permitted under Section 7.01 (except as provided in clause (f) below), (b) customary provisions in leases, subleases, licenses and other contracts restricting the assignment thereof, (c) applicable law, (d) Intra-Company Debt, (e) ordinary course restrictions in or contemplated by a Permitted Joint Venture's Organization Documents (subject to Section 6.17), (f) ordinary course restrictions in mortgage loan documents evidencing Indebtedness permitted under Section 7.01 and consisting of, among other things (i) provisions requiring funding and maintaining of reserves, (ii) restrictions on the transfer or assignment of the obligor's real or personal Property, and (iii) limitations on distributions of the obligor's net revenues, or (g) restrictions in contracts for sales or Dispositions of Property permitted hereby; provided, that, such restrictions relate only to the Property being disposed of.

1.12 Amendment to Subsection 7.14 Financial Covenants.

        A.    Subsection 7.14 shall be amended by adding a new paragraph at the end thereof which shall read as follows:

        Notwithstanding anything to the contrary contained herein, the Borrowers acknowledge and agree that in determining EBITDA and Net Operating Income for the Borrowers and their Subsidiaries, any items of net income (or net loss) on account of the operations of an Institutional Joint Venture shall not be included in the determination of EBITDA and/or Net Operating Income unless the Cash or Cash Equivalents related thereto have been distributed to Borrowers or their Wholly-Owned Subsidiaries which are Guarantors or are otherwise available to be so distributed without restriction, excluding ordinary course restrictions which limit distributions to a quarterly or more frequent basis.

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1.13 Amendment to Subsection 7.15 Change in Auditors.

        A.    Subsection 7.15 shall be deleted in its entirety and replaced with the following:

        7.15Change in Auditors.

        Change the certified public accountants auditing the books of Borrowers without the consent of Requisite Lenders, other than changes to Ernst & Young LLP, PricewaterhouseCoopers LLP and Deloitte & Touche LLP.

1.14 Amendment to Subsection 10.01 Amendments; Consents.

        A.    Subsection 10.01 shall be amended by adding the following paragraph at the end of such subsection:

        Notwithstanding any other provision contained herein to the contrary, any amendments or replacements of the Intercreditor Agreement in accordance with the First Amendment to Fifth Amended and Restated Credit Agreement dated as of the First Amendment Effective Date, among Borrowers, Lenders and the Administrative Agent shall only require the consent of the Administrative Agent and Requisite Lenders.

Section 2. CONDITIONS TO EFFECTIVENESS

        This Amendment shall become effective as of the Amendment Effective Date, at such time that all of the following conditions are satisfied:

        A.    Each Lender shall have executed this Amendment;

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

        C.    On or before the Amendment Effective Date, Borrowers have paid to Administrative Agent an amendment fee in an aggregate amount equal to the sum of 15 basis points times the Pro Rata Shares of Combined Commitments of each Lender who is party to this Amendment. The amendment fee will be distributed to each Lender who is a party to this Amendment in accordance with the foregoing;

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

        E.    Lenders and their respective counsel shall have received executed resolutions from Borrowers, Guarantors and Pledgors authorizing the entry into and performance of this

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Amendment and the Credit Agreement as amended, all in form and substance satisfactory to Administrative Agent and its counsel;

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

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

Section 3. BORROWERS' REPRESENTATIONS AND WARRANTIES

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

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

        3.2Authorization of Agreements. The execution and delivery of this Amendment and the performance of the Amended Agreement have been duly authorized by all necessary action on the part of Borrowers and the other parties delivering any of such documents, as the case may be. Except as disclosed on Schedule 3.2, the organizational documents of the Borrowers, Pledgors and Guarantors have not been modified in any material respect since February 14, 2003.

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

        3.4No Conflict. The execution, delivery and performance by Borrowers, Pledgors and Guarantors of this Amendment and the performance of the Amended Agreement by Borrowers, Pledgors and Guarantors does not and will not (i) violate any provision of any law or any governmental rule or regulation applicable to Borrowers, Pledgors, Guarantors or any of their Subsidiaries, the Organization Documents of Borrowers, Pledgors, Guarantors or any of their Subsidiaries or any order, judgment or decree of any court or other Governmental Authority binding on Borrowers, Pledgors, Guarantors or any of their Subsidiaries, (ii) conflict with, result

13

in a breach of or constitute (with due notice or lapse of time or both) a default under any Contractual Obligation of Borrowers, Pledgors, Guarantors or any of their Subsidiaries, (iii) result in or require the creation or imposition of any Lien upon any of the properties or assets of Borrowers, Pledgors, Guarantors or any of their Subsidiaries not otherwise permitted by the Amended Agreement, or (iv) require any approval of members or stockholders or any approval or consent of any Person under any Contractual Obligation of Borrowers, Pledgors, Guarantors or any of their Subsidiaries, except for such approvals or consents which have been or will be obtained on or before the Amendment Effective Date and such approvals or consents disclosed in writing to Lenders in accordance with Section 5.03 of the Credit Agreement.

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

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

        3.7Incorporation of Representations and Warranties From Credit Agreement. After giving effect to this Amendment, the representations and warranties contained in Section 5 of the Credit Agreement are and will be true, correct and complete in all material respects on and as of the Amendment Effective Date to the same extent as though made on and as of such date, except representations and warranties solely to the extent such representations and warranties specifically relate to an earlier date, in which case they were true, correct and complete in all material respects on and as of such earlier date.

Section 4. MISCELLANEOUS

4.1   Reference to and Effect on the Credit Agreement and the Other Loan Documents.

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

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

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

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

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

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

        4.5Entire Agreement. This Amendment embodies the entire agreement and understanding among the parties with respect to the amendment to the Credit Agreement, and supersedes all prior agreements and understandings, oral or written, relating thereto.

Section 5. ACKNOWLEDGEMENT AND CONSENT

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

        B.    Each Guarantor and each Pledgor hereby acknowledges that it has reviewed the terms and provisions of the Credit Agreement and this Amendment and consents to the amendment of the Credit Agreement effected pursuant to this Amendment. Each Guarantor hereby confirms that each Guaranty to which it is a party or otherwise bound, and each Pledgor hereby confirms that the Pledge Agreement to which it is a party or otherwise bound, will continue to guaranty or secure, as the case may be, to the fullest extent possible the payment and performance of all of the "Indebtedness" (as defined in the applicable Guaranty) or the "Secured

15

Obligations" (as defined in the applicable Pledge Agreement), as the case may be, including without limitation the payment and performance of all such "Indebtedness" or "Secured Obligations", as the case may be, with respect to the Obligations of Borrowers now or hereafter existing under or in respect of the Credit Agreement (as amended hereby) and the Notes defined therein.

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

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

        E.    Each Lender hereby acknowledges that it has received and reviewed the term sheet describing the material terms and provisions of the 2003 Term Loan which is attached hereto as Annex I ("2003 Term Loan Transaction"). Each Lender hereby consents to the 2003 Term Loan Transaction and all of the terms thereof and any modifications, supplements, replacements and/or amendments to the Loan Documents and the Casden Loan Documents which are necessary, in Administrative Agent's reasonable discretion to consummate and close the 2003 Term Loan Transaction other than modifications and/or amendments to any provision of the Credit Agreement that expressly requires the consent or approval of Supermajority Lenders or all Lenders pursuant to Section 10.01 of the Credit Agreement, except for such modifications and/or amendments (i) expressly set forth in this Amendment, (ii) providing that the Lenders' Liens on collateral and their recourse to the Guarantors will be pari passu with the respective Liens and recourse to the guarantors under the Casden Loan and the lenders under the 2003 Term Loan, and (iii) providing that the 2003 Term, Loan Casden Loan and Loans will be cross-defaulted; provided, that, the 2003 Term Loan Transaction closes and funds by no later than one hundred and eighty days after the date hereof and Requisite Lenders consent to such modifications, supplements, replacements and/or amendments, which consent shall not be unreasonably withheld, delayed or conditioned and in no event shall require the payment of any fee, consideration or premium to any Lender.

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Exhibit 10.2

THIRD AMENDMENT TO
FIFTH AMENDED AND RESTATED CREDIT AGREEMENT

among

Apartment Investment and Management Company,
AIMCO Properties, L.P.,
AIMCO/Bethesda Holdings, Inc., and
NHP Management Company,

as Borrowers,

Bank of America, N.A.,
as Administrative Agent and Letter of Credit Issuing Lender

Fleet National Bank,
as Syndication Agent

Wachovia Bank NA
as Documentation Agent

and

The Other Financial
Institutions Party Hereto

Dated as of September 30, 2003

Banc of America Securities LLC

and

Fleet Securities Inc.,
as Co-Lead Arrangers

and

Bank of America Securities LLC,
as Sole Bookrunner

THIRD AMENDMENT TO
FIFTH AMENDED AND RESTATED CREDIT AGREEMENT

        This THIRD AMENDMENT TO FIFTH AMENDED AND RESTATED CREDIT AGREEMENT (this "Amendment") is dated as of September 30, 2003 (the "Amendment Effective Date") and entered into by and among APARTMENT INVESTMENT AND MANAGEMENT COMPANY, a Maryland corporation (the "REIT"), AIMCO PROPERTIES, L.P., a Delaware limited partnership ("AIMCO"), AIMCO/BETHESDA HOLDINGS, INC., a Delaware corporation ("AIMCO/Bethesda") and NHP MANAGEMENT COMPANY, a District of Columbia corporation ("NHP Management") (the REIT, AIMCO, AIMCO/Bethesda and NHP Management collectively referred to herein as "Borrowers"), BANK OF AMERICA, N.A. ("Bank of America"), as Administrative Agent (in such capacity, "Administrative Agent"), and the Lenders party hereto, and is made with reference to that certain Fourth Amended and Restated Credit Agreement, dated as of March 11, 2002 ("Fourth Amended and Restated Credit Agreement"), as amended to date, including as amended by that certain Fifth Amended and Restated Credit Agreement, dated as of February 14, 2003, by and among Borrowers, each lender from time to time party thereto, BANK OF AMERICA, N.A., as Administrative Agent and Letter of Credit Issuing Lender, FLEET NATIONAL BANK, as a Lender and Syndication Agent, and WACHOVIA BANK NA (formerly known as First Union National Bank), as a Lender and Documentation Agent, and as amended by that certain First Amendment to Fifth Amended and Restated Credit Agreement, dated as of May 9, 2003 and that certain Second Amendment to Fifth Amended and Restated Credit Agreement, dated as of May 30, 2003 (the "Credit Agreement") (the Credit Agreement as amended by this Amendment, the "Amended Agreement"). Capitalized terms used in this Amendment shall have the meanings set forth in the Credit Agreement unless otherwise defined herein.

RECITALS

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

WHEREAS, pursuant to the Credit Agreement, certain of the amendments set forth herein require the consent of the Supermajority Lenders, and the Supermajority Lenders hereby consent thereto;

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

Section 1. AMENDMENTS TO THE CREDIT AGREEMENT

1.1   Amendment to Subsection 1.01 Defined Terms.

        A.    The defined terms "Adjusted Fixed Charges" and "Adjusted Fixed Charges Coverage Ratio" are deleted in their entirety.

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

        "Applicable Margin" means from and after the Effective Date the following amounts per annum, based upon the Fixed Charge Coverage Ratio as set forth in the most recent Compliance Certificate received by Administrative Agent pursuant to Section 6.02(b), plus the additional amount of the Leverage Premium, if applicable:

Applicable Margin (in basis points per annum)
Pricing Level	Fixed Charge Coverage Ratio	Offshore Rate +	Base Rate +
1	³ 2.00:1	215	65
2	³ 1.85:1 but < 2.00:1	240	90
3	³ 1.65:1 but < 1.85.00:1	270	120
4	< 1.65:1	285	135

        The Applicable Margin for all periods prior to the Revolving Commitment Termination Date shall be in effect from the date the most recent Compliance Certificate is received by Administrative Agent to but excluding the date the next Compliance Certificate is received; provided, however, that if Borrowers fail to timely deliver the next Compliance Certificate, the Applicable Margin from the date such Compliance Certificate was due to but excluding the date such Compliance Certificate is received by Administrative Agent shall be the highest pricing level set forth above, and, thereafter, the pricing level indicated by such Compliance Certificate when received.

        In the event that the Maturity Date is extended past the Revolving Commitment Termination Date pursuant to Section 2.13, for all periods after the Revolving Commitment Termination Date, the Applicable Margin for Base Rate Loans shall be 135 basis points per annum, plus the additional amount of the Leverage Premium, if applicable, and the Applicable Margin for Offshore Rate Loans shall be 285 basis points per annum, plus the additional amount of the Leverage Premium, if applicable.

        C.    The defined term "Funds From Operations" is deleted in its entirety and replaced with the following:

        "Funds From Operations" means, with respect to Borrowers and their Subsidiaries on a consolidated basis, net income calculated in accordance with GAAP, excluding gains or losses from debt restructuring and sales of property, plus real estate depreciation and amortization (excluding amortization of financing costs), plus amortization associated with the purchase of property management companies, and after adjustments for unconsolidated

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partnerships and joint ventures (with adjustments for unconsolidated partnerships and joint ventures calculated to reflect funds from operations on the same basis) together with adjustments for the non-cash deferred portion of any income tax provision for unconsolidated subsidiaries and the payment of dividends on preferred Stock, as interpreted by the National Association of Real Estate Investment Trusts in its March, 1995, White Paper on Funds From Operations; provided, however, the following shall be excluded when calculating "Funds From Operations": (i) non-cash adjustments for preferred Stock issuance costs, (ii) non-cash adjustments for loan amortization costs, and (iii) interest expense charges (or benefits) for minority interest marked-to-market adjustments arising under Statement of Financial Accounting Standards No. 150 of the Financial Accounting Standards Board ("FAS 150") as interpreted under GAAP.

        D.    The defined term "Gross Asset Value" is deleted in its entirety and replaced with the following:

        "Gross Asset Value" means as of any date of determination, the sum of the following, determined for Borrowers, the Guarantors and their respective Subsidiaries:

        (i)    Cash (including Restricted Cash) and Cash Equivalents of both consolidated and unconsolidated Persons, which Cash and Cash Equivalents are owned, directly or indirectly, by Borrowers, the Guarantors or their respective Subsidiaries as of such date of determination;

        (ii)   GP Loans valued at net realizable value as of such date of determination determined in accordance with GAAP;

        (iii)  with respect to all real estate assets wholly or partially owned by such Person(s) throughout the most recent four calendar quarters ending on or prior to such date of determination (other than Real Property Assets Under Development), the Adjusted Total NOI attributable to such real estate assets for such four quarter period divided by 8.75%;

        (iv)  with respect to all real estate assets wholly or partially owned by such Person(s) on such date of determination, but acquired less than four calendar quarters but at least one calendar quarter preceding such date of determination (other than Real Property Assets Under Development), the Adjusted Total NOI attributable to such real estate assets for the number of full calendar quarters that such Person(s) owned such assets measured on an annualized basis and divided by 8.75%;

        (v)   with respect to all real estate assets owned by such Person(s) on such date of determination, but acquired less than one calendar quarter preceding such date of determination (other than Real Property Assets Under Development), 95% of the purchase price paid by such Person(s) for such assets;

        (vi)  the gross book value of Real Property Assets Under Development as of such date of determination; and

        (vii) an amount equal to 400% of Management EBITDA for the four consecutive fiscal quarter period preceding such date of determination.

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        E.    The defined term "Indebtedness" is deleted in its entirety and replaced with the following:

        "Indebtedness" of any Person means without duplication, (a) all indebtedness for borrowed money, (b) all obligations issued, undertaken or assumed as the deferred purchase price of Property or services, (c) all direct or contingent obligations with respect to surety bonds, letters of credit, bankers' acceptances and similar instruments (in each case, to the extent material or noncontingent), (d) all obligations evidenced by notes, bonds, debentures or similar instruments, including obligations so evidenced incurred in connection with the acquisition of Properties, (e) all indebtedness created or arising under any conditional sale or other title retention agreement, or incurred as financing, in either case with respect to Properties acquired by the Person (even though the rights and remedies of the seller or bank under such agreement in the event of default are limited to repossession or sale of such properties), (f) all Capital Lease Obligations, (g) all net obligations with respect to Swap Agreements, (h) all obligations (other than, in the case of the REIT, the obligation to acquire Partnership Units in exchange for shares of common Stock of the REIT) to purchase, redeem, or acquire any Stock of such Person or its Affiliates that, by its terms or by the terms of any security into which it is convertible or exchangeable, (x) is, or upon the happening of any event (other than a change of control event as may be set forth in certain securities of the REIT and/or AIMCO which has not occurred prior to the date of determination hereunder) or the passage of time would be, required to be redeemed or repurchased by such Person or its Affiliates, including at the option of the holder, in whole or in part, or (y) has, or upon the happening of an event (other than the above change of control event as may be set forth in certain securities of the REIT and/or AIMCO which has not occurred prior to the date of determination hereunder) or passage of time would have, a redemption or similar payment due, in each case of clauses (x) and (y) before the date which is the one (1) year anniversary of the then effective Maturity Date (excluding, however, any such preferred Stock which is convertible only into common Stock of the REIT), (i) any direct or contingent obligations or liabilities under any equity forward agreements or transactions or under any similar arrangements or transactions, (j) all indebtedness referred to in clauses (a) through (i) above secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien upon or in Properties (including accounts and contract rights) owned by such Person, even though such Person has not assumed or become liable for the payment of such Indebtedness, and (k) all Guaranty Obligations in respect of indebtedness or obligations of others of the kinds referred to in clauses (a) through (i) above. "Indebtedness" shall also include such Person's share of the Indebtedness of any partnership or joint venture in which such Person, directly or indirectly, holds any interest, and any direct or indirect Recourse or contingent obligations of such Person with respect to Indebtedness of such partnership or joint venture in excess of its proportionate share. Solely for purposes of Section 7.14 only, "Indebtedness" shall exclude Intra-Company Debt, security deposits, accounts payable and accrued liabilities, any prepaid rent (as such terms are defined under GAAP) and that portion of the Contingent Acquisition Note, if any, which is not required under GAAP to be shown as indebtedness of any Borrower or any of their Subsidiaries at any time (including in the event of any acceleration thereof). Notwithstanding the foregoing, "Indebtedness" shall only include the net obligations of the REIT, AIMCO and NAPICO under the REAL Litigation Settlement Agreement, which shall be calculated quarterly based on the sum of (x) the difference of (A) $25,000,000 less (B) an amount equal to the product of (1) the then remaining number of shares

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of Cash Deposit Stock held by the REIT or an Affiliate of the REIT in escrow times (2) the average closing share price of such Cash Deposit Stock on the NYSE over the 21 trading day period immediately prior to each quarter-end, and (y) the difference of (A) (without duplication) the outstanding NAPICO Notes and the REAL Litigation Guaranty less (B) an amount equal to the product of (1) the then remaining number of shares of Mirror Notes Stock held by NAPICO or an Affiliate of NAPICO as pledgee times (2) the average closing share price of such Mirror Notes Stock on the NYSE over the 21 trading day period immediately prior to each quarter-end. In all events, the net obligations of the REIT, AIMCO and NAPICO under the REAL Litigation Settlement Agreement shall not be less than zero.

        F.    The defined term "Interest Expense" is deleted in its entirety and replaced with the following:

        "Interest Expense" means, for any Person and for any period, without double counting any item, the sum of (x) gross interest expense paid in, incurred or accrued during such period by such Person (including all commissions, discounts, fees and other charges in connection with standby letters of credit and similar instruments), including any amounts as capitalized interest, plus (y) dividends paid in, incurred or accrued during such period by such Person with respect to Trust Based Convertible Preferred Securities, plus (z) the portion of the upfront costs and expenses for Swap Agreements entered into by such Person (to the extent not included in gross interest expense) fairly allocated to such Swap Agreements as expenses for such period, as determined for such Person in accordance with GAAP; provided that all interest expense accrued by Borrowers and their respective Subsidiaries during such period, even if not payable on or before the Maturity Date, shall be included with "Interest Expense". Notwithstanding the foregoing, "Interest Expense" shall not include (i) amortization of loan costs and interest accrued under any Intra-Company Debt or (ii) interest expense charges (or benefits) from minority interest marked-to-market adjustments arising under FAS 150 as interpreted under GAAP.

        G.    The following defined terms shall be inserted in the correct alphabetical location as follows:

        "Leverage Premium" means, upon the Borrowers' election of a Temporary Leverage Increase for more than two consecutive quarters, an additional 25 basis points per annum increase in the Applicable Margin. The Leverage Premium shall be in effect from the date the Compliance Certificate in which the Borrowers have elected a Temporary Leverage Increase for more than two consecutive quarters is received by Administrative Agent to but excluding the date the next Compliance Certificate in which the Borrowers do not elect a Temporary Leverage Increase is received by Administrative Agent.

        "Mirror Notes" means the indemnity obligations of The Casden Company, a California corporation ("The Casden Company"), to NAPICO, which may be evidenced by certain non-recourse promissory notes issued by The Casden Company or one of its Affiliates to NAPICO or one of its Affiliates, which will have the same interest rate and maturity schedule as the NAPICO Notes.

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        "REAL Litigation Settlement Agreement" means that certain Settlement Agreement, dated as of August 12, 2003, by and among the REIT, AIMCO, National Partnership Investment Corp., a California corporation ("NAPICO"), Cerberus Partners, L.P., a Delaware limited partnership, XYZ Holdings, LLC, a Delaware limited liability company, Alan I. Casden, an individual, The Casden Company, a California corporation and Casden Investment Corp., a California corporation with respect to the settlement of In re Real Estate Associates Limited Partnership Litigation, CV 98-7035 DDP, United States District Court, Central District of California (the "REAL Litigation").

        "REAL Litigation Settlement Obligations" means, collectively, (i) Loans in the aggregate principal amount of $25,000,000 which were used by the REIT or one of its Affiliates to make a cash deposit in escrow for the benefit of the plaintiffs of the REAL Litigation (the "Cash Deposit"), and (ii) certain promissory notes made by NAPICO in the aggregate amount of $35,000,000 in favor of the plaintiffs of the REAL Litigation (the "NAPICO Notes") and that certain Guaranty made by AIMCO in favor of the plaintiffs of the REAL Litigation with respect to the payment and performance of the NAPICO Notes (the "REAL Litigation Guaranty").

        "REAL Litigation Settlement Pledged Stock" means, collectively, (i) 531,915 shares of common Stock of the REIT placed in escrow by The Casden Company for release to the REIT in connection with the Cash Deposit (the "Cash Deposit Stock"), as such number of shares may be reduced from time to time pursuant to the REAL Litigation Settlement Agreement, and (ii) 744,681 shares of common Stock of the REIT (plus up to 60,000 additional shares for accrued interest) pledged by The Casden Company or one of its Affiliates to NAPICO to secure the payment of the Mirror Notes (the "Mirror Notes Stock") as such number of shares may be reduced from time to time pursuant to the REAL Litigation Settlement Agreement.

        "Temporary Leverage Increase" means, upon the Borrowers' election by indicating their election in writing on the quarterly Compliance Certificate delivered to Administrative Agent pursuant to Section 6.02(b), an increase in the ratios set forth in either Section 7.14(e) or (f). A Temporary Leverage Increase shall be in effect for the fiscal quarter elected by the Borrowers on the Compliance Certificate.

1.2   Amendment to Section 1.03 Accounting Terms.

        A.    Subsection 1.03 shall be deleted in its entirety and replaced with the following:

        (a)   All accounting terms not specifically or completely defined in this Agreement shall be construed in conformity with, and all financial data (including financial ratios and other financial calculations but excluding financial statements) required to be submitted by this Agreement shall be prepared in conformity with, GAAP as in effect on September 30, 2003, except as otherwise specifically prescribed herein.

        (b)   If at any time any change in GAAP would affect the computation of any financial ratio or requirement set forth in this Agreement, and either Borrowers, Administrative Agent or Requisite Lenders shall so request, Administrative Agent, Lenders and Borrowers shall negotiate in good faith to amend such ratio or requirement to preserve the original intent thereof

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in light of such change in GAAP (subject to the approval of Requisite Lenders, Administrative Agent and Borrowers); provided, that, until so amended, such ratio or requirement shall continue to be computed in accordance with GAAP prior to such change therein.

1.3   Amendment to Section 6.02 Certificates, Notices and Other Information.

        A.    Subsection 6.02(b) shall be amended by deleting clause (1) thereof in its entirety and replacing it with the following:

        (1)   a duly completed Compliance Certificate signed by a Responsible Officer of Borrowers, with such supporting information as may be requested by Administrative Agent, including a statement as to whether any change in GAAP or in the application thereof has occurred since September 30, 2003, and, if any change has occurred, specifying the effect of such change on the financial statements accompanying such Compliance Certificate and setting forth a certified reconciliation between calculations of the financial ratios or requirements made before and after giving effect to such change in GAAP.

1.4   Amendment to Section 7.05 Investments.

        A.    Subsection 7.05 shall be amended by deleting the word "and" at the end of clause (m) thereof, deleting the period from the end of clause (n) thereof and replacing it with "; and" and adding a new clause (o) which will read as follows:

        (o)   Investments in the Mirror Notes and the REAL Litigation Settlement Pledged Stock securing the Mirror Notes required pursuant to the REAL Litigation Settlement Agreement.

1.5   Amendment to Section 7.07 Restricted Payments.

        A.    Subsection 7.07 shall be deleted in its entirety and replaced with the following:

        7.07Restricted Payments.

        (a)   (i) Declare or make any Restricted Payment or any distribution of any Properties (including cash, rights, obligations, partnership interests or Partnership Units, on account of any partnership interests, Partnership Units or Stock) to any Person (other than Borrowers or a Wholly-Owned Subsidiary), or (ii) purchase, redeem or otherwise acquire for value any of its partnership interests, Partnership Units or Stock, now or hereafter outstanding, from any Person (other than Borrowers or a Wholly-Owned Subsidiary) (all of the foregoing set forth in clauses (i) and (ii), collectively, being "distributions"), except for the following: (A) the exchange of common Stock of the REIT for Partnership Units; (B) if no Default or Event of Default exists under Section 8.01(a), (b) or (c)as a result of a breach of Section 7.14, then the Borrowers and all such Subsidiaries may make "distributions" during any four consecutive fiscal quarter period in an amount in the aggregate which does not exceed the greater of (1) 90% of Funds From Operations for each four consecutive fiscal quarter period ending on the last day of each fiscal quarter, or (2) such amount as may be necessary to maintain REIT Status ("distributions" under this clause (B) shall not include any "distributions" under clauses (A) or (C)); (C) that if no

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Default or Event of Default exists, the Borrowers and all such Subsidiaries may undertake Permitted Preferred Stock Redemptions; provided, that, prior to making any Permitted Preferred Stock Redemptions, Borrowers shall first certify in writing to Administrative Agent (i) that the Net Issuance Proceeds or Net Disposition Proceeds referred to in the definition of "Permitted Preferred Stock Redemptions" have been, or will be, applied as and to the extent required under Section 2.06, and (ii) that the use of funds to make such Permitted Preferred Stock Redemptions shall not cause a Default or an Event of Default under this Agreement; and (D) (1) the exercise by the Borrowers of their right as a secured party to take possession of the Mirror Notes Stock after a default under the Mirror Notes Stock pledge agreement and in accordance with the REAL Litigation Settlement Agreement, and (2) the release to the Borrowers of the Cash Deposit Stock currently held in escrow for the benefit of the Borrowers in accordance with the REAL Litigation Settlement Agreement; provided, however, that nothing in this Section 7.07 shall prohibit (A) any Borrower or any Subsidiary of Borrower from making tenders for or otherwise acquiring for value any partnership interest, Partnership Units or Stock, now or hereafter outstanding, of any Borrower or any Subsidiary of any Borrower which were not issued by such acquiring Borrower or Subsidiary or (B) any distribution of Property by any Borrower Party, or any Affiliate thereof, in the Ordinary Course of Business and pursuant to such Borrower Party's or Affiliate's Organization Documents, including (x) any distribution of proceeds from Dispositions permitted under Section 7.04, (y) any distribution of proceeds from Dispositions in the Ordinary Course of Business and (z) any distribution by a non-Wholly-Owned Subsidiary to any Borrower, any of Borrowers' Subsidiaries or to any other Person holding an equity interest in such non-Wholly-Owned Subsidiary.

        (b)   (i) Permit any Subsidiary to make a demand under any Intra-Company Debt which is payable upon demand at any time after the Revolving Commitment Termination Date, or (ii) permit any payment with respect to Intra-Company Debt while any Event of Default is continuing.

1.6   Amendment to Section 7.14 Financial Covenants.

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

        7.14Financial Covenants.

        (a)   Permit the Fixed Charge Coverage Ratio as of the end of any fiscal quarter to be less than 1.40:1.00.

        (b)   Intentionally Omitted.

        (c)   Permit the Interest Coverage Ratio as of the end of any fiscal quarter to be less than 2.00:1.00.

        (d)   Permit the Unsecured Debt Service Coverage Ratio as of the end of any fiscal quarter to be less than 3.00:1.00.

        (e)   Permit the ratio of Total Combined Debt to Gross Asset Value to exceed 0.55:1.00 at any time; provided, however, at any time during a Temporary Leverage Increase, the

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ratio shall not exceed 0.575:1.00; and provided, further, that for purposes of this Section 7.14(e), Gross Asset Value shall be reduced by an amount equal to the excess, if any, of (x) the sum of the amounts, as on the date of determination, from clauses (ii), (vi) and (vii) set forth in the definition of "Gross Asset Value" over (y) 15% of the sum of the amounts, as on such date of determination, from clauses (i), (iii), (iv) and (v) set forth in the definition of "Gross Asset Value".

        (f)    Permit the ratio of Total Obligations to Gross Asset Value to exceed 0.65:1.00 at any time; provided, however, at any time during a Temporary Leverage Increase, the ratio shall not exceed 0.675:1.00; and provided, further, that for purposes of this Section 7.14(f), Gross Asset Value shall be reduced by an amount equal to the excess, if any, of (x) the sum of the amounts, as on the date of determination, from clauses (ii), (vi) and (vii) set forth in the definition of "Gross Asset Value" over (y) 15% of the sum of the amounts, as on such date of determination, from clauses (i), (iii), (iv) and (v) set forth in the definition of "Gross Asset Value".

        (g)   Permit the Encumbered Property Debt Coverage Ratio as of the end of any fiscal quarter to be less than 1.50:1.00.

        (h)   Permit the Consolidated Net Worth of the REIT and its Subsidiaries on a consolidated basis to be less at any time than the sum of (x) $3,230,456,000 plus (y) 85% of the Net Issuance Proceeds of all issuances of Stock or Partnership Units from and after September 30, 2002.

        Notwithstanding anything to the contrary contained herein, the Borrowers acknowledge and agree that in determining EBITDA and Net Operating Income for the Borrowers and their Subsidiaries, any items of net income (or net loss) on account of the operations of an Institutional Joint Venture shall not be included in the determination of EBITDA and/or Net Operating Income unless the Cash or Cash Equivalents related thereto have been distributed to Borrowers or their Wholly-Owned Subsidiaries which are Guarantors or are otherwise available to be so distributed without restriction, excluding ordinary course restrictions which limit distributions to a quarterly or more frequent basis.

1.7   Amendment to Exhibit B—Form of Compliance Certificate.

        A.    Exhibit B—Form of Compliance Certificate shall be deleted in its entirety and replaced with Exhibit B—Form of Compliance Certificate attached hereto as Annex I.

Section 2. CONDITIONS TO EFFECTIVENESS

        This Amendment shall become effective as of the Amendment Effective Date, at such time that all of the following conditions are satisfied:

        A.    Supermajority Lenders shall have executed this Amendment;

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

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

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

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

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

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

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

Section 3. BORROWERS' REPRESENTATIONS AND WARRANTIES

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

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

        3.2Authorization of Agreements. The execution and delivery of this Amendment and the performance of the Amended Agreement have been duly authorized by all necessary action on the part of Borrowers and the other parties delivering any of such documents, as the case may be. Except as disclosed on Schedule 3.2, the organizational documents of the Borrowers, Pledgors and Guarantors have not been modified in any material respect since May 30, 2003;

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

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

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

        3.6Binding Obligation. The Credit Agreement, as amended by this Amendment, has been duly executed and delivered by Borrowers, Pledgors and Guarantors and is enforceable against Borrowers, Pledgors and Guarantors in accordance with its respective terms, except as may be

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limited by bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or limiting creditors' rights generally or by equitable principles relating to enforceability; and

        3.7Incorporation of Representations and Warranties From Credit Agreement. After giving effect to this Amendment, the representations and warranties contained in Section 5 of the Credit Agreement are and will be true, correct and complete in all material respects on and as of the Amendment Effective Date to the same extent as though made on and as of such date, except representations and warranties solely to the extent such representations and warranties specifically relate to an earlier date, in which case they were true, correct and complete in all material respects on and as of such earlier date.

Section 4. MISCELLANEOUS

4.1   Reference to and Effect on the Credit Agreement and the Other Loan Documents.

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

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

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

        4.2Fees and Expenses. Borrowers acknowledge that all reasonable costs, fees and expenses incurred by Administrative Agent and its counsel with respect to this Amendment and the documents and transactions contemplated hereby shall be for the account of Borrowers. On or before October     , 2003, the Borrowers hereby agree to pay the reasonable fees, cost and expenses of Administrative Agent's counsel in connection with this Amendment.

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

        4.4Counterparts; Effectiveness. This Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed an original, but all such counterparts together shall constitute but one and the same instrument; signature pages may be detached from multiple separate counterparts and attached to a single counterpart so that all signature pages are physically attached to the same document. This Amendment shall become effective upon the

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execution of a counterpart hereof by each Borrower and each Lender, and receipt by Borrowers and Administrative Agent of written, facsimile or telephonic notification of such execution and authorization of delivery thereof.

        4.5Entire Agreement. This Amendment embodies the entire agreement and understanding among the parties with respect to the amendment to the Credit Agreement, and supersedes all prior agreements and understandings, oral or written, relating thereto.

Section 5. ACKNOWLEDGEMENT AND CONSENT

        A.    Guarantors are party to that certain Amended and Restated Payment Guaranty, dated as of May 30, 2003, to the extent amended hereby, pursuant to which Guarantors have guarantied the Obligations. Pledgors are party to that certain Borrowers Pledge Agreement, dated as of May 30, 2003, to the extent amended hereby, pursuant to which Pledgors have pledged the Pledged Collateral as security for the Secured Obligations (as defined in the Borrowers Pledge Agreement).

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

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

        D.    Each Guarantor and each Pledgor acknowledges and agrees that (i) notwithstanding the conditions to effectiveness set forth in this Amendment, such Guarantor or such Pledgor, as the case may be, is not required by the terms of the Credit Agreement or any other Loan Document to consent to the amendments to the Credit Agreement effected pursuant

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to this Amendment and (ii) nothing in the Credit Agreement, this Amendment or any other Loan Document shall be deemed to require the consent of such Guarantor or such Pledgor to any future amendments to the Credit Agreement.

        E.    Each Lender hereby (i) acknowledges that it has received and reviewed the terms and provisions of that certain Sixth Amendment to Interim Credit Agreement, dated as of September 30, 2003 (the "Casden Amendment") among the REIT, AIMCO, NHP Management (collectively, the "Casden Borrowers"), Lehman Commercial Paper Inc., as administrative agent, syndication agent and a lender ("Lehman"), each lender from time to time party thereto, and Lehman Brothers Inc., as sole lead arranger, and (ii) consents to the modifications and amendments as set forth in the Casden Amendment to the Casden Credit Agreement and the Casden Loan Documents.

        F.    Each Lender hereby (i) acknowledges that it has received and reviewed the terms and provisions of that certain First Amendment to Term Loan Credit Agreement, dated as of September 30, 2003 (the "Term Amendment") among the REIT, AIMCO, NHP Management and AIMCO/Bethesda (collectively, the "Term Borrowers"), Bank of America, N.A., as administrative agent (in such capacity, the "Term Agent"), and each lender from time to time party thereto, and (ii) consents to the modifications and amendments as set forth in the Term Amendment to the Term Loan Credit Agreement and the Term Loan Documents.

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Exhibit 10.3

        FOURTH AMENDMENT, dated as of May 9, 2003 (this "Amendment"), to the INTERIM CREDIT AGREEMENT, dated as of March 11, 2002 (as amended by the First Amendment and Waiver, dated as of June 12, 2002, the Second Amendment, dated as of August 2, 2002, and the Third Amendment, dated as of February 14, 2003, and as further amended, restated, extended, supplemented or otherwise modified in writing from time to time, the "Credit Agreement"), among AIMCO PROPERTIES, L.P., a Delaware limited partnership ("AIMCO"), NHP MANAGEMENT COMPANY, a District of Columbia corporation ("NHP Management"), and APARTMENT INVESTMENT AND MANAGEMENT COMPANY, a Maryland corporation (the "REIT") (AIMCO, NHP Management and the REIT are collectively referred to herein as "Borrowers"), LEHMAN COMMERCIAL PAPER INC., as Administrative Agent (in such capacity, the "Administrative Agent"), as Syndication Agent and as a Lender, each lender from time to time party thereto and LEHMAN BROTHERS INC., as Sole Lead Arranger and Bookrunner.

W I T N E S S E T H:

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

        WHEREAS, the Borrower has requested that the Lenders agree to make certain amendments to the Credit Agreement;

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

        NOW, THEREFORE, the parties hereto agree as follows:

        1.     Defined Terms. Unless otherwise noted herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.

        2.     Amendments to Section 1.01 of the Credit Agreement (Defined Terms).

        (a)   Section 1.01 is hereby amended by inserting the following new definitions in the appropriate alphabetical order:

        "2003 Term Loan" means a term credit facility provided to the Borrowers and AIMCO/Bethesda Holdings, Inc. by a group of financial institutions and administered by Bank of America, as administrative agent, in an original principal amount not to exceed $250,000,000. The net cash proceeds of the 2003 Term Loan shall be applied to prepay Loans outstanding under the Revolving Credit Agreement (without any corresponding reduction of the commitments thereunder). The collateral for the 2003 Term Loan may consist of Liens on the Pledged Collateral, which Liens shall rank pari passu with the Lenders' Liens on such Pledged Collateral and the lender's Liens on the Pledged Collateral under the Revolving Loan Documents. The representations, warranties, covenants, events of default, remedies and other material terms of the 2003 Term Loan

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shall be substantially similar to the representations, warranties, covenants, events of default, remedies, and other material terms contained in this Agreement. The intercreditor relationship between the lenders under the 2003 Term Loan, the lenders under the Revolving Credit Agreement and the Lenders shall be governed by an intercreditor agreement which shall be satisfactory to the Administrative Agent and the Requisite Lenders.

        "Fourth Amendment Effective Date" means the "Effective Date" as defined in that certain Fourth Amendment to Credit Agreement dated as of May 9, 2003, among Borrowers, Lenders and the Administrative Agent.

        "Free Corporate Cash Flow" means, for any period, Total Corporate EBITDA for such period minus the sum of (a) Total Interest Expense for such period (excluding interest paid or accrued in respect of the Obligations), plus (b) Borrowers', the Guarantors' and their respective Subsidiaries' pro-rata share of all repayments of principal of Indebtedness (excluding (i) principal amortization in respect of the Obligations, (ii) any principal amortization consisting of a balloon payment of Indebtedness in connection with the repayment in full of such Indebtedness, and (iii) principal amortization in respect of the Obligations under, and as defined in, the Revolving Credit Agreement), plus (c) Borrowers', the Guarantors' and their respective Subsidiaries' pro-rata share of taxes based on income paid for such period, plus (d) preferred dividends accrued (whether or not declared or payable) on the preferred Stock and/or Partnership Units of the Borrowers or any of their Subsidiaries during such period, plus (e) an amount equal to 90% of the aggregate amount of REIT taxable income as reported on the REIT's federal income tax return (Form 1120-REIT) or as estimated from time to time based on current financial results for the period determined in accordance with all applicable requirements of the Code, plus (f) the Capital Expenditure Reserve as of the last day of such period of determination; provided, however, that, for purposes of determining Free Corporate Cash Flow, in no event shall any calculation of Total Corporate EBITDA include any Consolidated Net Income or net income (or loss, as applicable) in respect of any Property which has been Disposed of by Borrowers or any Subsidiary thereof, or any unconsolidated partnership or subsidiary thereof.

        "Institutional Joint Venture" means a Permitted Joint Venture which either (a) involves a financial institution or sophisticated investor which is primarily contributing Cash to the Permitted Joint Venture in exchange for equity interests therein and the Borrowers, Guarantors or their Subsidiaries directly or indirectly contributing Property to such Permitted Joint Venture in exchange for equity interests therein, or (b) involves the Borrowers, Guarantors or their Subsidiaries and one or more other Persons and where such Permitted Joint Venture's Organization Documents provide at any time that such other Persons may receive preferential returns or distributions with respect to the assets and/or cash flow of such Permitted Joint Venture, or (c) is set forth on Schedule 1.01G attached hereto. Before (but in no event later than 10 Business Days before) the consummation of the formation of any new Institutional Joint Venture, Borrower shall provide the Administrative Agent with copies of the proposed Organization Documents and promptly after such formation provide Administrative Agent with executed copies of the final Organization Documents. Schedule 1.01G attached hereto sets forth all entities

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which are Institutional Joint Ventures in existence or in negotiation on the Fourth Amendment Effective Date.

        "Permitted Joint Venture" means a joint venture, partnership, limited liability company or other similar arrangement, whether in corporate, partnership or other legal form (i) which is formed by or an interest in which is acquired by any of the Borrowers or its Subsidiaries in the Ordinary Course of Business, (ii) which complies with Section 7.09, and (iii) in which any of the Borrowers' or their Subsidiaries' equity or other beneficial interests is held at all times, directly or indirectly, by a Borrower and/or Guarantor.

        "Permitted Preferred Stock Redemptions" means the (A) purchase, redemption, retirement or other acquisition for value of any Redeemable Preferred Stock, in an amount up to 100% of the Net Issuance Proceeds from any issuance of common or preferred Stock by the Borrowers, the Guarantors or their Subsidiaries occurring after April 15, 2003 including the transactions set forth on Schedule 1.01H attached hereto, (B) purchase, redemption, retirement or other acquisition for value of any Redeemable Preferred Stock in an amount up to not more than 75% of the Net Disposition Proceeds from Dispositions occurring after April 15, 2003 including the transactions set forth on Schedule 1.01H attached hereto; provided, that, all such purchases or redemptions of Redeemable Preferred Stock under this clause (B) may not exceed $250,000,000 in the aggregate in any one calendar year and $400,000,000 in the aggregate in any two consecutive calendar years, or (C) purchase, redemption, retirement or other acquisition for value of any Redeemable Preferred Stock with Free Corporate Cash Flow.

        "Redeemable Preferred Stock" means (i) the preferred Partnership Units and (ii) the preferred Stock, in each case, of the Borrowers, the Guarantors or their Subsidiaries which is redeemable in accordance with its terms.

        "Total Pro Rata NOI" means, for any period, and without double counting any item, the Borrowers', the Guarantors' and their respective downstream Affiliates' pro-rata share of Net Operating Income, including the Borrowers', the Guarantors' and their respective downstream Affiliates' pro-rata share of Net Operating Income from unconsolidated Persons.

        "Total Corporate NOI" means, for any period, and without double counting any item, the sum of Net Operating Income of the Borrowers, the Guarantors, their respective Subsidiaries and any Person that owns an apartment Property and in which the Borrowers, the Guarantors or their respective Subsidiaries owns an equity or beneficial interest.

        (b)   Section 1.01 of the Credit Agreement is hereby further amended by deleting the following definitions in their entirety:

        (i)    "Casden Net Disposition Proceeds";

        (ii)   "Casden Net Indebtedness Proceeds";

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        (iii)  "Casden Net Issuance Proceeds";

        (iv)  "Casden Net Refinancing Proceeds";

        (v)   "Net Indebtedness Proceeds"; and

        (vi)  "Net Refinancing Proceeds".

        (c)   Section 1.01 of the Credit Agreement is hereby further amended by deleting the defined term "Applicable Margin" in its entirety and replacing it with the following:

        "Applicable Margin" means, with respect to Base Rate Loans, 1.65% per annum, and with respect to Offshore Rate Loans, 2.65% per annum, provided that in each case, if at any time (i) any credit rating of either AIMCO's or the REIT's obligations under their respective senior unsecured debt or either AIMCO's or the REIT's corporate credit rating is downgraded from its current level on the Closing Date as set forth on Schedule 1.01F by either Moody's or S&P or (ii) the credit rating of this Agreement, if rated, is downgraded from its initial rating by either Moody's or S&P, the Applicable Margin for Base Rate Loans shall be 1.90% per annum and the Applicable Margin for Offshore Rate Loans shall be 2.90% per annum for the period beginning on the effective date of such downgrade until the date such rating is at least the level in effect on the Closing Date or such initial rating, as the case may be.;

        (d)   Section 1.01 of the Credit Agreement is hereby further amended by deleting clause (h) of the defined term "Indebtedness" in its entirety and replacing it with the following:

        (h)   all obligations (other than, in the case of the REIT, the obligation to acquire Partnership Units in exchange for shares of common Stock of the REIT) to purchase, redeem, or acquire any Stock of such Person or its Affiliates that, by its terms or by the terms of any security into which it is convertible or exchangeable, (x) is, or upon the happening of any event (other than a change of control event as may be set forth in certain securities of the REIT and/or AIMCO and which has not occurred prior to the date of determination hereunder) or the passage of time would be, required to be redeemed or repurchased by such Person or its Affiliates, including at the option of the holder, in whole or in part, or (y) has, or upon the happening of an event (other than the above change of control event as may be set forth in certain securities of the REIT and/or AIMCO and which has not occurred prior to the date of determination hereunder) or passage of time would have, a redemption or similar payment due, in each case of clauses (x) and (y) before the date which is the one (1) year anniversary of the then effective Maturity Date (excluding, however, any such preferred Stock which is convertible only into common Stock of the REIT),;

        (e)   Section 1.01 of the Credit Agreement is hereby further amended by deleting the defined term "Net Disposition Proceeds" in its entirety and replacing it with the following:

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        "Net Disposition Proceeds" means, with respect to any Disposition of any Property (including as a result of casualty or condemnation and any purchase price refund in respect of any acquisition), Subsidiary, Management Entity or material property management contract, Cash payments (including any Cash received by way of deferred payment pursuant to, or by monetization of, a note receivable or otherwise, but only as and when so received) or Cash Equivalents received from such Disposition (which, in the case of non-wholly owned Persons, shall be limited to the Borrowers', the Guarantors' or any of their Subsidiaries' respective pro-rata share of such Disposition proceeds), net of any bona fide direct costs incurred in connection with such Disposition, including (i) income taxes reasonably estimated to be actually payable within two years of the date of such Disposition as a result of any gain recognized in connection with such Disposition and (ii) payment of the outstanding principal amount of, premium or penalty, if any, and interest on any Indebtedness (other than the Loans) that is secured by a Lien on the Stock or assets in question and that is required to be repaid under the terms thereof as a result of such Disposition.;

        (f)    Section 1.01 of the Credit Agreement is hereby further amended by deleting the defined term "Net Issuance Proceeds" in its entirety and replacing it with the following:

        "Net Issuance Proceeds" means, in respect of any issuance of Stock or Partnership Units or Debt Securities (other than proceeds of Debt Securities which are Indebtedness permitted pursuant to Section 7.01) by Borrowers or any of their respective Subsidiaries, the proceeds in Cash or Cash Equivalents (or, for purposes of Section 7.14(h), in the case of any issuance of Partnership Units in exchange for Property, the fair market value of the Property so acquired) received by Borrowers or any of their respective Subsidiaries upon or substantially simultaneously with such issuance (which, in the case of non-wholly owned Persons, shall be limited to the Borrowers', the Guarantors' or any of their Subsidiaries' respective pro-rata share of such issuance proceeds), net of (a) the direct costs of such issuance then payable by the recipient of such proceeds (excluding amounts payable to Borrowers or any Affiliate of Borrowers), (b) sales, use and other taxes paid or payable by such recipient as a result thereof, and (c) in the case of the issuance of Indebtedness secured by any Property, the portion of such proceeds used to repay Indebtedness previously incurred and secured by the same Property.;

        ; and

        (g)   Section 1.01 of the Credit Agreement is hereby further amended by deleting the defined term "Ordinary Course of Business" in its entirety and replacing it with the following:

        "Ordinary Course of Business" means, in respect of any transaction involving a Person, (i) the ordinary course of such Person's business, substantially as intended to be conducted by any such Person as of the Fourth Amendment Effective Date, and (ii) undertaken by such Person in good faith and not for purposes of evading any covenant or restriction in any Contractual Obligation of such Person or for purposes of defrauding its creditors; provided, that, with respect to any Person (other than the

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Borrowers, any Material Entity or any Institutional Joint Venture) which is disposing of all or substantially all of its Property, Ordinary Course of Business shall also include any Disposition consistent with clauses (i) and (ii) above and which is not otherwise in violation of this Agreement; provided, further, that in all events the Institutional Joint Ventures described on Schedule 1.01G and similar Institutional Joint Ventures permitted hereunder, shall be deemed to be in the Ordinary Course of Business for all purposes under this Agreement.

        3.     Amendments to Section 2.03 of the Credit Agreement.

        (a)   Section 2.03(b) shall be amended by deleting the words "Sections 2.03(a) and 2.03(c), respectively," and replacing them with "Section 2.03(a)".

        (b)   Section 2.03(c) shall be amended by deleting it in its entirety and substituting in lieu therefor "[Reserved]".

        (c)   Section 2.03(D) shall be amended by deleting the words "Section 2.03(a), (b) or (c)" and replacing them with "Section 2.03(a) or (b)".

        4.     Amendment to Section 6.15 of the Credit Agreement. Section 6.15 of the Credit Agreement is hereby amended by deleting it in its entirety and substituting in lieu therefor the following:

        Remain Solvent; provided, that, this Section 6.15 shall apply only to Borrower Parties and any Material Entities.

        5.     Amendment to Section 6.16(c) of the Credit Agreement. Section 6.16(c) of the Credit Agreement is hereby amended by deleting it in its entirety and substituting in lieu therefor the following:

        (c)   Additional Guarantors. Promptly upon (i) the formation by the Borrowers of any Person which is a Material Entity, (ii) any Subsidiary becoming a Material Entity or (iii) the acquisition by the Borrowers of any Subsidiary which constitutes a Material Entity after giving effect to such acquisition, in each case after the Closing Date, Borrowers shall (A) indicate whether such Person is a Casden Guarantor, and (B) cause such Person (so long as such Person is not prohibited from doing so by law, Organization Documents or Contractual Obligations not prohibited by this Agreement) to deliver to Administrative Agent for the ratable benefit of the Lenders a guaranty of the Obligations in the form attached hereto as Exhibit H-1 or H-2, as applicable. Concurrently with the delivery of such guaranty, Borrowers shall deliver to Administrative Agent with respect to such Person the same documents and other instruments required to be delivered pursuant to clauses (iii) and (iv) of Section 4.01(a) and an opinion of counsel, in form and substance satisfactory to Administrative Agent. In all events, if all such agreements, documents and other instruments required to be delivered to Administrative Agent pursuant to this Section 6.16(c) have not been delivered prior to the date of the next required Compliance Certificate, then such items shall be delivered collectively at the same time a Compliance Certificate is delivered to Administrative Agent pursuant to Section 6.02(b). Additionally and notwithstanding any provision of this Section 6.16(c)

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to the contrary, in all events and at all times, Borrowers shall cause the Guarantors and Borrowers to collectively represent not less than 75% of Total Pro Rata NOI for the immediately preceding fiscal quarter.

        6.     Amendment to Section 6.17 of the Credit Agreement. Section 6.17 of the Credit Agreement is hereby amended by deleting it in its entirety and substituting in lieu therefor the following:

        Use its reasonable best efforts to cause any Person in which any Borrower, any Guarantor or any of their respective Subsidiaries holds an equity interest to make regular distributions of Net Operating Income of such Person, subject to compliance with applicable law and such Person's Organization Documents and in the Ordinary Course of Business.

        7.     Amendments to Section 7.01 of the Credit Agreement.

        (a)   Section 7.01(d) of the Credit Agreement is hereby amended by deleting it in its entirety and substituting in lieu therefor the following:

        (d)   Indebtedness of Borrowers, the Guarantors and their Subsidiaries (whether secured or unsecured) which is Recourse to Borrowers, the Guarantors or any of their Subsidiaries (but excluding Indebtedness under the Loan Documents and the 2003 Term Loan and the Indebtedness under the Revolving Loan Documents on the Fourth Amendment Effective Date) in an aggregate principal amount not to exceed at any time an amount equal to the sum of (x) $250,000,000 plus (y) while the Lincoln Place Construction Financing is outstanding, the lesser of $151,000,000 or any portion of the Lincoln Place Construction Financing which constitutes Recourse Indebtedness. Such Recourse Indebtedness outstanding on the Closing Date is listed on Schedule 7.01(d);

        (b)   Section 7.01(n) shall be amended by deleting the word "and" at the end of such section.

        (c)   Section 7.01(o) shall be amended by deleting the period at the end of such section and replacing it with "; and".

        (d)   A new Section 7.01(p) shall be added which shall read as follows:

        (p)   Indebtedness pursuant to the 2003 Term Loan, including any Guaranty Obligations in connection therewith.

        8.     Amendments to Section 7.02 of the Credit Agreement.

        (a)   Section 7.02(i) of the Credit Agreement is hereby amended by deleting it in its entirety and substituting in lieu therefor the following:

        (i)    Liens and Negative Pledges pursuant to (x) the Revolving Credit Agreement and the other Revolving Loan Documents, including, without limitation, the Liens securing the Contingent Acquisition Note and (y) the 2003 Term Loan, subject, in

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the case of clause (y), to the execution of an intercreditor agreement satisfactory to the Administrative Agent and Requisite Lenders; and

        (b)   Section 7.02(j) of the Credit Agreement is hereby amended by deleting it in its entirety and substituting in lieu therefor the following:

        (j)    Liens and Negative Pledges (x) pursuant to the Organization Documents of the Institutional Joint Ventures listed on Schedule 1.01G attached hereto and permitted under Section 7.05(f) hereof; provided, that, such Liens and Negative Pledges only encumber or restrict Liens on the Property owned by such Institutional Joint Venture and/or the equity interests in such Institutional Joint Venture; and provided, further, in all cases such equity interests are owned directly or indirectly by a Guarantor and/or Borrower, and (y) pursuant to customary provisions in the Organization Documents of any other Permitted Joint Venture; provided, that, the Liens only encumber the Property owned by such Permitted Joint Venture and the Negative Pledges only restrict Liens on the Property owned by such Permitted Joint Venture and the transferability of the managing member or general partner interest in such Permitted Joint Venture.

        9.     Amendment to Section 7.03(c) of the Credit Agreement. Section 7.03(c) of the Credit Agreement is hereby amended by deleting it in its entirety and substituting in lieu therefor the following:

        (c)   Issue any preferred Stock or preferred Partnership Units; provided, however, the REIT or any of its Subsidiaries may issue preferred Stock and/or preferred Partnership Units so long as (i) if such preferred Stock or preferred Partnership Units has any mandatory redemption feature or has a redemption feature which is exercisable at the option of the holder thereof (other than a change of control put feature), then the face amount of such preferred Stock or preferred Partnership Units shall be deemed Unsecured Debt for all purposes of this Agreement; and (ii) any distributions with respect thereto shall comply with the provisions of this Agreement (including, without limitation, Section 7.07).

        10.   Amendment to Section 7.04(c) of the Credit Agreement. Section 7.04(c) of the Credit Agreement is hereby amended by inserting the word "and" immediately before the words "(ii) any" and by deleting the words "; and (iii) the Net Disposition Proceeds of such Dispositions shall be applied as required by Section 2.03(c)(ii)".

        11.   Amendment to Section 7.05(f) of the Credit Agreement. Section 7.05(f) of the Credit Agreement is hereby amended by deleting it in its entirety and substituting in lieu therefor the following:

        (f)    Investments in multi-family apartment projects (including those with de minimis commercial aspects) in fee simple or leasehold interests therein or partnership, joint venture interests or other Investments (including capital contributions or partner loans) in Persons that own, directly or indirectly, multi-family apartment projects (including those with de minimis commercial aspects); provided, however, Investments in Institutional Joint Ventures in addition to those listed on Schedule 1.01G shall not be

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permitted if and to extent any such additional Institutional Joint Venture causes or is expected to cause all Institutional Joint Ventures to generate more than 15% of Total Corporate NOI;

        12.   Amendment to Section 7.07(a) of the Credit Agreement. Section 7.07(a) of the Credit Agreement is hereby amended by deleting it in its entirety and substituting in lieu therefor the following:

        (a)   (i) Declare or make any Restricted Payment or any distribution of any Properties (including cash, rights, obligations, partnership interests or Partnership Units, on account of any partnership interests, Partnership Units or Stock) to any Person (other than Borrowers or a Wholly-Owned Subsidiary), or (ii) purchase, redeem or otherwise acquire for value any of its partnership interests, Partnership Units or Stock, now or hereafter outstanding, from any Person (other than Borrowers or a Wholly-Owned Subsidiary) (all of the foregoing set forth in clauses (i) and (ii), collectively, being "distributions"), except for the following: (A) the exchange of common Stock of the REIT for Partnership Units; (B) if no Default or Event of Default exists under Section 8.01(a), (b) or (c) as a result of a breach of Section 7.14, then the Borrowers and all such Subsidiaries may make "distributions" during any four consecutive fiscal quarter period in an amount in the aggregate which does not exceed the greater of (1) (x) 88% of Funds From Operations for each four consecutive fiscal quarter period ending on June 30, 2003, September 30, 2003, December 31, 2003 and March 31, 2004, (y) 85% of Funds From Operations for each four consecutive fiscal quarter period ending on June 30, 2004 and September 30, 2004, or (z) 80% of Funds From Operations for each four consecutive fiscal quarter period ending on the last day of each fiscal quarter thereafter, or (2) such amount as may be necessary to maintain REIT Status ("distributions" under this clause (B) shall not include any "distributions" under clauses (A) or (C)); and (C) that if no Default or Event of Default exists, the Borrowers and all such Subsidiaries may undertake Permitted Preferred Stock Redemptions; provided, that, prior to making any Permitted Preferred Stock Redemptions, Borrowers shall first certify in writing to Administrative Agent that the use of funds to make such Permitted Preferred Stock Redemptions shall not cause a Default or an Event of Default under this Agreement; provided, however, that nothing in this Section 7.07 shall prohibit (A) any Borrower or any Subsidiary of Borrower from making tenders for or otherwise acquiring for value any partnership interest, Partnership Units or Stock, now or hereafter outstanding, of any Borrower or any Subsidiary of any Borrower which were not issued by such acquiring Borrower or Subsidiary or (B) any distribution of Property by any Borrower Party, or any Affiliate thereof, in the Ordinary Course of Business and pursuant to such Borrower Party's or Affiliate's Organization Documents, including (x) any distribution of proceeds from Dispositions permitted under Section 7.04, (y) any distribution of proceeds from Dispositions in the Ordinary Course of Business and (z) any distribution by a non-Wholly-Owned Subsidiary to any Borrower, any of Borrowers' Subsidiaries or to any other Person holding an equity interest in such non-Wholly-Owned Subsidiary.

        13.   Amendment to Section 7.13 of the Credit Agreement. Section 7.13 of the Credit Agreement is hereby amended by deleting it in its entirety and substituting in lieu therefor the following:

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        Agree to any restriction or limitation on the making of Restricted Payments from any Subsidiary of Borrower to a Borrower, the making of any loans or advances to Borrowers or any other Subsidiary of Borrowers, the repayment or prepayment of any Indebtedness owed by any Subsidiary of Borrowers to any Borrower or any other Subsidiary of Borrowers, or the transferring of assets from any Subsidiary of Borrowers to any Borrower or any other Subsidiary of Borrowers, except for such restrictions existing or by reason of (a) any restrictions existing under the Loan Documents or the Revolving Loan Documents or any other Indebtedness permitted under Section 7.01 (except as provided in clause (f) below), (b) customary provisions in leases, subleases, licenses and other contracts restricting the assignment thereof, (c) applicable law, (d) Intra-Company Debt, (e) ordinary course restrictions in or contemplated by a Permitted Joint Venture's Organization Documents (subject to Section 6.17), (f) ordinary course restrictions in mortgage loan documents evidencing Indebtedness permitted under Section 7.01 and consisting of, among other things (i) provisions requiring funding and maintaining of reserves, (ii) restrictions on the transfer or assignment of the obligor's real or personal Property, and (iii) limitations on distributions of the obligor's net revenues, or (g) restrictions in contracts for sales or Dispositions of Property permitted hereby; provided, that, such restrictions relate only to the Property being disposed of.

        14.   Amendment to Section 7.14 of the Credit Agreement. Section 7.14 shall be amended by adding a new paragraph at the end thereof which shall read as follows:

        Notwithstanding anything to the contrary contained herein, the Borrowers acknowledge and agree that in determining EBITDA and Net Operating Income for the Borrowers and their Subsidiaries, any items of net income (or net loss) on account of the operations of an Institutional Joint Venture shall not be included in the determination of EBITDA and/or Net Operating Income unless the Cash or Cash Equivalents related thereto have been distributed to Borrowers or their Wholly-Owned Subsidiaries which are Guarantors or are otherwise available to be so distributed without restriction, excluding ordinary course restrictions which limit distributions to a quarterly or more frequent basis.

        15.   Amendment to Section 7.15 of the Credit Agreement. Section 7.15 of the Credit Agreement is hereby amended by deleting it in its entirety and substituting in lieu therefor the following:

        Change the certified public accountants auditing the books of Borrowers without the consent of Requisite Lenders, other than changes to Ernst & Young LLP, PricewaterhouseCoopers LLP and Deloitte & Touche LLP.

        16.   Amendment to Section 10.01 of the Credit Agreement. Section 10.01 shall be amended by adding the following paragraph at the end of such section:

        Notwithstanding any other provision contained herein to the contrary, any amendments or replacements of the Intercreditor Agreement in accordance with the Fourth Amendment to the Credit Agreement dated as of the Fourth Amendment Effective Date, among Borrowers, Lenders and the Administrative Agent shall only require the consent of the Administrative Agent and Requisite Lenders.

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        17.   Each Lender hereby acknowledges that it has received and reviewed the term sheet describing the material terms and provisions of the 2003 Term Loan which is attached hereto as Annex I ("2003 Term Loan Transaction"). Each Lender hereby consents to the 2003 Term Loan Transaction and all of the terms thereof and any modifications, supplements, replacements and/or amendments to the Loan Documents and the Revolving Loan Documents which are necessary, in Administrative Agent's reasonable discretion to consummate and close the 2003 Term Loan Transaction other than modifications and/or amendments to any provision of the Credit Agreement that expressly requires the consent or approval of Supermajority Lenders or all Lenders pursuant to Section 10.01 of the Credit Agreement, except for such modifications and/or amendments (i) expressly set forth in this Amendment, (ii) providing that the Lenders' Liens on collateral and their recourse to the Guarantors will be pari passu with the respective Liens and recourse to the guarantors under the Revolving Credit Agreement and the lenders under the 2003 Term Loan, and (iii) providing that the 2003 Term Loan, the loans under the Revolving Credit Agreement, and the Loans will be cross-defaulted; provided that, the 2003 Term Loan Transaction closes and funds by no later than one hundred and eighty days after the date hereof and Requisite Lenders consent to such modifications, supplements, replacements and/or amendments, which consent shall not be unreasonably withheld, delayed or conditioned and in no event shall require the payment of any fee, consideration or premium to any Lender.

        18.   Amendment to Schedules to the Credit Agreement. The Schedules to the Credit Agreement are hereby supplemented by adding Annex II and III attached hereto as "Schedule 1.01G" and "Schedule 1.01H", respectively.

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

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

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

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

        (d)   The Administrative Agent shall have received for the account of each Lender that executes and delivers to the Administrative Agent a Lender Consent Letter at or prior to 5:00 P.M., New York City time, on May 9, 2003, a consent fee equal to 0.15% of the aggregate unpaid principal amount of such Lender's Loans on such date.

        (e)   If required by Administrative Agent, Lenders and their respective counsel shall have received originally executed copies of one or more favorable written opinions of counsel for Borrowers, Guarantors and Pledgors in form and substance satisfactory to Administrative Agent and its counsel, dated as of the Fourth Amendment Effective Date,

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with respect to the validity, binding effect and enforceability of this Amendment, and due authorization, execution and delivery thereof, and as to such other matters as Administrative Agent acting on behalf of Lenders may request.

        (f)    On or before the Effective Date, all corporate and other proceedings taken or to be taken in connection with this Amendment and all documents incidental thereto not previously found acceptable by Administrative Agent, acting on behalf of Lenders, and its counsel shall be satisfactory in form and substance to Administrative Agent and such counsel, and Administrative Agent and such counsel shall have received all such counterpart originals or certified copies of such documents as Administrative Agent may reasonably request.

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

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

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

        (a)   Each Borrower has all requisite corporate or other entity power and authority to enter into this Amendment and to carry out the transactions contemplated by, and perform its obligations under, the Credit Agreement as amended by this Amendment (the "Amended Agreement") and each Loan Document. Each Guarantor and each Pledgor has all requisite corporate or other entity power and authority to enter into the Acknowledgement and Consent, in the form of Exhibit B-1, B-2 or B-3, as applicable, and to carry out the transactions contemplated by, and perform its obligations under each Loan Document to which it is a party.

        (b)   The execution and delivery of this Amendment and of each Acknowledgement and Consent and the performance of the Amended Agreement and of each other Loan Document have been duly authorized by all necessary corporate or other entity action on the part of each Borrower Party that is a party thereto. Except as disclosed on Schedule 3.2, the organizational documents of the Borrowers, Pledgors and Guarantors have not been modified in any material respect since February 14, 2003.

        (c)   The execution, delivery, and performance by each Borrower of this Amendment and of the Amended Agreement and by each Pledgor and Guarantor of each

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

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

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

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

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

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

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

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

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

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

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

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

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Exhibit 10.4

        SIXTH AMENDMENT, dated as of September 30, 2003 (this "Amendment"), to the INTERIM CREDIT AGREEMENT, dated as of March 11, 2002 (as amended by the First Amendment and Waiver, dated as of June 12, 2002, the Second Amendment, dated as of August 2, 2002, the Third Amendment, dated as of February 14, 2003, the Fourth Amendment, dated as of May 9, 2003, and the Fifth Amendment, dated as of May 30, 2003, and as further amended, restated, extended, supplemented or otherwise modified in writing from time to time, the "Credit Agreement"), among AIMCO PROPERTIES, L.P., a Delaware limited partnership ("AIMCO"), NHP MANAGEMENT COMPANY, a District of Columbia corporation ("NHP Management"), and APARTMENT INVESTMENT AND MANAGEMENT COMPANY, a Maryland corporation (the "REIT") (AIMCO, NHP Management and the REIT are collectively referred to herein as "Borrowers"), LEHMAN COMMERCIAL PAPER INC., as Administrative Agent (in such capacity, the "Administrative Agent"), as Syndication Agent and as a Lender, each lender from time to time party thereto and LEHMAN BROTHERS INC., as Sole Lead Arranger and Bookrunner.

W I T N E S S E T H:

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

        WHEREAS, the Borrower has requested that the Lenders agree to make certain amendments to the Credit Agreement;

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

        NOW, THEREFORE, the parties hereto agree as follows:

        1.     Defined Terms. Unless otherwise noted herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.

        2.     Amendments to Section 1.01 of the Credit Agreement (Defined Terms).

        (a)   Section 1.01 of the Credit Agreement is hereby amended by deleting the following definitions in their entirety:

        (i)    "Adjusted Fixed Charges" and

        (ii)   "Adjusted Fixed Charges Coverage Ratio".

        (b)   Section 1.01 of the Credit Agreement is hereby further amended by inserting the following new definitions in the appropriate alphabetical order:

        "Leverage Premium" means, upon the Borrowers' election of a Temporary Leverage Increase for more than two consecutive quarters, an additional 25 basis points

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per annum increase in the Applicable Margin. The Leverage Premium shall be in effect from the date the Compliance Certificate in which the Borrowers have elected a Temporary Leverage Increase for more than two consecutive quarters is received by Administrative Agent to but excluding the date the next Compliance Certificate in which the Borrowers do not elect a Temporary Leverage Increase is received by Administrative Agent.

        "Mirror Notes" means the indemnity obligations of The Casden Company, a California corporation ("The Casden Company"), to NAPICO, which may be evidenced by certain non-recourse promissory notes issued by The Casden Company or one of its Affiliates to NAPICO or one of its Affiliates, which will have the same interest rate and maturity schedule as the NAPICO Notes.

        "REAL Litigation Settlement Agreement" means that certain Settlement Agreement, dated as of August 12, 2003, by and among the REIT, AIMCO, National Partnership Investment Corp., a California corporation ("NAPICO"), Cerberus Partners, L.P., a Delaware limited partnership, XYZ Holdings, LLC, a Delaware limited liability company, Alan I. Casden, an individual, The Casden Company, a California corporation and Casden Investment Corp., a California corporation with respect to the settlement of In re Real Estate Associates Limited Partnership Litigation, CV 98-7035 DDP, United States District Court, Central District of California (the "REAL Litigation").

        "REAL Litigation Settlement Obligations" means, collectively, (i) Loans in the aggregate principal amount of $25,000,000 which were used by the REIT or one of its Affiliates to make a cash deposit in escrow for the benefit of the plaintiffs of the REAL Litigation (the "Cash Deposit"), and (ii) certain promissory notes made by NAPICO in the aggregate amount of $35,000,000 in favor of the plaintiffs of the REAL Litigation (the "NAPICO Notes") and that certain Guaranty made by AIMCO in favor of the plaintiffs of the REAL Litigation with respect to the payment and performance of the NAPICO Notes (the "REAL Litigation Guaranty").

        "REAL Litigation Settlement Pledged Stock" means, collectively, (i) 531,915 shares of common Stock of the REIT placed in escrow by The Casden Company for release to the REIT in connection with the Cash Deposit (the "Cash Deposit Stock"), as such number of shares may be reduced from time to time pursuant to the REAL Litigation Settlement Agreement, and (ii) 744,681 shares of common Stock of the REIT (plus up to 60,000 additional shares for accrued interest) pledged by The Casden Company or one of its Affiliates to NAPICO to secure the payment of the Mirror Notes (the "Mirror Notes Stock") as such number of shares may be reduced from time to time pursuant to the REAL Litigation Settlement Agreement.

        "Temporary Leverage Increase" means, upon the Borrowers' election by indicating their election in writing on the quarterly Compliance Certificate delivered to Administrative Agent pursuant to Section 6.02(b), an increase in the ratios set forth in either Section 7.14(e) or (f). A Temporary Leverage Increase shall be in effect for the fiscal quarter elected by the Borrowers on the Compliance Certificate.

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        (c)   Section 1.01 of the Credit Agreement is hereby further amended by deleting the definition of "Applicable Margin" in its entirety and substituting in lieu thereof the following:

        "Applicable Margin" means, with respect to Base Rate Loans, 1.85% per annum, plus the additional amount of the Leverage Premium, if applicable, and with respect to Offshore Rate Loans, 2.85% per annum, plus the additional amount of the Leverage Premium, if applicable, provided that in each case, if at any time (i) any credit rating of either AIMCO's or the REIT's obligations under their respective senior unsecured debt or either AIMCO's or the REIT's corporate credit rating is downgraded from its current level on the Closing Date as set forth on Schedule 1.01F by either Moody's or S&P or (ii) the credit rating of this Agreement, if rated, is downgraded from its initial rating by either Moody's or S&P, the Applicable Margin for Base Rate Loans shall be 2.10% per annum, plus the additional amount of the Leverage Premium, if applicable, and the Applicable Margin for Offshore Rate Loans shall be 3.10% per annum, plus the additional amount of the Leverage Premium, if applicable, for the period beginning on the effective date of such downgrade until the date such rating is at least the level in effect on the Closing Date or such initial rating, as the case may be.

        (d)   Section 1.01 of the Credit Agreement is hereby further amended by deleting the "." at the end of the last sentence of the definition of "Funds from Operations" and replacing it with the following:

        ; provided, however, the following shall be excluded when calculating "Funds From Operations": (i) non-cash adjustments for preferred Stock issuance costs, (ii) non-cash adjustments for loan amortization costs, and (iii) interest expense charges (or benefits) for minority interest marked-to-market adjustments arising under Statement of Financial Accounting Standards No. 150 of the Financial Accounting Standards Board ("FAS 150") as interpreted under GAAP.

        (e)   Section 1.01 of the Credit Agreement is hereby further amended by deleting the word "9.00" from clauses (c) and (d) of the definition of "Gross Asset Value", and replacing it with the word "8.75".

        (f)    Section 1.01 of the Credit Agreement is hereby further amended by adding the following words to the definition of "Indebtedness" immediately after the last sentence thereof:

        Notwithstanding the foregoing, "Indebtedness" shall only include the net obligations of the REIT, AIMCO and NAPICO under the REAL Litigation Settlement Agreement, which shall be calculated quarterly based on the sum of (x) the difference of (A) $25,000,000 less (B) an amount equal to the product of (1) the then remaining number of shares of Cash Deposit Stock held by the REIT or an Affiliate of the REIT in escrow times (2) the average closing share price of such Cash Deposit Stock on the NYSE over the 21 trading day period immediately prior to each quarter-end, and (y) the

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difference of (A) (without duplication) the outstanding NAPICO Notes and the REAL Litigation Guaranty less (B) an amount equal to the product of (1) the then remaining number of shares of Mirror Notes Stock held by NAPICO or an Affiliate of NAPICO as pledgee times (2) the average closing share price of such Mirror Notes Stock on the NYSE over the 21 trading day period immediately prior to each quarter-end. In all events, the net obligations of the REIT, AIMCO and NAPICO under the REAL Litigation Settlement Agreement shall not be less than zero.

        (g)   Section 1.01 of the Credit Agreement is hereby further amended by deleting the words "Notwithstanding the foregoing, amortization of loan costs and interest accrued under any Intra-Company Debt shall not be included within "Interest Expense" for any purposes hereof." from the definition of "Interest Expense", and replacing them with the following:

        Notwithstanding the foregoing, "Interest Expense" shall not include (i) amortization of loan costs and interest accrued under any Intra-Company Debt or (ii) interest expense charges (or benefits) from minority interest marked-to-market adjustments arising under FAS 150 as interpreted under GAAP.

        3.     Amendment to Section 1.03 of the Credit Agreement. Section 1.03 of the Credit Agreement is hereby amended by deleting it in its entirety and substituting in lieu thereof the following:

        (a)   All accounting terms not specifically or completely defined in this Agreement shall be construed in conformity with, and all financial data (including financial ratios and other financial calculations but excluding financial statements) required to be submitted by this Agreement shall be prepared in conformity with, GAAP as in effect on September 30, 2003, except as otherwise specifically prescribed herein.

        (b)   If at any time any change in GAAP would affect the computation of any financial ratio or requirement set forth in this Agreement, and either Borrowers, Administrative Agent or Requisite Lenders shall so request, Administrative Agent, Lenders and Borrowers shall negotiate in good faith to amend such ratio or requirement to preserve the original intent thereof in light of such change in GAAP (subject to the approval of Requisite Lenders, Administrative Agent and Borrowers); provided, that, until so amended, such ratio or requirement shall continue to be computed in accordance with GAAP prior to such change therein.

        4.     Amendment to Section 6.02 of the Credit Agreement. Section 6.02 of the Credit Agreement is hereby amended by, immediately after the words "(1) a duly completed Compliance Certificate signed by a Responsible Officer of the Borrowers, with such supporting information as may be requested by Administrative Agent," adding the following:

including a statement as to whether any change in GAAP or in the application thereof has occurred since September 30, 2003, and, if any change has occurred, specifying the effect of such change on the financial statements accompanying such Compliance Certificate

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and setting forth a certified reconciliation between calculations of the financial ratios or requirements made before and after giving effect to such change in GAAP,

        5.     Amendment to Section 7.05 of the Credit Agreement. Section 7.05 is hereby amended by deleting the word "and" at the end of clause (m) thereof, deleting the period from the end of clause (n) thereof and replacing it with "; and" and adding a new clause (o) which will read as follows:

        (o)   Investments in the Mirror Notes and the REAL Litigation Settlement Pledged Stock securing the Mirror Notes required pursuant to the REAL Litigation Settlement Agreement.

        6.     Amendment to Section 7.07 of the Credit Agreement.

        (a)   Section 7.07(a)(B) is hereby amended by deleting the words "(1) (x) 88% of Funds From Operations for each four consecutive fiscal quarter period ending on June 30, 2003, September 30, 2003, December 31, 2003 and March 31, 2004, (y) 85% of Funds From Operations for each four consecutive fiscal quarter period ending on June 30, 2004 and September 30, 2004, or (z) 80% of Funds From Operations for each four consecutive fiscal quarter period ending on the last day of each fiscal quarter thereafter, or" and replacing them with the following:

        (1)   90% of Funds From Operations for each four consecutive fiscal quarter period ending on the last day of each fiscal quarter, or

        (b)   Section 7.07(a)(B) is hereby further amended by deleting the words "; and (C)" and replacing them with the words "; (C)".

        (c)   Section 7.07(a) is hereby further amended by adding a new clause (D) immediately preceding the words "provided, however" which will read as follows:

        and (D) (1) the exercise by the Borrowers of their right as a secured party to take possession of the Mirror Notes Stock after a default under the Mirror Notes Stock pledge agreement and in accordance with the REAL Litigation Settlement Agreement, and (2) the release to the Borrowers of the Cash Deposit Stock currently held in escrow for the benefit of the Borrowers in accordance with the REAL Litigation Settlement Agreement;

        7.     Amendments to Section 7.14 of the Credit Agreement.

        (a)   Section 7.14(a) is hereby amended by deleting the word "1.50" and replacing it with the word "1.40".

        (b)   Section 7.14(b) is hereby amended by deleting it in its entirety and substituting in lieu thereof the words "Intentionally Omitted."

        (c)   Section 7.14(c) is hereby amended by deleting the word "2.25" and replacing it with the word "2.00".

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        (d)   Section 7.14(e) is hereby amended by inserting the words "at any time during a Temporary Leverage Increase, the ratio shall not exceed 0.575:1.00; and provided, further," immediately following the words "provided, however".

        (e)   Section 7.14(f) is hereby amended by deleting the words "Permit the ratio of Total Obligations to Gross Asset Value to exceed 0.68:1.00 at any time up to and including September 30, 2002, nor permit the ratio of Total Obligations to Gross Asset Value to exceed 0.65:1.00 at October 1, 2002 or any time thereafter; provided, however," and replacing it with the following:

        Permit the ratio of Total Obligations to Gross Asset Value to exceed 0.65:1.00 at any time; and provided, however, at any time during a Temporary Leverage Increase, the ratio shall not exceed 0.675:1.00; provided, further,

        (f)    Section 7.14(g) is hereby amended by deleting the word "1.60" and replacing it with the word "1.50".

        8.     Amendment to Exhibits to the Credit Agreement. Exhibit B—Form of Compliance Certificate shall be deleted in its entirety and replaced with Exhibit B—Form of Compliance Certificate attached hereto as Annex I.

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

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

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

        (c)   Guarantors and Pledgors shall have executed this Amendment with respect to Section 14.

        (d)   The Administrative Agent shall have received for the account of each Lender that executes and delivers to the Administrative Agent a Lender Consent Letter at or prior to 5:00 P.M., New York City time, on October 30, 2003, a consent fee equal to 0.10% of the aggregate unpaid principal amount of such Lender's Loans on such date.

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

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

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

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

        (i)    Lenders and their respective counsel shall have received executed resolutions or other action, incumbency certificates and/or other certificates of Responsible Officers of each Borrower Party, Guarantors and Pledgors as Administrative Agent may require to establish the identities of and verify the authority and capacity of each Responsible Officer thereof authorized to act as a Responsible Officer thereof.

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

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

        (b)   The execution and delivery of this Amendment and the performance of the Amended Agreement and of each other Loan Document have been duly authorized by all necessary corporate or other entity action on the part of each Borrower Party that is a party thereto. Except as set forth on Schedule 10(b) hereto, the organizational documents of the Borrowers, Pledgors and Guarantors have not been modified in any material respect since May 30, 2003.

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

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

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

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

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

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

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

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

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

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

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

        (d)   This Amendment embodies the entire agreement and understanding among the parties with respect to the amendment to the Credit Agreement, and supersedes all prior agreements and understandings, oral or written, relating thereto.

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

        14.   Acknowledgement and Consent.

        (a)   Guarantors are party to that certain Amended and Restated Payment Guaranty, dated as of May 30, 2003, to the extent amended hereby, pursuant to which Guarantors have guarantied the Obligations. Pledgors are party to that certain Borrowers Pledge Agreement, dated as of May 30, 2003, to the extent amended hereby, pursuant to which Pledgors have pledged the Pledged Collateral as security for the Secured Obligations (as defined in the Borrowers Pledge Agreement).

        (b)   Each Guarantor and each Pledgor hereby acknowledges that it has reviewed the terms and provisions of the Credit Agreement and this Amendment and consents to the amendment of the Credit Agreement effected pursuant to this Amendment. Each Guarantor hereby confirms that each Guaranty to which it is a party or otherwise bound, and each Pledgor hereby confirms that the Pledge Agreement to

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which it is a party or otherwise bound, will continue to guaranty or secure, as the case may be, to the fullest extent possible the payment and performance of all of the "Indebtedness" (as defined in the applicable Guaranty) or the "Secured Obligations" (as defined in the Borrowers Pledge Agreement), as the case may be, including without limitation the payment and performance of all such "Indebtedness" or "Secured Obligations", as the case may be, with respect to the Obligations of Borrowers now or hereafter existing under or in respect of the Credit Agreement (as amended hereby) and the Notes defined therein.

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

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

        (e)   Each Lender hereby (i) acknowledges that it has received and reviewed the terms and provisions of that certain Third Amendment to Fifth Amended and Restated Credit Agreement, dated as of September 30, 2003 (the "Revolver Amendment") among the REIT, AIMCO, NHP Management, and AIMCO/Bethesda Holdings, Inc., a Delaware corporation (collectively, the "Revolver Borrowers"), Bank of America, N.A., as administrative agent, each lender from time to time party thereto, and (ii) consents to the modifications and amendments as set forth in the Revolver Amendment to the Revolving Credit Agreement and the Revolving Loan Documents.

        (f)    Each Lender hereby (i) acknowledges that it has received and reviewed the terms and provisions of that certain First Amendment to Term Loan Credit Agreement, dated as of September 30, 2003 (the "Term Amendment") among the REIT, AIMCO, NHP Management and AIMCO/Bethesda (collectively, the "Term Borrowers"), Bank of America, N.A., as administrative agent (in such capacity, the "Term Agent"), each lender from time to time party thereto, and (ii) consents to the modifications and

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amendments as set forth in the Term Amendment to the Term Loan Credit Agreement and the Term Loan Documents.

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Exhibit 10.5

FIRST AMENDMENT TO
TERM LOAN CREDIT AGREEMENT

among

Apartment Investment and Management Company,
AIMCO Properties, L.P.,
AIMCO/Bethesda Holdings, Inc., and
NHP Management Company,

as Borrowers,

Bank of America, N.A.,
as Administrative Agent

and

The Other Financial
Institutions Party Hereto

Dated as of September 30, 2003

Banc of America Securities LLC
as Sole-Lead Arranger

and

Sole Bookrunner

FIRST AMENDMENT TO
TERM LOAN CREDIT AGREEMENT

        This FIRST AMENDMENT TO TERM LOAN CREDIT AGREEMENT (this "Amendment") is dated as of September 30, 2003 (the "Amendment Effective Date") and entered into by and among APARTMENT INVESTMENT AND MANAGEMENT COMPANY, a Maryland corporation (the "REIT"), AIMCO PROPERTIES, L.P., a Delaware limited partnership ("AIMCO"), AIMCO/BETHESDA HOLDINGS, INC., a Delaware corporation ("AIMCO/Bethesda") and NHP MANAGEMENT COMPANY, a District of Columbia corporation ("NHP Management") (the REIT, AIMCO, AIMCO/Bethesda and NHP Management collectively referred to herein as "Borrowers"), BANK OF AMERICA, N.A. ("Bank of America"), as Administrative Agent (in such capacity, "Administrative Agent"), and the Lenders party hereto, and is made with reference to that certain Term Loan Credit Agreement, dated as of May 30, 2003, by and among Borrowers, each lender from time to time party thereto, and BANK OF AMERICA, N.A., as Administrative Agent (the "Credit Agreement") (the Credit Agreement as amended by this Amendment, the "Amended Agreement"). Capitalized terms used in this Amendment shall have the meanings set forth in the Credit Agreement unless otherwise defined herein.

RECITALS

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

WHEREAS, pursuant to the Credit Agreement, certain of the amendments set forth herein require the consent of the Supermajority Lenders, and the Supermajority Lenders hereby consent thereto;

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

Section 1. AMENDMENTS TO THE CREDIT AGREEMENT

1.1   Amendment to Subsection 1.01 Defined Terms.

        A.    The defined terms "Adjusted Fixed Charges" and "Adjusted Fixed Charges Coverage Ratio" are deleted in their entirety.

        B.    The defined term "Funds From Operations" is deleted in its entirety and replaced with the following:

        "Funds From Operations" means, with respect to Borrowers and their Subsidiaries on a consolidated basis, net income calculated in accordance with GAAP, excluding gains or losses from debt restructuring and sales of property, plus real estate depreciation and amortization (excluding amortization of financing costs), plus amortization associated with the purchase of property management companies, and after adjustments for unconsolidated partnerships and joint ventures (with adjustments for unconsolidated partnerships and joint

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ventures calculated to reflect funds from operations on the same basis) together with adjustments for the non-cash deferred portion of any income tax provision for unconsolidated subsidiaries and the payment of dividends on preferred Stock, as interpreted by the National Association of Real Estate Investment Trusts in its March, 1995, White Paper on Funds From Operations; provided, however, the following shall be excluded when calculating "Funds From Operations": (i) non-cash adjustments for preferred Stock issuance costs, (ii) non-cash adjustments for loan amortization costs, and (iii) interest expense charges (or benefits) for minority interest marked-to-market adjustments arising under Statement of Financial Accounting Standards No. 150 of the Financial Accounting Standards Board ("FAS 150") as interpreted under GAAP.

        C.    The defined term "Gross Asset Value" is deleted in its entirety and replaced with the following:

        "Gross Asset Value" means as of any date of determination, the sum of the following, determined for Borrowers, the Guarantors and their respective Subsidiaries:

        (i)    Cash (including Restricted Cash) and Cash Equivalents of both consolidated and unconsolidated Persons, which Cash and Cash Equivalents are owned, directly or indirectly, by Borrowers, the Guarantors or their respective Subsidiaries as of such date of determination;

        (ii)   GP Loans valued at net realizable value as of such date of determination determined in accordance with GAAP;

        (iii)  with respect to all real estate assets wholly or partially owned by such Person(s) throughout the most recent four calendar quarters ending on or prior to such date of determination (other than Real Property Assets Under Development), the Adjusted Total NOI attributable to such real estate assets for such four quarter period divided by 8.75%;

        (iv)  with respect to all real estate assets wholly or partially owned by such Person(s) on such date of determination, but acquired less than four calendar quarters but at least one calendar quarter preceding such date of determination (other than Real Property Assets Under Development), the Adjusted Total NOI attributable to such real estate assets for the number of full calendar quarters that such Person(s) owned such assets measured on an annualized basis and divided by 8.75%;

        (v)   with respect to all real estate assets owned by such Person(s) on such date of determination, but acquired less than one calendar quarter preceding such date of determination (other than Real Property Assets Under Development), 95% of the purchase price paid by such Person(s) for such assets;

        (vi)  the gross book value of Real Property Assets Under Development as of such date of determination; and

        (vii) an amount equal to 400% of Management EBITDA for the four consecutive fiscal quarter period preceding such date of determination.

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        D.    The defined term "Indebtedness" is deleted in its entirety and replaced with the following:

        "Indebtedness" of any Person means without duplication, (a) all indebtedness for borrowed money, (b) all obligations issued, undertaken or assumed as the deferred purchase price of Property or services, (c) all direct or contingent obligations with respect to surety bonds, letters of credit, bankers' acceptances and similar instruments (in each case, to the extent material or noncontingent), (d) all obligations evidenced by notes, bonds, debentures or similar instruments, including obligations so evidenced incurred in connection with the acquisition of Properties, (e) all indebtedness created or arising under any conditional sale or other title retention agreement, or incurred as financing, in either case with respect to Properties acquired by the Person (even though the rights and remedies of the seller or bank under such agreement in the event of default are limited to repossession or sale of such properties), (f) all Capital Lease Obligations, (g) all net obligations with respect to Swap Agreements, (h) all obligations (other than, in the case of the REIT, the obligation to acquire Partnership Units in exchange for shares of common Stock of the REIT) to purchase, redeem, or acquire any Stock of such Person or its Affiliates that, by its terms or by the terms of any security into which it is convertible or exchangeable, (x) is, or upon the happening of any event (other than a change of control event as may be set forth in certain securities of the REIT and/or AIMCO which has not occurred prior to the date of determination hereunder) or the passage of time would be, required to be redeemed or repurchased by such Person or its Affiliates, including at the option of the holder, in whole or in part, or (y) has, or upon the happening of an event (other than the above change of control event as may be set forth in certain securities of the REIT and/or AIMCO which has not occurred prior to the date of determination hereunder) or passage of time would have, a redemption or similar payment due, in each case of clauses (x) and (y) before the date which is the one (1) year anniversary of the then effective Maturity Date (excluding, however, any such preferred Stock which is convertible only into common Stock of the REIT), (i) any direct or contingent obligations or liabilities under any equity forward agreements or transactions or under any similar arrangements or transactions, (j) all indebtedness referred to in clauses (a) through (i) above secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien upon or in Properties (including accounts and contract rights) owned by such Person, even though such Person has not assumed or become liable for the payment of such Indebtedness, and (k) all Guaranty Obligations in respect of indebtedness or obligations of others of the kinds referred to in clauses (a) through (i) above. "Indebtedness" shall also include such Person's share of the Indebtedness of any partnership or joint venture in which such Person, directly or indirectly, holds any interest, and any direct or indirect Recourse or contingent obligations of such Person with respect to Indebtedness of such partnership or joint venture in excess of its proportionate share. Solely for purposes of Section 7.14 only, "Indebtedness" shall exclude Intra-Company Debt, security deposits, accounts payable and accrued liabilities, any prepaid rent (as such terms are defined under GAAP) and that portion of the Contingent Acquisition Note, if any, which is not required under GAAP to be shown as indebtedness of any Borrower or any of their Subsidiaries at any time (including in the event of any acceleration thereof). Notwithstanding the foregoing, "Indebtedness" shall only include the net obligations of the REIT, AIMCO and NAPICO under the REAL Litigation Settlement Agreement, which shall be calculated quarterly

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based on the sum of (x) the difference of (A) $25,000,000 less (B) an amount equal to the product of (1) the then remaining number of shares of Cash Deposit Stock held by the REIT or an Affiliate of the REIT in escrow times (2) the average closing share price of such Cash Deposit Stock on the NYSE over the 21 trading day period immediately prior to each quarter-end and (y) the difference of (A) (without duplication) the outstanding NAPICO Notes and the REAL Litigation Guaranty less (B) an amount equal to the product of (1) the then remaining number of shares of Mirror Notes Stock held by NAPICO or an Affiliate of NAPICO as pledgee times (2) the average closing share price of such Mirror Notes Stock on the NYSE over the 21 trading day period immediately prior to each quarter-end. In all events, the net obligations of the REIT, AIMCO and NAPICO under the REAL Litigation Settlement Agreement shall not be less than zero.

        E.    The defined term "Interest Expense" is deleted in its entirety and replaced with the following:

        "Interest Expense" means, for any Person and for any period, without double counting any item, the sum of (x) gross interest expense paid in, incurred or accrued during such period by such Person (including all commissions, discounts, fees and other charges in connection with standby letters of credit and similar instruments), including any amounts as capitalized interest, plus (y) dividends paid in, incurred or accrued during such period by such Person with respect to Trust Based Convertible Preferred Securities, plus (z) the portion of the upfront costs and expenses for Swap Agreements entered into by such Person (to the extent not included in gross interest expense) fairly allocated to such Swap Agreements as expenses for such period, as determined for such Person in accordance with GAAP; provided that all interest expense accrued by Borrowers and their respective Subsidiaries during such period, even if not payable on or before the Maturity Date, shall be included with "Interest Expense". Notwithstanding the foregoing, "Interest Expense" shall not include (i) amortization of loan costs and interest accrued under any Intra-Company Debt or (ii) interest expense charges (or benefits) from minority interest marked-to-market adjustments arising under FAS 150 as interpreted under GAAP.

        F.    The following defined terms shall be inserted in the correct alphabetical location as follows:

        "Leverage Premium" means, upon the Borrowers' election of a Temporary Leverage Increase for more than two consecutive quarters, an additional 25 basis points per annum increase in the Applicable Margin. The Leverage Premium shall be in effect from the date the Compliance Certificate in which the Borrowers have elected a Temporary Leverage Increase for more than two consecutive quarters is received by Administrative Agent to but excluding the date the next Compliance Certificate in which the Borrowers do not elect a Temporary Leverage Increase is received by Administrative Agent.

        "Mirror Notes" means the indemnity obligations of The Casden Company, a California corporation ("The Casden Company"), to NAPICO, which may be evidenced by certain non-recourse promissory notes issued by The Casden Company or one of its Affiliates to

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NAPICO or one of its Affiliates, which will have the same interest rate and maturity schedule as the NAPICO Notes.

        "REAL Litigation Settlement Agreement" means that certain Settlement Agreement, dated as of August 12, 2003, by and among the REIT, AIMCO, National Partnership Investment Corp., a California corporation ("NAPICO"), Cerberus Partners, L.P., a Delaware limited partnership, XYZ Holdings, LLC, a Delaware limited liability company, Alan I. Casden, an individual, The Casden Company, a California corporation and Casden Investment Corp., a California corporation with respect to the settlement of In re Real Estate Associates Limited Partnership Litigation, CV 98-7035 DDP, United States District Court, Central District of California (the "REAL Litigation").

        "REAL Litigation Settlement Obligations" means, collectively, (i) Loans in the aggregate principal amount of $25,000,000 which were used by the REIT or one of its Affiliates to make a cash deposit in escrow for the benefit of the plaintiffs of the REAL Litigation (the "Cash Deposit"), and (ii) certain promissory notes made by NAPICO in the aggregate amount of $35,000,000 in favor of the plaintiffs of the REAL Litigation (the "NAPICO Notes") and that certain Guaranty made by AIMCO in favor of the plaintiffs of the REAL Litigation with respect to the payment and performance of the NAPICO Notes (the "REAL Litigation Guaranty").

        "REAL Litigation Settlement Pledged Stock" means, collectively, (i) 531,915 shares of common Stock of the REIT placed in escrow by The Casden Company for release to the REIT in connection with the Cash Deposit (the "Cash Deposit Stock"), as such number of shares may be reduced from time to time pursuant to the REAL Litigation Settlement Agreement, and (ii) 744,681 shares of common Stock of the REIT (plus up to 60,000 additional shares for accrued interest) pledged by The Casden Company or one of its Affiliates to NAPICO to secure the payment of the Mirror Notes (the "Mirror Notes Stock"), as such number of shares may be reduced from time to time pursuant to the REAL Litigation Settlement Agreement.

        "Temporary Leverage Increase" means, upon the Borrowers' election by indicating their election in writing on the quarterly Compliance Certificate delivered to Administrative Agent pursuant to Section 6.02(b), an increase in the ratios set forth in either Section 7.14(e) or (f). A Temporary Leverage Increase shall be in effect for the fiscal quarter elected by the Borrowers on the Compliance Certificate.

1.2   Amendment to Section 1.03 Accounting Terms.

        A.    Subsection 1.03 shall be deleted in its entirety and replaced with the following:

        (a)   All accounting terms not specifically or completely defined in this Agreement shall be construed in conformity with, and all financial data (including financial ratios and other financial calculations but excluding financial statements) required to be submitted by this Agreement shall be prepared in conformity with, GAAP as in effect on September 30, 2003, except as otherwise specifically prescribed herein.

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        (b)   If at any time any change in GAAP would affect the computation of any financial ratio or requirement set forth in this Agreement, and either Borrowers, Administrative Agent or Requisite Lenders shall so request, Administrative Agent, Lenders and Borrowers shall negotiate in good faith to amend such ratio or requirement to preserve the original intent thereof in light of such change in GAAP (subject to the approval of Requisite Lenders, Administrative Agent and Borrowers); provided, that, until so amended, such ratio or requirement shall continue to be computed in accordance with GAAP prior to such change therein.

1.3   Amendment to Section 2.05 Principal and Interest; Default Rate.

        A.    Subsection 2.05(c) shall be deleted in its entirety and replaced with the following:

        (c)   Each Offshore Rate Loan shall bear interest for each day during the Interest Period with respect thereto at a rate per annum equal to the Offshore Rate determined for such day plus 285 basis points per annum.

        B.    Subsection 2.05(d) shall be deleted in its entirety and replaced with the following:

        (d)   Each Base Rate Loan shall bear interest at a rate per annum equal to the Base Rate plus 115 basis points per annum.

1.4   Amendment to Section 6.02 Certificates, Notices and Other Information.

        A.    Subsection 6.02(b) shall be amended by deleting clause (1) thereof in its entirety and replacing it with the following:

        (1)   a duly completed Compliance Certificate signed by a Responsible Officer of Borrowers, with such supporting information as may be requested by Administrative Agent, including a statement as to whether any change in GAAP or in the application thereof has occurred since September 30, 2003, and, if any change has occurred, specifying the effect of such change on the financial statements accompanying such Compliance Certificate and setting forth a certified reconciliation between calculations of the financial ratios or requirements made before and after giving effect to such change in GAAP.

1.5   Amendment to Section 7.05 Investments.

        A.    Subsection 7.05 shall be amended by deleting the word "and" at the end of clause (m) thereof, deleting the period from the end of clause (n) thereof and replacing it with "; and" and adding a new clause (o) which will read as follows:

        (o)   Investments in the Mirror Notes and the REAL Litigation Settlement Pledged Stock securing the Mirror Notes required pursuant to the REAL Litigation Settlement Agreement.

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1.6   Amendment to Section 7.07 Restricted Payments.

        A.    Subsection 7.07 shall be deleted in its entirety and replaced with the following:

        7.07Restricted Payments.

        (a)   (i) Declare or make any Restricted Payment or any distribution of any Properties (including cash, rights, obligations, partnership interests or Partnership Units, on account of any partnership interests, Partnership Units or Stock) to any Person (other than Borrowers or a Wholly-Owned Subsidiary), or (ii) purchase, redeem or otherwise acquire for value any of its partnership interests, Partnership Units or Stock, now or hereafter outstanding, from any Person (other than Borrowers or a Wholly-Owned Subsidiary) (all of the foregoing set forth in clauses (i) and (ii), collectively, being "distributions"), except for the following: (A) the exchange of common Stock of the REIT for Partnership Units; (B) if no Default or Event of Default exists under Section 8.01(a), (b) or (c) as a result of a breach of Section 7.14, then the Borrowers and all such Subsidiaries may make "distributions" during any four consecutive fiscal quarter period in an amount in the aggregate which does not exceed the greater of (1) 90% of Funds From Operations for each four consecutive fiscal quarter period ending on the last day of each fiscal quarter, or (2) such amount as may be necessary to maintain REIT Status ("distributions" under this clause (B) shall not include any "distributions" under clauses (A) or (C)); (C) that if no Default or Event of Default exists, the Borrowers and all such Subsidiaries may undertake Permitted Preferred Stock Redemptions; provided, that, prior to making any Permitted Preferred Stock Redemptions, Borrowers shall first certify in writing to Administrative Agent (i) that the Net Issuance Proceeds or Net Disposition Proceeds referred to in the definition of "Permitted Preferred Stock Redemptions" have been, or will be, applied as and to the extent required under Section 2.06 of the Revolver Credit Agreement, and (ii) that the use of funds to make such Permitted Preferred Stock Redemptions shall not cause a Default or an Event of Default under this Agreement; and (D) (1) the exercise by the Borrowers of their right as a secured party to take possession of the Mirror Note Stock after a default under the Mirror Note Stock pledge agreement and in accordance with the REAL Litigation Settlement Agreement, and (2) the release to the Borrowers of the Cash Deposit Stock currently held in escrow for the benefit of the Borrowers in accordance with the REAL Litigation Settlement Agreement; provided, however, that nothing in this Section 7.07 shall prohibit (A) any Borrower or any Subsidiary of Borrower from making tenders for or otherwise acquiring for value any partnership interest, Partnership Units or Stock, now or hereafter outstanding, of any Borrower or any Subsidiary of any Borrower which were not issued by such acquiring Borrower or Subsidiary or (B) any distribution of Property by any Borrower Party, or any Affiliate thereof, in the Ordinary Course of Business and pursuant to such Borrower Party's or Affiliate's Organization Documents, including (x) any distribution of proceeds from Dispositions permitted under Section 7.04, (y) any distribution of proceeds from Dispositions in the Ordinary Course of Business and (z) any distribution by a non-Wholly-Owned Subsidiary to any Borrower, any of Borrowers' Subsidiaries or to any other Person holding an equity interest in such non-Wholly-Owned Subsidiary.

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        (b)   (i) Permit any Subsidiary to make a demand under any Intra-Company Debt which is payable upon demand at any time after the Revolving Commitment Termination Date, or (ii) permit any payment with respect to Intra-Company Debt while any Event of Default is continuing.

1.7   Amendment to Section 7.14 Financial Covenants

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

        7.14Financial Covenants.

        (a)   Permit the Fixed Charge Coverage Ratio as of the end of any fiscal quarter to be less than 1.40:1.00.

        (b)   Intentionally Omitted.

        (c)   Permit the Interest Coverage Ratio as of the end of any fiscal quarter to be less than 2.00:1.00.

        (d)   Permit the Unsecured Debt Service Coverage Ratio as of the end of any fiscal quarter to be less than 3.00:1.00.

        (e)   Permit the ratio of Total Combined Debt to Gross Asset Value to exceed 0.55:1.00 at any time; provided, however, at any time during a Temporary Leverage Increase, the ratio shall not exceed 0.575:1.00; and provided, further, that for purposes of this Section 7.14(e), Gross Asset Value shall be reduced by an amount equal to the excess, if any, of (x) the sum of the amounts, as on the date of determination, from clauses (ii), (vi) and (vii) set forth in the definition of "Gross Asset Value" over (y) 15% of the sum of the amounts, as on such date of determination, from clauses (i), (iii), (iv) and (v) set forth in the definition of "Gross Asset Value".

        (f)    Permit the ratio of Total Obligations to Gross Asset Value to exceed 0.65:1.00 at any time; provided, however, at any time during a Temporary Leverage Increase, the ratio shall not exceed 0.675:1.00; and provided, further, that for purposes of this Section 7.14(f), Gross Asset Value shall be reduced by an amount equal to the excess, if any, of (x) the sum of the amounts, as on the date of determination, from clauses (ii), (vi) and (vii) set forth in the definition of "Gross Asset Value" over (y) 15% of the sum of the amounts, as on such date of determination, from clauses (i), (iii), (iv) and (v) set forth in the definition of "Gross Asset Value".

        (g)   Permit the Encumbered Property Debt Coverage Ratio as of the end of any fiscal quarter to be less than 1.50:1.00.

        (h)   Permit the Consolidated Net Worth of the REIT and its Subsidiaries on a consolidated basis to be less at any time than the sum of (x) $3,230,456,000

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plus (y) 85% of the Net Issuance Proceeds of all issuances of Stock or Partnership Units from and after September 30, 2002.

        Notwithstanding anything to the contrary contained herein, the Borrowers acknowledge and agree that in determining EBITDA and Net Operating Income for the Borrowers and their Subsidiaries, any items of net income (or net loss) on account of the operations of an Institutional Joint Venture shall not be included in the determination of EBITDA and/or Net Operating Income unless the Cash or Cash Equivalents related thereto have been distributed to Borrowers or their Wholly-Owned Subsidiaries which are Guarantors or are otherwise available to be so distributed without restriction, excluding ordinary course restrictions which limit distributions to a quarterly or more frequent basis.

1.8   Amendment to Exhibit B—Form of Compliance Certificate.

        A.    Exhibit B—Form of Compliance Certificate shall be deleted in its entirety and replaced with Exhibit B—Form of Compliance Certificate attached hereto as Annex I.

Section 2. CONDITIONS TO EFFECTIVENESS

        This Amendment shall become effective as of the Amendment Effective Date, at such time that all of the following conditions are satisfied:

        A.    Supermajority Lenders shall have executed this Amendment;

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

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

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

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

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

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

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

Section 3. BORROWERS' REPRESENTATIONS AND WARRANTIES

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

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

3.2   Authorization of Agreements. The execution and delivery of this Amendment and the performance of the Amended Agreement have been duly authorized by all necessary action on the part of Borrowers and the other parties delivering any of such documents, as the case may be. Except as disclosed on Schedule 3.2, the organizational documents of the Borrowers, Pledgors and Guarantors have not been modified in any material respect since May 30, 2003;

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

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

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

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

3.7   Incorporation of Representations and Warranties From Credit Agreement. After giving effect to this Amendment, the representations and warranties contained in Section 5 of the Credit Agreement are and will be true, correct and complete in all material respects on and as of the Amendment Effective Date to the same extent as though made on and as of such date, except representations and warranties solely to the extent such representations and warranties specifically relate to an earlier date, in which case they were true, correct and complete in all material respects on and as of such earlier date.

Section 4. MISCELLANEOUS

4.1   Reference to and Effect on the Credit Agreement and the Other Loan Documents.

        A.    On and after the Amendment Effective Date, each reference in the Credit Agreement to "this Agreement", "hereunder", "hereof", "herein" or words of like import

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referring to the Credit Agreement, and each reference in the other Loan Documents to the "Credit Agreement", "thereunder", "thereof" or words of like import referring to the Credit Agreement shall mean and be a reference to the Credit Agreement, as amended by this Amendment.

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

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

4.2   Fees and Expenses. Borrowers acknowledge that all reasonable costs, fees and expenses incurred by Administrative Agent and its counsel with respect to this Amendment and the documents and transactions contemplated hereby shall be for the account of Borrowers. On or before October    , 2003, the Borrowers hereby agree to pay the reasonable fees, cost and expenses of Administrative Agent's counsel in connection with this Amendment.

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

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

4.5   Entire Agreement. This Amendment embodies the entire agreement and understanding among the parties with respect to the amendment to the Credit Agreement, and supersedes all prior agreements and understandings, oral or written, relating thereto.

Section 5. ACKNOWLEDGEMENT AND CONSENT

        A.    Guarantors are party to that certain Amended and Restated Payment Guaranty, dated as of May 30, 2003, to the extent amended hereby, pursuant to which Guarantors have guarantied the Obligations. Pledgors are party to that certain Borrowers Pledge Agreement, dated as of May 30, 2003, to the extent amended hereby, pursuant to which Pledgors have pledged the Pledged Collateral as security for the Secured Obligations (as defined in the Borrowers Pledge Agreement).

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

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

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

        E.    Each Lender hereby (i) acknowledges that it has received and reviewed the terms and provisions of that certain Sixth Amendment to Interim Credit Agreement, dated as of September 30, 2003 (the "Casden Amendment") among the REIT, AIMCO, NHP Management (collectively, the "Casden Borrowers"), Lehman Commercial Paper Inc., as administrative agent, syndication agent and a lender ("Lehman"), each lender from time to time party thereto, and Lehman Brothers Inc., as sole lead arranger, and (ii) consents to the modifications and amendments as set forth in the Casden Amendment to the Casden Credit Agreement and the Casden Loan Documents.

        F.    Each Lender hereby (i) acknowledges that it has received and reviewed the terms and provisions of that certain Third Amendment to Fifth Amended and Restated Credit Agreement, dated as of September 30, 2003 (the "Revolver Amendment") among the REIT,

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AIMCO, NHP Management and AIMCO/Bethesda (collectively, the "Revolver Borrowers"), Bank of America, N.A., as administrative agent and letter of credit issuing lender (in such capacity, the "Revolver Agent"), and each lender from time to time party thereto, and (ii) consents to the modifications and amendments as set forth in the Revolver Amendment to the Revolver Credit Agreement and the Revolver Loan Documents.

[Signatures on Next Page]

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Exhibit 10.5

EX-31.1

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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)) 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)

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

(c)

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: November 12, 2003

/s/  TERRY CONSIDINE Terry Considine
Chairman and Chief Executive Officer

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Certifications
CHIEF EXECUTIVE OFFICER CERTIFICATION

EX-31.2

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Exhibit 31.2

CHIEF FINANCIAL OFFICER CERTIFICATION

I, Paul J. McAuliffe, 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)) 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)

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

(c)

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: November 12, 2003

/s/  PAUL J. MCAULIFFE Paul J. McAuliffe
Executive Vice President and Chief Financial Officer

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CHIEF FINANCIAL OFFICER CERTIFICATION

EX-32.1

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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 period ending September 30, 2003 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
November 12, 2003

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

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Certification of CEO Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

EX-32.2

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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 period ending September 30, 2003 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Paul J. McAuliffe, 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/  PAUL J. MCAULIFFE Paul J. McAuliffe
Executive Vice President and Chief Financial Officer
November 12, 2003

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

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Certification of CFO Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

EX-99.1

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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 period ending September 30, 2003, 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/  PETER KOMPANIEZ Peter Kompaniez President

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Exhibit 99.1