Form 8-K

Exhibit 99.1

Item 6. Selected Financial Data

The following selected financial data is based on our audited historical financial statements. This information should be read in conjunction with such financial statements, including the notes thereto, and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included herein or in previous filings with the Securities and Exchange Commission.


	For the Years Ended December 31,
	2009(1)			2008 (1) (2)			2007 (1)			2006 (1)			2005 (1)
	(dollar amounts in thousands, except per unit data)
OPERATING DATA:
Total revenues	$	1,151,736		$	1,199,423		$	1,132,109		$	1,043,683		$	866,992
Total operating expenses (3)		(1,051,394	)		(1,151,459	)		(958,070	)		(879,107	)		(731,102	)
Operating income (3)		100,342			47,964			174,039			164,576			135,890
Loss from continuing operations (3)		(197,883	)		(118,377	)		(49,348	)		(41,838	)		(31,908	)
Income from discontinued operations, net (4)		153,903			746,165			175,603			331,820			161,718
Net (loss) income		(43,980	)		627,788			126,255			289,982			129,810
Net income attributable to noncontrolling interests		(22,442	)		(155,749	)		(92,138	)		(92,917	)		(49,064	)
Net income attributable to preferred unitholders		(56,854	)		(61,354	)		(73,144	)		(90,527	)		(98,946	)
Net (loss) income attributable to the Partnership’s common unitholders		(123,276	)		403,700			(43,508	)		104,592			(22,458	)
Earnings (loss) per common unit — basic and diluted (5):
Loss from continuing operations attributable to the Partnership’s common unitholders	$	(1.75	)	$	(1.96	)	$	(1.40	)	$	(1.47	)	$	(1.32	)
Net (loss) income attributable to the Partnership’s common unitholders	$	(1.00	)	$	4.11		$	(0.42	)	$	0.99		$	(0.21	)

BALANCE SHEET INFORMATION:
Real estate, net of accumulated depreciation	$	6,795,896		$	6,957,136		$	6,730,419		$	6,265,799		$	5,573,996
Total assets		7,922,139			9,456,721			10,631,746			10,305,903			10,031,761
Total indebtedness		5,541,148			5,919,771			5,534,154			4,852,928			4,192,292
Total partners’ capital		1,550,374			1,661,600			2,152,326			2,753,617			3,164,111

OTHER INFORMATION:
Distributions declared per common unit	$	0.40		$	7.48		$	4.31		$	2.40		$	3.00
Total consolidated properties (end of period)		426			514			657			703			619
Total consolidated apartment units (end of period)		95,202			117,719			153,758			162,432			158,548
Total unconsolidated properties (end of period)		77			85			94			102			264
Total unconsolidated apartment units (end of period)		8,478			9,613			10,878			11,791			35,269
Units managed (end of period) (6)		31,974			35,475			38,404			42,190			46,667


(1)		Certain reclassifications have been made to conform to the September 30, 2010 financial statement presentation, including retroactive adjustments to reflect additional properties sold or classified as held for sale as of September 30, 2010, as discontinued operations (see Note 13 to the consolidated financial statements in Item 8), and retroactive adjustments related to our January 1, 2009 adoption of the provisions of Financial Accounting Standards Board, or FASB, Statement of Financial Accounting Standards No. 141(R), or SFAS 141(R), FASB Statement of Financial Accounting Standards No. 160, or SFAS 160, and FASB Staff Position No. EITF 03-6-1, or FSP EITF 03-6-1 (see Note 2 to the consolidated financial statements in Item 8).

(2)		The consolidated statement of income for the year ended December 31, 2008, has been restated to reclassify impairment losses on real estate development assets within operating income. The reclassification reduced operating income by $91.1 million for the year ended December 31, 2008, and had no effect on the reported amounts of loss from continuing operations, net income, net income available to the Partnership’s common unitholders or earnings per unit. Additionally, the reclassification had no effect on the consolidated balance sheets, statements of partners’ capital or statements of cash flows. See Note 2 to the consolidated financial statements in Item 8.

(3)		Total operating expenses, operating income and loss from continuing operations for the year ended December 31, 2008, include a $91.1 million pre-tax provision for impairment losses on real estate development assets, which is discussed further in Management’s Discussion and Analysis of Financial Condition and Results of Operations in Item 7.


(4)		Income from discontinued operations for the years ended December 31, 2009, 2008, 2007, 2006 and 2005 includes $221.8 million, $800.3 million, $117.6 million, $337.1 million and $162.7 million in gains on disposition of real estate, respectively. Income from discontinued operations for 2009, 2008 and 2007 is discussed further in Management’s Discussion and Analysis of Financial Condition and Results of Operations in Item 7.

(5)		Weighted average common units, common OP unit equivalents, dilutive preferred securities and earnings per unit amounts for each of the periods presented above have been adjusted for our application during the fourth quarter 2009 of a change in accounting, which requires the units issued in our special distributions paid in 2008 and January 2009 to be treated as issued and outstanding on the distribution payment dates for basic purposes and as potential unit equivalents for the periods between the ex-dividend dates and payment dates for diluted purposes, rather than treating the units as issued and outstanding as of the beginning of the earliest period presented for both basic and diluted purposes. See Note 2 to the consolidated financial statements in Item 8 for further discussion of this accounting change.

(6)		Units managed represents units in properties for which we provide asset management services only, although in certain cases we may indirectly own generally less than one percent of the economic interest in such properties through a partnership syndication or other fund.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Executive Overview

We are a limited partnership engaged in the acquisition, ownership, management and redevelopment of apartment properties. We are the operating partnership for Aimco, which is a self-administered and self-managed real estate investment trust, or REIT. Our property operations are characterized by diversification of product, location and price point. We primarily invest in the 20 largest U.S. markets, as measured by total market capitalization, which is the total market value of institutional-grade apartment properties in a particular market. We define these markets as “target markets” and they possess the following characteristics: a high concentration of population and apartment units; geographic and employment diversification; and historically strong returns with reduced volatility as part of a diversified portfolio. We are one of the largest owners and operators of apartment properties in the United States. As of December 31, 2009, we owned or managed 870 apartment properties containing 135,654 units located in 44 states, the District of Columbia and Puerto Rico. Our primary sources of income and cash are rents associated with apartment leases.

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

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

During the challenging financial and economic environment in 2009, we focused on: serving and retaining residents; continually improving our portfolio; reducing leverage and financial risk; and simplifying our business model.

We are focused on owning and operating B/B+ quality apartments concentrated in our target markets. We intend to upgrade the quality of our portfolio through the sale of approximately 5% to 10% of our portfolio annually, with the proceeds generally used to increase our allocation of capital to well located properties within our target markets through capital investments, redevelopment or acquisitions.

The following discussion and analysis of the results of our operations and financial condition should be read in conjunction with the accompanying consolidated financial statements in Item 8.

Results of Operations

Overview

2009 compared to 2008

We reported net loss attributable to the Partnership of $66.4 million and net loss attributable to the Partnership’s common unitholders of $123.3 million for the year ended December 31, 2009, compared to net income attributable to the Partnership of $472.0 million and net income attributable to the Partnership’s common unitholders of $403.7 million for the year ended December 31, 2008, decreases of $538.4 million and $527.0 million, respectively. These decreases were principally due to the following items, all of which are discussed in further detail below:

	•		a decrease in income from discontinued operations, primarily related to our sale of fewer assets in 2009 and the recognition of lower gains on sales as compared to 2008;

	•		a decrease in gain on dispositions of unconsolidated real estate and other, primarily due to a large gain on the sale of an interest in an unconsolidated real estate partnership in 2008;

	•		an increase in depreciation and amortization expense, primarily related to completed redevelopments and capital additions placed in service for partial periods during 2008 or 2009; and

	•		a decrease in asset management and tax credit revenues, primarily due to a reduction in promote income, which is income earned in connection with the disposition of properties owned by our consolidated joint ventures.

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

	•		a decrease in earnings allocable to noncontrolling interests, primarily due to a decrease in the noncontrolling interests’ share of the decrease in gains on sales discussed above;

	•		a decrease in general and administrative expenses, primarily related to reductions in personnel and related expenses from our organizational restructuring activities during 2008 and 2009; and

	•		impairment losses on real estate development assets in 2008, for which no similar impairments were recognized in 2009.

2008 compared to 2007

We reported net income attributable to the Partnership of $472.0 million and net income attributable to the Partnership’s Aimco common unitholders of $403.7 million for the year ended December 31, 2008, compared to net income attributable to the Partnership of $34.1 million and net loss attributable to the Partnership’s common unitholders of $43.5 million for the year ended December 31, 2007, increases of $437.9 million and $447.2 million, respectively. These increases were principally due to the following items, all of which are discussed in further detail below:

	•		an increase in income from discontinued operations, primarily related to an increase in the number of assets sold during 2008 and our recognition of higher gains on sales as compared to 2007;

	•		an increase in gain on dispositions of unconsolidated real estate and other, primarily due to a large gain on the sale of an interest in an unconsolidated real estate partnership in 2008;

	•		an increase in net operating income associated with property operations, reflecting improved operations of our same store properties and other properties; and

	•		an increase in asset management and tax credit revenues, primarily due to an increase in promote income, which is income earned in connection with the disposition of properties owned by our consolidated joint ventures.

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

	•		impairment losses on real estate development assets in 2008, for which no similar impairments were recognized in 2007;

	•		an increase in earnings allocable to noncontrolling interests, primarily due to an increase in the noncontrolling interests’ share of the increase in gains on sales discussed above;

	•		an increase in depreciation and amortization expense, primarily related to completed redevelopments placed in service for partial periods during 2007 or 2008;

	•		restructuring costs recognized during the fourth quarter of 2008; and

	•		an increase in provisions for losses on notes receivable, primarily due to the impairment during 2008 of our interest in Casden Properties LLC.

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

Business Segment Operating Results

As of December 31, 2009, we had two reportable segments: real estate (owning, operating and redeveloping apartments) and investment management (portfolio management and asset management). Based on a planned reduction in our transactional activities, during the three months ended March 31, 2010, we reevaluated our reportable segments and determined our investment management reporting unit no longer meets the requirements for a reportable segment. Additionally, to provide more meaningful information regarding our real estate operations, we elected to disaggregate information for the prior real estate segment. Following these changes, we have two reportable segments: conventional real estate operations and affordable real estate operations, which are discussed in further detail below.

Real Estate Operations

Our real estate portfolio is comprised of two business components: conventional real estate operations and affordable real estate operations, which also represent our two reportable segments. Our conventional real estate portfolio consists of market-rate apartments with rents paid by the resident and includes 226 properties with 70,758 units. Our affordable real estate portfolio consists of 244 properties with 28,034 units, with rents that are generally paid, in whole or part, by a government agency. Our conventional and affordable properties contributed 87% and 13%, respectively, of our property net operating income attributed to the Partnership’s common unitholders during the year ended December 31, 2009.

Our chief operating decision maker uses various generally accepted industry financial measures to assess the performance and financial condition of the business, including: net operating income; Net Asset Value; Pro forma Funds From Operations; Adjusted Funds From Operations; same store property operating results; Free Cash Flow; financial coverage ratios; and leverage as shown on our balance sheet. Our chief operating decision maker emphasizes net operating income as a key measurement of segment profit or loss. Segment net operating income is generally defined as segment revenues less direct segment operating expenses.

The following table summarizes the net operating income of our real estate operations, including our conventional and affordable segments, for the years ended December 31, 2009, 2008 and 2007 (in thousands):


	Year Ended
	December 31,
	2009		2008		2007
Rental and other property revenues:
Conventional real estate operations	$	909,218	$	913,793	$	882,545
Affordable real estate operations		187,583		180,456		168,885
Corporate and amounts not allocated		5,082		6,344		6,924

Total		1,101,883		1,100,593		1,058,354

Property operating expenses:
Conventional real estate operations		363,863		360,479		354,455
Affordable real estate operations		92,416		91,867		83,126
Corporate and amounts not allocated		59,469		74,870		69,822

Total		515,748		527,216		507,403

Real estate operations net operating income	$	586,135	$	573,377	$	550,951

For the year ended December 31, 2009, compared to the year ended December 31, 2008, our real estate operations net operating income increased $12.8 million, or 2.2%, due to an increase in rental and other property revenues of $1.3 million, or 0.1%, and a decrease in property operating expenses of $11.5 million, or 2.2%.

Our conventional real estate operations net operating income decreased $8.0 million, or 1.4%, from $553.3 million during the year ended December 31, 2008 to $545.3 million during the year ended December 31, 2009. This decrease was primarily attributable to our conventional same store properties, including a $10.1 million, or 1.4%, decrease in revenues due to lower average rent (approximately $19 per unit) and a decrease of 30 basis points in average physical occupancy, and $1.4 million increase in expenses due to increases in payroll, repairs and maintenance, and insurance expenses, partially offset by decreases in contract services, marketing and administrative expenses. The decrease in conventional net operating income associated with our same store properties was partially offset by a $3.5 million increase in net operating income associated with our conventional non-same store properties. Revenues of our conventional non-same store properties increased $5.5 million, primarily due to an $8.1 million increase in redevelopment revenues, primarily due to more units in service at these properties in 2009, partially offset by a $2.0 million increase in expenses related to our non-same store properties, primarily due to increases in real estate taxes and expenses related to properties newly consolidated in 2009.

Our affordable real estate operations net operating income increased $6.6 million, or 7.4%, from $88.6 million during the year ended December 31, 2008, to $95.2 million during the year ended December 31, 2009. This increase in net operating income was primarily due to increases in revenues of our affordable properties of $7.1 million, including a $5.0 million increase primarily due to higher average rents partially offset by lower physical occupancy, and a $2.1 million increase related to properties that were newly consolidated in 2009.

Real estate operations net operating income includes property management revenues and expenses and casualty losses, which we do not allocate to our conventional or affordable segments for purposes of evaluating segment performance. Property management revenues decreased by $1.3 million, due to a reduction in the number of properties managed due to sales. Expenses not allocated to our conventional or affordable segments decreased by $15.4 million, primarily due to a $16.6 million decrease in property management expenses, resulting primarily from reductions in personnel and related costs attributed to our restructuring activities (see Note 3 to the consolidated financial statements in Item 8).

For the year ended December 31, 2008, compared to the year ended December 31, 2007, our real estate operations net operating income increased $22.4 million, or 4.1%, due to an increase in rental and other property revenues of $42.2 million, or 4.0%, partially offset by an increase in property operating expenses of $19.8 million, or 3.9%.

Our conventional real estate operations net operating income increased $25.2 million, or 4.8%, from $528.1 million during the year ended December 31, 2007 to $553.3 million during the year ended December 31, 2008. This increase was primarily attributable to our conventional same store properties, including a $22.2 million, or 3.1%, increase in revenues due to higher average rent (approximately $21 per unit) and an increase of 80 basis points in average physical occupancy, partially offset by a $1.7 million increase in expenses due to increases in utility, real estate tax, marketing, administrative and contract service expenses, offset by decreases in payroll, turnover and repair and maintenance expenses. In addition to the increase in conventional same store net operating income, net operating income related to our conventional non-same store properties increased by $4.7 million. Revenues of our conventional non-same store properties increased $9.0 million, primarily due to a $6.5 million increase in redevelopment revenues due to more units in service during 2008, partially offset by a $4.3 million increase in expenses of our conventional non-same store properties primarily due to increases in payroll, real estate tax, contract services and marketing expenses.

Our affordable real estate operations net operating income increased $2.8 million, or 3.3%, from $85.8 million during the year ended December 31, 2007, to $88.6 million during the year ended December 31, 2008. Revenues of our affordable properties increased by $11.5 million and expenses of our affordable properties increased by $8.7 million, primarily due to properties newly consolidated during late 2007.

Real estate operations net operating income includes property management revenues and expenses and casualty losses, which we do not allocate to our conventional or affordable segments for purposes of evaluating segment performance. Property management revenues decreased by $0.6 million, primarily attributable to a reduction in the number of properties managed due to sales. Expenses not allocated to our conventional or affordable segments increased by $5.0 million, primarily due to a $2.8 million increase in casualty losses, primarily due to properties damaged by Tropical Storm Fay and Hurricane Ike in 2008, and a $2.2 million increase in property management expenses.

Asset Management and Tax Credit Revenues

We perform activities and services for consolidated and unconsolidated real estate partnerships, including portfolio strategy, capital allocation, joint ventures, tax credit syndication, acquisitions, dispositions and other transaction activities. Within our owned portfolio, we refer to these activities as “Portfolio Management,” and their benefit is seen in property operating results and in gains on dispositions. For affiliated partnerships, we refer to these activities as asset management, for which we are separately compensated through fees paid by third party investors. These activities are conducted in part by our taxable subsidiaries, and the related net operating income may be subject to income taxes.

Asset management revenue may include certain fees that were earned in a prior period, but not recognized at that time because collectibility was not reasonably assured. Those fees may be recognized in a subsequent period upon occurrence of a transaction or a high level of the probability of occurrence of a transaction, or improvement in operations that generates sufficient cash to pay the fees.

For the year ended December 31, 2009, compared to the year ended December 31, 2008, asset management and tax credit revenues decreased $49.0 million. This decrease is primarily attributable to a $42.8 million decrease in promote income, which is income earned in connection with the disposition of properties owned by our consolidated joint ventures, due to fewer related sales in 2009, a $7.6 million decrease in other general partner transactional fees and a $2.2 million decrease in asset management fees, offset by a $3.6 million increase in revenues associated with our affordable housing tax credit syndication business, including syndication fees and other revenue earned in connection with these arrangements.

For the year ended December 31, 2008, compared to the year ended December 31, 2007, asset management and tax credit revenues increased $25.1 million. This increase is primarily attributable to a $30.7 million increase in promote income, which is income earned in connection with the disposition of properties owned by our consolidated joint ventures, and a $10.3 million increase in other general partner transactional fees. These increases are offset by a decrease of $10.0 million in asset management fees and a decrease of $5.9 million in revenues associated with our affordable housing tax credit syndication business, including syndication fees and other revenue earned in connection with these arrangements.

Investment Management Expenses

Investment management expenses consist primarily of the costs of departments that perform asset management and tax credit activities. For the year ended December 31, 2009, compared to the year ended December 31, 2008, investment management expenses decreased $9.0 million, primarily due to reductions in personnel and related costs from our organizational restructurings and a reduction in transaction costs related to our retroactive adoption of SFAS 141 (R) (see Note 2 to the consolidated financial statements in Item 8).

For the year ended December 31, 2008, compared to the year ended December 31, 2007, investment management expenses increased $4.3 million, primarily due to a $3.5 million increase in acquisition costs.

Other Operating Expenses (Income)

Depreciation and Amortization

For the year ended December 31, 2009, compared to the year ended December 31, 2008, depreciation and amortization increased $50.8 million, or 13.3%. This increase primarily consists of depreciation related to properties acquired during the latter part of 2008, completed redevelopments and other capital projects recently placed in service.

For the year ended December 31, 2008, compared to the year ended December 31, 2007, depreciation and amortization increased $45.3 million, or 13.4%. This increase reflects depreciation of $65.1 million for newly acquired properties, completed redevelopments and other capital projects recently placed in service. This increase was partially offset by a decrease of $25.7 million in depreciation adjustments necessary to reduce the carrying amount of buildings and improvements to their estimated disposition value, or zero in the case of a planned demolition, primarily due to a property that became fully depreciated during 2007.

Provision for Operating Real Estate Impairment Losses

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

For the years ended December 31, 2009 and 2007, we recognized impairment losses of $2.3 million and $1.1 million, respectively, related to properties classified as held for use as of December 31, 2009. We recognized no such impairment losses during the year ended December 31, 2008.

Provision for Impairment Losses on Real Estate Development Assets

In connection with the preparation of our 2008 annual financial statements, we assessed the recoverability of our investment in our Lincoln Place property, located in Venice, California. Based upon the decline in land values in Southern California during 2008 and the expected timing of our redevelopment efforts, we determined that the total carrying amount of the property was no longer probable of full recovery and, accordingly, during the three months ended December 31, 2008, recognized an impairment loss of $85.4 million ($55.6 million net of tax).

Similarly, we assessed the recoverability of our investment in Pacific Bay Vistas (formerly Treetops), a vacant property located in San Bruno, California, and determined that the carrying amount of the property was no longer probable of full recovery and, accordingly, we recognized an impairment loss of $5.7 million for this property during the three months ended December 31, 2008.

The impairments discussed above totaled $91.1 million and are included in provisions for impairment losses on real estate development assets in our consolidated statement of income for the year ended December 31, 2009 included in Item 8. We recognized no similar impairments on real estate development assets during the years ended December 31, 2009 or 2007.

General and Administrative Expenses

For the year ended December 31, 2009, compared to the year ended December 31, 2008, general and administrative expenses decreased $23.7 million, or 29.5%. This decrease is primarily attributable to reductions in personnel and related expenses associated with our organizational restructurings (see Note 3 to the consolidated financial statements in Item 8), pursuant to which we eliminated approximately 400, or 36%, of our offsite positions between December 31, 2008 and December 31, 2009.

For the year ended December 31, 2008, compared to the year ended December 31, 2007, general and administrative expenses increased $8.0 million, or 11.1%. This increase is primarily attributable to higher personnel and related expenses of $6.1 million and an increase of $1.5 million in information technology communications costs.

Other Expenses, Net

Other expenses, net includes franchise taxes, risk management activities, partnership administration expenses and certain non-recurring items.

For the year ended December 31, 2009, compared to the year ended December 31, 2008, other expenses, net decreased by $6.3 million. The decrease is primarily attributable to a $5.4 million write-off during 2008 of certain communications hardware and capitalized costs in 2008, and a $5.3 million reduction in expenses of our self insurance activities, including a decrease in casualty losses on less than wholly owned properties from 2008 to 2009. These decreases are partially offset by an increase of $4.8 million in costs related to certain litigation matters.

For the year ended December 31, 2008, compared to the year ended December 31, 2007, other expenses, net increased by $3.1 million. The increase includes a $5.4 million write-off of certain communications hardware and capitalized costs during 2008 and a $1.2 million write-off of redevelopment costs associated with a change in the planned use of a property during 2008. The net unfavorable change also reflects $3.6 million of income recognized in 2007 related to the transfer of certain property rights to an unrelated party. These increases were partially offset by a $3.7 million reduction in expenses of our self insurance activities (net of costs in 2008 related to Tropical Storm Fay and Hurricane Ike) and a net decrease of $2.0 million in costs related to certain litigation matters.

Restructuring Costs

For the year ended December 31, 2009, we recognized restructuring costs of $11.2 million, as compared to $22.8 million in the year ended December 31, 2008, related to our organizational restructurings, which are further discussed in Note 3 to the consolidated financial statements in Item 8. We recognized no restructuring costs during the year ended December 31, 2007.

Interest Income

Interest income consists primarily of interest on notes receivable from non-affiliates and unconsolidated real estate partnerships, interest on cash and restricted cash accounts, and accretion of discounts on certain notes receivable from unconsolidated real estate partnerships. Transactions that result in accretion occur infrequently and thus accretion income may vary from period to period.

For the year ended December 31, 2009, compared to the year ended December 31, 2008, interest income decreased $10.5 million, or 51.4%. Interest income decreased by $8.7 million due to lower interest rates on notes receivable, cash and restricted cash balances and lower average balances and by $4.1 million due to a decrease in accretion income related to our note receivable from Casden Properties LLC for which we ceased accretion following impairment of the note in 2008. These decreases were partially offset by a $2.3 million increase in accretion income related to other notes during the year ended December 31, 2008, resulting from a change in the timing and amount of collection.

For the year ended December 31, 2008, as compared to the year ended December 31, 2007, interest income decreased $23.1 million, or 53.1%. Interest income decreased by $15.9 million due to lower interest rates on notes receivable, cash and restricted cash balances and lower average balances. Interest income also decreased by $5.8 million due to an adjustment of accretion on certain discounted notes during the year ended December 31, 2008, resulting from a change in the estimated timing and amount of collection, and by $1.5 million for accretion income recognized during the year ended December 31, 2007, related to the prepayment of principal on certain discounted loans collateralized by properties in West Harlem in New York City.

Provision for Losses on Notes Receivable

During the years ended December 31, 2009, 2008 and 2007, we recognized net provisions for losses on notes receivable of $21.5 million, $17.6 million and $2.0 million, respectively. The provisions for losses on notes receivable for the years ended December 31, 2009 and 2008, primarily consist of impairments related to our investment in Casden Properties LLC, which are discussed further below.

As part of the March 2002 acquisition of Casden Properties, Inc., we invested $50.0 million for a 20% passive interest in Casden Properties LLC, an entity organized to acquire, re-entitle and develop land parcels in Southern California. Based upon the profit allocation agreement, we account for this investment as a note receivable and through 2008 were amortizing the discounted value of the investment to the $50.0 million previously estimated to be collectible, through January 2, 2009, the initial dissolution date of the entity. In 2009, the managing member extended the dissolution date. In connection with the preparation of our 2008 annual financial statements and as a result of a decline in land values in Southern California, we determined our recorded investment amount was not fully recoverable, and accordingly recognized an impairment loss of $16.3 million ($10.0 million net of tax) during the three months ended December 31, 2008. In connection with the preparation of our 2009 annual financial statements and as a result of continued declines in land values in Southern California, we determined our then recorded investment amount was not fully recoverable, and accordingly recognized an impairment loss of $20.7 million ($12.4 million net of tax) during the three months ended December 31, 2009.

In addition to the impairments related to Casden Properties LLC discussed above, we recognized provisions for losses on notes receivable totaling $0.8 million, $1.3 million and $2.0 million during the years ended December 31, 2009, 2008 and 2007, respectively.

Interest Expense

For the years ended December 31, 2009 and December 31, 2008, interest expense, which includes the amortization of deferred financing costs, totaled $315.4 million and $315.0 million, respectively. Interest expense increased by $14.5 million due to a reduction in redevelopment activity during 2009, which resulted in a reduction in capitalized interest. In addition, interest expense increased by $1.2 million due to an increase in prepayment penalties associated with refinancing activities, from $2.8 million in 2008 to $4.0 million in 2009, and by $4.0 million related to non-recourse property loans, from $301.9 million to $305.9 million, primarily due to higher average interest rates partially offset by lower average balances during 2009. These increases in interest expense were substantially offset by decreases in corporate interest expense. Interest expense related to corporate debt, which is primarily floating rate, decreased by $19.4 million, from $34.8 million to $15.4 million, primarily due to lower average balances and interest rates during 2009.

For the year ended December 31, 2008, compared to the year ended December 31, 2007, interest expense increased $10.3 million, or 3.4%. Interest expense related to non-recourse property loans increased by $16.2 million, from $285.7 million to $301.9 million, primarily due to higher average balances partially offset by lower average interest rates during 2008. In addition, interest expense increased by $4.6 million, due to a decrease in capitalized interest from $29.1 million in 2007 to $24.5 million in 2008, resulting from more units in service and lower interest rates. These increases were partially offset by a decrease in interest expense related to corporate debt, which is primarily floating rate and which decreased by $10.4 million, from $45.2 million to $34.8 million, primarily due to lower average balances and interest rates during 2008.

Equity in Losses of Unconsolidated Real Estate Partnerships

Equity in losses of unconsolidated real estate partnerships includes our share of net losses of our unconsolidated real estate partnerships and is primarily driven by depreciation expense in excess of the net operating income recognized by such partnerships.

During the years ended December 31, 2009, 2008 and 2007, we recognized equity in losses of unconsolidated real estate partnerships of $12.0 million, $4.6 million and $3.3 million, respectively. The $7.4 million increase in our equity in losses from 2008 to 2009 was primarily due to our sale in late 2008 of an interest in an unconsolidated real estate partnership that generated $3.0 million of equity in earnings during the year ended December 31, 2008, and our sale during 2009 of our interest in an unconsolidated group purchasing organization which resulted in a decrease of equity in earnings of approximately $1.2 million. The increase in equity in losses also includes additional losses recognized during 2009 related to the underlying investment properties of certain tax credit syndications we consolidated during 2009 and 2008.

Impairment Losses Related to Unconsolidated Real Estate Partnerships

Impairment losses related to unconsolidated real estate partnerships includes our share of impairment losses recognized by our unconsolidated real estate partnerships. For the year ended December 31, 2009, compared to the year ended December 31, 2008, impairment losses related to unconsolidated real estate partnerships decreased $2.3 million, and for the year ended December 31, 2008, compared to the year ended December 31, 2007, impairment losses related to unconsolidated real estate partnerships increased $2.7 million. This decrease and increase are primarily attributable to impairment losses recognized by unconsolidated partnerships on their underlying real estate properties during 2008.

Gain on Dispositions of Unconsolidated Real Estate and Other

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

For the year ended December 31, 2009, compared to the year ended December 31, 2008, gain on dispositions of unconsolidated real estate and other decreased $77.4 million. This decrease is primarily attributable to a gain of $98.4 million on our disposition in 2008 of interests in two unconsolidated real estate partnerships. This decrease was partially offset by $18.7 million of gains on the disposition of interests in unconsolidated partnerships during 2009. Gains recognized in 2009 consist of $8.6 million related to our receipt in 2009 of additional proceeds related to our disposition during 2008 of one of the partnership interests discussed above (see Note 3 to the consolidated financials statements in Item 8), $4.0 million from the disposition of our interest in a group purchasing organization (see Note 3 to the consolidated financial statements in Item 8), and $6.1 million from our disposition in 2009 of interests in unconsolidated real estate partnerships.

For the year ended December 31, 2008, compared to the year ended December 31, 2007, gain on dispositions of unconsolidated real estate and other increased $76.5 million. This increase is primarily attributable to a $98.4 million net gain on the disposition of interests in two unconsolidated real estate partnerships during the year ended December 31, 2008. During 2007, we recognized a $6.0 million non-refundable option and extension fee resulting from the termination of rights under an option agreement to sell the North and Central towers of our Flamingo South Beach property, approximately $6.4 million of net gains on dispositions of land parcels and our share of gains on dispositions of properties by unconsolidated real estate partnerships in 2007, and a $9.5 million gain on debt extinguishment related to properties in the VMS partnership (see Note 3 to the consolidated financial statements in Item 8).

Income Tax Benefit

In conjunction with Aimco’s UPREIT structure, certain of our operations, or a portion thereof, such as property management, asset management and risk management, are conducted through, and certain of our properties are owned by, taxable subsidiaries. Income taxes related to the results of continuing operations of our taxable subsidiaries are included in income tax benefit in our consolidated statements of income.

For the year ended December 31, 2009, compared to the year ended December 31, 2008, income tax benefit decreased by $34.5 million. This decrease was primarily attributed to $36.1 million of income tax benefit recognized in 2008 related to the impairments of our Lincoln Place property and our investment in Casden Properties LLC, both of which are owned through taxable subsidiaries, partially offset by $8.1 million of income tax benefit recognized in 2009 related to the impairment of our investment in Casden Properties LLC.

For the year ended December 31, 2008, compared to the year ended December 31, 2007, income tax benefit increased by $33.4 million. This increase was primarily attributed to $36.1 million of income tax benefit recognized in 2008 related to the impairments of our Lincoln Place property and our investment in Casden Properties LLC.

Income from Discontinued Operations, Net

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

For the years ended December 31, 2009 and 2008, income from discontinued operations totaled $153.9 million and $746.2 million, respectively. The $592.3 million decrease in income from discontinued operations was principally due to a $541.2 million decrease in gain on dispositions of real estate, net of income taxes, primarily attributable to fewer properties sold in 2009 as compared to 2008, and a $111.8 million decrease in operating income (inclusive of a $27.1 million increase in real estate impairment losses), partially offset by a $59.1 million decrease in interest expense.

For the years ended December 31, 2008 and 2007, income from discontinued operations totaled $746.2 million and $175.6 million, respectively. The $570.6 million increase in income from discontinued operations was principally due to a $641.7 million increase in gain on dispositions of real estate, net of income taxes, primarily attributable to more properties sold in 2008 as compared to 2007 and a $27.1 million decrease in interest expense. These increases were partially offset by a $66.7 million decrease in operating income (inclusive of a $22.0 million increase in real estate impairment losses) and a $32.7 million decrease related to a 2007 gain on debt extinguishment related to properties in the VMS partnership.

During the year ended December 31, 2009, we sold 89 consolidated properties for gross proceeds of $1.3 billion and net proceeds of $432.7 million, resulting in a net gain on sale of approximately $216.0 million (which is net of $5.8 million of related income taxes). During the year ended December 31, 2008, we sold 151 consolidated properties for gross proceeds of $2.4 billion and net proceeds of $1.1 billion, resulting in a net gain on sale of approximately $757.2 million (which is net of $43.1 million of related income taxes). During the year ended December 31, 2007, we sold 73 consolidated properties for gross proceeds of $480.0 million and net proceeds of $203.8 million, resulting in a net gain on sale of approximately $115.5 million (which is net of $2.1 million of related income taxes).

For the years ended December 31, 2009, 2008 and 2007, income from discontinued operations includes the operating results of the properties sold or classified as held for sale as of September 30, 2010.

Changes in the level of gains recognized from period to period reflect the changing level of our disposition activity from period to period. Additionally, gains on properties sold are determined on an individual property basis or in the aggregate for a group of properties that are sold in a single transaction, and are not comparable period to period (see Note 13 of the consolidated financial statements in Item 8 for additional information on discontinued operations).

Noncontrolling Interests in Consolidated Real Estate Partnerships

Noncontrolling interests in consolidated real estate partnerships reflects the non-Aimco partners’, or noncontrolling partners’, share of operating results of consolidated real estate partnerships. This generally includes the noncontrolling partners’ share of property management fees, interest on notes and other amounts eliminated in consolidation that we charge to such partnerships. As discussed in Note 2 to the consolidated financial statements in Item 8, we adopted the provisions of SFAS 160, which are now codified in the Financial Accounting Standards Board’s Accounting Standards Codification, or FASB ASC, Topic 810, effective January 1, 2009. Prior to our adoption of SFAS 160, we generally did not recognize a benefit for the noncontrolling interest partners’ share of partnership losses for partnerships that have deficit noncontrolling interest balances and we generally recognized a charge to our earnings for distributions paid to noncontrolling partners for partnerships that had deficit noncontrolling interest balances. Under the updated provisions of FASB ASC Topic 810, we are required to attribute losses to noncontrolling interests even if such attribution would result in a deficit noncontrolling interest balance and we are no longer required to recognize a charge to our earnings for distributions paid to noncontrolling partners for partnerships that have deficit noncontrolling interest balances.

For the year ended December 31, 2009, compared to the year ended December 31, 2008, net earnings attributed to noncontrolling interests in consolidated real estate partnerships decreased by $133.3 million. This decrease is primarily attributable to a reduction of $108.7 million related to the noncontrolling interests in consolidated real estate partnerships’ share of gains on dispositions of real estate, due primarily to fewer sales in 2009 as compared to 2008, $5.5 million of losses allocated to noncontrolling interests in 2009 that we would not have allocated to the noncontrolling interest partners in 2008 because to do so would have resulted in deficits in their noncontrolling interest balances, and approximately $3.8 million related to deficit distribution charges recognized as a reduction to our earnings in 2008, for which we did not recognize similar charges in 2009 based on the change in accounting discussed above. These decreases are in addition to the noncontrolling interest partners’ share of increased losses of our consolidated real estate partnerships in 2009 as compared to 2008.

For the year ended December 31, 2008, compared to the year ended December 31, 2007, net income attributed to noncontrolling interests in consolidated real estate partnerships increased by $63.6 million. This increase is primarily attributable to an increase of $105.6 million related to the noncontrolling interests in consolidated real estate partnerships’ share of gains on dispositions of real estate, due primarily to more sales in 2008 as compared to 2007, partially offset by increases of $42.0 million in net recoveries of deficit distributions.

As discussed in Note 2 to the consolidated financial statements in Item 8, during the first quarter 2010, we will adopt new accounting guidance related to accounting for variable interest entities. This change in accounting guidance may result in our consolidation of certain previously unconsolidated entities as well as our deconsolidation of certain we currently consolidate. At this time, we have not yet determined the effect this accounting change will have on our consolidated financial statements.

Critical Accounting Policies and Estimates

We prepare our consolidated financial statements in accordance with accounting principles generally accepted in the United States of America, or GAAP, which requires us to make estimates and assumptions. We believe that the following critical accounting policies involve our more significant judgments and estimates used in the preparation of our consolidated financial statements.

Impairment of Long-Lived Assets

From time to time, we have non-revenue producing properties that we hold for future redevelopment. We assess the recoverability of the carrying amount of these redevelopment properties by comparing our estimate of undiscounted future cash flows based on the expected service potential of the redevelopment property upon completion to the carrying amount. In certain instances, we use a probability-weighted approach to determine our estimate of undiscounted future cash flows when alternative courses of action are under consideration. As discussed in Provision for Impairment Losses on Real Estate Development Assets within the preceding discussion of our Results of Operations, during 2008 we recognized impairment losses on our Lincoln Place and Pacific Bay Vistas properties of $85.4 million ($55.6 million net of tax) and $5.7 million, respectively.

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

	•		the general economic climate;

	•		competition from other apartment communities and other housing options;

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

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

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

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

	•		changes in interest rates and the availability of financing.

Any adverse changes in these and other factors could cause an impairment in our long-lived assets, including real estate and investments in unconsolidated real estate partnerships. In addition to the impairments of Lincoln Place and Pacific Bay Vistas discussed above, based on periodic tests of recoverability of long-lived assets, for the years ended December 31, 2009 and 2007, we recorded net impairment losses of $2.3 million and $1.1 million, respectively, related to properties classified as held for use, and during the year ended December 31, 2008, we recorded no additional impairments related to properties held for use.

Notes Receivable and Interest Income Recognition

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

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

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

Provision for Losses on Notes Receivable

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

During the years ended December 31, 2009, 2008 and 2007 we recorded net provisions for losses on notes receivable of $21.5 million, $17.6 million and $2.0 million, respectively. As discussed in Provision for Losses on Notes Receivable within the preceding discussion of our Results of Operations, provisions for losses on notes receivable in 2009 and 2008 include impairment losses of $20.7 million ($12.4 million net of tax) and $16.3 million ($10.0 million net of tax), respectively, on our investment in Casden Properties LLC, which we account for as a note receivable. We will continue to evaluate the collectibility of these notes, and we will adjust related allowances in the future due to changes in market conditions and other factors.

Capitalized Costs

We capitalize costs, including certain indirect costs, incurred in connection with our capital additions activities, including redevelopment and construction projects, other tangible property improvements and replacements of existing property components. Included in these capitalized costs are payroll costs associated with time spent by site employees in connection with the planning, execution and control of all capital additions activities at the property level. We characterize as “indirect costs” an allocation of certain department costs, including payroll, at the area operations and corporate levels that clearly relate to capital additions activities. We capitalize interest, property taxes and insurance during periods in which redevelopment and construction projects are in progress. We charge to expense as incurred costs that do not relate to capital additions activities, including ordinary repairs, maintenance, resident turnover costs and general and administrative expenses (see Capital Additions and Related Depreciation in Note 2 to the consolidated financial statements in Item 8).

For the years ended December 31, 2009, 2008 and 2007, for continuing and discontinued operations, we capitalized $9.8 million, $25.7 million and $30.8 million of interest costs, respectively, and $40.0 million, $78.1 million and $78.1 million of site payroll and indirect costs, respectively. The reduction is primarily due to a reduced level of redevelopment activities.

Funds From Operations

FFO is a non-GAAP financial measure that we believe, when considered with the financial statements determined in accordance with GAAP, is helpful to investors in understanding our performance because it captures features particular to real estate performance by recognizing that real estate generally appreciates over time or maintains residual value to a much greater extent than do other depreciable assets such as machinery, computers or other personal property. The Board of Governors of the National Association of Real Estate Investment Trusts, or NAREIT, defines FFO as net income (loss), computed in accordance with GAAP, excluding gains from sales of depreciable property, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. Adjustments for unconsolidated partnerships and joint ventures are calculated to reflect FFO on the same basis. We compute FFO for all periods presented in accordance with the guidance set forth by NAREIT’s April 1, 2002, White Paper, which we refer to as the White Paper. We calculate FFO attributable to the Partnership’s common unitholders (diluted) by subtracting redemption or repurchase related preferred OP Unit issuance costs and distributions on preferred OP Units and adding back distributions on dilutive preferred securities and premiums or discounts on preferred OP Unit redemptions or repurchases. FFO should not be considered an alternative to net income or net cash flows from operating activities, as determined in accordance with GAAP, as an indication of our performance or as a measure of liquidity. FFO is not necessarily indicative of cash available to fund future cash needs. In addition, although FFO is a measure used for comparability in assessing the performance of REITs, there can be no assurance that our basis for computing FFO is comparable with that of other REITs.

For the years ended December 31, 2009, 2008 and 2007, our FFO is calculated as follows (in thousands):


	2009			2008			2007
Net (loss) income attributable to the Partnership’s common unitholders (1)	$	(123,276	)	$	403,700		$	(43,508	)
Adjustments:
Depreciation and amortization		433,933			383,084			337,804
Depreciation and amortization related to non-real estate assets		(16,597	)		(17,305	)		(20,108	)
Depreciation of rental property related to noncontrolling partners and unconsolidated entities (2)		(39,278	)		(26,695	)		(13,167	)
Gain on dispositions of unconsolidated real estate and other, net of noncontrolling partners’ interest		(20,615	)		(99,597	)		(22,252	)
Income tax expense (benefit) arising from disposition of unconsolidated real estate and other		1,582			(433	)		(17	)
Add back portion of gain on dispositions of unconsolidated real estate and other that relates to non-depreciable assets and debt extinguishment gain		7,783			1,669			16,851
Deficit distributions to noncontrolling partners (3)		—			26,640			26,641
Discontinued operations:
Gain on dispositions of real estate, net of noncontrolling partners’ interest (2)		(166,159	)		(618,173	)		(65,035	)
Depreciation of rental property, net of noncontrolling partners’ interest (2)		54,671			115,714			121,500
(Recovery of deficit distributions) deficit distributions to noncontrolling partners, net (3)		—			(30,783	)		12,119
Income tax expense arising from disposals		5,788			43,146			2,135
Preferred OP Unit distributions		58,503			62,836			70,509
Preferred OP Unit redemption related (gains) costs		(1,649	)		(1,482	)		2,635
Amounts allocable to participating securities (4)		—			6,985			4,481

FFO	$	194,686		$	249,306		$	430,588
Preferred OP Unit distributions		(58,503	)		(62,836	)		(70,509	)
Preferred OP Unit redemption related gains (costs)		1,649			1,482			(2,635	)
Amounts allocable to participating securities (4)		(792	)		(6,985	)		(4,481	)
Distributions on dilutive preferred securities		—			4,292			1,442

FFO attributable to the Partnership’s common unitholders — diluted	$	137,040		$	185,259		$	354,405


Weighted average number of common units, common unit equivalents and dilutive preferred securities outstanding (5):
Common units and equivalents (6) (7)		124,442			99,386			106,802
Dilutive preferred securities		—			1,490			457

Total		124,442			100,876			107,259


Notes:

(1)		Represents the numerator for calculating basic earnings per common unit in accordance with GAAP (see Note 14 to the consolidated financial statements in Item 8).

(2)		“Noncontrolling partners” refers to noncontrolling partners in our consolidated real estate partnerships.

(3)		Prior to adoption of SFAS 160 (see Note 2 to the consolidated financial statements in Item 8), we recognized deficit distributions to noncontrolling partners as charges in our income statement when cash was distributed to a noncontrolling partner in a consolidated partnership in excess of the positive balance in such partner’s noncontrolling interest balance. We recorded these charges for GAAP purposes even though there was no economic effect or cost. Deficit distributions to noncontrolling partners occurred when the fair value of the underlying real estate exceeded its depreciated net book value because the underlying real estate had appreciated or maintained its value. As a result, the recognition of expense for deficit distributions to noncontrolling partners represented, in substance, either (a) our recognition of depreciation previously allocated to the noncontrolling partner or (b) a payment related to the noncontrolling partner’s share of real estate appreciation. Based on White Paper guidance that requires real estate depreciation and gains to be excluded from FFO, we added back deficit distributions and subtracted related recoveries in our reconciliation of net income to FFO. Subsequent to our adoption of SFAS 160, effective January 1, 2009, we may reduce the balance of noncontrolling interests below zero in such situations and we are no longer required to recognize such charges in our income statement.


(4)		Amounts allocable to participating securities represent distributions declared and any amounts of undistributed earnings allocable to participating securities. See Note 2 and Note 14 to the consolidated financial statements in Item 8 for further information regarding participating securities.

(5)		Weighted average common units, common unit equivalents, dilutive preferred securities for each of the periods presented above have been adjusted for our application during the fourth quarter 2009 of a change in GAAP, which requires the common OP units issued to Aimco in connection with our special distributions paid in 2008 and January 2009 to be treated as issued and outstanding on the distribution payment dates for basic purposes and as potential unit equivalents for the periods between the ex-dividend dates and the payment dates for diluted purposes, rather than treating the units as issued and outstanding as of the beginning of the earliest period presented for both basic and diluted purposes. The change in accounting treatment had no effect on diluted weighted average units outstanding for the year ended December 31, 2009. The change in accounting treatment reduced diluted weighted average units outstanding by 32.9 million and 46.7 million for the years ended December 31, 2008 and 2007, respectively.

(6)		Represents the denominator for earnings per common unit — diluted, calculated in accordance with GAAP, plus common OP unit equivalents that are dilutive for FFO.

(7)		During the years ended December 31, 2009, 2008 and 2007, we had 6,534,140, 7,191,199, and 7,367,400 common OP Units outstanding and 2,344,719, 2,367,629 and 2,379,084 High Performance Units outstanding.

Liquidity and Capital Resources

Liquidity is the ability to meet present and future financial obligations. Our primary source of liquidity is cash flow from our operations. Additional sources are proceeds from property sales and proceeds from refinancings of existing property loans and borrowings under new property loans.

Our principal uses for liquidity include normal operating activities, payments of principal and interest on outstanding debt, capital additions, distributions paid to unitholders and distributions paid to noncontrolling interest partners, repurchases of common OP Units from Aimco in connection with Aimco’s concurrent repurchase of its Class A Common Stock, and acquisitions of, and investments in, properties. We use our cash and cash equivalents and our cash provided by operating activities to meet short-term liquidity needs. In the event that our cash and cash equivalents and cash provided by operating activities are not sufficient to cover our short-term liquidity demands, we have additional means, such as short-term borrowing availability and proceeds from property sales and refinancings, to help us meet our short-term liquidity demands. We may 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, primarily secured, the issuance of equity securities (including OP Units), the sale of properties and cash generated from operations.

The state of credit markets and related effect on the overall economy may have an adverse affect on our liquidity, both through increases in interest rates and credit risk spreads, and access to financing. As further discussed in Item 7A, Quantitative and Qualitative Disclosures About Market Risk, we are subject to interest rate risk associated with certain variable rate liabilities, preferred stock and assets. Based on our net variable rate liabilities, preferred OP Units and assets outstanding at December 31, 2009, we estimate that a 1.0 % increase in 30-day LIBOR with constant credit risk spreads would reduce our income attributable to the Partnership’s common unitholders by approximately $1.6 million on an annual basis. Although base interest rates have generally decreased relative to their levels prior to the disruptions in the financial markets, the tightening of credit markets has affected the credit risk spreads charged over base interest rates on, and the availability of, property loan financing. For future refinancing activities, our liquidity and cost of funds may be affected by increases in base interest rates or higher credit risk spreads. If timely property financing options are not available for maturing debt, we may consider alternative sources of liquidity, such as reductions in certain capital spending or proceeds from asset dispositions.

As further discussed in Note 2 to our consolidated financial statements in Item 8, we use total rate of return swaps as a financing product to lower our cost of borrowing through conversion of fixed rate tax-exempt bonds payable and fixed rate notes payable to variable interest rates indexed to the SIFMA rate for tax-exempt bonds payable and the 30-day LIBOR rate for notes payable, plus a credit risk spread. The cost of financing through these arrangements is generally lower than the fixed rate on the debt. As of December 31, 2009, we had total rate of return swap positions with two financial institutions with notional amounts totaling $353.1 million. Swaps with notional amounts of $307.9 million and $45.2 million had maturity dates in May 2012 and October 2012, respectively.

The total rate of return swaps require specified loan-to-value ratios. In the event the values of the real estate properties serving as collateral under these agreements decline or if we sell properties in the collateral pool with low loan-to-value ratios, certain of our consolidated subsidiaries have an obligation to pay down the debt or provide additional collateral pursuant to the swap agreements, which may adversely affect our cash flows. The obligation to provide collateral is limited to these subsidiaries and is non-recourse to us. At December 31, 2009, these subsidiaries were not required to provide cash collateral based on the loan-to-value ratios of the real estate properties serving as collateral under these agreements.

We periodically evaluate counterparty credit risk associated with these arrangements. At the current time, we have concluded we do not have material exposure. In the event a counterparty were to default under these arrangements, loss of the net interest benefit we generally receive under these arrangements, which is equal to the difference between the fixed rate we receive and the variable rate we pay, may adversely affect our operating cash flows.

See Derivative Financial Instruments in Note 2 to the consolidated financial statements in Item 8 for additional discussion of these arrangements, including the current swap maturity dates.

As of December 31, 2009, the amount available under our $180.0 million revolving credit facility was $136.2 million (after giving effect to $43.8 million outstanding for undrawn letters of credit). Our total outstanding term loan of $90.0 million at December 31, 2009, matures in March 2011. We repaid an additional $45.0 million on the term loan through February 26, 2010, leaving a remaining outstanding balance of $45.0 million. Additionally, we have limited obligations to fund redevelopment commitments during the year ending December 31, 2010, and no development commitments.

At December 31, 2009, we had $81.3 million in cash and cash equivalents, a decrease of $218.4 million from December 31, 2008. At December 31, 2009, we had $219.0 million of restricted cash, primarily consisting of reserves and escrows held by lenders for bond sinking funds, capital additions, 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 in Item 8.

Operating Activities

For the year ended December 31, 2009, our net cash provided by operating activities of $233.8 million was primarily related to operating income from our consolidated properties, which is affected primarily by rental rates, occupancy levels and operating expenses related to our portfolio of properties, in excess of payments of operating accounts payable and accrued liabilities, including amounts related to our organizational restructuring. Cash provided by operating activities decreased $206.6 million compared with the year ended December 31, 2008, primarily due to a $159.3 million decrease in operating income related to consolidated properties included in discontinued operations, which was attributable to property sales in 2009 and 2008, a $42.8 million decrease in promote income, which is generated by the disposition of properties by consolidated real estate partnerships, and an increase in payments on operating accounts payable and accrued expenses, including payments related to our restructuring accrual, in 2009 as compared to 2008.

Investing Activities

For the year ended December 31, 2009, our net cash provided by investing activities of $630.7 million consisted primarily of proceeds from disposition of real estate and partnership interests, partially offset by 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 when compared to alternative uses for our capital. During the year ended December 31, 2009, we sold 89 consolidated properties. These properties were sold for an aggregate sales price of $1.3 billion, or $1.2 billion, after the payment of transaction costs and debt prepayment penalties. The $1.2 billion is inclusive of promote income and debt assumed by buyers. Net cash proceeds from property sales were used primarily to repay term debt and for other corporate purposes.

Capital Additions

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

CR represents the share of capital additions that are deemed to replace the portion of acquired capital assets that was consumed during the period we have owned the asset. CI represents the share of additions that are made to enhance the value, profitability or useful life of an asset as compared to its original purchase condition. CR and CI exclude capital additions for casualties and redevelopment. Casualty additions represent capitalized costs incurred in connection with casualty losses and are associated with the restoration of the asset. A portion of the restoration costs may be reimbursed by insurance carriers subject to deductibles associated with each loss. Redevelopment additions represent additions that substantially upgrade the property.

The table below details our share of actual spending, on both consolidated and unconsolidated real estate partnerships, for CR, CI, casualties and redevelopment for the year ended December 31, 2009, on a per unit and total dollar basis (in thousands, except per unit amounts). Per unit numbers for CR and CI are based on approximately 97,196 average units for the year, including 81,135 conventional units and 16,061 affordable units. Average units are weighted for the portion of the period that we owned an interest in the property, represent ownership-adjusted effective units, and exclude non-managed units.


	Our Share of
	Additions			Per Effective Unit

Capital Replacements Detail:
Building and grounds	$	32,876		$	338
Turnover related		30,298			312
Capitalized site payroll and indirect costs		7,076			73

Our share of Capital Replacements	$	70,250		$	723


Capital Replacements:
Conventional	$	64,675		$	797
Affordable		5,575		$	347

Our share of Capital Replacements		70,250		$	723


Capital Improvements:
Conventional		47,634		$	587
Affordable		5,755		$	358
Our share of Capital Improvements		53,389		$	549


Casualties:
Conventional		17,724
Affordable		1,872

Our share of casualties		19,596


Redevelopment:
Conventional projects		66,768
Tax credit projects (1)		46,066

Our share of redevelopment		112,834

Our share of capital additions		256,069

Plus noncontrolling partners’ share of consolidated additions		20,062
Less our share of unconsolidated additions		(687	)

Total capital additions	$	275,444


(1)		Redevelopment additions on tax credit projects are substantially funded from tax credit investor contributions.

Included in the above additions for CI, casualties and redevelopment, was approximately $34.6 million of our share of capitalized site payroll and indirect costs related to these activities for the year ended December 31, 2009.

We generally fund capital additions with cash provided by operating activities, working capital and property sales as discussed below.

Financing Activities

For the year ended December 31, 2009, net cash used in financing activities of $1.1 billion was primarily attributed to debt principal payments, distributions paid to common and preferred unitholders and distributions to noncontrolling interests, partially offset by proceeds from property loans.

Property Debt

At December 31, 2009 and 2008, we had $5.6 billion and $6.3 billion, respectively, in consolidated property debt outstanding, which included $178.3 million and $909.4 million, respectively, of property debt classified within liabilities related to assets held for sale. During the year ended December 31, 2009, we refinanced or closed property loans on 55 properties generating $788.1 million of proceeds from borrowings with a weighted average interest rate of 5.78%. Our share of the net proceeds after repayment of existing debt, payment of transaction costs and distributions to limited partners, was $132.3 million. We used these total net proceeds for capital expenditures and other corporate purposes. We intend to continue to refinance property debt primarily as a means of extending current and near term maturities and to finance certain capital projects.

Term Loans and Credit Facility

We have an Amended and Restated Senior Secured Credit Agreement, as amended, with a syndicate of financial institutions, which we refer to as the Credit Agreement.

As of December 31, 2009, the Credit Agreement consisted of aggregate commitments of $270.0 million, comprised of our $90.0 million outstanding balance on the term loan and $180.0 million of revolving loan commitments. The term loan bears interest at LIBOR plus 1.5%, or at our option, a base rate equal to the prime rate, and matures March 2011. Borrowings under the revolving credit facility bear interest based on a pricing grid determined by leverage (either at LIBOR plus 4.25% with a LIBOR floor of 2.00% or, at our option, a base rate equal to the Prime rate plus a spread of 3.00%). The revolving credit facility matures May 1, 2011, and may be extended for an additional year, subject to certain conditions, including payment of a 45.0 basis point fee on the total revolving commitments and repayment of the remaining term loan balance by February 1, 2011.

At December 31, 2009, the term loan had an outstanding principal balance of $90.0 million and an interest rate of 1.73%. We repaid $45.0 million on the term loan through February 26, 2010, leaving a remaining outstanding balance of $45.0 million. At December 31, 2009, we had no outstanding borrowings under the revolving credit facility. The amount available under the revolving credit facility at December 31, 2009, was $136.2 million (after giving effect to $43.8 million outstanding for undrawn letters of credit issued under the revolving credit facility). The proceeds of revolving loans are generally permitted to be used to fund working capital and for other corporate purposes.

Fair Value Measurements

Our method used to calculate the fair value of the total rate of return swaps generally results in changes in fair value that are equal to the changes in fair value of the related borrowings, which is consistent with our hedging strategy. We believe that these financial instruments are highly effective in offsetting the changes in fair value of the related borrowings during the hedging period, and accordingly, changes in the fair value of these instruments have no material impact on our liquidity, results of operations or capital resources.

During the year ended December 31, 2009, changes in the fair values of these financial instruments resulted in increases of $5.2 million in the carrying amount of the hedged borrowings and equal decreases in accrued liabilities and other for total rate of return swaps. At December 31, 2009, the cumulative recognized changes in the fair value of these financial instruments resulted in a $24.3 million reduction in the carrying amount of the hedged borrowings offset by an equal increase in accrued liabilities and other for total rate of return swaps. The cumulative changes in the fair values of the hedged borrowings and related swaps reflect the recent uncertainty in the credit markets which has decreased demand and increased pricing for similar debt instruments.

During the year ended December 31, 2009, we received net cash receipts of $19.4 million under the total return swaps, which positively affected our liquidity. To the extent interest rates increase above the fixed rates on the underlying borrowings, our obligations under the total return swaps will negatively affect our liquidity. At December 31, 2009, we were not required to provide cash collateral pursuant to the total rate of return swaps. In the event the values of the real estate properties serving as collateral under these agreements decline, we may be required to provide additional collateral pursuant to the swap agreements, which would adversely affect our liquidity.

See Note 2 to the consolidated financial statements in Item 8 for more information on our total rate of return swaps and related borrowings.

Partners’ Capital Transactions

During the year ended December 31, 2009, we paid cash distributions totaling $59.2 million, $116.8 million and $92.4 million to preferred unitholders, common unitholders and noncontrolling interests, respectively. Additionally, we paid distributions totaling $149.0 million to Aimco through the issuance of approximately 15.5 million common OP units.

During the year ended December 31, 2009, Aimco repurchased 12 shares, or $6.0 million in liquidation preference, of its CRA Preferred Stock for $4.2 million. Concurrent with Aimco’s repurchase, we repurchased from Aimco an equivalent number of our CRA Preferred Units.

We and Aimco have a shelf registration statement that provides for the issuance of debt securities by us and debt and equity securities by Aimco.

Contractual Obligations

This table summarizes information contained elsewhere in this Annual Report regarding payments due under contractual obligations and commitments as of December 31, 2009 (amounts in thousands):


			Less than						More than
	Total		One Year		1-3 Years		3-5 Years		5 Years
Scheduled long-term debt maturities (1)	$	5,451,148	$	100,958	$	651,166	$	843,747	$	3,855,277
Scheduled long-term debt maturities related to properties classified as held for sale (1).		178,339		4,855		20,773		25,736		126,975
Term loan (1) (2)		90,000		—		90,000		—		—
Redevelopment and other construction commitments		4,795		4,795		—		—		—
Leases for space occupied (3)		24,888		7,345		10,856		4,859		1,828
Other obligations (4)		4,605		4,605		—		—		—

Total	$	5,753,775	$	122,558	$	772,795	$	874,342	$	3,984,080


(1)		Scheduled debt maturities presented above include amortization and the maturities in 2010 consist primarily of amortization. The scheduled maturities presented above exclude related interest amounts. Refer to Note 6 in the consolidated financial statements in Item 8 for a description of average interest rates associated with our debt.

(2)		After payments of $45.0 million through February 26, 2010, the term loan had an outstanding balance of $45.0 million.

(3)		Inclusive of leased space that has been abandoned as part of our organizational restructuring in 2008 (see Restructuring Costs in Note 3 to the consolidated financial statements in Item 8).

(4)		Represents a commitment to fund $4.6 million in second mortgage loans on certain properties in West Harlem, New York City.

In addition to the amounts presented in the table above, at December 31, 2009, we had $690.5 million of outstanding preferred units outstanding with annual dividend yields ranging from 1.5% (variable) to 9.4%, and $85.7 million of redeemable preferred units outstanding with annual distribution yields ranging from 5.9% to 9.5%.

Additionally, we may enter into commitments to purchase goods and services in connection with the operations of our properties. Those commitments generally have terms of one year or less and reflect expenditure levels comparable to our historical expenditures.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Partners
AIMCO Properties, L.P.

We have audited the accompanying consolidated balance sheets of AIMCO Properties, L.P. (the “Partnership”) as of December 31, 2009 and 2008, and the related consolidated statements of income, partners’ capital and cash flows for each of the three years in the period ended December 31, 2009. Our audits also included the financial statement schedule listed in the accompanying Index to Financial Statements. These financial statements and schedule are the responsibility of the Partnership’s management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of the Partnership at December 31, 2009 and 2008, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2009, in conformity with United States generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly, in all material respects the information set forth therein.

The consolidated financial statements include retroactive adjustments to reflect the adoption in 2009 of Statement of Financial Accounting Standards No. 160, Noncontrolling Interests in Consolidated Financial Statements, an amendment to ARB 51 (codified in FASB ASC 810), Statement of Financial Accounting Standards No. 141(R), Business Combinations — a replacement of FASB Statement No 141 (codified in FASB ASC 805), FASB Staff Position No. EITF 03-6-1, Determining Whether Instruments Granted in Share-Based Payment Transactions are Participating Securities (codified in FASB ASC 260), and FASB Accounting Standards Update No. 2010-01, Accounting for Distributions to Shareholders with Components of Stock and Cash (codified in FASB ASC 505). Further, as discussed in Notes 13 and 17, the Partnership retrospectively adjusted the consolidated financial statements to reflect real estate assets that meet the definition of a component and have been sold or meet the criteria to be classified as held for sale at December 31, 2009 pursuant to Statement of Financial Accounting Standards No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets (codified in FASB ASC 360), through September 30, 2010, and to reflect changes in its reportable segments. As discussed in Note 2 to the consolidated financial statements, the consolidated statement of income for the year ended December 31, 2008 has been restated to reclassify provisions for impairment losses on real estate development assets into operating income.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Partnership’s internal control over financial reporting as of December 31, 2009, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 26, 2010 (which is not included herein) expressed an unqualified opinion thereon.



	/s/ ERNST & YOUNG LLP

Denver, Colorado
February 26, 2010, except for Note 17, as to which the date is September 10, 2010,
and Note 13, as to which the date is November 19, 2010

AIMCO PROPERTIES, L.P.
CONSOLIDATED BALANCE SHEETS
As of December 31, 2009 and 2008
(In thousands)


	2009			2008

ASSETS
Real estate:
Buildings and improvements	$	7,242,051		$	7,047,744
Land		2,148,389			2,132,129

Total real estate		9,390,440			9,179,873
Less accumulated depreciation		(2,594,544	)		(2,222,737	)

Net real estate		6,795,896			6,957,136
Cash and cash equivalents		81,260			299,676
Restricted cash		218,981			252,199
Accounts receivable, net		59,822			90,318
Accounts receivable from affiliates, net		23,744			38,978
Deferred financing costs, net		50,807			49,947
Notes receivable from unconsolidated real estate partnerships, net		14,295			22,567
Notes receivable from non-affiliates, net		125,269			139,897
Notes receivable from Aimco		16,371			15,551
Investment in unconsolidated real estate partnerships		104,193			117,905
Other assets		185,816			198,639
Deferred income tax assets, net		42,015			28,326
Assets held for sale		203,670			1,245,582

Total assets	$	7,922,139		$	9,456,721


LIABILITIES AND PARTNERS’ CAPITAL
Property tax-exempt bond financing	$	574,926		$	629,499
Property loans payable		4,823,165			4,794,291
Term loans		90,000			400,000
Other borrowings		53,057			95,981

Total indebtedness		5,541,148			5,919,771

Accounts payable		29,819			64,241
Accrued liabilities and other		286,326			569,997
Deferred income		179,433			192,368
Security deposits		34,491			35,920
Liabilities related to assets held for sale		183,892			924,676

Total liabilities		6,255,109			7,706,973


Redeemable preferred units (Note 11)		116,656			88,148

Commitments and contingencies (Note 8)		—			—

Partners’ capital:
Preferred units		660,500			696,500
General Partner and Special Limited Partner		521,692			543,238
Limited Partners		95,990			82,461
High Performance Units		(40,313	)		(37,263	)
Investment in Aimco Class A Common Stock		(4,621	)		(5,109	)

Partners’ capital attributable to the Partnership		1,233,248			1,279,827

Noncontrolling interests in consolidated real estate partnerships		317,126			381,773

Total partners’ capital		1,550,374			1,661,600

Total liabilities and partners’ capital	$	7,922,139		$	9,456,721

See notes to consolidated financial statements.

AIMCO PROPERTIES, L.P.
CONSOLIDATED STATEMENTS OF INCOME
For the Years Ended December 31, 2009, 2008 and 2007
(In thousands, except per unit data)


	2009			2008			2007
				(as restated —
				see Note 2)
REVENUES:
Rental and other property revenues	$	1,101,883		$	1,100,593		$	1,058,354
Asset management and tax credit revenues		49,853			98,830			73,755

Total revenues		1,151,736			1,199,423			1,132,109


OPERATING EXPENSES:
Property operating expenses		515,748			527,216			507,403
Investment management expenses		15,779			24,784			20,507
Depreciation and amortization		433,933			383,084			337,804
Provision for operating real estate impairment losses		2,329			—			1,080
Provision for impairment losses on real estate development assets		—			91,138			—
General and administrative expenses		56,643			80,376			72,359
Other expenses, net		15,721			22,059			18,917
Restructuring costs		11,241			22,802			—

Total operating expenses		1,051,394			1,151,459			958,070

Operating income		100,342			47,964			174,039

Interest income		9,924			20,439			43,561
Provision for losses on notes receivable, net		(21,549	)		(17,577	)		(2,010	)
Interest expense		(315,416	)		(315,007	)		(304,752	)
Equity in losses of unconsolidated real estate partnerships		(12,025	)		(4,601	)		(3,347	)
Impairment losses related to unconsolidated real estate partnerships		(322	)		(2,661	)		—
Gain on dispositions of unconsolidated real estate and other		22,494			99,864			23,366

Loss before income taxes and discontinued operations		(216,552	)		(171,579	)		(69,143	)
Income tax benefit		18,669			53,202			19,795

Loss from continuing operations		(197,883	)		(118,377	)		(49,348	)
Income from discontinued operations, net		153,903			746,165			175,603

Net (loss) income		(43,980	)		627,788			126,255
Net income attributable to noncontrolling interests in consolidated real estate partnerships		(22,442	)		(155,749	)		(92,138	)

Net (loss) income attributable to the Partnership		(66,422	)		472,039			34,117
Net income attributable to the Partnership’s preferred unitholders		(56,854	)		(61,354	)		(73,144	)
Net income attributable to participating securities		—			(6,985	)		(4,481	)

Net (loss) income attributable to the Partnership’s common unitholders	$	(123,276	)	$	403,700		$	(43,508	)


Earnings (loss) per common unit — basic and diluted:
Loss from continuing operations attributable to the Partnership’s common unitholders	$	(1.75	)	$	(1.96	)	$	(1.40	)
Income from discontinued operations attributable to the Partnership’s common unitholders		0.75			6.07			0.98

Net (loss) income attributable to the Partnership’s common unitholders	$	(1.00	)	$	4.11		$	(0.42	)


Weighted average common units outstanding — basic and diluted		123,180			98,249			104,853

Distributions declared per common unit	$	0.40		$	7.48		$	4.31

See notes to consolidated financial statements.

AIMCO PROPERTIES, L.P.
CONSOLIDATED STATEMENTS OF PARNTERS’ CAPITAL
For the Years Ended December 31, 2009, 2008 and 2007
(In thousands)


				General												Partners’
				Partner						High			Investment			Capital
				and Special						Perform-			in Aimco			Attributable			Non-			Total
	Preferred			Limited			Limited			ance			Common			to the			controlling			Partners’
	Units			Partner			Partners			Units			Stock			Partnership			Interests			Capital
Balances at December 31, 2006	$	914,215		$	1,208,866		$	439,903		$	(18,308	)	$	(7,074	)	$	2,537,602		$	216,015		$	2,753,617

Cumulative effect of change in accounting principle — adoption of FIN 48		—			(763	)		(61	)		(20	)		—			(844	)		—			(844	)
Redemption of preferred units held by Aimco		(100,000	)		(2,000	)		—			—			—			(102,000	)		—			(102,000	)
Common and preferred units redeemed by Limited Partners to Special Limited Partner		—			27,853			(27,853	)		—			—			—			—			—
Contribution from Aimco related to employee stock purchases, net		—			1,827			—			—			—			1,827			—			1,827
Contribution from Aimco related to stock option exercises		—			53,719			—			—			—			53,719			—			53,719
Amortization of Aimco stock-based compensation		—			19,235			—			—			—			19,235			—			19,235
Contributions from noncontrolling interests		—			—			—			—			—			—			203,552			203,552
Adjustment to noncontrolling interests from VMS transactions (Note 3) Effect on transactions with owners (VMS)		—			—			—			—			—			—			62,820			62,820
Adjustment to noncontrolling interests from consolidation of entities		—			—			—			—			—			—			91,219			91,219
Redemption of preferred units and common units		—			—			(2,181	)		—			—			(2,181	)		—			(2,181	)

Repurchase of common units related to Aimco common stock repurchases		—			(325,822	)		—			—			—			(325,822	)		—			(325,822	)
Other, net		—			(1,462	)		2,998			720			—			2,256			(201	)		2,055
Net income (loss)		73,144			(35,399	)		(2,742	)		(886	)		—			34,117			92,138			126,255
Common distributions		—			(406,854	)		(31,329	)		(10,246	)		923			(447,506	)		(211,314	)		(658,820	)
Distributions to preferred unitholders		(72,306	)		—			—			—			—			(72,306	)		—			(72,306	)
Adjustment to reflect Limited Partners’ capital at redemption value		—			125,083			(125,083	)		—			—			—			—			—

Balances at December 31, 2007		815,053			664,283			253,652			(28,740	)		(6,151	)		1,698,097			454,229			2,152,326

Redemption of preferred units held by Aimco		(27,000	)		2,160			—			—			—			(24,840	)		—			(24,840	)

Common units redeemed by Limited Partners to Special Limited Partner		—			4,182			(4,182	)		—			—			—			—			—
Contribution from Aimco related to employee stock purchases, net		—			1,671			—			—			—			1,671			—			1,671
Contribution from Aimco related to stock option exercises		—			481			—			—			—			481			—			481
Amortization of Aimco stock-based compensation		—			17,573			—			—			—			17,573			—			17,573
Contributions from noncontrolling interests		—			—			—			—			—			—			6,854			6,854
Adjustment to noncontrolling interests from consolidation of entities		—			—			—			—			—			—			14,969			14,969
Redemption of preferred units and common units		(976	)		—			(2,046	)		(1,146	)		—			(4,168	)		—			(4,168	)
Repurchase of common units related to Aimco common stock repurchases		—			(473,532	)		—			—			—			(473,532	)		—			(473,532	)
Other, net		(1,083	)		(488	)		(8	)		388			—			(1,191	)		(572	)		(1,763	)
Net income		61,354			370,729			30,059			9,897			—			472,039			155,749			627,788
Common units issued to Aimco pursuant to special distributions		—			487,477			—			—			—			487,477			—			487,477
Common distributions		—			(675,416	)		(50,896	)		(17,662	)		1,042			(742,932	)		(249,456	)		(992,388	)
Distributions to preferred unitholders		(62,700	)		—			—			—			—			(62,700	)					(62,700	)
Reclassification of redeemable preferred units to temporary capital (Note 11)		(88,148	)		—			—			—			—			(88,148	)		—			(88,148	)
Adjustment to reflect Limited Partners’ capital at redemption value		—			144,118			(144,118	)		—			—			—			—			—

Balances at December 31, 2008	$	696,500		$	543,238		$	82,461		$	(37,263	)	$	(5,109	)	$	1,279,827		$	381,773		$	1,661,600

See notes to consolidated financial statements.

AIMCO PROPERTIES, L.P.
CONSOLIDATED STATEMENTS OF PARNTERS’ CAPITAL
For the Years Ended December 31, 2009, 2008 and 2007
(In thousands)


				General												Partners’
				Partner						High			Investment			Capital
				and Special						Perform-			in Aimco			Attributable			Non-			Total
	Preferred			Limited			Limited			ance			Common			to the			controlling			Partners’
	Units			Partner			Partners			Units			Stock			Partnership			Interests			Capital
Redemption of preferred units held by Aimco		(6,000	)		1,800			—			—			—			(4,200	)		—			(4,200	)
Common units redeemed by Limited Partners to Special Limited Partner		—			7,085			(7,085	)		—			—			—			—			—
Amortization of Aimco stock-based compensation		—			8,007			—			—			—			8,007			—			8,007
Contribution from noncontrolling interests		—			—			—			—			—			—			5,535			5,535
Redemption of preferred units and common units		—			—			(980	)		—			—			(980	)		—			(980	)
Other, net		—			4,164			—			—			—			4,164			(720	)		3,444
Net income (loss)		50,566			(114,390	)		(6,539	)		(2,347	)		—			(72,710	)		22,442			(50,268	)
Common units issued to Aimco pursuant to special distributions		—			148,746			—			—			—			148,746			—			148,746
Common distributions		—			(46,880	)		(1,945	)		(703	)		488			(49,040	)		(91,904	)		(140,944	)
Distributions to preferred unitholders		(50,566	)		—			—			—			—			(50,566	)		—			(50,566	)
Reclassification of redeemable preferred units to temporary capital (Note 11)		(30,000	)		—			—			—			—			(30,000	)		—			(30,000	)
Adjustment to reflect Limited Partners’ capital at redemption value		—			(30,078	)		30,078			—			—			—			—			—

Balances at December 31, 2009	$	660,500		$	521,692		$	95,990		$	(40,313	)	$	(4,621	)	$	1,233,248		$	317,126		$	1,550,374

See notes to consolidated financial statements.

AIMCO PROPERTIES, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 2009, 2008 and 2007

(In thousands)


	2009			2008			2007
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income	$	(43,980	)	$	627,788		$	126,255

Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization		433,933			383,084			337,804
Equity in losses of unconsolidated real estate partnerships		12,025			4,601			3,347
Provision for impairment losses on real estate development assets		—			91,138			—
Provision for operating real estate impairment losses		2,329			—			1,080
Gain on dispositions of unconsolidated real estate and other		(22,494	)		(99,864	)		(23,366	)
Income tax benefit		(18,669	)		(53,202	)		(19,795	)
Stock-based compensation expense		6,666			13,833			14,921
Amortization of deferred loan costs and other		10,845			9,950			7,916
Distributions of earnings from unconsolidated entities		4,893			14,619			4,239
Discontinued operations:
Depreciation and amortization		61,634			132,463			162,134
Gain on disposition of real estate		(221,793	)		(800,335	)		(117,628	)
Other adjustments to income from discontinued operations		53,974			67,215			(25,167	)
Changes in operating assets and operating liabilities:
Accounts receivable		27,067			4,848			7,453
Other assets		1,620			56,369			(10,500	)
Accounts payable, accrued liabilities and other		(74,238	)		(12,139	)		14,249

Total adjustments		277,792			(187,420	)		356,687

Net cash provided by operating activities		233,812			440,368			482,942

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of real estate		—			(112,655	)		(201,434	)
Capital expenditures		(300,344	)		(665,233	)		(689,719	)
Proceeds from dispositions of real estate		875,931			2,060,344			431,863
Change in funds held in escrow from tax-free exchanges		—			345			25,863
Proceeds from sale of interests and distributions from real estate partnerships		25,067			94,277			198,998
Purchases of partnership interests and other assets		(6,842	)		(28,121	)		(86,204	)
Originations of notes receivable		(5,778	)		(6,911	)		(10,812	)
Proceeds from repayment of notes receivable		5,264			8,929			14,370
Distributions received from Aimco		488			1,042			923
Other investing activities		36,956			(6,106	)		45,476

Net cash provided by (used in) investing activities		630,742			1,345,911			(270,676	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from property loans		772,443			949,549			1,552,048
Principal repayments on property loans		(1,076,318	)		(1,291,543	)		(850,484	)
Proceeds from tax-exempt bond financing		15,727			50,100			82,350
Principal repayments on tax-exempt bond financing		(157,862	)		(217,361	)		(70,029	)
(Payments on) borrowings under term loans		(310,000	)		(75,000	)		75,000
Net repayments on revolving credit facility		—			—			(140,000	)
Proceeds from (payments on) other borrowings		(40,085	)		21,367			(8,468	)
Repurchases and redemptions of preferred units		(4,200	)		(24,840	)		(102,000	)
Repurchase of common units		—			(502,296	)		(307,382	)
Proceeds from Class A Common Stock option exercises		—			481			53,719
Payment of distributions to noncontrolling interests		(92,421	)		(248,537	)		(168,499	)
Payment of distributions to General Partner and Special Limited Partner		(95,823	)		(213,328	)		(231,729	)
Payment of distributions to Limited Partners		(15,403	)		(55,770	)		(16,760	)
Payment of distributions to High Performance Units		(5,580	)		(18,757	)		(5,710	)
Payment of distributions to preferred units		(59,172	)		(62,733	)		(74,221	)
Other financing activities		(14,276	)		(8,396	)		(19,464	)

Net cash used in financing activities		(1,082,970	)		(1,697,064	)		(231,629	)

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS		(218,416	)		89,215			(19,363	)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR		299,676			210,461			229,824

CASH AND CASH EQUIVALENTS AT END OF YEAR	$	81,260		$	299,676		$	210,461

See notes to consolidated financial statements.

AIMCO PROPERTIES, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 2009, 2008 and 2007
(In thousands)


	2009			2008			2007
SUPPLEMENTAL CASH FLOW INFORMATION:

Interest paid	$	348,341		$	434,645		$	452,324
Cash paid for income taxes		4,560			13,780			2,994
Non-cash transactions associated with the acquisition of real estate and interests in unconsolidated real estate partnerships:
Secured debt assumed in connection with purchase of real estate		—			—			16,000
Issuance of OP Units for interests in unconsolidated real estate partnerships and acquisitions of real estate		—			—			2,998
Non-cash transactions associated with the disposition of real estate:
Secured debt assumed in connection with the disposition of real estate		314,265			157,394			27,929
Issuance of notes receivable connection with the disposition of real estate		3,605			10,372			—
Non-cash transactions associated with consolidation of real estate partnerships:
Real estate, net		6,058			25,830			56,877
Investments in and notes receivable primarily from affiliated entities		4,326			4,497			84,545
Restricted cash and other assets		(1,682	)		5,483			8,545
Secured debt		2,031			22,036			41,296
Accounts payable, accrued and other liabilities		6,769			14,020			48,602
Other non-cash transactions:
Redemption of common OP Units for Aimco Class A Common Stock		7,085			4,182			27,810
Conversion of preferred units and securities into common units		—			—			43
(Cancellation) origination of notes receivable from officers of Aimco, net		(1,452	)		(385	)		2,386
Common OP Units issued to Aimco pursuant to special distributions (Note 11)		(148,746	)		(487,477	)		—

See notes to consolidated financial statements.

AIMCO PROPERTIES, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2009

NOTE 1 — Organization

AIMCO Properties, L.P., a Delaware limited partnership, or the Partnership, and together with its consolidated subsidiaries was formed on May 16, 1994 to conduct the business of acquiring, redeveloping, leasing, and managing multifamily apartment properties. Our securities include Partnership Common Units, or common OP Units, Partnership Preferred Units, or preferred OP Units, and High Performance Partnership Units, or High Performance Units, which are collectively referred to as “OP Units.” Apartment Investment and Management Company, or Aimco, is the owner of our general partner, AIMCO-GP, Inc., or the General Partner, and special limited partner, AIMCO-LP Trust, or the Special Limited Partner. The General Partner and Special Limited Partner hold common OP Units and are the primary holders of outstanding preferred OP Units. “Limited Partners” refers to individuals or entities that are our limited partners, other than Aimco, the General Partner or the Special Limited Partner, and own common OP Units or preferred OP Units. Generally, after holding the common OP Units for one year, the Limited Partners have the right to redeem their common OP Units for cash, subject to our prior right to acquire some or all of the common OP Units tendered for redemption in exchange for shares of Aimco Class A Common Stock. Common OP Units redeemed for Aimco Class A Common Stock are generally exchanged on a one-for-one basis (subject to antidilution adjustments). Preferred OP Units and High Performance Units may or may not be redeemable based on their respective terms, as provided for in the Third Amended and Restated Agreement of Limited Partnership of AIMCO Properties, L.P. as amended, or the Partnership Agreement.

We, through our operating divisions and subsidiaries, hold substantially all of Aimco’s assets and manage the daily operations of Aimco’s business and assets. Aimco is required to contribute all proceeds from offerings of its securities to us. In addition, substantially all of Aimco’s assets must be owned through the Partnership; therefore, Aimco is generally required to contribute all assets acquired to us. In exchange for the contribution of offering proceeds or assets, Aimco receives additional interests in us with similar terms (e.g., if Aimco contributes proceeds of a preferred stock offering, Aimco (through the General Partner and Special Limited Partner) receives preferred OP Units with terms substantially similar to the preferred securities issued by Aimco).

Aimco frequently consummates transactions for our benefit. For legal, tax or other business reasons, Aimco may hold title or ownership of certain assets until they can be transferred to us. However, we have a controlling financial interest in substantially all of Aimco’s assets in the process of transfer to us. Except as the context otherwise requires, “we,” “our” and “us” refer to the Partnership, and the Partnership’s consolidated entities, collectively. Except as the context otherwise requires, “Aimco” refers to Aimco and Aimco’s consolidated entities, collectively.

As of December 31, 2009, we:

	•		owned an equity interest in and consolidated 95,202 units in 426 properties (which we refer to as “consolidated properties”), of which 93,098 units were also managed by us;

	•		owned an equity interest in and did not consolidate 8,478 units in 77 properties (which we refer to as “unconsolidated properties”), of which 3,594 units were also managed by us; and

	•		provided services for or managed 31,974 units in 367 properties, primarily pursuant to long-term agreements (including 29,879 units in 345 properties for which we provide asset management services only, and not also property management services). In certain cases, we may indirectly own generally less than one percent of the operations of such properties through a partnership syndication or other fund.

At December 31, 2009, we had outstanding 122,509,304 common OP Units, 28,096,618 preferred OP Units and 2,344,719 High Performance Units. At December 31, 2009, Aimco owned 116,479,791 of the common OP Units and 24,940,134 of the preferred OP Units.

NOTE 2 — Basis of Presentation and Summary of Significant Accounting Policies

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of the Partnership and its consolidated entities. Pursuant to a Management and Contribution Agreement between the Partnership and Aimco, we have acquired, in exchange for interests in the Partnership, the economic benefits of subsidiaries of Aimco in which we do not have an interest, and Aimco has granted us a right of first refusal to acquire such subsidiaries’ assets for no additional consideration. Pursuant to the agreement, Aimco has also granted us certain rights with respect to assets of such subsidiaries. We consolidate all variable interest entities for which we are the primary beneficiary. Generally, we consolidate real estate partnerships and other entities that are not variable interest entities when we own, directly or indirectly, a majority voting interest in the entity or are otherwise able to control the entity. All significant intercompany balances and transactions have been eliminated in consolidation.

Interests held in consolidated real estate partnerships by limited partners other than us are reflected as noncontrolling interests in consolidated real estate partnerships. The assets of consolidated real estate partnerships owned or controlled by Aimco or us generally are not available to pay creditors of Aimco or the Partnership.

As used herein, and except where the context otherwise requires, “partnership” refers to a limited partnership or a limited liability company and “partner” refers to a partner in a limited partnership or a member in a limited liability company.

Variable Interest Entities

We consolidate all variable interest entities for which we are the primary beneficiary. Generally, a variable interest entity, or VIE, is an entity with one or more of the following characteristics: (a) the total equity investment at risk is not sufficient to permit the entity to finance its activities without additional subordinated financial support; (b) as a group, the holders of the equity investment at risk lack (i) the ability to make decisions about an entity’s activities through voting or similar rights, (ii) the obligation to absorb the expected losses of the entity, or (iii) the right to receive the expected residual returns of the entity; or (c) the equity investors have voting rights that are not proportional to their economic interests and substantially all of the entity’s activities either involve, or are conducted on behalf of, an investor that has disproportionately few voting rights. The primary beneficiary generally is the entity that will receive a majority of the VIE’s expected losses, receive a majority of the VIE’s expected residual returns, or both.

In determining whether we are the primary beneficiary of a VIE, we consider qualitative and quantitative factors, including, but not limited to: the amount and characteristics of our investment; the obligation or likelihood for us or other investors to provide financial support; our and the other investors’ ability to control or significantly influence key decisions for the VIE; and the similarity with and significance to the business activities of us and the other investors. Significant judgments related to these determinations include estimates about the current and future fair values and performance of real estate held by these VIEs and general market conditions.

As of December 31, 2009, we were the primary beneficiary of, and therefore consolidated, 90 VIEs, which owned 67 apartment properties with 9,652 units. Real estate with a carrying amount of $769.4 million collateralized $474.3 million of debt of those VIEs. The creditors of the consolidated VIEs do not have recourse to our general credit. As of December 31, 2009, we also held variable interests in 120 VIEs for which we were not the primary beneficiary. Those VIEs consist primarily of partnerships that are engaged, directly or indirectly, in the ownership and management of 172 apartment properties with 9,566 units. We are involved with those VIEs as an equity holder, lender, management agent, or through other contractual relationships. At December 31, 2009, our maximum exposure to loss as a result of our involvement with unconsolidated VIEs is limited to our recorded investments in and receivables from those VIEs totaling $107.5 million and our contractual obligation to advance funds to certain VIEs totaling $4.6 million. We may be subject to additional losses to the extent of any financial support that we voluntarily provide in the future. Additionally, the provision of financial support in the future may require us to consolidate a VIE.

In December 2009, the FASB issued Accounting Standards Update 2009-17, Improvements to Financial Reporting by Enterprises Involved with Variable Interest Entities, or ASU 2009-17, which is effective for fiscal years beginning after November 15, 2009. ASU 2009-17, which modifies the guidance in FASB ASC Topic 810, introduces a more qualitative approach to evaluating VIEs for consolidation and requires a company to perform an analysis to determine whether its variable interests give it a controlling financial interest in a VIE. This analysis identifies the primary beneficiary of a VIE as the entity that has (a) the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance, and (b) the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. In determining whether it has the power to direct the activities of the VIE that most significantly affect the VIE’s performance, ASU 2009-17 requires a company to assess whether it has an implicit financial responsibility to ensure that a VIE operates as designed, requires continuous reassessment of primary beneficiary status rather than periodic, event-driven assessments as previously required, and incorporates expanded disclosure requirements.

Our adoption of ASU 2009-17 during 2010 may result in changes in our conclusions regarding whether we are required to consolidate certain unconsolidated real estate partnerships that are VIEs. As of December 31, 2009, in addition to the unconsolidated VIEs discussed above, we held insignificant partnership interests in VIEs that own approximately 250 properties. We hold general and/or limited partner interests generally ranging from less than 1% to 5% and our recorded investment in these entities is typically limited to accounts receivable from our provision of property management and asset management services to these partnerships. We may be required to consolidate some of these VIEs if we conclude that we control the activities that are significant to the VIEs’ economic performance. Additionally, we may be required to deconsolidate certain VIEs that we currently consolidate if we conclude we do not control the activities that are significant to such VIEs’ economic performance. We have not yet completed our evaluation of ASU 2009-17 and therefore have not determined the effect our adoption of ASU 2009-17 will have on our consolidated financial statements.

Acquisition of Real Estate Assets and Related Depreciation and Amortization

We capitalize the purchase price and incremental direct costs associated with the acquisition of properties as the cost of the assets acquired. We allocate the cost of acquired properties to tangible assets and identified intangible assets based on their fair values. We determine the fair value of tangible assets, such as land, building, furniture, fixtures and equipment, on an “as-if vacant” basis, generally using internal valuation techniques that consider comparable market transactions, discounted cash flow techniques, replacement costs and other available information. We determine the fair value of identified intangible assets (or liabilities), which typically relate to in-place leases, using internal valuation techniques that consider the terms of the in-place leases, current market data for comparable leases, and our experience in leasing similar properties. The intangible assets or liabilities related to in-place leases are comprised of:

	1.		The value of the above- and below-market leases in-place. An asset or liability is recognized based on the difference between (a) the contractual amounts to be paid pursuant to the in-place leases and (b) our estimate of fair market lease rates for the corresponding in-place leases, measured over the period, including estimated lease renewals for below-market leases, that the leases are expected to remain in effect.

	2.		The estimated unamortized portion of avoided leasing commissions and other costs that ordinarily would be incurred to acquire the in-place leases.

	3.		The value associated with vacant units during the absorption period (estimates of lost rental revenue during the expected lease-up periods based on current market demand and stabilized occupancy levels).

The values of the above- and below-market leases are amortized to rental revenue over the expected remaining terms of the associated leases. Other intangible assets related to in-place leases are amortized to depreciation and amortization over the expected remaining terms of the associated leases. Amortization is adjusted, as necessary, to reflect any early lease terminations that were not anticipated in determining amortization periods.

Depreciation for all tangible real estate assets is calculated using the straight-line method over their estimated useful lives. Acquired buildings and improvements are depreciated over a composite life of 14 to 52 years, based on the age, condition and other physical characteristics of the property. As discussed under Impairment of Long Lived Assets below, we may adjust depreciation of properties that are expected to be disposed of or demolished prior to the end of their useful lives. Furniture, fixtures and equipment associated with acquired properties are depreciated over five years.

At December 31, 2009 and 2008, deferred income in our consolidated balance sheets includes below-market lease amounts totaling $31.8 million and $36.2 million, respectively, which are net of accumulated amortization of $21.0 million and $16.6 million, respectively. Additions to below-market leases resulting from acquisitions during the year ended December 31, 2007 totaled $18.9 million, and there were no such additions during the years ended December 31, 2009 or 2008. During the years ended December 31, 2009, 2008 and 2007, we included amortization of below-market leases of $4.4 million, $4.4 million and $4.6 million, respectively, in rental and other property revenues in our consolidated statements of income. During the year ended December 31, 2008, we revised the estimated fair value of assets acquired and liabilities assumed in acquisitions completed in 2007, resulting in a $4.7 million reduction of below-market lease values and a corresponding reduction in buildings and improvements. At December 31, 2009, our below- market leases had a weighted average amortization period of 7.1 years and estimated aggregate amortization for each of the five succeeding years as follows (in millions):


	2010		2011		2012		2013		2014
Estimated amortization	$	3.9	$	3.6	$	3.2	$	2.8	$	2.5

Capital Additions and Related Depreciation

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

We depreciate capitalized costs using the straight-line method over the estimated useful life of the related component or improvement, which is generally five, 15 or 30 years. All capitalized site payroll and indirect costs are allocated proportionately, based on direct costs, among capital projects and depreciated over the estimated useful lives of such projects.

Certain homogeneous items that are purchased in bulk on a recurring basis, such as carpeting and appliances, are depreciated using group methods that reflect the average estimated useful life of the items in each group. Except in the case of property casualties, where the net book value of lost property is written off in the determination of casualty gains or losses, we generally do not recognize any loss in connection with the replacement of an existing property component because normal replacements are considered in determining the estimated useful lives used in connection with our composite and group depreciation methods.

For the years ended December 31, 2009, 2008 and 2007, for continuing and discontinued operations, we capitalized $9.8 million, $25.7 million and $30.8 million, respectively, of interest costs, and $40.0 million, $78.1 million and $78.1 million, respectively, of site payroll and indirect costs, respectively.

Impairment of Long-Lived Assets

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

In connection with the preparation of our 2008 annual financial statements, we assessed the recoverability of our investment in our Lincoln Place property, located in Venice, California. Based upon the declines in land values in Southern California during 2008 and the expected timing of our redevelopment efforts, we determined that the total carrying amount of the property was no longer probable of full recovery and, accordingly, during the three months ended December 31, 2008, recognized an impairment loss of $85.4 million ($55.6 million net of tax).

In addition to the impairments of Lincoln Place and Pacific Bay Vistas, based on periodic tests of recoverability of long-lived assets, for the years ended December 31, 2009 and 2007, we recorded real estate impairment losses of $2.3 million and $1.1 million, respectively, related to properties classified as held for use. For the year ended December 31, 2008, we recorded no similar impairment losses related to properties classified as held for use.

We report impairment losses or recoveries related to properties sold or classified as held for sale in discontinued operations.

Our tests of recoverability address real estate assets that do not currently meet all conditions to be classified as held for sale, but are expected to be disposed of prior to the end of their estimated useful lives. If an impairment loss is not required to be recorded, the recognition of depreciation is adjusted prospectively, as necessary, to reduce the carrying amount of the real estate to its estimated disposition value over the remaining period that the real estate is expected to be held and used. We also may adjust depreciation prospectively to reduce to zero the carrying amount of buildings that we plan to demolish in connection with a redevelopment project. These depreciation adjustments decreased net income available to the Partnership’s common unitholders by $19.6 million, $11.8 million and $37.3 million, and resulted in decreases in basic and diluted earnings per unit of $0.16, $0.12 and $0.36, for the years ended December 31, 2009, 2008 and 2007, respectively.

Cash Equivalents

We classify highly liquid investments with an original maturity of three months or less as cash equivalents.

Restricted Cash

Restricted cash includes capital replacement reserves, completion repair reserves, bond sinking fund amounts and tax and insurance escrow accounts held by lenders.

Accounts Receivable and Allowance for Doubtful Accounts

Accounts receivable are generally comprised of amounts receivable from residents, amounts receivable from non-affiliated real estate partnerships for which we provide property management and other services and other miscellaneous receivables from non-affiliated entities. We evaluate collectibility of accounts receivable from residents and establish an allowance, after the application of security deposits and other anticipated recoveries, for accounts greater than 30 days past due for current residents and all receivables due from former residents. Accounts receivable from residents are stated net of allowances for doubtful accounts of approximately $1.4 million and $3.3 million as of December 31, 2009 and 2008, respectively.

We evaluate collectibility of accounts receivable from non-affiliated entities and establish an allowance for amounts that are considered to be uncollectible. Accounts receivable relating to non-affiliated entities are stated net of allowances for doubtful accounts of approximately $5.4 million and $5.0 million as of December 31, 2009 and 2008, respectively.

Accounts Receivable and Allowance for Doubtful Accounts from Affiliates

Accounts receivable from affiliates are generally comprised of receivables related to property management and other services provided to unconsolidated real estate partnerships in which we have an ownership interest. We evaluate collectibility of accounts receivable balances from affiliates on a periodic basis, and establish an allowance for the amounts deemed to be uncollectible. Accounts receivable from affiliates are stated net of allowances for doubtful accounts of approximately $1.9 million and $2.8 million as of December 31, 2009 and 2008, respectively.

Deferred Costs

We defer lender fees and other direct costs incurred in obtaining new financing and amortize the amounts over the terms of the related loan agreements. Amortization of these costs is included in interest expense.

We defer leasing commissions and other direct costs incurred in connection with successful leasing efforts and amortize the costs over the terms of the related leases. Amortization of these costs is included in depreciation and amortization.

Notes Receivable from Unconsolidated Real Estate Partnerships and Non-Affiliates and Related Interest Income and Provision for Losses

Notes receivable from unconsolidated real estate partnerships consist primarily of notes receivable from partnerships in which we are the general partner but do not consolidate the partnership. The ultimate repayment of these notes and those from non-affiliates is subject to a number of variables, including the performance and value of the underlying real estate property and the claims of unaffiliated mortgage lenders. Our notes receivable include loans extended by us that we carry at the face amount plus accrued interest, which we refer to as “par value notes,” and loans extended by predecessors whose positions we generally acquired at a discount, which we refer to as “discounted notes.”

Investments in Unconsolidated Real Estate Partnerships

We own general and limited partner interests in real estate partnerships that own apartment properties. We generally account for investments in real estate partnerships that we do not consolidate under the equity method. Under the equity method, our share of the earnings or losses of the entity for the periods being presented is included in equity in earnings (losses) from unconsolidated real estate partnerships, except for our share of impairments and property disposition gains related to such entities, which we report separately in the consolidated statements of income. Certain investments in real estate partnerships that were acquired in business combinations were determined to have insignificant value at the acquisition date and are accounted for under the cost method. Any distributions received from such partnerships are recognized as income when received.

The excess of the cost of the acquired partnership interests over the historical carrying amount of partners’ equity or deficit is ascribed generally to the fair values of land and buildings owned by the partnerships. We amortize the excess cost related to the buildings over the estimated useful lives of the buildings. Such amortization is recorded as a component of equity in earnings (losses) of unconsolidated real estate partnerships.

Intangible Assets

At December 31, 2009 and 2008, other assets included goodwill associated with our real estate segment of $71.8 million and $81.9 million, respectively. We perform an annual impairment test of goodwill that compares the fair value of reporting units with their carrying amounts, including goodwill. We determined that our goodwill was not impaired in 2009, 2008 or 2007.

During the year ended December 31, 2009, we allocated $10.1 million of goodwill related to our real estate segment to the carrying amounts of the properties sold or classified as held for sale. The amounts of goodwill allocated to these properties were based on the relative fair values of the properties sold or classified as held for sale and the retained portions of the reporting units to which the goodwill as allocated. During 2008 and 2007, we did not allocate any goodwill to properties sold or classified as held for sale as real estate properties were not considered businesses under then applicable accounting principles generally accepted in the United States of America, or GAAP.

Other assets also includes intangible assets for purchased management contracts with finite lives that we amortize on a straight-line basis over terms ranging from five to 20 years and intangible assets for in-place leases as discussed under Acquisition of Real Estate Assets and Related Depreciation and Amortization.

Capitalized Software Costs

Purchased software and other costs related to software developed for internal use are capitalized during the application development stage and are amortized using the straight-line method over the estimated useful life of the software, generally five years. We write-off the costs of software development projects when it is no longer probable that the software will be completed and placed in service. For the years ended December 31, 2009, 2008 and 2007, we capitalized software development costs totaling $5.6 million, $20.9 million and $11.9 million, respectively. At December 31, 2009 and 2008, other assets included $29.7 million and $35.7 million of net capitalized software, respectively. During the years ended December 31, 2009, 2008 and 2007, we recognized amortization of capitalized software of $11.5 million, $10.0 million and $10.8 million, respectively, which is included in depreciation and amortization in our consolidated statements of income.

During the year ended December 31, 2008, we reassessed our approach to communication technology needs at our properties, which resulted in the discontinuation of an infrastructure project and a $5.4 million write-off of related hardware and capitalized internal and consulting costs included in other assets. The write-off, which is net of sales proceeds, is included in other expenses, net. During the year ended December 31, 2008, we additionally recorded a $1.6 million write-off of certain software and hardware assets that are no longer consistent with our information technology strategy. This write-off is included in depreciation and amortization. During the year ended December 31, 2007, we abandoned certain internal-use software development projects and recorded a $4.2 million write-off of the capitalized costs of such projects in depreciation and amortization. There were no similar write-offs during the year ended December 31, 2009.

Noncontrolling Interests in Consolidated Real Estate Partnerships

We report the unaffiliated partners’ interests in our consolidated real estate partnerships as noncontrolling interests in consolidated real estate partnerships. Noncontrolling interests in consolidated real estate partnerships represent the noncontrolling partners’ share of the underlying net assets of our consolidated real estate partnerships. Prior to 2009, when these consolidated real estate partnerships made cash distributions to partners in excess of the carrying amount of the noncontrolling interest, we generally recorded a charge equal to the amount of such excess distribution, even though there was no economic effect or cost. These charges are reported in the consolidated statements of income for the years ended December 31, 2008 and 2007 within noncontrolling interests in consolidated real estate partnerships. Also prior to 2009, we allocated the noncontrolling partners’ share of partnership losses to noncontrolling partners to the extent of the carrying amount of the noncontrolling interest. We generally recorded a charge when the noncontrolling partners’ share of partnership losses exceed the carrying amount of the noncontrolling interest, even though there is no economic effect or cost. These charges are reported in the consolidated statements of income within noncontrolling interests in consolidated real estate partnerships. We did not record charges for distributions or losses in certain limited instances where the noncontrolling partner had a legal obligation and financial capacity to contribute additional capital to the partnership. For the years ended December 31, 2008 and 2007, we recorded charges for partnership losses resulting from depreciation of approximately $9.0 million and $12.2 million, respectively that were not allocated to noncontrolling partners because the losses exceeded the carrying amount of the noncontrolling interest.

Noncontrolling interests in consolidated real estate partnerships consist primarily of equity interests held by limited partners in consolidated real estate partnerships that have finite lives. The terms of the related partnership agreements generally require the partnership to be liquidated following the sale of the partnership’s real estate. As the general partner in these partnerships, we ordinarily control the execution of real estate sales and other events that could lead to the liquidation, redemption or other settlement of noncontrolling interests. The aggregate carrying amount of noncontrolling interests in consolidated real estate partnerships is approximately $317.1 million at December 31, 2009. The aggregate fair value of these interests varies based on the fair value of the real estate owned by the partnerships. Based on the number of classes of finite-life noncontrolling interests, the number of properties in which there is direct or indirect noncontrolling ownership, complexities in determining the allocation of liquidation proceeds among partners and other factors, we believe it is impracticable to determine the total required payments to the noncontrolling interests in an assumed liquidation at December 31, 2009. As a result of real estate depreciation that is recognized in our financial statements and appreciation in the fair value of real estate that is not recognized in our financial statements, we believe that the aggregate fair value of our noncontrolling interests exceeds their aggregate carrying amount. As a result of our ability to control real estate sales and other events that require payment of noncontrolling interests and our expectation that proceeds from real estate sales will be sufficient to liquidate related noncontrolling interests, we anticipate that the eventual liquidation of these noncontrolling interests will not have an adverse impact on our financial condition.

Revenue Recognition

Our properties have operating leases with apartment residents with terms generally of 12 months or less. We recognize rental revenue related to these leases, net of any concessions, on a straight-line basis over the term of the lease. We recognize revenues from property management, asset management, syndication and other services when the related fees are earned and are realized or realizable.

Advertising Costs

We generally expense all advertising costs as incurred to property operating expense. For the years ended December 31, 2009, 2008 and 2007, for both continuing and discontinued operations, total advertising expense was $25.0 million, $36.0 million and $38.0 million, respectively.

Insurance

We believe that our insurance coverages insure our properties adequately against the risk of loss attributable to fire, earthquake, hurricane, tornado, flood, and other perils. In addition, we have insurance coverage for substantial portions of our property, workers’ compensation, health, and general liability exposures. Losses are accrued based upon our estimates of the aggregate liability for uninsured losses incurred using certain actuarial assumptions followed in the insurance industry and based on our experience.

Stock-Based Compensation

We recognize all stock-based employee compensation, including grants of employee stock options, in the consolidated financial statements based on the grant date fair value and recognize compensation cost, which is net of estimates for expected forfeitures, ratably over the awards’ requisite service period. See Note 12 for further discussion of our stock-based compensation.

Tax Credit Arrangements

We sponsor certain partnerships that own and operate apartment properties that qualify for tax credits under Section 42 of the Internal Revenue Code of 1986, as amended, which we refer to as the Code, and for the U.S. Department of Housing and Urban Development, or HUD, subsidized rents under HUD’s Section 8 program. These partnerships acquire, develop and operate qualifying affordable housing properties and are structured to provide for the pass-through of tax credits and deductions to their partners. The tax credits are generally realized ratably over the first ten years of the tax credit arrangement and are subject to the partnership’s compliance with applicable laws and regulations for a period of 15 years. Typically, we are the general partner with a legal ownership interest of one percent or less. We market limited partner interests of at least 99 percent to unaffiliated institutional investors (which we refer to as tax credit investors or investors) and receive a syndication fee from each investor upon such investor’s admission to the partnership. At inception, each investor agrees to fund capital contributions to the partnerships. We agree to perform various services to the partnerships in exchange for fees over the expected duration of the tax credit service period. The related partnership agreements generally require adjustment of each tax credit investor’s required capital contributions if actual tax benefits to such investor differ from projected amounts.

We have determined that the partnerships in these arrangements are variable interest entities and, where we are general partner, we are generally the primary beneficiary that is required to consolidate the partnerships. When the contractual arrangements obligate us to deliver tax benefits to the investors, and entitle us through fee arrangements to receive substantially all available cash flow from the partnerships, we account for these partnerships as wholly owned subsidiaries. Capital contributions received by the partnerships from tax credit investors represent, in substance, consideration that we receive in exchange for our obligation to deliver tax credits and other tax benefits to the investors, and the receipts are recognized as revenue in our consolidated financial statements when our obligation to the investors is relieved upon delivery of the expected tax benefits.

In summary, our accounting treatment recognizes the income or loss generated by the underlying real estate based on our economic interest in the partnerships. Proceeds received in exchange for the transfer of the tax credits are recognized as revenue proportionately as the tax benefits are delivered to the tax credit investors and our obligation is relieved. Syndication fees and related costs are recognized in income upon completion of the syndication effort. We recognize syndication fees in amounts determined based on a market rate analysis of fees for comparable services, which generally fell within a range of 10% to 15% of investor contributions during the periods presented. Other direct and incremental costs incurred in structuring these arrangements are deferred and amortized over the expected duration of the arrangement in proportion to the recognition of related income. Investor contributions in excess of recognized revenue are reported as deferred income in our consolidated balance sheets.

During the years ended December 31, 2008 and 2007, we recognized syndication fee income of $3.4 million and $13.8 million, respectively. We recognized no syndication fee income during the year ended December 31, 2009. During the years ended December 31, 2009, 2008 and 2007 we recognized revenue associated with the delivery of tax benefits of $36.6 million, $29.4 million and $24.0 million, respectively. At December 31, 2009 and 2008, $148.1 million and $159.6 million, respectively, of investor contributions in excess of the recognized revenue were included in deferred income in our consolidated balance sheets.

Discontinued Operations

We classify certain properties and related assets and liabilities as held for sale when they meet certain criteria. The operating results of such properties as well as those properties sold during the periods presented are included in discontinued operations in both current periods and all comparable periods presented. Depreciation is not recorded on properties once they have been classified as held for sale; however, depreciation expense recorded prior to classification as held for sale is included in discontinued operations. The net gain on sale and any impairment losses are presented in discontinued operations when recognized. See Note 13 for additional information regarding discontinued operations.

Derivative Financial Instruments

We primarily use long-term, fixed-rate and self-amortizing non-recourse debt to avoid, among other things, risk related to fluctuating interest rates. For our variable rate debt, we are sometimes required by our lenders to limit our exposure to interest rate fluctuations by entering into interest rate swap or cap agreements. The interest rate swap agreements moderate our exposure to interest rate risk by effectively converting the interest on variable rate debt to a fixed rate. The interest rate cap agreements effectively limit our exposure to interest rate risk by providing a ceiling on the underlying variable interest rate. The fair values of the interest rate swaps are reflected as assets or liabilities in the balance sheet, and periodic changes in fair value are included in interest expense or equity, as appropriate. These interest rate caps are not material to our financial position or results of operations.

As of December 31, 2009 and 2008, we had interest rate swaps with aggregate notional amounts of $52.3 million and $27.2 million, and recorded fair values of $1.6 million and $2.6 million, respectively, reflected in accrued liabilities and other in our consolidated balance sheets. At December 31, 2009, these interest rate swaps had a weighted average term of 11.1 years. We have designated these interest rate swaps as cash flow hedges and recognize any changes in their fair value as an adjustment of accumulated other comprehensive income within partners’ capital to the extent of their effectiveness. For the year ended December 31, 2009, we recognized changes in fair value of $1.0 million, of which $1.4 million resulted in an adjustment to accumulated other comprehensive loss within consolidated partners’ capital. For the year ended December 31, 2008, we recognized changes in fair value of $2.2 million, of which $2.1 million resulted in an adjustment to accumulated other comprehensive loss within consolidated partners’ capital. We recognized $0.4 million and less than $0.1 million of ineffectiveness as an adjustment of interest expense during the years ended December 31, 2009 and 2008, respectively, and we recognized no ineffectiveness during the year ended December 31, 2007. Our consolidated comprehensive loss for the year ended December 31, 2009 totaled $42.6 million and our comprehensive income for the years ended December 31, 2008 and 2007, totaled $625.6 million and $125.5 million, respectively, before the effects of noncontrolling interests. If the forward rates at December 31, 2009 remain constant, we estimate that during the next twelve months, we would reclassify into earnings approximately $1.5 million of the unrealized losses in accumulated other comprehensive income.

We have entered into total rate of return swaps on various fixed rate secured tax-exempt bonds payable and fixed rate notes payable to convert these borrowings from a fixed rate to a variable rate and provide an efficient financing product to lower our cost of borrowing. In exchange for our receipt of a fixed rate generally equal to the underlying borrowing’s interest rate, the total rate of return swaps require that we pay a variable rate, equivalent to the Securities Industry and Financial Markets Association Municipal Swap Index, or SIFMA, rate for tax-exempt bonds payable and the 30-day LIBOR rate for notes payable, plus a risk spread. These swaps generally have a second or third lien on the property collateralized by the related borrowings and the obligations under certain of these swaps are cross-collateralized with certain of the other swaps with a particular counterparty. The underlying borrowings are generally callable at our option, with no prepayment penalty, with 30 days advance notice, and the swaps generally have a term of less than five years. The total rate of return swaps have a contractually defined termination value generally equal to the difference between the fair value and the counterparty’s purchased value of the underlying borrowings, which may require payment by us or to us for such difference. Accordingly, we believe fluctuations in the fair value of the borrowings from the inception of the hedging relationship generally will be offset by a corresponding fluctuation in the fair value of the total rate of return swaps.

We designate total rate of return swaps as hedges of the risk of overall changes in the fair value of the underlying borrowings. At each reporting period, we estimate the fair value of these borrowings and the total rate of return swaps and recognize any changes therein as an adjustment of interest expense. We evaluate the effectiveness of these fair value hedges at the end of each reporting period and recognize an adjustment of interest expense as a result of any ineffectiveness.

Borrowings payable subject to total rate of return swaps with aggregate outstanding principal balances of $352.7 million and $421.7 million at December 31, 2009 and 2008, respectively, are reflected as variable rate borrowings in Note 6. Due to changes in the estimated fair values of these debt instruments and the corresponding total rate of return swaps, we increased property loans payable by $5.2 million for the year ended December 31, 2009, and reduced property loans payable by $20.1 million and $9.4 million for the years ended December 31, 2008 and 2007, respectively, with offsetting adjustments to accrued liabilities, resulting in no net effect on net income. Refer to Fair Value Measurements for further discussion of fair value measurements related to these arrangements. During 2009, 2008 and 2007, we determined these hedges were fully effective and accordingly we made no adjustments to interest expense for ineffectiveness.

At December 31, 2009, the weighted average fixed receive rate under the total return swaps was 6.8% and the weighted average variable pay rate was 1.0%, based on the applicable SIFMA and 30-day LIBOR rates effective as of that date. Further information related to our total return swaps as of December 31, 2009 is as follows (dollars in millions):


										Weighted Average
										Swap Variable Pay
		Year of Debt		Weighted Average						Rate at December
Debt Principal		Maturity		Debt Interest Rate			Swap Notional Amount		Swap Maturity Date	31, 2009
$	45.2		2012		7.5	%	$	45.2	2012		1.6	%
	24.0		2015		6.9	%		24.0	2012		1.0	%
	14.2		2018		7.3	%		14.2	2012		1.0	%
	42.8		2025		7.0	%		42.8	2012		1.0	%
	93.0		2031		7.4	%		93.0	2012		1.0	%
	108.7		2036		6.2	%		109.1	2012		0.7	%
	12.3		2038		5.5	%		12.3	2012		0.9	%
	12.5		2048		6.5	%		12.5	2012		0.9	%

$	352.7						$	353.1

Fair Value Measurements

Beginning in 2008, we applied the FASB’s revised accounting provisions related to fair value measurements, which are codified in FASB ASC Topic 820. These revised provisions define fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, establish a hierarchy that prioritizes the information used in developing fair value estimates and require disclosure of fair value measurements by level within the fair value hierarchy. The hierarchy gives the highest priority to quoted prices in active markets (Level 1 measurements) and the lowest priority to unobservable data (Level 3 measurements), such as the reporting entity’s own data. We adopted the revised fair value measurement provisions that apply to recurring and nonrecurring fair value measurements of financial assets and liabilities effective January 1, 2008, and the provisions that apply to the remaining fair value measurements effective January 1, 2009, and at those times determined no transition adjustments were required.

The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date and includes three levels defined as follows:


Level 1 —		Unadjusted quoted prices for identical and unrestricted assets or liabilities in active markets

Level 2 —		Quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument

Level 3 —		Unobservable inputs that are significant to the fair value measurement

A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

Following are descriptions of the valuation methodologies used for our significant assets or liabilities measured at fair value on a recurring or nonrecurring basis. Although some of the valuation methodologies use observable market inputs in limited instances, the majority of inputs we use are unobservable and are therefore classified within Level 3 of the valuation hierarchy.

Provisions for Real Estate Impairment Losses

If events or circumstances indicate that the carrying amount of a property may not be recoverable, we make an assessment of its recoverability by comparing the carrying amount to our estimate of the undiscounted future cash flows, excluding interest charges, of the property. If the carrying amount exceeds the aggregate undiscounted future cash flows, we recognize an impairment loss to the extent the carrying amount exceeds the estimated fair value of the property, for properties classified as held for use, and estimated fair value of the property, less estimated selling costs, for properties classified as held for sale.

We estimate the fair value of real estate using income and market valuation techniques using information such as broker estimates, purchase prices for recent transactions on comparable assets and net operating income capitalization analyses using observable and unobservable inputs such as capitalization rates, asset quality grading, geographic location analysis, and local supply and demand observations. For certain properties classified as held for sale, we may also recognize the impairment loss based on the contract sale price, which we believe is representative of fair value, less estimated selling costs.

Notes Receivable

We assess the collectibility of notes receivable on a periodic basis, which assessment consists primarily of an evaluation of cash flow projections of the borrower to determine whether estimated cash flows are sufficient to repay principal and interest in accordance with the contractual terms of the note. We recognize impairments on notes receivable when it is probable that principal and interest will not be received in accordance with the contractual terms of the loan. The amount of the impairment to be recognized generally is based on the fair value of the real estate, which represents the primary source of loan repayment. The fair value of real estate is estimated through income and market valuation approaches using information such as broker estimates, purchase prices for recent transactions on comparable assets and net operating income capitalization analyses using observable and unobservable inputs such as capitalization rates, asset quality grading, geographic location analysis, and local supply and demand observations.

Interest Rate Swaps

We estimate the fair value of interest rate swaps using an income approach with primarily observable inputs, including information regarding the hedged variable cash flows and forward yield curves relating to the variable interest rates on which the hedged cash flows are based.

Total Rate of Return Swaps

Our total rate of return swaps have contractually-defined termination values generally equal to the difference between the fair value and the counterparty’s purchased value of the underlying borrowings. Upon termination, we are required to pay the counterparty the difference if the fair value is less than the purchased value, and the counterparty is required to pay us the difference if the fair value is greater than the purchased value. The underlying borrowings are generally callable, at our option, at face value prior to maturity and with no prepayment penalty. Due to our control of the call features in the underlying borrowings, we believe the inherent value of any differential between the fixed and variable cash payments due under the swaps would be significantly discounted by a market participant willing to purchase or assume any rights and obligations under these contracts.

The swaps are generally cross-collateralized with other swap contracts with the same counterparty and do not allow transfer or assignment, thus there is no alternate or secondary market for these instruments. Accordingly, our assumptions about the fair value that a willing market participant would assign in valuing these instruments are based on a hypothetical market in which the highest and best use of these contracts is in-use in combination with the related borrowings, similar to how we use the contracts. Based on these assumptions, we believe the termination value, or exit value, of the swaps approximates the fair value that would be assigned by a willing market participant. We calculate the termination value using a market approach by reference to estimates of the fair value of the underlying borrowings, which are discussed below, and an evaluation of potential changes in the credit quality of the counterparties to these arrangements. We compare our estimates of the fair value of the swaps and related borrowings to the valuations provided by the counterparties on a quarterly basis.

Our method for calculating fair value of the swaps generally results in changes in fair value equal to the changes in fair value of the related borrowings. Accordingly, we believe these instruments are highly effective in offsetting the changes in fair value of the borrowings during the hedging period.

Changes in Fair Value of Borrowings Subject to Total Rate of Return Swaps

We recognize changes in the fair value of certain borrowings subject to total rate of return swaps, which we have designated as fair value hedges.

We estimate the fair value of debt instruments using an income and market approach, including comparison of the contractual terms to observable and unobservable inputs such as market interest rate risk spreads, collateral quality and loan-to-value ratios on similarly encumbered assets within our portfolio. These borrowings are collateralized and non-recourse to us; therefore, we believe changes in our credit rating will not materially affect a market participant’s estimate of the borrowings’ fair value.

The methods described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, although we believe our valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain assets and liabilities could result in a different estimate of fair value at the reporting date.

The table below presents amounts at December 31, 2009, 2008 and 2007 (and the changes in fair value between such dates) for significant items measured in our consolidated balance sheets at fair value (in thousands). Certain of these fair value measurements are based on significant unobservable inputs classified within Level 3 of the valuation hierarchy. When a determination is made to classify a fair value measurement within Level 3 of the valuation hierarchy, the determination is based upon the significance of the unobservable factors to the overall fair value measurement. However, Level 3 fair value measurements typically include, in addition to the unobservable or Level 3 components, observable components that can be validated to observable external sources; accordingly, the changes in fair value in the table below are due in part to observable factors that are part of the valuation methodology.


	Level 2			Level 3
							Changes in fair
							value of debt
							instruments
							subject to total
	Interest rate			Total rate of			rate of return
	swaps			return swaps			swaps			Total
Fair value at December 31, 2007	$	(371	)	$	(9,420	)	$	9,420		$	(371	)
Unrealized gains (losses) included in earnings (1)(2)		(47	)		(20,075	)		20,075			(47	)
Realized gains (losses) included in earnings		—			—			—			—
Unrealized gains (losses) included in partners’ capital		(2,139	)		—			—			(2,139	)

Fair value at December 31, 2008	$	(2,557	)	$	(29,495	)	$	29,495		$	(2,557	)
Unrealized gains (losses) included in earnings (1)(2)		(447	)		5,188			(5,188	)		(447	)
Realized gains (losses) included in earnings		—			—			—			—
Unrealized gains (losses) included in partners’ capital		1,408			—			—			1,408

Fair value at December 31, 2009	$	(1,596	)	$	(24,307	)	$	24,307		$	(1,596	)


(1)		Unrealized gains (losses) relate to periodic revaluations of fair value and have not resulted from the settlement of a swap position.

(2)		Included in interest expense in the accompanying condensed consolidated statements of income.

In addition to the amounts in the table above, during the years ended December 31, 2009, 2008 and 2007, we recognized $56.9 million, $118.6 million and $6.5 million, respectively, of provisions for real estate impairment losses (including amounts in discontinued operations) to reduce the carrying amounts of certain real estate properties to their estimated fair value (or fair value less estimated costs to sell) and provisions for losses on notes receivable of $21.5 million, $17.6 million and $2.0 million, respectively, based on our estimates of the fair value of the real estate properties that represent the primary source of repayment. Based on the significance of the unobservable inputs used in our methods for estimating the fair values for these amounts, we classify these fair value measurements within Level 3 of the valuation hierarchy.

Disclosures Regarding Fair Value of Financial Instruments

We believe that the aggregate fair value of our cash and cash equivalents, receivables, payables and short-term secured debt approximates their aggregate carrying value at December 31, 2009, due to their relatively short-term nature and high probability of realization. We estimate fair value for our notes receivable and debt instruments using present value techniques that include income and market valuation approaches using observable inputs such as market rates for debt with the same or similar terms and unobservable inputs such as collateral quality and loan-to-value ratios on similarly encumbered assets. Present value calculations vary depending on the assumptions used, including the discount rate and estimates of future cash flows. In many cases, the fair value estimates may not be realizable in immediate settlement of the instruments. The estimated aggregate fair value of our notes receivable was approximately $126.1 million and $161.6 million at December 31, 2009 and 2008, respectively. See Note 5 for further information on notes receivable. The estimated aggregate fair value of our consolidated debt (including amounts reported in liabilities related to assets held for sale) was approximately $5.7 billion and $6.7 billion at December 31, 2009 and 2008, respectively. The combined carrying amount of our consolidated debt (including amounts reported in liabilities related to assets held for sale) was approximately $5.7 billion and $6.8 billion at December 31, 2009 and 2008, respectively. See Note 6 and Note 7 for further details on our consolidated debt. Refer to Derivative Financial Instruments for further discussion regarding certain of our fixed rate debt that is subject to total rate of return swap instruments.

Income Taxes

We are treated as a “pass-through” entity for United States Federal income tax purposes and are not subject to United States Federal income taxation. Each of our partners, however, is subject to tax on his allocable share of partnership tax items, including partnership income, gains, losses, deductions and credits, or Partnership Tax Items, for each taxable year during which he is a partner, regardless of whether he receives any actual distributions of cash or other property from us during the taxable year. Generally, the characterization of any particular Partnership Tax Item is determined by us, rather than at the partner level, and the amount of a partner’s allocable share of such item is governed by the terms of the Partnership Agreement. The General Partner is our “tax matters partner” for United States Federal income tax purposes. The tax matters partner is authorized, but not required, to take certain actions on behalf of us with respect to tax matters.

Aimco has elected to be taxed as a REIT under the Code commencing with its taxable year ended December 31, 1994, and intends to continue to operate in such a manner. Aimco’s current and continuing qualification as a REIT depends on its ability to meet the various requirements imposed by the Code, which are related to organizational structure, distribution levels, diversity of stock ownership and certain restrictions with regard to owned assets and categories of income. If Aimco qualifies for taxation as a REIT, it will generally not be subject to United States Federal corporate income tax on our taxable income that is currently distributed to stockholders. This treatment substantially eliminates the “double taxation” (at the corporate and stockholder levels) that generally results from an investment in a corporation.

Even if Aimco qualifies as a REIT, it may be subject to United States Federal income and excise taxes in various situations, such as on our undistributed income. Aimco also will be required to pay a 100% tax on any net income on non-arms length transactions between it and a TRS (described below) and on any net income from sales of property that was property held for sale to customers in the ordinary course. Aimco and its stockholders may be subject to state or local taxation in various state or local jurisdictions, including those in which Aimco transacts business or Aimco’s stockholders reside. In addition, Aimco could also be subject to the alternative minimum tax, or AMT, on our items of tax preference. The state and local tax laws may not conform to the United States Federal income tax treatment. Any taxes imposed on Aimco reduce its and our operating cash flow and net income.

Certain of Aimco’s operations, or a portion thereof, including property management, asset management and risk are conducted through taxable REIT subsidiaries, which are subsidiaries of the Partnership, and each of which we refer to as a TRS. A TRS is a C-corporation that has not elected REIT status and as such is subject to United States Federal corporate income tax. Aimco uses TRS entities to facilitate its ability to offer certain services and activities to its residents, as these services and activities generally cannot be offered directly by the REIT. Aimco also uses TRS entities to hold investments in certain properties.

For Aimco’s TRS entities, deferred income taxes result from temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for Federal income tax purposes, and are measured using the enacted tax rates and laws that are expected to be in effect when the differences reverse. We reduce deferred tax assets by recording a valuation allowance when we determine based on available evidence that it is more likely than not that the assets will not be realized. We recognize the tax consequences associated with intercompany transfers between the REIT and TRS entities when the related assets are sold to third parties, impaired or otherwise disposed of for financial reporting purposes.

In March 2008, we were notified by the Internal Revenue Service that it intended to examine our 2006 Federal tax return. During June 2008, the IRS issued AIMCO-GP, Inc., our general and tax matters partner, a summary report including the IRS’s proposed adjustments to our 2006 Federal tax return. In addition, in May 2009, we were notified by the IRS that it intended to examine our 2007 Federal tax return. During November 2009, the IRS issued AIMCO-GP, Inc. a summary report including the IRS’s proposed adjustments to our 2007 Federal tax return. We do not expect the 2006 or 2007 proposed adjustments to have any material effect on our unrecognized tax benefits, financial condition or results of operations.

Concentration of Credit Risk

Financial instruments that potentially could subject us to significant concentrations of credit risk consist principally of notes receivable and total rate of return swaps. As discussed in Note 5, a significant portion of our notes receivable at December 31, 2009, are collateralized by properties in the West Harlem area of New York City. There are no other significant concentrations of credit risk with respect to our notes receivable due to the large number of partnerships that are borrowers under the notes and the geographic diversity of the properties that collateralize the notes.

At December 31, 2009, we had total rate of return swap positions with two financial institutions totaling $353.1 million. The swap positions with one counterparty are comprised of $340.9 million of fixed rate debt effectively converted to variable rates using total rate of return swaps, including $295.7 million of tax-exempt bonds indexed to SIFMA and $45.2 million of taxable second mortgage notes indexed to LIBOR. Additionally, the swap agreements with this counterparty provide for collateral calls to maintain specified loan-to-value ratios. As of December 31, 2009, we were not required to provide cash collateral pursuant to the total rate of return swaps. We have one swap position with another counterparty that is comprised of $12.2 million of fixed rate tax-exempt bonds indexed to SIFMA. We periodically evaluate counterparty credit risk associated with these arrangements. At the current time, we have concluded we do not have material exposure. In the event either counterparty were to default under these arrangements, loss of the net interest benefit we generally receive under these arrangements, which is equal to the difference between the fixed rate we receive and the variable rate we pay, may adversely impact our results of operations and operating cash flows. In the event the values of the real estate properties serving as collateral under these agreements decline, we may be required to provide additional collateral pursuant to the swap agreements, which may adversely affect our cash flows.

FASB Accounting Standards Codification

In June 2009, the Financial Accounting Standards Board, or FASB, issued Statement of Financial Accounting Standards No. 168, The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles — a replacement of FASB Statement No. 162, or SFAS 168, which is effective for financial statements issued for interim and annual periods ending after September 15, 2009. Upon the effective date of SFAS 168, the FASB Accounting Standards Codification, or the FASB ASC, became the single source of authoritative GAAP recognized by the FASB to be applied by nongovernmental entities. Rules and interpretive releases of the Securities and Exchange Commission, or SEC, under authority of federal securities laws are also sources of authoritative GAAP for SEC registrants. The FASB ASC superseded all then-existing non-SEC accounting and reporting standards, and all other non-grandfathered non-SEC accounting literature not included in the FASB ASC is now non-authoritative. Subsequent to the effective date of SFAS 168, the FASB will issue Accounting Standards Updates that serve to update the FASB ASC.

Business Combinations

We adopted the provisions of FASB Statement of Financial Accounting Standards No. 141(R), Business Combinations — a replacement of FASB Statement No. 141, or SFAS 141(R), which are codified in FASB ASC Topic 805, effective January 1, 2009. These provisions apply to all transactions or events in which an entity obtains control of one or more businesses, including those effected without the transfer of consideration, for example by contract or through a lapse of minority veto rights. These provisions require the acquiring entity in a business combination to recognize the full fair value of assets acquired and liabilities assumed in the transaction (whether a full or partial acquisition); establish the acquisition-date fair value as the measurement objective for all assets acquired and liabilities assumed; and require expensing of most transaction and restructuring costs.

We believe most operating real estate assets meet the revised definition of a business. Accordingly, beginning in 2009, we expense transaction costs associated with acquisitions of operating real estate or interests therein when we consolidate the asset. The FASB did not provide implementation guidance regarding the treatment of acquisition costs incurred prior to December 31, 2008, for acquisitions that did not close until 2009. The SEC indicated any of the following three transition methods were acceptable, provided that the method chosen is disclosed and applied consistently:

	1)		expense acquisition costs in 2008 when it is probable that the acquisition will not close in 2008;

	2)		expense acquisition costs January 1, 2009; or

	3)		give retroactive treatment to the acquisition costs January 1, 2009, by retroactively adjusting prior periods to record acquisition costs in the prior periods in which they were incurred.

We elected to apply the third method and accordingly have retroactively adjusted our results of operations for the year ended December 31, 2008, by $3.5 million, which also resulted in a corresponding reduction to our December 31, 2008 equity balance. This retroactive adjustment is reflected in investment management expenses in our accompanying consolidated statements of income and reduced basic and diluted earnings per unit amounts by $0.04 for the year ended December 31, 2008.

Noncontrolling Interests

Effective January 1, 2009, we adopted the provisions of FASB Statement of Financial Accounting Standards No. 160, Noncontrolling Interests in Consolidated Financial Statements — an amendment of ARB No. 51, or SFAS 160, which are codified in FASB ASC Topic 810. These provisions clarified that a noncontrolling interest in a subsidiary is an ownership interest in a consolidated entity, which should be reported as equity in the parent’s consolidated financial statements. These provisions require disclosure, on the face of the consolidated income statements, of the amounts of consolidated net income and other comprehensive income attributable to controlling and noncontrolling interests, eliminating the past practice of reporting amounts of income attributable to noncontrolling interests as an adjustment in arriving at consolidated net income. These provisions also require us to attribute to noncontrolling interests their share of losses even if such attribution results in a deficit noncontrolling interest balance within our equity accounts, and in some instances, recognize a gain or loss in net income when a subsidiary is deconsolidated.

In connection with our retrospective application of these provisions, we reclassified into our consolidated equity accounts the historical balances related to noncontrolling interests in consolidated real estate partnerships. At December 31, 2008, the carrying amount of noncontrolling interests in consolidated real estate partnerships was $381.8 million.

Beginning in 2009, we no longer record a charge related to cash distributions to noncontrolling interests in excess of the carrying amount of such noncontrolling interests, and we attribute losses to noncontrolling interests even if such attribution results in a deficit noncontrolling interest balance within our equity accounts. The following table illustrates the pro forma amounts of loss from continuing operations, discontinued operations and net loss that would have been attributed to the Partnership’s common unitholders for the year ended December 31, 2009, had we applied the accounting provisions related to noncontrolling interests prior to their amendment by SFAS 160 (in thousands, except per unit amounts):


	Year Ended
	December 31, 2009

Loss from continuing operations attributable to the Partnership’s common unitholders	$	(235,815	)
Income from discontinued operations attributable to the Partnership’s common unitholders		92,466

Net loss attributable to the Partnership’s common unitholders	$	(143,349	)


Basic and diluted earnings (loss) per common unit:
Loss from continuing operations attributable to the Partnership’s common unitholders	$	(1.91	)
Income from discontinued operations attributable to the Partnership’s common unitholders		0.75

Net loss attributable to the Partnership’s common unitholders	$	(1.16	)

Changes in our ownership interest in consolidated real estate partnerships generally consist of our purchase of an additional interest in or the sale of our entire interest in a consolidated real estate partnership. Our purchase of additional interests in consolidated real estate partnerships had no direct effect on partners’ equity attributable to the Partnership during the years ended December 31, 2008 and 2007, and did not have a significant effect on partners’ capital attributable to the Partnership during the year ended December 31, 2009. The effect on our capital of sales of our entire interest in consolidated real estate partnerships is reflected in our consolidated financial statements as sales of real estate and accordingly the effect on our capital is reflected as gains on disposition of real estate, less the amounts of such gains attributable to noncontrolling interests, within consolidated net (loss) income attributable to the Partnership’s common unitholders.

Earnings per Unit

We calculate earnings per unit based on the weighted average number of common OP Units, common OP Unit equivalents, participating securities and other potentially dilutive securities outstanding during the period (see Note 14).

Effective January 1, 2009, we adopted the provisions of FASB Statement of Position No. EITF 03-6-1, Determining Whether Instruments Granted in Share-Based Payment Transactions are Participating Securities, or FSP EITF 03-6-1, which are codified in FASB ASC Topic 260. FSP EITF 03-6-1 clarified that unvested share-based payment awards that participate in dividends similar to shares of common stock or common partnership units should be treated as participating securities. FSP EITF 03-6-1 affects our computation of basic and diluted earnings per unit for unvested restricted stock awards and shares purchased pursuant to officer stock loans, which serve as collateral for such loans, both of which entitle the holders to dividends. Refer to Note 14, which details our calculation of earnings per unit and the effect of our retroactive application of FSP EITF 03-6-1 on our earnings per unit.

In December 2009, we adopted the provisions of FASB Accounting Standards Update 2010-01, Accounting for Distributions to Shareholders with Components of Stock and Cash, or ASU 2010-01, which are codified in FASB ASC Topic 505. ASU 2010-01 requires that for distributions with components of cash and stock, the portion distributed in stock should be accounted for prospectively as a stock issuance with no retroactive adjustment to basic and diluted earnings per share. In accordance with ASU 2010-01, we retrospectively revised the accounting treatment of our special distributions paid during 2008 and 2009, resulting in changes in the number of weighted average units outstanding and earnings per unit amounts for the years ended December 31, 2008 and 2007, as compared to the amounts previously reported.

The following table illustrates the effects of these changes in accounting treatment on our basic and diluted weighted average units outstanding and on net income (loss) attributable to the Partnership’s common unitholders per common unit for the years ended December 31, 2008 and 2007:


	2008			2007
Weighted average units outstanding — basic and diluted:
As previously reported		130,772			149,883
Reduction in weighted average units outstanding		(32,523	)		(45,030	)

As currently reported		98,249			104,853


Net income (loss) attributable to the Partnership’s common unitholders per common unit — basic and diluted:
As previously reported	$	3.17		$	(0.26	)
Effect of reduction in weighted average units outstanding		1.01			(0.12	)
Effect of participating securities allocations		(0.07	)		(0.04	)

As currently reported	$	4.11		$	(0.42	)

Use of Estimates

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

Restatement to Reclassify Impairment Losses on Real Estate Development Assets

Our consolidated statement of income for the year ended December 31, 2008, has been restated to reclassify the provision for impairment losses on real estate development assets into operating income. The reclassification reduced operating income by $91.1 million for the year ended December 31, 2008, and had no effect on the reported amounts of loss before income taxes and discontinued operations, loss from continuing operations, net income, net income available to the Partnership’s common unitholders or earnings per unit. Additionally, the reclassification had no effect on the consolidated balance sheet at December 31, 2008, or the consolidated statements of partners’ capital and cash flows for the year ended December 31, 2008.

Reclassifications

Certain items included in the 2008 and 2007 financial statements have been reclassified to conform to the current presentation.

NOTE 3 — Real Estate and Partnership Acquisitions and Other Significant Transactions

Real Estate Acquisitions

During the year ended December 31, 2009, we did not acquire any real estate properties.

During the year ended December 31, 2008, we acquired three conventional properties with a total of 470 units, located in San Jose, California, Brighton, Massachusetts and Seattle, Washington. The aggregate purchase price of $111.5 million, excluding transaction costs, was funded using $39.0 million in proceeds from property loans, $41.9 million in tax-free exchange proceeds (provided by 2008 real estate dispositions) and the remainder in cash.

During the year ended December 31, 2007, we completed the acquisition of 16 conventional properties with approximately 1,300 units for an aggregate purchase price of approximately $217.0 million, excluding transaction costs. Of the 16 properties acquired, ten are located in New York City, New York, two in Daytona Beach, Florida, one in Park Forest, Illinois, one in Poughkeepsie, New York, one in Redwood City, California, and one in North San Diego, California. The purchases were funded with cash, tax-free exchange proceeds, new debt and the assumption of existing debt.

Acquisitions of Partnership Interests

During the year ended December 31, 2009, we did not acquire a significant amount of limited partnership interests. During the years ended December 31, 2008 and 2007, we acquired limited partnership interests in 22 and 50 partnerships, respectively, in which our affiliates served as general partner. In connection with such acquisitions, we paid cash of approximately $2.0 million and $47.4 million, including transaction costs. The cost of the acquisitions was approximately $2.4 million and $43.6 million in excess of the carrying amount of noncontrolling interest in such limited partnerships, which excess we generally assigned to real estate.

Disposition of Unconsolidated Real Estate and Other

During the year ended December 31, 2009, we recognized $22.5 million in gains on disposition of unconsolidated real estate and other. Gains recognized in 2009 primarily consist of $8.6 million related to our receipt in 2009 of additional proceeds related to our disposition during 2008 of one of the partnership interests (discussed below), $4.0 million from the disposition of our interest in a group purchasing organization (discussed further below), $6.1 million from our disposition of interests in unconsolidated real estate partnerships and our share of gains recognized by our unconsolidated partnerships on the sale of real estate and $3.8 million related to various other transactions.

During the year ended December 31, 2008, we recognized $99.9 million in gains on disposition of unconsolidated real estate and other, which primarily consisted of a $98.4 million gain recognized on the disposal of our interests in unconsolidated real estate partnerships that owned two properties with 671 units.

Casualty Loss Related to Tropical Storm Fay and Hurricane Ike

During 2008, Tropical Storm Fay and Hurricane Ike caused severe damage to certain of our properties located primarily in Florida and Texas, respectively. We incurred total losses of approximately $33.9 million, including property damage replacement costs and clean-up costs. After consideration of estimated third party insurance proceeds and the noncontrolling interest partners’ share of losses for consolidated real estate partnerships, the net effect of these casualties on net income available to the Partnership’s common unitholders was a loss of approximately $5.6 million.

Sale of Interest in Group Purchasing Organization

During 2009, we sold our interest in an unconsolidated group purchasing organization to an unrelated entity for $5.9 million, resulting in the recognition of a gain on sale of $4.0 million, which is included in gain on disposition of unconsolidated real estate and other in our consolidated statement of income for the year ended December 31, 2009. This gain was partially offset by a $1.0 million provision for income tax. We also have a note receivable from another principal in the group purchasing organization, which is collateralized by its equity interest in the entity. In connection with the sale of our interest, we reevaluated collectibility of the note receivable and reversed $1.4 million of previously recognized impairment losses, which is reflected in provision for losses on notes receivable, net in our consolidated statement of income for the year ended December 31, 2009. As of December 31, 2009, the carrying amount of the note receivable, which is due for repayment in 2010, totaled $1.6 million.

Restructuring Costs

In connection with 2008 property sales and an expected reduction in redevelopment and transactional activities, during the three months ended December 31, 2008, we initiated an organizational restructuring program that included reductions in workforce and related costs, reductions in leased corporate facilities and abandonment of certain redevelopment projects and business pursuits. This restructuring effort resulted in a restructuring charge of $22.8 million, which consisted of: severance costs of $12.9 million; unrecoverable lease obligations of $6.4 million related to space that we will no longer use; and the write-off of deferred transaction costs totaling $3.5 million associated with certain acquisitions and redevelopment opportunities that we will no longer pursue. We completed the workforce reductions by March 31, 2009.

During 2009, in connection with continued repositioning of our portfolio, we completed additional organizational restructuring activities that included reductions in workforce and related costs and the abandonment of additional leased corporate facilities and redevelopment projects.

Our 2009 restructuring activities resulted in a restructuring charge of $11.2 million, which consisted of severance costs and personnel related costs of $7.0 million; unrecoverable lease obligations of $2.6 million related to space that we will no longer use; the write-off of deferred costs totaling $0.9 million associated with certain redevelopment opportunities that we will no longer pursue; and $0.7 million in other costs.

As of December 31, 2009, the remaining accruals associated with our restructuring activity are $6.9 million for estimated unrecoverable lease obligations, which will be paid over the remaining terms of the affected leases, and $4.7 million for severance and personnel related costs, which are anticipated to be paid during the first quarter 2010.

Transactions Involving VMS National Properties Joint Venture

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

During the year ended December 31, 2007, VMS sold eight properties to third parties for an aggregate gain of $22.7 million. Additionally, VMS contributed its seven remaining properties to wholly-owned subsidiaries of Aimco in exchange for consideration totaling $230.1 million, consisting primarily of cash of $21.3 million, common OP Units with a fair value of $9.8 million, the assumption of $168.0 million in property debt, and the assumption of $30.9 million in mortgage participation liabilities. This total consideration included $50.7 million related to our 22% equity interest in VMS. Exclusive of our share, the consideration paid for the seven properties exceeded the carrying amount of the noncontrolling interest in such properties by $44.9 million. This excess consideration is reflected in our consolidated balance sheet as an increase in the carrying amount of the seven properties.

In connection with VMS’s sale of seven properties to our wholly-owned subsidiaries, we issued 178,500 common OP Units to the limited partners in VMS. As a limited partner in VMS, we received approximately 123,400 common OP Units, which we eliminate in our consolidated financial statements. Common OP Units issued to unrelated limited partners in VMS totaled 55,100 and had an aggregate fair value of $3.0 million.

Approximately $32.7 million of the $42.2 million debt extinguishment gain related to the property loans that were secured by the eight properties sold to third parties and three properties we acquired from VMS but subsequently sold and is reported in discontinued operations for the year ended December 31, 2007. The remaining $9.5 million portion of the debt extinguishment gain related to the property loans that were secured by the four VMS properties we purchased and continue to own and is reported in our continuing operations as gain on dispositions of unconsolidated real estate and other. Although 78% of the equity interests in VMS were held by unrelated noncontrolling partners, no noncontrolling interest share of the gains on debt extinguishment and sale of the properties was recognized in our earnings. As required by then applicable GAAP, we had in prior years recognized the noncontrolling partners’ share of VMS losses in excess of the noncontrolling partners’ capital contributions. The amounts of those previously recognized losses exceeded the noncontrolling partners’ share of the gains on debt extinguishment and sale of the properties; accordingly, no noncontrolling interests in such gains have been recognized in our earnings. For the year ended December 31, 2007, the aggregate effect of the gains on extinguishment of VMS debt and sale of VMS properties was to decrease loss from continuing operations attributable to the Partnership’s common unitholders by $9.5 million ($0.09 per diluted unit) and decrease net loss attributable to the Partnership’s common unitholders by $65.0 million ($0.62 per diluted unit).

During the three months ended December 31, 2007, VMS distributed its remaining cash, consisting primarily of undistributed proceeds from the sale of its 15 properties (including properties sold to us). Of the $42.4 million of cash distributed to the unrelated limited partners, $21.3 million represents the cash consideration we contributed in exchange for the purchase of seven properties and is presented in purchases of partnership interests and other assets in the consolidated statement of cash flows for the year ended December 31, 2007. The remainder of the cash distributed to the unrelated limited partners is presented in payment of distributions to noncontrolling interest in the consolidated statement of cash flows.

Palazzo Joint Venture

In December 2007, we entered into a joint venture agreement with a third party investor which provides for the co-ownership of three multi-family properties with 1,382 units located in West Los Angeles. Under the agreement, we contributed three wholly-owned properties, The Palazzo at Park La Brea, The Palazzo East at Park La Brea and The Villas at Park La Brea to the partnership, which we refer to as Palazzo, at a value of $726.0 million, or approximately $525,000 per unit. Palazzo had existing property debt of approximately $296.0 million and an implied equity value of approximately $430.0 million. We received $202.0 million from the investor in exchange for an approximate 47% interest in Palazzo, of which approximately $7.9 million was used to fund escrows for capital improvements and various operating requirements. We own the remaining interests in Palazzo, including a managing interest, and will operate the properties in exchange for a property management fee and certain other fees over the term of the partnership.

We determined Palazzo is a VIE and that we are the primary beneficiary who should consolidate this partnership. We deferred recognition of a gain on this transaction and recognized the consideration received as an increase in noncontrolling interests in consolidated real estate partnerships.

NOTE 4 — Investments in Unconsolidated Real Estate Partnerships

We owned general and limited partner interests in unconsolidated real estate partnerships owning approximately 77, 85 and 94 properties at December 31, 2009, 2008 and 2007, respectively. We acquired these interests through various transactions, including large portfolio acquisitions and offers to individual limited partners. Our total ownership interests in these unconsolidated real estate partnerships typically ranges from less than 1% to 50% and in some instances may exceed 50%.

The following table provides selected combined financial information for the unconsolidated real estate partnerships in which we had investments accounted for under the equity method as of and for the years ended December 31, 2009, 2008 and 2007 (in thousands):


	2009			2008			2007
Real estate, net of accumulated depreciation	$	95,226		$	122,788		$	133,544
Total assets		122,543			155,444			165,567
Secured and other notes payable		101,678			122,859			124,406
Total liabilities		145,637			175,681			180,222
Partners’ deficit		(23,094	)		(20,237	)		(14,655	)
Rental and other property revenues		55,366			69,392			73,672
Property operating expenses		(34,497	)		(42,863	)		(45,998	)
Depreciation expense		(10,302	)		(12,640	)		(13,965	)
Interest expense		(11,103	)		(17,182	)		(17,194	)
Gain on sale		8,482			5,391			59
Net income (loss)		6,622			1,398			(4,845	)

As a result of our acquisition of interests in unconsolidated real estate partnerships at a cost in excess of the historical carrying amount of the partnerships’ net assets, our aggregate investment in these partnerships at December 31, 2009 and 2008 of $104.2 million and $117.9 million, respectively, exceeds our share of the underlying historical partners’ deficit of the partnerships by approximately $108.4 million and $121.8 million, respectively.

NOTE 5 — Notes Receivable

The following table summarizes our notes receivable at December 31, 2009 and 2008 (in thousands):


	2009									2008
	Unconsolidated									Unconsolidated
	Real Estate			Non-						Real Estate			Non-
	Partnerships			Affiliates			Total			Partnerships			Affiliates			Total
Par value notes	$	11,353		$	20,862		$	32,215		$	18,855		$	19,253		$	38,108
Discounted notes		5,095			141,468			146,563			8,575			138,387			146,962
Allowance for loan losses		(2,153	)		(37,061	)		(39,214	)		(4,863	)		(17,743	)		(22,606	)

Total notes receivable	$	14,295		$	125,269		$	139,564		$	22,567		$	139,897		$	162,464


Face value of discounted notes	$	37,709		$	155,848		$	193,557		$	39,333		$	148,790		$	188,123

Included in notes receivable from unconsolidated real estate partnerships at December 31, 2009 and 2008, are $2.4 million and $4.2 million, respectively, in notes that were secured by interests in real estate or interests in real estate partnerships. We earn interest on these secured notes receivable at various annual interest rates averaging 12.0%.

Included in the notes receivable from non-affiliates at December 31, 2009 and 2008, are $102.2 million and $95.8 million, respectively, in notes that were secured by interests in real estate or interests in real estate partnerships. We earn interest on these secured notes receivable at various annual interest rates ranging between 4.0% and 12.0% and averaging 4.7%.

Notes receivable from non-affiliates at December 31, 2009 and 2008, include notes receivable totaling $87.4 million and $85.6 million, respectively, from 31 entities (the “borrowers”) that are wholly owned by a single individual. We originated these notes in November 2006 pursuant to a loan agreement that provides for total funding of approximately $110.0 million, including $16.4 million for property improvements and an interest reserve, of which $4.6 million had not been funded as of December 31, 2009. The notes mature in November 2016, bear interest at LIBOR plus 2.0%, are partially guaranteed by the owner of the borrowers, and are collateralized by second mortgages on 87 buildings containing 1,597 residential units and 42 commercial spaces in West Harlem, New York City. In conjunction with the loan agreement, we entered into a purchase option and put agreement with the borrowers under which we may purchase some or all of the buildings and, subject to achieving specified increases in rental income, the borrowers may require us to purchase the buildings (see Note 8). We determined that the stated interest rate on the notes on the date the loan was originated was a below-market interest rate and recorded a $19.4 million discount to reflect the estimated fair value of the notes based on an estimated market interest rate of LIBOR plus 4.0%. The discount was determined to be attributable to our real estate purchase option, which we recorded separately in other assets. Accretion of this discount, which is included in interest income in our consolidated statements of income, totaled $0.9 million in 2009, $0.7 million in 2008 and $1.9 million in 2007, inclusive of a $1.5 million adjustment of accretion recognized upon the repayment of a portion of the outstanding principal balance in 2007. The value of the purchase option asset will be included in the cost of properties acquired pursuant to the option or otherwise be charged to expense. We determined that the borrowers are VIEs and, based on qualitative and quantitative analysis, determined that the individual who owns the borrowers and partially guarantees the notes is the primary beneficiary.

Interest income from total non-impaired par value and certain discounted notes for the years ended December 31, 2009, 2008 and 2007 totaled $5.7 million, $7.8 million and $11.7 million, respectively. For the years ended December 31, 2009, 2008 and 2007, we recognized accretion income on certain discounted notes of $0.1 million, $1.4 million and $8.1 million, respectively.

The activity in the allowance for loan losses in total for both par value notes and discounted notes for the years ended December 31, 2009 and 2008, is as follows (in thousands):


	2009			2008
Balance at beginning of year	$	(22,606	)	$	(6,435	)
Provisions for losses on notes receivable		(2,231	)		(1,673	)
Recoveries of losses on notes receivable		1,422			417
Provisions for impairment loss on investment in Casden Properties LLC		(20,740	)		(16,321	)
Net reductions due to consolidation of real estate partnerships and property dispositions		4,941			1,406

Balance at end of year	$	(39,214	)	$	(22,606	)

During the years ended December 31, 2009 and 2008, we determined that an allowance for loan losses of $1.2 million and $3.6 million, respectively, was required on certain of our par value notes that had carrying amounts of $3.8 million and $11.4 million, respectively. The average recorded investment in the impaired par value notes for the years ended December 31, 2009 and 2008, was $7.6 million and $9.0 million, respectively. The remaining $28.4 million in par value notes receivable at December 31, 2009, is estimated to be collectible and, therefore, interest income on these par value notes is recognized as it is earned.

As of December 31, 2009 and 2008, we determined that an allowance for loan losses of $1.0 million and $2.7 million, respectively, was required on certain of our discounted notes (excluding the note related to Casden Properties LLC discussed above) that had carrying values of $1.6 million and $5.4 million, respectively. The average recorded investment in the impaired discounted notes for the years ended December 31, 2009 and 2008, was $3.5 million and $4.9 million, respectively.

NOTE 6 — Property Tax-Exempt Bond Financings, Property Loans Payable and Other Borrowings

The following table summarizes our property tax-exempt bond financings related to properties classified as held for use at December 31, 2009 and 2008, the majority of which is non-recourse to us (in thousands):


	Weighted Average			Principal
	Interest Rate			Outstanding
	2009			2009		2008
Fixed rate property tax-exempt bonds payable		5.10	%	$	140,995	$	131,530
Variable rate property tax-exempt bonds payable		0.90	%		433,931		497,969

Total				$	574,926	$	629,499

Fixed rate property tax-exempt bonds payable mature at various dates through December 2049. Variable rate property tax-exempt bonds payable mature at various dates through June 2038. Principal and interest on these bonds are generally payable in semi-annual installments with balloon payments due at maturity. Certain of our property tax-exempt bonds at December 31, 2009, are remarketed periodically by a remarketing agent to maintain a variable yield. If the remarketing agent is unable to remarket the bonds, then the remarketing agent can put the bonds to us. We believe that the likelihood of this occurring is remote. At December 31, 2009, our property tax-exempt bond financings related to properties classified as held for use were secured by 39 properties with a combined net book value of $837.7 million. As discussed in Note 2, certain fixed rate property tax-exempt bonds payable have been converted to variable rates using total rate of return swaps and are presented above as variable rate debt at their carrying amounts, or fair value.

The following table summarizes our property loans payable related to properties classified as held for use at December 31, 2009 and 2008, the majority of which are non-recourse to us (in thousands):


	Weighted Average			Principal
	Interest Rate			Outstanding
	2009			2009		2008
Fixed rate property notes payable		6.00	%	$	4,712,744	$	4,524,322
Variable rate property notes payable		2.46	%		75,877		223,561
Secured notes credit facility		1.02	%		34,544		46,408

Total				$	4,823,165	$	4,794,291

Fixed rate property notes payable mature at various dates through August 2053. Variable rate property notes payable mature at various dates through November 2030. Principal and interest are generally payable monthly or in monthly interest-only payments with balloon payments due at maturity. At December 31, 2009, our property notes payable related to properties classified as held for use were secured by 347 properties with a combined net book value of $5,864.1 million. As discussed in Note 2, certain fixed rate secured notes payable have been converted to variable rates using total rate of return swaps and are presented above as variable rate debt at their carrying amounts, or fair value.

At December 31, 2009, we had a secured revolving credit facility with a major life company that provided for borrowings of up to $200.0 million. In January 2010, the credit facility was modified to reduce allowed borrowings to the then outstanding amount of $46.3 million. The primary function of the facility is to secure short-term fully pre-payable non-recourse loans for a period of less than three years. The interest rate on the notes provided through the facility is 30-day LIBOR plus 0.78%. Each loan under the facility is treated as a separate borrowing and is secured by a specific property. None of the facility loans are cross-collateralized or cross-defaulted. This facility matures in October 2010, and has two one-year extension options for a $500,000 fee per extension. At December 31, 2009, outstanding borrowings of $34.5 million related to properties classified as held for use are included in 2012 maturities below based on the extension options.

Our consolidated debt instruments generally contain covenants common to the type of facility or borrowing, including financial covenants establishing minimum debt service coverage ratios and maximum leverage ratios. At December 31, 2009, we were in compliance with all financial covenants pertaining to our consolidated debt instruments.

Other borrowings totaled $53.1 million and $96.0 million at December 31, 2009 and 2008, respectively. At December 31, 2009, other borrowings includes $44.6 million in fixed rate obligations with interest rates ranging from zero to 10.0% and $8.5 million in variable rate obligations bearing interest at the prime rate plus 1.75%. The maturity dates for other borrowings range from 2010 to 2039, although certain amounts are due upon occurrence of specified events, such as property sales.

As of December 31, 2009, the scheduled principal amortization and maturity payments for our property tax-exempt bonds, property notes payable and other borrowings related to properties in continuing operations are as follows (in thousands):


	Amortization		Maturities		Total
2010	$	97,609	$	3,349	$	100,958
2011		102,274		237,796		340,070
2012		105,391		205,705		311,096
2013		104,892		369,210		474,102
2014		102,101		267,544		369,645
Thereafter						3,855,277

					$	5,451,148

NOTE 7 — Term Loans and Credit Facility

We have an Amended and Restated Senior Secured Credit Agreement, as amended, with a syndicate of financial institutions, which we refer to as the Credit Agreement. In addition to us, Aimco and an Aimco subsidiary are also borrowers under the Credit Agreement.

As of December 31, 2009, the Credit Agreement consisted of aggregate commitments of $270.0 million, comprised of the $90.0 million outstanding balance on the term loan and $180.0 million of revolving loan commitments. The term loan bears interest at LIBOR plus 1.5%, or at our option, a base rate equal to the prime rate, and matures March 2011. Borrowings under the revolving credit facility bear interest based on a pricing grid determined by leverage (either at LIBOR plus 4.25% with a LIBOR floor of 2.00% or, at our option, a base rate equal to the Prime rate plus a spread of 3.00%). The revolving credit facility matures May 1, 2011, and may be extended for an additional year, subject to certain conditions, including payment of a 45.0 basis point fee on the total revolving commitments and repayment of the remaining term loan balance by February 1, 2011. Pursuant to the Credit Agreement, while any balance under the term loan is outstanding, repurchases of our Common Stock are permitted with 50% of net asset sale proceeds if the other 50% of such net asset sale proceeds are applied to repay the term loan. The Credit Agreement permits us to increase revolving commitments by up to $320.0 million, subject to our obtaining such commitments from eligible lenders.

The Credit Agreement includes customary financial covenants, including the maintenance of specified ratios with respect to total indebtedness to gross asset value, total secured indebtedness to gross asset value, aggregate recourse indebtedness to gross asset value, variable rate debt to total indebtedness, debt service coverage and fixed charge coverage; the maintenance of a minimum adjusted tangible net worth; and limitations regarding the amount of cross-collateralized debt. The Credit Agreement includes other customary covenants, including a restriction on distributions and other restricted payments, but permits distributions during any four consecutive fiscal quarters in an aggregate amount of up to 95% of our funds from operations for such period, subject to certain non-cash adjustments, or such amount as may be necessary to maintain Aimco’s REIT status. We were in compliance with all such covenants as of December 31, 2009.

The lenders under the Credit Agreement may accelerate any outstanding loans if, among other things: we fail to make payments when due (subject to applicable grace periods); material defaults occur under other debt agreements; certain bankruptcy or insolvency events occur; material judgments are entered against us; we fail to comply with certain covenants, such as the requirement to deliver financial information or the requirement to provide notices regarding material events (subject to applicable grace periods in some cases); indebtedness is incurred in violation of the covenants; or prohibited liens arise.

At December 31, 2009, the term loan had an outstanding principal balance of $90.0 million and an interest rate of 1.73%. We repaid $45.0 million of the term loan through February 26, 2010, leaving a remaining outstanding balance of $45.0 million. At December 31, 2009, we had no outstanding borrowings under the revolving credit facility. The amount available under the revolving credit facility at December 31, 2009, was $136.2 million (after giving effect to $43.8 million outstanding for undrawn letters of credit issued under the revolving credit facility). The proceeds of revolving loans are generally permitted to be used to fund working capital and for other corporate purposes.

On February 3, 2010, we entered into an Eighth Amendment to our Credit Agreement, which provides for a reduction in the minimum threshold for our debt service coverage and fixed charge coverage ratios and an increase in the maximum threshold for our secured indebtedness ratio.

NOTE 8 — Commitments and Contingencies

Commitments

In connection with our redevelopment and capital improvement activities, we have commitments of approximately $4.8 million related to construction projects that are expected to be completed during 2010. Additionally, we enter into certain commitments for future purchases of goods and services in connection with the operations of our properties. Those commitments generally have terms of one year or less and reflect expenditure levels comparable to our historical expenditures.

As discussed in Note 5, we have committed to fund an additional $4.6 million in loans on certain properties in West Harlem in New York City. In certain circumstances, the obligor under these notes has the ability to put properties to us, which would result in a cash payment between $30.0 and $97.5 million and the assumption of approximately $119.0 million in property debt. The ability to exercise the put and the amount of cash payment required upon exercise is dependent upon the achievement of specified thresholds by the current owner of the properties.

As discussed in Note 11, we have a potential obligation to repurchase $30.0 million in liquidation preference of our Series A Community Reinvestment Act Perpetual Partnership Preferred Units for $21.0 million.

Tax Credit Arrangements

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

Legal Matters

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

Limited Partnerships

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

Environmental

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

We have determined that our legal obligations to remove or remediate hazardous substances may be conditional asset retirement obligations, as defined in GAAP. Except in limited circumstances where the asset retirement activities are expected to be performed in connection with a planned construction project or property casualty, we believe that the fair value of our asset retirement obligations cannot be reasonably estimated due to significant uncertainties in the timing and manner of settlement of those obligations. Asset retirement obligations that are reasonably estimable as of December 31, 2009, are immaterial to our consolidated financial condition, results of operations and cash flows.

Mold

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

Operating Leases

We are obligated under office space and equipment non-cancelable operating leases. In addition, we sublease certain of our office space to tenants under non-cancelable subleases. Approximate minimum annual rentals under operating leases and approximate minimum payments to be received under annual subleases are as follows (in thousands):


	Operating
	Lease		Sublease
	Obligations		Receivables
2010	$	7,345	$	818
2011		5,800		185
2012		5,056		64
2013		2,594		12
2014		2,265		—
Thereafter		1,828		—

Total	$	24,888	$	1,079

Substantially all of the office space subject to the operating leases described above are for the use of our corporate offices and area operations. Rent expense recognized totaled $7.7 million, $10.2 million and $9.8 million for the years ended December 31, 2009, 2008 and 2007, respectively. Sublease receipts that offset rent expense totaled approximately $0.7 million, $0.7 million and $1.3 million for the years ended December 31, 2009, 2008 and 2007, respectively.

As discussed in Note 3, during the years ended December 31, 2009 and 2008, we commenced restructuring activities pursuant to which we vacated certain leased office space for which we remain obligated. In connection with the restructurings, we accrued amounts representing the estimated fair value of certain lease obligations related to space we are no longer using, reduced by estimated sublease amounts. At December 31, 2009, approximately $6.9 million related to the above operating lease obligations was included in accrued liabilities related to these estimates.

NOTE 9 — Income Taxes

Deferred income taxes reflect the net effects of temporary differences between the carrying amounts of assets and liabilities of the taxable REIT subsidiaries for financial reporting purposes and the amounts used for income tax purposes. Significant components of our deferred tax liabilities and assets are as follows (in thousands):


	2009			2008
Deferred tax liabilities:
Partnership differences	$	32,565		$	47,635
Depreciation		2,474			2,477
Deferred revenue		14,862			7,757
Other		—			11

Total deferred tax liabilities	$	49,901		$	57,880


Deferred tax assets:
Net operating, capital and other loss carryforwards	$	37,164		$	7,183
Provision for impairments on real estate assets		33,321			33,321
Receivables		3,094			5,530
Accrued liabilities		9,272			23,504
Accrued interest expense		—			2,220
Intangibles — management contracts		1,911			3,789
Tax credit carryforwards		6,949			8,521
Equity compensation		1,463			1,983
Other		929			155

Total deferred tax assets		94,103			86,206

Valuation allowance		(2,187	)		—

Net deferred income tax assets	$	42,015		$	28,326

As of December 31, 2009, we determined a valuation allowance for our deferred tax assets was necessary for certain state net operating losses based on a determination that it was more likely than not that such assets will not be realized prior to their expiration.

A reconciliation of the beginning and ending balance of our unrecognized tax benefits is presented below:


	2009			2008		2007
Balance at January 1	$	3,080		$	2,965	$	3,118
Reductions as a result of the lapse of applicable statutes		—			—		(189	)
Additions based on tax positions related to the prior year		—			115		36
Reductions based on tax positions related to the prior year		(1	)		—		—

Balance at December 31	$	3,079		$	3,080	$	2,965

We do not anticipate any material changes in existing unrecognized tax benefits during the next 12 months. Because the statute of limitations has not yet elapsed, our Federal income tax returns for the year ended December 31, 2006, and subsequent years and certain of our State income tax returns for the year ended December 31, 2004, and subsequent years are currently subject to examination by the Internal Revenue Service or other tax authorities. As discussed in Note 2, the IRS has issued us summary reports including its proposed adjustments to the Aimco Operating Partnership’s 2007 and 2006 Federal tax returns. We do not expect the proposed adjustments to have any material effect on our unrecognized tax benefits, financial condition or results of operations. Our policy is to include interest and penalties related to income taxes in income taxes in our consolidated statements of income.

In accordance with the accounting requirements for stock-based compensation, our deferred tax assets at December 31, 2008, are net of $3.6 million of excess tax benefits from employee stock option exercises and vested restricted stock awards. As of December 31, 2009, we had no such excess tax benefits from employee stock option exercises and vested restricted stock awards.

The cost of land and depreciable property, net of accumulated depreciation, for federal income tax purposes was approximately $4.6 billion.

Significant components of the provision (benefit) for income taxes are as follows and are classified within income tax benefit in continuing operations and income from discontinued operations, net in our statements of income for the years ended December 31, 2009, 2008 and 2007 (in thousands):


	2009			2008			2007
Current:
Federal	$	(1,910	)	$	8,678		$	20
State		3,992			2,415			1,938

Total current		2,082			11,093			1,958


Deferred:
Federal		(17,320	)		(22,115	)		(17,816	)
State		(3,988	)		(2,386	)		(1,833	)

Total deferred		(21,308	)		(24,501	)		(19,649	)

Total benefit	$	(19,226	)	$	(13,408	)	$	(17,691	)

Classification:
Continuing operations	$	(18,669	)	$	(53,202	)	$	(19,795	)
Discontinued operations	$	(557	)	$	39,794		$	2,104

Consolidated losses subject to tax, consisting of pretax income or loss of our taxable REIT subsidiaries and gains or loss on certain property sales that are subject to income tax under section 1374 of the Internal Revenue Code, for the years ended December 31, 2009, 2008 and 2007 totaled $40.6 million, $81.8 million and $41.5 million, respectively. The reconciliation of income tax attributable to continuing and discontinued operations computed at the U.S. statutory rate to income tax benefit is shown below (dollars in thousands):


	2009						2008						2007
	Amount			Percent			Amount			Percent			Amount			Percent
Tax at U.S. statutory rates on consolidated loss subject to tax	$	(14,221	)		35.0	%	$	(28,632	)		35.0	%	$	(14,508	)		35.0	%
State income tax, net of Federal tax benefit		(2,183	)		5.4	%		29			—			106			(0.3	%)
Effect of permanent differences		127			(0.3	%)		215			(0.3	%)		(306	)		0.7	%
Tax effect of intercompany transfers of assets between the REIT and taxable REIT subsidiaries (1)		(4,759	)		11.7	%		15,059			(18.4	%		—			—
Write-off of excess tax basis		(377	)		0.9	%		(79	)		0.1	%		(2,983	)		7.2	%
Increase in valuation allowance		2,187			(5.4	%)		—			—			—			—

	$	(19,226	)		47.3	%	$	(13,408	)		16.4	%	$	(17,691	)		42.6	%


(1)		Includes the effect of assets contributed by us to taxable REIT subsidiaries, for which deferred tax expense or benefit was recognized upon the sale or impairment of the asset by the taxable REIT subsidiary.

Income taxes paid totaled approximately $4.6 million, $13.8 million and $3.0 million in the years ended December 31, 2009, 2008 and 2007, respectively.

At December 31, 2009, we had net operating loss carryforwards, or NOLs, of approximately $60.6 million for income tax purposes that expire in years 2027 to 2029. Subject to certain separate return limitations, we may use these NOLs to offset all or a portion of taxable income generated by our taxable REIT subsidiaries. We generated approximately $45.9 million of NOLs during the year ended December 31, 2009, as a result of losses from our taxable REIT subsidiaries. The deductibility of intercompany interest expense with our taxable REIT subsidiaries is subject to certain intercompany limitations based upon taxable income as required under Section 163(j) of the Code. As of December 31, 2009, interest carryovers of approximately $24.6 million, limited by Section 163(j) of the Code, are available against U.S. Federal tax without expiration. The deferred tax asset related to these interest carryovers is approximately $9.6 million. Additionally, our low-income housing and rehabilitation tax credit carryforwards as of December 31, 2009, were approximately $7.4 million for income tax purposes that expire in years 2012 to 2028.

NOTE 10 — Notes Receivable from Aimco

In exchange for the sale of certain real estate assets to Aimco in December 2000, we received notes receivable, totaling $10.1 million. The notes bear interest at the rate of 5.7% per annum. Of the $10.1 million total, $7.6 million is due upon demand, and the remainder is due in scheduled semi-annual payments with all unpaid principal and interest due on December 31, 2010. At December 31, 2009 and 2008, the balance of the notes totaled $16.4 million and $15.6, respectively, which includes accrued and unpaid interest.

NOTE 11 — Partners’ Capital and Redeemable Preferred Units

Preferred OP Units Owned by Aimco

At December 31, 2009 and 2008, we had the following classes of preferred OP Units owned by Aimco outstanding (stated at their redemption values):


			Annual
			Distribution			Balance
			Rate Per Share			December 31,
	Redemption		(paid			2009			2008
	Date (1)		quarterly)			(thousands)			(thousands)
Perpetual:
Class G Partnership Preferred Units, $0.01 par value, 4,050,000 units authorized, 4,050,000 units issued and outstanding (2)		07/15/2008		9.3750	%	$	101,000		$	101,000
Class T Partnership Preferred Units, $0.01 par value, 6,000,000 units authorized, 6,000,000 units issued and outstanding		07/31/2008		8.000	%		150,000			150,000
Class U Partnership Preferred Units, $0.01 par value, 8,000,000 units authorized, 8,000,000 units issued and outstanding		03/24/2009		7.750	%		200,000			200,000
Class V Partnership Preferred Units, $0.01 par value, 3,450,000 units authorized, 3,450,000 units issued and outstanding		09/29/2009		8.000	%		86,250			86,250
Class Y Partnership Preferred Units, $0.01 par value, 3,450,000 units authorized, 3,450,000 units issued and outstanding		12/21/2009		7.875	%		86,250			86,250
Series A Community Reinvestment Act Perpetual Partnership Preferred Units, $0.01 par value per unit, 240 units authorized, 134 and 146 units issued and outstanding (3)		06/30/2011		(3	)		67,000			73,000

Total						$	690,500		$	696,500

Less preferred units subject to repurchase agreement (4)							(30,000	)		—

Total						$	660,500		$	696,500


(1)		All classes of preferred units are redeemable by the Partnership only in connection with a concurrent redemption by Aimco of the corresponding preferred Aimco equity held by unrelated parties. All classes of Aimco’s corresponding preferred stock are redeemable at Aimco’s option on and after the dates specified.

(2)		Includes 10,000 units held by a consolidated subsidiary that are eliminated in consolidation.

(3)		During 2006, Aimco sold 200 shares of its Series A Community Reinvestment Act Perpetual Preferred Stock, $0.01 par value per share, or the CRA Preferred Stock, with a liquidation preference of $500,000 per share, for net proceeds of $97.5 million. The Series A Community Reinvestment Act Perpetual Partnership Preferred Units, or the CRA Preferred Units, have substantially the same terms as the CRA Preferred Stock. Holders of the CRA Preferred Units are entitled to cumulative cash dividends payable quarterly in arrears on March 31, June 30, September 30, and December 31 of each year, when and as declared, beginning on September 30, 2006. For the period from the date of original issuance through March 31, 2015, the distribution rate is a variable rate per annum equal to the Three-Month LIBOR Rate (as defined in the articles supplementary designating the CRA Preferred Stock) plus 1.25%, calculated as of the beginning of each quarterly dividend period. The rate at December 31, 2009 and 2008, was 1.54% and 5.01%, respectively. Upon liquidation, holders of the CRA Preferred Units are entitled to a preference of $500,000 per share, plus an amount equal to accumulated, accrued and unpaid distributions, whether or not earned or declared. The CRA Preferred Units rank prior to our common OP Units and on the same level as our other OP preferred Units, with respect to the payment of distributions and the distribution of amounts upon liquidation, dissolution or winding up. The CRA Preferred Units are not redeemable prior to June 30, 2011, except in limited circumstances related to Aimco’s REIT qualification. On and after June 30, 2011, the CRA Preferred Units are redeemable for cash, in whole or from time to time in part, upon the redemption, at Aimco’s option, of its CRA Preferred Stock at a price per share equal to the liquidation preference, plus accumulated, accrued and unpaid dividends, if any, to the redemption date.


(4)		In June 2009, Aimco entered into an agreement to repurchase $36.0 million in liquidation preference of its CRA Preferred Stock at a 30% discount to the liquidation preference. Pursuant to this agreement, in June 2009, Aimco repurchased 12 shares, or $6.0 million in liquidation preference, of CRA Preferred Stock for $4.2 million, and the holder of the CRA Preferred Stock may require Aimco to repurchase an additional 60 shares, or $30.0 million in liquidation preference, of CRA Preferred Stock over the next three years, for $21.0 million. Concurrent with Aimco’s repurchase of 12 shares, we repurchased from Aimco an equivalent number of our CRA Preferred Units. If required, these additional repurchases will be for up to $10.0 million in liquidation preference in May 2010, 2011 and 2012. Upon any repurchases required of Aimco under this agreement, we will repurchase from Aimco an equivalent number of our CRA Preferred Units. Based on the holder’s ability to require Aimco to repurchase an additional 60 shares of CRA Preferred Stock pursuant to this agreement and our obligation to purchase from Aimco a corresponding number of our CRA Preferred Units, $30.0 million in liquidation preference of CRA Preferred Units, or the maximum redemption value of such preferred units, is classified as part of redeemable preferred units within temporary capital in our consolidation balance sheet at December 31, 2009.

In connection with our June 2009 CRA Preferred Units repurchase discussed above, we reflected the $1.8 million excess of the carrying value over the repurchase price, offset by $0.2 million of issuance costs previously recorded as a reduction of partners’ capital, as a reduction of net income attributable to preferred unitholders for the year ended December 31, 2009.

During 2008, Aimco repurchased 54 shares, or $27.0 million in liquidation preference, of its CRA Preferred Stock, for cash totaling $24.8 million. Concurrent with this redemption, we repurchased from Aimco an equivalent number of outstanding CRA Preferred Units. We reflected the $2.2 million excess of the carrying value over the redemption price, offset by $0.7 million of issuance costs previously recorded as a reduction of partners’ capital, is reflected as a reduction of net income attributable to the Partnership’s preferred unitholders for purposes of calculating earnings per unit for the year ended December 31, 2008.

All classes of preferred OP Units are pari passu with each other and are senior to the common OP Units. None of the classes of preferred OP Units have any voting rights, except the right to approve certain changes to the Partnership Agreement that would adversely affect holders of such class of units. Distributions on all preferred OP Units are subject to being declared by the General Partner. All of the above outstanding classes of preferred units have a liquidation preference per unit of $25, with the exception of the CRA Preferred Units, which have a liquidation preference per unit of $500,000.

Redeemable Preferred OP Units

As of December 31, 2009 and 2008, the following classes of preferred OP Units (stated at their redemption values) owned by third parties were outstanding (in thousands, except unit data):


	2009		2008
Class One Partnership Preferred Units, 90,000 units issued and outstanding, redeemable at the holders option one year following issuance, holder to receive distributions at 8.75% ($8.00 per annum per unit)	$	8,229	$	9,000
Class Two Partnership Preferred Units, 23,700 and 44,050 units issued and outstanding, redeemable at the holders option one year following issuance, holders to receive distributions at 5.9% ($1.48 per annum per unit)		593		1,102
Class Three Partnership Preferred Units, 1,371,451 and 1,419,316 units issued and outstanding, redeemable at the holders option one year following issuance, holders to receive distributions at 7.88% ($1.97 per annum per unit)		34,286		35,483
Class Four Partnership Preferred Units, 755,999 units issued and outstanding, redeemable at the holders option one year following issuance, holders to receive distributions at 8.0% ($2.00 per annum per unit)		18,900		18,900
Class Five Partnership Preferred Units, 68,671 units issued and outstanding, redeemable for cash at any time at our option, holder to receive distributions equal to the per unit distribution on the common OP Units (1)		2,747		2,747
Class Six Partnership Preferred Units, 802,453 units issued and outstanding, redeemable at the holders option one year following issuance, holder to receive distributions at 8.5% ($2.125 per annum per unit)		20,061		20,061
Class Seven Partnership Preferred Units, 27,960 units issued and outstanding, redeemable at the holders option one year following issuance, holder to receive distributions at 9.5% ($2.375 per annum per unit)		699		699
Class Eight Partnership Preferred Units, 6,250 units issued and outstanding, redeemable for cash at any time at our option, holder to receive distributions equal to the per unit distribution on the common OP Units (1)		156		156

Subtotal	$	85,671	$	88,148


(1)		Holders of the Class Five and Class Eight Partnership Preferred Units received the per unit special distributions discussed below in addition to the regular distributions received by common OP unitholders during 2009 and 2008.

The Class One, Class Two, Class Three, Class Four, Class Six and Class Seven preferred OP Units are redeemable, at the holders’ option. We, at our sole discretion, may settle such redemption requests in cash or shares of Aimco’s Class A Common Stock in a value equal to the redemption preference. In the event we require Aimco to issue shares to settle a redemption request, we would issue to Aimco a corresponding number of common OP Units. During 2008, we established a redemption policy that requires cash settlement of redemption requests for the redeemable preferred OP Units, subject to limited exceptions. Accordingly, these redeemable units are classified as redeemable preferred units within temporary capital in our consolidated balance sheets at December 31, 2009 and 2008, based on the expectation that we will cash settle these units.

For any preferred OP Units that are redeemed for Aimco Class A Common Stock, upon redemption, we will issue a common OP Unit to Aimco for each share of Aimco Class A Common Stock issued. In addition, subject to certain conditions, the Class Four, Class Five, Class Six and Class Eight Partnership Preferred Units are convertible into common OP Units.

During the years ended December 31, 2009 and 2008, approximately 68,200 and 38,400 preferred OP Units, respectively, were tendered for redemption in exchange for cash. During the years ended December 31, 2009 and 2008, no preferred OP Units were tendered for redemption in exchange for shares of Aimco Class A Common Stock.

The following table presents a reconciliation of redeemable preferred units classified within temporary capital for the years ended December 31, 2009 and 2008:


	2009			2008
Balance at January	$	88,148		$	—
Net income attributable to redeemable preferred units		6,288			—
Distributions to preferred units		(6,806	)		—
Purchases of preferred units		(1,725	)		—
Reclassification of redeemable preferred units from partners’ capital		30,000			88,148
Other		751			—

Balance at December 31	$	116,656		$	88,148

The distributions paid on each class of preferred OP Units classified as partners’ capital in the years ended December 31, 2009, 2008 and 2007, and, in the case of the redeemable preferred OP Units discussed above, classified in temporary capital as of December 31, 2009, are as follows (in thousands, except per unit data):


	2009					2008					2007
	Amount			Total		Amount			Total		Amount			Total
Class of Preferred	Per			Amount		Per			Amount		Per			Amount
OP Units	Unit (1)			Paid		Unit (1)			Paid		Unit (1)			Paid
Class G	$	2.34		$	9,492	$	2.34		$	9,492	$	2.34		$	9,492
Class T		2.00			12,000		2.00			12,000		2.00			12,000
Class U		1.94			15,500		1.94			15,500		1.94			15,500
Class V		2.00			6,900		2.00			6,900		2.00			6,900
Class W		—			—		—			—		4.25	(2)		8,100
Class Y		1.97			6,792		1.97			6,792		1.97			6,792
Series A CRA		10,841	(3)		1,531		24,381	(4)		4,531		41,661			8,316
Class One		8.00			720		8.00			720		8.00			720
Class Two		1.80			43		1.52			67		1.48			68
Class Three		1.99			2,733		2.01			2,856		1.97			2,869
Class Four		2.00			1,512		2.00			1,512		2.00			1,512
Class Five		2.38			163		7.91			543		2.40			165
Class Six		2.13			1,705		2.12			1,705		2.13			1,705
Class Seven		2.38			66		2.36			66		2.38			67
Class Eight		2.38			15		7.91			49		2.40			15

Total				$	59,172				$	62,733				$	74,221


(1)		Amounts per unit are calculated based on the number of preferred units outstanding either at the end of each year or as of conversion or redemption date, as noted.

(2)		For the period from January 1, 2007, to the date of redemption.

(3)		Amount per unit based on 134 units outstanding for the entire period. 12 units were repurchased in June 2009 and received $6,509 in dividends through the date of purchase.

(4)		Amount per unit is based on 146 units outstanding for the entire period. 54 units were repurchased in September 2008 and received $17,980 in dividends through the date of purchase.

Common OP Units

Common OP Units are redeemable by common OP Unitholders (other than the General Partner and Special Limited Partner) at their option, subject to certain restrictions, on the basis of one common OP Unit for either one share of Aimco Class A Common Stock or cash equal to the fair value of a share of Aimco Class A Common Stock at the time of redemption. We have the option to require Aimco to deliver shares of Aimco Class A Common Stock in exchange for all or any portion of the cash requested. When a Limited Partner redeems a common OP Unit for Aimco Class A Common Stock, Limited Partners’ Capital is reduced and Special Limited Partners’ capital is increased. Common OP Units held by Aimco are not redeemable.

In December 2008, October 2008, July 2008, and December 2007, we declared special distributions payable on January 29, 2009, December 1, 2008, August 29, 2008 and January 30, 2008, respectively, to holders of record of common OP Units and High Performance Units on December 29, 2008, October 27, 2008, July 28, 2008 and December 31, 2007, respectively. The special distributions were paid on common OP Units and High Performance Units in the amounts listed below. We distributed to Aimco common OP Units equal to the number of shares we issued pursuant to Aimco’s corresponding special dividends in addition to approximately $0.60 per unit in cash. Holders of common OP Units other than Aimco and holders of High Performance Units received the distribution entirely in cash.


	January 2009		December 2008		August 2008		January 2008
Aimco Operating Partnership	Special		Special		Special		Special
Special Distributions	Distribution		Distribution		Distribution		Distribution
Distribution per unit	$	2.08	$	1.80	$	3.00	$	2.51
Total distribution	$	230.1 million	$	176.6 million	$	285.5 million	$	257.2 million
Common OP Units and High Performance Units outstanding on record date		110,654,142		98,136,520		95,151,333		102,478,510
Common OP Units held by Aimco		101,169,951		88,650,980		85,619,144		92,795,891
Total distribution on Aimco common OP Units	$	210.4 million	$	159.6 million	$	256.9 million	$	232.9 million
Cash distribution to Aimco	$	60.6 million	$	53.2 million	$	51.4 million	$	55.0 million
Portion of distribution paid to Aimco through issuance of common OP Units	$	149.8 million	$	106.4 million	$	205.5 million	$	177.9 million
Common OP Units issued to Aimco pursuant to distributions		15,627,330		12,572,267		5,731,310		4,594,074
Cash distributed to common OP Unit and High Performance Unit holders other than Aimco	$	19.7 million	$	17.0 million	$	28.6 million	$	24.3 million

As discussed in Note 2, during December 2009, we adopted the provisions of ASU 2010-01, which relate to accounting for dividends with components of cash and stock. In prior periods, we treated the shares of units issued in our special distributions similar to stock distributions, with a reclassification within consolidated capital at the beginning of the earliest period presented. In connection with our adoption of ASU 2010-01, we retrospectively adjusted our consolidated balance sheet at December 31, 2008, by increasing accrued liabilities and other by $149.0 million, representing the portion of our special distributions declared in December 2008 that was paid in January 2009 through the issuance of common OP Units.

Also in December 2008, October 2008, July 2008 and December 2007, Aimco’s board of directors declared corresponding special dividends payable on January 29, 2009, December 1, 2008, August 29, 2008 and January 30, 2008, respectively, to holders of record of its Common Stock on December 29, 2008, October 27, 2008, July 28, 2008 and December 31, 2007, respectively. A portion of the special dividends in the amounts of $0.60 per share represents payment of the regular dividend for the quarters ended December 31, 2008, September 30, 2008, June 30, 2008 and December 31, 2007, respectively, and the remaining amount per share represents an additional dividend associated with taxable gains from property dispositions. Portions of the special dividends were paid through the issuance of shares of Aimco Class A Common Stock. The table below summarizes information regarding these special dividends.


	January 2009		December 2008		August 2008		January 2008
	Special		Special		Special		Special
Aimco Special Dividends	Dividend		Dividend		Dividend		Dividend
Dividend per share	$	2.08	$	1.80	$	3.00	$	2.51
Outstanding shares of Common Stock on the record date		101,169,951		88,650,980		85,619,144		92,795,891

Total dividend	$	210.4 million	$	159.6 million	$	256.9 million	$	232.9 million
Portion of dividend paid in cash	$	60.6 million	$	53.2 million	$	51.4 million	$	55.0 million
Portion of dividend paid through issuance of shares	$	149.8 million	$	106.4 million	$	205.5 million	$	177.9 million
Shares issued pursuant to dividend		15,627,330		12,572,267		5,731,310		4,594,074
Average share price on determination date	$	9.58	$	8.46	$	35.84	$	38.71

Amounts after elimination of the effects of shares of Common Stock held by consolidated subsidiaries:
Outstanding shares of Common Stock on the record date		100,642,817		88,186,456		85,182,665		92,379,751
Total dividend	$	209.3 million	$	158.7 million	$	255.5 million	$	231.9 million
Portion of dividend paid in cash	$	60.3 million	$	52.9 million	$	51.1 million	$	54.8 million
Portion of dividend paid through issuance of shares	$	149.0 million	$	105.8 million	$	204.4 million	$	177.1 million
Shares issued pursuant to dividend		15,548,996		12,509,657		5,703,265		4,573,735

During 2008, Aimco issued approximately 17,000 shares of Aimco Class A Common Stock to certain of its non-executive officers who purchased the shares at market prices. In exchange for the shares purchased, the officers executed notes payable totaling $0.6 million. No shares were issued under similar arrangements during 2009. These notes, which are 25% recourse to the borrowers, have a 10-year maturity and bear interest either at a fixed rate of 6% annually or a floating rate based on the 30-day LIBOR plus 3.85%, which is subject to an annual interest rate cap of typically 7.25%. The notes were contributed by Aimco to us in exchange for an equivalent number of common OP Units. Total payments in 2009 and 2008 on all notes from officers were $0.8 million and $1.5 million, respectively. In 2009 and 2008, Aimco reacquired approximately 94,000 and 31,000 shares of Aimco Class A Common Stock from officers in exchange for the cancellation of related notes totaling $1.5 million and $1.0 million, respectively. Concurrently, we reacquired from Aimco an equal number of common OP Units.

In addition, in 2009 and 2008, Aimco issued approximately 378,000 and 225,000 restricted shares of Class A Common Stock to certain officers and employees and we concurrently issued a corresponding number of common OP Units to Aimco. The restricted stock was recorded at the fair market value of Aimco Class A Common Stock on the date of issuance. These shares of restricted Aimco Class A Common Stock may not be sold, assigned, transferred, pledged, hypothecated or otherwise disposed of and are subject to a risk of forfeiture prior to the expiration of the applicable vesting period (ratably over a period of four years).

In 2008 and 2007, Aimco purchased in the open market approximately 13.9 million and 7.5 million shares of Aimco Class A Common Stock, respectively, at an average price per share of approximately $34.02 and $43.70, respectively. Concurrent with Aimco’s repurchases of Aimco Class A Common Stock in 2008 and 2007, we repurchased from Aimco a corresponding number of common OP Units at prices per unit equal to the prices per share paid by Aimco to repurchase such shares. During 2009, Aimco did not repurchase any shares of Class A Common Stock on the open market.

In 2007, we completed tender offers for limited partnership interests resulting in the issuance of approximately 55,400 common OP Units. Approximately 55,100 of the common OP Units issued in 2007 were to unrelated limited partners in VMS in connection with our purchase of seven properties from the partnership, as discussed in Note 3. In 2009 and 2008, we did not issue a significant number of common OP Units in connection with tender offers for limited partners.

During the years ended December 31, 2009 and 2008, approximately 64,000 and 50,000 common OP Units, respectively, were redeemed in exchange for cash, and approximately 519,000 and 114,000 common OP Units, respectively, were redeemed in exchange for shares of Aimco Class A Common Stock.

High Performance Units

From 1998 through 2005, we issued various classes of High Performance Units, or HPUs. These HPUs were issued to limited liability companies owned by certain members of our senior management (and Aimco’s independent directors in the case of Class I HPUs only) in exchange for cash in amounts that we determined, with the assistance of a nationally recognized independent valuation expert, to be the fair value of the HPUs. The terms of the HPUs provide for the issuance, following a measurement period of generally three years of an increased number of HPUs depending on the degree, if any, to which certain financial performance benchmarks are achieved over the applicable measurement period. The holders of HPUs at the conclusion of the measurement period receive the same amount of distributions that are paid to holders of an equivalent number of our outstanding common OP Units. At December 31, 2009 and 2008, 2,344,719 Class I HPUs, the sole class of HPUs to meet the performance benchmarks, were outstanding. The minimum performance benchmarks were not achieved for HPU Classes II through IX. Accordingly, those HPUs had only nominal value at the conclusion of the related measurement period and were reacquired by us and cancelled.

Investment in Aimco

In 1998, Aimco issued 1.0 million shares of Class J Cumulative Convertible Preferred Stock, which we refer to as Class J Preferred Stock, for proceeds of $100.0 million. The proceeds were contributed by Aimco to us in exchange for 1.0 million Class J Partnership Preferred Units, which we refer to as Class J Preferred Units. Concurrently, we issued 250,000 Class J Preferred Units valued at $25.0 million to Aimco, in exchange for 250,000 shares of Class J Preferred Stock. In June 2000, we converted 250,000 shares of Aimco Class J Preferred Stock, with a liquidation value of $25.0 million, into 625,000 shares of Aimco Class A Common Stock. In connection with this conversion, 41,991 shares of Aimco Class A Common Stock, valued at $1.5 million, were exchanged by us for common OP Units held by a limited partner. In 2001, 198,269 shares of Aimco Class A Common Stock, valued at $7.1 million, were exchanged by us for common OP Units held by a limited partner. Our investment in Aimco Class A Common Stock is presented in the accompanying financial statements as a reduction to partners’ capital.

Registration Statements

We and Aimco have a shelf registration statement that provides for the issuance of debt securities by us and debt and equity securities by Aimco.

NOTE 12 — Share-Based Compensation and Employee Benefit Plans

Stock Award and Incentive Plan

Aimco, from time to time, issues restricted stock and stock options to its employees. We are required to issue common OP Units to Aimco for the same number of shares of Aimco Class A Common Stock that are issued to employees under these arrangements. Upon exercise of the stock options, Aimco must contribute to us the proceeds received in connection with the exercised options. Therefore, the following disclosures pertain to Aimco’s stock options. Our obligations to issue common OP Units under Aimco’s share based compensation plans results in reciprocal accounting treatment in our financial statements.

Aimco’s board of directors adopted the Apartment Investment and Management Company 1997 Stock Award and Incentive Plan, or the 1997 Plan, to attract and retain officers, key employees and independent directors. The 1997 Plan reserved for issuance a maximum of 20 million shares, which may be in the form of incentive stock options, non-qualified stock options and restricted stock, or other types of awards as authorized under the 1997 Plan. The 1997 Plan expired on April 24, 2007. On April 30, 2007, the 2007 Stock Award and Incentive Plan, or the 2007 Plan, was approved as successor to the 1997 Plan. The 2007 Plan reserves for issuance a maximum of 4.1 million shares, which may be in the form of incentive stock options, non-qualified stock options and restricted stock, or other types of awards as authorized under the 2007 Plan. Pursuant to the anti-dilution provisions of the 2007 Plan, the number of shares reserved for issuance has been adjusted to reflect Aimco’s special dividends discussed in Note 11. At December 31, 2009 there were approximately 1.7 million shares available to be granted under the 2007 Plan. The 2007 Plan is administered by the Compensation and Human Resources Committee of Aimco’s board of directors. In the case of stock options, the exercise price of the options granted may not be less than the fair market value of Aimco Class A Common Stock at the date of grant. The term of the options is generally ten years from the date of grant. The options typically vest over a period of one to four or five years from the date of grant. Aimco generally issues new shares upon exercise of options. Restricted stock awards typically vest over a period of three to five years.

Refer to Stock-Based Compensation in Note 2 for discussion of our accounting policy related to stock-based compensation.

We estimated the fair value of our options using a Black-Scholes closed-form valuation model using the assumptions set forth in the table below. For options granted in 2009 and 2008, the expected term of the options was based on historical option exercises and post-vesting terminations. For options granted in 2007, the expected term of the options reflects the average of the vesting period and the contractual term for the options, with the exception of a grant of approximately 0.6 million options to an executive during 2007, for which the expected term used was equal to the vesting period of five years. Expected volatility reflects the historical volatility of Aimco Class A Common Stock during the historical period commensurate with the expected term of the options that ended on the date of grant. The expected dividend yield reflects expectations regarding cash dividend amounts per share paid on Aimco Class A Common Stock during the expected term of the option and the risk-free interest rate reflects the annualized yield of a zero coupon U.S. Treasury security with a term equal to the expected term of the option. The weighted average fair value of options and our valuation assumptions for the years ended December 31, 2009, 2008 and 2007 were as follows:


	2009			2008			2007
Weighted average grant-date fair value	$	2.47		$	4.34		$	6.28
Assumptions:
Risk-free interest rate		2.26	%		3.12	%		4.70	%
Expected dividend yield		8.00	%		6.02	%		4.94	%
Expected volatility		45.64	%		24.02	%		21.66	%
Weighted average expected life of options	6.9 years			6.5 years			5.6 years

The following table summarizes activity for Aimco’s outstanding stock options for the years ended December 31, 2009, 2008 and 2007 (numbers of options in thousands):


	2009⁽¹⁾					2008⁽¹⁾					2007⁽¹⁾
				Weighted					Weighted					Weighted
				Average					Average					Average
	Number of			Exercise		Number of			Exercise		Number of			Exercise
	Options			Price		Options			Price		Options			Price
Outstanding at beginning of year		10,344		$	31.01		8,555		$	39.57		8,598		$	39.36
Granted		965			8.92		980			39.77		955			57.25
Exercised		—			—		(14	)		37.45		(1,403	)		38.29
Forfeited		(2,436	)		32.03		(1,423	)		38.75		(26	)		37.83
Adjustment to outstanding options pursuant to special dividends		—			N/A		2,246			N/A		431			N/A

Outstanding at end of year		8,873		$	28.22		10,344		$	31.01		8,555		$	39.57

Exercisable at end of year		6,840		$	29.65		7,221		$	29.51		6,417		$	$37.75


(1)		In connection with Aimco’s special dividends discussed in Note 11, effective on the record date of each dividend, the number of options and exercise prices of all outstanding awards were adjusted pursuant to the anti-dilution provisions of the applicable plans based on the market price of Aimco’s stock on the ex-dividend dates of the related special dividends. The adjustment to the number of outstanding options is reflected in the table separate from the other activity during the periods at the weighted average exercise price for those outstanding options. The exercise prices for options granted and forfeited in the table above reflect the actual exercise prices at the time of the related activity. The number and weighted average exercise price for options outstanding and exercisable at the end of the year reflect the adjustment for the applicable special dividends. The adjustment of the awards pursuant to Aimco’s special dividends is considered a modification of the awards, but did not result in a change in the fair value of any awards and therefore did not result in a change in total compensation to be recognized over the remaining term of the awards.

The intrinsic value of a stock option represents the amount by which the current price of the underlying stock exceeds the exercise price of the option. Options outstanding at December 31, 2009, had an aggregate intrinsic value of $5.7 million and a weighted average remaining contractual term of 4.4 years. Options exercisable at December 31, 2008, had no aggregate intrinsic value and a weighted average remaining contractual term of 5.7 years. No stock options were exercised during the year ended 2009. The intrinsic value of stock options exercised during the years ended December 31, 2008 and 2007, was less than $0.1 million and $28.9 million, respectively. We may realize tax benefits in connection with the exercise of options by employees of Aimco’s taxable subsidiaries. As no stock options were exercised during the year ended December 31, 2009, we realized no related tax benefits.

The following table summarizes activity for Aimco’s restricted stock awards for the years ended December 31, 2009, 2008 and 2007 (numbers of shares in thousands):


	2009					2008					2007
				Weighted					Weighted					Weighted
				Average					Average					Average
	Number of			Grant-Date		Number of			Grant-Date		Number of			Grant-Date
	Shares			Fair Value		Shares			Fair Value		Shares			Fair Value
Unvested at beginning of year		893		$	40.33		960		$	46.08		1,088		$	40.11
Granted		378			8.92		248			39.85		308			60.13
Vested		(418	)		34.42		(377	)		43.45		(387	)		40.31
Forfeited		(533	)		28.57		(128	)		46.85		(49	)		47.43
Issued pursuant to special dividends (1)		138			9.58		190			22.51		—			—

Unvested at end of year		458		$	24.23		893		$	40.33		960		$	46.08


(1)		This represents shares of restricted stock issued to holders of restricted stock pursuant to Aimco’s special dividends discussed in Note 11. The weighted average grant-date fair value for these shares represents the price of Aimco Class A Common Stock on the determination date for each dividend. The issuance of the additional shares of restricted stock resulted in no incremental compensation expense.

The aggregate fair value of shares that vested during the years ended December 31, 2009, 2008 and 2007 was $3.1 million, $16.5 million and $19.5 million, respectively.

Total compensation cost recognized for restricted stock and stock option awards was $8.0 million, $17.6 million and $19.2 million for the years ended December 31, 2009, 2008 and 2007, respectively. Of these amounts, $1.3 million, $3.8 million and $4.3 million, respectively, were capitalized. At December 31, 2009, total unvested compensation cost not yet recognized was $10.1 million. We expect to recognize this compensation over a weighted average period of approximately 1.5 years.

Employee Stock Purchase Plan

Under the terms of Aimco’s employee stock purchase plan, eligible employees may authorize payroll deductions of up to 15% of their base compensation to purchase shares of Aimco’s Class A Common Stock at a five percent discount from its fair value on the last day of the calendar quarter during which payroll deductions are made. In 2009, 2008 and 2007, 20,076, 8,926 and 3,751 shares were purchased under this plan at an average price of $8.82, $23.86 and $44.67, respectively. No compensation cost is recognized in connection with this plan.

401(k) Plan

We provide a 401(k) defined-contribution employee savings plan. Employees who have completed 30 days of service and are age 18 or older are eligible to participate. For the period from January 1, 2009 through January 29, 2009, and during the years ended December 31, 2008 and 2007, our matching contributions were made in the following manner: (1) a 100% match on the first 3% of the participant’s compensation; and (2) a 50% match on the next 2% of the participant’s compensation. On December 31, 2008, we suspended employer matching contributions effective January 29, 2009. We may reinstate employer matching contributions at any time. We incurred costs in connection with this plan of approximately $0.6 million, $5.2 million and $5.2 million in 2009, 2008 and 2007, respectively.

NOTE 13 — Discontinued Operations and Assets Held for Sale

We report as discontinued operations real estate assets that meet the definition of a component of an entity and have been sold or meet the criteria to be classified as held for sale. We include all results of these discontinued operations, less applicable income taxes, in a separate component of income on the consolidated statements of income under the heading “income from discontinued operations, net.” This treatment resulted in the retrospective adjustment of 2009, 2008 and 2007 financial statement amounts to reflect as discontinued operations all properties sold or classified as held for sale as of September 30, 2010.

We are currently marketing for sale certain real estate properties that are inconsistent with our long-term investment strategy. At the end of each reporting period, we evaluate whether such properties meet the criteria to be classified as held for sale, including whether such properties are expected to be sold within 12 months. Additionally, certain properties that do not meet all of the criteria to be classified as held for sale at the balance sheet date may nevertheless be sold and included in discontinued operations in the subsequent 12 months; thus the number of properties that may be sold during the subsequent 12 months could exceed the number classified as held for sale. At December 31, 2009 and 2008, we had 31 and 120 properties, with an aggregate of 5,825 and 28,328 units, classified as held for sale, respectively. Amounts classified as held for sale in the accompanying consolidated balance sheets are as follows (in thousands):


	December 31,		December 31,
	2009		2008
Real estate, net	$	199,743	$	1,228,368
Other assets		3,927		17,214

Assets held for sale	$	203,670	$	1,245,582


Property debt	$	178,339	$	909,360
Other liabilities		5,553		15,316

Liabilities related to assets held for sale	$	183,892	$	924,676

During the years ended December 31, 2009, 2008 and 2007, we sold 89, 151 and 73 consolidated properties with an aggregate 22,503, 37,202 and 11,588 units, respectively. For the years ended December 31, 2009, 2008 and 2007, discontinued operations includes the results of operations for the periods prior to the date of sale for all properties sold or classified as held for sale as of September 30, 2010.

The following is a summary of the components of income from discontinued operations for the years ended December 31, 2009, 2008 and 2007 (in thousands):


	2009			2008			2007
Rental and other property revenues	$	196,838		$	506,979		$	641,531
Property operating expenses		(98,471	)		(251,611	)		(317,220	)
Depreciation and amortization		(61,634	)		(132,463	)		(162,134	)
Provision for operating real estate impairment losses		(54,530	)		(27,420	)		(5,430	)
Other expenses, net		(11,921	)		(13,402	)		(7,972	)

Operating (loss) income		(29,718	)		82,083			148,775
Interest income		349			2,008			4,157
Interest expense		(39,337	)		(98,467	)		(125,554	)
Gain on extinguishment of debt		259			—			32,701

(Loss) income before gain on dispositions of real estate and income taxes		(68,447	)		(14,376	)		60,079
Gain on dispositions of real estate		221,793			800,335			117,628
Income tax benefit (expense)		557			(39,794	)		(2,104	)

Income from discontinued operations, net	$	153,903		$	746,165		$	175,603


Income from discontinued operation attributable to:
Noncontrolling interests in consolidated real estate partnerships	$	(62,085	)	$	(150,140	)	$	(72,211	)

The Partnership	$	91,818		$	596,025		$	103,392

Gain on dispositions of real estate is reported net of incremental direct costs incurred in connection with the transaction, including any prepayment penalties incurred upon repayment of property loans collateralized by the property being sold. Such prepayment penalties totaled $29.0 million, $64.9 million and $12.6 million for the years ended December 31, 2009, 2008 and 2007, respectively. We classify interest expense related to property debt within discontinued operations when the related real estate asset is sold or classified as held for sale. As discussed in Note 2, during the year ended December 31, 2009, we allocated $10.1 million of goodwill related to our real estate segment to the carrying amounts of the properties sold or classified as held for sale. Of these amounts, $8.7 million was reflected as a reduction of gain on dispositions of real estate and $1.4 million was reflected as an adjustment of impairment losses.

NOTE 14 — Earnings per Unit

We calculate earnings per unit based on the weighted average number of common OP Units, participating securities, common OP Unit equivalents and dilutive convertible securities outstanding during the period. We consider both common OP Units and Class I HPUs, which have identical rights to distributions and undistributed earnings, to be common units for purposes of the earnings per unit data presented below. The following table illustrates the calculation of basic and diluted earnings per unit for the years ended December 31, 2009, 2008 and 2007 (in thousands, except per unit data):


	2009			2008			2007
Numerator:
Loss from continuing operations	$	(197,883	)	$	(118,377	)	$	(49,348	)
Loss (income) from continuing operations attributable to noncontrolling interests		39,643			(5,609	)		(19,927	)
Income attributable to the Partnership’s preferred unitholders		(56,854	)		(61,354	)		(73,144	)
Income attributable to participating securities		—			(6,985	)		(4,481	)

Loss from continuing operations attributable to the Partnership’s common unitholders	$	(215,094	)	$	(192,325	)	$	(146,900	)

Income from discontinued operations	$	153,903		$	746,165		$	175,603
Income from discontinued operations attributable to noncontrolling interests		(62,085	)		(150,140	)		(72,211	)

Income from discontinued operations attributable to the Partnership’s common unitholders	$	91,818		$	596,025		$	103,392


Net (loss) income	$	(43,980	)	$	627,788		$	126,255
Net income attributable to noncontrolling interests		(22,442	)		(155,749	)		(92,138	)
Income attributable to the Partnership’s preferred unitholders		(56,854	)		(61,354	)		(73,144	)
Income attributable to participating securities		—			(6,985	)		(4,481	)

Net (loss) income attributable to the Partnership’s common unitholders	$	(123,276	)	$	403,700		$	(43,508	)

Denominator:
Denominator for basic earnings per unit — weighted average number of shares of common units outstanding Common OP Units		120,836			95,881			102,474
Class I HPUs		2,344			2,368			2,379

Total common units		123,180			98,249			104,853
Effect of dilutive securities:
Dilutive potential common units		—			—			—

Denominator for diluted earnings per unit		123,180			98,249			104,853

Earnings (loss) per common unit — basic and diluted:
Loss from continuing operations attributable to the Partnership’s common unitholders	$	(1.75	)	$	(1.96	)	$	(1.40	)
Income from discontinued operations attributable to the Partnership’s common unitholders		0.75			6.07			0.98

Net (loss) income attributable to the Partnership’s common unitholders	$	(1.00	)	$	4.11		$	(0.42	)

As discussed in Note 2, earnings (loss) per common unit for the years ended December 31, 2008 and 2007 have been retroactively adjusted for the effect of our adoption of FSP EITF 03-6-1 and FASB ASU 2010-01.

As of December 31, 2009, 2008 and 2007, the common unit equivalents that could potentially dilute basic earnings per unit in future periods totaled 8.9 million, 9.2 million and 8.1 million, respectively. These securities, representing stock options to purchase shares of Aimco Class A Common Stock, have been excluded from the earnings per unit computations for the years ended December 31, 2009, 2008 and 2007, because their effect would have been anti-dilutive.

Participating securities, consisting of unvested restricted shares of Aimco stock and shares of Aimco stock purchased pursuant to officer loans, receive dividends similar to shares of Aimco Class A Common Stock and common OP Units totaled 0.5 million, 1.0 million and 1.2 million at December 31, 2009, 2008 and 2007, respectively. The effect of participating securities is reflected in basic and diluted earnings per unit computations for the periods presented above using the two-class method of allocating distributed and undistributed earnings. During the year ended December 31, 2009, the adjustment to compensation expense recognized related to cumulative dividends on forfeited shares of restricted stock exceeded the amount of dividends declared related to participating securities. Accordingly, distributed earnings attributed to participating securities during 2009 were reduced to zero for purposes of calculating earnings per unit using the two-class method.

As discussed in Note 11, we have various classes of preferred OP Units, which may be redeemed at the holders’ option. We may redeem these units for cash or at our option, shares of Aimco Class A Common Stock. During the periods presented, no common unit equivalents related to these preferred OP Units have been included in earnings per unit computations because their effect was antidilutive.

NOTE 15 — Unaudited Summarized Consolidated Quarterly Information

Summarized unaudited consolidated quarterly information for 2009 and 2008 is provided below (in thousands, except per unit amounts).


	Quarter (1)
2009	First			Second			Third			Fourth
Total revenues	$	286,386		$	288,066		$	285,397		$	291,887
Total operating expenses		(256,316	)		(258,578	)		(268,206	)		(268,294	)
Operating income		30,070			29,488			17,191			23,593
Loss from continuing operations		(34,683	)		(45,986	)		(54,758	)		(62,456	)
Income from discontinued operations, net		2,315			38,563			45,407			67,618
Net (loss) income		(32,368	)		(7,423	)		(9,351	)		5,162
Loss attributable to the Partnership’s common unitholders		(40,320	)		(32,336	)		(43,510	)		(7,110	)
Loss per common unit — basic and diluted:
Loss from continuing operations attributable to the Partnership’s common unitholders	$	(0.32	)	$	(0.40	)	$	(0.45	)	$	(0.57	)
Net loss attributable to the Partnership’s common unitholders	$	(0.34	)	$	(0.26	)	$	(0.35	)	$	(0.06	)

Weighted average common units outstanding (2)		119,661			124,333			124,376			124,351
Weighted average common units and common unit equivalents outstanding (2)		119,661			124,333			124,376			124,351


	Quarter (1)
2008	First			Second			Third			Fourth
Total revenues	$	285,524		$	310,371		$	310,213		$	293,315
Total operating expenses (3)		(247,611	)		(256,302	)		(265,632	)		(381,914	)
Operating income (loss) (3)		37,913			54,069			44,581			(88,599	)
Loss (income) from continuing operations (3)		(30,975	)		(20,657	)		74,982			(141,727	)
Income from discontinued operations, net		7,511			363,807			162,604			212,243
Net (loss) income		(23,464	)		343,150			237,586			70,516
Net (loss) income attributable to the Partnership’s common unitholders		(42,768	)		265,723			174,009			4,092
Earnings (loss) per common unit — basic and diluted:
(Loss) income from continuing operations attributable to the Partnership’s common unitholders	$	(0.47	)	$	(0.44	)	$	0.56		$	(1.54	)
Net (loss) income attributable to the Partnership’s common unitholders	$	(0.43	)	$	2.73		$	1.82		$	0.04

Weighted average common units outstanding (2)		99,135			97,349			95,511			101,001
Weighted average common units and common unit equivalents outstanding (2)		99,135			97,349			95,816			101,001


(1)		Certain reclassifications have been made to 2009 and 2008 quarterly amounts primarily related to treatment of discontinued operations for properties sold or classified as held for sale through September 30, 2010 and related to newly adopted accounting standards during 2009 (see Note 2).

(2)		As discussed in Note 2, in December 2009, we adopted the provisions of ASU 2010-01, which resulted in reductions in the number of weighted average common OP Units and common OP unit equivalents outstanding, as compared to the amounts previously reported.

(3)		Total operating expenses, operating income (loss) and (loss) income from continuing operations for the quarter ended December 31, 2008, includes a $91.1 million provision for impairment losses on real estate development assets, which is discussed further in Note 2.

NOTE 16 — Transactions with Affiliates

We earn revenue from affiliated real estate partnerships. These revenues include fees for property management services, partnership and asset management services, risk management services and transactional services such as refinancing, construction supervisory and disposition (including promote income, which is income earned in connection with the disposition of properties owned by certain of our consolidated joint ventures). In addition, we are reimbursed for our costs in connection with the management of the unconsolidated real estate partnerships. These fees and reimbursements for the years ended December 31, 2009, 2008 and 2007 totaled $18.5 million, $72.5 million and $42.1 million, respectively. The total accounts receivable due from affiliates was $23.7 million, net of allowance for doubtful accounts of $3.4 million, at December 31, 2009, and $39.0 million, net of allowance for doubtful accounts of $2.8 million, at December 31, 2008.

Additionally, we earn interest income on notes from real estate partnerships in which we are the general partner and hold either par value or discounted notes. During the years ended December 31, 2009 and 2008, we did not recognize a significant amount of interest income on par value notes from unconsolidated real estate partnerships. Interest income earned on par value notes from unconsolidated real estate partnerships totaled $8.1 million for the year ended December 31, 2007. Accretion income recognized on discounted notes from affiliated real estate partnerships totaled $0.1 million, $1.4 million and $8.1 million for the years ended December 31, 2009, 2008 and 2007, respectively. See Note 5 for additional information on notes receivable from unconsolidated real estate partnerships.

NOTE 17 — Business Segments

Based on a planned reduction in our transactional activities, during the three months ended March 31, 2010, we reevaluated our reportable segments and determined our investment management reporting unit no longer meets the requirements for a reportable segment. Additionally, to provide more meaningful information regarding our real estate operations, we elected to disaggregate information for the prior real estate segment. Following these changes, we have two reportable segments: conventional real estate operations and affordable real estate operations. Our conventional real estate operations consist of market-rate apartments with rents paid by the resident and included 226 properties with 70,680 units as of December 31, 2009. Our affordable real estate operations consisted of 241 properties with 27,591 units as of December 31, 2009, with rents that are generally paid, in whole or part, by a government agency. Based on this change in reportable segments, we have recast the presentation of our results of operations for the years ended December 31, 2009, 2008 and 2007, as presented below.

Our chief operating decision maker uses various generally accepted industry financial measures to assess the performance and financial conditions of the business, including: Net Asset Value, which is the estimated fair value of our assets, net of debt, or NAV; Funds From Operations, or FFO; Adjusted FFO, or AFFO, which is FFO less spending for Capital Replacements; same store property operating results; net operating income; Free Cash Flow which is net operating income less spending for Capital Replacements; financial coverage ratios; and leverage as shown on our balance sheet. Our chief operating decision maker emphasizes net operating income as a key measurement of segment profit or loss. Segment net operating income is generally defined as segment revenues less direct segment operating expenses.

The following tables present the revenues, net operating income (loss) and income (loss) from continuing operations of our conventional and affordable real estate operations segments for the years ended December 31, 2009, 2008 and 2007 (in thousands):


					Corporate
					Not Allocated
	Conventional		Affordable		to Segments			Total
Year Ended December 31, 2009:
Rental and other property revenues (1)	$	909,218	$	187,583	$	5,082		$	1,101,883
Asset management and tax credit revenues		—		—		49,853			49,853

Total revenues		909,218		187,583		54,935			1,151,736

Property operating expenses (1)		363,863		92,416		59,469			515,748
Investment management expenses		—		—		15,779			15,779
Depreciation and amortization (1)		—		—		433,933			433,933
Provision for operating real estate impairment losses		—		—		2,329			2,329
General and administrative expenses		—		—		56,643			56,643
Other expenses, net		—		—		15,721			15,721
Restructuring costs		—		—		11,241			11,241

Total operating expenses		363,863		92,416		595,115			1,051,394

Net operating income (loss)		545,355		95,167		(540,180	)		100,342
Other items included in continuing operations		—		—		(298,225	)		(298,225	)

Income (loss) from continuing operations	$	545,355	$	95,167	$	(838,405	)	$	(197,883	)


					Corporate
					Not Allocated to
	Conventional		Affordable		Segments			Total
Year Ended December 31, 2008:
Rental and other property revenues (1)	$	913,793	$	180,456	$	6,344		$	1,100,593
Asset management and tax credit revenues		—		—		98,830			98,830

Total revenues		913,793		180,456		105,174			1,199,423

Property operating expenses (1)		360,479		91,867		74,870			527,216
Investment management expenses		—		—		24,784			24,784
Depreciation and amortization (1)		—		—		383,084			383,084
Provision for impairment losses on real estate development assets		—		—		91,138			91,138
General and administrative expenses		—		—		80,376			80,376
Other expenses, net		—		—		22,059			22,059
Restructuring costs		—		—		22,802			22,802

Total operating expenses		360,479		91,867		699,113			1,151,459

Net operating income (loss)		553,314		88,589		(593,939	)		47,964
Other items included in continuing operations		—		—		(166,341	)		(166,341	)

Income (loss) from continuing operations	$	553,314	$	88,589	$	(760,280	)	$	(118,377	)


					Corporate
					Not Allocated
	Conventional		Affordable		to Segments			Total
Year Ended December 31, 2007:
Rental and other property revenues (1)	$	882,545	$	168,885	$	6,924		$	1,058,354
Asset management and tax credit revenues		—		—		73,755			73,755

Total revenues		882,545		168,885		80,679			1,132,109

Property operating expenses (1)		354,455		83,126		69,822			507,403
Investment management expenses		—		—		20,507			20,507
Depreciation and amortization (1)		—		—		337,804			337,804
Provision for operating real estate impairment losses		—		—		1,080			1,080
General and administrative expenses		—		—		72,359			72,359
Other expenses, net		—		—		18,917			18,917

Total operating expenses		354,455		83,126		520,489			958,070

Net operating income (loss)		528,090		85,759		(439,810	)		174,039
Other items included in continuing operations		—		—		(223,387	)		(223,387	)

Income (loss) from continuing operations	$	528,090	$	85,759	$	(663,197	)	$	(49,348	)


(1)		Our chief operating decision maker assesses the performance of our conventional and affordable real estate operations using among other measures, net operating income, excluding property management revenues and certain property management expenses, casualty gains and losses, depreciation and amortization and provision for operating real estate impairment losses. Accordingly, we do not allocate these amounts to our segments.

During the years ended December 31, 2009, 2008 and 2007, for continuing operations, our rental revenues include $129.8 million, $122.2 million and $112.0 million, respectively, of subsidies from government agencies, which represented 11.8%, 11.1% and 10.6%, respectively, of our real estate operations revenues.

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


	December 31,		December 31,
	2009		2008
Conventional	$	6,032,988		6,310,926
Affordable		1,130,089		1,205,157
Corporate and other assets		759,062		1,940,638

Total consolidated assets	$	7,922,139		9,456,721

For the years ended December 31, 2009, 2008 and 2007, capital additions related to our conventional segment totaled $208.0 million, $516.6 million and $595.6 million, respectively, and capital additions related to our affordable segment totaled $67.4 million, $148.6 million and $94.1 million, respectively.

AIMCO PROPERTIES, L.P.
SCHEDULE III: REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 2009
(In Thousands Except Unit Data)


							(2)				(3)
		(1)					Initial Cost				Cost Capitalized		December 31, 2009
	Property	Date		Year	Number				Buildings and		Subsequent to				Buildings and		(5)		Accumulated			Total Cost
Property Name	Type	Consolidated	Location	Built	of Units		Land		Improvements		Consolidation		Land		Improvements		Total		Depreciation (AD)			Net of AD		Encumbrances
Continuing Operations:
Conventional Properties:
100 Forest Place	High Rise	Dec-97	OakPark, IL	1987		234		2,664		18,815		4,493		2,664		23,308		25,972		(8,692	)		17,280		27,761
1582 First Avenue	High Rise	Mar-05	New York, NY	1900		17		4,250		752		224		4,281		945		5,226		(249	)		4,977		2,671
173 E. 90th Street	High Rise	May-04	New York, NY	1910		72		11,773		4,535		1,445		12,067		5,686		17,753		(1,365	)		16,388		8,772
182-188 Columbus Avenue	Mid Rise	Feb-07	New York, NY	1910		32		17,187		3,300		3,690		19,123		5,054		24,177		(992	)		23,185		13,471
204-206 West 133rd Street	Mid Rise	Jun-07	New York, NY	1910		44		3,291		1,450		1,921		4,352		2,310		6,662		(303	)		6,359		3,132
2232-2240 Seventh Avenue	Mid Rise	Jun-07	New York, NY	1910		24		2,863		3,785		1,477		3,366		4,759		8,125		(517	)		7,608		2,972
2247-2253 Seventh Avenue	Mid Rise	Jun-07	New York, NY	1910		35		6,787		3,335		1,464		7,356		4,230		11,586		(586	)		11,000		5,483
2252-2258 Seventh Avenue	Mid Rise	Jun-07	New York, NY	1910		35		3,623		4,504		1,814		4,318		5,623		9,941		(772	)		9,169		5,125
2300-2310 Seventh Avenue	Mid Rise	Jun-07	New York, NY	1910		63		8,623		6,964		5,260		10,417		10,430		20,847		(1,441	)		19,406		9,896
236 - 238 East 88th Street	High Rise	Jan-04	New York, NY	1900		43		8,751		2,914		1,295		8,820		4,140		12,960		(1,155	)		11,805		6,879
237-239 Ninth Avenue	High Rise	Mar-05	New York, NY	1900		36		8,430		1,866		770		8,494		2,572		11,066		(614	)		10,452		5,227
240 West 73rd Street, LLC	High Rise	Sep-04	New York, NY	1900		200		68,006		12,140		3,563		68,109		15,600		83,709		(2,827	)		80,882		30,286
2484 Seventh Avenue	Mid Rise	Jun-07	New York, NY	1921		23		2,384		1,726		468		2,601		1,977		4,578		(243	)		4,335		2,472
2900 on First Apartments	Mid Rise	Oct-08	Seattle, WA	1989		135		19,015		17,518		330		19,071		17,792		36,863		(860	)		36,003		20,719
306 East 89th Street	High Rise	Jul-04	New York, NY	1930		20		2,659		1,006		167		2,681		1,151		3,832		(350	)		3,482		1,908
311 & 313 East 73rd Street	Mid Rise	Mar-03	New York, NY	1904		34		5,635		1,609		546		5,678		2,112		7,790		(940	)		6,850		2,761
322-324 East 61st Street	High Rise	Mar-05	New York, NY	1900		40		6,319		2,224		681		6,372		2,852		9,224		(707	)		8,517		3,691
3400 Avenue of the Arts	Mid Rise	Mar-02	Costa Mesa, CA	1987		770		55,223		65,506		73,301		57,240		136,790		194,030		(31,750	)		162,280		119,869
452 East 78th Street	High Rise	Jan-04	New York, NY	1900		12		1,966		608		278		1,982		870		2,852		(242	)		2,610		1,600
464-466 Amsterdam & 200-210 W. 83rd Street	Mid Rise	Feb-07	New York, NY	1910		72		23,677		7,101		3,881		25,552		9,107		34,659		(1,241	)		33,418		19,679
510 East 88th Street	High Rise	Jan-04	New York, NY	1900		20		3,137		1,002		278		3,163		1,254		4,417		(307	)		4,110		2,634
514-516 East 88th Street	High Rise	Mar-05	New York, NY	1900		36		6,230		2,168		556		6,282		2,672		8,954		(618	)		8,336		4,607
656 St. Nicholas Avenue	Mid Rise	Jun-07	New York, NY	1920		31		2,731		1,636		2,774		3,576		3,565		7,141		(467	)		6,674		2,374
759 St. Nicholas Avenue	Mid Rise	Oct-07	New York, NY	1920		9		682		535		587		1,013		791		1,804		(84	)		1,720		545
865 Bellevue	Garden	Jul-00	Nashville, TN	1972		326		3,558		12,037		27,055		3,558		39,092		42,650		(11,840	)		30,810		19,184
Arbors (Grovetree), The	Garden	Oct-97	Tempe, AZ	1967		200		1,092		6,208		2,940		1,092		9,148		10,240		(4,038	)		6,202		6,743
Arbours Of Hermitage, The	Garden	Jul-00	Hermitage, TN	1972		350		3,217		12,023		6,795		3,217		18,818		22,035		(8,527	)		13,508		10,258
Auburn Glen	Garden	Dec-06	Jacksonville, FL	1974		251		7,483		8,191		3,202		7,670		11,206		18,876		(2,098	)		16,778		9,912
BaLaye	Garden	Apr-06	Tampa, FL	2002		324		10,329		28,800		969		10,608		29,490		40,098		(4,187	)		35,911		23,012
Bank Lofts	High Rise	Apr-01	Denver, CO	1920		117		3,525		9,045		1,668		3,525		10,713		14,238		(4,668	)		9,570		7,242
Bay Parc Plaza	High Rise	Sep-04	Miami, FL	2000		471		22,680		41,847		4,097		22,680		45,944		68,624		(6,612	)		62,012		46,294
Bay Ridge at Nashua	Garden	Jan-03	Nashua, NH	1984		412		3,352		40,713		6,895		3,262		47,698		50,960		(10,541	)		40,419		40,766
Bayberry Hill Estates	Garden	Aug-02	Framingham, MA	1971		424		18,915		35,945		8,744		18,916		44,688		63,604		(14,036	)		49,568		35,250
Bayhead Village	Garden	Oct-00	Indianapolis, IN	1978		202		1,411		5,139		3,482		1,411		8,621		10,032		(3,400	)		6,632		2,728
Boston Lofts	High Rise	Apr-01	Denver, CO	1890		158		3,447		20,589		3,188		3,447		23,777		27,224		(9,855	)		17,369		14,559
Boulder Creek	Garden	Jul-94	Boulder, CO	1972		221		755		7,730		17,156		755		24,886		25,641		(11,913	)		13,728		12,031
Brandywine	Garden	Jul-94	St. Petersburg, FL	1971		477		1,437		12,725		8,763		1,437		21,488		22,925		(13,782	)		9,143		21,124
Breakers, The	Garden	Oct-98	Daytona Beach, FL	1985		208		1,008		5,507		3,257		1,008		8,764		9,772		(3,856	)		5,916		6,378
Broadcast Center	Garden	Mar-02	Los Angeles, CA	1990		279		27,603		41,244		29,066		29,407		68,506		97,913		(15,963	)		81,950		55,875
Buena Vista	Mid Rise	Jan-06	Pasadena, CA	1973		92		9,693		6,818		1,126		9,693		7,944		17,637		(768	)		16,869		10,607
Burke Shire Commons	Garden	Mar-01	Burke, VA	1986		360		4,867		23,617		3,860		4,867		27,477		32,344		(10,304	)		22,040		46,100
Calhoun Beach Club	High Rise	Dec-98	Minneapolis, MN	1928		332		11,708		73,334		45,743		11,708		119,077		130,785		(40,408	)		90,377		49,119
Canterbury Green	Garden	Dec-99	Fort Wayne, IN	1979		1,988		13,659		73,115		25,704		13,659		98,819		112,478		(45,994	)		66,484		53,200
Canyon Terrace	Garden	Mar-02	Saugus, CA	1984		130		7,300		6,602		5,909		7,508		12,303		19,811		(3,593	)		16,218		11,750
Carriage Hill	Garden	Jul-00	East Lansing, MI	1972		143		1,957		7,912		2,053		1,957		9,965		11,922		(5,434	)		6,488		5,360
Casa del Mar at Baymeadows	Garden	Oct-06	Jacksonville, FL	1984		144		4,902		10,562		1,403		5,039		11,828		16,867		(1,752	)		15,115		9,434
Cedar Rim	Garden	Apr-00	Newcastle, WA	1980		104		761		5,218		17,174		761		22,392		23,153		(9,405	)		13,748		7,857
Center Square	High Rise	Oct-99	Doylestown, PA	1975		350		582		4,190		3,532		582		7,722		8,304		(3,104	)		5,200		15,159
Charleston Landing	Garden	Sep-00	Brandon, FL	1985		300		7,488		8,656		7,711		7,488		16,367		23,855		(5,745	)		18,110		13,101
Chesapeake Landing I	Garden	Sep-00	Aurora, IL	1986		416		15,800		16,875		4,931		15,800		21,806		37,606		(7,748	)		29,858		24,630
Chesapeake Landing II	Garden	Mar-01	Aurora, IL	1987		184		1,969		7,980		3,308		1,969		11,288		13,257		(4,730	)		8,527		10,241
Chestnut Hall	High Rise	Oct-06	Philadelphia, PA	1923		315		12,047		14,299		4,653		12,338		18,661		30,999		(3,996	)		27,003		18,690
Chestnut Hill	Garden	Apr-00	Philadelphia, PA	1963		821		6,463		49,315		48,996		6,463		98,311		104,774		(36,814	)		67,960		51,444
Chimneys of Cradle Rock	Garden	Jun-04	Columbia, MD	1979		198		2,234		8,107		578		2,040		8,879		10,919		(2,284	)		8,635		16,737
Colonnade Gardens	Garden	Oct-97	Phoenix, AZ	1973		196		766		4,346		2,912		766		7,258		8,024		(3,615	)		4,409		1,625
Colony at Kenilworth	Garden	Oct-99	Towson, MD	1966		383		2,403		18,798		10,801		2,403		29,599		32,002		(14,784	)		17,218		24,443
Columbus Avenue	Mid Rise	Sep-03	New York, NY	1880		59		35,472		9,450		3,599		35,527		12,994		48,521		(4,970	)		43,551		25,826
Country Lakes I	Garden	Apr-01	Naperville, IL	1982		240		8,512		10,832		3,300		8,512		14,132		22,644		(5,213	)		17,431		14,557
Country Lakes II	Garden	May-97	Naperville, IL	1986		400		5,165		29,430		5,921		5,165		35,351		40,516		(14,200	)		26,316		24,893


							(2)				(3)
		(1)					Initial Cost				Cost Capitalized		December 31, 2009
	Property	Date		Year	Number				Buildings and		Subsequent to				Buildings and		(5)		Accumulated			Total Cost
Property Name	Type	Consolidated	Location	Built	of Units		Land		Improvements		Consolidation		Land		Improvements		Total		Depreciation (AD)			Net of AD		Encumbrances
Creekside	Garden	Jan-00	Denver, CO	1974		328		2,953		12,697		5,028		3,189		17,489		20,678		(7,788	)		12,890		14,359
Creekside	Garden	Mar-02	Simi Valley, CA	1985		397		24,595		18,818		6,775		25,245		24,943		50,188		(8,109	)		42,079		40,670
Crescent at West Hollywood, The	Mid Rise	Mar-02	West Hollywood, CA	1982		130		15,382		10,215		14,817		15,765		24,649		40,414		(9,223	)		31,191		24,195
Douglaston Villas and Townhomes	Garden	Aug-99	Altamonte Springs, FL	1979		234		1,666		9,353		7,460		1,666		16,813		18,479		(6,381	)		12,098		10,512
Elm Creek	Mid Rise	Dec-97	Elmhurst, IL	1986		372		5,534		30,830		17,422		5,635		48,151		53,786		(18,347	)		35,439		35,154
Evanston Place	High Rise	Dec-97	Evanston, IL	1988		189		3,232		25,546		4,398		3,232		29,944		33,176		(10,325	)		22,851		21,645
Fairlane East	Garden	Jan-01	Dearborn, MI	1973		244		6,550		11,711		5,136		6,550		16,847		23,397		(8,610	)		14,787		10,200
Farmingdale	Mid Rise	Oct-00	Darien, IL	1975		240		11,763		15,174		9,177		11,763		24,351		36,114		(9,406	)		26,708		17,732
Ferntree	Garden	Mar-01	Phoenix, AZ	1968		219		2,078		13,752		3,195		2,079		16,946		19,025		(6,327	)		12,698		7,058
Fisherman’s Village	Garden	Jan-06	Indianapolis, IN	1982		328		2,156		9,936		2,685		2,156		12,621		14,777		(7,059	)		7,718		6,350
Fishermans Wharf	Garden	Nov-96	Clute, TX	1981		360		1,257		7,584		5,428		1,257		13,012		14,269		(5,704	)		8,565		6,930
Flamingo Towers	High Rise	Sep-97	Miami Beach, FL	1960		1,127		32,191		38,399		217,720		32,239		256,071		288,310		(91,197	)		197,113		118,890
Forestlake Apartments	Garden	Mar-07	Daytona Beach, FL	1982		120		3,691		4,320		496		3,860		4,647		8,507		(623	)		7,884		4,735
Four Quarters Habitat	Garden	Jan-06	Miami, FL	1976		336		2,383		17,199		14,503		2,379		31,706		34,085		(11,365	)		22,720		11,698
Foxchase	Garden	Dec-97	Alexandria, VA	1947		2,113		15,419		96,062		31,800		15,496		127,785		143,281		(55,566	)		87,715		184,131
Georgetown	Garden	Aug-02	Framingham, MA	1964		207		12,351		13,168		2,091		12,351		15,259		27,610		(4,535	)		23,075		12,775
Glen at Forestlake, The	Garden	Mar-07	Daytona Beach, FL	1982		26		897		862		182		933		1,008		1,941		(125	)		1,816		1,039
Granada	Mid Rise	Aug-02	Framingham, MA	1958		72		4,577		4,058		854		4,577		4,912		9,489		(2,043	)		7,446		4,275
Grand Pointe	Garden	Dec-99	Columbia, MD	1974		325		2,715		16,771		5,264		2,715		22,035		24,750		(8,144	)		16,606		16,987
Greens	Garden	Jul-94	Chandler, AZ	2000		324		2,303		713		27,244		2,303		27,957		30,260		(12,346	)		17,914		12,855
Greenspoint at Paradise Valley	Garden	Jan-00	Phoenix, AZ	1985		336		3,042		13,223		12,350		3,042		25,573		28,615		(11,541	)		17,074		16,287
Hampden Heights	Garden	Jan-00	Denver, CO	1973		376		3,224		12,905		5,893		3,453		18,569		22,022		(8,681	)		13,341		13,830
Harbour, The	Garden	Mar-01	Melbourne, FL	1987		162		4,108		3,563		5,774		4,108		9,337		13,445		(3,026	)		10,419		—
Heritage Park at Alta Loma	Garden	Jan-01	Alta Loma, CA	1986		232		1,200		6,428		3,456		1,200		9,884		11,084		(3,560	)		7,524		7,264
Heritage Park Escondido	Garden	Oct-00	Escondido, CA	1986		196		1,055		7,565		1,325		1,055		8,890		9,945		(4,118	)		5,827		7,299
Heritage Park Livermore	Garden	Oct-00	Livermore, CA	1988		167		1,039		9,170		1,343		1,039		10,513		11,552		(4,639	)		6,913		7,432
Heritage Park Montclair	Garden	Mar-01	Montclair, CA	1985		144		690		4,149		1,206		690		5,355		6,045		(1,873	)		4,172		4,620
Heritage Village Anaheim	Garden	Oct-00	Anaheim, CA	1986		196		1,832		8,541		1,609		1,832		10,150		11,982		(4,777	)		7,205		8,858
Hidden Cove	Garden	Jul-98	Escondido, CA	1985		334		3,043		17,615		6,980		3,043		24,595		27,638		(10,158	)		17,480		31,006
Hidden Cove II	Garden	Jul-07	Escondido, CA	1986		118		12,730		6,530		5,473		12,849		11,884		24,733		(1,806	)		22,927		11,586
Hidden Harbour	Garden	Oct-02	Melbourne, FL	1985		216		1,444		7,590		4,798		1,444		12,388		13,832		(3,471	)		10,361		—
Highcrest Townhomes	Town Home	Jan-03	Woodridge, IL	1968		176		3,045		13,452		1,368		3,045		14,820		17,865		(6,091	)		11,774		10,876
Hillcreste	Garden	Mar-02	Century City, CA	1989		315		33,755		47,216		25,906		35,862		71,015		106,877		(21,022	)		85,855		57,610
Hillmeade	Garden	Nov-94	Nashville, TN	1985		288		2,872		16,069		13,564		2,872		29,633		32,505		(16,923	)		15,582		18,376
Horizons West Apartments	Mid Rise	Dec-06	Pacifica, CA	1970		78		8,763		6,376		1,610		8,887		7,862		16,749		(1,059	)		15,690		5,377
Hunt Club	Garden	Sep-00	Gaithersburg, MD	1986		336		17,859		13,149		3,598		17,859		16,747		34,606		(6,372	)		28,234		32,160
Hunt Club	Garden	Mar-01	Austin, TX	1987		384		10,342		11,920		8,537		10,342		20,457		30,799		(9,758	)		21,041		16,499
Hunter’s Chase	Garden	Jan-01	Midlothian, VA	1985		320		7,935		7,915		3,259		7,935		11,174		19,109		(3,398	)		15,711		16,407
Hunter’s Crossing	Garden	Apr-01	Leesburg, VA	1967		164		2,244		7,763		4,079		2,244		11,842		14,086		(6,371	)		7,715		6,940
Hunters Glen IV	Garden	Oct-99	Plainsboro, NJ	1976		264		2,709		14,420		4,819		2,709		19,239		21,948		(9,525	)		12,423		20,191
Hunters Glen V	Garden	Oct-99	Plainsboro, NJ	1977		304		3,283		17,337		5,211		3,283		22,548		25,831		(11,087	)		14,744		24,194
Hunters Glen VI	Garden	Oct-99	Plainsboro, NJ	1977		328		2,787		15,501		6,075		2,787		21,576		24,363		(11,389	)		12,974		25,182
Hyde Park Tower	High Rise	Oct-04	Chicago, IL	1990		155		4,683		14,928		1,931		4,731		16,811		21,542		(2,913	)		18,629		13,781
Independence Green	Garden	Jan-06	Farmington Hills, MI	1960		981		10,293		24,586		20,189		10,156		44,912		55,068		(13,065	)		42,003		27,758
Indian Oaks	Garden	Mar-02	Simi Valley, CA	1986		254		23,927		15,801		3,489		24,523		18,694		43,217		(5,884	)		37,333		33,171
Island Club	Garden	Oct-00	Oceanside, CA	1986		592		18,027		28,654		11,220		18,027		39,874		57,901		(15,731	)		42,170		64,973
Island Club (Beville)	Garden	Oct-00	Daytona Beach, FL	1986		204		6,086		8,571		2,135		6,087		10,705		16,792		(4,444	)		12,348		8,440
Key Towers	High Rise	Apr-01	Alexandria, VA	1964		140		1,526		7,050		3,849		1,526		10,899		12,425		(4,859	)		7,566		10,868
Lakeside	Garden	Oct-99	Lisle, IL	1972		568		5,840		27,937		28,127		5,840		56,064		61,904		(22,153	)		39,751		29,375
Lakeside at Vinings Mountain	Garden	Jan-00	Atlanta, GA	1983		220		2,109		11,863		15,149		2,109		27,012		29,121		(10,884	)		18,237		9,666
Lakeside Place	Garden	Oct-99	Houston, TX	1976		734		6,160		34,151		15,942		6,160		50,093		56,253		(21,654	)		34,599		26,955
Lamplighter Park	Garden	Apr-00	Bellevue, WA	1967		174		2,225		9,272		4,150		2,225		13,422		15,647		(6,442	)		9,205		10,576
Latrobe	High Rise	Jan-03	Washington, DC	1980		175		3,459		9,103		15,543		3,459		24,646		28,105		(10,353	)		17,752		22,192
Lazy Hollow	Garden	Apr-05	Columbia, MD	1979		178		2,424		12,181		956		2,424		13,137		15,561		(5,520	)		10,041		7,867
Leahy Square	Garden	Apr-07	Redwood City, CA	1973		110		15,352		7,909		1,755		15,444		9,572		25,016		(1,631	)		23,385		15,185
Lewis Park	Garden	Jan-06	Carbondale, IL	1972		269		1,407		12,193		3,183		1,404		15,379		16,783		(8,520	)		8,263		3,981
Lincoln Place Garden	Garden	Oct-04	Venice, CA	1951		692		43,979		10,439		86,174		42,894		97,698		140,592		(1,691	)		138,901		65,000
Lodge at Chattahoochee, The	Garden	Oct-99	Sandy Springs, GA	1970		312		2,320		16,370		21,615		2,320		37,985		40,305		(15,095	)		25,210		11,087
Los Arboles	Garden	Sep-97	Chandler, AZ	1985		232		1,662		9,504		3,197		1,662		12,701		14,363		(5,741	)		8,622		8,086
Malibu Canyon	Garden	Mar-02	Calabasas, CA	1986		698		66,257		53,438		34,982		69,834		84,843		154,677		(30,295	)		124,382		97,604
Maple Bay	Garden	Dec-99	Virginia Beach, VA	1971		414		2,598		16,141		29,935		2,598		46,076		48,674		(15,809	)		32,865		33,548
Mariners Cove	Garden	Mar-02	San Diego, CA	1984		500		—		66,861		7,271		—		74,132		74,132		(18,728	)		55,404		5,813
Meadow Creek	Garden	Jul-94	Boulder, CO	1972		332		1,435		24,532		6,358		1,435		30,890		32,325		(13,197	)		19,128		24,071
Merrill House	High Rise	Jan-00	Falls Church, VA	1962		159		1,836		10,831		5,863		1,836		16,694		18,530		(4,452	)		14,078		15,600
Mesa Royale	Garden	Jul-94	Mesa, AZ	1985		152		832		4,569		9,585		832		14,154		14,986		(5,290	)		9,696		—
Montecito	Garden	Jul-94	Austin, TX	1985		268		1,268		6,896		4,958		1,267		11,855		13,122		(6,165	)		6,957		996
Monterey Grove	Garden	Jun-08	San Jose, CA	1999		224		34,175		21,939		2,072		34,325		23,861		58,186		(1,806	)		56,380		35,000


							(2)				(3)
		(1)					Initial Cost				Cost Capitalized		December 31, 2009
	Property	Date		Year	Number				Buildings and		Subsequent to				Buildings and		(5)		Accumulated			Total Cost
Property Name	Type	Consolidated	Location	Built	of Units		Land		Improvements		Consolidation		Land		Improvements		Total		Depreciation (AD)			Net of AD		Encumbrances
Oak Park Village	Garden	Oct-00	Lansing, MI	1973		618		10,048		16,771		7,340		10,048		24,111		34,159		(12,777	)		21,382		23,487
Ocean Oaks	Garden	May-98	Port Orange, FL	1988		296		2,132		12,855		3,242		2,132		16,097		18,229		(6,492	)		11,737		10,295
One Lytle Place	High Rise	Jan-00	Cincinnati ,OH	1980		231		2,662		21,800		12,551		2,662		34,351		37,013		(12,139	)		24,874		15,450
Pacific Bay Vistas	Garden	Mar-01	San Bruno, CA	1987		308		3,703		62,460		22,184		22,994		65,353		88,347		(55,442	)		32,905		—
Pacifica Park	Garden	Jul-06	Pacifica, CA	1977		104		12,770		6,579		3,183		12,970		9,562		22,532		(2,205	)		20,327		11,260
Palazzo at Park La Brea, The	Mid Rise	Feb-04	Los Angeles, CA	2002		521		47,822		125,464		8,804		48,362		133,728		182,090		(30,135	)		151,955		125,554
Palazzo East at Park La Brea, The	Mid Rise	Mar-05	Los Angeles, CA	2005		611		61,004		136,503		22,142		72,578		147,071		219,649		(26,968	)		192,681		150,000
Paradise Palms	Garden	Jul-94	Phoenix, AZ	1985		129		647		3,515		6,959		647		10,474		11,121		(5,539	)		5,582		6,400
Park at Cedar Lawn, The	Garden	Nov-96	Galveston, TX	1985		192		1,025		2,521		3,585		1,025		6,106		7,131		(2,539	)		4,592		—
Park Towne Place	High Rise	Apr-00	Philadelphia, PA	1959		959		10,451		47,301		54,589		10,451		101,890		112,341		(23,850	)		88,491		86,343
Parktown Townhouses	Garden	Oct-99	Deer Park, TX	1968		309		2,570		12,052		9,410		2,570		21,462		24,032		(8,186	)		15,846		5,618
Parkway	Garden	Mar-00	Willamsburg, VA	1971		148		386		2,834		2,754		386		5,588		5,974		(3,284	)		2,690		9,273
Pathfinder Village	Garden	Jan-06	Fremont, CA	1973		246		19,595		14,838		8,147		19,595		22,985		42,580		(3,163	)		39,417		19,348
Peachtree Park	Garden	Jan-96	Atlanta, GA	1962		303		4,683		11,713		9,900		4,683		21,613		26,296		(9,890	)		16,406		9,543
Peak at Vinings Mountain, The	Garden	Jan-00	Atlanta, GA	1980		280		2,651		13,660		17,606		2,651		31,266		33,917		(12,410	)		21,507		10,412
Peakview Place	Garden	Jan-00	Englewood, CO	1975		296		3,440		18,734		4,547		3,440		23,281		26,721		(15,330	)		11,391		12,711
Pebble Point	Garden	Oct-02	Indianapolis, IN	1980		220		1,790		6,883		2,612		1,790		9,495		11,285		(4,526	)		6,759		5,430
Peppertree	Garden	Mar-02	Cypress, CA	1971		136		7,835		5,224		2,778		8,030		7,807		15,837		(2,743	)		13,094		15,750
Pine Lake Terrace	Garden	Mar-02	Garden Grove, CA	1971		111		3,975		6,035		2,094		4,125		7,979		12,104		(2,531	)		9,573		12,000
Pine Shadows	Garden	May-98	Tempe, AZ	1983		272		2,095		11,899		3,725		2,095		15,624		17,719		(7,375	)		10,344		7,500
Pines, The	Garden	Oct-98	Palm Bay, FL	1984		216		603		3,318		2,716		603		6,034		6,637		(2,415	)		4,222		1,937
Plantation Gardens	Garden	Oct-99	Plantation ,FL	1971		372		3,773		19,443		6,204		3,773		25,647		29,420		(10,871	)		18,549		24,141
Post Ridge	Garden	Jul-00	Nashville, TN	1972		150		1,883		6,712		3,517		1,883		10,229		12,112		(4,456	)		7,656		6,042
Ramblewood	Garden	Dec-99	Wyoming, MI	1973		1,708		8,607		61,082		1,930		8,661		62,958		71,619		(12,161	)		59,458		34,944
Ravensworth Towers	High Rise	Jun-04	Annandale, VA	1974		219		3,455		17,157		2,272		3,455		19,429		22,884		(9,501	)		13,383		20,685
Reflections	Garden	Sep-00	Virginia Beach, VA	1987		480		15,988		13,684		5,255		15,988		18,939		34,927		(7,638	)		27,289		39,451
Reflections	Garden	Oct-00	West Palm Beach, FL	1986		300		5,504		9,984		4,113		5,504		14,097		19,601		(5,272	)		14,329		9,190
Reflections	Garden	Oct-02	Casselberry, FL	1984		336		3,906		10,491		4,233		3,906		14,724		18,630		(4,662	)		13,968		10,700
Regency Oaks	Garden	Oct-99	Fern Park, FL	1965		343		1,832		9,905		8,398		1,832		18,303		20,135		(10,017	)		10,118		11,134
Remington at Ponte Vedra Lakes	Garden	Dec-06	Ponte Vedra Beach, FL	1986		344		18,576		18,650		2,242		18,795		20,673		39,468		(3,586	)		35,882		24,695
River Club	Garden	Apr-05	Edgewater, NJ	1998		266		30,578		30,638		1,910		30,579		32,547		63,126		(6,208	)		56,918		39,373
River Reach	Garden	Sep-00	Naples, FL	1986		556		17,728		18,337		6,365		17,728		24,702		42,430		(10,002	)		32,428		23,452
Riverbend Village	Garden	Jul-01	Arlington, TX	1983		201		893		4,128		4,963		893		9,091		9,984		(3,967	)		6,017		—
Riverloft	High Rise	Oct-99	Philadelphia, PA	1910		184		2,120		11,287		31,118		2,120		42,405		44,525		(15,462	)		29,063		19,951
Riverside	High Rise	Apr-00	Alexandria ,VA	1973		1,222		10,433		65,474		76,986		10,433		142,460		152,893		(59,333	)		93,560		96,289
Rosewood	Garden	Mar-02	Camarillo, CA	1976		152		12,128		8,060		2,407		12,430		10,165		22,595		(3,320	)		19,275		17,900
Royal Crest Estates	Garden	Aug-02	Fall River, MA	1974		216		5,832		12,044		1,953		5,832		13,997		19,829		(5,694	)		14,135		12,161
Royal Crest Estates	Garden	Aug-02	Warwick, RI	1972		492		22,433		24,095		5,296		22,433		29,391		51,824		(12,162	)		39,662		37,890
Royal Crest Estates	Garden	Aug-02	Marlborough, MA	1970		473		25,178		28,786		3,835		25,178		32,621		57,799		(13,594	)		44,205		35,400
Royal Crest Estates	Garden	Aug-02	North Andover, MA	1970		588		51,292		36,808		9,632		51,292		46,440		97,732		(18,797	)		78,935		60,305
Royal Crest Estates	Garden	Aug-02	Nashua, NH	1970		902		68,231		45,562		11,187		68,231		56,749		124,980		(25,003	)		99,977		50,667
Runaway Bay	Garden	Oct-00	Lantana, FL	1987		404		5,934		16,052		7,643		5,934		23,695		29,629		(7,842	)		21,787		21,644
Runaway Bay	Garden	Jul-02	Pinellas Park, FL	1986		192		1,884		7,045		1,831		1,884		8,876		10,760		(2,402	)		8,358		9,004
Savannah Trace	Garden	Mar-01	Shaumburg, IL	1986		368		13,960		20,731		4,001		13,960		24,732		38,692		(8,502	)		30,190		22,282
Scandia	Garden	Oct-00	Indianapolis, IN	1977		444		10,540		9,852		12,780		10,539		22,633		33,172		(11,260	)		21,912		19,163
Scotchollow	Garden	Jan-06	San Mateo, CA	1971		418		49,474		17,756		7,733		49,473		25,490		74,963		(3,128	)		71,835		49,605
Scottsdale Gateway I	Garden	Oct-97	Tempe, AZ	1965		124		591		3,359		8,017		591		11,376		11,967		(4,075	)		7,892		5,800
Scottsdale Gateway II	Garden	Oct-97	Tempe, AZ	1976		487		2,458		13,927		23,353		2,458		37,280		39,738		(15,204	)		24,534		5,087
Shadow Creek	Garden	May-98	Mesa, AZ	1984		266		2,016		11,886		3,790		2,016		15,676		17,692		(7,685	)		10,007		—
Shenandoah Crossing	Garden	Sep-00	Fairfax, VA	1984		640		18,492		57,197		7,499		18,492		64,696		83,188		(27,715	)		55,473		69,724
Signal Pointe	Garden	Oct-99	Winter Park, FL	1971		368		2,382		11,359		21,447		2,382		32,806		35,188		(10,480	)		24,708		18,596
Signature Point	Garden	Nov-96	League City, TX	1994		304		2,810		17,579		2,810		2,810		20,389		23,199		(6,784	)		16,415		10,823
Springwoods at Lake Ridge	Garden	Jul-02	Woodbridge, VA	1984		180		5,587		7,284		1,278		5,587		8,562		14,149		(1,944	)		12,205		14,502
Spyglass at Cedar Cove	Garden	Sep-00	Lexington Park, MD	1985		152		3,241		5,094		2,479		3,241		7,573		10,814		(3,237	)		7,577		10,300
Stafford	High Rise	Oct-02	Baltimore, MD	1889		96		706		4,032		3,131		562		7,307		7,869		(3,524	)		4,345		4,315
Steeplechase	Garden	Sep-00	Largo, MD	1986		240		3,675		16,111		3,301		3,675		19,412		23,087		(7,106	)		15,981		23,600
Steeplechase	Garden	Jul-02	Plano, TX	1985		368		7,056		10,510		6,974		7,056		17,484		24,540		(5,158	)		19,382		13,987
Sterling Apartment Homes, The	Garden	Oct-99	Philadelphia, PA	1962		535		8,871		55,364		17,358		8,871		72,722		81,593		(30,782	)		50,811		77,915
Stone Creek Club	Garden	Sep-00	Germantown, MD	1984		240		13,593		9,347		2,948		13,593		12,295		25,888		(6,743	)		19,145		24,900
Sun Lake	Garden	May-98	Lake Mary, FL	1986		600		4,551		25,543		30,903		4,551		56,446		60,997		(20,010	)		40,987		35,727
Sun River Village	Garden	Oct-99	Tempe ,AZ	1981		334		2,367		13,303		3,888		2,367		17,191		19,558		(8,524	)		11,034		10,569
Tamarac Village	Garden	Apr-00	Denver, CO	1979		564		3,928		23,491		8,089		4,223		31,285		35,508		(16,205	)		19,303		18,389
Tamarind Bay	Garden	Jan-00	St. Petersburg, FL	1980		200		1,091		6,310		4,987		1,091		11,297		12,388		(5,368	)		7,020		6,925
Tatum Gardens	Garden	May-98	Phoenix, AZ	1985		128		1,323		7,155		1,928		1,323		9,083		10,406		(4,706	)		5,700		7,403
The Bluffs at Pacifica	Garden	Oct-06	Pacifica, CA	1963		64		7,975		4,131		7,635		8,108		11,633		19,741		(1,067	)		18,674		6,428
Timbertree	Garden	Oct-97	Phoenix, AZ	1979		387		2,292		13,000		6,209		2,292		19,209		21,501		(9,830	)		11,671		4,510
Towers Of Westchester Park, The	High Rise	Jan-06	College Park, MD	1972		303		15,198		22,029		4,504		15,198		26,533		41,731		(3,946	)		37,785		27,667


							(2)				(3)
		(1)					Initial Cost				Cost Capitalized		December 31, 2009
	Property	Date		Year	Number				Buildings and		Subsequent to				Buildings and		(5)		Accumulated			Total Cost
Property Name	Type	Consolidated	Location	Built	of Units		Land		Improvements		Consolidation		Land		Improvements		Total		Depreciation (AD)			Net of AD		Encumbrances
Township At Highlands	Town Home	Nov-96	Centennial, CO	1985		161		1,615		9,773		6,118		1,536		15,970		17,506		(6,955	)		10,551		16,640
Twin Lake Towers	High Rise	Oct-99	Westmont, IL	1969		399		3,268		18,763		23,625		3,268		42,388		45,656		(15,984	)		29,672		9,255
Twin Lakes	Garden	Apr-00	Palm Harbor, FL	1986		262		2,062		12,850		4,584		2,062		17,434		19,496		(7,652	)		11,844		10,604
Vantage Pointe	Mid Rise	Aug-02	Swampscott, MA	1987		96		4,749		10,089		1,351		4,749		11,440		16,189		(3,498	)		12,691		7,385
Verandahs at Hunt Club	Garden	Jul-02	Apopka, FL	1985		210		2,271		7,724		2,974		2,271		10,698		12,969		(2,641	)		10,328		11,070
Views at Vinings Mountain, The	Garden	Jan-06	Atlanta, GA	1983		180		610		5,026		12,209		610		17,235		17,845		(7,559	)		10,286		13,757
Villa Del Sol	Garden	Mar-02	Norwalk, CA	1972		120		7,294		4,861		2,512		7,476		7,191		14,667		(2,670	)		11,997		13,500
Village Crossing	Garden	May-98	West Palm Beach, FL	1986		189		1,618		8,188		2,941		1,618		11,129		12,747		(5,497	)		7,250		7,000
Village in the Woods	Garden	Jan-00	Cypress, TX	1983		530		3,457		15,787		10,230		3,457		26,017		29,474		(12,765	)		16,709		19,451
Village of Pennbrook	Garden	Oct-98	Levittown, PA	1969		722		10,229		38,222		13,539		10,229		51,761		61,990		(21,542	)		40,448		48,419
Villages of Baymeadows	Garden	Oct-99	Jacksonville, FL	1972		904		4,859		33,957		53,735		4,859		87,692		92,551		(40,263	)		52,288		38,050
Villas at Park La Brea, The	Garden	Mar-02	Los Angeles, CA	2002		250		8,621		48,871		3,603		8,630		52,465		61,095		(12,802	)		48,293		30,564
Vista Del Lagos	Garden	Dec-97	Chandler, AZ	1986		200		804		4,952		3,442		804		8,394		9,198		(3,431	)		5,767		11,783
Waterford Village	Garden	Aug-02	Bridgewater, MA	1971		588		28,585		28,102		5,591		29,110		33,168		62,278		(15,640	)		46,638		40,542
Waterways Village	Garden	Jun-97	Aventura, FL	1991		180		4,504		11,064		3,683		4,504		14,747		19,251		(6,456	)		12,795		7,145
Waverly Apartments	Garden	Aug-08	Brighton, MA	1970		103		7,696		11,347		1,188		7,920		12,311		20,231		(723	)		19,508		12,000
West Winds	Garden	Oct-02	Orlando, FL	1985		272		2,324		11,481		3,030		2,324		14,511		16,835		(4,829	)		12,006		12,776
Westway Village	Garden	May-98	Houston, TX	1979		326		2,921		11,384		3,172		2,921		14,556		17,477		(6,586	)		10,891		7,677
Wexford Village	Garden	Aug-02	Worcester, MA	1974		264		6,339		17,939		2,082		6,339		20,021		26,360		(7,250	)		19,110		13,924
Willow Bend	Garden	May-98	Rolling Meadows, IL	1985		328		2,717		15,437		26,391		2,717		41,828		44,545		(13,960	)		30,585		19,876
Willow Park on Lake Adelaide	Garden	Oct-99	Altamonte Springs, FL	1972		185		1,225		7,357		3,266		1,224		10,624		11,848		(5,611	)		6,237		6,804
Windrift	Garden	Mar-01	Oceanside, CA	1987		404		24,960		17,590		18,667		24,960		36,257		61,217		(15,443	)		45,774		28,999
Windrift	Garden	Oct-00	Orlando, FL	1987		288		3,696		10,029		5,495		3,696		15,524		19,220		(5,710	)		13,510		17,094
Windsor Crossing	Garden	Mar-00	Newport News, VA	1978		156		307		2,110		1,992		131		4,278		4,409		(2,102	)		2,307		2,153
Windsor Park	Garden	Mar-01	Woodbridge, VA	1987		220		4,279		15,970		2,172		4,279		18,142		22,421		(6,430	)		15,991		13,444
Woodcreek	Garden	Oct-02	Mesa, AZ	1985		432		2,426		15,886		4,487		2,426		20,373		22,799		(10,400	)		12,399		19,449
Woods of Burnsville	Garden	Nov-04	Burnsville, MN	1984		400		3,954		18,125		2,694		3,954		20,819		24,773		(7,429	)		17,344		16,580
Woods of Inverness	Garden	Oct-99	Houston, TX	1983		272		2,146		10,978		3,860		2,146		14,838		16,984		(7,194	)		9,790		5,878
Woods Of Williamsburg	Garden	Jan-06	Williamsburg, VA	1976		125		798		3,657		873		798		4,530		5,328		(3,309	)		2,019		1,189
Yacht Club at Brickell	High Rise	Dec-03	Miami, FL	1998		357		31,363		32,214		4,297		31,363		36,511		67,874		(5,900	)		61,974		37,804
Yorktown Apartments	High Rise	Dec-99	Lombard, IL	1973		364		2,971		18,163		16,098		3,055		34,177		37,232		(10,538	)		26,694		22,626

Total Conventional Properties:						69,377		1,970,960		3,818,111		2,152,391		2,027,400		5,914,062		7,941,462		(2,107,330	)		5,834,132		4,691,425

Affordable Properties:
All Hallows	Garden	Jan-06	San Francisco, CA	1976		157		1,348		29,770		20,124		1,338		49,904		51,242		(15,590	)		35,652		21,219
Alliance Towers	High Rise	Mar-02	Alliance, OH	1971		101		530		1,934		756		530		2,690		3,220		(745	)		2,475		2,234
Arvada House	High Rise	Nov-04	Arvada, CO	1977		88		641		3,314		1,746		405		5,296		5,701		(1,304	)		4,397		4,152
Ashland Manor	High Rise	Mar-02	Toledo, OH	1977		189		205		455		363		205		818		1,023		(667	)		356		561
Bannock Arms	Garden	Mar-02	Boise, ID	1978		66		275		1,139		571		275		1,710		1,985		(575	)		1,410		1,406
Bayview	Garden	Jun-05	San Francisco, CA	1976		146		1,023		15,265		16,548		582		32,254		32,836		(9,118	)		23,718		12,520
Beacon Hill	High Rise	Mar-02	Hillsdale, MI	1980		198		1,380		7,044		6,599		1,093		13,930		15,023		(3,236	)		11,787		4,616
Bedford House	Mid Rise	Mar-02	Falmouth, KY	1979		48		230		919		310		230		1,229		1,459		(434	)		1,025		1,084
Benjamin Banneker Plaza	Mid Rise	Jan-06	Chester, PA	1976		70		79		3,862		670		79		4,532		4,611		(2,890	)		1,721		1,538
Berger Apartments	Mid Rise	Mar-02	New Haven, CT	1981		144		1,152		4,657		2,229		1,152		6,886		8,038		(2,080	)		5,958		1,061
Biltmore Towers	High Rise	Mar-02	Dayton, OH	1980		230		1,813		6,411		13,073		1,813		19,484		21,297		(8,817	)		12,480		10,648
Blakewood	Garden	Oct-05	Statesboro, GA	1973		42		316		882		373		316		1,255		1,571		(1,085	)		486		698
Bolton North	High Rise	Jan-06	Baltimore, MD	1977		209		1,450		6,569		649		1,429		7,239		8,668		(2,347	)		6,321		2,438
Burchwood	Garden	Oct-07	Berea, KY	1999		24		253		1,173		551		253		1,724		1,977		(958	)		1,019		981
Butternut Creek	Mid Rise	Jan-06	Charlotte, MI	1980		100		505		3,617		3,957		505		7,574		8,079		(2,239	)		5,840		—
Cache Creek Apartment Homes	Mid Rise	Jun-04	Clearlake, CA	1986		80		1,545		9,405		494		1,545		9,899		11,444		(2,866	)		8,578		2,302
California Square I	High Rise	Jan-06	Louisville, KY	1982		101		154		5,704		523		154		6,227		6,381		(3,600	)		2,781		3,499
Canterbury Towers	High Rise	Jan-06	Worcester, MA	1976		156		567		4,557		936		567		5,493		6,060		(3,681	)		2,379		3,966
Carriage House	Mid Rise	Dec-06	Petersburg, VA	1885		118		847		2,886		3,356		716		6,373		7,089		(1,407	)		5,682		2,273
Casa de Las Hermanitas	Garden	Mar-02	Los Angeles, CA	1982		88		1,775		4,606		4,222		1,879		8,724		10,603		(1,118	)		9,485		5,081
Castlewood	Garden	Mar-02	Davenport, IA	1980		96		585		2,351		1,443		585		3,794		4,379		(1,497	)		2,882		3,503
City Line	Garden	Mar-02	Newport News, VA	1976		200		500		2,014		7,172		500		9,186		9,686		(2,046	)		7,640		4,863
Clisby Towers	Mid Rise	Jan-06	Macon, GA	1980		52		524		1,970		228		524		2,198		2,722		(1,677	)		1,045		939
Club, The	Garden	Jan-06	Lexington, NC	1972		87		498		2,128		662		498		2,790		3,288		(1,978	)		1,310		303
Coatesville Towers	High Rise	Mar-02	Coatesville, PA	1979		90		500		2,011		693		500		2,704		3,204		(866	)		2,338		2,108
Cold Spring Homes	Garden	Oct-07	Cold Springs, KY	2000		30		187		917		1,122		187		2,039		2,226		(1,441	)		785		790
Community Circle II	Garden	Jan-06	Cleveland, OH	1975		129		263		4,699		804		263		5,503		5,766		(3,265	)		2,501		3,275
Copperwood I Apartments	Garden	Apr-06	The Woodlands, TX	1980		150		390		8,373		4,862		363		13,262		13,625		(8,167	)		5,458		5,590
Copperwood II Apartments	Garden	Oct-05	The Woodlands, TX	1981		150		452		5,552		3,415		459		8,960		9,419		(3,134	)		6,285		5,773
Country Club Heights	Garden	Mar-04	Quincy, IL	1976		200		676		5,715		4,841		675		10,557		11,232		(3,837	)		7,395		7,312
Country Commons	Garden	Jan-06	Bensalem, PA	1972		352		1,853		17,657		2,308		1,853		19,965		21,818		(10,649	)		11,169		4,715
Courtyard	Mid Rise	Jan-06	Cincinnati, OH	1980		137		1,362		4,876		448		1,362		5,324		6,686		(3,126	)		3,560		3,830


							(2)				(3)
		(1)					Initial Cost				Cost Capitalized		December 31, 2009
	Property	Date		Year	Number				Buildings and		Subsequent to				Buildings and		(5)		Accumulated			Total Cost
Property Name	Type	Consolidated	Location	Built	of Units		Land		Improvements		Consolidation		Land		Improvements		Total		Depreciation (AD)			Net of AD		Encumbrances
Crevenna Oaks	Town Home	Jan-06	Burke, VA	1979		50		355		4,849		219		355		5,068		5,423		(945	)		4,478		3,312
Crockett Manor	Garden	Mar-04	Trenton, TN	1982		38		42		1,395		38		42		1,433		1,475		(37	)		1,438		978
Cumberland Court	Garden	Jan-06	Harrisburg, PA	1975		108		379		4,040		682		379		4,722		5,101		(3,282	)		1,819		1,314
Daugette Tower	High Rise	Mar-02	Gadsden, AL	1979		100		540		2,178		1,744		540		3,922		4,462		(1,324	)		3,138		117
Delhaven Manor	Mid Rise	Mar-02	Jackson, MS	1983		104		575		2,304		1,986		575		4,290		4,865		(1,621	)		3,244		3,758
Denny Place	Garden	Mar-02	North Hollywood, CA	1984		17		394		1,579		139		394		1,718		2,112		(479	)		1,633		1,121
Douglas Landing	Garden	Oct-07	Austin, TX	1999		96		11		4,989		22		11		5,011		5,022		—			5,022		4,000
Elmwood	Garden	Jan-06	Athens, AL	1981		80		346		2,643		346		346		2,989		3,335		(1,673	)		1,662		1,869
Fairburn And Gordon II	Garden	Jan-06	Atlanta, GA	1969		58		439		1,647		231		439		1,878		2,317		(1,469	)		848		98
Fairwood	Garden	Jan-06	Carmichael, CA	1979		86		176		5,264		379		176		5,643		5,819		(3,523	)		2,296		2,475
Fountain Place	Mid Rise	Jan-06	Connersville, IN	1980		102		440		2,091		2,883		447		4,967		5,414		(511	)		4,903		1,155
Fox Run	Garden	Mar-02	Orange, TX	1983		70		420		1,992		1,026		420		3,018		3,438		(928	)		2,510		2,563
Foxfire	Garden	Jan-06	Jackson, MI	1975		160		856		6,853		1,423		856		8,276		9,132		(5,247	)		3,885		1,803
Franklin Square School Apts	Mid Rise	Jan-06	Baltimore, MD	1888		65		566		3,581		216		566		3,797		4,363		(2,153	)		2,210		2,099
Friendset Apartments	High Rise	Jan-06	Brooklyn, NY	1979		259		550		16,825		1,737		550		18,562		19,112		(10,414	)		8,698		14,404
Frio	Garden	Jan-06	Pearsall, TX	1980		63		327		2,207		407		327		2,614		2,941		(1,728	)		1,213		1,109
Gates Manor	Garden	Mar-04	Clinton, TN	1981		80		266		2,225		881		264		3,108		3,372		(1,195	)		2,177		2,411
Gateway Village	Garden	Mar-04	Hillsborough, NC	1980		64		433		1,666		580		515		2,164		2,679		(746	)		1,933		2,360
Glens, The	Garden	Jan-06	Rock Hill, SC	1982		88		839		4,135		1,140		839		5,275		6,114		(3,627	)		2,487		3,757
Greenbriar	Garden	Jan-06	Indianapolis, IN	1980		121		812		3,272		346		812		3,618		4,430		(2,491	)		1,939		1,098
Hamlin Estates	Garden	Mar-02	North Hollywood, CA	1983		30		1,010		1,691		241		1,010		1,932		2,942		(678	)		2,264		1,515
Hanover Square	High Rise	Jan-06	Baltimore, MD	1980		199		1,656		9,575		425		1,656		10,000		11,656		(6,267	)		5,389		5,495
Harris Park Apartments	Garden	Dec-97	Rochester, NY	1968		114		475		2,786		1,101		475		3,887		4,362		(1,824	)		2,538		200
Hatillo Housing	Mid Rise	Jan-06	Hatillo, PR	1982		64		202		2,875		204		202		3,079		3,281		(1,820	)		1,461		1,370
Hemet Estates	Garden	Mar-02	Hemet, CA	1983		80		700		2,802		2,995		420		6,077		6,497		(1,138	)		5,359		4,316
Henna Townhomes	Garden	Oct-07	Round Rock, TX	1999		160		1,047		12,893		84		1,047		12,977		14,024		(2,641	)		11,383		6,172
Heritage House	Mid Rise	Jan-06	Lewisburg, PA	1982		80		178		3,251		131		178		3,382		3,560		(2,034	)		1,526		2,106
Hopkins Village	Mid Rise	Sep-03	Baltimore, MD	1979		165		438		5,973		3,680		452		9,639		10,091		(1,192	)		8,899		9,100
Hudson Gardens	Garden	Mar-02	Pasadena, CA	1983		41		914		1,548		335		914		1,883		2,797		(644	)		2,153		539
Indio Gardens	Mid Rise	Oct-06	Indio, CA	1980		151		775		8,759		4,155		775		12,914		13,689		(1,213	)		12,476		4,173
Ingram Square	Garden	Jan-06	San Antonio, TX	1980		120		630		3,137		5,716		630		8,853		9,483		(1,338	)		8,145		3,825
Jenny Lind Hall	High Rise	Mar-04	Springfield, MO	1977		78		142		3,684		260		142		3,944		4,086		(358	)		3,728		942
JFK Towers	Mid Rise	Jan-06	Durham, NC	1983		177		750		7,970		773		750		8,743		9,493		(4,678	)		4,815		5,796
Kephart Plaza	High Rise	Jan-06	Lock Haven, PA	1978		101		609		3,796		462		609		4,258		4,867		(2,987	)		1,880		1,488
King Bell Apartments	Garden	Jan-06	Milwaukie, OR	1982		62		204		2,497		193		204		2,690		2,894		(1,451	)		1,443		1,631
Kirkwood House	High Rise	Sep-04	Baltimore, MD	1979		261		1,281		9,358		6,398		1,275		15,762		17,037		(1,929	)		15,108		16,000
Kubasek Trinity Manor (The Hollows)	High Rise	Jan-06	Yonkers, NY	1981		130		54		8,308		1,788		54		10,096		10,150		(5,033	)		5,117		4,749
La Salle	Garden	Oct-00	San Francisco, CA	1976		145		1,841		19,568		16,650		1,866		36,193		38,059		(12,408	)		25,651		15,992
La Vista	Garden	Jan-06	Concord, CA	1981		75		565		4,448		4,223		581		8,655		9,236		(909	)		8,327		5,499
Lafayette Square	Garden	Jan-06	Camden, SC	1978		72		142		1,875		79		142		1,954		2,096		(1,629	)		467		270
Lakeview Arms	Mid Rise	Jan-06	Poughkeepsie, NY	1981		72		111		3,256		288		111		3,544		3,655		(2,182	)		1,473		1,790
Landau	Garden	Oct-05	Clinton, SC	1970		80		1,293		1,429		246		1,293		1,675		2,968		(1,675	)		1,293		283
Laurelwood	Garden	Jan-06	Morristown, TN	1981		65		75		1,870		179		75		2,049		2,124		(1,275	)		849		1,320
Lock Haven Gardens	Garden	Jan-06	Lock Haven, PA	1979		150		1,163		6,045		606		1,163		6,651		7,814		(4,643	)		3,171		2,860
Locust House	High Rise	Mar-02	Westminster, MD	1979		99		650		2,604		786		650		3,390		4,040		(1,123	)		2,917		2,264
Long Meadow	Garden	Jan-06	Cheraw, SC	1973		56		158		1,342		174		158		1,516		1,674		(1,168	)		506		198
Loring Towers	High Rise	Oct-02	Minneapolis, MN	1975		230		1,297		7,445		7,587		886		15,443		16,329		(4,248	)		12,081		7,387
Loring Towers Apartments	High Rise	Sep-03	Salem, MA	1973		250		129		14,050		6,414		140		20,453		20,593		(3,664	)		16,929		16,177
Lynnhaven	Garden	Mar-04	Durham, NC	1980		75		539		2,159		793		563		2,928		3,491		(652	)		2,839		2,787
Michigan Beach	Garden	Oct-07	Chicago, IL	1958		239		2,225		10,797		757		2,225		11,554		13,779		(3,296	)		10,483		5,510
Mill Pond	Mid Rise	Jan-06	Taunton, MA	1982		49		80		2,704		311		80		3,015		3,095		(1,655	)		1,440		1,301
Miramar Housing	High Rise	Jan-06	Ponce, PR	1983		96		367		5,085		194		367		5,279		5,646		(2,946	)		2,700		2,869
Montblanc Gardens	Town Home	Dec-03	Yauco, PR	1982		128		391		3,859		959		391		4,818		5,209		(2,469	)		2,740		3,282
Moss Gardens	Mid Rise	Jan-06	Lafayette, LA	1980		114		524		3,818		257		524		4,075		4,599		(3,058	)		1,541		1,991
New Baltimore	Mid Rise	Mar-02	New Baltimore, MI	1980		101		888		2,360		5,154		896		7,506		8,402		(1,459	)		6,943		2,213
Newberry Park	Garden	Dec-97	Chicago, IL	1985		82		1,380		7,632		459		1,380		8,091		9,471		(2,739	)		6,732		7,399
Northlake Village	Garden	Oct-00	Lima, OH	1971		150		487		1,317		1,791		487		3,108		3,595		(1,736	)		1,859		608
Northpoint	Garden	Jan-00	Chicago, IL	1921		304		2,280		14,334		16,403		2,510		30,507		33,017		(14,624	)		18,393		19,556
Northwinds, The	Garden	Mar-02	Wytheville, VA	1978		144		500		2,012		525		500		2,537		3,037		(1,339	)		1,698		1,599
Oakbrook	Garden	Jan-08	Topeka, KS	1979		170		240		6,200		7		240		6,207		6,447		(2,773	)		3,674		2,770
Oakwood Manor	Garden	Mar-04	Milan, TN	1984		34		95		498		27		95		525		620		(96	)		524		433
O’Neil	High Rise	Jan-06	Troy, NY	1978		115		88		4,067		791		88		4,858		4,946		(3,278	)		1,668		1,353
Orange Village	Garden	Jan-06	Hermitage, PA	1979		81		79		3,406		436		79		3,842		3,921		(2,361	)		1,560		1,833
Overbrook Park	Garden	Jan-06	Chillicothe, OH	1981		50		136		2,282		198		136		2,480		2,616		(1,377	)		1,239		1,447
Oxford House	Mid Rise	Mar-02	Deactur, IL	1979		156		993		4,164		451		993		4,615		5,608		(1,932	)		3,676		2,910
Palm Springs Senior	Garden	Mar-02	Palm Springs, CA	1981		116		—		8,745		3,657		—		12,402		12,402		(1,782	)		10,620		6,902
Panorama Park	Garden	Mar-02	Bakersfield, CA	1982		66		621		5,520		893		619		6,415		7,034		(1,254	)		5,780		2,331


							(2)				(3)
		(1)					Initial Cost				Cost Capitalized		December 31, 2009
	Property	Date		Year	Number				Buildings and		Subsequent to				Buildings and		(5)		Accumulated			Total Cost
Property Name	Type	Consolidated	Location	Built	of Units		Land		Improvements		Consolidation		Land		Improvements		Total		Depreciation (AD)			Net of AD		Encumbrances
Parc Chateau I	Garden	Jan-06	Lithonia, GA	1973		86		592		1,442		324		592		1,766		2,358		(1,744	)		614		434
Parc Chateau II	Garden	Jan-06	Lithonia, GA	1974		88		596		2,965		284		596		3,249		3,845		(2,522	)		1,323		437
Park — Joplin Apartments	Garden	Oct-07	Joplin, MO	1974		192		996		8,847		2		996		8,849		9,845		(2,816	)		7,029		3,395
Park Place	Mid Rise	Jun-05	St Louis, MO	1977		242		742		6,327		9,758		705		16,122		16,827		(8,022	)		8,805		9,572
Park Vista	Garden	Oct-05	Anaheim, CA	1958		392		6,155		25,929		4,463		6,155		30,392		36,547		(6,356	)		30,191		37,757
Parkview	Garden	Mar-02	Sacramento, CA	1980		97		1,041		2,880		7,019		1,145		9,795		10,940		(1,456	)		9,484		6,198
Parkways, The	Garden	Jun-04	Chicago, IL	1925		446		3,684		23,257		17,401		3,427		40,915		44,342		(12,211	)		32,131		21,927
Patman Switch	Garden	Jan-06	Hughes Springs, TX	1978		82		727		1,382		604		727		1,986		2,713		(1,532	)		1,181		1,229
Pavilion	High Rise	Mar-04	Philadelphia, PA	1976		296		—		15,416		1,265		—		16,681		16,681		(4,111	)		12,570		9,230
Peachwood Place	Garden	Oct-07	Waycross, GA	1999		72		163		2,254		—		163		2,254		2,417		(1,317	)		1,100		737
Pinebluff Village	Mid Rise	Jan-06	Salisbury, MD	1980		151		1,112		7,177		685		1,112		7,862		8,974		(5,627	)		3,347		2,050
Pinewood Place	Garden	Mar-02	Toledo, OH	1979		99		420		1,698		1,234		420		2,932		3,352		(1,229	)		2,123		2,001
Pleasant Hills	Garden	Apr-05	Austin, TX	1982		100		1,188		2,631		3,502		1,229		6,092		7,321		(1,810	)		5,511		3,206
Plummer Village	Mid Rise	Mar-02	North Hills, CA	1983		75		624		2,647		1,613		667		4,217		4,884		(1,670	)		3,214		2,598
Portner Place	Town Home	Jan-06	Washington, DC	1980		48		697		3,753		92		697		3,845		4,542		(287	)		4,255		6,428
Post Street Apartments	High Rise	Jan-06	Yonkers, NY	1930		56		148		3,315		415		148		3,730		3,878		(2,297	)		1,581		1,599
Pride Gardens	Garden	Dec-97	Flora, MS	1975		76		102		1,071		1,628		102		2,699		2,801		(1,454	)		1,347		1,079
Rancho California	Garden	Jan-06	Temecula, CA	1984		55		488		5,462		256		488		5,718		6,206		(2,797	)		3,409		4,536
Ridgewood (La Loma)	Garden	Mar-02	Sacramento, CA	1980		75		684		227		7,367		718		7,560		8,278		(910	)		7,368		4,650
Ridgewood Towers	High Rise	Mar-02	East Moline, IL	1977		140		698		2,803		755		698		3,558		4,256		(1,296	)		2,960		1,552
River Village	High Rise	Jan-06	Flint, MI	1980		340		1,756		13,877		1,484		1,756		15,361		17,117		(10,068	)		7,049		7,370
River’s Edge	Town Home	Jan-06	Greenville, MI	1983		49		311		2,097		283		311		2,380		2,691		(1,643	)		1,048		664
Riverwoods	High Rise	Jan-06	Kankakee, IL	1983		125		590		4,932		3,454		598		8,378		8,976		(1,234	)		7,742		5,077
Rosedale Court Apartments	Garden	Mar-04	Dawson Springs, KY	1981		40		194		1,177		180		194		1,357		1,551		(548	)		1,003		876
Round Barn	Garden	Mar-02	Champaign, IL	1979		156		947		5,134		5,729		934		10,876		11,810		(2,312	)		9,498		5,220
Rutherford Park	Town Home	Jan-06	Hummelstown, PA	1981		85		376		4,814		312		376		5,126		5,502		(3,005	)		2,497		2,841
San Jose Apartments	Garden	Sep-05	San Antonio, TX	1970		220		404		5,770		11,373		234		17,313		17,547		(3,275	)		14,272		5,271
San Juan Del Centro	Mid Rise	Sep-05	Boulder, CO	1971		150		243		7,110		12,551		438		19,466		19,904		(3,729	)		16,175		11,652
Sandy Hill Terrace	High Rise	Mar-02	Norristown, PA	1980		174		1,650		6,599		2,783		1,650		9,382		11,032		(3,011	)		8,021		3,598
Sandy Springs	Garden	Mar-05	Macon, GA	1979		74		366		1,522		1,403		366		2,925		3,291		(1,703	)		1,588		1,915
School Street	Mid Rise	Jan-06	Taunton, MA	1920		75		219		4,335		645		219		4,980		5,199		(2,742	)		2,457		2,625
Sherman Hills	High Rise	Jan-06	Wilkes-Barre, PA	1976		344		2,039		15,549		1,334		2,039		16,883		18,922		(13,422	)		5,500		3,028
Shoreview	Garden	Oct-99	San Francisco, CA	1976		156		1,498		19,071		18,283		1,476		37,376		38,852		(13,248	)		25,604		17,278
South Bay Villa	Garden	Mar-02	Los Angeles, CA	1981		80		663		2,770		4,354		1,352		6,435		7,787		(3,290	)		4,497		3,063
Springfield Villas	Garden	Oct-07	Lockhart, TX	1999		32		—		1,153		9		—		1,162		1,162		—			1,162		855
St. George Villas	Garden	Jan-06	St. George, SC	1984		40		86		1,025		95		86		1,120		1,206		(787	)		419		503
Sterling Village	Town Home	Mar-02	San Bernadino, CA	1983		80		549		3,459		2,722		188		6,542		6,730		(1,470	)		5,260		4,497
Stonegate Apts	Mid Rise	Jul-09	Indianapolis, IN	1920		52		255		3,610		6		255		3,616		3,871		(733	)		3,138		1,918
Sumler Terrace	Garden	Jan-06	Norfolk, VA	1976		126		215		4,400		503		215		4,903		5,118		(3,643	)		1,475		1,303
Summit Oaks	Town Home	Jan-06	Burke, VA	1980		50		382		4,930		288		382		5,218		5,600		(1,103	)		4,497		3,303
Suntree	Garden	Jan-06	St. Johns, MI	1980		121		403		6,488		658		403		7,146		7,549		(4,472	)		3,077		966
Tabor Towers	Mid Rise	Jan-06	Lewisburg, WV	1979		84		163		3,360		236		163		3,596		3,759		(2,136	)		1,623		1,934
Tamarac Apartments I	Garden	Nov-04	Woodlands, TX	1980		144		140		2,775		3,613		363		6,165		6,528		(2,071	)		4,457		4,188
Tamarac Apartments II	Garden	Nov-04	Woodlands, TX	1980		156		142		3,195		4,048		266		7,119		7,385		(2,349	)		5,036		4,537
Terraces	Mid Rise	Jan-06	Kettering, OH	1979		102		1,561		2,815		634		1,561		3,449		5,010		(2,493	)		2,517		2,483
Terry Manor	Mid Rise	Oct-05	Los Angeles, CA	1977		170		1,775		5,848		6,648		1,997		12,274		14,271		(4,379	)		9,892		6,961
Tompkins Terrace	Garden	Oct-02	Beacon, NY	1974		193		872		6,827		12,128		872		18,955		19,827		(3,124	)		16,703		8,536
Trestletree Village	Garden	Mar-02	Atlanta, GA	1981		188		1,150		4,655		1,500		1,150		6,155		7,305		(2,119	)		5,186		2,856
University Square	High Rise	Mar-05	Philadelphia, PA	1978		442		702		12,201		12,209		702		24,410		25,112		(8,361	)		16,751		13,634
Van Nuys Apartments	High Rise	Mar-02	Los Angeles, CA	1981		299		4,253		21,226		19,594		4,219		40,854		45,073		(5,581	)		39,492		20,870
Victory Square	Garden	Mar-02	Canton, OH	1975		81		215		889		550		215		1,439		1,654		(633	)		1,021		850
Village Oaks	Mid Rise	Jan-06	Catonsville, MD	1980		181		2,127		5,188		1,775		2,127		6,963		9,090		(4,748	)		4,342		4,479
Village of Kaufman	Garden	Mar-05	Kaufman, TX	1981		68		370		1,606		628		370		2,234		2,604		(747	)		1,857		1,851
Vintage Crossing	Town Home	Mar-04	Cuthbert, GA	1982		50		188		1,058		553		188		1,611		1,799		(917	)		882		1,639
Vista Park Chino	Garden	Mar-02	Chino, CA	1983		40		380		1,521		388		380		1,909		2,289		(693	)		1,596		1,446
Vistula Heritage Village	Garden	Oct-08	Toledo, OH	1930		250		1,312		20,635		—		1,312		20,635		21,947		(8,119	)		13,828		12,716
Wah Luck House	High Rise	Jan-06	Washington, DC	1982		153		—		8,690		476		—		9,166		9,166		(2,407	)		6,759		9,147
Walnut Hills	High Rise	Jan-06	Cincinnati, OH	1983		198		888		5,608		5,114		826		10,784		11,610		(1,788	)		9,822		5,645
Wasco Arms	Garden	Mar-02	Wasco, CA	1982		78		625		2,519		1,025		625		3,544		4,169		(1,368	)		2,801		3,109
Washington Square West	Mid Rise	Sep-04	Philadelphia, PA	1982		132		555		11,169		5,854		582		16,996		17,578		(7,665	)		9,913		3,888
Westwood Terrace	Mid Rise	Mar-02	Moline, IL	1976		97		720		3,242		586		720		3,828		4,548		(1,237	)		3,311		1,652
White Cliff	Garden	Mar-02	Lincoln Heights, OH	1977		72		215		938		419		215		1,357		1,572		(567	)		1,005		1,003
Whitefield Place	Garden	Apr-05	San Antonio, TX	1980		80		223		3,151		2,550		219		5,705		5,924		(2,054	)		3,870		2,260
Wickford	Garden	Mar-04	Henderson, NC	1983		44		247		946		123		247		1,069		1,316		(436	)		880		1,423
Wilderness Trail	High Rise	Mar-02	Pineville, KY	1983		124		1,010		4,048		674		1,010		4,722		5,732		(1,223	)		4,509		4,478
Wilkes Towers	High Rise	Mar-02	North Wilkesboro, NC	1981		72		410		1,680		494		410		2,174		2,584		(723	)		1,861		1,875
Willow Wood	Garden	Mar-02	North Hollywood, CA	1984		19		1,051		840		193		1,051		1,033		2,084		(308	)		1,776		1,068


							(2)				(3)
		(1)					Initial Cost				Cost Capitalized		December 31, 2009
	Property	Date		Year	Number				Buildings and		Subsequent to				Buildings and		(5)		Accumulated			Total Cost
Property Name	Type	Consolidated	Location	Built	of Units		Land		Improvements		Consolidation		Land		Improvements		Total		Depreciation (AD)			Net of AD		Encumbrances
Winnsboro Arms	Garden	Jan-06	Winnsboro, SC	1978		60		272		1,697		253		272		1,950		2,222		(1,508	)		714		182
Winter Gardens	High Rise	Mar-04	St Louis, MO	1920		112		300		3,072		4,448		300		7,520		7,820		(1,334	)		6,486		3,796
Woodcrest	Garden	Dec-97	Odessa, TX	1972		80		41		229		674		41		903		944		(708	)		236		443
Woodland	Garden	Jan-06	Spartanburg, SC	1972		100		182		663		1,379		182		2,042		2,224		(491	)		1,733		—
Woodland Hills	Garden	Oct-05	Jackson, MI	1980		125		541		3,875		4,266		321		8,361		8,682		(2,727	)		5,955		3,644

Total Affordable Properties:						20,845		119,679		881,432		442,857		118,882		1,325,086		1,443,968		(484,724	)		959,244		706,666


Other (4)						—		74		2,470		2,465		2,107		2,903		5,010		(2,490	)		2,520		—


Total Continuing Operations						90,222		2,090,713		4,702,013		2,597,713		2,148,389		7,242,051		9,390,440		(2,594,544	)		6,795,896		5,398,091


Discontinued Operations:
Conventional Properties:
Atriums of Plantation	Mid Rise	Aug-98	Plantation, FL	1979		210		1,807		10,385		2,833		1,807		13,218		15,025		(5,151	)		9,874		5,780
Citrus Grove	Garden	Jun-98	Redlands, CA	1985		198		1,118		6,642		2,186		1,118		8,828		9,946		(3,983	)		5,963		3,261
Defoors Crossing	Garden	Jan-06	Atlanta, GA	1987		60		348		957		392		348		1,349		1,697		(1,213	)		484		—
Fairway	Garden	Jan-00	Plano, TX	1978		256		2,961		5,137		5,788		2,961		10,925		13,886		(5,794	)		8,092		8,885
Glenbridge Manors	Garden	Sep-03	Cincinnati, OH	1978		274		1,030		17,447		14,108		1,031		31,554		32,585		(7,012	)		25,573		16,820
Highland Ridge	Garden	Sep-04	Atlanta, GA	1984		219		1,225		6,174		5,145		1,242		11,302		12,544		(4,605	)		7,939		6,100
Homestead	Garden	Apr-05	East Lansing, MI	1986		168		1,565		8,200		761		1,566		8,960		10,526		(3,878	)		6,648		3,372
Sandpiper Cove	Garden	Dec-97	Boynton Beach, FL	1987		416		3,511		21,396		7,141		3,511		28,537		32,048		(11,039	)		21,009		29,425
Sienna Bay	Garden	Apr-00	St. Petersburg, FL	1984		276		1,737		9,778		10,702		1,737		20,480		22,217		(10,277	)		11,940		10,630
Solana Vista	Garden	Dec-97	Bradenton, FL	1984		200		1,276		7,170		6,872		1,276		14,042		15,318		(5,449	)		9,869		7,865
Stoney Brook	Garden	Nov-96	Houston, TX	1972		113		275		1,865		1,931		275		3,796		4,071		(1,215	)		2,856		1,797
Summit Creek	Garden	May-98	Austin, TX	1985		164		1,211		6,037		2,591		1,211		8,628		9,839		(3,285	)		6,554		5,670
Talbot Woods	Garden	Sep-04	Middleboro, MA	1972		121		5,852		4,719		2,026		5,852		6,745		12,597		(2,150	)		10,447		6,203
Tar River Estates	Garden	Oct-99	Greenville, NC	1969		220		1,558		14,298		3,740		1,558		18,038		19,596		(7,601	)		11,995		3,960
Tierra Palms	Garden	Jan-06	Norwalk, CA	1970		144		6,441		6,807		609		6,441		7,416		13,857		(855	)		13,002		10,777
Village Green	Garden	Oct-02	Altamonte Springs, FL	1970		164		608		6,618		2,514		608		9,132		9,740		(4,386	)		5,354		6,510
Wilson Acres	Garden	Apr-06	Greenville, NC	1979		146		1,175		3,943		962		1,485		4,595		6,080		(866	)		5,214		2,743

Total Conventional Properties:						3,349		33,698		137,573		70,301		34,027		207,545		241,572		(78,759	)		162,813		129,800

Affordable Properties:
Baldwin Oaks	Mid Rise	Oct-99	Parsippany ,NJ	1980		251		746		8,516		1,998		746		10,514		11,260		(6,245	)		5,015		12,972
Baldwin Towers	High Rise	Jan-06	Pittsburgh, PA	1983		99		398		5,256		202		398		5,458		5,856		(4,002	)		1,854		1,458
Bloomsburg Towers	Mid Rise	Jan-06	Bloomsburg, PA	1981		75		1		4,128		351		1		4,479		4,480		(2,761	)		1,719		1,553
Campbell Heights	High Rise	Oct-02	Washington, D.C.	1978		171		750		6,719		859		750		7,578		8,328		(3,062	)		5,266		15,449
Cherry Ridge Terrace	Garden	Mar-02	Northern Cambria, PA	1983		62		372		1,490		906		372		2,396		2,768		(852	)		1,916		795
Hillside Village	Town Home	Jan-06	Catawissa, PA	1981		50		31		2,643		186		31		2,829		2,860		(1,795	)		1,065		1,089
Hilltop	Garden	Jan-06	Duquesne, PA	1975		152		1,271		6,194		722		1,271		6,916		8,187		(5,198	)		2,989		2,110
Hudson Terrace	Garden	Jan-06	Hudson, NY	1973		168		647		5,025		584		647		5,609		6,256		(3,813	)		2,443		1,044
Lodge Run	Mid Rise	Jan-06	Portage, PA	1983		31		274		1,211		377		274		1,588		1,862		(1,259	)		603		363
Morrisania II	High Rise	Jan-06	Bronx, NY	1979		203		659		15,783		1,710		659		17,493		18,152		(10,840	)		7,312		8,144
New Vistas I	Garden	Jan-06	Chicago, IL	1925		148		1,448		6,121		380		1,448		6,501		7,949		(5,577	)		2,372		1,386
Oxford Terrace IV	Town Home	Oct-07	Indianapolis, IN	1994		48		247		1,410		607		247		2,017		2,264		(1,057	)		1,207		1,261
Spring Manor	Mid Rise	Jan-06	Holidaysburg, PA	1983		51		608		2,083		425		608		2,508		3,116		(2,168	)		948		631
Stonegate Village	Garden	Oct-00	New Castle, IN	1970		122		313		1,895		1,342		308		3,242		3,550		(1,344	)		2,206		284

Total Affrodable Properties:						1,631		7,765		68,474		10,649		7,760		79,128		86,888		(49,973	)		36,915		48,539


Other (4)						—		—		—		78		1		77		78		(63	)		15		—


Total Discontinued Operations						4,980		41,463		206,047		81,028		41,788		286,750		328,538		(128,795	)		199,743		178,339


Total Continuing and Discontinued Operations						95,202		2,132,176		4,908,060		2,678,741		2,190,177		7,528,801		9,718,978		(2,723,339	)		6,995,639		5,576,430


(1)		Date we acquired the property or first consolidated the partnership which owns the property.

(2)		Initial cost includes the tendering costs to acquire the noncontrolling interest share of our consolidated real estate partnerships.

(3)		Costs capitalized subsequent to consolidation includes costs capitalized since acquisition or first consolidation of the partnership/property.

(4)		Other includes land parcels, commercial properties and other related costs.

(5)		The aggregate cost of land and depreciable propertyfor federal income tax purposes was approximately $8.0 billion at December 31, 2009.


DELAWARE	0-24497	84-1275621

(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)


4582 SOUTH ULSTER STREET PARKWAY SUITE 1100, DENVER, CO		80237

(Address of principal executive offices)		(Zip Code)

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

o		Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

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

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


Exhibit Number		Description

23.1		Consent of Independent Registered Public Accounting Firm
99.1		Form 10-K, Item 6. Selected Financial Data
		Form 10-K, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
		Form 10-K, Item 8. Financial Statements and Supplementary Data


	AIMCO PROPERTIES, L.P.
	By:	AIMCO-GP, Inc., its General Partner

	/s/ Ernest M. Freedman
	Ernest M. Freedman
	Executive Vice President and Chief Financial Officer

	/s/ Paul Beldin
	Paul Beldin
	Senior Vice President and Chief Accounting Officer


Item 8.		*Financial Statements and Supplementary Data*


	Page
Financial Statements:
Report of Independent Registered Public Accounting Firm		22
Consolidated Balance Sheets as of December 31, 2009 and 2008		23
Consolidated Statements of Income for the Years Ended December 31, 2009, 2008 (as restated) and		24
2007
Consolidated Statements of Partners’ Capital for the Years Ended December 31, 2009, 2008 and 2007		25
Consolidated Statements of Cash Flows for the Years Ended December 31, 2009, 2008 and 2007		27
Notes to Consolidated Financial Statements		29

Financial Statement Schedule:
Schedule III — Real Estate and Accumulated Depreciation		72

All other schedules are omitted because they are not applicable or the required information is shown in the financial statements or notes thereto.


(1)		Includes the effect of newly consolidated assets, acquisition of limited partnership interests and related activity.

(2)		Casualty and other write-offs in 2008 include impairments totaling $91.1 million related to our Lincoln Place and Pacific Bay Vistas properties.