SC TO-T

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

SCHEDULE TO

(Rule 14d-100)

TENDER OFFER STATEMENT UNDER SECTION 14(d)(1) OR 13(e)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934

Springhill Lake Investors Limited Partnership

(Name of Subject Company (Issuer))

AIMCO Properties, L.P.
Apartment Investment and Management Company

AIMCO-GP, Inc.

AIMCO/Springhill Lake Investors GP, LLC

(Names of Filing Persons (Offerors))

Limited Partnership Units

(Title of Class of Securities)

None

(CUSIP Number of Class of Securities)

Martha L. Long
Apartment Investment and Management Company
55 Beattie Place
PO Box 1089
Greenville, South Carolina 29602
(864) 239-1000

(Name, Address, and Telephone Numbers of Person
Authorized to Receive Notices and Communications on Behalf of Filing Persons)

Copy to:

Jonathan L. Friedman, Esq.
Skadden, Arps, Slate, Meagher & Flom LLP
300 South Grand Avenue
Los Angeles, California 90071
(213) 687-5000

Calculation of Filing Fee

Transaction Valuation*	Amount of Filing Fee
$15,403,581	$472.89

* For purposes of calculating the fee only. This amount assumes the purchase of 126.35 units of limited partnership interest of the subject partnership for $121,912 per unit. Based on the current fee rate of $30.70 per million, the fee is $472.89.

o Check the box if any part of the fee is offset as provided by Rule 0-11(a)(2) and identify the filing with which the offsetting fee was      previously paid. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

Amount Previously Paid:	Filing Party:
Form or Registration No.:	Date Filed:

o Check the box if the filing relates solely to preliminary communications made before the commencement of a tender offer.

Check the appropriate boxes below to designate any transactions to which the statement relates:

þ third-party tender offer subject to Rule 14d-1

o issuer tender offer subject to Rule 13e-4

þ going-private transaction subject to Rule 13e-3

o amendment to Schedule 13D under Rule 13d-2

Check the following box if the filing is a final amendment reporting the results of the tender offer: o

TABLE OF CONTENTS

	ITEM 1. SUMMARY TERM SHEET.
	ITEM 2. SUBJECT COMPANY INFORMATION.
	ITEM 3. IDENTITY AND BACKGROUND OF FILING PERSON.
	ITEM 4. TERMS OF THE TRANSACTION
	ITEM 5. PAST CONTACTS, TRANSACTIONS, NEGOTIATIONS AND AGREEMENTS
	ITEM 6. PURPOSES OF THE TRANSACTION AND PLANS OR PROPOSALS
	ITEM 7. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
	ITEM 8. INTEREST IN SECURITIES OF THE SUBJECT COMPANY
	ITEM 9. PERSONS/ASSETS, RETAINED, EMPLOYED, COMPENSATED OR USED
	ITEM 10. FINANCIAL STATEMENTS
	ITEM 11. ADDITIONAL INFORMATION
	ITEM 12. EXHIBITS
	ITEM 13. INFORMATION REQUIRED BY SCHEDULE 13E-3
	ITEM 2. SUBJECT COMPANY INFORMATION
	ITEM 4. TERMS OF THE TRANSACTION
	ITEM 5. PAST CONTACTS, TRANSACTIONS, NEGOTIATIONS AND AGREEMENTS
	ITEM 6. PURPOSES OF THE TRANSACTION AND PLANS OR PROPOSALS
	ITEM 7. PURPOSES, ALTERNATIVES, REASONS AND EFFECTS
	ITEM 8. FAIRNESS OF THE TRANSACTION
	ITEM 9. REPORTS, OPINIONS, APPRAISALS AND NEGOTIATIONS
	ITEM 10. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
	ITEM 12. THE SOLICITATION OR RECOMMENDATION
	ITEM 13. FINANCIAL STATEMENTS
	ITEM 14. PERSONS/ASSETS, RETAINED, EMPLOYED, COMPENSATED OR USED
	ITEM 15. ADDITIONAL INFORMATION
	ITEM 16. EXHIBITS
SIGNATURE
EXHIBIT INDEX
Offer to Purchase
Letter of Transmittal and Related Instructions
Letter
Appraisal

SCHEDULE TO

     This Tender Offer Statement and Rule 13e-3 Transaction Statement on Schedule TO (the “Schedule TO”) relates to the offer by AIMCO Properties, L.P., a Delaware limited partnership, to purchase units of limited partnership interest (“Units”) of Springhill Lake Investors Limited Partnership, a Maryland limited partnership (the “Partnership”), at a price of $121,912 per unit in cash, subject to the conditions set forth in the Offer to Purchase dated March 12, 2007 (the “Offer to Purchase”) and in the related Letter of Transmittal (the “Letter of Transmittal” and, together with the Offer to Purchase, as each may be supplemented or amended from time to time, the “Offer”). Copies of the Offer to Purchase and the Letter of Transmittal are filed with the Schedule TO as Exhibits (a)(1) and (a)(2), respectively. The item numbers and responses thereto below are in accordance with the requirements of Schedule TO. Unless defined herein, capitalized terms used and not otherwise defined herein have the respective meanings ascribed to such terms in the Offer to Purchase.

ITEM 1. SUMMARY TERM SHEET.

     The information set forth under “Summary Term Sheet” in the Offer to Purchase is incorporated herein by reference.

ITEM 2. SUBJECT COMPANY INFORMATION.

     (a) The information set forth under “The Offer - Section 7. Certain Information Concerning Your Partnership” in the Offer to Purchase is incorporated herein by reference. The Partnership’s principal executive offices are located at 55 Beattie Place, P.O. Box 1089, Greenville, South Carolina 29602, and its phone number is (864) 239-1000.

     (b) This Schedule TO relates to the units of limited partnership interest of Springhill Lake Investors Limited Partnership, of which 649 units were issued and outstanding as of December 31, 2006.

     (c) Not applicable.

ITEM 3. IDENTITY AND BACKGROUND OF FILING PERSON.

     (a)-(c) This Schedule TO is being filed by Apartment Investment and Management Company, a Maryland corporation (“Aimco”), AIM CO Properties, L.P., a Delaware limited partnership (“Aimco OP”), AIMCO-GP, Inc., a Delaware corporation (“Aimco-GP”), and AIMCO/Springhill Lake Investors GP, LLC, a Delaware limited liability company (“Springhill Lake GP”). Aimco-GP is the general partner of Aimco OP and a wholly owned subsidiary of Aimco. Springhill Lake GP is the managing general partner of the Partnership and is a wholly owned subsidiary of Aimco. The principal business of Aimco, Aimco-GP, and Aimco OP is the ownership, acquisition, development, expansion and management of multi-family apartment properties. The principal business of Springhill Lake GP is managing the affairs of the Partnership. The business address of Aimco, Aimco-GP and Aimco OP is 4582 South Ulster Street Parkway, Suite 1100, Denver, Colorado 80237, and their telephone number is (303) 757-8101. The principal address of Springhill Lake GP is 55 Beattie Place, P.O. Box 1089, Greenville, South Carolina 29602, and its phone number is (864) 239-1000.

     The information set forth under “The Offer - Section 6. Information Concerning Us and Certain of Our Affiliates” and Annex I of the Offer to Purchase is incorporated herein by reference.

     During the last five years, none of Aimco, Aimco-GP, Aimco OP or Springhill Lake GP nor, to the best of their knowledge, any of the persons listed in Annex I to the Offer to Purchase (i) has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or (ii) was a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining further violations of or prohibiting activities subject to federal or state securities laws or finding any violation with respect to such laws.

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ITEM 4. TERMS OF THE TRANSACTION.

     (a) The information set forth in the Offer to Purchase and in the related Letter of Transmittal is incorporated herein by reference.

ITEM 5. PAST CONTACTS, TRANSACTIONS, NEGOTIATIONS AND AGREEMENTS.

     (a) and (b) The information set forth under “Special Factors – Valuation of Units – Prior Tender Offers and Private Purchases,” “– Background and Reasons for the Offer” and “– Conflicts of Interest and Transactions with Affiliates” in the Offer to Purchase is incorporated herein by reference.

ITEM 6. PURPOSES OF THE TRANSACTION AND PLANS OR PROPOSALS.

     (a), (c)(1)-(7) The information set forth under “ Special Factors – Effects of the Offer,” “– Background and Reasons for the Offer” and “– Future Plans and Proposals” in the Offer to Purchase is incorporated herein by reference.

ITEM 7. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.

     (a), (b) and (d) The information set forth under “The Offer – Section 9. Source of Funds” and “– Section 13. Fees and Expenses” in the Offer to Purchase is incorporated herein by reference.

ITEM 8. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.

     The information set forth under “The Offer – Section 7. Certain Information Concerning Your Partnership – Ownership and Voting” in the Offer to Purchase is incorporated herein by reference.

ITEM 9. PERSONS/ASSETS, RETAINED, EMPLOYED, COMPENSATED OR USED.

     Not applicable.

ITEM 10. FINANCIAL STATEMENTS.

     (a) The financial statements included in AIMCO Properties’ Annual Report on Form 10-K for the year ended December 31, 2006, which are listed on the Index to Financial Statements on page F-1 of such report, are incorporated herein by reference. Such report may be inspected at the Securities and Exchange Commission’s (the “Commission”) public reference room in Washington, D.C., located at One Station Place, 100 F Street, N.E., Washington, D.C. 20549. A copy of the report can be also obtained from the Commission’s web site at www.sec.gov.

     (b) Not applicable.

ITEM 11. ADDITIONAL INFORMATION.

     (a) The information set forth under “The Offer – Section 12. Certain Legal Matters” in the Offer to Purchase is incorporated herein by reference.

     (b) The information set forth in the Offer to Purchase and in the related Letter of Transmittal is incorporated herein by reference.

ITEM 12. EXHIBITS.

(a)(1)	Offer to Purchase dated March 12, 2007.
(a)(2)	Letter of Transmittal and related Instructions.
(a)(3)	Letter from Aimco OP to the Limited Partners of Springhill Lake Investors Limited Partnership.
(b)(1)	Amended and Restated Secured Credit Agreement, dated as of November 2, 2004, by and among Aimco, AIMCO Properties, L.P., AIMCO/Bethesda Holdings, Inc., and NHP Management Company as the borrowers and Bank of America, N.A., Keybank National Association, and the Lenders listed therein (Exhibit 4.1 to Aimco’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2004, is incorporated herein by reference).
(b)(2)	First Amendment to Amended and Restated Senior Secured Credit Agreement, dated as of June 16, 2005, by and among Apartment Investment and Management Company, AIMCO Properties, L.P., AIMCO/Bethesda Holdings, Inc., and NHP Management Company as the borrowers, and Bank of

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	America, N.A., Keybank National Association, and the lenders listed therein (Exhibit 10.1 to Aimco’s Current Report on Form 8-K filed with the Securities and Exchange Commission on June 22, 2005, is incorporated herein by reference).
(b)(3)	Second Amendment to Amended and Restated Senior Secured Credit Agreement, dated as of March 22, 2006, by and among Apartment Investment and Management Company, AIMCO Properties, L.P., and AIMCO/Bethesda Holdings, Inc., as the borrowers, and Bank of America, N.A., Keybank National Association, and the lenders listed therein (Exhibit 10.1 to Aimco’s Current Report on Form 8-K filed with the Securities and Exchange Commission on March 27, 2006, is incorporated herein by reference).
(c)(1)	Appraisal of Springhill Lake Apartments, effective April 20, 2004, prepared by Integra Realty Resources – Washington DC.
(d)	Not applicable.
(g)	None.
(h)	None.

ITEM 13. INFORMATION REQUIRED BY SCHEDULE 13E-3.

     SCHEDULE 13E-3, ITEM 2. SUBJECT COMPANY INFORMATION.

     (d) The information set forth under “The Offer – Section 7. Certain Information Concerning Your Partnership – Distributions” in the Offer to Purchase is incorporated herein by reference.

     (e) Not applicable.

     (f) The information set forth under “Special Factors – Valuation of Units – Prior Tender Offers and Private Purchases” in the Offer to Purchase is incorporated herein by reference.

     SCHEDULE 13E-3, ITEM 4. TERMS OF THE TRANSACTION.

     (c) The information set forth under “Special Factors – Background and Reasons for the Offer” in the Offer to Purchase is incorporated herein by reference.

     (d)-(e) The information set forth under “The Offer – Section 10. Dissenters’ Rights” in the Offer to Purchase is incorporated herein by reference.

     (f) Not applicable.

     SCHEDULE 13E-3, ITEM 5. PAST CONTACTS, TRANSACTIONS, NEGOTIATIONS AND AGREEMENTS.

     (c) The information set forth under “Special Factors – Background and Reasons for the Offer” in the Offer to Purchase is incorporated herein by reference.

     (e) Not applicable.

     SCHEDULE 13E-3, ITEM 6. PURPOSES OF THE TRANSACTION AND PLANS OR PROPOSALS.

     (b) The information set forth under “Special Factors – Future Plans and Proposals” in the Offer to Purchase is incorporated herein by reference.

     (c)(8) The information set forth under “Special Factors – Effects of the Offer” in the Offer to Purchase is incorporated herein by reference

     SCHEDULE 13E-3, ITEM 7. PURPOSES, ALTERNATIVES, REASONS AND EFFECTS.

     (a) The information set forth under “Special Factors – Background and Reasons for the Offer – General” in the Offer to Purchase is incorporated herein by reference.

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     (b) The information set forth under “Special Factors – Background and Reasons for the Offer – Alternatives Considered by Your General Partner” and “– Alternative Transactions Considered by Us” in the Offer to Purchase is incorporated herein by reference.

     (c) The information set forth under “Special Factors – Background and Reasons for the Offer” in the Offer to Purchase is incorporated herein by reference.

     (d) The information set forth under “Special Factors – Material Federal Income Tax Matters” and “– Effects of the Offer” in the Offer to Purchase is incorporated herein by reference.

     SCHEDULE 13E-3, ITEM 8. FAIRNESS OF THE TRANSACTION.

     (a)-(f) The information set forth under “Special Factors – Position of the Managing General Partner of Your Partnership with Respect to the Offer” in the Offer to Purchase is incorporated herein by reference.

     SCHEDULE 13E-3, ITEM 9. REPORTS, OPINIONS, APPRAISALS AND NEGOTIATIONS.

     (a) The information set forth under “Special Factors – Summary of 2004 Independent Appraisal” and “–Position of the Managing General Partner of Your Partnership with Respect to the Offer” in the Offer to Purchase is incorporated herein by reference.

     (b) The information set forth under “Special Factors – Summary of 2004 Independent Appraisal” in the Offer to Purchase is incorporated herein by reference.

     (c) The information set forth under “Special Factors – Summary of 2004 Independent Appraisal” in the Offer to Purchase is incorporated herein by reference.

     SCHEDULE 13E-3, ITEM 10. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.

     (c) The information set forth under “The Offer – Section 13. Fees and Expenses” in the Offer to Purchase is incorporated herein by reference.

     SCHEDULE 13E-3, ITEM 12. THE SOLICITATION OR RECOMMENDATION.

     (d)-(e) The information set forth under “Special Factors – Position of the Managing General Partner of Your Partnership with Respect to the Offer” in the Offer to Purchase is incorporated herein by reference.

     SCHEDULE 13E-3, ITEM 13. FINANCIAL STATEMENTS.

     The information set forth under “The Offer – Section 7. Certain Information Concerning Your Partnership” in the Offer to Purchase and Item 7 of Part II of the Partnership’s Annual Report on Form 10-K for the fiscal year ended December 31, 2005 and Item 1 of Part I of the Partnership’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2006 are incorporated herein by reference.

     SCHEDULE 13E-3, ITEM 14. PERSONS/ASSETS, RETAINED, EMPLOYED, COMPENSATED OR USED.

     (b) Not applicable.

     SCHEDULE 13E-3, ITEM 15. ADDITIONAL INFORMATION.

     (b) The information set forth in the Offer to Purchase and the related Letter of Transmittal is incorporated herein by reference.

     SCHEDULE 13E-3, ITEM 16. EXHIBITS.

     (f) Not applicable.

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SIGNATURE

     After due inquiry and to the best of its knowledge and belief, the undersigned hereby certify that the information set forth in this statement is true, complete and correct.

Date: March 12, 2007
	APARTMENT INVESTMENT AND
	MANAGEMENT COMPANY
	By:	/s/    Martha L. Long
		Martha L. Long
		Senior Vice President
	AIMCO-GP, INC.
	By:	/s/    Martha L. Long
		Martha L. Long
		Senior Vice President
	AIMCO PROPERTIES, L.P.
	By:	AIMCO-GP, INC.
		Its General Partner
	By:	/s/    Martha L. Long
		Martha L. Long
		Senior Vice President
	AIMCO/SPRINGHILL LAKE INVESTORS GP, LLC
	By: AIMCO PROPERTIES, L.P.
		By:    AIMCO-GP, INC.
		Its General Partner
	By:	/s/    Martha L. Long
		Martha L. Long
		Senior Vice President

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EXHIBIT INDEX

Exhibit No.	Description
(a)(1)	Offer to Purchase dated March 12, 2007
(a)(2)	Letter of Transmittal and related Instructions.
(a)(3)	Letter from Aimco OP to the Limited Partners of Springhill Lake Investors Limited Partnership
(c)(1)	Appraisal of Springhill Lake Apartments, effective April 20, 2004, prepared by Integra Realty Resources – Washington, DC.

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EX-99.(A)(1)

OFFER TO PURCHASE

AIMCO Properties, L.P.

is offering to purchase any and all limited partnership units in

Springhill Lake Investors Limited Partnership

for $121,912 per unit in CASH

Upon the terms and subject to the conditions set forth herein, we will accept any and all units validly tendered in response to our offer.

You will not pay any partnership transfer fees if you tender your units pursuant to this offer. You will pay any other fees or costs, including any transfer taxes.

Our offer price will be reduced for any distributions subsequently made or declared by your partnership prior to the expiration of our offer.

OUR OFFER AND YOUR WITHDRAWAL RIGHTS WILL EXPIRE AT MIDNIGHT, NEW YORK CITY TIME, ON APRIL 9, 2007, UNLESS WE EXTEND THE DEADLINE.

The managing general partner of your partnership does not make any recommendation regarding whether you should accept this offer. You are encouraged to carefully review this Offer to Purchase and any other information available to you and to seek advice from your independent lawyer, tax advisor and/or financial advisor with respect to your particular circumstances before deciding whether or not to accept this offer.

See “Risk Factors” beginning on page 4 of this Offer to Purchase for a description of risk factors that you should consider in connection with our offer, including the following:

•  Upon completion of this offer, your partnership will terminate the registration of its limited partnership units under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and will no longer file reports with the Securities and Exchange Commission (the “SEC”). As a result, it may become more difficult for you to obtain information about the partnership, its results of operations and financial condition.

•  There is no established or regular trading market for your units, nor is there a reliable standard for determining the fair market value of the units. Accordingly, our offer price may not represent the fair market value for your units.

•  Our offer price does not ascribe any value to potential future improvements in the fair market value or operating performance of your partnership’s property, including any prospective increase in value or property income that may result from the proposed redevelopment of Springhill Lake Apartments. Our offer price might be higher if it took into account any potential improvements in the fair market value or property income.

(Continued on next page)

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of this transaction, passed upon the merits of this transaction, or passed upon the adequacy or accuracy of the disclosure in this Offer to Purchase. Any representation to the contrary is a criminal offense.

If you decide to accept our offer, you must complete and sign the enclosed letter of transmittal in accordance with the instructions thereto and mail or deliver the signed letter of transmittal and any other required documents to The Altman Group, Inc., which is acting as Information Agent in connection with our offer, at one of its addresses set forth on the back cover of this Offer to Purchase. Questions and requests for assistance or for additional copies of this Offer to Purchase or the letter of transmittal may also be directed to the Information Agent at (800) 217-9608.

March 12, 2007

(Continued from prior page)

•  We did not obtain a third-party valuation and did not determine our offer price through any arms-length negotiations. Other persons might ascribe a value to your limited partnership units that is higher than our offer price. As a result, you might be able to sell your units to a third party at a price that exceeds our offer price.

•  Holding your units may result in greater future value. If your partnership’s property were sold in the future and the net proceeds from the sale were distributed to the limited partners, the amount of such distributions per unit might exceed our current offer price.

•  Your managing general partner and the property manager are affiliates of ours and, therefore, your managing general partner has substantial conflicts of interest with respect to our offer.

•  Continuation of your partnership will result in our affiliates continuing to receive management fees from your partnership. Such fees would not be payable if your partnership were liquidated.

•  We are making this offer with a view to making a profit and, therefore, there is a conflict between our desire to purchase your units at a low price and your desire to sell your units at a high price.

•  If we do not acquire all of the outstanding units in your partnership, it is possible that we may conduct a future offer at a higher price, although we have no obligation or current intention to do so.

•  For any units that we acquire from you, you will not receive any future distributions from operating cash flow of your partnership or upon a sale or refinancing of property owned by your partnership.

•  We and our affiliates own a majority of the outstanding units of your partnership. As a result, we and our affiliates control the voting decisions with respect to your partnership, including, but not limited to, the removal of a general partner, most amendments to the partnership agreement and the sale of all or substantially all of your partnership’s assets.

•  The managing general partner makes no recommendation as to whether you should tender your units because each limited partner’s circumstances may differ from those of other limited partners.

The managing general partner does not make any recommendation regarding whether you should accept this offer. You are encouraged to carefully review this Offer to Purchase, and any other information available to you and to seek the advice of your independent lawyer, tax advisor and/or financial advisor with respect to your particular circumstances before deciding whether or not to accept this offer.

THE INFORMATION AGENT FOR THE OFFER IS:

THE ALTMAN GROUP, INC.

By Mail:	By Overnight Courier:	By Hand:
1200 Wall Street, 3rd Floor	1200 Wall Street, 3rd Floor	1200 Wall Street, 3rd Floor
Lyndhurst, NJ 07071	Lyndhurst, NJ 07071	Lyndhurst, NJ 07071

For information, please call:

TOLL FREE: (800) 217-9608

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TABLE OF CONTENTS

	Page
SUMMARY TERM SHEET		1
RISK FACTORS		4
There will be a reduction of available information about your partnership as a result of this offer		4
Our offer price may not represent the price you could obtain for your units in an open market		4
Our offer price does not reflect future prospects		4
Our offer price was determined without any arms-length negotiations, which might result in a higher value for your partnership units		4
Our offer price for your units may be less than the liquidation value attributable to your units		4
Continuation of the partnership; no time frame regarding sale of property		5
Holding your units may result in greater future value		5
Your partnership has a significant balloon payment due on its mortgage debt		5
The managing general partner faces conflicts of interest with respect to this offer		5
Your managing general partner is not making a recommendation regarding this offer		6
Your managing general partner faces conflicts of interest relating to management fees		6
If we do not acquire all of the outstanding units in this offer, we may make a future offer at a higher price		6
Your U.S. federal tax liability resulting from a sale of your units could exceed our offer price		6
If you tender your units in this offer, you will no longer be entitled to distributions from your partnership		6
We control your partnership		6
You could recognize gain in the event of a future reduction in your partnership’s liabilities		7
We could delay acceptance of, and payment for, your units		7
SPECIAL FACTORS		8
Valuation of Units		8
Summary of 2004 Independent Appraisal		10
Background and Reasons for the Offer		13
Material Federal Income Tax Matters		14
Effects of the Offer		16
Position of the Managing General Partner of Your Partnership With Respect to the Offer		17
Conflicts of Interest and Transactions with Affiliates		20
Future Plans and Proposals		21
THE OFFER		22
1. Terms of the Offer; Expiration Date		22
2. Acceptance for Payment and Payment for Units		23
3. Procedure for Tendering Units		24
4. Withdrawal Rights		26
5. Extension of Tender Offer Period; Termination; Amendment; No Subsequent Offering Period		27
6. Information Concerning Us and Certain of Our Affiliates		27
7. Certain Information Concerning Your Partnership		32
8. Voting Power		36
9. Source of Funds		36
10. Dissenters’ Rights		37
11. Conditions to the Offer		37
12. Certain Legal Matters		38
13. Fees and Expenses		39
ANNEX I — OFFICERS AND DIRECTORS		A-1

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SUMMARY TERM SHEET

This summary term sheet highlights the material information regarding our offer, but it does not describe all of the details thereof. We urge you to read this entire Offer to Purchase, which contains the full details of our offer. We have also included in the summary term sheet references to the sections of this Offer to Purchase where a more complete discussion may be found. Unless otherwise indicated, references in this Offer to Purchase to “we,” “our,” “us” or “Aimco Operating Partnership” refer to AIMCO Properties, L.P., a Delaware limited partnership, and references to “managing general partner” refer to AIMCO/Springhill Lake Investors GP, LLC, a Delaware limited liability company.

•  The Offer.  Upon the terms and subject to the conditions set forth in this Offer to Purchase, we are offering to acquire any and all of the limited partnership units of Springhill Lake Investors Limited Partnership, your partnership, for $121,912 per unit in cash. See “Special Factors — Valuation of Units,” “Special Factors — Effects of the Offer” and “The Offer — Section 1. Terms of the Offer; Expiration Date.”

•  Termination of Registration.  On May 16, 2000, we commenced an offer to purchase any and all limited partnership units in your partnership. At the time of the commencement of the offer, there were more than 300 unitholders. Rule 13e-3 under the Exchange Act requires the filing of a transaction statement with the SEC in connection with an offer that has a purpose or reasonable likelihood of causing securities registered under the Exchange Act to be held of record by fewer than 300 persons. If there are fewer than 300 holders of record of any class of registered securities, SEC rules permit the termination of registration and, accordingly, the cessation of the obligation to file periodic reports with the SEC under the Exchange Act. Rule 13e-3 is intended to provide investors with additional information in connection with a transaction that might result in a termination of such registration. In our May 2000 offer to purchase, we indicated that if the number of units tendered in response to the offer would otherwise result in there being fewer than 320 unitholders, we would prorate our purchases and acquire only 99% of the units tendered by each person. On this basis, we did not file a Rule 13e-3 transaction statement with the SEC for that offer. However, when the offer was completed, we inadvertently failed to implement the 99% proration, which resulted in there being less than 300 holders of limited partnership units. Although there were fewer than 300 holders of record, the partnership did not terminate its registration under the Exchange Act, and has continued to file periodic reports with the SEC. In connection with this offer, we have filed a Rule 13e-3 transaction statement with the SEC, and the partnership intends to terminate registration after this offer is completed and will cease filing periodic reports with the SEC. As a result, it may become more difficult for you to obtain information about your partnership, its results of operations and financial condition. See “Special Factors — Background and Reasons for the Offer,” “— Effects of the Offer” and “— Future Plans and Proposals.”

•  Factors in Determining the Offer Price.  In determining the offer price per unit we principally considered:

•  your partnership’s estimated property income, net of an allowance for capital replacements, based on projections made in connection with the preparation of the property’s operating budget for fiscal year 2007;

•  our estimate of an appropriate capitalization rate for such property income;

•  the location, condition and debt structure of your partnership’s property;

•  the current economic conditions in the local market in which the property is located;

•  our estimate of the fees and expenses expected to be incurred by your partnership if its property is sold; and

•  your partnership’s other assets and liabilities.

•  Fairness of the Offer.  Although we, Apartment Investment and Management Company (“Aimco”), a Maryland corporation, and AIMCO-GP, Inc., a Maryland corporation (collectively, the “Aimco Entities”) and your managing general partner have interests that may conflict with those of the partnership’s unaffiliated limited partners, each of the Aimco Entities believes that the offer price and the offer are fair to the unaffiliated limited partners of your partnership. This determination is based on the information and the factors set forth under “Special Factors — Position of the Managing General Partner of Your Partnership with Respect to the Offer.”

•  No Managing General Partner Recommendation.  The managing general partner of your partnership makes no recommendation as to whether you should tender or refrain from tendering your units. Each limited partner should make his or her own decision whether or not to tender. You are encouraged to carefully review this Offer to

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Purchase and any other information available to you and to seek advice from your independent lawyer, tax advisor and/or financial advisor with respect to your particular circumstances before deciding whether or not to accept this offer. See “Special Factors — Position of the Managing General Partner of Your Partnership with Respect to the Offer.”

•  Who We Are.  We are AIMCO Properties, L.P., the operating partnership of Aimco, a New York Stock Exchange-listed company. We and our affiliates currently own 523.65 units, or 80.69% of the total outstanding units of your partnership. See “The Offer — Section 6. Information Concerning Us and Certain of Our Affiliates.”

•  Conflicts of Interest.  OP Property Management, LLC (which is our affiliate) receives fees for managing your partnership’s property, and the managing general partner of your partnership (which is our subsidiary) is entitled to receive asset management fees and reimbursement of certain expenses involving your partnership and its property. As a result, a conflict of interest exists between continuing the partnership and receiving these fees, and the liquidation of the partnership and the termination of these fees. See “Special Factors — Conflicts of Interest and Transactions with Affiliates” and “The Offer — Section 7. Certain Information Concerning Your Partnership.”

•  Tax Consequences.  Your sale of units in this offer will be a taxable transaction for federal income tax purposes. The consequences to each limited partner may vary and you should consult your tax advisor on the precise tax consequences to you. See “Special Factors — Material Federal Income Tax Matters.”

•  Expiration Date.  Our offer expires on April 9, 2007, unless extended, and you can tender your units until our offer expires. See “The Offer — Section 1. Terms of the Offer; Expiration Date.”

•  Right to Extend the Expiration Date.  We can extend the expiration date of the offer in our reasonable discretion. We reserve the right to extend the offer subject to customary conditions. In the event we extend the offer, we will issue a press release or other public announcement no later than 9:00 a.m., New York City time, on the next business day after the scheduled expiration date of the offer, in accordance with Rule 14e-1(d) of the Securities Exchange Act of 1934. See “The Offer — Section 5. Extension of Tender Offer Period; Termination; Amendment; No Subsequent Offering Period.”

•  How to Tender.  To tender your units, complete the accompanying letter of transmittal and send it, along with any other documents required by the letter of transmittal, to the Information Agent, The Altman Group, Inc., at one of the addresses set forth on the back of this Offer to Purchase. See “The Offer — Section 3. Procedure for Tendering Units.”

•  Withdrawal Rights.  You can withdraw your units at any time prior to the expiration of the offer, including any extensions. If you properly withdraw all of the units you previously tendered in the offer, the corresponding letter of transmittal, including your release and assignment of future claims contained therein, will be deemed revoked and of no force or effect. See “The Offer — Section 4. Withdrawal Rights.”

•  How to Withdraw.  To withdraw your units, you need to send a notice of withdrawal to the Information Agent, identifying yourself and the units to be withdrawn. See “The Offer — Section 4. Withdrawal Rights.”

•  Availability of Funds.  We intend to pay the purchase price for any units tendered from our existing cash balances or borrowings under our line of credit. See “The Offer — Section 9. Source of Funds.”

•  Conditions to the Offer.  There are a number of conditions to our offer, including the absence of competing tender offers, that there be no material change with respect to our financial condition and the absence of certain changes in the financial markets. See “The Offer — Section 11. Conditions to the Offer.”

•  Remaining as a Limited Partner.  If you do not tender your units, you will remain a limited partner in your partnership. Consummation of the offer will not affect the operations, business or financial position of your partnership. However, it is expected that, after this offer, the partnership will terminate registration under the Exchange Act and will cease to file periodic reports with the SEC. As a result, it may become more difficult for you to obtain information about the partnership, its results of operations and financial condition. See “Special Factors — Effects of the Offer.”

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•  No Subsequent Offering Period.  We do not currently intend to have a subsequent offering period after the expiration date of the initial offering period (including any extensions). See “The Offer — Section 5. Extension of Tender Offer Period; Termination; Amendment; No Subsequent Offering Period.”

•  Additional Information.  For assistance in tendering your units, please contact our Information Agent at one of the addresses or the telephone number set forth on the back cover page of this Offer to Purchase.

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RISK FACTORS

Before deciding whether or not to tender any of your units, you should consider carefully the following risks and disadvantages of the offer:

There will be a reduction of available information about your partnership as a result of this offer.

Upon consummation of this offer, your partnership will terminate the registration of its limited partnership units under the Exchange Act and will no longer file reports with the SEC, such as annual reports on Form 10-K containing annual audited financial statements and quarterly reports on Form 10-Q containing unaudited quarterly financial statements. In addition, it will no longer be subject to certain provisions of the Sarbanes-Oxley Act of 2002 and the liability provisions of the Exchange Act. The lack of such filings could adversely affect the already limited secondary market which currently exists for units in your partnership and may discourage future offers to purchase your units. In such a case, you would regularly have access only to the information your partnership’s agreement of limited partnership requires your managing general partner (which is our subsidiary) to provide each year, which consists primarily of tax information. See “Special Factors — Effects of the Offer — Effect on Trading Market; Registration Under Section 12(g) of the Exchange Act” and “Special Factors — Future Plans and Proposals.”

Our offer price may not represent the price you could obtain for your units in an open market.

There is no established or regular trading market for your units, nor is there another reliable standard for determining the fair market value of the units. Our offer price does not necessarily reflect the price that you would receive in an open market for your units. Such prices could be higher than our offer price. See “Special Factors — Valuation of Units.”

Our offer price does not reflect future prospects.

Our offer price does not ascribe any value to potential future improvements in the fair market value or operating performance of your partnership’s property, including any prospective increase in value or property income that may result from the proposed redevelopment of Springhill Lake Apartments. The managing general partner has taken steps to obtain approval from local government authorities for a proposed redevelopment of Springhill Lake Apartments, which includes an increase in the number of units from 2,899 to up to 5,800. Your managing general partner believes that the proposed redevelopment, if completed, will permit it to remain competitive with other rental properties in the local market. Your managing general partner is currently evaluating the effect of a redevelopment to the net operating income of the property. However, no assurances can be made regarding whether the necessary governmental approvals will be obtained or the time of such approvals, whether the partnership will move forward with the proposed redevelopment if such approvals are obtained, the timing of the redevelopment, or whether there will be any resulting change in the value of the property. Our offer price might be higher if it took into account the proposed redevelopment or any potential improvements in the fair market value or property income. For more information regarding the proposed redevelopment, see “Special Factors — Future Plans and Proposals” and “The Offer — Section 7. Certain Information Concerning Your Partnership — Investment Objectives and Policies; Sale or Financing of Investments.”

Our offer price was determined without any arms-length negotiations, which might result in a higher value for your partnership units.

Our offer price was determined without any arms-length negotiations. If your partnership were to sell its assets and liquidate, the value of the assets would be determined through negotiations with third parties, who may be willing to pay more for your partnership’s property than the value implied by our offer price. Although the actual proceeds you might receive in a liquidation are uncertain, they could exceed our offer price. Similarly, other persons might ascribe a value to your partnership units that is higher than our offer price. As a result, you might be able to sell your units to a third party at a price that exceeds our offer price.

Our offer price for your units may be less than the liquidation value attributable to your units.

The actual proceeds obtained from liquidation are highly uncertain and could be more than our estimate. Other persons could derive different estimates of the liquidation value. If your partnership were to sell its assets and liquidate, the value of the assets would be determined through negotiations with third parties, who may use different valuation

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methods to determine the value of your partnership’s assets. Accordingly, our offer price could be less than the net proceeds that you would realize upon an actual liquidation of your partnership. In addition, your partnership would generally make liquidating distributions in accordance with the partners’ respective positive capital account balances, regardless of whether such distributions are proportionate to the percentage of partnership units held by a limited partner. Our offer price is based upon an estimated average per-unit value and not upon your capital account balance. Accordingly, the amount that you receive pursuant to our offer may be less than the amount you would have received in a liquidating distribution of the partnership.

Continuation of the partnership; no time frame regarding sale of property.

Your managing general partner, which is our subsidiary, is proposing to continue to operate your partnership and not to attempt to liquidate it at the present time. It is not known when the property owned by your partnership may be sold. The managing general partner of your partnership from time to time considers whether the property should be sold or otherwise disposed of after consideration of relevant factors, including prevailing economic conditions, availability of favorable financing and tax considerations, with a view to achieving maximum capital appreciation for your partnership. At the current time, the managing general partner of your partnership believes that selling your partnership’s property would not be advantageous given market conditions, the condition of the property and tax considerations. In particular, the managing general partner considered changes in the local rental market resulting from local economic conditions (such as unemployment, availability of alternative rental properties, vacancy rates and changes in market rental rates), the potential for appreciation in the value of a property given current local market conditions and trends for the sale of multi-family residential properties (such as the current expected sales price of a property given supply and demand and recent sales of comparable properties in surrounding neighborhoods, the local competitive climate for property sales, development plans for new construction and trends in local and regional real estate markets), the potential for appreciation given the proposed redevelopment of your partnership’s property, the partnership’s operating cash flow requirements and the potential tax liability to limited partners on the sale of the property.

Holding your units may result in greater future value.

Although a liquidation of your partnership is not currently contemplated in the near future, you might receive more value if you retain your units until your partnership is liquidated. Your managing general partner believes that the proposed redevelopment of Springhill Lake Apartments, if completed, will permit it to remain competitive with other rental properties in the local market. However, our offer price does not ascribe any value to the redevelopment, and if the operating performance of the property improves, you could receive more value for your units in the future. For more information regarding the redevelopment, see “Special Factors — Future Plans and Proposals” and “The Offer — Section 7. Certain Information Concerning Your Partnership — Investment Objectives and Policies; Sale or Financing of Investments.” In addition, at the current time, the managing general partner of your partnership believes that selling your partnership’s property would not be advantageous given market conditions, the condition of the property and tax considerations. If your partnership’s property were sold in the future and the net proceeds from the sale were distributed to the limited partners, the per-unit amount of such distributions might exceed our current offer price. For partnerships in which we control the managing general partner and have made tender offers, it has not been unusual for those partnerships to subsequently sell a property at a price in excess of the value we used to determine our tender offer price.

Your partnership has a significant balloon payment due on its mortgage debt.

Your partnership has a balloon payment of approximately $113,500,000 due on its mortgage in August 2011. Your partnership will have to refinance such debt, sell assets or otherwise obtain additional funds prior to the balloon payment date, or it will be in default and could lose its property to foreclosure.

The managing general partner faces conflicts of interest with respect to this offer.

The managing general partner of your partnership is our subsidiary and, therefore, has substantial conflicts of interest with respect to our offer. We are making this offer with a view to making a profit. There is a conflict between our desire to purchase your units at a low price and your desire to sell your units at a high price. We determined our offer price without negotiation with any other party, including any general or limited partner.

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Your managing general partner is not making a recommendation regarding this offer.

The managing general partner of your partnership (which is our subsidiary) makes no recommendation as to whether or not you should tender or refrain from tendering your units because each limited partner’s circumstances may differ from those of other limited partners. Although the managing general partner believes the offer is fair, you must make your own decision whether or not to participate in the offer based upon a number of factors, including several factors that may be personal to you, such as your financial position, your need or desire for liquidity, other financial opportunities available to you, your tax position and the tax consequences to you of selling your units. You are encouraged to carefully review this Offer to Purchase and any other information available to you and to seek advice from your independent lawyer, tax advisor and/or financial advisor with respect to your particular circumstances before deciding whether or not to accept this offer.

Your managing general partner faces conflicts of interest relating to management fees.

Because we or our subsidiaries receive fees for managing your partnership and its property, a conflict of interest exists between continuing the partnership and receiving such fees, and the liquidation of the partnership and the termination of such fees. Also, a decision of the limited partners of your partnership to remove, for any reason, the managing general partner of your partnership or the property manager of your partnership’s property would result in a decrease or elimination of the substantial fees to which they are entitled for services provided to your partnership.

If we do not acquire all of the outstanding units in this offer, we may make a future offer at a higher price.

It is possible that we may conduct a future offer at a higher price, although we have no obligation or current intention to do so. Our decision to conduct a future offer will depend on, among other things, the performance of the partnership, prevailing economic conditions and our interest in acquiring additional units.

Your U.S. federal tax liability resulting from a sale of your units could exceed our offer price.

For U.S. federal income tax purposes, your sale of units for cash will be a taxable sale, with the result that you will recognize taxable gain or loss measured by the difference between the amount realized on the sale and your adjusted tax basis in the units of limited partnership interest of your partnership that you transfer to us. The “amount realized” with respect to a unit of limited partnership interest that you transfer to us will be equal to the sum of the amount of cash received by you for the unit sold pursuant to the offer plus the amount of partnership liabilities allocable to your unit. Depending on your basis in the units and your tax position, your tax liability resulting from a sale of units to us pursuant to the offer could exceed our offer price. The particular tax consequences for you of our offer will depend upon a number of factors related to your tax situation, including your adjusted tax basis in the units you transfer to us, whether you dispose of all of your units and whether you have available suspended passive losses, credits or other tax items to offset any gain recognized as a result of your sale of your units. We may also be required by federal, state or local tax laws to withhold a portion of our offer price. Because the income tax consequences of tendering units will not be the same for everyone, you should consult your tax advisor to determine the tax consequences of the offer to you.

If you tender your units in this offer, you will no longer be entitled to distributions from your partnership.

If you tender your units in response to our offer, you will transfer to us all right, title and interest in and to all of the units we accept and the right to receive all distributions in respect of such units on and after the date on which we accept such units for purchase. Accordingly, for any units that we acquire from you, you will not receive any future distributions from operating cash flow of your partnership or upon a sale or refinancing of the property owned by your partnership.

We control your partnership.

Decisions with respect to the day-to-day management of your partnership are the responsibility of the managing general partner. Because the managing general partner of your partnership is our subsidiary, we control the management of your partnership. Under your partnership’s agreement of limited partnership, limited partners holding a majority of the outstanding units must approve certain extraordinary transactions, including the removal of a general partner, most amendments to the partnership agreement and the sale of all or substantially all of your partnership’s assets. We and our

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affiliates own 523.65 units, or 80.69% of the total outstanding units of your partnership. Because we and our affiliates own a majority of the outstanding units, we have the ability to control any vote of the limited partners.

You could recognize gain in the event of a future reduction in your partnership’s liabilities.

Generally, a decrease in your share of partnership liabilities is treated, for federal income tax purposes, as a deemed cash distribution. Although the managing general partner of your partnership does not have any current plan or intention to reduce the liabilities of your partnership, it is possible that future economic, market, legal, tax or other considerations may cause the managing general partner to reduce your share of the partnership liabilities. If you retain all or a portion of your units and your share of the partnership liabilities were to be reduced, you would be treated as receiving a hypothetical distribution of cash resulting from a decrease in your share of the liabilities of the partnership. Any such hypothetical distribution of cash would be treated as a nontaxable return of capital to the extent of your adjusted tax basis in your units and thereafter as gain. Gain recognized by you on the disposition of retained units with a holding period of 12 months or less may be classified as short-term capital gain and subject to taxation at ordinary income tax rates.

We could delay acceptance of, and payment for, your units.

We reserve the right to extend the period of time during which our offer is open and thereby delay acceptance for payment of any tendered units. The offer may be extended in our reasonable discretion, and no payment will be made in respect of tendered units until the expiration of the offer and acceptance of units for payment. We will pay for or return tendered units promptly after expiration of the offer.

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SPECIAL FACTORS

In reviewing this offer and before deciding whether or not to tender any of your units, you should consider carefully the information discussed in this Special Factors section of this Offer to Purchase.

Valuation of Units

Determination of Offer Price.  Our offer price is based on our estimate of the proceeds that would be available for distribution to limited partners in the event of a liquidation of your partnership’s property. We determined our offer price by estimating the net equity value of your partnership based on our valuation of your partnership’s property using the direct capitalization method. Although this method is a widely accepted way of valuing real estate, there are a number of other methods available to value real estate, each of which may result in different valuations of a property. The direct capitalization method involves applying a capitalization rate to property income. A capitalization rate is a percentage commonly applied to property income by purchasers of real estate to determine the present value of income-producing property. The lower the capitalization rate, the higher the value produced, and the higher the capitalization rate, the lower the value produced. We selected the current market capitalization rate for the property based on a variety of factors including sale prices for comparable assets, the location and condition of the property and recent changes in the property’s income and occupancy rate. We then adjusted the capitalization rate based on whether the interest rate on the mortgage debt encumbering the property was above or below prevailing market rates. Generally, the capitalization rate would be increased if the interest rate on the mortgage debt was at above market rates and based on the amount of any prepayment penalty. All of these factors are subjective in nature to some degree, and others evaluating the same property might use a different capitalization rate and derive a different property value.

Property income is the difference between the revenues from the property and related costs and expenses, excluding income derived from sources other than regular activities and before income deductions. Income deductions include interest, income taxes, prior-year adjustments, charges to reserves, write-offs of intangibles, adjustments arising from major changes in accounting methods and other material and nonrecurring items. In this respect, property income differs from net income disclosed in the partnership’s financial statements, which does not exclude these income sources and deductions.

We determined our offer price as follows:

•  First, we estimated the gross value of your partnership’s property using the direct capitalization method. We estimated annual property income for your partnership’s property to be $15,600,000 based on projections made in connection with the preparation of the property’s operating budget for fiscal year 2007. We then deducted from property income a capital replacement reserve of $750 per apartment unit (approximately $2,157,750) to arrive at net property income of $13,442,250. We then applied a capitalization rate of 5.5% to net property income to derive an estimated gross property value of $245,000,000.

•  Second, we calculated the net equity value of your partnership by adding to the estimated gross property value the value of the non-real estate assets of your partnership and deducting its liabilities, including mortgage debt, debt owed by your partnership to the managing general partner or its affiliates, accounts payable and accrued expenses and certain other costs, including a contingency reserve that would be set aside for any expenses attributable to the property that are payable subsequent to the sale of the property.

•  Finally, we allocated 70.62% of this net equity value to limited partners, which is the percentage of net proceeds that would be distributed to limited partners in the event of a liquidation of your partnership under the partnership agreement, and divided this by the number of outstanding limited partnership units to determine a net equity value per unit.

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Our offer price represents the net equity value per unit determined in this manner, as of December 31, 2006, as indicated below.

Estimated gross valuation of partnership property	$	245,000,000
Plus: Cash and cash equivalents		124,459
Plus: Other partnership assets		3,681,445
Less: Mortgage debt, including accrued interest		(113,500,000	)
Less: Loans from the managing general partner and/or affiliates		(356,085	)
Less: Accounts payable and accrued expenses		(1,111,280	)
Less: Other liabilities		(1,250,007	)
Less: Distributions to lower tier limited partner		(15,651,467	)
Less: Contingency reserve		(4,900,000	)
Net equity value of your partnership	$	112,037,065
Percentage of net equity value allocated to holders of Units		70.62	%
Net equity value of units	$	79,120,980
Total number of units		649.00
Net equity value per unit	$	121,912

Comparison of Offer Price to Alternative Consideration.  To assist holders of units in evaluating the offer, your managing general partner, which is our subsidiary, has attempted to compare the offer price against: (a) all cash tender offer prices or private purchase prices since January 1, 2004 that the managing general partner has knowledge of, excluding this offer, and (b) prices at which the units have been sold on the secondary market that the managing general partner has knowledge of. The managing general partner of your partnership believes that analyzing the alternatives in terms of estimated value, based upon currently available data and, where appropriate, reasonable assumptions made in good faith, establishes a reasonable framework for comparing alternatives. Because the value of the consideration for alternatives to the offer is dependent upon varying market conditions, no assurance can be given that the estimated values reflect the actual range of possible values. The results of these comparative analyses are summarized in the chart below.

Comparison Table	Per Unit
Cash offer price	$	121,912
Alternatives
Highest cash tender offer or private purchase price (January 1, 2004 — February 28, 2007)	$	97,000
Highest price on secondary market (January 1, 2004 — February 28, 2007)	$	85,000

Prior Tender Offers and Private Purchases.  We have not conducted any prior tender offers for units in your partnership in the past three years. From time to time, we become aware of tender offers by unaffiliated third parties to acquire units in your partnership in exchange for cash. Although we are not always informed when such third party offers commence or have occurred, your managing general partner is aware of the following third party offers in the past three years: (1) On January 22, 2007, MPF-NY 2006, LLC, MPF Badger Acquisition Co., LLC, MPF DeWaay Fund 3, LLC, MPF DeWaay Premier Fund 3, LLC, MP Value Fund 7, LLC, MP Income Fund 16, LLC, MPF Senior Note Program I, LP, MPF Income Fund 22, LLC, MPF DeWaay Fund 5, LLC, Sutter Opportunity Fund 4, LLC, and MacKenzie Patterson Fuller, LP, and/or their assigns initiated a mini-tender offer for units in your partnership at an offer price of $70,000 per unit; and (2) On September 6, 2005, MP Falcon Growth Fund 2, LLC, MPF DeWaay Fund 4, LLC, MPF Income Fund 22, LLC, Sutter Opportunity Fund 3, LLC, Sutter Opportunity Fund 3 Tax Exempt, LLC, MPF-NY, 2005, LLC, MPF DeWaay Fund 3, LLC, MPF Income Fund 23, LLC and MacKenzie Patterson Fuller, Inc., and/or their assigns initiated a mini-tender offer for units in your partnership at an offer price of $45,000 per unit.

On April 27, 2004, we purchased one unit in your limited partnership for a purchase price of $92,000, and on June 9, 2006, we purchased one unit in your limited partnership for a purchase price of $97,000. We have not purchased any other units in your partnership in the past three years.

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Prices on Secondary Market.  Secondary market sales information is not a reliable measure of value because of the limited number of any known trades. Except for offers made by us and unaffiliated third parties, privately negotiated sales and sales through intermediaries are the only means that may be available to a limited partner to liquidate an investment in units (other than our offer) because the units are not listed or traded on any securities exchange or quoted on Nasdaq, on the Electronic Bulletin Board, or in “pink sheets.” Secondary sales activity for the units, including privately negotiated sales, has been limited and sporadic.

Set forth below are the high and low secondary sales prices of units during the year ended December 31, 2006, as reported by Direct Investments Spectrum (formerly known as The Partnership Spectrum), which is an independent, third-party source. The gross sales prices reported by Direct Investments Spectrum do not necessarily reflect the net sales proceeds received by sellers of units, which typically are reduced by commissions and other secondary market transaction costs to amounts less than the reported price. We do not know whether the information compiled by Direct Investments Spectrum is accurate or complete.

Sales Prices of Partnership Units, as Reported by Direct Investments Spectrum

	High		Low
Year Ended December 31, 2006 (through November 30):	$	85,000	$	65,300

No high and low sales prices of units during the years ended December 31, 2005 and 2004 were reported by Direct Investments Spectrum or the American Partnership Board, which is the only other independent, third-party source from which we currently have information regarding secondary sales, nor did American Partnership Board report such sales prices during the year ended December 31, 2006 and for the two months ended February 28, 2007. Other sources, such as The Stanger Report, may contain prices for the units that equal or exceed the sales prices reported by Direct Investments Spectrum and The American Partnership Board.

Summary of 2004 Independent Appraisal

Set forth below is a summary of the independent appraisal of Springhill Lake Apartments conducted in April 2004 by Integra Realty Resources — Washington, DC (“IRR”), a third-party, independent appraiser. The summary below includes a description of the procedures followed by IRR, its findings and recommendations, bases for and methods of arriving at such findings and recommendations, instructions received from, or limitations imposed by (if any), us or our affiliates, and the conclusions reached by IRR in appraising the value of Springhill Lake Apartments. IRR concluded that the market value of the leased fee simple estate of Springhill Lake Apartments, as of April 20, 2004, was $208,500,000.

Selection and Qualifications of Independent Appraiser.  In connection with the refinancing of the mortgage indebtedness encumbering Springhill Lake Apartments in 2004, the lender selected IRR to perform a complete appraisal of the market value of the leased fee simple estate of Springhill Lake Apartments. IRR is a property valuation and counseling firm with 51 offices in 30 states and over 140 professionals who hold the Appraisal Institute’s MAI designation.

We paid IRR a fee of $15,000 for the appraisal and $1,500 in connection with IRR’s review and consent in connection with this offer. Other than the foregoing, during the prior two years, no material relationship has existed between IRR and your partnership or any of its affiliates, including the Aimco Entities.

IRR performed a complete appraisal of Springhill Lake Apartments. IRR represented in its report that it was prepared in conformity with the requirements of the Uniform Standards of Professional Appraisal Practice, the Code of Professional Ethics and the Standards of Professional Appraisal Practice of the Appraisal Institute and the appraisal regulations issued in connection with the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA), as amended. The managing general partner caused IRR to be furnished with all of the necessary information requested by IRR in connection with the appraisal. The information furnished to IRR was true, correct and complete in all material respects.

In preparing its valuation of Springhill Lake Apartments, IRR’s analysis included, without limitation:

•  a physical inspection of the property and the surrounding market area;

•  gathering, and confirming with various sources, factual information about the property and the surrounding market;

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•  a highest and best use analysis as though vacant and improved;

•  an analysis of market information and indications of value for the property under all applicable approaches;

•  a review of the rent roll dated April 5, 2004 in effect at the property, a unit status report dated April 19, 2004 and historical income and expense statements;

•  a reconciliation of all indications of value into a conclusion of value as of the effective date of the appraisal;

•  economic analysis of Prince George’s County and Washington-Baltimore Consolidated Metropolitan Statistical Area, including population, employment and income analysis;

•  market area and neighborhood analysis, including analysis of access and linkages, factors generating real estate demand, surrounding retail and public services, neighborhood land uses, demographics, development activity and trends, and market outlook and conclusions;

•  apartment market outlook analysis, including supply and demand indicators such as inventory levels, absorption, vacancy and rental rates, new and proposed construction, peer group analysis;

•  property analysis, including physical features of the property, access, zoning, legal and regulatory constraints on the property, utilities, improvements, unit mix and floor plans and, mechanical systems; and

•  real estate tax analysis using assessed values by the state tax assessor.

Summary of Valuation Approaches and Methodologies Employed.  The following summary describes the material approaches and analyses employed by IRR in valuing Springhill Lake Apartments. IRR utilized the sales comparison and income capitalization approaches in valuing the property.

The sales comparison approach assumes that an informed purchaser would pay no more for a property than the cost of acquiring another existing property with the same utility. The following steps are taken to apply the sales comparison approach: (i) recent sales of comparable improved properties in surrounding or competing areas are identified; (ii) sales most comparable to the subject property are selected and pertinent data relating to the comparable properties is gathered; (iii) the sales are compared to the subject property using various elements of comparison that are then used to indicate a value for the subject property; (iv) for each comparable property, adjustments are made to the sales prices for differences from the subject property to arrive at an adjusted sales price; and (v) the adjusted prices of all of the comparable properties are reconciled into a value indication for the subject property. Obtaining data with a high degree of comparability is most important for this method. This approach is especially appropriate when an active market provides sufficient reliable data that can be verified from authoritative sources, and is less reliable in an inactive market or when estimating the value of properties for which no real comparable sales data are available. The reliability of this method is dependent upon the availability of comparable sales data, the verification of such sales data, the degree of comparability, the extent of adjustment necessary for differences and the absence of non-typical conditions affecting the sales prices.

The income capitalization approach reflects the market perception of a relationship between a property’s potential income and its market value, a relationship expressed as a capitalization rate. This approach converts the anticipated benefits (dollar income or amenities) to be derived from the ownership of property into a value indication through capitalization. This approach is widely applied when appraising income-producing properties. The purpose of the income capitalization approach is to value a property by analyzing the anticipated future income and expenses of the property over an anticipated investment (or holding) period. Under this approach, the value of a property is estimated by deducting an appropriate vacancy and collection allowance rate and all applicable expenses from the property’s anticipated gross annual income to arrive at a projected net operating income, which is then capitalized at an interest rate (the capitalization rate) commensurate with the risk inherent in the ownership of the property. The reliability of this approach is dependent on the reliability of the net income estimate and the capitalization rate. There are two primary income capitalization methods: (1) direct capitalization analysis, which converts a single year’s net operating income into an indication of value by dividing the net operating income by an appropriate capitalization rate and (2) discounted cash flow analysis, which estimates the value of a property by discounting to present value the forecasted net income of the property over the course of an anticipated investment period and the estimated proceeds from a hypothetical sale of such property at the end of such investment period. IRR utilized only the direct capitalization method.

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A third approach, the cost approach, was not used by IRR because the property was beyond the age at which market participants typically use the cost approach to price and value assets.

Valuation Under Sales Comparison Approach.  To apply the sales comparison approach, IRR surveyed sales activity throughout the suburban Maryland area to identify recent sales of properties that were similar to Springhill Lake Apartments in physical and economic characteristics. Out of all data reviewed, IRR selected five comparable properties — four multifamily apartment complexes with similar characteristics that were sold between October 2002 and February 2004, and one sale that was pending as of the date of the appraisal. The unit of comparison used was the sales price per unit, and all the comparable sales were analyzed on this basis. Although all of the comparables were of similar construction and were generally similar to Springhill Lake Apartments with respect to age, condition and amenities, IRR made adjustments to the sales price per unit of each comparable property to reflect differences in time/market conditions, location, age, unit size/mix and community size. Based on the available data, IRR concluded a value range of $64,475 to $85,771 per unit before adjustments. After adjustments, the sales prices per unit ranged from $67,224 to $73,814, with an average adjusted sales price of $70,745 per unit. With 2,899 units at $71,000 per unit, IRR determined the market value of Springhill Lake Apartments to be $205,829,000, subtracted the present value of a below-market commercial lease on the property ($270,000) to arrive at a value indication of $205,559,470 and, finally, rounded to a value conclusion of $206,000,000 using the sales comparison approach. IRR assumed a marketing and exposure period of six months.

Valuation Under Income Capitalization Approach.  Under the income capitalization approach, IRR performed a direct capitalization analysis to derive a value for Springhill Lake Apartments, which involved estimating, for the twelve-month period following the effective date of the appraisal (April 2004 — March 2005): (i) potential gross income; (ii) vacancy and credit loss; (iii) operating expenses; and (iv) net operating income.

To estimate potential gross income, IRR reviewed the property’s leases to establish contract rent from leased space and analyzed market rent to apply to the property’s vacant space. Upon a review of leases in place (including 153 vacant units at market rent), IRR estimated contract rents in place for occupied units to be $34,058,856 per year. To establish market rent, IRR reviewed the current asking and actual rental rates for the property and compared them with rents at competitive properties. Based on such review, IRR estimated market rent at $35,949,720 per year. IRR then averaged contract rents in place for occupied units and market rent for vacant units and arrived at an estimated potential gross rent of $35,000,000 per year. IRR then deducted estimated stabilized vacancy and collection loss of -7% (based on 5% vacancy and 2% credit loss) from potential gross rent to arrive at effective gross income. Other income from property such as laundry facilities, vending machines, storage space rentals, tenant fees and other miscellaneous sources, as well as income from a commercial lease, were added to effective gross income to arrive at a total effective gross income of $34,170,128 per year. IRR then estimated operating expenses by performing a pro forma analysis using historical operating statements from 2001 to 2003, and estimated total expenses for the property to be $17,989,580 per year. Deducting the projected operating expenses of $17,989,580 from projected effective gross income of $34,170,128, IRR estimated net operating income to be $16,180,548 per year.

IRR then derived an overall capitalization rate of 7.75% using three methods: (i) comparable sales; (ii) investor surveys; and (iii) band of investment. Analysis of eight comparable sales resulted in an average capitalization rate of 7.68%. Survey of brokers active in apartment acquisitions in the suburban Washington, DC area resulted in a capitalization rate in the range of 7% to 7.5%. The band of investment method resulted in a capitalization rate of 7.65%. The band of investment method derives a capitalization rate from the weighted average of the mortgage and equity demands on net income generated from the property. This involves an estimate of typical financing terms based on a survey of lenders active in the property type as well as an estimated rate of return on equity capital sufficient to attract investors. Applying an overall capitalization rate of 7.75% to net operating income of $16,180,548, and deducting the present value of a below-market commercial lease on the property, IRR arrived at a value indication of $208,500,000 (rounded) for Springhill Lake Apartments under the income capitalization approach.

Reconciliation of Values and Conclusions of Appraisal.  The final step in the appraisal process was to reconcile the sales comparison approach and the income capitalization approach values to arrive at a final value conclusion. The reconciliation of the two approaches involved weighing the valuation techniques in relation to their substantiation by market and other sources of data, the relativity and applicability of the approaches to the property type, and the purpose of the valuation. IRR concluded a market value of $206,000,000 under the sales comparison approach and a market value of $208,500,000 under the income capitalization approach. IRR placed primary emphasis on the income capitalization

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approach in reaching its final value conclusion because Springhill Lake Apartment is an income-producing property, and because the reliability of this approach was enhanced by the large quantity of market data that was available to develop estimates of rental rates, operating expenses and capitalization rates. After reconciling the various factors, IRR determined a final estimate of market value of $208,500,000 for Springhill Lake Apartments as of April 20, 2004 in its appraisal report dated May 6, 2004.

Assumptions, Limitations and Qualifications of IRR’s Valuation.  In preparing the appraisal, IRR relied, without independent verification, on the accuracy and completeness of all information supplied or otherwise made available to it by or on behalf of the partnership. Except as set forth herein, neither we, any of our affiliates nor the partnership imposed any conditions or limitations on the scope of IRR’s investigation or the methods and procedures to be followed in preparing the appraisal. IRR’s appraisal report and opinion of value were made subject to the assumptions and limiting conditions contained in the report.

Availability of Appraisal Report.  You may obtain a full copy of IRR’s appraisal upon request, without charge, by contacting the Information Agent at one of the addresses or the telephone number on the back cover of this Offer to Purchase. Copies of the appraisal for the property are also available for inspection and copying at the principal executive offices of the partnership during regular business hours by any interested unitholder or his or her designated representative at his or her cost. In addition, a copy of the appraisal has been filed with the SEC as an exhibit to the Tender Offer Statement and Rule 13e-3 Transaction Statement on Schedule TO and is available on the SEC’s site on the World Wide Web at http://www.sec.gov.

Background and Reasons for the Offer

General.  We are in the business of acquiring direct and indirect interests in apartment properties such as the property indirectly owned by your partnership. Our offer provides us with an opportunity to increase our ownership interest in your partnership’s property while providing you and other investors with an opportunity to liquidate your current investment.

On May 16, 2000, we commenced an offer to purchase any and all limited partnership units in your partnership. At the time of the commencement of the offer, there were more than 300 unitholders. Rule 13e-3 under the Exchange Act requires the filing of a transaction statement with the SEC in connection with an offer that has a purpose or reasonable likelihood of causing securities registered under the Exchange Act to be held of record by fewer than 300 persons. If there are fewer than 300 holders of record of any class of registered securities, SEC rules permit the termination of registration and, accordingly, the cessation of the obligation to file periodic reports with the SEC under the Exchange Act. Rule 13e-3 is intended to provide investors with additional information in connection with a transaction that might result in a termination of such registration. In the May 2000 offer to purchase, we indicated that if the number of units tendered in response to the offer would otherwise result in there being fewer than 320 unitholders, we would prorate our purchases and acquire only 99% of the units tendered by each person. On this basis, we did not file a Rule 13e-3 transaction statement with the SEC for that offer. However, when the offer was completed, we inadvertently failed to implement the 99% proration, which resulted in there being less than 300 holders of limited partnership units. Although there were fewer than 300 holders of record, the partnership did not terminate its registration under the Exchange Act, and has continued to file periodic reports with the SEC. In connection with this offer, we have filed a Rule 13e-3 transaction statement with the SEC, and the partnership intends to terminate registration after this offer is completed, and will cease filing periodic reports with the SEC. As a result, it may become more difficult for you to obtain information about your partnership, its results of operations and financial condition.

Alternatives Considered by Your Managing General Partner.  From time to time in the past, we have made offers to acquire units of limited partnership interest in your partnership. Before making this offer, your managing general partner (which is our subsidiary) considered a number of alternative transactions. The following is a brief discussion of the advantages and disadvantages of the alternatives considered by your managing general partner.

Liquidation.  One alternative would be for the partnership to sell its assets, distribute the net liquidation proceeds to its partners in accordance with the agreement of limited partnership, and thereafter dissolve. Partners would be at liberty to use the net liquidation proceeds after taxes for investment, business, personal or other purposes, at their option. If your partnership were to sell its assets and liquidate, you would not need to rely upon capitalization of income or other

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valuation methods to estimate the fair market value of partnership assets. Instead, such assets would be valued through negotiations with prospective purchasers.

However, in the opinion of your managing general partner, which is our subsidiary, the present time may not be the most desirable time to sell the residential real estate assets of your partnership in a private transaction, and the proceeds realized from any such sale would be uncertain. Your managing general partner believes it is currently in the best interest of your partnership to continue holding its real estate assets. See “The Offer — Section 7. Certain Information Concerning Your Partnership — Investment Objectives and Policies; Sale or Financing of Investments” and “Special Factors — Conflicts of Interest and Transactions with Affiliates.” The term of the partnership will continue until December 31, 2035, unless the partnership is terminated sooner under the provisions of the partnership agreement.

Continuation of the Partnership Without the Offer.  A second alternative would be for your partnership to continue as a separate legal entity with its own assets and liabilities and continue to be governed by its existing agreement of limited partnership, without our offer. A number of advantages could result from the continued operation of your partnership. If rental market conditions improve or the property’s operating performance improves, the level of distributions to limited partners might increase over time. It is possible that the private resale market for properties could improve over time, making a sale of the partnership’s property at some point in the future a more attractive option than it is currently. The continuation of your partnership would allow you to continue to participate in any increases in net income of your partnership and any net proceeds from a future sale of the property. However, no assurance can be given as to future operating results or as to the results of any future attempts to sell the property indirectly owned by your partnership.

The primary disadvantage of continuing the operations of your partnership without our offer is that you would have limited liquidity with respect to your units, for which there is no established trading market. Although you could sell your units to a third party, any such sale might be at a price less than our offer price.

Alternative Transactions Considered by Us.  At the present time, we have decided to proceed with this offer. We considered making an offer to exchange units in your partnership for limited partnership interests in the Aimco Operating Partnership. However, because of the expense and delay associated with making such an exchange offer, we decided to make an offer for cash only. In addition, our historical experience has been that when we have offered limited partners an opportunity to receive cash or limited partnership interests in the Aimco Operating Partnership, the limited partners who tender usually prefer the cash option.

Material Federal Income Tax Matters

The following summary is a discussion of the material United States federal income tax consequences of the offer that may be relevant to (i) limited partners who tender some or all of their units for cash pursuant to our offer, and (ii) limited partners who do not tender any of their units pursuant to our offer. This discussion is based on the Internal Revenue Code of 1986, as amended (the “Code”), Treasury Regulations, rulings issued by the IRS, and judicial decisions, all as of the date of this Offer to Purchase, all of which are subject to change or alternative construction, possibly with retroactive effect. Any such change or alternative construction could affect the continuing accuracy of this summary. This summary is based on the assumption that your partnership is operated in accordance with its organizational documents, including its certificate of limited partnership and agreement of limited partnership. This summary does not purport to discuss all aspects of federal income taxation that may be important to a particular person in light of its investment or tax circumstances, or to certain types of investors subject to special tax rules (including financial institutions, broker-dealers, insurance companies, and, except to the extent discussed below, tax-exempt organizations and foreign investors, as determined for United States federal income tax purposes), nor (except as otherwise expressly indicated) does it describe any aspect of state, local, foreign or other tax laws. This summary assumes that the units are held by the limited partners for investment purposes (commonly referred to as “capital assets”), and are not held by partners for sale to customers as dealer property under the Code. No advance ruling has been or will be sought from the IRS regarding any matter discussed in this Offer to Purchase. Further, no opinion of counsel has been obtained with regard to the offer.

The United States federal income tax treatment of a limited partner participating in the offer depends in some instances on determinations of fact and interpretations of complex provisions of United States federal income tax law for which no clear precedent or authority may be available. Accordingly, you should consult your tax advisor regarding the United States federal, state, local and foreign tax consequences of selling the interests in your

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partnership represented by your units pursuant to our offer or of a decision not to sell in light of your specific tax situation.

Tax Consequences to Limited Partners Tendering Units for Cash.  The sale of a unit of limited partnership interest pursuant to this offer will be a taxable transaction for United States federal income tax purposes. You will recognize gain or loss on a sale of a unit of limited partnership interest of your partnership equal to the difference, if any, between (i) your “amount realized” on the sale and (ii) your adjusted tax basis in the unit sold. The “amount realized” with respect to a unit will be equal to the sum of the amount of cash received by you for the unit sold pursuant to the offer plus the amount of partnership liabilities allocable to your unit (as determined under Section 752 of the Code). Thus, your tax liability resulting from a sale of a unit could exceed the cash received upon such sale.

Adjusted Tax Basis.  If you acquired your units for cash, your initial tax basis in such units was generally equal to your cash investment in your partnership increased by your share of partnership liabilities at the time you acquired such units. Your initial tax basis generally has been increased by (i) your share of partnership income and gains, and (ii) any increases in your share of partnership liabilities, and has been decreased (but not below zero) by (i) your share of partnership cash distributions, (ii) any decreases in your share of partnership liabilities, (iii) your share of partnership losses, and (iv) your share of nondeductible partnership expenditures that are not chargeable to capital. For purposes of determining your adjusted tax basis in your units immediately prior to a disposition of your units, your adjusted tax basis in your units will include your allocable share of partnership income, gain or loss for the taxable year of disposition. If your adjusted tax basis is less than your share of partnership liabilities (e.g., as a result of the effect of net loss allocations and/or distributions exceeding the cost of your unit), your gain recognized with respect to a unit pursuant to the offer will exceed the cash proceeds realized upon the sale of such unit, and may result in a tax liability to you that exceeds the cash received upon such sale.

Character of Gain or Loss Recognized Pursuant to the Offer.  Except as described below, the gain or loss recognized by you on a sale of a unit pursuant to the offer generally will be treated as a long-term capital gain or loss if you held the unit for more than one year. Long-term capital gains recognized by individuals and certain other noncorporate taxpayers generally will be subject to a maximum United States federal income tax rate of 15%. If the amount realized with respect to a unit of limited partnership interest of your partnership that is attributable to your share of “unrealized receivables” of your partnership exceeds the tax basis attributable to those assets, such excess will be treated as ordinary income. Among other things, “unrealized receivables” include depreciation recapture for certain types of property. In addition, the maximum United States federal income tax rate applicable to persons who are noncorporate taxpayers for net capital gains attributable to the sale of depreciable real property (which may be determined to include an interest in a partnership such as your units) held for more than one year is currently 25% (rather than 15%) with respect to that portion of the gain attributable to depreciation deductions previously taken on the property. Certain limitations apply to the use of capital losses.

If you tender a unit of limited partnership interest of your partnership in the offer, you will be allocated a share of partnership taxable income or loss for the year of tender with respect to any units sold. You will not receive any future distributions on units tendered on or after the date on which such units are accepted for purchase and, accordingly, you may not receive any distributions with respect to such accreted income. Such allocation and any partnership cash distributions to you for that year will affect your adjusted tax basis in your unit and, therefore, the amount of your taxable gain or loss upon a sale of a unit pursuant to the offer.

Passive Activity Losses.  The passive activity loss rules of the Code limit the use of losses derived from passive activities, which generally include investments in limited partnership interests such as your units. An individual, as well as certain other types of investors, generally may not use losses from passive activities to offset nonpassive activity income received during the taxable year. Passive losses that are disallowed for a particular tax year are “suspended” and may be carried forward to offset passive activity income earned by the investor in future taxable years. In addition, such suspended losses may be claimed as a deduction, subject to other applicable limitations, upon a taxable disposition of the investor’s interest in such activity. Accordingly, if your investment in your units is treated as a passive activity, you may be able to reduce gain from the sale of your units pursuant to the offer with passive losses in the manner described below. You are urged to consult your tax advisor concerning whether, and the extent to which, you have available “suspended” passive activity losses from your partnership or other investments that may be used to reduce gain from the sale of units pursuant to the offer.

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Release and Assignment of Claims.  If you tender units in this offer, a portion of the price paid to you may be deemed a payment for your release and assignment of claims. The proper treatment for federal income tax purposes of your receipt of any deemed payments for your release and assignment of claims is uncertain. No opinion or assurance can be given that the IRS will not challenge the treatment of any deemed payments for your release and assignment of claims as additional consideration for the units, and assert that such amount should be treated as an ordinary income payment in exchange for your release and/or assignment of current and future claims. You should consult your tax advisor regarding the tax consequences to you with respect to your right to, and your receipt of, any deemed payments for your release and assignment of claims.

Information Reporting, Backup Withholding and FIRPTA.  If you tender any units, you must report the transaction by filing a statement with your United States federal income tax return for the year of the tender which provides certain required information to the IRS. The paying agent may also be required to report the transaction to the IRS. To prevent the possible application of United States federal back-up withholding tax (currently, 28%) with respect to the payment of the offer consideration, you are generally required to provide us a completed Substitute IRS Form W-9, included with the letter of transmittal. Back-up withholding is not an additional tax. Any amounts withheld under the back-up withholding rules may be refunded or credited against your United States federal income tax liability, if any, provided that the required information is furnished to the IRS.

Gain realized by a foreign person on the sale of a unit pursuant to the offer will be fully subject to United States federal income tax under the Foreign Investment in Real Property Tax Act of 1980. In addition, if we acquire an interest held by a foreign person, we will be required to deduct and withhold 10% of the amount realized by such foreign person on the disposition. Amounts withheld would be creditable against a foreign person’s United States federal income tax liability and, if in excess thereof, a refund could be claimed from the IRS by filing a United States income tax return.

State and Local Withholding.  If you tender any units pursuant to this offer, we may be required under state or local tax laws to deduct and withhold a portion of our offer price. You should consult your tax advisor concerning whether any state or local withholding would be required on a disposition of your units and whether such amounts may be available to you as a credit on your state or local tax returns.

Tax Consequences to the Managing General Partner of Your Partnership and its Affiliates, including the Aimco Operating Partnership.  The sale of your units pursuant to this offer will not be a taxable transaction for the managing general partner of your partnership or its affiliates, including the Aimco Operating Partnership Consequently, the managing general partner of your partnership and its affiliates will not recognize gain or loss in connection with this offer.

Effects of the Offer

Because the managing general partner of your partnership is our subsidiary, we have control over the management of your partnership. In addition, we, together with AIMCO IPLP, L.P. (which is our affiliate), own 523.65 units, or 80.69% of the total outstanding units of your partnership. Because we and our affiliates own a majority of the outstanding units and control your partnership’s managing general partner, we control the outcome of most voting decisions with respect to your partnership. In general, subject to any fiduciary duties we may have, we will vote the units owned by us in whatever manner we deem to be in our best interests, which may not be in the interest of other limited partners. This could (1) prevent non-tendering limited partners from taking action that they desire but that we oppose and (2) enable us to take action desired by us but opposed by non-tendering limited partners.

If we acquire all of the units that we are seeking in the offer, our interest in your partnership’s net income (which was a net loss of $270,000 for the nine months ended September 30, 2006) and net book value (($66,481,000) as of September 30, 2006) will increase to 100%. Aimco, through its wholly owned subsidiaries, AIMCO-GP, Inc. and AIMCO-LP, Inc., holds approximately a 90% interest in the Aimco Operating Partnership as of December 31, 2006.

Distributions to Us.  If we acquire units in the offer, we will participate in any subsequent distributions to limited partners with respect to the units purchased (as well as our existing units).

Partnership Status.  The rules regarding whether a partnership is treated as a “publicly traded partnership” taxable as a corporation are not certain. We believe that our purchase of units in accordance with the terms of our offer should not adversely affect the issue of whether your partnership is classified as a partnership for federal income tax purposes.

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Business.  Our offer will not affect the operation of the property owned by your partnership. We will continue to control the managing general partner of your partnership and the property manager, both of which will remain the same. Consummation of the offer will not affect your agreement of limited partnership, the operations of your partnership, the business and property owned by your partnership or any other matter relating to your partnership, except that it would result in us increasing our ownership of units. We have no current intention of changing the fee structure for your managing general partner or the manager of your partnership’s property.

Effect on Trading Market; Registration Under Section 12(g) of the Exchange Act.  If a substantial number of units are purchased pursuant to the offer, the result will be a reduction in the number of limited partners in your partnership. In the case of certain kinds of equity securities, a reduction in the number of securityholders might be expected to result in a reduction in the liquidity and volume of activity in the trading market for the security. In the case of your partnership, however, there is no established public trading market for the units and, therefore, we do not believe a reduction in the number of limited partners will materially further restrict your ability to find purchasers for your units through secondary market transactions.

The units are currently registered under Section 12(g) of the Exchange Act, which means, among other things, that your partnership is required to file periodic reports with the SEC and to comply with the SEC’s proxy rules. Because there are currently less than 300 unitholders in your partnership, upon consummation of this offer, your partnership will terminate the registration of its limited partnership units under Section 12(g) of the Exchange Act. Upon such termination of registration, your partnership will no longer file reports with the SEC, such as annual reports on Form 10-K containing annual audited financial statements and quarterly reports on Form 10-Q containing unaudited quarterly financial statements. Additionally, your partnership will not be required to provide current reports on Form 8-K describing certain material events. In addition, it will no longer be subject to certain provisions of the Sarbanes-Oxley Act of 2002 and the liability provisions of the Exchange Act. As a result, you regularly will have access only to the limited information that your partnership’s agreement of limited partnership requires your managing general partner (which is our subsidiary) to provide to unitholders each year, which consists primarily of tax information. In particular, you will continue to receive a Schedule K-1 as well as audited financial statements with respect to your partnership each year. A Schedule K-1 is an information statement that contains tax information for the fiscal year of your partnership, such as your allocation of income, deductions, credits, gains and losses of your partnership for federal income tax purposes. In comparison, the periodic reports filed by your partnership under the Exchange Act contain your partnership’s annual and quarterly financial statements prepared in accordance with generally accepted accounting principles. These periodic reports filed under the Exchange Act also include information regarding your partnership’s business and property and a discussion regarding your partnership’s financial condition and results of operations. The lack of filing periodic reports could affect the already limited secondary market which currently exists for units in your partnership and may result in others not tendering for such units.

Costs Associated with Being a Public Company.  There are various costs associated with being a public company, including costs associated with preparing, auditing and filing our periodic reports with the SEC. We estimate these expenses to be approximately $23,000 per year. This represents approximately 3.52% of the partnership’s general and administrative expenses and 0.07% of the partnership’s total expenses (based on 2006 expenses of approximately $654,000 and $34,483,000, respectively). If the partnership were to terminate its registration under the Exchange Act, the estimated cost savings would be approximately $23,000.

Accounting Treatment.  Upon consummation of the offer, we will account for our investment in any acquired units under the purchase method of accounting. There will be no effect on the accounting treatment of your partnership as a result of the offer.

Position of the Managing General Partner of Your Partnership With Respect to the Offer

The partnership and the managing general partner of your partnership (which is our subsidiary) have provided the following information for inclusion in this Offer to Purchase:

Factors in Favor of Fairness Determination.  The managing general partner of your partnership believes the offer price and the structure of the transaction are fair to the unaffiliated limited partners whether or not they tender units in the

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offer. In support of such determination, the managing general partner considered the factors and information set forth below, but did not quantify or otherwise attach particular weight to any such factors or information:

The managing general partner considered the following factors in support of the fairness of the offer to unaffiliated limited partners who do NOT tender units in the offer:

•  each limited partner has an opportunity to make an individual decision on whether to tender his or her units (and how many to tender) or to continue to hold his or her units; and

•  limited partners may continue to participate in the future performance of the partnership and the property following an alternative transaction such as a property sale or a liquidation of the partnership.

The managing general partner considered the following factors in support of the fairness of the offer to unaffiliated limited partners who DO tender units in the offer:

•  each limited partner has an opportunity to make an individual decision on whether to tender his or her units (and how many to tender) or to continue to hold his or her units;

•  there is no established trading market for the limited partnership units, and the offer would provide immediate liquidity for tendering limited partners;

•  the uncertainty of the resulting proceeds from the possible alternative transactions, particularly a property sale or a liquidation of the partnership;

•  our offer price does not take into account any transaction costs that would ordinarily be incurred in connection with a sale of the property;

•  our offer price exceeds the most recent price at which the units sold in the secondary market ($85,000 as of November 30, 2006);

•  our offer price exceeds the most recent price at which an unaffiliated third-party initiated an unsolicited tender offer for units ($70,000 as of January 22, 2007);

•  our offer price exceeds the $97,000 per unit purchase price we paid in a negotiated purchase of one unit in your limited partnership on June 9, 2006;

•  our offer price exceeds the book value per unit of ($97,254) at September 30, 2006;

•  our offer price does not reflect any discount for minority interests; and

•  we have not received any firm offers from third parties for all or substantially all of the partnership’s assets, a merger or other extraordinary transaction during the past two years with which to compare the offer.

Factors Not in Favor of Fairness Determination.  In addition to the foregoing factors, the managing general partner considered the following countervailing factors:

•  our offer price does not ascribe any value to potential future improvements in the fair market value or operating performance of your partnership’s property, including any prospective increase in value or property income that may result from the proposed redevelopment of Springhill Lake Apartments; our offer price might be higher if it took into account any potential improvements in fair market value or property income;

•  an unaffiliated representative was not retained to act solely on behalf of unaffiliated limited partners for purposes of negotiating the terms of the offer; and

•  the managing general partner’s board of directors that ultimately controls your general partner is comprised solely of employees of the Aimco Operating Partnership, and, as a result, the terms of the offer were not approved by any independent directors.

The managing general partner did not consider going concern value separately from liquidation value because it does not believe that there is a distinction between going concern value and liquidation value for income-producing properties such as your partnership’s property, where the likely sale price in the event of liquidation is expected to be equal to the going concern value of the property. In some markets, where there is a great demand for apartments to be converted into

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condominiums, it is possible that sale prices for apartment properties may be higher than their operating income would justify. In these situations, the liquidation value may exceed the going concern value. The managing general partner has determined that your partnership’s property is not in a market where the demand for condominium conversions has resulted in this effect. Accordingly, the managing general partner did not consider the two values separately.

Although there is no established trading market for your limited partnership units, the managing general partner took into consideration the prices at which limited partnership units have sold in the secondary market from January 2004 through February 28, 2007 (the most recent date for which information was available), to the extent such information is available.

The managing general partner believes that the offer is procedurally fair because, among other things, each limited partner has an opportunity to make an individual decision on whether to tender his or her units (and how many to tender) or to continue to hold his or her units. In making this determination, the managing general partner took into account the absence of the following procedural safeguards: (1) the requirement of approval of the offer by a majority of the unaffiliated limited partners; (2) an unaffiliated representative to act solely on behalf of unaffiliated limited partners for purposes of negotiating the terms of the offer; and (3) the approval of the offer by a majority of non-employee directors of your managing general partner’s board of directors.

Your managing general partner is our subsidiary. We and your managing general partner are subsidiaries of Aimco. As a result, your managing general partner has a conflict of interest and makes no recommendation as to whether or not you should tender or refrain from tendering your units in this offer. While the managing general partner believes that the terms of our offer are fair, the managing general partner also believes that you must make your own decision whether or not to participate in this offer. The managing general partner is unable to make a recommendation because each limited partner’s circumstances may differ from those of other limited partners. These circumstances, which would impact the desirability of tendering units in the offer, include your financial position, your need or desire for liquidity, other financial opportunities available to you, and your tax position and the tax consequences to you of selling your units. You are encouraged to carefully review this Offer to Purchase and any other information available to you and to seek advice from your independent lawyer, tax advisor and/or financial advisor with respect to your particular circumstances before deciding whether or not to accept this offer.

Neither the managing general partner of your partnership nor its affiliates have any plans or arrangements to tender any units. Except as otherwise provided in “Special Factors — Future Plans and Proposals,” the managing general partner does not have any present plans or proposals which relate to or would result in an extraordinary transaction, such as a merger, reorganization or liquidation, involving your partnership; a purchase or sale or transfer of a material amount of your partnership’s assets; or any changes in your partnership’s present capitalization, indebtedness or distribution policies. The sale of your units pursuant to this offer will not be a taxable transaction for the managing general partner of your partnership or its affiliates. Consequently, the managing general partner of your partnership and its affiliates will not recognize gain or loss in connection with this offer. For information relating to certain relationships between your partnership and its managing general partner, on one hand, and Aimco and its affiliates, on the other, and conflicts of interests with respect to the tender offer, see “Special Factors — Background and Reasons for the Offer” and “— Conflicts of Interest and Transactions with Affiliates.” See also “Special Factors — Valuation of Units — Comparison of Offer Price to Alternative Consideration” for certain information regarding transactions with respect to units of your partnership.

Your partnership did not receive any report, opinion or appraisal with respect to the fairness of this offer or the offer price being offered to limited partners. However, the partnership did receive the appraisal prepared by IRR, as described above.

Although the Aimco Entities have interests that may be in conflict with those of the partnership’s unaffiliated limited partners, each of the Aimco Entities believes that the offer price and the structure of the transaction are fair to the unaffiliated limited partners based on the information and factors considered by the managing general partner of your partnership. Each of Aimco Entities expressly adopts the analysis, and the factors underlying such analysis, of the managing general partner of your partnership.

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Conflicts of Interest and Transactions with Affiliates

Conflicts of Interest with Respect to the Offer.  The managing general partner of your partnership is a subsidiary of Aimco. As a result, the managing general partner has substantial conflicts of interest with respect to the offer. We desire to purchase units at a low price and you desire to sell units at a high price. Such conflicts of interest in connection with the offer differ from those conflicts of interest that exist in connection with the managing general partner’s management of your partnership. Your managing general partner has filed a Solicitation/Recommendation Statement on Schedule 14D-9 with the SEC, which indicates that it is remaining neutral and making no recommendation as to whether limited partners should tender their units in the offer. YOU ARE URGED TO READ THIS OFFER TO PURCHASE AND THE SCHEDULE 14D-9 AND THE RELATED MATERIALS CAREFULLY AND IN THEIR ENTIRETY BEFORE DECIDING WHETHER TO TENDER YOUR UNITS.

Conflicts of Interest That Currently Exist for Your Partnership.   Conflicts of interest exist between the managing general partner of your partnership and its affiliates (including us), on the one hand, and you and the other limited partners of the partnership, on the other. The directors and officers of your managing general partner have fiduciary duties to manage the managing general partner in a manner beneficial to its stockholder, which is a subsidiary of Aimco. At the same time, the managing general partner of your partnership has fiduciary duties to manage your partnership in a manner beneficial to all of the limited partners. Such conflicts of interest might arise in the following situations, among others:

•  The partnership pays fees and reimburses expenses to the managing general partner and its affiliates for costs incurred in managing and operating the partnership and its property. We and the managing general partner of your partnership received total fees and reimbursements (excluding property management fees) of approximately $796,000 in 2003, $779,000 in 2004 and $792,000 in 2005. Total fees and reimbursements (excluding property management fees) for the nine months ended September 30, 2006 were approximately $930,000. The property manager is entitled to receive three percent of residential rent collections and five percent of commercial income from the partnership’s property as compensation for providing property management services. It received property management fees of approximately $953,000 in 2003, $965,000 in 2004 and $995,000 for 2005. Property Management fees for the nine months ended September 30, 2006 were approximately $766,000. We have no current intention of changing the fee structure for your managing general partner or the manager of your partnership’s property.

•  In determining to sell a property owned by your partnership, the managing general partner takes into consideration, among other factors: (i) Aimco’s objectives, including its liquidity needs and its relative desire to retain or dispose of properties within its entire portfolio, including the property owned by your partnership; and (ii) the investment objectives of your partnership. See “The Offer — Section 7. Certain Information Concerning Your Partnership — Investment Objectives and Policies; Sale or Financing of Investments.”

•  Decisions of the managing general partner with respect to the amount and timing of cash expenditures, borrowings, issuances of additional interests and reserves in any quarter will affect whether or the extent to which there is available cash to make distributions in a given quarter.

Competition Among Properties.  Because Aimco and your partnership both invest in apartment properties, these properties may compete with one another for tenants. Furthermore, you should bear in mind that Aimco may acquire properties in the general market area where your partnership’s property is located. We believe that this concentration of properties in a general market area will facilitate overall operations through collective advertising efforts and other operational efficiencies. In managing Aimco’s properties, we will attempt to reduce conflicts between competing properties by referring prospective customers to the property considered to be most conveniently located for the customer’s needs.

Future Offers.  We are not obligated to make another tender offer for units in your partnership. We have no current plans to conduct future tender offers for the units in your partnership, but our plans may change based on future circumstances, including tender offers made by third parties. Any such future offers that we make could be at prices that are more or less than the current offer price.

Transactions with Affiliates.  Your partnership has no employees and is dependent on the managing general partner and us for the management and administration of all partnership activities. The partnership agreement provides for (i) certain payments to our affiliates for services, (ii) reimbursement of certain expenses incurred by our affiliates on

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behalf of the partnership, (iii) an annual asset management fee of $100,000 and (iv) an annual administration fee of $10,000.

Your partnership’s property manager, which is our affiliate, is entitled to receive three percent of residential rent collections and five percent of commercial income from your partnership’s property as compensation for providing property management services, and received management fees of approximately $953,000 in 2003, $965,000 in 2004 and $995,000 in 2005. Management fees for the nine months ended September 30, 2006 were approximately $766,000. We were eligible to receive reimbursement of accountable administrative expenses amounting to approximately $413,000 in 2003, $381,000 in 2004, $369,000 in 2005 and $333,000 for the nine months ended September 30, 2006.

In accordance with the partnership agreement, the managing general partner earned $100,000 in asset management fees and $10,000 in administrative fees for each of the years ended December 31, 2003, 2004 and 2005. Asset management fees and administrative fees were $75,000 and $8,000, respectively, for the nine months ended September 30, 2006.

During the nine months ended September 30, 2006, an affiliate of the managing general partner advanced approximately $1,393,000 to the partnership to cover real estate taxes and capital expenditures. Interest accrues at the prime rate plus 2% (10.25% at September 30, 2006). Interest expense amounted to approximately $3,000 for the nine months ended September 30, 2006. The total balance of advances and accrued interest due to an affiliate of the managing general partner was approximately $1,396,000. Subsequent to September 30, 2006, an affiliate of the managing general partner advanced the partnership approximately $415,000 for property operating expenses. There were no advances made for the years ended December 31, 2005, 2004 and 2003. Interest expense was less than $1,000 for the year ended December 31, 2003. The partnership did not recognize any interest expense during the years ended December 31, 2004 and 2005.

The partnership insures its property up to certain limits through coverage provided by Aimco, which is generally self-insured for a portion of losses and liabilities related to workers’ compensation, property casualty, general liability and vehicle liability. The partnership insures its property above the Aimco limits through insurance policies obtained by Aimco from insurers unaffiliated with your managing general partner. The partnership was charged by Aimco and its affiliates approximately $273,000, $288,000 and $313,000 during the years ended December 31, 2003, 2004 and 2005, respectively, and $511,000 for the nine months ended September 30, 2006 for insurance coverage and fees associated with policy claims administration.

Future Plans and Proposals

As described above under “Special Factors — Background and Reasons for the Offer,” your managing general partner is our subsidiary and, therefore, we have the ability to control the management of your partnership. In addition, we are affiliated with the manager of your partnership’s property. We currently intend that, upon consummation of the offer, we will hold the units acquired and your partnership will continue its business and operations substantially as they are currently being conducted. The offer is not expected to have any effect on partnership operations.

Although we are not obligated to do so, we may make future tender offers. However, we have no current plans to conduct future tender offers for units in your partnership. We may acquire additional units or sell units after completion or termination of the offer. Any acquisition may be made through private purchases, through one or more future tender or exchange offers or by any other means deemed advisable. Any acquisition may be at a price higher or lower than the price to be paid for the units purchased pursuant to this offer, and may be for cash, limited partnership interests in the Aimco Operating Partnership or other consideration. We may consider selling some or all of the units we acquire pursuant to this offer to persons not yet determined, which may include our affiliates. We may also attempt to buy your partnership’s property or attempt to acquire additional units through merger or other consolidation, although we have no present intention to do so. There can be no assurance, however, that we will initiate or complete, or will cause your partnership to initiate or complete, any subsequent transaction during any specific time period following the expiration of the offer or at all.

Upon consummation of this offer, your partnership will terminate the registration of its limited partnership units under the Exchange Act and will no longer file reports with the SEC. As a result, it may become more difficult for you to

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obtain information about your partnership, its results of operations and financial condition. See “Special Factors — Effects of the Offer — Effect on Trading Market; Registration Under Section 12(g) of the Exchange Act.”

The managing general partner has taken steps to obtain approval from local government authorities for a proposed redevelopment of Springhill Lake Apartments, which includes an increase in the number of units from 2,899 to up to 5,800. As part of the approval process, the managing general partner submitted a Conceptual Site Plan (“CSP”) to local government authorities. On January 12, 2006, the managing general partner was notified that approval of the CSP was administratively certified by the local government authorities, effective January 11, 2006. Prior to moving forward with the proposed redevelopment, the partnership must obtain approval of a Preliminary Plan of Subdivision (“PPS”) and multiple Detailed Site Plans (“DSP”), which precisely describes the proposed site, buildings and infrastructure. The managing general partner has submitted a PPS which is currently under review by local government authorities. Once the PPS is approved, the managing general partner expects to begin to submit individual DSPs, as market conditions allow. No assurances can be made regarding whether the necessary approvals will be obtained or the timing of such approvals, whether the partnership will move forward with the proposed redevelopment if such approvals are obtained, the timing of the redevelopment, or whether there will be any resulting change in the value of the property.

Except as set forth herein, neither we nor the managing general partner have any other present plans or proposals which relate to or would result in any extraordinary transaction, such as a merger, reorganization or liquidation, involving your partnership; any purchase or sale or transfer of a material amount of your partnership’s assets; any change in composition of your partnership’s senior management or personnel or their compensation; any material change in your partnership’s present capitalization, indebtedness or distribution policy; or any other material change in your partnership’s organizational structure or business. However, we expect that, consistent with your managing general partner’s fiduciary obligations, the managing general partner will seek and review opportunities, including opportunities identified by us, to engage in transactions which could benefit your partnership, such as sales or refinancings of assets or a combination of the partnership with one or more other entities, with the objective of seeking to maximize returns to limited partners. As discussed under “The Offer — Section 7. Certain Information Concerning Your Partnership — Investment Objectives and Policies; Sale or Financing of Investments,” the managing general partner regularly evaluates the real estate and capital markets. The managing general partner may consider refinancing the partnership’s existing indebtedness to the extent that the managing general partner is able to obtain a lower interest rate or if such indebtedness is approaching maturity. Furthermore, in the event that the managing general partner receives an attractive offer for your partnership’s property, the managing general partner would give due consideration to such an offer.

If any of the transactions referred to above occur and financial benefits accrue to the limited partners, we will participate in those benefits to the extent of our ownership of units. The agreement of limited partnership prohibits limited partners from voting on actions taken by the partnership, unless otherwise specifically permitted therein. Limited partners may vote on a liquidation, and we will be able to significantly influence or control the outcome of any such vote. Our primary objective in seeking to acquire the units pursuant to the offer is not, however, to influence the vote on any particular transaction, but rather to generate a profit on the investment represented by those units.

THE OFFER

1.   Terms of the Offer; Expiration Date

Upon the terms and subject to the conditions of the offer, we will accept (and thereby purchase) any and all units that are validly tendered on or prior to the expiration date and not withdrawn in accordance with the procedures set forth in “The Offer — Section 4. Withdrawal Rights.” For purposes of the offer, the term “expiration date” shall mean midnight, New York City time, on April 9, 2007, unless we in our reasonable discretion shall have extended the period of time for which the offer is open. See “The Offer — Section 5. Extension of Tender Offer Period; Termination; Amendment; No Subsequent Offering Period,” for a description of our right to extend the period of time during which the offer is open and to amend or terminate the offer.

The purchase price per unit will automatically be reduced by the aggregate amount of distributions per unit, if any, made or declared by your partnership on or after the commencement of our offer and prior to the date on which we acquire your units pursuant to our offer. If the offer price is reduced in this manner, we will notify you and, if necessary,

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we will extend the offer period so that you will have at least ten business days from the date of our notice to withdraw your units.

If, prior to the expiration date, we increase the consideration offered pursuant to the offer, the increased consideration will be paid for all units accepted for payment pursuant to the offer, whether or not the units were tendered prior to the increase in consideration.

The offer is conditioned on satisfaction of certain conditions. The offer is not conditioned upon any minimum number of units being tendered. See “The Offer — Section 11. Conditions to the Offer,” which sets forth in full the conditions to the offer. We reserve the right (but in no event shall we be obligated), in our reasonable discretion, to waive any or all of those conditions. If, on or prior to the expiration date, any or all of the conditions have not been satisfied or waived, we reserve the right to (i) decline to purchase any of the units tendered, terminate the offer and return all tendered units to tendering limited partners, (ii) waive all the unsatisfied conditions and purchase, subject to the terms of the offer, any and all units validly tendered, (iii) extend the offer and, subject to your withdrawal rights, retain the units that have been tendered during the period or periods for which the offer is extended, or (iv) amend the offer. Although we intend to pay for tendered units that have been accepted for payment as promptly as practicable, which we expect will be within three business days after expiration of the offer, by executing the letter of transmittal, you will agree that the transfer of units will be deemed to take effect as of the first day of the calendar quarter in which the offer expires. Although the payment date will occur after expiration of the offer, in the books and records of the partnership the change in ownership of tendered units will be made retroactive to the first day of the calendar quarter in which the offer expires. For tax, accounting and financial reporting purposes, the transfer of tendered units will be deemed to take effect on the first day of the calendar quarter in which the offer expires. Accordingly, all profits and losses relating to any tendered units will be allocated to us from and after this date. If we waive any material conditions to our offer, we will notify you and, if necessary, we will extend the offer period so that you will have at least five business days from the date of our notice to withdraw your units.

This offer is being mailed on or about March 12, 2007 to the persons shown by your partnership’s records to have been limited partners or, in the case of units owned of record by Individual Retirement Accounts and qualified plans, beneficial owners of units.

2.   Acceptance for Payment and Payment for Units

Upon the terms and subject to the conditions of the offer, we will purchase, by accepting for payment, and will pay for, any and all units validly tendered as promptly as practicable, which we expect will be within three business days after expiration of the offer. A tendering beneficial owner of units whose units are owned of record by an Individual Retirement Account or other qualified plan will not receive direct payment of the offer price; rather, payment will be made to the custodian of such account or plan. In all cases, payment for units purchased pursuant to the offer will be made only after timely receipt by the Information Agent of a properly completed and duly executed letter of transmittal and other documents required by the letter of transmittal. See “The Offer — Section 3. Procedure for Tendering Units.” UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON THE OFFER PRICE BY REASON OF ANY DELAY IN MAKING SUCH PAYMENT.

For purposes of the offer, we will be deemed to have accepted for payment pursuant to the offer, and thereby purchased, validly tendered units, if, as and when we give verbal or written notice to the Information Agent of our acceptance of those units for payment pursuant to the offer. Payment for units accepted for payment pursuant to the offer will be made through the Information Agent, which will act as agent for tendering limited partners for the purpose of receiving cash payments from us and transmitting cash payments to tendering limited partners.

If any tendered units are not accepted for payment by us for any reason, the letter of transmittal with respect to such units not purchased may be destroyed by the Information Agent or us or returned to you. You may withdraw tendered units until the expiration date (including any extensions). After the expiration date, the Information Agent may, on our behalf, retain tendered units, and those units may not be otherwise withdrawn if, for any reason, acceptance for payment of, or payment for, any units tendered pursuant to the offer is delayed or we are unable to accept for payment, purchase or pay for units tendered pursuant to the offer. Any such action is subject, however, to our obligation under Rule 14e-1(c) under the Exchange Act, to pay you the offer price in respect of units tendered or return those units promptly after termination or withdrawal of the offer.

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We reserve the right to transfer or assign, in whole or in part, to one or more of our affiliates, the right to purchase units tendered pursuant to the offer, but no such transfer or assignment will relieve us of our obligations under the offer or prejudice your rights to receive payment for units validly tendered and accepted for payment pursuant to the offer.

3.   Procedure for Tendering Units

Valid Tender.  To validly tender units pursuant to the offer, a properly completed and duly executed letter of transmittal, and any other required documents must be received by the Information Agent, at one of its addresses set forth on the back cover of this Offer to Purchase, on or prior to the expiration date. You may tender all or any portion of your units. No alternative, conditional or contingent tenders will be accepted.

Signature Requirements.  If the letter of transmittal is signed by the registered holder of a unit and payment is to be made directly to that holder, then no signature guarantee is required on the letter of transmittal. Similarly, if a unit is tendered for the account of a member firm of a registered national securities exchange, a member of the National Association of Securities Dealers, Inc. or a commercial bank, savings bank, credit union, savings and loan association or trust company having an office, branch or agency in the United States (each an “Eligible Institution”), no signature guarantee is required on the letter of transmittal. However, in all other cases, all signatures on the letter of transmittal must be guaranteed by an Eligible Institution.

In order for you to tender in the offer, your units must be validly tendered and not withdrawn on or prior to the expiration date.

The method of delivery of the letter of transmittal and all other required documents is at your option and risk, and delivery will be deemed made only when actually received by the Information Agent. If delivery is by mail, registered mail with return receipt requested is recommended. In all cases, sufficient time should be allowed to assure timely delivery.

Appointment as Proxy; Power of Attorney.  By executing the letter of transmittal, you are irrevocably appointing us and our designees as your proxy, in the manner set forth in the letter of transmittal and each with full power of substitution, to the fullest extent of your rights with respect to the units tendered by you and accepted for payment by us. Each such proxy shall be considered coupled with an interest in the tendered units. Such appointment will be effective when, and only to the extent that, we accept the tendered units for payment. Upon such acceptance for payment, all prior proxies given by you with respect to the units will, without further action, be revoked, and no subsequent proxies may be given (and if given will not be effective). We and our designees will, as to those units, be empowered to exercise all voting and other rights as a limited partner as we, in our sole discretion, may deem proper at any meeting of limited partners, by written consent or otherwise. By executing the letter of transmittal, you agree to execute all such documents and take such other actions as shall be reasonably required to enable the units tendered to be voted in accordance with our directions. The proxy granted by you to us will remain effective and be irrevocable for a period of ten years following the termination of our offer.

By executing the letter of transmittal, you also irrevocably constitute and appoint us and our designees as your attorneys-in-fact, each with full power of substitution, to the fullest extent of your rights with respect to the units tendered by you and accepted for payment by us. Such appointment will be effective when, and only to the extent that, we pay for your units, and will remain effective and be irrevocable for a period of ten years following the termination of our offer. You will agree not to exercise any rights pertaining to the tendered units without our prior consent. Upon such payment, all prior powers of attorney granted by you with respect to such units will, without further action, be revoked, and no subsequent powers of attorney may be granted (and if granted will not be effective). Pursuant to such appointment as attorneys-in-fact, we and our designees each will have the power, among other things, (i) to transfer ownership of such units on the partnership books maintained by your managing general partner (and execute and deliver any accompanying evidences of transfer and authenticity it may deem necessary or appropriate in connection therewith), (ii) upon receipt by the Information Agent of the offer consideration, to become a substituted limited partner, to receive any and all distributions made by your partnership on or after the date on which we acquire such units, and to receive all benefits and otherwise exercise all rights of beneficial ownership of such units in accordance with the terms of our offer, (iii) to execute and deliver to the managing general partner of your partnership a change of address form instructing the managing general partner to send any and all future distributions to which we are entitled pursuant to the terms of the offer in respect of tendered units to the address specified in such form, and (iv) to endorse any check payable to you or upon your

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order representing a distribution to which we are entitled pursuant to the terms of our offer, in each case, in your name and on your behalf.

Assignment of Interest in Future Distributions.  By executing the letter of transmittal, you will irrevocably assign to us and our assigns all of your right, title and interest in and to any and all distributions made by your partnership from any source and of any nature, including, without limitation, distributions in the ordinary course, distributions from sales of assets, distributions upon liquidation, winding-up or dissolution, payments in settlement of existing or future litigation, and all other distributions and payments from and after the expiration date of our offer, in respect of the units tendered by you and accepted for payment and thereby purchased by us. If, after the unit is accepted for payment and purchased by us, you receive any distribution from any source and of any nature, including, without limitation, distributions in the ordinary course, distributions from sales of assets, distributions upon liquidation, winding-up or dissolution, payments in settlement of existing or future litigation and all other distributions and payments, from your partnership in respect of such unit, you will agree to forward promptly such distribution to us.

Release of Claims.  By executing the letter of transmittal, effective upon acceptance for payment of the units tendered by you, you will, on behalf of yourself, your heirs, estate, executor, administrator, successors and assigns, and your partnership, fully, finally and forever release, relinquish and discharge us and our predecessors, successors and assigns and our present and former parents, subsidiaries, affiliates, investors, insurers, reinsurers, officers, directors, employees, agents, administrators, auditors, attorneys, accountants, information and solicitation agents, investment bankers, and other representatives, including but not limited to the Aimco Operating Partnership (collectively, the “Releasees”), from any and all claims and causes of action, whether brought individually, on behalf of a class, or derivatively, demands, rights, or liabilities, including, but not limited to, claims for negligence, gross negligence, professional negligence, breach of duty of care or loyalty, or breach of duty of candor, fraud, breach of fiduciary duty, mismanagement, corporate waste, malpractice, misrepresentation, whether intentional or negligent, misstatements and omissions to disclose, breach of contract, violations of any state or federal statutes, rules or regulations, whether known claims or unknown claims, through and including the date of execution of the letter of transmittal, including, but not limited to, those claims that arise out of or relate to (a) the ownership of one or more units in your partnership, including but not limited to, any and all claims related to the management of your partnership or the property owned by your partnership (whether currently or previously), the payment of management fees or other monies to the managing general partner of your partnership and its affiliates, prior acquisitions or tender offers, or (b) the purchase, acquisition, holding, sale, tender or voting of one or more units in your partnership (collectively, the “Released Claims”); provided, however, that the Released Claims are not intended to include any claim based upon violations of federal or state securities laws in connection with this offer.

In addition, you will expressly waive and relinquish, to the fullest extent permitted by law and consistent with the releases described herein, the provisions, rights and benefits of Section 1542 of the Civil Code of California (“Section 1542”), which provides:

A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN ITS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR.

You will have also waived any and all provisions, rights and benefits conferred by any law of any state or territory of the United States, or principle of common law, that is similar, comparable or equivalent to Section 1542. You may hereafter discover facts in addition to or different from those which you now know or believe to be true with respect to the subject matter of the Released Claims, but you will be deemed to have fully, finally and forever settled and released any and all Released Claims, known or unknown, suspected or unsuspected, contingent or non-contingent, that now exist or heretofore have existed upon any theory of law or equity now existing, including, but not limited to, conduct that is negligent, intentional, with or without malice, or a breach of any duty, law or rule, without regard to the subsequent discovery of the existence of such different or additional facts.

You will acknowledge and agree that the releases contained in the letter of transmittal are intended to include the Released Claims, which you may have and which you do not know or suspect to exist in your favor against the Releasees and that the releases contained in the letter of transmittal extinguish those claims. You will represent and warrant to the Releasees that you have been advised by your attorney of the effect and import of the provisions of Section 1542, and that you have not assigned or otherwise transferred or subrogated any interest in the Released Claims.

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Determination of Validity; Rejection of Units; Waiver of Defects; No Obligation to Give Notice of Defects.  All questions as to the validity, form, eligibility (including time of receipt) and acceptance for payment of any tender of units pursuant to our offer will be determined by us, in our reasonable discretion, which determination shall be final and binding on all parties. We reserve the absolute right to reject any or all tenders of any particular unit determined by us not to be in proper form or if the acceptance of or payment for that unit may, in the opinion of our counsel, be unlawful. We also reserve the absolute right to waive or amend any of the conditions to the offer that we are legally permitted to waive as to the tender of any particular unit and to waive any defect or irregularity in any tender with respect to any particular unit of any particular limited partner. If we waive any of the conditions of the offer with respect to the tender of a particular unit or with respect to a particular limited partner, we will waive such condition with respect to all other tenders of units or all other limited partners in this offer as well. Our interpretation of the terms and conditions to the offer (including the letter of transmittal) will be final and binding on all parties. No tender of units will be deemed to have been validly made unless and until all defects and irregularities have been cured or waived. Neither we, the Information Agent, nor any other person will be under any duty to give notification of any defects or irregularities in the tender of any unit or will incur any liability for failure to give any such notification.

Backup Federal Income Tax Withholding.  To prevent the possible application of back-up federal income tax withholding with respect to payment of the offer price, you must provide us with your correct taxpayer identification number. See the instructions to the letter of transmittal and “Special Factors — Material Federal Income Tax Matters.”

State and Local Withholding.  If you tender any units pursuant to this offer, we may be required under state or local tax laws to deduct and withhold a portion of our offer price. You should consult your tax advisor concerning whether any state or local withholding would be required on a disposition of your units and whether such amounts may be available to you as a credit on your state or local tax returns.

FIRPTA Withholding.  To prevent the withholding of federal income tax in an amount equal to 10% of the amount realized on the disposition (the amount realized is generally the offer price plus the partnership liabilities allocable to each unit purchased), you must certify that you are not a foreign person if you tender units. See the instructions to the letter of transmittal and “Special Factors — Material Federal Income Tax Matters.”

Transfer Taxes.  The amount of any transfer taxes (whether imposed on the registered holder of units or any person) payable on account of the transfer of units will be deducted from the purchase price unless satisfactory evidence of the payment of such taxes or exemption therefrom is submitted.

Binding Agreement.  A tender of a unit pursuant to any of the procedures described above and the acceptance for payment of such unit will constitute a binding agreement between the tendering limited partner and us on the terms set forth in this Offer to Purchase and the letter of transmittal.

4.   Withdrawal Rights

You may withdraw your tendered units at any time prior to the expiration date, including any extensions thereof. If you properly withdraw all of the units you previously tendered in the offer, the corresponding letter of transmittal, including your release and assignment of future claims contained therein, will be deemed revoked and of no force or effect.

For a withdrawal to be effective, a written notice of withdrawal must be timely received by the Information Agent at one of its addresses set forth on the back cover of this Offer to Purchase. Any such notice of withdrawal must specify the name of the person who tendered, the number of units to be withdrawn and the name of the registered holder of such units, if different from the person who tendered. In addition, the notice of withdrawal must be signed by the person who signed the letter of transmittal in the same manner as the letter of transmittal was signed.

If purchase of, or payment for, a unit is delayed for any reason, or if we are unable to purchase or pay for a unit for any reason, then, without prejudice to our rights under the offer, tendered units may be retained by the Information Agent; subject, however, to our obligation, pursuant to Rule 14e-1(c) under the Exchange Act, to pay the offer price in respect of units tendered or return those units promptly after termination or withdrawal of our offer.

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Any units properly withdrawn will thereafter be deemed not to have been validly tendered for purposes of our offer. However, withdrawn units may be re-tendered at any time prior to the expiration date by following the procedures described in “The Offer — Section 3. Procedure for Tendering Units.”

All questions as to the validity and form (including time of receipt) of notices of withdrawal will be determined by us in our reasonable discretion, which determination will be final and binding on all parties. Neither we, the Information Agent, nor any other person will be under any duty to give notification of any defects or irregularities in any notice of withdrawal or incur any liability for failure to give any such notification.

5.   Extension of Tender Offer Period; Termination; Amendment; No Subsequent Offering Period

We expressly reserve the right, in our reasonable discretion, at any time and from time to time, (i) to extend the period of time during which our offer is open and thereby delay acceptance for payment of, and the payment for, any unit, (ii) to terminate the offer and not accept any units not theretofore accepted for payment or paid for if any of the conditions to the offer are not satisfied, and (iii) to amend our offer in any respect (including, without limitation, by increasing or decreasing the consideration offered, increasing or decreasing the units being sought, or both). We will not assert any of the conditions to the offer subsequent to the expiration of the offer. Notice of any such extension, termination or amendment will promptly be disseminated to you in a manner reasonably designed to inform you of such change. In the case of an extension of the offer, the extension will be followed by a press release or public announcement which will be issued no later than 9:00 a.m., New York City time, on the next business day after the scheduled expiration date of our offer, in accordance with Rule 14e-1(d) under the Exchange Act.

If we extend the offer, or if we delay payment for a unit (whether before or after its acceptance for payment) or are unable to pay for a unit pursuant to our offer for any reason, then, without prejudice to our rights under the offer, the Information Agent may retain tendered units and those units may not be withdrawn except to the extent tendering limited partners are entitled to withdrawal rights as described in “The Offer — Section 4. Withdrawal Rights;” subject, however, to our obligation, pursuant to Rule 14e-1(c) under the Exchange Act, to pay the offer price in respect of units tendered or return those units promptly after termination or withdrawal of the offer.

If we make a material change in the terms of our offer, or if we waive a material condition to our offer, we will extend the offer and disseminate additional tender offer materials to the extent required by Rules 14d-4 and 14e-1 under the Exchange Act. The minimum period during which the offer must remain open following any material change in the terms of the offer, other than a change in price or a change in percentage of securities sought or a change in any dealer’s soliciting fee, if any, will depend upon the facts and circumstances, including the materiality of the change, but generally will be five business days. With respect to a change in price or, subject to certain limitations, a change in the percentage of securities sought or a change in any dealer’s soliciting fee, if any, a minimum of ten business days from the date of such change is generally required to allow for adequate dissemination to limited partners. Accordingly, if, prior to the expiration date, we increase (other than increases of not more than two percent of the outstanding units) or decrease the number of units being sought, or increase or decrease the offer price, and if the offer is scheduled to expire at any time earlier than the tenth business day after the date that notice of such increase or decrease is first published, sent or given to limited partners, the offer will be extended at least until the expiration of such ten business days. As used in this Offer to Purchase, “business day” means any day other than a Saturday, Sunday or a Federal holiday, and consists of the time period from 12:01 a.m. through 12:00 midnight, New York City time.

Pursuant to Rule 14d-11 under the Exchange Act, subsequent offering periods may be provided in tender offers for “any and all” outstanding units of a partnership. A subsequent offering period is an additional period of from three to twenty business days following the expiration date of the offer, including any extensions, in which limited partners may continue to tender units not tendered in the offer for the offer price. We do not currently intend to offer a subsequent offering period.

6.   Information Concerning Us and Certain of Our Affiliates.

General.  We are AIMCO Properties, L.P., a Delaware limited partnership and the operating partnership of Aimco. Together with our subsidiaries, we conduct substantially all of the operations of Aimco, a Maryland corporation. Aimco is a real estate investment trust that owns and manages multifamily apartment properties throughout the United States. Aimco’s Class A Common Stock is listed and traded on the New York Stock Exchange under the symbol “AIV.” As of

27

December 31, 2006, we owned or managed 1,256 apartment properties containing 216,413 apartment units located in 46 states, the District of Columbia and Puerto Rico. As of December 31, 2006, we:

•  owned an equity interest in and consolidated 162,432 units in 703 apartment properties;

•  owned an equity interest in and did not consolidate 11,791 units in 102 apartment properties; and

•  provided services to or managed, for third party owners, 42,190 units in 451 apartment properties, primarily pursuant to long term, non-cancelable agreements (including 38,617 units in 410 properties that are asset managed only, and not property managed), although in certain cases we may indirectly own generally less than one percent of the operations of such properties through a partnership syndication or other fund.

Our general partner is AIMCO-GP, Inc., a Delaware corporation, which is a wholly owned subsidiary of Aimco. Our principal executive office is located at 4582 South Ulster Street Parkway, Suite 1100, Denver, Colorado 80237, and our telephone number is (303) 757-8101.

The names, positions and business addresses of the directors and executive officers of Aimco (which is our affiliate), as well as a biographical summary of the experience of such persons for the past five years or more, are set forth on Annex I attached hereto and are incorporated herein by reference.

We and Aimco are both subject to the information and reporting requirements of the Exchange Act and, in accordance therewith, file reports and other information with the SEC relating to our business, financial condition and other matters, including the complete financial statements summarized below. Such reports and other information may be inspected at the public reference facilities maintained by the SEC at One Station Place, 100 F Street, N.E., Washington, D.C. 20549. Copies of such material can also be obtained from the Public Reference Room of the SEC in Washington, D.C. at prescribed rates. The SEC also maintains a site on the World Wide Web at http://www.sec.gov that contains reports, proxy and information statements and other information regarding registrants that file electronically with the SEC. In addition, information filed by Aimco with the New York Stock Exchange may be inspected at the offices of the New York Stock Exchange at 20 Broad Street, New York, New York 10005.

For more information regarding Aimco and the Aimco Operating Partnership, please refer to our Annual Report on Form 10-K for the year ended December 31, 2006 (particularly the management’s discussion and analysis of financial condition and results of operations) and other reports and documents we have filed with the SEC.

Except as described in “Special Factors — Background and Reasons for the Offer,” “— Conflicts of Interest and Transactions with Affiliates” and “The Offer — Section 7. Certain Information Concerning Your Partnership; Ownership and Voting,” neither we nor, to the best of our knowledge, any of the persons listed on Annex I attached hereto, (i) beneficially own or have a right to acquire any units, (ii) has effected any transaction in the units in the past 60 days, or (iii) have any contract, arrangement, understanding or relationship with any other person with respect to any securities of your partnership, including, but not limited to, contracts, arrangements, understandings or relationships concerning transfer or voting thereof, joint ventures, loan or option arrangements, puts or calls, guarantees of loans, guarantees against loss or the giving or withholding of proxies. Neither we nor our affiliates intend to tender any units beneficially owned in this offer.

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Summary Selected Financial Information for the Aimco Operating Partnership.  The historical financial data set forth below for the Aimco Operating Partnership for the years ended December 31, 2006, 2005 and 2004 is based on audited 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 of the Aimco Operating Partnership” included in the Aimco Operating Partnership’s Annual Report on Form 10-K for the year ended December 31, 2006.

	For the Year Ended
	December 31,
	2006(2)			2005(2)			2004(2)
	(Dollars in thousands, except per unit data)
Operating Data:
Total revenues	$	1,690,994		$	1,408,464		$	1,279,205
Total operating expenses		(1,353,841	)		(1,129,076	)		(994,970	)
(Loss) income from continuing operations (1)		(45,778	)		(23,980	)		61,897
Income from discontinued operations, net		242,842			104,724			235,181
Cumulative effect of change in accounting principle		—			—			(3,957	)
Net income		197,064			80,744			293,121
Per Share Data:
Earnings per common unit — basic:
Loss from continuing operations (net of preferred distributions)	$	(1.28	)	$	(1.18	)	$	(0.34	)
Income from discontinued operations		2.28			1.01			2.26
Cumulative effect of change in accounting principle		—			—			(0.04	)
Net income (loss) attributable to common unitholders		1.00			(0.17	)		1.88
Earnings per common unit — diluted:
Loss from continuing operations (net of preferred distributions)		(1.28	)		(1.18	)		(0.34	)
Income from discontinued operations		2.28			1.01			2.26
Cumulative effect of change in accounting principle		—			—			(0.04	)
Net income (loss) attributable to common unitholders		1.00			(0.17	)		1.88
Dividends declared per common unit		2.40			3.00			2.40
Balance Sheet Information:
Real estate, net of accumulated depreciation	$	9,081,723		$	8,189,743		$	7,672,954
Total assets		10,303,091			10,031,756			10,086,229
Total indebtedness		6,872,753			6,021,857			5,372,870
Partners’ capital (1)		2,537,602			2,945,402			3,291,087
Cash Flow Data:
Cash provided by operating activities	$	534,521		$	359,321		$	365,523
Cash provided by investing activities		233,964			36,374			407,683
Cash used in financing activities		(700,391	)		(339,308	)		(782,295	)
Net increase (decrease) in cash and cash equivalents		68,094			56,387			(9,089	)
Other Data:
Funds from operations available to common unitholders — diluted	$	334,583		$	265,754		$	295,645
Weighted average number of common units, common units equivalents and dilutive preferred securities outstanding		108,036			108,027			105,694

(1) Effective January 1, 2006, Aimco applied Emerging Issues Task Force Issue 04-5, Determining Whether a General Partner, or the General Partners as a Group, Controls a Limited Partnership or Similar Entity When the Limited

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Partners Have Certain Rights, or EITF 04-5. Aimco applied EITF 04-5 using a transition method that does not involve retrospective application to the financial statements for prior periods. In prior periods, Aimco used the equity method to account for our investments in the partnerships that were consolidated in 2006 in accordance with EITF 04-5. In accordance with our transition method for the adoption of EITF 04-5, Aimco recorded a $84.6 million charge to partners’ capital as of January 1, 2006, for the cumulative amount of additional losses that would have been recognized had EITF 04-5 been applied in prior periods. Substantially all of these losses were attributable to real estate depreciation expense.

(2)

Certain reclassifications have been made to the 2005 and 2004 amounts to conform to the 2006 presentation. These reclassifications primarily represent presentation changes related to discontinued operations resulting from the 2002 adoption of Statement of Financial Accounting Standards No. 144.

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For the years ended December 31, 2006, 2005 and 2004, our FFO is calculated as follows:

	For the Year Ended
	December 31,
	2006			2005			2004
	(Amounts in thousands)
Net income (loss) attributable to common unitholders (A)	$	106,537		$	(18,202	)	$	196,199
Adjustments:
Depreciation and amortization (B)		470,597			376,231			315,451
Depreciation and amortization related to non-real estate assets		(19,620	)		(17,700	)		(18,349	)
Depreciation on rental property related to minority partners and unconsolidated entities (C)		(4,409	)		(12,474	)		(14,457	)
Depreciation on rental property related to minority partners’ interest-adjustment (D)		7,377			—			—
Gain on dispositions of unconsolidated real estate and other		(34,567	)		(18,958	)		(69,294	)
Gain on dispositions of non-depreciable assets		11,525			2,480			38,977
Deficit distributions to minority partners, net (E)		21,004			11,615			17,374
Cumulative effect of change in accounting principle		—			—			3,957
Discontinued operations:
Gain on dispositions of real estate, net of minority partners’ interest (C)		(260,206	)		(102,972	)		(249,353	)
Depreciation of rental property, net of minority partners’ interest (C)		16,910			51,897			59,297
Recovery of deficit distributions to minority partners, net (E)		(15,927	)		(14,606	)		(3,231	)
Income tax arising from disposals		32,918			4,481			16,015
Preferred OP Unit distributions		83,679			97,823			93,433
Redemption related preferred OP Unit issuance costs		6,848			1,123			3,489
Funds from Operations	$	422,666		$	360,738		$	389,508
Preferred OP Unit distributions		(83,679	)		(97,823	)		(93,433	)
Redemption related preferred OP Unit issuance costs		(6,848	)		(1,123	)		(3,489	)
Distributions on dilutive preferred securities		2,444			3,962			3,059
Funds from Operations attributable to common unitholders — diluted	$	334,583		$	265,754		$	295,645
Weighted average number of common units, common unit equivalents
and dilutive preferred securities outstanding:
Common unit and equivalents (F)		106,268			105,081			104,386
Dilutive preferred securities		1,768			2,946			1,308
Total		108,036			108,027			105,694

(A)	Represents the numerator for earnings per common unit, calculated in accordance with GAAP.
(B)	Includes amortization of management contracts where we are the general partner. Such management contracts were established in certain instances where we acquired a general partner interest in either a consolidated or an unconsolidated partnership. Because the recoverability of these management contracts depends primarily on the operations of the real estate owned by the limited partnerships, we believe it is consistent with the White Paper to add back such amortization, as the White Paper directs the add-back of amortization of assets uniquely significant to the real estate industry.
(C)	“Minority partners’ interest,” means minority interest in our consolidated real estate partnerships.
(D)	Represents prior period depreciation of certain tax credit redevelopment properties that Aimco included in an adjustment to minority interest in real estate partnerships for the year ended December 31, 2006. This prior period depreciation is added back to determine FFO in accordance with the NAREIT White Paper.

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(E)

In accordance with GAAP, deficit distributions to minority partners are charges recognized in our income statement when cash is distributed to a non-controlling partner in a consolidated real estate partnership in excess of the positive balance in such partner’s capital account, which is classified as minority interest on our balance sheet. We record these charges for GAAP purposes even though there is no economic effect or cost. Deficit distributions to minority partners occur when the fair value of the underlying real estate exceeds its depreciated net book value because the underlying real estate has appreciated or maintained its value. As a result, the recognition of expense for deficit distributions to minority partners represents, in substance, either (a) our recognition of depreciation previously allocated to the non-controlling partner or (b) a payment related to the non-controlling partner’s share of real estate appreciation. Based on White Paper guidance that requires real estate depreciation and gains to be excluded from FFO, we add back deficit distributions and subtract related recoveries in our reconciliation of net income to FFO.

(F)

Represents the denominator for earnings per common unit — diluted, calculated in accordance with GAAP, plus additional common share equivalents that are dilutive for FFO.

7.   Certain Information Concerning Your Partnership

General.  Your partnership was organized on December 28, 1984, under the laws of the State of Maryland. Its primary business is real estate ownership and related operations. Your partnership was formed for the purpose of investing as a general partner in Springhill Lake Limited Partnerships I through IX and Springhill Commercial Limited Partnership (collectively, the “Operating Partnerships”), each of which is a Maryland limited partnership owning a section of Springhill Lake Apartments, a residential apartment and townhouse complex with a four-store shopping center. The partnership is the sole general partner of each Operating Partnership. The limited partner of each Operating Partnership is Theodore N. Lerner, a former general partner of the Operating Partnerships whose interest was converted to that of a limited partner on January 16, 1985 in conjunction with the partnership’s acquisition of its interest in the Operating Partnerships. The partnership’s interest in the Operating Partnerships entitles it to 87.26% of profits and losses for tax purposes, 87.26% of the Operating Partnerships’ cash flow (after certain priority distributions) and 85% of the proceeds of a sale or disposition of Springhill Lake Apartments (after certain priority distributions). Your partnership currently has 142 limited partners as of December 31, 2006.

Managing General Partner.  The managing general partner of your partnership is AIMCO/Springhill Lake Investors GP, LLC, which is a subsidiary of Aimco. The principal executive office of the managing general partner is located at 55 Beattie Place, P.O. Box 1089, Greenville, South Carolina 29602, and its phone number is (864) 239-1000. The names, positions and business addresses of the directors and executive officers of the general partner (which is our affiliate), as well as a biographical summary of the experience of such persons for the past five years or more, are set forth on Annex I attached hereto and are incorporated herein by reference.

Our affiliate serves as manager of the property owned by your partnership. We and the managing general partner of your partnership received total fees and reimbursements (excluding property management fees) of approximately $796,000 in 2003, $779,000 in 2004 and $792,000 in 2005. Total fees and reimbursements (excluding property management fees) for the nine months ended September 30, 2006 were approximately $930,000. The property manager is entitled to receive three percent of residential rent collections and five percent of commercial income from the partnership’s property as compensation for providing property management services. It received property management fees of approximately $953,000 in 2003, $965,000 in 2004 and $995,000 for 2005. Property management fees for the nine months ended September 30, 2006 were approximately $766,000.

Ownership and Voting.  We, together with AIMCO IPLP, L.P. (which is our affiliate), own 523.65 units, or 80.69% of the total outstanding units of your partnership. Because we and our affiliate own a majority of the outstanding units and control your partnership’s managing general partner, we control the outcome of most voting decisions with respect to your partnership. In general, we will vote the units owned by us in whatever manner we deem to be in our best interests, which may not be in the interest of other limited partners. See “Special Factors — Effects of the Offer” and “The Offer — Section 8. Voting Power.”

Investment Objectives and Policies; Sale or Financing of Investments.  In general, your managing general partner (which is our subsidiary) regularly evaluates the partnership’s property by considering various factors, such as the partnership’s financial position and real estate and capital markets conditions. The managing general partner monitors the property’s specific locale and sub-market conditions (including stability of the surrounding neighborhood), evaluating

32

current trends, competition, new construction and economic changes. It oversees the operating performance of the property and continuously evaluates the physical improvement requirements. In addition, the financing structure for the property (including any prepayment penalties), tax implications, availability of attractive mortgage financing to a purchaser, and the investment climate are all considered. Any of these factors, and possibly others, could potentially contribute to any decision by the managing general partner to sell, refinance, upgrade with capital improvements or hold the partnership property. After taking into account the foregoing considerations, your managing general partner has no present intention of seeking a sale of your partnership’s property. Although the future operating results of your partnership and future sales price of the property owned by your partnership are uncertain, the operating performance of your partnership’s property may improve in the future or the private resale market for properties could improve over time, which, in turn, may result in higher property values, making a sale of your partnership’s property a more attractive option in the future. Such values, however, are also a function of the interest rate environment at the time. Another significant factor considered by your managing general partner is the likely tax consequences of a sale of the property for cash. Such a transaction would likely result in tax liabilities for many limited partners.

The managing general partner has taken steps to obtain approval from local government authorities for a proposed redevelopment of Springhill Lake Apartments, which includes an increase in the number of units from 2,899 to up to 5,800. No assurances can be made regarding whether the necessary approvals will be obtained or the timing of such approvals, whether the partnership will move forward with the proposed redevelopment if such approvals are obtained, the timing of the redevelopment, or whether there will be any resulting change in the value of the property. For more information regarding the proposed redevelopment, see “Special Factors — Future Plans and Proposals.”

Term of Your Partnership.  Under your partnership’s agreement of limited partnership, the term of the partnership will continue until December 31, 2035, unless sooner terminated as provided in the agreement or by law.

Capital Replacements.  Your partnership has an ongoing program of capital improvements, replacements and renovations, including carpet replacement, structural improvements, building refurbishments, general enhancements, parking lot resurfacing and other replacements and renovations in the ordinary course of business. The capital expenditures will be incurred only if cash is available from operations or from partnership reserves. Although there can be no assurance as to the effect of capital expenditures on the future performance of the property, these expenditures are expected to improve the desirability of the property to tenants.

The managing general partner spent approximately $6,266,000 for capital improvements at Springhill Lake Apartments during the year ended December 31, 2005 to repair and update the property. During the nine months ended September 30, 2006, the partnership completed approximately $5,960,000 of capital improvements consisting primarily of land improvements and entitlements, major landscaping, building and structural improvements, appliances, HVAC and water and sewer upgrades, and roof and floor covering replacements. During 2006, the partnership completed the repairs and improvements at the property required to be made in connection with the July 2004 refinancing of the mortgage encumbering the property. In connection with the refinancing, approximately $675,000 was deposited in an escrow account to fund such repairs and improvements. At September 30, 2006, the funds from the escrow account were fully used. In addition, during 2006, the partnership completed a majority of the renovations to one building which was damaged by a fire in June 2005 and clean up work for two other buildings which were destroyed in the fire and will not be rebuilt. The renovation work is anticipated to be completed during the first half of 2007. The partnership received insurance proceeds of approximately $1,453,000 during 2005 related to this casualty, of which approximately $663,000 is being held in escrow by the mortgage company. Any portion of the insurance proceeds not used for renovation or clean up costs will be applied to the principal balance of the mortgage encumbering the property.

For 2007, the capital improvements for your partnership’s property will be determined on a quarterly basis, primarily based on the immediate maintenance needs of the property to maintain both tenant safety and curb appeal. Such capital expenditures will depend on the physical condition of the property as well as anticipated cash flow generated by the property.

Competition.  There are other residential properties within the market area of your partnership’s property. The number and quality of competitive properties in such an area could have a material effect on the rental market for the apartments at your partnership’s property and the rents that may be charged for such apartments. While Aimco is a significant factor in the United States in the apartment industry, competition for apartments is local. According to data

33

published by the National Multi-Housing Council, we believe Aimco is one of the largest owners and managers of multifamily apartment properties in the United States.

Financial Data.  The selected financial information of your partnership set forth below for the nine months ended September 30, 2006 and 2005 is based on unaudited financial statements. The selected financial information of your partnership set forth below for the years ended December 31, 2005, 2004 and 2003 is based on audited 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 of Your Partnership” in the Annual Report on Form 10-K of your partnership for the year ended December 31, 2005 and the Quarterly Report on Form 10-QSB for the quarter ended September 30, 2006. These reports and other information may be inspected at the public reference facilities maintained by the SEC at One Station Place, 100 F Street, N.E., Washington, D.C. 20549. Copies of such material can also be obtained from the Public Reference Room of the SEC in Washington, D.C. at prescribed rates. The SEC also maintains a site on the World Wide Web at http://www.sec.gov that contains reports, proxy and information statements and other information regarding registrants that file electronically with the SEC.

	For the Nine Months Ended						For the Year Ended
	September 30,						December 31,
	2006			2005			2005			2004			2003
	(Unaudited)
				(In thousands, except for unit data)
Operating Data:
Total revenues	$	25,784		$	25,076		$	34,792		$	32,824		$	32,282
Income before minority interest		379			2,504			4,451			4,811			5,440
(Loss) Distributions to minority interest partner in excess of investment		(649	)		(375	)		(375	)		(2,737	)		(985	)
(Loss) Income from continuing operations		(270	)		2,129			4,076			2,074			4,455
Net (loss) income		(270	)		2,129			4,076			2,074			4,455
(Loss) Income from continuing operations per limited partnership unit		(394	)		3,117			5,966			3,035			6,521
Net (loss) income per limited partnership unit		(394	)		3,117			5,966			3,035			6,521
Distributions per limited partnership unit		6,390			3,669			3,669			27,836			10,097
(Deficit) Ratio of earnings to fixed charges		(372	)		167.96	%		190.05	%		176.39	%		266.53	%
Balance Sheet Data:
Cash and cash equivalents	$	238		$	1,953		$	3,725		$	1,502		$	5,194
Real estate, net of accumulated depreciation		45,354			44,815			44,758			45,976			48,571
Total assets		51,107			51,586			53,516			51,540			65,825
Notes payable		113,500			113,500			113,500			113,500			110,386
General partners’ deficit		(3,363	)		(3,229	)		(3,131	)		(3,210	)		(2,771	)
Limited partners’ deficit		(63,118	)		(60,564	)		(58,715	)		(60,206	)		(44,110	)
Partners’ deficit		(66,481	)		(63,793	)		(61,846	)		(63,416	)		(46,881	)
Total distributions		(4,365	)		(2,506	)		(2,506	)		(18,609	)		(6,750	)
Book value per limited partnership unit		(97,254	)		(93,319	)		(90,470	)		(92,767	)		(67,966	)
Cash Flow Data:
Net (decrease) increase in cash and cash equivalents	$	(3,487	)	$	451		$	2,223		$	(3,692	)	$	(365	)
Net cash provided by operating activities		5,252			7,430			10,348			13,219			13,134

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Description of Property.  The following shows the location, the date of purchase, the nature of your partnership’s ownership interest in and the use of your partnership’s property.

	Date of
Property	Purchase		Type of Ownership		Primary Use
Springhill Lake Apartments Greenbelt, Maryland		10/84		Fee ownership subject to a first mortgage		Apartment
						2,877 units

Springhill Lake Apartments was initially acquired by the Operating Partnerships in October 1984 for an initial cost of $73,316,500. The property consists of 2,877 apartment and townhouse units and a four-store shopping center situated on 154 acres of landscaped grounds and also contains a clubhouse/community center, two Olympic-size swimming pools and six tennis courts.

Accumulated Depreciation Schedule.  The following shows the gross carrying value and accumulated depreciation of your partnership’s property as of December 31, 2005.

	Gross		Accumulated		Depreciable		Method of		Federal
Property	Carrying Value		Depreciation		Life		Depreciation		Tax Basis
	(In thousands)								(In thousands)
Springhill Lake Apartments	$	138,864	$	94,106		5-30 years		Straight line	$	33,993

Schedule of Mortgages.  The following shows certain information regarding the outstanding first mortgage encumbering your partnership’s property as of December 31, 2005.

Principal

Principal

Balance At

Stated

Balance

December 31,

Interest

Period

Maturity

Due At

Property

2005

Rate

Amortized

Date

Maturity(1)

(In thousands)

(In thousands)

Springhill Lake Apartments

$

113,500

(2

)

(3

)

08/11

$

113,500

(1)	See notes to financial statements in the partnership’s Annual Report on Form 10-K for the year ended December 31, 2005 for information with respect to the partnership’s ability to prepay these loans and other specific details about these loans.
(2)	Adjustable rate based on the Freddie Mac discounted mortgage-backed security index plus 63 basis points. The rate at December 31, 2005 was 4.713% and is reset monthly.
(3)	Interest only payments on loan at December 31, 2005.

Average Rental Rates and Occupancy.  The following shows the average rental rates and occupancy percentages for your partnership’s property during the periods indicated.

	Average Annual				Average
	Rental Rates				Annual
	(per unit)				Occupancy
Property	2005		2004		2005			2004
Springhill Lake Apartments	$	11,758	$	11,275		94	%		95	%

Property Management.  Your partnership’s property is managed by one of our affiliates. Pursuant to the management agreement between the property manager and your partnership, the property manager operates your partnership’s property, establishes rental policies and rates and directs marketing activities. The property manager also is responsible for maintenance, the purchase of equipment and supplies, and the selection and engagement of all vendors, suppliers and independent contractors.

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Distributions.  The following table shows, for each of the years indicated, the distributions paid per unit of limited partnership interest for such years.

Year Ended December 31	Amount
2003	$	10,097
2004	$	27,836
2005	$	3,669
2006 (through September 30)	$	6,390

Compensation Paid to the Managing General Partner and its Affiliates.  The following table shows, for each of the years indicated, approximate amounts paid to your managing general partner and its affiliates on a historical basis. The managing general partner is reimbursed for actual direct costs and expenses incurred in connection with the operation of the partnership. The property manager is entitled to receive fees for transactions involving your partnership and its property and is entitled to receive five percent of the gross receipts from the partnership’s property for providing property management services. See “Special Factors — Conflicts of Interest and Transactions with Affiliates.”

	Partnership Fees		Property Management
Year	and Expenses		Fees
2003	$	796,000	$	953,000
2004	$	779,000	$	965,000
2005	$	792,000	$	995,000
2006 (through September 30)	$	930,000	$	766,000

Legal Proceedings.  From time to time, your partnership may be a party to a variety of legal proceedings related to its ownership of the property which arise in the ordinary course of business.

8.   Voting Power

Decisions with respect to the day-to-day management of your partnership are the responsibility of the managing general partner. Because the managing general partner of your partnership is our subsidiary, we control the management of your partnership. Under your partnership’s agreement of limited partnership, limited partners holding a majority of the outstanding units must approve certain extraordinary transactions, including the removal of the managing general partner, most amendments to the partnership agreement and the sale of all or substantially all of your partnership’s assets. We, together with AIMCO IPLP, L.P. (which is our affiliate), own 523.65 units, or 80.69% of the total outstanding units of your partnership. Because we and our affiliates own a majority of the outstanding units and control your partnership’s managing general partner, we control the outcome of most voting decisions with respect to your partnership. In general, we will vote the units owned by us in whatever manner we deem to be in our best interests, which may not be in the interest of other limited partners. See “Special Factors — Effects of the Offer.”

9.   Source of Funds

We expect that approximately $15.3 million will be required to purchase all of the limited partnership units that we are seeking in this offer exclusive of fees and expenses. For more information regarding fees and expenses, see “The Offer — Section 13. Fees and Expenses.”

In addition to this offer, we intend to make concurrent offers to acquire interests in several other limited partnerships. If such transactions were fully subscribed for cash, we would be required to pay approximately $84.7 million for such units. If for some reason we did not have such funds available, we might extend these offers for a period of time sufficient for us to obtain additional funds, or we could terminate the offers. However, we do not expect these offers to be fully subscribed. Additionally, we believe that we will have sufficient cash on hand and available sources of financing to acquire all units tendered pursuant to these offers. As of December 31, 2006, we had approximately $229.8 million of cash on hand and $277.3 million available for borrowing under existing lines of credit. We intend to repay any amounts borrowed to finance the offer out of future working capital.

We have a $450 million revolving credit facility with a syndicate of financial institutions. The Aimco Operating Partnership, Aimco and an Aimco subsidiary, AIMCO/Bethesda Holdings, Inc., are the borrowers. The annual interest rate

36

under the credit facility is based on either LIBOR or a base rate, plus, in either case, an applicable margin. The margin ranges between 1.125% and 1.75% in the case of LIBOR-based loans and between 0% and 0.25% in the case of base rate loans, based upon Aimco’s leverage ratio. The default rate of interest for the loan is equal to the rate described above plus 3%. The credit facility matures on May 1, 2009.

10.   Dissenters’ Rights

Neither the agreement of limited partnership of your partnership nor applicable law provides any right for you to have your units appraised or redeemed in connection with, or as a result of, our offer. You have the opportunity to make an individual decision on whether or not to tender your units in the offer.

No provisions have been made with regard to the offer to allow you or other limited partners to inspect the books and records of the partnership or to obtain counsel or appraisal services at our expense or at the expense of your partnership. However, you have the right under your partnership’s agreement of limited partnership to obtain a list of the limited partners in your partnership.

11.   Conditions to the Offer

We will not be required to accept for payment and pay for any units tendered pursuant to our offer, may postpone the purchase of, and payment for, units tendered, and may terminate or amend our offer if at any time on or after the date of this Offer to Purchase and at or before the expiration of our offer (including any extension thereof), if any of the following shall occur:

•  any change shall have occurred or been threatened in the business, properties, assets, liabilities, indebtedness, capitalization, condition (financial or otherwise), operations, licenses or franchises, management contract, or results of operations or prospects of your partnership or local markets in which your partnership owns or operates its property, including any fire, flood, natural disaster, casualty loss, or act of God that is adverse to your partnership or the value of your units to us, which change would, individually or in the aggregate, result in an adverse effect on net operating income of your partnership of more than $10,000 per year, or a decrease in value of an asset of your partnership, or the incurrence of a liability with respect to your partnership, in an amount in excess of $100,000 (a “Material Adverse Effect”); or

•  there shall have occurred (i) any general suspension of trading in, or limitation on prices for, securities on any national securities exchange or the over-the-counter market in the United States, (ii) a decline in the closing share price of Aimco’s Class A Common Stock of more than 5.0%, measured from the close of business on the last trading day preceding the date of this offer and the close of business on the last trading day preceding the expiration of this offer, (iii) any extraordinary or material adverse change in the financial, real estate or money markets or major equity security indices in the United States such that there shall have occurred at least a 25 basis point increase in LIBOR, or at least a 5.0% decrease in the S&P 500 Index, the Morgan Stanley REIT Index, or the price of the 10-year Treasury Bond or the price of the 30-year Treasury Bond, in each case, measured from the close of business on the last trading day preceding the date of this offer and the close of business on the last trading day preceding the expiration of this offer, (iv) a declaration of a banking moratorium or any suspension of payments in respect of banks in the United States, (v) any limitation (whether or not mandatory) by any governmental authority on, or any other material event which, in either case, could reasonably be expected to affect the extension of credit by banks or other lending institutions, or (vi) in the case of any of the foregoing existing at the time of the commencement of the offer, a material acceleration or worsening thereof; or

•  there shall have been threatened in writing, instituted or pending any action, proceeding, application or counterclaim by any Federal, state, local or foreign government, governmental authority or governmental agency, or by any other person, before any governmental authority, court or regulatory or administrative agency, authority or tribunal, which (i) challenges or seeks to challenge the acquisition by us of the units, restrains, prohibits or delays the making or consummation of the offer, prohibits the performance of any of the contracts or other arrangements entered into by us (or any of our affiliates) seeks to obtain any material amount of damages as a result of the transactions contemplated by the offer, (ii) seeks to make the purchase of, or payment for, some or all of the units pursuant to the offer illegal or results in a delay in our ability to accept for payment or pay for some or all of the units, (iii) seeks to prohibit or limit the ownership or operation by us or any of our affiliates of the entity serving

37

as your managing general partner (which is our subsidiary) or to remove such entity as the managing general partner of your partnership, or seeks to impose any material limitation on our ability or any of our affiliates to conduct your partnership’s business or own such assets, (iv) seeks to impose material limitations on our ability or any of our affiliates to acquire or hold or to exercise full rights of ownership of the units including, but not limited to, the right to vote the units purchased by us on all matters properly presented to unitholders, or (v) in the case of any of the foregoing existing at the time of the commencement of the offer, a material acceleration or worsening thereof; or

•  there shall be any action taken, or any statute, rule, regulation, order or injunction shall be sought, proposed, enacted, promulgated, entered, enforced or deemed applicable to the offer, your partnership, any general partner of your partnership, us or any affiliate of ours or your partnership, or any other action shall have been taken, proposed or threatened, by any government, governmental authority or court, that, directly or indirectly, results in any of the consequences referred to in clauses (i) through (v) of the immediately preceding paragraph; or

•  a tender or exchange offer for any units shall have been commenced or publicly proposed to be made by another person or “group” (as defined in Section 13(d)(3) of the Securities Exchange Act of 1934), or it shall have been publicly disclosed or we shall have otherwise learned that (i) any person or group shall have acquired or proposed or be attempting to acquire beneficial ownership of more than four percent of the units, or shall have been granted any option, warrant or right, conditional or otherwise, to acquire beneficial ownership of more than four percent of the units, or (ii) any person or group shall have entered into a definitive agreement or an agreement in principle or made a proposal with respect to a merger, consolidation, purchase or lease of assets, debt refinancing or other business combination with or involving your partnership; or

•  there shall have occurred any event, circumstance, change, effect or development that, individually or in the aggregate with any other events, circumstances, changes, effects or developments, has had an adverse effect on our financial condition in an amount in excess of $10,000,000, which does not result from actions or inactions by us or our affiliates.

The foregoing conditions are for our sole benefit and may be asserted by us regardless of the circumstances giving rise to such conditions or may be waived by us at any time in our reasonable discretion prior to the expiration of this offer. The failure by us at any time to exercise any of the foregoing rights shall not be deemed a waiver of any such right, and the waiver of any such right with respect to any particular facts or circumstances shall not be deemed a waiver with respect to any other facts or circumstances. If we waive any of the conditions to the offer with respect to the tender of a particular unit, we will waive such condition with respect to all other tenders of units in this offer as well. All conditions to our offer will be satisfied or waived on or before the expiration of our offer. We will not waive a material condition to the offer on the expiration date. If we waive any material conditions to our offer, we will notify you and, if necessary, we will extend the offer period so that you will have at least five business days from the date of our notice to withdraw your units.

12.   Certain Legal Matters

General.  Except as set forth in this Section 12, we are not aware of any licenses or regulatory permits that would be material to the business of your partnership, taken as a whole, and that might be adversely affected by our acquisition of units as contemplated herein, or any filings, approvals or other actions by or with any domestic or foreign governmental authority or administrative or regulatory agency that would be required prior to the acquisition of units by us pursuant to the offer, other than the filing of a Tender Offer Statement and Rule 13e-3 Transaction Statement on Schedule TO with the SEC (which has already been filed) and any required amendments thereto. While there is no present intent to delay the purchase of units tendered pursuant to the offer pending receipt of any such additional approval or the taking of any such action, there can be no assurance that any such additional approval or action, if needed, would be obtained without substantial conditions or that adverse consequences might not result to your partnership or its business, or that certain parts of its business might not have to be disposed of or other substantial conditions complied with in order to obtain such approval or action, any of which could cause us to elect to terminate the offer without purchasing units thereunder. Our obligation to purchase and pay for units is subject to certain conditions, including conditions related to the legal matters discussed in this Section 12.

38

Antitrust.  We do not believe that the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, is applicable to the acquisition of units contemplated by our offer.

Margin Requirements.  The units are not “margin securities” under the regulations of the Board of Governors of the Federal Reserve System and, accordingly, those regulations generally are not applicable to our offer.

State Laws.  We are not aware of any jurisdiction in which the making of our offer is not in compliance with applicable law. If we become aware of any jurisdiction in which the making of the offer would not be in compliance with applicable law, we will make a good faith effort to comply with any such law. If, after such good faith effort, we cannot comply with any such law, the offer will not be made to (nor will tenders be accepted from or on behalf of) limited partners residing in such jurisdiction. In those jurisdictions with securities or blue sky laws that require the offer to be made by a licensed broker or dealer, the offer shall be made on behalf of us, if at all, only by one or more registered brokers or dealers licensed under the laws of that jurisdiction.

13.   Fees and Expenses

You will not pay any partnership transfer fees if you tender your units. Except as set forth herein, we will not pay any fees or commissions to any broker, dealer or other person for soliciting tenders of units pursuant to the offer. We have retained The Altman Group, Inc. to act as Information Agent in connection with our offer. The Information Agent may contact holders of units by mail, telephone, telex, telegraph and personal interview and may request brokers, dealers and other nominee limited partners to forward materials relating to the offer to beneficial owners of the units. We will pay the Information Agent reasonable and customary compensation for its services in connection with the offer, plus reimbursement for out-of-pocket expenses, and will indemnify it against certain liabilities and expenses in connection therewith, including liabilities under the Federal securities laws. We will also pay all costs and expenses of printing and mailing the offer and any related legal fees and expenses. The partnership will not be responsible for paying any of the fees or expenses incurred by us in connection with this offer.

The following is an itemized statement of the aggregate estimated expenses incurred and to be incurred in this offer by us:

Information Agent Fees	$	1,000
Legal Fees		60,000
Printing Fees		700
Tax and Accounting Fees		1,500
Postage		800
Depositary		500
Total	$	64,500

No person has been authorized to give any information or to make any representation on behalf of us not contained herein, or in the letter of transmittal and, if given or made, such information or representation must not be relied upon as having been authorized.

The managing general partner does not make any recommendation regarding whether you should accept this offer. You are instead encouraged to carefully review this Offer to Purchase and any other information available to you and to seek advice from your independent lawyer, tax advisor and/or financial advisor with respect to your particular circumstances before deciding whether or not to accept this offer.

We have filed with the SEC a Tender Offer Statement and Rule 13e-3 Transaction Statement on Schedule TO, pursuant to Sections 13(e)(4), 14(d)(1) and Rule 14d-3 under the Exchange Act, furnishing certain additional information with respect to our offer, and may file amendments thereto. Your partnership has filed with the SEC a Solicitation/Recommendation Statement on Schedule 14D-9 pursuant to Section 14(d)(4) and Rule 14d-9 under the Exchange Act, furnishing certain additional information about your partnership’s and the managing general partner’s position concerning our offer, and your partnership may file amendments thereto. The Schedules TO and 14D-9 and any amendments to either Schedule, including exhibits, may be inspected and copies may be obtained at the same place and in the same manner as described in “The Offer — Section 7. Certain Information Concerning Your Partnership.”

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The letter of transmittal and any other required documents should be sent or delivered by each limited partner or such limited partner’s broker, dealer, bank, trust company or other nominee to the Information Agent at one of its addresses set forth below.

THE INFORMATION AGENT FOR THE OFFER IS:

THE ALTMAN GROUP, INC.

By Mail:	By Overnight Courier:	By Hand:
1200 Wall Street, 3rd Floor	1200 Wall Street, 3rd Floor	1200 Wall Street, 3rd Floor
Lyndhurst, NJ 07071	Lyndhurst, NJ 07071	Lyndhurst, NJ 07071

For information, please call:

TOLL FREE: (800) 217-9608

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ANNEX I

OFFICERS AND DIRECTORS

The names and positions of the executive officers of Apartment Investment and Management Company (“Aimco”), AIMCO-GP, Inc. (“Aimco-GP”) and AIMCO/Springhill Lake Investors GP, LLC, the managing general partner of your partnership (the “Managing General Partner”) are set forth below. The directors of Aimco are also set forth below. All of the executive officers of Aimco also serve as executive officers of Aimco-GP. The two directors of Aimco-GP are Terry Considine and Thomas M. Herzog. The managers of the Managing General Partner of your partnership are Harry G. Alcock and Martha L. Long. Unless otherwise indicated, the business address of each executive officer and director is 4582 South Ulster Parkway, Suite 1100, Denver, Colorado 80237. Each executive officer and director is a citizen of the United States of America.

Name	Position
Terry Considine	Chairman of the Board, Chief Executive Officer and President of Aimco and Aimco-GP
Jeffrey W. Adler	Executive Vice President — Conventional Property Operations of Aimco, Aimco-GP and the Managing General Partner
Harry G. Alcock	Executive Vice President and Chief Investment Officer of Aimco, Aimco-GP and the Managing General Partner; Manager of the Managing General Partner
Timothy J. Beaudin	Executive Vice President and Chief Development Officer of Aimco, Aimco-GP and the Managing General Partner
Miles Cortez	Executive Vice President, General Counsel and Secretary of Aimco, Aimco-GP and the Managing General Partner
Patti K. Fielding	Executive Vice President — Securities and Debt, and Treasurer of Aimco, Aimco-GP and the Managing General Partner
Lance J. Graber	Executive Vice President — Aimco Capital Asset Management and Transactions, East, of Aimco and Aimco-GP; Executive Vice President of the Managing General Partner
Thomas M. Herzog	Executive Vice President and Chief Financial Officer of Aimco, Aimco-GP and the Managing General Partner; Director of Aimco-GP
James G. Purvis	Executive Vice President — Human Resources of Aimco, Aimco-GP and the Managing General Partner
David Robertson	Executive Vice President, President and Chief Executive Officer — Aimco Capital, of Aimco, Aimco-GP and the Managing General Partner
Robert Y. Walker, IV	Executive Vice President and Conventional Operations Chief Financial Officer of Aimco, Aimco-GP and the Managing General Partner
Scott W. Fordham	Senior Vice President and Chief Accounting Officer of Aimco, Aimco-GP and the Managing General Partner
Martha L. Long	Senior Vice President — Partnership Transactions of Aimco, Senior Vice President of Aimco-GP and Manager of the Managing General Partner
Stephen B. Waters	Vice President of the Managing General Partner
James N. Bailey	Director of Aimco
Richard S. Ellwood	Director of Aimco
J. Landis Martin	Director of Aimco
Thomas L. Rhodes	Director of Aimco
Michael A. Stein	Director of Aimco

A-1

Name	Principal Occupations for the Last Five Years
Terry Considine	Mr. Considine has been Chairman of the Board and Chief Executive Officer of Aimco since July 1994. Mr. Considine also serves as Chairman of the Board of Directors and Chief Executive Officer of American Land Lease, Inc., another publicly held real estate investment trust. Mr. Considine devotes substantially all of his time to his responsibilities at Aimco.
Jeffrey W. Adler	Mr. Adler was appointed Executive Vice President — Conventional Property Operations in February 2004. Previously he served as Senior Vice President of Risk Management of Aimco from January 2002 until November 2002, when he added the responsibility of Senior Vice President, Marketing. Prior to joining Aimco, from 2000 to 2002, Mr. Adler was Vice President, Property/Casualty for Channelpoint, a software company.
Harry G. Alcock	Mr. Alcock was appointed Executive Vice President and Chief Investment Officer of Aimco in October 1999. Mr. Alcock has had responsibility for acquisition and financing activities of Aimco since July 1994, serving as a Vice President from July 1996 to October 1997 and as a Senior Vice President from October 1997 to October 1999. Mr. Alcock was appointed Manager of the Managing General Partner in October 2004 and was appointed Executive Vice President of the Managing General Partner in February 2004.
Timothy J. Beaudin	Mr. Beaudin was appointed Executive Vice President and Chief Development Officer of Aimco and of the Managing General Partner in October 2005. Prior to joining Aimco and beginning in 1995, Mr. Beaudin was with Catellus Development Corporation, a San Francisco, California-based real estate investment trust. During his last five years at Catellus, Mr. Beaudin served as served as executive vice president, with management responsibility for development, construction and asset management.
Miles Cortez	Mr. Cortez was appointed Executive Vice President, General Counsel and Secretary of Aimco in August 2001 and of the Managing General Partner in February 2004. Prior to joining Aimco, Mr. Cortez was the senior partner of Cortez Macaulay Bernhardt & Schuetze LLC, a Denver law firm, from December 1997 through September 2001. Mr. Cortez served as President of the Colorado Bar Association from 1996 to 1997 and President of the Denver Bar Association from 1982 to 1983.
Patti K. Fielding	Ms. Fielding was appointed Executive Vice President — Securities and Debt of Aimco in February 2003 and of the Managing General Partner in February 2004. Ms. Fielding was appointed Treasurer of Aimco in January 2005. She is responsible for debt financing and the treasury department. From January 2000 to February 2003, Ms. Fielding served as Senior Vice President — Securities and Debt. Ms. Fielding joined Aimco as Vice President in February 1997.

A-2

Name	Principal Occupations for the Last Five Years
Scott W. Fordham	Mr. Fordham was appointed Senior Vice President and Chief Accounting Officer of Aimco and of the Managing General Partner in January 2007. From January 2006 through December 2006, Mr. Fordham served as vice president and chief accounting officer of Brandywine Realty Trust. Prior to the merger of Prentiss Properties Trust with Brandywine Realty Trust, Mr. Fordham served as senior vice president and chief accounting officer of Prentiss Properties Trust and was in charge of the corporate accounting and financial reporting groups. Prior to joining Prentiss Properties Trust in 1992, Mr. Fordham worked in public accounting with PricewaterhouseCoopers LLP. Mr. Fordham is a certified public accountant.
Lance J. Graber	Mr. Graber has been Executive Vice President — Aimco Capital Asset Management and Transactions, East, since October 1999 and focuses on transactions related to Aimco Capital’s portfolio of affordable properties in the eastern portion of the country. Mr. Graber was appointed Executive Vice President of the Managing General Partner in February 2004. Prior to joining Aimco, Mr. Graber was a Director at Credit Suisse First Boston from 1994 to May 1999.
Thomas M. Herzog	Mr. Herzog was appointed Executive Vice President of Aimco and of the Managing General Partner in July 2005 and Chief Financial Officer in November 2005. In January 2004, Mr. Herzog joined Aimco as Senior Vice President and Chief Accounting Officer. Prior to joining Aimco, Mr. Herzog was at GE Real Estate, serving as Chief Accounting Officer & Global Controller from April 2002 to January 2004 and as Chief Technical Advisor from March 2000 to April 2002. Prior to joining GE Real Estate, Mr. Herzog was at Deloitte & Touche LLP from 1990 until 2000.
James G. Purvis	Mr. Purvis was appointed Executive Vice President — Human Resources of Aimco in February 2003 and of the Managing General Partner in February 2004. Prior to joining Aimco, from October 2000 to February 2003, Mr. Purvis served as the Vice President of Human Resources at SomaLogic, Inc. a privately held biotechnology company in Boulder, Colorado. From July 1997 to October 2000, Mr. Purvis was the principal consultant for O(3)C Global Organization Solutions, a global human resources strategy and technology consulting company based in Colorado and London.
David Robertson	Mr. Robertson has been Executive Vice President of Aimco since February 2002 and President and Chief Executive Officer of Aimco Capital since October 2002. Prior to joining Aimco, from 1991 to 1996, Mr. Robertson was a member of the investment-banking group at Smith Barney. Since February 1996, Mr. Robertson has been Chairman of Robeks Corporation, a privately held chain of specialty food stores.
Robert Y. Walker, IV	Mr. Walker has served as Executive Vice President and Conventional Operations Chief Financial Officer of Aimco and of the Managing General Partner since January 2007. Mr. Herzog was appointed Senior Vice President of Aimco in August 2005 and became the Chief Accounting Officer of Aimco and of the Managing General Partner in November 2005. From June 2002 until he joined Aimco, Mr. Walker served as senior vice president and chief financial officer at Miller Global Properties, LLC, a Denver-based private equity, real estate fund manager. From May 1997 to June 2002, Mr. Walker was employed by GE Capital Real Estate, serving as global controller from May 2000 to June 2002.

A-3

Name	Principal Occupations for the Last Five Years
Martha L. Long	Martha L. Long has been with Aimco since October 1998 and has served in various capacities. From 1998 to 2001, she served as Senior Vice President and Controller of Aimco and the Managing General Partner. During 2002 and 2003, she served as Senior Vice President of Continuous Improvement. Ms. Long has been a Manager and Senior Vice President of the Managing General Partner since February 2004.
Stephen B. Waters	Mr. Waters was appointed Vice President of the Managing General Partner in April 2004. Mr. Waters previously served as a Director of Real Estate Accounting since joining Aimco in September 1999. Mr. Waters has responsibilities for real estate and partnership accounting with Aimco.
James N. Bailey Cambridge Associates, Inc. 1 Winthrop Square, Suite 500 Boston, MA 02110	Mr. Bailey was first elected as a Director of Aimco in June 2000 and is currently Chairman of the Nominating and Corporate Governance Committee and a member of the Audit and Compensation and Human Resources Committees. Mr. Bailey co-founded Cambridge Associates, LLC, an investment consulting firm, in 1973 and currently serves as its Senior Managing Director and Treasurer. He is also a director of The Plymouth Rock Company, SRB Corporation, Inc., Direct Response Corporation and Homeowners Direct Company, all four of which are insurance companies. In addition, he is a director of Getty Images, Inc., a publicly held company. He has also been a member of a number of Harvard University alumni affairs committees, including, the Overseers Nominating Committee and The Harvard Endowment Committee. Mr. Bailey is a member of the Massachusetts Bar and the American Bar Associations.
Richard S. Ellwood 12 Auldwood Lane Rumson, NJ 07660	Mr. Ellwood was first elected as a Director of Aimco in July 1994. Mr. Ellwood is currently a member of the Audit, Compensation and Human Resources, and Nominating and Corporate Governance Committees. Mr. Ellwood was the founder and President of R.S. Ellwood & Co., Incorporated, which he operated as a real estate investment banking firm until December 31, 2004. Prior to forming his firm, Mr. Ellwood had 31 years experience on Wall Street as an investment banker, serving as: Managing Director and senior banker at Merrill Lynch Capital Markets from 1984 to 1987; Managing Director at Warburg Paribas Becker from 1978 to 1984; general partner and then Senior Vice President and a director at White, Weld & Co. from 1968 to 1978; and in various capacities at J.P. Morgan & Co. from 1955 to 1968. Mr. Ellwood currently serves as a director of Felcor Lodging Trust, Incorporated, a publicly held company.

A-4

Name	Principal Occupations for the Last Five Years
J. Landis Martin 199 Broadway Suite 4300 Denver, CO 80202	Mr. Martin was first elected as a Director of Aimco in July 1994 and is currently Chairman of the Compensation and Human Resources Committee. Mr. Martin is a member of the Audit and Nominating and Corporate Governance Committees. Mr. Martin is also the Lead Independent Director of Aimco’s Board. Mr. Martin is the founder of Platte River Ventures LLC, a private equity firm. In November 2005, Mr. Martin retired as Chairman and CEO of Titanium Metals Corporation, a publicly held integrated producer of titanium metals, where he served since January 1994. Mr. Martin served as President and CEO of NL Industries, Inc., a publicly held manufacturer of titanium dioxide chemicals, from 1987 to 2003. Mr. Martin is also a director of Halliburton Company, a publicly held provider of products and services to the energy industry and Crown Castle International Corporation. Mr. Martin was a director of Tremont Corporation until February 2003, Special Metals Corporation until December 2003 and Trico Maine Services, Inc. until February 2005.
Thomas L. Rhodes 215 Lexington Avenue 4th Floor New York, NY 10016	Mr. Rhodes was first elected as a Director of Aimco in July 1994 and is currently a member of the Audit, Compensation and Human Resources, and Nominating and Corporate Governance Committees. Mr. Rhodes is Chairman of National Review magazine where he served as President since November 1992 and as a Director since 1988. From 1976 to 1992, he held various positions at Goldman, Sachs & Co., was elected a General Partner in 1986 and served as a General Partner from 1987 until November 1992. Mr. Rhodes is Chairman of the Board of Directors of The Lynde and Harry Bradley Foundation and Vice Chairman of American Land Lease, Inc., publicly held real estate investment trust.
Michael A. Stein 22021 20th Avenue SE Bothell, WA 98021	Mr. Stein was first elected as a Director of Aimco in October 2004 and is currently the Chairman of the Audit Committee. Mr. Stein is a member of the Compensation and Human Resources and Nominating and Corporate Governance Committees. Mr. Stein is Senior Vice President and Chief Financial Officer of ICOS Corporation, a biotechnology company based in Bothell, Washington. He joined ICOS in January 2001. From October 1998 to September 2000, Mr. Stein was Executive Vice President and Chief Financial Officer of Nordstrom, Inc. From 1989 to September 1998, Mr. Stein served in various capacities with Marriott International, Inc., including Executive Vice President and Chief Financial Officer from 1993 to 1998. Prior to joining Marriott, Mr. Stein spent 18 years at Arthur Andersen LLP, where he was a partner and served as the head of the Commercial Group within the Washington, D.C. office. Mr. Stein serves on the Board of Directors of Getty Images, Inc., a publicly held company, and the Board of Trustees of the Fred Hutchinson Cancer Research Center.

A-5

Questions and requests for assistance or for additional copies of this Offer to Purchase and the letter of transmittal may be directed to the Information Agent at its telephone number and address listed below. You may also contact your broker, dealer, bank, trust company or other nominee for assistance concerning the offer.

The Information Agent for offer is:

THE ALTMAN GROUP, INC.

By Mail:

1200 Wall Street, 3rd Floor

Lyndhurst, NJ 07071

By Overnight Courier:

1200 Wall Street, 3rd Floor

Lyndhurst, NJ 07071.

By Hand:

1200 Wall Street, 3rd Floor

Lyndhurst, NJ 07071

For information, please call:

By Telephone:

TOLL FREE: (800) 217-9608

By Fax:

(201) 460-0050

EX-99.(A)(2)

LETTER OF TRANSMITTAL
To Tender Units of Limited Partnership Interest In
Springhill Lake Investors Limited Partnership (the “Partnership”)
Pursuant to the Offer to Purchase
Dated March 12, 2007
by
AIMCO PROPERTIES, L.P.

THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT MIDNIGHT, NEW YORK CITY TIME, ON APRIL 9, 2007, UNLESS EXTENDED (the “Expiration Date”). THE OFFER PRICE IS $121,912 PER UNIT

IF YOU HAVE THE CERTIFICATE ORIGINALLY ISSUED TO REPRESENT YOUR INTEREST IN THE PARTNERSHIP PLEASE SEND IT TO THE INFORMATION AGENT WITH THIS LETTER OF TRANSMITTAL.

The Information Agent for the offer is:

THE ALTMAN GROUP, INC.

By Mail:	By Overnight Courier:	By Hand:
1200 Wall Street, 3rd Floor	1200 Wall Street, 3rd Floor	1200 Wall Street, 3rd Floor
Lyndhurst, NJ 07071	Lyndhurst, NJ 07071	Lyndhurst, NJ 07071
By Telephone:
TOLL FREE (800) 217-9608
By Fax:
(201) 460-0050

To participate in the offer, you must send a duly executed copy of this Letter of Transmittal and any other documents required by this Letter of Transmittal so that such documents are received by The Altman Group, Inc., the Information Agent, on or prior to the Expiration Date. The method of delivery of this Letter of Transmittal and all other required documents is at your option and risk, and delivery will be deemed made only when actually received by the Information Agent. If delivery is by mail, registered mail with return receipt requested is recommended. In all cases, sufficient time should be allowed to assure timely delivery. Delivery of this Letter of Transmittal or any other required documents to an address other than as set forth above does not constitute valid delivery.

For information or assistance in connection with the offer or the completion of this Letter of Transmittal, please contact the Information Agent at (800) 217-9608 (toll free).

The instructions accompanying this Letter of Transmittal should be read carefully before this Letter of Transmittal is completed.

WHEN TENDERING, YOU MUST SEND ALL PAGES OF THIS LETTER OF TRANSMITTAL, INCLUDING EXECUTED TAX CERTIFICATIONS (BOXES A AND B).

DESCRIPTION OF UNITS TENDERED
Name(s), Address(es), Number of Units Owned and Tax Identification Number of Registered Holder(s).	Total Number of
(Please indicate changes or corrections to the name, address, number of units owned	Units Tendered
and tax identification number printed below.)	(#)

SPECIAL PAYMENT INSTRUCTIONS
(See Instructions 2, 4 and 8)

To be completed ONLY if the consideration for the purchase price of Units accepted for payment is to be issued in the name of someone other than the undersigned.

o  Issue consideration to:

Name:

(Please Type or Print)

Address:

(Include Zip Code)

(Tax Identification or Social Security No.)

(See Substitute Form W-9)

SPECIAL PAYMENT INSTRUCTIONS
(See Instructions 2, 4 and 8)

To be completed ONLY if the consideration for the purchase price of Units accepted for payment is to be sent to someone other than the undersigned or to the undersigned at an address other than that shown above.

o  Mail Consideration to:

Name:

(Please Type or Print)

Address:

(Include Zip Code)

NOTE: SIGNATURES MUST BE PROVIDED BELOW.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY.

Ladies and Gentlemen:

The undersigned hereby acknowledges that he or she has received (i) the Offer to Purchase (the “Offer to Purchase”) dated March 12, 2007 (the “Offer Date”) relating to the offer by AIMCO Properties, L.P. (the “Purchaser”) to purchase Limited Partnership Interests (the “Units”) in the Partnership and (ii) this Letter of Transmittal and the Instructions hereto, as each may be supplemented or amended from time to time (collectively, the “Offer”).

The general partner of your Partnership does not make any recommendation regarding whether you should accept the Offer. You are encouraged to carefully review the Offer to Purchase and any other information available to you and to seek advice from your independent lawyer, tax advisor and/or financial advisor with respect to your particular circumstances before deciding whether or not to accept the Offer.

Upon the terms and subject to the conditions set forth in the Offer to Purchase, and this Letter of Transmittal, the undersigned hereto hereby tenders to the Purchaser the Units set forth in the box above entitled “Description of Units Tendered,” including all interests in any limited partnership represented by such units (collectively, the “Units”), at the price indicated on the Offer and any supplement thereto, less the amount of distributions, if any, made by the Partnership from the Offer Date until the Expiration Date (the “Offer Price”), net to the undersigned in cash, without interest.

By executing this Letter of Transmittal, the undersigned hereby acknowledges that the general partner does not make any recommendation regarding whether the undersigned should accept the Offer, and the undersigned hereto represents and warrants to the Purchaser that the undersigned has received the Offer.

Subject to and effective upon acceptance for payment of any of the Units tendered hereby in accordance with the terms of the Offer, the undersigned hereto hereby irrevocably sells, assigns, transfers, conveys and delivers to, or upon the order of, the Purchaser all right, title and interest in and to such Units tendered hereby that are accepted for payment pursuant to the Offer, including, without limitation, (i) all of the undersigned’s interest in the capital of the Partnership, and the undersigned’s interest in all profits, losses and distributions of any kind to which the undersigned shall at any time be entitled in respect of the Units, including, without limitation, distributions in the ordinary course, distributions from sales of assets, distributions upon liquidation, winding-up, or dissolution, payments in settlement of existing or future litigation, and all other distributions and payments from and after the Expiration Date of the Offer, in respect of the Units tendered by the undersigned and accepted for payment and thereby purchased by the Purchaser; (ii) all other payments, if any, due or to become due to the undersigned in respect of the Units, under or arising out of the agreement and certificate of limited partnership of the Partnership (the “Partnership Agreement”), or any agreement pursuant to which the Units were sold (the “Purchase Agreement”), whether as contractual obligations, damages, insurance proceeds, condemnation awards or otherwise; (iii) all of the undersigned’s claims, rights, powers, privileges, authority, options, security interests, liens and remedies, if any, under or arising out of the Partnership Agreement or Purchase Agreement or the undersigned’s ownership of the Units, including, without limitation, all voting rights, rights of first offer, first refusal or similar rights, and rights to be substituted as a limited partner of the Partnership; and (iv) all present and future claims, if any, of the undersigned whether on behalf of the Partnership, individually or on behalf of a putative class (including without limitation any claims against limited partners of the Partnership, the general partner(s) and/or any affiliates thereof) under, arising out of or related to the Partnership Agreement, the Purchase Agreement, the undersigned’s status as a limited partner, the terms or conditions of the Offer, the management of the Partnership, monies loaned or advanced, services rendered to the Partnership or its partners, or any other claims arising out of or related to the undersigned’s ownership of Units in the Partnership.

The undersigned hereto, on behalf of himself or herself, his or her heirs, estate, executor, administrator, successors and assigns, and the Partnership, fully, finally and forever releases, relinquishes and discharges the Purchaser and its predecessors, successors and assigns and its present and former parents, subsidiaries, affiliates, investors, insurers, reinsurers, officers, directors, employees, agents, administrators, auditors, attorneys, accountants, information and solicitation agents, investment bankers, and other representatives, including but not limited to Apartment Investment and Management Company and the general partner of the Partnership (collectively, the “Releasees”), from any and all claims and causes of action, whether brought individually, on behalf of a class, or derivatively, demands, rights, or liabilities, including, but not limited to, claims for negligence, gross negligence,

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professional negligence, breach of duty of care or loyalty, or breach of duty of candor, fraud, breach of fiduciary duty, mismanagement, corporate waste, malpractice, misrepresentation, whether intentional or negligent, misstatements and omissions to disclose, breach of contract, violations of any state or federal statutes, rules or regulations, whether known claims or unknown claims, through and including the date of execution of the letter of transmittal, including, but not limited to, those claims that arise out of or relate to (a) the ownership of one or more Units in the Partnership, including but not limited to, any and all claims related to the management of the Partnership or the properties owned by the Partnership (whether currently or previously), the payment of management fees or other monies to the general partner of the Partnership and its affiliates, prior acquisitions or tender offers and the prior settlement or (b) the purchase, acquisition, holding, sale, tender or voting of one or more Units in the Partnership.

The undersigned hereto expressly waives and relinquishes, to the fullest extent permitted by law and consistent with the releases contained herein, the provisions, rights and benefits of Section 1542 of the Civil Code of California (“Section 1542”), which provides:

A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN ITS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR.

The undersigned hereto irrevocably appoints the Purchaser and its designees as his or her proxy, each with full power of substitution, to the fullest extent of the undersigned’s rights with respect to the Units tendered by him or her and accepted for payment by the Purchaser. Such proxy shall be considered coupled with an interest in the tendered Units. Such appointment will be effective when, and only to the extent that, we accept the tendered units for payment. Upon such acceptance for payment, all prior proxies and consents given by the undersigned hereto with respect to the Units will, without further action, be revoked, and no subsequent proxies or consents may be given (and if given will not be effective). The Purchaser and its designees are, as to those Units, empowered to exercise all voting and other rights as a limited partner as the Purchaser, in its discretion, may deem proper at any meeting of limited partners, by written consent or otherwise. By executing this Letter of Transmittal, the undersigned agrees to execute all such documents and take such other actions as shall be reasonably required to enable the Units tendered to be voted in accordance with the Purchaser’s directions. The proxy granted by the undersigned hereto to the Purchaser will remain effective and be irrevocable for a period of ten years following the Expiration Date of the Offer.

The undersigned hereto hereby irrevocably constitutes and appoints the Purchaser and any designees of the Purchaser as the true and lawful agent and attorney-in-fact of the undersigned with respect to such Units, with full power of substitution (such power of attorney being deemed to be an irrevocable power coupled with an interest), to do all such acts and things necessary or expedient to deliver such Units and transfer ownership of such Units on the partnership books maintained by the general partner of the Partnership, together with all accompanying evidence of transfer and authenticity to, or upon the order of, the Purchaser, to sign any and all documents necessary to authorize the transfer of the Units to the Purchaser including, without limitation, the “Transferor’s (Seller’s) Application for Transfer” created by the National Association of Securities Dealers, Inc., if required, and upon receipt by the Information Agent (as the undersigned’s agent) of the Offer Price, to become a substitute limited partner, to receive any and all distributions made or declared by the Partnership from and after the Expiration Date of the Offer (regardless of the record date for any such distribution), and to receive all benefits and otherwise exercise all rights of beneficial ownership of such Units, all in accordance with the terms of the Offer. This appointment is effective upon purchase of the Units by the Purchaser and will remain effective and be irrevocable for a period of ten years following the Expiration Date of the Offer. Upon purchase of the Units pursuant to the Offer, all prior powers of attorney given by the undersigned hereto with respect to such Units will be revoked and no subsequent powers of attorney may be given (and if given will not be deemed effective).

In addition to and without limiting the generality of the foregoing, the undersigned hereto hereby irrevocably (i) requests and authorizes (subject to and effective upon acceptance for payment of any Unit tendered hereby) the Partnership and its general partner to take any and all actions as may be required to effect the transfer of the undersigned’s Units to the Purchaser (or its designee) and to admit the Purchaser as a substitute limited partner in the Partnership under the terms of the Partnership Agreement; (ii) empowers the Purchaser and its agent to execute and deliver to the general partner a change of address form instructing the general partner to send any and all future

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distributions to the address specified in the form, and to endorse any check payable to or upon the order of such unitholder representing a distribution to which the Purchaser is entitled pursuant to the terms of the Offer, in each case, in the name and on behalf of the tendering unitholder; (iii) agrees not to exercise any rights pertaining to the Units without the prior consent of the Purchaser; and (iv) requests and consents to the transfer of the Units, to be effective on the books and records of the Partnership as of the effective date set forth in the Offer.

Notwithstanding any provision in the Partnership Agreement or any Purchase Agreement to the contrary, the undersigned hereto hereby directs the general partner of the Partnership to make all distributions after the Purchaser accepts the tendered Units for payment to the Purchaser or its designee. Subject to and effective upon acceptance for payment of any Unit tendered hereby, the undersigned hereby requests that the Purchaser be admitted to the Partnership as a substitute limited partner under the terms of the Partnership Agreement. Upon request, the undersigned will execute and deliver additional documents deemed by the Information Agent or the Purchaser to be necessary or desirable to complete the assignment, transfer and purchase of Units tendered hereby and will hold any distributions received from the Partnership after the Expiration Date in trust for the benefit of the Purchaser and, if necessary, will promptly forward to the Purchaser any such distributions immediately upon receipt. The Purchaser reserves the right to transfer or assign, in whole or in part, from time to time, to one or more of its affiliates, the right to purchase Units tendered pursuant to the Offer, but any such transfer or assignment will not relieve the Purchaser of its obligations under the Offer or prejudice the rights of tendering unitholders to receive payment for Units validly tendered and accepted for payment pursuant to the Offer.

By executing this Letter of Transmittal, the undersigned hereto represents that either (i) the undersigned is not a plan subject to Title I of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), or Section 4975 of the Internal Revenue Code of 1986, as amended (the “Code”), or an entity deemed to hold “plan assets” within the meaning of 29 C.F.R. Section 2510.3-101 of any such plan, or (ii) the tender and acceptance of Units pursuant to the Offer will not result in a nonexempt prohibited transaction under Section 406 of ERISA or Section 4975 of the Code.

The undersigned hereto understands that a tender of Units to the Purchaser will constitute a binding agreement between the undersigned and the Purchaser upon the terms and subject to the conditions of the Offer. The undersigned recognizes that under certain circumstances set forth in the Offer, the Purchaser may not be required to accept for payment any or all of the Units tendered hereby. In such event, the undersigned understands that any Letter of Transmittal for Units not accepted for payment may be returned to the undersigned or destroyed by the Purchaser (or its agent). This tender is irrevocable, except that Units tendered pursuant to the Offer may be withdrawn at any time prior to the Expiration Date, or unless already accepted for payment, any time after 60 days from the Offer Date.

The undersigned has been advised that the Purchaser is an affiliate of the general partner of the Partnership. The undersigned hereto has made his or her own decision to tender Units.

The undersigned hereto hereby represents and warrants for the benefit of the Partnership and the Purchaser that the undersigned owns the Units tendered hereby and has full power and authority and has taken all necessary action to validly tender, sell, assign, transfer, convey and deliver the Units tendered hereby and that when the same are accepted for payment by the Purchaser, the Purchaser will acquire good, marketable and unencumbered title thereto, free and clear of all liens, restrictions, charges, encumbrances, conditional sales agreements or other obligations relating to the sale or transfer thereof, and such Units will not be subject to any adverse claims and that the transfer and assignment contemplated herein are in compliance with all applicable laws and regulations.

All authority herein conferred or agreed to be conferred shall survive the death or incapacity of the undersigned hereto, and any obligations of the undersigned shall be binding upon the heirs, personal representatives, trustees in bankruptcy, legal representatives, and successors and assigns of the undersigned.

The undersigned hereto further represents and warrants that, to the extent a certificate evidencing the Units tendered hereby (the “original certificate”) is not delivered by the undersigned together with this Letter of Transmittal, (i) the undersigned has not sold, transferred, conveyed, assigned, pledged, deposited or otherwise disposed of any portion of the Units, (ii) the undersigned has caused a diligent search of its records to be taken and has been unable to locate the original certificate, (iii) if the undersigned shall find or recover the original certificate

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evidencing the Units, the undersigned will immediately and without consideration surrender it to the Purchaser; and (iv) the undersigned shall at all times indemnify, defend, and save harmless the Purchaser and the Partnership, its successors, and its assigns from and against any and all claims, actions, and suits whether groundless or otherwise, and from and against any and all liabilities, losses, damages, judgments, costs, charges, counsel fees, and other expenses of every nature and character by reason of honoring or refusing to honor the original certificate when presented by or on behalf of a holder in due course of a holder appearing to or believed by the partnership to be such, or by issuance or delivery of a replacement certificate, or the making of any payment, delivery, or credit in respect of the original certificate without surrender thereof, or in respect of the replacement certificate.

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IMPORTANT: WHEN TENDERING, YOU MUST SEND ALL PAGES OF THIS LETTER OF
TRANSMITTAL, INCLUDING EXECUTED TAX CERTIFICATIONS ON NEXT PAGE.

SIGNATURE BOX
(SEE INSTRUCTION 2)

Please sign exactly as your name is printed on the front of this Letter of Transmittal. For joint owners, each joint owner must sign. (See Instruction 2).

The undersigned hereto hereby represents, warrants and agrees as set forth in this Letter of Transmittal and tenders the Units indicated in this Letter of Transmittal to the Purchaser pursuant to the terms of the Offer.

X

(Signature of Owner)

X

(Signature of Joint Owner)

Name and Capacity (if other than individuals):

Title:

Address:

(City) (State) (Zip)

Area Code and Telephone No. (Day):

                           (Evening):

SIGNATURE GUARANTEE (If Required)

(SEE INSTRUCTION 2)

YOU DO NOT NEED TO HAVE YOUR SIGNATURE GUARANTEED UNLESS YOU ARE A TRUSTEE, EXECUTOR, ADMINISTRATOR, GUARDIAN, ATTORNEY-IN-FACT, OFFICER OF A CORPORATION OR OTHER PERSON ACTING IN A FIDUCIARY OR REPRESENTATIVE CAPACITY.

Name and Address of Eligible Institution:

Authorized Signature:  X

Name:

Title: _ _ Date: _ _

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TAX CERTIFICATIONS
(See Instruction 5)

Please refer to the attached Instructions for completing Boxes A and B below.

BOX A
REQUESTER’S NAME: AIMCO PROPERTIES, L.P.
SUBSTITUTE FORM W-9	Part 1 — PLEASE PROVIDE YOUR TIN IN THE BOX AT THE RIGHT
		Social Security Number OR
Department of the Treasury Internal Revenue Service (IRS)		Taxpayer Identification Number
		o Exempt
Payor’s Request for Taxpayer Identification Number (“TIN”)
	Check appropriate box: o Disregarded Entity o Individual/Sole Proprietor o Corporation o Partnership o Other _ _(If you are an LLC, check the box marked “Other”, write LLC, and also check one of the other boxes to indicate your tax status (e.g., disregarded entity, individual/sole proprietor, corporation, partnership).
Please fill in your name and address below. Name Business Name Address (number and street) City, State and Zip Code	Part 2 — Certification — Under penalties of perjury, I certify that: (1) The number shown on this form is my correct Taxpayer Identification Number (or I am waiting for a number to be issued to me), (2) I am not subject to backup withholding either because (a) I am exempt from backup withholding, (b) I have not been notified by the IRS that I am subject to backup withholding as a result of failure to report all interest or dividends, or (c) the IRS has notified me that I am no longer subject to backup withholding, and (3) I am a U.S. person (as defined for U.S. federal income tax purposes).
	Certification Instructions — You must cross out item (2) in Part 2 above if you have been notified by the IRS that you are subject to backup withholding because of under reporting interest or dividends on your tax return. However, if after being notified by the IRS that you were subject to backup withholding, you received another notification from the IRS that you are no longer subject to backup withholding, do not cross out item (2). If you are exempt from backup withholding, check the box in Part 1 and see the enclosed “Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9”.
	Signature:_ _		Date:_ _

BOX B
FIRPTA AFFIDAVIT

Under Section 1445(e)(5) of the Internal Revenue Code and Treas. Reg. 1.1445 11T(d), a transferee must withhold tax equal to 10% of the amount realized with respect to certain transfers of an interest in a partnership if 50% or more of the value of its gross assets consists of U.S. real property interests and 90% or more of the value of its gross assets consists of U.S. real property interests plus cash equivalents, and the holder of the Units is a foreign person. To inform AIMCO Properties, L.P. that no withholding is required with respect to the unitholder’s Units in the Partnership, the undersigned hereby certifies the following under penalties of perjury:

(i) Unless this box o is checked, the unitholder, if an individual, is a U.S. citizen or a resident alien for purposes of U.S. income taxation, and if other than an individual, is not a foreign corporation, foreign partnership, foreign estate or foreign trust (as those terms are defined in the Internal Revenue Code and Income Tax Regulations);

(ii) The unitholder is not a disregarded entity as defined in Treas. Reg. Section 1.1445-2(b)(2)(iii);

(iii) The unitholder’s U.S. social security number (for individuals) or employer identification number (for non individuals) is correct as furnished in the blank provided for that purpose in Box A;

(iv) The unitholder’s home address (for individuals), or office address (for non individuals), is correctly printed (or corrected) is correct as furnished in the blank provided for that purpose in Box A.

The undersigned understands that this certification may be disclosed to the IRS by AIMCO Properties, L.P. and that any false statements contained herein could be punished by fine, imprisonment, or both.

Under penalties of perjury I declare that I have examined this certification and to the best of my knowledge and belief it is true, correct, and complete.

Signature: _ _  Date:_ _

THE IRS DOES NOT REQUIRE YOUR CONSENT TO ANY PROVISION OF THIS DOCUMENT OTHER THAN THE CERTIFICATIONS REQUIRED TO AVOID BACKUP WITHHOLDING.

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INSTRUCTIONS
FOR COMPLETING LETTER OF TRANSMITTAL

1.  Requirements of Tender.  To be effective, a duly completed and signed Letter of Transmittal (or facsimile thereof) and any other required documents must be received by the Information Agent at one of its addresses (or its facsimile number) set forth herein on or before the date and time of the Expiration Date, unless extended. To ensure receipt of the Letter of Transmittal and any other required documents, it is suggested that you use overnight courier delivery or, if the Letter of Transmittal and any other required documents are to be delivered by United States mail, that you use certified or registered mail, return receipt requested.

Our records indicate that you own the number of Units set forth in the box above entitled “Description of Units Tendered” under the column entitled “Name(s), Address(es), Number of Units Owned and Tax Identification Number of Registered Holder(s).” If you would like to tender only a portion of your Units, please so indicate in the space provided in the box above entitled “Description of Units Tendered.”

WHEN TENDERING, YOU MUST SEND ALL PAGES OF THE LETTER OF TRANSMITTAL, INCLUDING EXECUTED TAX CERTIFICATIONS (BOXES A and B).

THE METHOD OF DELIVERY OF THE LETTER OF TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS IS AT THE OPTION AND RISK OF THE TENDERING UNITHOLDER AND DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE INFORMATION AGENT. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE TIMELY DELIVERY.

2.  Signature Requirements.

Individual and Joint Owners.  After carefully reading and completing the Letter of Transmittal, to tender Units, unitholders must sign at the “X” in the Signature Box of the Letter of Transmittal. The signature(s) must correspond exactly with the names printed (or corrected) on the front of the Letter of Transmittal. No signature guarantee on the Letter of Transmittal is required if the Letter of Transmittal is signed by the unitholder (or beneficial owner in the case of an IRA). If any tendered Units are registered in the names of two or more joint owners, all such owners must sign this Letter of Transmittal.

IRAs/Eligible Institutions.  For Units held in an IRA account, the beneficial owner should sign in the Signature Box and no signature guarantee is required. Similarly, no signature guarantee is required if Units are tendered for the account of a member firm of a registered national security exchange, a member firm of the National Association of Securities Dealers, Inc. or a commercial bank, savings bank, credit union, savings and loan association or trust company having an office, branch or agency in the United States (each an “Eligible Institution”).

Trustees, Corporations, Partnership and Fiduciaries.  Trustees, executors, administrators, guardians, attorneys-in-fact, officers of a corporation, authorized partners of a partnership or other persons acting in a fiduciary or representative capacity must sign at the “X” in the Signature Box and have their signatures guaranteed by an Eligible Institution by completing the signature guarantee set forth in the Signature Box of the Letter of Transmittal. If the Letter of Transmittal is signed by trustees, administrators, guardians, attorneys-in-fact, officers of a corporation, authorized partners of a partnership or others acting in a fiduciary or representative capacity, such persons should, in addition to having their signatures guaranteed, indicate their title in the Signature Box and must submit proper evidence satisfactory to the Purchaser of their authority to so act (see Instruction 3 below).

3.  Documentation Requirements.  In addition to the information required to be completed on the Letter of Transmittal, additional documentation may be required by the Purchaser under certain circumstances including, but not limited to, those listed below. Questions on documentation should be directed to the Information Agent at its telephone number set forth herein.

Deceased Owner (Joint Tenant)	— Copy of death certificate.
Deceased Owner (Others)	— Copy of death certificate (see also Executor/Administrator/Guardian below).
Executor/Administrator/Guardian	— Copy of court appointment documents for executor or administrator; and

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	(a) a copy of applicable provisions of the will (title page, executor(s)’ powers, asset distribution); or
	(b) estate distribution documents.
Attorney-in-Fact	— Current power of attorney.
Corporation/Partnership	— Corporate resolution(s) or other evidence of authority to act. Partnership should furnish a copy of the partnership agreement.
Trust/Pension Plans	— Unless the trustee(s) are named in the registration, a copy of the cover page of the trust or pension plan, along with a copy of the section(s) setting forth names and powers of trustee(s) and any amendments to such sections or appointment of successor trustee(s).

4.  Special Payment and Delivery Instructions.  If consideration is to be issued in the name of a person other than the person signing the Signature Box of the Letter of Transmittal or if consideration is to be sent to someone other than such signer or to an address other than that set forth on the Letter of Transmittal in the box entitled “Description of Units Tendered,” the appropriate boxes on the Letter of Transmittal should be completed.

5.  Tax Certifications.  The unitholder(s) tendering Units to the Purchaser pursuant to the Offer must furnish the Purchaser with the unitholder(s)’ taxpayer identification number (“TIN”) and certify as true, under penalties of perjury, the representations in Box A and Box B. See attached Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9 for guidance in determining the proper TIN to give the Purchaser.

U.S. Persons.  A unitholder that is a U.S. citizen or a resident alien individual, a domestic corporation, a domestic partnership, a domestic trust or a domestic estate (collectively, “U.S. Persons”), as those terms are defined in the Code, should follow the instructions below with respect to certifying Box A and Box B.

Box A — Substitute Form W-9.

Part (i), Taxpayer Identification Number.  Tendering unitholders must certify to the Purchaser that the TIN provided in Box A is correct. If a correct TIN is not provided, penalties may be imposed by the Internal Revenue Service (the “IRS”), in addition to the unitholder being subject to backup withholding.

Part (ii), Backup Withholding.  In order to avoid Federal income tax backup withholding, the tendering unitholder must certify, under penalty of perjury, that such unitholder is not subject to backup withholding. Certain unitholders (including, among others, all corporations and certain exempt non-profit organizations) are not subject to backup withholding. Backup withholding is not an additional tax. If withholding results in an overpayment of taxes, a refund may be obtained from the IRS. Do not check the box in Box A, Part (ii), unless you have been notified by the IRS that you are subject to backup withholding.

When determining the TIN to be furnished, please refer to the following as a guide:

Individual accounts — should reflect owner’s TIN.

Joint accounts — should reflect the TIN of the owner whose name appears first.

Trust accounts — should reflect the TIN assigned to the trust.

IRA custodial accounts — should reflect the TIN of the custodian (not necessary to provide).

Custodial accounts for the benefit of minors — should reflect the TIN of the minor.

Corporations, partnership or other business entities — should reflect the TIN assigned to that entity.

Single member limited liability company — should reflect the TIN of the owner of the Units for federal income tax purposes.

Non-U.S. Persons.  In order for a unitholder that is not a U.S. Person (“Non-U.S. Person”) to qualify as exempt, such unitholder must submit a completed Form W-8BEN “Certificate of Foreign Status,” Form W-8ECI

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“Certificate of Foreign Person’s Claim for Exemption from Withholding on Income Effectively Connected with the Conduct of a U.S. Trade or Business,” or Form W-8IMY “Certificate of Foreign Intermediary, Foreign Flow Through Entity or Certain U.S. Branches for United States Tax Withholding” signed under penalties of perjury attesting to such exempt status. Such forms may be obtained from the IRS at www.irs.gov.

Box B — FIRPTA Affidavit.  Section 1445 of the Code requires that each unitholder transferring interests in a partnership with real estate assets meeting certain criteria certify under penalty of perjury the representations made in Box B, or be subject to withholding of tax equal to 10% of the amount realized for interests purchased. Tax withheld under Section 1445 of the Code is not an additional tax. If withholding results in an overpayment of tax, a refund may be obtained from the IRS. Part (i) should be checked only if the tendering unitholder is not a U.S. Person, as described therein.

6.  Conditional Tenders.  No alternative, conditional or contingent tenders will be accepted.

7.  Validity of Letter of Transmittal.  All questions as to the validity, form, eligibility (including time of receipt) and acceptance of a Letter of Transmittal and other required documents will be determined by the Purchaser and such determination will be final and binding. The Purchaser’s interpretation of the terms and conditions of the Offer (including these Instructions for this Letter of Transmittal) will be final and binding. The Purchaser will have the right to waive any irregularities or conditions as to the manner of tendering. Any irregularities in connection with tenders, unless waived, must be cured within such time as the Purchaser shall determine. This Letter of Transmittal will not be valid until any irregularities have been cured or waived. Neither the Purchaser nor the Information Agent are under any duty to give notification of defects in a Letter of Transmittal and will incur no liability for failure to give such notification.

8.  Assignee Status.  Assignees must provide documentation to the Information Agent which demonstrates, to the satisfaction of the Purchaser, such person’s status as an assignee.

9.  Transfer Taxes.  The amount of any transfer taxes (whether imposed on the registered holder or such person) payable on account of the transfer to such person will be deducted from the purchase price unless satisfactory evidence of the payment of such taxes or exemption therefrom is submitted.

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GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9

GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE PAYER. — Social Security Numbers have nine digits separated by two hyphens: i.e., 000 00 0000. Employer Identification Numbers have nine digits separated by only one hyphen: i.e., 00 0000000. The table below will help determine the type of number to give the payer.

		Give the SOCIAL
		SECURITY number
For this type of account:		of —
1.	Individual	The individual
2.	Two or more individuals (joint account)	The actual owner of the account or, if combined funds, the first individual on the account(1)
3.	Custodian account of a minor (Uniform Gift to Minors Act)	The minor(2)
4.	a. The usual revocable savings trust (grantor is also trustee)	The grantor-trustee(1)
	b. So-called trust account that is not a legal or valid trust under state law	The actual owner(1)
5.	Sole proprietorship or single-owner LLC	The owner(3)

		Give the EMPLOYER
		IDENTIFICATION number
For this type of account:		of —
6.	A valid trust, estate, or pension trust	The legal entity (Do not furnish the identifying number of the personal representative or trustee unless the legal entity itself is not designated in the account title.)(4)
7.	Corporate or LLC electing corporate status on Form 8832	The corporation
8.	Association, club, religious, charitable, educational or other tax-exempt organization	The organization
9.	Partnership or multi-member LLC	The partnership
10.	A broker or registered nominee	The broker or nominee
11.	Account with the Department of Agriculture in the name of a public entity (such as a state or local government, school district, or prison) that receives agricultural program payments	The public entity

(1)	List first and circle the name of the person whose number you furnish. If only one person on a joint account has a Social Security number, that person’s number must be furnished.
(2)	Circle the minor’s name and furnish the minor’s Social Security number.
(3)	You must show your individual name. You may also enter your business name or “doing business” name on the second line. You may use your Social Security number or Employer Identification number.
(4)	List first and circle the name of the valid trust, estate or pension trust.

Note:  If no name is circled when is more than one name, the number will be considered to be that of the first name listed.

11

GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER (TIN) ON SUBSTITUTE FORM W-9
(Section references are to the Internal Revenue Code)
Page 2

Obtaining a Number

If you do not have a taxpayer identification number, apply for one immediately. To apply for an SSN, obtain Form SS-5, Application for a Social Security Card, from your local Social Security Administration office or get this form online at www.socialsecurity.gov/online/ss-5.pdf. You may also get this form by calling 1-800-772-1213. Use Form W-7, Application for IRS Individual Taxpayer Identification Number, to apply for an ITIN, or Form SS-4, Application for Employer Identification Number, to apply for an EIN. You can apply for an EIN online by accessing the IRS website at www.irs.gov/businesses/ and clicking on Employer ID Numbers under Related Topics. You can get Forms W-7 and SS-4 from the IRS by visiting www.irs.gov or by calling 1-800-TAX-FORM (1-800-829-3676).

Payees and Payments Exempt From Backup Withholding

Payees specifically exempt from backup withholding (if the payee properly establishes its entitlement to such exemption through the provision of the requisite documentation to the extent required by Treasury regulations) on all payments include the following:

(1) An organization exempt from tax under section 501(a), or an individual retirement plan (“IRA”), or a custodial account under section 403(b)(7) if the account satisfies the requirements of section 401(f)(2).

(2) The United States or any of its agencies or instrumentalities.

(3) A State, the District of Columbia, a possession of the United States, or any of their political subdivision or instrumentalities.

(4) A foreign government or any of its political subdivisions, agencies or instrumentalities.

(5) An international organization or any of its agencies or instrumentalities.

Payees specifically exempted from backup withholding on interest and dividend payments include the following:

(6) A corporation.

(7) A foreign central bank of issue.

(8) A dealer in securities or commodities required to register in the United States or a possession of the United States.

(9) A real estate investment trust

(10) An entity registered at all times during the tax year under the Investment Company Act of 1940.

(11) A common trust fund operated by a bank under section 584 (a).

(12) A financial institution.

(13) A middleman known in the investment community as a nominee or custodian.

(14) A trust exempt from tax under section 664 or described in section 4947.

Payments that are not subject to information reporting are generally also not subject to backup withholding. For details, see sections 6041, 6041A(a), 6042, 6044, 6045, 6049, 6050A, and 6050N, and the regulations under those sections. Exempt payees should complete a Substitute Form W-9 to avoid possible erroneous backup withholding.

Privacy Act Notice.  Section 6109 requires you to furnish your correct taxpayer identification number to persons who must file information returns with the IRS to report interest, dividends, and certain other income paid to you, mortgage interest you paid, the acquisition or abandonment of secured property, cancellation of debt, or contributions you made to an IRA. The IRS uses the numbers for identification purposes and to help verify the accuracy of your tax return and may also provide this information to various government agencies for tax enforcement or litigation purposes. The IRS may also disclose this information to other countries under a tax treaty. You must provide your taxpayer identification number whether or not you are required to file a tax return. Payers must generally withhold 28% of taxable interest, dividend, and certain other payments to a payee who does not furnish a tax identification number to a payer. Certain penalties may also apply.

Penalties

(1) Failure to Furnish Taxpayer Identification Number.  If you fail to furnish your correct taxpayer identification number to a payer, you are subject to a penalty of $50 for each such failure unless your failure is due to reasonable cause and not to willful neglect.

(2) Civil Penalty for False Information With Respect to Withholding.  If you make a false statement with no reasonable basis that results in no backup withholding, you are subject to a $500 penalty.

(3) Criminal Penalty for Falsifying Information.  Willfully falsifying certifications or affirmations may subject you to criminal penalties including fines and/or imprisonment.

(4) Misuse of Taxpayer Identification Numbers.  If the requester discloses or uses taxpayer identification numbers in violation of federal law, the requester may be subject to civil and criminal penalties.

FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE IRS

12

Questions and requests for assistance or for additional copies of this Offer to Purchase and the letter of transmittal may be directed to the Information Agent at its telephone number and address listed below. You may also contact your broker, dealer, bank, trust company or other nominee for assistance concerning the offer.

The Information Agent for the offer is:

THE ALTMAN GROUP, INC.

By Mail:	By Overnight Courier:	By Hand:
1200 Wall Street, 3rd Floor	1200 Wall Street, 3rd Floor	1200 Wall Street, 3rd Floor
Lyndhurst, NJ 07071	Lyndhurst, NJ 07071	Lyndhurst, NJ 07071
By Telephone:
TOLL FREE (800) 217-9608
By Fax:
(201) 460-0050

EX-99.(A)(3)

AIMCO PROPERTIES, L.P.
c/o The Altman Group, Inc.

1200 Wall Street, 3rd Floor

Lyndhurst, NJ 07071

(800) 217-9608

March 12, 2007

Dear Limited Partner:

We are offering to purchase any and all units in your partnership, Springhill Lake Investors Limited Partnership, for $121,912 per unit in cash. Our offer is being made pursuant to the enclosed Offer to Purchase and related Letter of Transmittal, which set forth all the terms and conditions of the offer. You should carefully review the Offer to Purchase, Letter of Transmittal and any other information available to you prior to making a decision whether or not to tender your units. The offer is scheduled to expire on April 9, 2007, unless otherwise extended. Our offer is not subject to any minimum number of units being tendered. You will not be required to pay any partnership transfer fees in connection with any sale of your units pursuant to our offer. Our offer price will be reduced for any distributions subsequently made by your partnership prior to the expiration of our offer.

If we purchase your tendered units, you will receive cash, but you may recognize a gain or loss for federal income tax purposes. If you retain your units, you will continue to be a limited partner. However, you may not be able to liquidate your investment until the partnership terminates.

As with any investment decision, there are advantages and disadvantages to you of accepting or declining our offer. The managing general partner of your partnership is remaining neutral and makes no recommendation as to whether you should tender or refrain from tendering your units in any offer. The managing general partner believes that you must make your own decision whether or not to participate in any offer, based upon a number of factors described in the Offer to Purchase.

You should be aware that, upon completion of this offer, your partnership will terminate the registration of its limited partnership units under the Securities Exchange Act of 1934, as amended, and will no longer file reports with the Securities and Exchange Commission, such as annual reports on Form 10-K and quarterly reports on Form 10-Q. You will, however, continue to receive a Schedule K-1 as well as audited financial statements with respect to your partnership pursuant to the terms of your partnership’s agreement of limited partnership.

If you desire to tender any of your units in response to our offer, you should complete and sign the enclosed Letter of Transmittal in accordance with the instructions and mail or deliver it and any other required documents to The Altman Group, Inc., which is acting as Information Agent in connection with this offer, at the address set forth on the back cover of the enclosed Offer to Purchase. If you have any questions, please contact the Information Agent, toll free, at (800) 217-9608.

Very truly yours,

AIMCO PROPERTIES, L.P.

EX-99.(C)(1)

Complete Appraisal in a
Self-Contained Report
Apartment Property

Springhill Lake Apartments
9164 Edmonston Road
Greenbelt, Prince George’s County, MD 20770

Prepared For:
Mr. James Badolato
Commercial Loan Analyst
GMAC Commercial Mortgage Corporation
200 Witmer Road
Horsham, PA 19044

Effective Date of the Appraisal:
April 20, 2004

Integra Realty Resources — Baltimore
File Number: 141-2004-0038

© 2004 by Integra Realty Resources

Springhill Lake Apartments
Greenbelt, MD

May 6, 2004

Mr. James Badolato
Commercial Loan Analyst
GMAC Commercial Mortgage Corporation
200 Witmer Road
Horsham, PA 19044

SUBJECT: Market Value Appraisal
Springhill Lake Apartments
9164 Edmonston Road
Greenbelt, Prince George’s County, MD 20770
Integra Baltimore File No. 141-2004-0038

Dear Mr. Badolato:

Integra Realty Resources — Baltimore is pleased to transmit the self-contained report of a complete appraisal of the referenced property. The purpose of the appraisal is to develop an opinion of the market value of the leased fee interest (subject to several commercial leases) in the property as of April 20, 2004, the effective date of the appraisal. The attached report sets forth the data, research, analyses, and conclusions for this appraisal.

The report is prepared in conformity with the Uniform Standards of Professional Appraisal Practice (USPAP) and the Code of Professional Ethics and Standards of Professional Appraisal Practice of the Appraisal Institute. Our opinion of market value is premised upon the Assumptions and Limiting Conditions contained within this report.

The site has an area of 153.30 acres (per assessment records); it is improved with a three-story garden and two-story townhouse apartment community containing 2,899 units. The improvements were constructed in nine phases between 1962 and 1969 and contain 2,750,537 square feet of rentable floor area. As of the effective date of the appraisal, the property is 95% occupied.

IRR.
The Flagship Building • 11785 Beltsville Drive, Suite 150 • Beltsville, MD 20705-4025 • Phone: 301-586-9320 • Fax: 301-586-9322

Mr. James Badolato
GMAC Commercial Mortgage Corporation
May 6, 2004
Page 2

Based on the analyses and conclusions in the accompanying report, and subject to the definitions, assumptions, and limiting conditions expressed herein, it is our opinion that the market value of the leased fee estate of the property, as of April 20, 2004, is

TWO HUNDRED EIGHT MILLION FIVE HUNDRED THOUSAND
DOLLARS
($208,500,000).

The preceding value conclusion is subject to the following Extraordinary Assumptions:

1.	Based upon the age of the improvements, there is the possibility that they contain asbestos and/or lead paint. Also, the site presently contains underground fuel storage tanks used for the storage of heating fuel. Our estimate of value is based upon the site being free of environmental hazards, which would negatively impact value.
2.	The value conclusions do not consider the contributory benefit of furniture, fixtures, and equipment such as leasing office and community room furniture, office furniture and equipment, and recreational amenities.
3.	Building plans were incomplete, and “as built” plans and location surveys were not available. Gross building and individual unit rentable floor areas are based upon information and construction drawings provided by management. We have relied upon measurement information provided by property management. Gross and rentable areas of the subject and comparables should be considered as the best estimates available for description purposes, but should not be relied upon for any other purpose.

If you have any questions or comments, please contact the undersigned. Thank you for the opportunity to be of service.

Respectfully submitted,

Integra Realty Resources — Baltimore

Patrick C. Kerr, MAI, SRA	Jennifer L. McCoun
Managing Director	Analyst
Certified General Real Estate Appraiser	Real Estate Appraiser Trainee
Maryland Certificate #1100	Maryland License #11740

Springhill Lake Apartments Table of Contents

TABLE OF CONTENTS

	PAGE NO.
Summary of Salient Facts and Conclusions		1
General Information		3
Identification of Subject		3
Current Ownership and Sales History		3
Purpose, Property Rights and Effective Date		4
Intended Use and Intended User		4
Scope of Appraisal		4
Economic Analysis		6
Prince George’s County Area Analysis		6
Market Area Analysis		16
Apartment Market Analysis		22
Property Analysis		29
Description and Analysis of the Land		29
Description and Analysis of the Improvements		34
Real Estate Tax Analysis		52
Highest and Best Use Analyses		55
Valuation Analysis		57
Valuation Methodology		57
Insurable Value		58
Sales Comparison Approach		59
Income Capitalization Approach		66
Reconciliation		86
Certification		88
Assumptions and Limiting Conditions		91
Addenda
Qualifications of Appraiser(s)	Addendum A
Definitions	Addendum B
Subject Photographs	Addendum C
Financials and Property Information	Addendum D
Comparables	Addendum E
Improved Sales
Rentals
Operating Expenses
Letter of Authorization	Addendum F

© 2004 by Integra Realty Resources

Springhill Lake Apartments Summary of Salient Facts and Conclusions

SUMMARY OF SALIENT FACTS AND CONCLUSIONS
PART ONE

Property	Springhill Lake Apartments
	9164 Edmonston Road
	Greenbelt, Prince George’s County, MD 20770
Census Tract Number	8067.03
Property Tax Identification Number(s)	18 accounts
Owner of Record	First Springhill Lake Associates, et al
Date of the Report	May 6, 2004
Effective Date of the Appraisal	April 20, 2004
Land Area	153.30 acres; 6,677,687 square feet
Number of Apartment Units	2,899
Rentable Floor Area (RFA)	2,750,537 square feet
Current Occupancy	95% (153 units vacant)
Year Built	Nine phases between 1962 and 1969
Zoning Designation	R-18 (majority of property) & C-A (one parcel),
	Multifamily Medium Density Residential & Ancillary
	Commercial
Floodplain Map Panel Number and Date	2452080015D; 12/15/1989
Floodplain Designation	C - Area of minimal flooding.
Real Estate Taxes, Year 2004-2005	$2,325,844
Highest and Best Use as Improved	Multifamily
Property Rights Appraised	Leased fee estate
Estimated Exposure Time and Marketing Period	Six months; Six months
Market Value Indications
Cost Approach	Not Applicable
Sales Comparison Approach	$206,000,000
Income Capitalization Approach	$208,500,000
Market Value Conclusion*	$208,500,000 ($71,921 per Unit)
Insurable Value	$171,000,000

* The market value conclusion is subject to the Extraordinary Assumptions set forth in the letter of transmittal.

Page 1

Springhill Lake Apartments Summary of Salient Facts and Conclusions

PART TWO
UNIT MIX AND MARKET RENTS

	# of		Unit		Market		Market
Unit Type	Units		SF		Rent/Mo.		Rent/SF
One Bedroom/1 Bath		662		783	$	900	$	1.15
One Bedroom/1 Bath & Den		316		872	$	980	$	1.12
Two Bedroom/1 Bath		1280		971	$	1,032	$	1.06
Two Bedroom/1 Bath & Den		266		1073	$	1,085	$	1.01
Two Bedroom/2 Bath		32		1029	$	1,100	$	1.07
Two Bedroom/2 Bath & Den		30		1294	$	1,215	$	0.94
Three Bedroom/1.5 Bath		182		1122	$	1,250	$	1.11
Three Bedroom/1.5 Bath TH		116		1113	$	1,375	$	1.24
Four Bedroom/2.5 Bath TH		4		1478	$	1,540	$	1.04
Four Bedroom/2 Bath		11		1579	$	1,450	$	0.92
Total / Weighted Average		2,899		949	$	1,033	$	1.09

PART THREE

Sales Comparison Approach:
Number of Sales	5
Range of Dates of Sale	October, 2002 - April, 2004
Range of Prices per Unit (Unadjusted)	$64,475 - $85,771
Range of Prices per Unit (Adjusted)	$68,945 - $73,814
Indicated Value by Sales Comparison Approach	$206,000,000 ($71,059 per Unit)
Income Approach:
Potential Gross Income (PGI)	$35,000,000 ($12,073 per Unit)
Stabilized % Vacancy & Collection Loss	-7%
Other Income	$1,400,000 ($483 per Unit)
Commercial Income	$220,128 ($76 per Unit)
Effective Gross Income (EGI)	$34,170,128 ($11,787 per Unit)
Operating Expenses	$17,989,580 ($6,205 per Unit)
Operating Expense Ratio	52.6% of EGI
Net Operating Income (NOI)	$16,180,548 ($5,581 per Unit)
Capitalization Rate Applied	7.75%
Indicated Value by Income Approach	$208,500,000 ($71,921 per Unit)

Page 2

Springhill Lake Apartments General Information

GENERAL INFORMATION

Identification of Subject

The property is a three-story garden and two-story townhouse apartment community containing 2,899 units. The street address is 9164 Edmonston Road, Greenbelt, MD 20770. The site has an area of 153.30 acres, or 6,677,687 square feet. It is further identified by the assessment office by the tax parcels summarized below.

SPRINGHILL LAKE APARTMENTS TAX ACCOUNTS

Account (21-)	Tax Map Reference	Acreage	Owner
2397438	Map 26, Grid B3, Block B, Par 12	0.4871	Springhill Commercial LP
2397404	Map 26, Grid C3, Section 1, Pt Par 1 EQ	1.6346	Springhill Commercial LP
2397412	Map 26, Grid C3, Section 1, Pt Par 2 EQ	8.2057	Albert H. Small, et al
2399632	Map 26, Grid C3, Section 1, Pt Par 2 EQ	8.6583	Springfield Facilities LLC
2397446	Map 26, Grid B3, Section 1, Pt Par 3 EQ	1.0969	First Springhill Lake LP
2323210	Map 26, Grid C4, Section 1, Pt Par 1 EQ	4.1037	First Springhill Lake LP
2323228	Map 26, Grid C3, Section 1, Pt Par 2 EQ	3.0379	First Springhill Lake LP
2323236	Map 26, Grid B3, Section 1, Pt Par 1 EQ	1.4144	First Springhill Lake LP
2394187	Map 26, Grid B4, Section 2, Par 4	11.08	Second Springhill Lake Ass.
2403681	Map 26, Grid C4, Section 3, Block A, Par 6	15.09	Third Springhill Lake Associates
2324275	Map 26, Grid B4, Section 4, Block A, Par 7	6.41	Fourth Springhill Lake Associates
2324267	Map 26, Grid B3, Section 2, Block A, Par 5	2.06	Fourth Springhill Lake Associates
2322915	Map 26, Grid B3, Section 5, Block B, Par 8	18.58	Fifth Springhill Lake Associates
2322923	Map 26, Grid B3, Section 5, Block C, Par 9	3.87	Fifth Springhill Lake Associates
2396968	Map 26, Grid B4, Section 6, Block B, Par 10	22.87	Sixth Springhill Lake Associates
2394963	Map 26, Grid B4, Section 7, Block B, Par 11	20.79	Seventh Springhill Lake Associates
2318715	Map 26, Grid C4, Section 8, Block A, Par 13	8.73	Eighth Springhill Lake Associates
2371409	Map 26, Grid B3, Section 9, Block C, Par 14	15.18	Ninth Springhill Lake Associates
18		153.30

Photographs of the subject are in Addendum C.

Current Ownership and Sales History

The entire property was purchased and constructed at various times between 1962 and 1969. The current management and ownership is AIMCO, who reportedly acquired the property in 1999.

During 2003, the owners spent approximately $1,910,243 in capital improvements (or $659 per unit), as itemized in the following exhibit:

Page 3

Springhill Lake Apartments General Information

Springhill Lake Apartments Property #025033

CAP “R” 2003

	DESCRIPTION	Total CAP “R” 2003
141003	Swimming Pools	$	16,453.00
142408	Electrical	$	63,031.00
142413	Roofs	$	53,973.00
143004	Water Heaters	$	39,727.00
143005	Major Sewer/H.W. dig ups	$	424,862.00
144100	Office Computers	$	20,542.00
145499	A/C	$	25,124.00
145699	Cabinets	$	65,699.00
146501	Dishwashers	$	13,549.00
146502	Stoves	$	36,089.00
146503	Refrigerators	$	57,986.00
146506	Washers/Dryers	$	21,389.00
146601	Carpet	$	432,500.00
146602	Tile	$	42,415.00
147001	Maint. Equip.	$	3,535.00
147399	Heating	$	47,961.00
147499	Interior Improvement (City of Greenbelt)	$	120,225.00
147899	Painting (Major Drywall)	$	44,750.00
149299	Structural	$	380,433.00
	Total	$	1,910,243.00

To the best of our knowledge, no other sale or transfer of ownership has occurred within the past three years, and as of the effective date of this appraisal, the property is not subject to an agreement of sale or option to buy, nor is it listed for sale.

Purpose, Property Rights and Effective Date

The purpose of the appraisal is to develop an opinion of the market value of the leased fee interest (subject to several commercial leases) in the property as of the effective date of the appraisal, April 20, 2004. “Market value” is defined in the addenda. Unless otherwise stated, all factors pertinent to a determination of value are considered as of this date.

Intended Use and Intended User

This appraisal report is prepared for Mr. James Badolato, Commercial Loan Analyst, GMAC Commercial Mortgage Corporation, 200 Witmer Road, Horsham, PA, for use in possible collateral for a Freddie Mac-insured loan transaction. It is not intended for any other use or user.

Scope of Appraisal

To perform this assignment, we took the following steps to gather, confirm, and analyze relevant data.

Page 4

Springhill Lake Apartments General Information

n	Physically inspected the property and the surrounding market area. Patrick C. Kerr, MAI, SRA, and Jennifer L. McCoun conducted a interior and exterior inspection of a sample of units/buildings on April 19 and 20, 2004.
n	Collected factual information about the property and the surrounding market, and confirmed that information with various sources.
n	Performed a highest and best use analysis of the subject site as though vacant and of the property as improved.
n	Analyzed market information and developed indications of value under all applicable approaches.
n	Reviewed the rent roll dated April 5, 2004 in effect at the property, a Unit Status Report dated April 19, 2004, as well as historical income and expense statements.
n	Reconciled all indications of value into a conclusion of value as of the effective date of the appraisal.

This is a complete appraisal in a self-contained report that conforms with the requirements of the Uniform Standards of Professional Appraisal Practice (USPAP), the Code of Professional Ethics and Standards of Professional Appraisal Practice of the Appraisal Institute, and the appraisal regulations issued in connection with the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA).

Page 5

Springhill Lake Apartments Prince George’s County Area Analysis

ECONOMIC ANALYSIS

Prince George’s County Area Analysis

   Introduction

The subject is in the Washington-Baltimore Consolidated Metropolitan Statistical Area (CMSA). This area is a combination of the two metropolitan areas – Washington, DC and Baltimore, MD; these two areas have grown “together”, i.e., commuting patterns, development and other criteria are similar, therefore, for many statistical purposes, they have been combined. The CMSA forms a land area of 9,578 square miles (1.5 times the size of the State of Connecticut) and includes 25 counties and 10 cities, stretching from the Eastern Shore to the Shenandoah Valley and from the Pennsylvania line to Fredericksburg, Virginia.

The Washington-Baltimore CMSA is strategically located midway along the East Coast of the United States. It is anchored by the port city of Baltimore to the north and the nation’s capital, Washington, D.C., 40 miles south. A circumferential beltway rings each of the two cities. The beltways are only 19 miles apart and are linked by 22 freeway lanes. The Mid-Atlantic location and excellent highway infrastructure allows single-day road access to the densely populated Northeast Corridor of the United States. Also, overnight truck access can serve 32 percent of the nation’s population and 34 percent of the country’s manufacturers. No other U.S. market allows commodities to be imported from or exported to retailers and end-users as fast and economically.

According to the 2000 census, the Washington-Baltimore CMSA is the fourth largest consolidated market in the nation (behind New York, Los Angeles and Chicago, respectively). The population was estimated to be 7,608,070 in 2000, which was a 13.1% increase from 1990. The Washington, DC Primary Metropolitan Statistical Area (PMSA) comprises approximately 66% of the total population.

Prince George’s County is located in central Maryland, bordered by the Patuxent River to the east and the Potomac River and Washington, DC to the west. A demographic analysis of Prince George’s County and the Washington, DC MSA was conducted using information provided by NPA Data Services, Inc., a recognized source. Information supplied includes historical and projected population, employment and income data.

   Population

Historical and projected population trends for Prince George’s County are charted below:

Page 6

Springhill Lake Apartments Prince George’s County Area Analysis

POPULATION TRENDS

Prince George’s County

The population of Prince George’s County increased at a compounded annual rate of 0.70% from 1999 to 2004. For the same time period, the Washington, DC MSA grew at a compounded annual rate of approximately 1.61%. Over the last ten years Prince George’s County’s average annual compound change was 0.83%, compared to 1.56% for the Washington, DC MSA.

Looking ahead, both Prince George’s County and the Washington, DC MSA are anticipated to experience continued growth, with future population estimates reflecting growth rates slightly lower than those experienced in the past. For the period 2004 to 2014, the populations of Prince George’s County and the the Washington, DC MSA are expected to increase by an average annual compound rate of 0.42% and 1.21%, respectively. For the next five years, the population of Prince George’s County should grow at a rate similar to the ten year average.

Page 7

Springhill Lake Apartments Prince George’s County Area Analysis

POPULATION TRENDS COMPARISON

			Washington, DC MSA				Prince George’s County
				%					%
	Year		Population (000’s)	Change			Population (000’s)		Change
		1994	4,496.5					757.6
		1999	4,847.6		7.8	%		795.0		4.9	%
		2000	4,951.4		2.1	%		804.0		1.1	%
Historical		2001	5,060.8		2.2	%		819.3		1.9	%
		2002	5,126.4		1.3	%		820.9		0.2	%
		2003	5,189.8		1.2	%		822.1		0.1	%
Current		2004	5,250.0		1.2	%		823.1		0.1	%
		2005	5,313.0		1.2	%		824.8		0.2	%
		2006	5,377.5		1.2	%		827.1		0.3	%
		2007	5,442.3		1.2	%		829.7		0.3	%
Projected		2008	5,507.8		1.2	%		832.6		0.4	%
		2009	5,574.6		1.2	%		836.0		0.4	%
		2014	5,923.7		6.3	%		858.7		2.7	%
Average Annual			Historical
Compound Change			Past 5 years		1.61	%				0.70	%
			Past 10 years		1.56	%				0.83	%
			Projected
			Next 5 years		1.21	%				0.31	%
			Next 10 years		1.21	%				0.42	%

Source: NPA Data Services, Inc.; compiled by IRR

Employment

Employment trends for both Prince George’s County and the Washington, DC MSA should follow a pattern similar to the population trends for these areas, although at higher rates of increase. From 1999 to 2004, Prince George’s County employment grew at an average annual compound rate of 0.82% compared to 1.73% for the the Washington, DC MSA. These figures indicate that Prince George’s County lagged the Washington, DC MSA in employment growth over the last five years. Looking back ten years, Prince George’s County employment grew at an average annual compound rate of 1.08%, compared to the Washington, DC MSA growth rate of 1.91%.

Over the next five and ten years Prince George’s County employment growth should lag the Washington, DC MSA growth rate. From 2004 to 2009, Prince George’s County should grow by a 1.52% average annual growth rate, while the long term projection, 2004 to 2014, is for a 1.48% increase. For the same periods, employment in the Washington, DC MSA is expected to grow at average annual compound rates of 2.09% and 1.98%, respectively. Employment gains are a strong indicator of economic health and generally correlate with real estate demand. Historically, Prince George’s County has lagged the Washington, DC MSA’s growth rate, suggesting that Prince George’s County’s relative position is declining.

Page 8

Springhill Lake Apartments Prince George’s County Area Analysis

Employment trends for Prince George’s County and the Washington, DC MSA are presented below.

NON-FARM EMPLOYMENT TRENDS COMPARISON

			Washington, DC MSA				Prince George’s County
				%					%
	Year		Employment (000’s)	Change			Employment (000’s)		Change
		1994	3,001.0					363.8
		1999	3,327.5		10.9	%		388.7		6.8	%
Historical		2000	3,471.5		4.3	%		396.1		1.9	%
		2001	3,503.9		0.9	%		398.2		0.5	%
		2002	3,484.2		-0.6	%		393.4		-1.2	%
		2003	3,545.7		1.8	%		398.7		1.4	%
Current		2004	3,624.9		2.2	%		405.0		1.6	%
		2005	3,711.6		2.4	%		412.1		1.8	%
		2006	3,789.5		2.1	%		418.3		1.5	%
Projected		2007	3,868.2		2.1	%		424.6		1.5	%
		2008	3,942.4		1.9	%		430.5		1.4	%
		2009	4,019.4		2.0	%		436.7		1.4	%
		2014	4,409.9		9.7	%		469.2		7.5	%
Average Annual			Historical
Compound Change			Past 5 years		1.73	%				0.82	%
			Past 10 years		1.91	%				1.08	%
			Projected
			Next 5 years		2.09	%				1.52	%
			Past 10 years		1.98	%				1.48	%

Source: NPA Data Services, Inc.; compiled by IRR

The following chart depicts the current distribution of employment by industry. In 2004, the largest employment sectors in Prince George’s County are:

• Services (35.8%)

• Government (21.9%)

• Retail Trade (12.2%)

• Construction ( 9.3%)

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Springhill Lake Apartments Prince George’s County Area Analysis

EMPLOYMENT SECTORS 2004

Prince George’s County

By comparison, the Washington, DC MSA’s largest employment sectors are Services (45.3%), Government (19.9%), Retail Trade ( 8.9%), and FIRE ( 7.6%).

Over the past three years, the largest meaningful percentage gains in employment within Prince George’s County occurred within the Services and Transport, Info, Util sectors with annual average compound growth rates of 1.54% and 1.50%, respectively. The second largest sector, Government, also saw an increase of 0.45%.

For the Washington, DC MSA, the largest meaningful gains in employment over the past three years occurred within the Services sector with annual average compound growth rates of 1.6%. The Wholesale Trade sector saw the second largest employment gain, but since it only comprises 2.1% of the total employment for the Washington, DC MSA, it was not regarded as a meaningful gain on the whole. Most other sectors in the MSA fall around a 1% employment gain.

We are unable to examine more than three years of historical trends in employment sectors because the US Department of Commerce switched from the Standard Industrial Classification (SIC) system of employment categories to the North American Industrial Classification System (NAICS) in 2001. NAICS employment categories differ from those of the SIC system, making it difficult to compare pre-2001 and post-2001 data.

Ten year projections for Prince George’s County show Services related employment leading all other sectors with Transport, Info, Util second. The forecast for the Washington, DC MSA has Services related employment leading all other sectors. The Mining & Other sector has the second largest projection, but since it comprises only 0.5% of the total employment for the Washington, DC MSA, it is not regarded as an important projection.

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Springhill Lake Apartments Prince George’s County Area Analysis

EMPLOYMENT SECTOR TRENDS

Prince George’s County

					%							Change Rate
	2001		2004		of Total			2009		2014		’01-’04			’04-’09			’04-’14
Total Employment		398.2		405.0		100	%		436.7		469.2		0.56	%		1.52	%		1.48	%
Services		142.4		149.1		35.8	%		168.4		187.9		1.54	%		2.47	%		2.34	%
Government		87.0		88.2		21.9	%		93.1		98.0		0.45	%		1.09	%		1.06	%
Retail Trade		48.6		47.7		12.2	%		49.2		51.1		-0.56	%		0.60	%		0.68	%
Construction		37.1		37.0		9.3	%		39.3		41.9		-0.04	%		1.21	%		1.25	%
Transport, Info, Util		30.5		31.9		7.7	%		35.2		38.0		1.50	%		1.98	%		1.77	%
FIRE		25.5		25.5		6.4	%		26.6		27.8		-0.03	%		0.89	%		0.88	%
Wholesale Trade		14.0		14.3		3.5	%		15.4		16.6		0.66	%		1.56	%		1.49	%
Manufacturing		12.7		12.0		3.2	%		11.8		11.9		-2.03	%		-0.18	%		-0.03	%
Mining & Other		0.4		0.4		0.1	%		0.4		0.4		-2.33	%		0.00	%		0.00	%
Ttl Non-Mfg.		385.5		393.0		96.8	%		424.8		457.3		0.64	%		1.57	%		1.53	%
Ttl Office-Related*		254.9		262.7		64.0	%		288.1		313.6		1.01	%		1.86	%		1.79	%

* Includes FIRE, Services and Government

(Numbers in thousands (000’s))

EMPLOYMENT SECTOR TRENDS

Washington, DC MSA

					%							Change Rate
	2001		2004		of Total			2009		2014		’01-’04			’04-’09			’04-’14
Total Employment		3,503.9		3,624.9		100	%		4,019.4		4,409.9		1.14	%		2.09	%		1.98	%
Construction		212.8		217.7		6.1	%		239.0		261.1		0.75	%		1.89	%		1.84	%
FIRE		265.9		271.1		7.6	%		291.4		310.5		0.65	%		1.45	%		1.37	%
Government		696.2		712.4		19.9	%		772.0		828.0		0.77	%		1.62	%		1.52	%
Manufacturing		105.9		100.4		3.0	%		103.2		107.3		-1.78	%		0.56	%		0.67	%
Mining & Other		17.6		18.1		0.5	%		20.4		22.9		0.82	%		2.47	%		2.37	%
Retail Trade		313.3		323.0		8.9	%		354.3		384.0		1.03	%		1.86	%		1.74	%
Services		1,588.5		1,666.5		45.3	%		1,892.4		2,122.0		1.61	%		2.58	%		2.45	%
Transport, Info, Util		229.1		237.6		6.5	%		261.9		284.2		1.22	%		1.96	%		1.81	%
Wholesale Trade		74.6		77.9		2.1	%		87.1		96.0		1.45	%		2.26	%		2.11	%
Ttl Non-Mfg.		3,398.0		3,624.9		97.0	%		3,916.2		4,302.6		2.18	%		1.56	%		1.73	%
Ttl Office-Related*		2,550.5		2,650.0		72.8	%		2,955.8		3,260.5		1.28	%		2.21	%		2.09	%

* Includes FIRE, Services and Government

(Numbers in thousands (000’s))

In the following chart, we focus on trends in two broad employment sectors: office-related and manufacturing employment. For purposes of this analysis, we define office-related employment as the total number of jobs in the FIRE, Services and Government sectors. While not all employment in these sectors is office-related, office employment trends tend to mirror the trends in these three categories combined. In Prince George’s County, office-related employment is growing while manufacturing employment is declining. This indicates a shift toward a more service-based economy, which is consistent with the national trend.

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Springhill Lake Apartments Prince George’s County Area Analysis

EMPLOYMENT SECTOR TRNDS
Prince George’s County

Prince George’s County accounted for approximately 12.12% of the Washington, DC MSA’s employment in 1994. In 2004, the ratio is 11.25% and it is projected at 10.64% through 2014. This is an indication that Prince George’s County is growing at a rate similar to the Washington, DC MSA.

Prince George’s County’s economy is not dependent on a particular sector. The employment base is varied, as are the major employers. Therefore, Prince George’s County should be less susceptible to cyclical fluctuations that have occurred in other areas dominated by a single industry. The area’s major employers are listed below.

MAJOR EMPLOYERS

Employer	# of Employees
University of Maryland at College Park		13,260
Andrews Air Force Base		12,600
NASA – Goddard Space Flight Center		8,188
Giant Food, Inc.		6,031
Census Bureau		4,420
U.S. Postal Service		4,220
Dimensions Healthcare Sys.		3,000
Verizon Communications		2,738
Safeway		2,400

Source: Prince George’s County Economic Development Corporation, 2003

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Springhill Lake Apartments Prince George’s County Area Analysis

   Income

Personal income is a significant factor in determining the real estate demand in a given market. From 1999 to 2004, Prince George’s County’s income grew at an average annual compound rate of 2.51%, compared to the Washington, DC MSA average annual compound growth rate of 2.32%. Prince George’s County displayed a per capita income growth lower than that of the Washington, DC MSA over the last ten years. Prince George’s County’s average annual compound growth rate was 1.76% as compared to 2.35% for the Washington, DC MSA. Projections for the next five and ten year periods reflect growth rates for Prince George’s County that are greater than the anticipated gains for the Washington, DC MSA. For the two time frames, 2004 to 2009 and 2004 to 2014, Prince George’s County is anticipated to experience 2.66% and 2.43% average annual growth rates, respectively, compared to the projected growth rates of the Washington, DC MSA of 2.08% and 1.88%, respectively.

An examination of income per household reveals that, historically, Prince George’s County has experienced a growth rate similar to the Washington, DC MSA. Future projections predict similar growth for Prince George’s County compared to the Washington, DC MSA. In absolute dollars, Prince George’s County’s personal income historically has been below that of the Washington, DC MSA, both on per capita and per household bases.

INCOME PER CAPITA COMPARISON

			Washington, DC MSA					Prince George’s County
					%					%
	Year		Income/Capita		Change			Income/Capita		Change
		1994	$	32,006				$	25,858
		1999	$	35,991		12.5	%	$	27,185		5.1	%
		2000	$	37,746		4.9	%	$	28,253		3.9	%
Historical		2001	$	38,135		1.0	%	$	28,347		0.3	%
		2002	$	38,111		-0.1	%	$	28,646		1.1	%
		2003	$	39,258		3.0	%	$	29,763		3.9	%
Current		2004	$	40,374		2.8	%	$	30,779		3.4	%
		2005	$	41,516		2.8	%	$	31,827		3.4	%
		2006	$	42,387		2.1	%	$	32,686		2.7	%
		2007	$	43,228		2.0	%	$	33,527		2.6	%
Projected
		2008	$	43,979		1.7	%	$	34,302		2.3	%
		2009	$	44,751		1.8	%	$	35,096		2.3	%
		2014	$	48,658		8.7	%	$	39,143		11.5	%
Average Annual			Historical
Compound Change			Past 5 years			2.32	%				2.51	%
			Past 10 years			2.35	%				1.76	%
			Projected
			Next 5 years			2.08	%				2.66	%
			Past 10 years			1.88	%				2.43	%

Source: NPA Data Services, Inc.; compiled by IRR

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Springhill Lake Apartments Prince George’s County Area Analysis

INCOME PER HOUSEHOLD COMPARISON

			Washington, DC MSA					Prince George’s County
					%					%
	Year		Income/Household		Change			Income/Household		Change
		1994	$	85,670				$	72,532
		1999	$	95,871		11.9	%	$	75,980		4.8	%
		2000	$	100,413		4.7	%	$	78,879		3.8	%
		2001	$	101,238		0.8	%	$	79,022		0.2	%
		2002	$	101,010		-0.2	%	$	79,666		0.8	%
		2003	$	103,879		2.8	%	$	82,572		3.6	%
Current		2004	$	106,687		2.7	%	$	85,219		3.2	%
		2005	$	109,552		2.7	%	$	87,940		3.2	%
		2006	$	111,692		2.0	%	$	90,129		2.5	%
		2007	$	113,741		1.8	%	$	92,261		2.4	%
Projected		2008	$	115,543		1.6	%	$	94,199		2.1	%
		2009	$	117,391		1.6	%	$	96,186		2.1	%
		2014	$	126,615		7.9	%	$	106,194		10.4	%
Average Annual			Historical
Compound Growth			Past 5 years			2.16	%				2.32	%
			Past 10 years			2.22	%				1.63	%
			Projected
			Next 5 years			1.93	%				2.45	%
			Past 10 years			1.73	%				2.22	%

Source: NPA Data Services, Inc.; compiled by IRR

   Conclusion

Overall, the economic outlook for Prince George’s County is positive. Total population is projected to increase slightly. More importantly, the area is projected to experience increasing employment growth. Based on this analysis, it is anticipated that Prince George’s County will continue to grow and prosper. The expected growth should provide an economic base that supports demand for real estate in the subject neighborhood and for the subject property. These conditions should stimulate increases in general property values within the foreseeable future.

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Springhill Lake Apartments Prince George’s County Area Analysis

   Area Map

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Springhill Lake Apartments Market Area Analysis

Market Area Analysis

   Boundaries

The subject is in the northern portion of Prince George’s County in an area known as Greenbelt, a suburb of the Washington, DC area, as well as an incorporated municipality with a mayor and city council. For purposes of this report, the market area boundaries are best described as follows:

North	National Agricultural Research Center
South	Greenbelt Road (MD 193)
East	Baltimore-Washington Parkway (MD 295)
West	Baltimore Avenue (US 1)

A map highlighting these boundaries and identifying the location of the property follows this section. The subject’s neighborhood is primarily influenced by its proximity to the nation’s capital, the University of Maryland-College Park, and various federal employers, including the Henry A. Wallace Beltsville Agricultural Research Center (USDA) and the NASA Goddard Space Flight Center. The large number of University of Maryland students in the area influences much of the real estate activity.

   Access and Linkages

Greenbelt is the intersecting point for four major highways, including the Baltimore-Washington Parkway and the Capital Beltway (I-495/95). As such, rapid access to much of the metropolitan area is available. Primary access to the area is from the Capital Beltway, Kenilworth Avenue, and Baltimore-Washington Parkway. Secondary access is from Greenbelt Road. Road access is considered good.

Public transportation is provided by both rail and bus services. The nearest Metro-rail and MARC station is located less than one mile west of the subject at the Greenbelt Metro, accessed from the property by adjacent Cherrywood Lane. A University of Maryland shuttle bus services the subject apartment community on a regular basis and provides transportation to the University as well as the Metro station. Neighborhood bus services travel along Baltimore Avenue (Route 1), Greenbelt Road (Route 193), and other primary roads.

The Washington Metro Area Transit Authority, which operates the Metro-rail and MARC trains, is proposing to the Greenbelt City Council a new Purple Line light rail to serve area residents from New Carrollton to northwest Bethesda. The line would include 10 stations within 14 miles and serve mostly pedestrian populations such as students and those without private transportation. The main goal of the project is to provide adequate access to the University of Maryland-College Park.

The District of Columbia CBD, the economic and cultural center of the region, is approximately 11 miles from the market area.

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Springhill Lake Apartments Market Area Analysis

   Demand Generators

Primary employment centers in the neighborhood consist of Capitol Office Park on Kenilworth Avenue and the Beltway, and Golden Triangle Office Park on Greenbelt Road. In addition to the area’s business parks, the University of Maryland, the Henry A. Wallace Beltsville National Agricultural Research Center and the NASA Goddard Space Flight Center are major employers. Regional employment nodes include Beltsville, Silver Spring, Rockville, Washington, DC, and Tyson’s Corner, Virginia.

The northern portion of Prince George’s County has in recent years benefited from its location as an outlying area of the high technology-influenced Baltimore-Washington Corridor. Major companies in the County include AlliedSignal, AT&T Wireless, DIGEX, Inc., Federal Data Corporation, Lockheed Martin, and North American Vaccine, among others. Additionally, the County is home to many research-oriented federal agencies, such as the previously mentioned NASA Goddard Space Flight Center and National Agricultural Research Center, as well as the Army Research Laboratory, the Institute for Defense Analysis, and the U.S. Census Bureau. New facilities for Federal agencies in the County include the Federal Food and Drug Administration’s Center for Safety and Applied Nutrition in College Park (410,000 square feet); the Bureau of Alcohol, Tobacco and Firearms Fire Forensics Laboratory in Beltsville (180,000 square feet); The Drug Enforcement Agency laboratory in Landover (50,000 square feet); and the National Center for Health Statistics at the Prince George’s Metro Center in Hyattsville (200,000 square feet).

   Retail and Public Services

Beltway Plaza Mall is located adjacent to the subject on the south. This super-regional mall opened in 1961 is one million square feet and is anchored by Target, Value City, AMC Theaters, Marshalls, Jo-Ann Fabrics, PETsMart, and Giant Food, among others. The nearest shopping centers are Greenway Center, a community center located at Greenbelt Road and Baltimore-Washington Parkway, about ¹/2 mile from the property; Eastgate Shoppers World, a neighborhood center at Greenbelt and Lanham-Severn roads; and Cipriano Square, a community center at Greenbelt and Cipriano Roads. The area is served by the Prince George’s County Public School system and there are two elementary schools and one middle school on the subject site, as well as a Head-Start center. The nearest high school is Eleanor Roosevelt about two miles east of the subject on Greenbelt Road. The University of Maryland is approximately two miles west of the subject on US 1. Police protection is provided by the Prince George’s County Police Department. The nearest fire and police stations are within two miles of the property.

   Land Use

Neighborhood land uses include a mix of residential and commercial. Office and retail land uses are situated along Greenbelt Road (Route 193) and Baltimore Avenue (Route 1). Other land use characteristics are summarized below.

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Springhill Lake Apartments Market Area Analysis

Character of Area	Suburban
Predominant Housing Age	20-40 years
(Both Ownership and Rental)
Predominant Quality and Condition	Above Average to Average
Approximate Percent Developed	80%
Percent Developed by Land Use	65% Single Family; 20%
	Apartments; 15% Commercial
Infrastructure/Planning	Above Average
Prospective Change in Land Use	Not likely
Prevailing Direction of Growth	East
Subject’s Immediate Surrounding Land Uses

North	Capital Beltway and Office Park
South	Retail (Beltway Plaza Mall) and County Middle School
East	Office/Condo (Capitol Office Park, Golden Triangle Office Park)
West	Wooded/Metro station

The City of Greenbelt was the first community in the United States built as a federal venture in housing. From the beginning it was designed as a complete city, with businesses, schools, roads, and facilities for recreation and town government. Greenbelt was a planned community, noted for its interior walkways, underpasses, its system of inner courtyards and one of the first mall-type shopping centers in the United States. It is now on the National Register of Historic Places as it was designed to provide average American families with economical housing in a pleasant, neighborly environment. The original housing of this planned community, now operated by a cooperative (Greenbelt Homes, Inc.), offers residents low-cost townhouse living in a financial arrangement that offers the best features of home ownership and the best features of renting. The community is located off Baltimore-Washington Parkway and Greenbelt Road.

   Demographic Factors

As indicated in the table below, population and households in the market area have grown over the past thirteen years and this trend is expected to continue in the foreseeable future. Income levels in the market area are lower than income levels in the Washington, DC metro area as a whole.

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Springhill Lake Apartments Market Area Analysis

DEMOGRAPHIC DATA

			Median		Median
City of			Number of		Household
Greenbelt	Population		Households		Income
1990		21,096		9,347		N/A
2000		21,456		9,368	$	46,328	*
2003		21,978		9,558	$	49,251
2008 (est.)		22,906		9,909		N/A

Source: 2004 Claritas, Inc. and *US Census Bureau

   Development Activity and Trends

There has been limited development activity within the market area because of its mostly built-up nature. However, 240 acres of undeveloped land at the Greenbelt Metro Station is planned for a large-scale, mixed-use project. The developers, Greenbelt Metroland LLC, had originally called for 2.2 million square feet of office, 2.15 million square feet of retail, two hotels, senior housing, and up to 1,525 residential units. The approval had one condition, however, that the developers deliver on their plans for the retail portion to be upscale only. The developers hoped a new interchange into the development would be paid for by state and/or federal funds. However, the City of Greenbelt opposed the amount of commercial space and wanted to see an increase in residential units. Settlement on the project between the developers and the City was halted because the developer’s did not agree with the City’s proposed annexation of the south core of the project ( the north core is within the City limits).

Goddard Space Flight Center (GSFC) took a step forward in the first phase of its facilities master plan with the solicitation notice for designers of its new, 200,000 square foot Space Sciences Directorate facility. The project, which will enable GSFC to consolidate pertinent administrative and lab activities currently conducted in six different buildings, could cost as much as $100 million. GSFC will be able to house the relevant laboratories, computer rooms, and offices for 900 employees into a singular location.

In other development, Shamin Hotels applied for a commercial building permit for a $4.5 million Hilton Gardens Hotel proposed for the Golden Triangle Office Park.

In the adjacent town of College Park, home of the University of Maryland, Avalon Bay Communities proposes to build 320 luxury apartments and 200,000 square feet of office space, according to the Prince George’s Newsletter dated May 14, 2001. The project, which is slated for the College Park/University of Maryland Metro Station, needed financing, however, for parking, which, as the article stated, was solved by charging higher parking fees at existing Metro stations.

The University of Maryland acquired 52 acres of land located near the College Park metro station in late 2003 for a new research park. The University has been steadily acquiring properties that will ultimately equal 124 acres. The Center for the Advanced Study of Language has signed a lease for 128,000 square feet on 35 acres. The GSA

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Springhill Lake Apartments Market Area Analysis

also selected 10 acres of the property to build a new, 268,762 square foot NOAA Center for Weather and Climate Prediction.

   Outlook and Conclusions

The market area is in the stability stage of its life cycle. Recent development activity has been minimal, but major infill development proposals are in the approval process. Given the history of the area and the growth trends, it is our opinion that property values will increase in the near future.

In comparison to other areas in the region, the market area is rated as follows:

MARKET AREA ATTRIBUTE RATINGS

Highway Access	Above Average
Demand Generators	Above Average
Convenience to Supporting Services	Above Average
Convenience to Public Transportation	Above Average
Convenience to Schools	Above Average
Employment Stability	Above Average
Police and Fire Protection	Above Average
Property Compatibility	Above Average
General Appearance of Properties	Average
Appeal to Market	Average
Prices/Value Trend	Average

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Springhill Lake Apartments Market Area Analysis

    Market Area Map

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Springhill Lake Apartments Apartment Market Analysis

Apartment Market Analysis

   Metro Area Overview

Supply and demand indicators for multifamily housing in the Suburban Maryland area of the Washington, DC metropolitan area, including inventory levels, absorption, vacancy, and rental rates for all classes of space are presented below.

SUBURBAN MARYLAND METRO AREA APARTMENT MARKET

		Inventory		Completions					Net Absorption		Effective		%
Year	Quarter	(Units)		(Units)		Vacancy %			(Units)		Rental Rate		Change
1994	Annual		125,385		215		3.8	%		1,109	$	727		1.5	%
1995	Annual		125,667		282		3.4	%		735	$	732		0.7	%
1996	Annual		126,443		776		3.5	%		569	$	741		1.2	%
1997	Annual		127,710		1,267		2.7	%		2,300	$	769		3.8	%
1998	Annual		128,922		1,212		2.2	%		1,804	$	790		2.7	%
1999	Annual		130,218		1,296		2.2	%		1,337	$	827		4.7	%
2000	Annual		131,429		1,211		1.5	%		2,084	$	894		8.1	%
2001	Annual		132,161		732		1.4	%		771	$	943		5.5	%
2002	Annual		132,450		289		3.8	%		-2,806	$	961		1.9	%
2003	Annual		134,421		1,971		5.0	%		248	$	1,000		4.1	%

Source: REIS, Inc.; compiled by Integra Realty Resources, Inc.

VACANCY RATE VS EFFECTIVE RENTAL RATE

Source: REIS, Inc.; compiled by Integra Realty Resources, Inc.

The Suburban Maryland apartment market contains an overall inventory of about 134,421 units, which has increased at a 0.8% annual compound rate over the past nine years.

The market has generally strengthened over the last nine years. The overall vacancy rate is estimated to be 5% as of year-end 2003, which represents a modest increase from a low mark of 1.4% reported in 2001 and 3.8% in 2002, due to over 1,900 units completed during the last year. Absorption turned negative in 2002 as the effects of the

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Springhill Lake Apartments Apartment Market Analysis

national economic slowdown were felt. Absorption was positive in 2003 with 248 units.

The effective rental rate is $1,000 per unit, which represents an increase from a low mark of $727 per unit in 1994. Rental rates have increased an average of 3.6% per year since that time.

According to forecasts prepared by REIS, the vacancy rate will increase over the next year before stabilizing at 5.4% in 2004 and 2005. The weighted average rental rate is forecast to move upward for the next five years before stabilizing around $1,179 per unit.

   Submarket Analysis

The subject is located in the College Park/Greenbelt apartment submarket. Key supply and demand indicators for all classes of space in this submarket are displayed in the table below, followed by a separate table showing Class B properties only.

SUBMARKET — CLASS BC PROPERTIES

		Inventory		Completions					Net Absorption		Asking
Year	Quarter	(Units)		(Units)		Vacancy %			(Units)		Rental Rate		% Change
1995	Annual		4,984		0		2.7	%		5	$	758		2.0	%
1996	Annual		4,984		0		2.8	%		-5	$	767		1.2	%
1997	Annual		4,984		0		1.6	%		61	$	780		1.7	%
1998	Annual		4,984		0		2.2	%		-30	$	781		0.1	%
1999	Annual		4,984		0		0.9	%		65	$	801		2.6	%
2000	Annual		4,984		0		0.7	%		10	$	835		4.2	%
2001	Annual		4,984		0		0.2	%		26	$	907		8.6	%
2002	Annual		4,984		0		2.1	%		-95	$	935		3.1	%
2003	Annual		4,984		0		3.1	%		155	$	994		6.3	%

Source: REIS, Inc.; compiled by Integra Realty Resources, Inc.

Supply Analysis

The College Park/Greenbelt submarket contains an overall inventory of 11,837 units, of which 4,984 units, or 42%, are Class B/C units. Approximately 648 units have been added to the overall submarket inventory over the past eight years, all Class A. The overall submarket is growing at an average rate of 0.6% per year.

The Class B/C properties generally range from 15 to 35 years old and are typically two to three stories. The most recent apartment construction in the College Park/Greenbelt submarket occurred in 1998, with the addition of 648 units in a Class A property.

New and Proposed Construction

Within the submarket, the following apartment projects are planned.

1. Jefferson Square Apartments at College Park, SE Cnr. US 1 and Cherokee Street, 262 units and 3,400 square feet of retail, site plans submitted.

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Springhill Lake Apartments Apartment Market Analysis

2.	W/S US 1 opposite Berwyn Road, College Park, Star Hotels proposes building an apartment building on a former Starlite Inn site. The number of units is uncertain, but 38,000 square feet of retail space is also planned.
3.	Summit at North College Park, W/S US 1, North of Beltway. Proposal to build 500 units and 30,000 square feet of retail; site plans submitted.

It is unlikely that projects in the planning stage will proceed without commitments for construction financing. Therefore, the impact of these planned projects on the current market is marginal.

Vacancy Rate Trends

Vacancy rate trends for the College Park/Greenbelt submarket are charted below.

VACANCY RATE COMPARISON

Source: REIS, Inc.; compiled by Integra Realty Resources, Inc.

Overall submarket vacancy (all classes of space combined) is estimated at 3.8% as of year-end 2003, which represents a modest increase from a low mark of 0.8% in 2001. Class B/C vacancy is slightly lower at 3.1% and has been moving upward since its low point of 0.2% in 2001.

According to forecasts by REIS, overall submarket vacancy will increase over the next two years before stabilizing at 5.1% in 2006, then decrease to 3.5% by 2008.

Rental Rate Trends

Trends in reported rents for the College Park/Greenbelt submarket are shown in the following chart.

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Springhill Lake Apartments Apartment Market Analysis

RENTAL RATE COMPARISON

Source: REIS, Inc.; compiled by Integra Realty Resources, Inc.

The average effective rent for the overall submarket is $1,025 per unit, which represents an increase from the low mark of $769 per unit in 1996. Effective rents have increased an average of 4.2% per year since that time.

The Class B/C asking rental rate is lower at $994 per unit but has been moving upward since its low point of $758 per unit in 1995. Class B/C asking rents have increased an average of 3.4% per year since that time. REIS does not report effective rents for ClassB/C properties; therefore, asking rents are used in this analysis.

According to forecasts by REIS, overall submarket rental rates will increase over the next five years before stabilizing at $1,210 per unit in 2008.

Demand Analysis

As noted previously, population in the market area is projected to increase by 4.22% from 2003 to 2008. While population is not growing at a high rate, it should be noted that the personal income levels have increased markedly and the appeal of multi-family housing has grown considerably over the past several years while little new construction has been completed. Our review of nearby apartment communities revealed that occupancies are high with few concessions being offered. The subject is generally comparable in age, condition, amenity package, style, size, layout and other considerations as its closest competition. So while population is generally static, the limited new supply has had a profound positive effect on demand.

Another demographic consideration in the market area is the average household size, as it provides some insight as to the appropriate unit size. Household size continues to decrease locally, regionally and nationally. The decrease in household size can be attributed to an influx of single residents working at expanding nearby businesses and

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Springhill Lake Apartments Apartment Market Analysis

the aging population base in the market area, i.e., older households selling their residences and moving into multi-family dwellings. The declining household size bodes well for multi-family housing demand. Locally, it has remained stable between 2000 and 2003 at around 2.3.

Another primary demographic consideration in the market area is the affordability of the subject apartment rents. As noted previously, the income levels in the market area are lower than regional levels. The subject rents range from a low of $849 to a high of $1,609. Based on a market standard affordability factor of 30% (i.e., rent should not be greater than 30% of household income), the subject rents indicate that households need to be in the income range of about $33,960 to $64,360. As noted in the Market Area Analysis, the median household income of the primary market of the property is $49,521 (the average household income is $61,572). In conclusion, most households in this area can afford the subject rental rates.

Overall demand for multi-family housing in the submarket should remain stable, with steady absorption, low vacancy and moderately increasing rental rates.

Peer Group Analysis

The subject unit mix contains a wide variety of unit types ranging from one bedroom gardens to four-bedroom townhomes. The most significant supply and demand indicators for the subject are the occupancy rates exhibited by directly competing properties. There are an adequate number of competing garden communities in the immediate market area with one to three bedroom units; however, townhomes and four bedroom units are very rare. In our survey of comparable communities, it was necessary to go outside the subject’s Greenbelt market area to Riverdale, Beltsville, Silver Spring, and Laurel, all of which are within 10 miles of the subject, to find townhomes and four bedroom rentals. A summary of the apartment properties considered to be primary competition for the subject is shown below:

COMPETITIVE PROPERTIES

				Year	Distance to
No.	Name	Units	Occupancy	Built	Subject
1	Greenway Village	320	95%	1967/R1992	3 miles east
2	Woodland Landing	443	98%	1969	5 miles east
3	Brittany Place	592	98%	1966	3 miles east
4	Lakeside North	276	100%	1965	2 miles northeast
5	University Square	495	98%	1968	2 miles east
6	Glen Oaks	463	95%	1977	3 miles east
7	Chesapeake Landing	173	99%	1974	6 miles south
8	Barclay Square	180	99%	1962	6 miles northwest
9	Muirfield at Montpelier	386	90%	1969/R2001	8 miles north
10	Fernwood Gardens	159	99%	1966	5 miles south
11	Falkland Chase	450	99%	1937/R1987	10 miles northwest
	Subject	2,899	95%	1962-1969

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Springhill Lake Apartments Apartment Market Analysis

The locations of these competing communities are shown on the Competitive Properties Map following this section. Profiles and photos of these communities are included in Addendum E. Comparables 1 through 6 are all within the subject’s Greenbelt submarket. Comparables 3, 1, and 2 are considered the most similar to the subject, in that order, in terms of age/condition, setting, and amenities. Comparables 4 and 5 are situated in residential settings set back from main roads. Comparable 6 is similar in setting, but is superior in age and condition.

Comparables 7 and 10 are located in Riverdale, a somewhat inferior area to the subject’s; Comparable 8 is in nearby Beltsville, a similar location; Comparable 9 is located in Laurel, which is the northernmost area in the County, with only a slightly inferior setting; and Comparable 11 is located in Silver Spring in nearby Montgomery County in a far superior area. Comparables 7 through 11 were chosen in our analysis of market rent (see Income Capitalization Approach) for their four bedroom garden apartments or three-bedroom townhomes.

Due to high occupancy at the present time, very few communities are offering rent specials or concessions. The exceptions are Brittany Place and Falkland Chase (Comparables 3 and 11), which are offering internet specials of $100 off the first month’s rent; Barclay Square (Comparable 8), which is offering their one-bedrooms for $55 less per month than the regular rent; and Muirfield at Montpelier (Comparable 9), which is offering various specials for those who move in within 15 days of application on select units. Due to the proximity of the University of Maryland and Federal agencies in the market area, rental communities typically provide discounts to students and Federal employees, in addition to county police.

The average occupancy rate for this group is 97%. Over the long run, the occupancy rate of the subject should continue to reflect that of the peer group.

Apartment Market Outlook and Conclusions

The subject is a 2,899-unit apartment property in the College Park/Greenbelt submarket. Supply and demand trends in the submarket are expected to be stable for the short term. Occupancy rates are expected to continue to remain high, and rental rates are expected to increase. Over the long run, employment, population and household growth should foster positive absorption of units in both the Suburban Maryland area and in the submarket.

In comparison to other apartment submarkets in the region, the College Park/Greenbelt submarket is rated as follows:

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Springhill Lake Apartments Apartment Market Analysis

SUBMARKET ATTRIBUTE RATINGS

Market Size/Stature	Average
Market Demand	Stable
Vacancy Trends	Stable
Threat of New Supply	Below Average
Rental Trends	Increasing

Competitive Properties Map

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Springhill Lake Apartments Description and Analysis of the Land

PROPERTY ANALYSIS

Description and Analysis of the Land

The following description is based on our inspection of the property as well as information provided by property management. This included a review of the site sketch of the property, and the property’s tax map and plats. A copy of the site plan follows this section.

Physical Features

Land Area	153.30 acres, or 6,677,687 square feet.
Configuration	Irregular
Topography	Gently rolling
Drainage	Adequate
Floodplain
Community Panel #	2452080015D, effective 12/15/1989
Flood Zone	C — Area of minimal flooding.
Flood Insurance	Not typically required in this zone.
Environmental Hazards
An environmental assessment report was not provided for review and environmental issues are beyond our scope of expertise. Our inspection of the site did not reveal any obvious signs that there are contaminants on or near the property. Therefore, we assume the subject is not adversely affected by environmental hazards (see Extraordinary Assumptions).
Ground Stability
A soil report was not provided for review; however, based on our inspection of the property and observation of development on nearby sites, we assume that the subject is not affected by any adverse soil conditions that would restrict it from being developed to its highest and best use.

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Springhill Lake Apartments Description and Analysis of the Land

Streets, Access, Frontage

Street	Edmonston Road	Cherrywood Lane
Frontage Feet	Not Available	Not Available
Paving	Asphalt	Asphalt
Curbs/Gutters	Yes	Yes
Sidewalks	Yes	Yes
Lanes	Two	Two
Direction of Traffic	North-South	North-South
Condition	Average	Average
Traffic Levels	Not Available	Not Available
Signals/Traffic Control	Stop sign	Stop sign
Access	Curb cuts	Curb cuts
Visibility	Good	Good

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Springhill Lake Apartments Description and Analysis of the Land

Zoning

Designation:	R-18 (majority of property) & C-A (one parcel)
Description:	Multifamily Medium Density Residential & Ancillary Commercial
Permitted Uses:	R-18 provides for multiple family developments of moderate density, single-family detached and attached, two-family and three-family dwellings, etc. C-A provides for certain small-scale retail commercial uses, physician and dental offices, and similar professional offices that necessities frequent supply are strictly related to and in demand and daily needs of an area with a minimum of consumer travel.
Zoning Jurisdiction:	Prince George’s County
Lot Restrictions	Required
Minimum Lot Area	R-18: 0.367 acres, 16,000 square feet. C-A: Maximum of 3 contiguous acres.
Minimum Lot Frontage	R-18: 85 feet
Minimum Lot Depth	N/A
Maximum Bedroom	40% 2BR, 10% 3BR; Eff. & 1BR N/A
Percentage
Building Restrictions	Required
Maximum Density	12 units per acre
Maximum Height	R-18: 36 feet
Max. Floor Area Ratio	N/A
Min. Front Setback	R-18: 30 feet. C-A: 10 feet from street.
Min. Side Setback	R-18: 30 feet. C-A: 12 feet
Min. Rear Setback	R-18: 30 feet. C-A: 25 feet
Minimum Parking	Multifamily: 1.33 spaces per dwelling unit plus 0.5 per bedroom in excess of one per unit. Commercial Trade: 1 space per 150 square feet of the first 3,000 square feet of GFA (gross floor area) plus 1 per each additional 200 square feet.
Conformity
Based on our inspection, a review of the site plan, and verification with a zoning official, the current use of the site constitutes a legal, non-conforming use. If destroyed by a fire or act of God, the property can be rebuilt at the existing density within 12 months of the catastrophe. The property does have a rental license with the City of Greenbelt for 2,899 units.

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Springhill Lake Apartments Description and Analysis of the Land

Other Legal and Regulatory Constraints

Easements, Encumbrances, and Restrictions

Although a title report was not provided for review, we are not aware of any easements, encumbrances, or restrictions that would adversely affect the use of the site. A title search is recommended to determine whether any adverse conditions exist. We assume that there are no easements, encumbrances, or restrictions that would restrict the property from being developed to its highest and best use.

Encroachments

We were not provided a survey, however, an inspection of the site revealed no apparent encroachments. It is assumed that the property is free and clear of encroachments.

Rent Control Regulations

The property is not affected by any type of regulation that would restrict the amount of rent that the owner can charge to tenants.

Other Land Use Regulations; Development Moratoriums

We are not aware of any land use regulations other than zoning that would affect the property, nor are we aware of any moratoriums on development.

Utilities

Utilities	Provider	Availability	Capacity
Water	WSSC	At Site	Adequate
Sewer	WSSC	At Site	Adequate
Electricity	PEPCO	At Site	Adequate
Natural Gas	Washington Gas Light	At Site	Adequate
	Company
Local Phone	Verizon	At Site	Adequate

Summary of Land Description

Overall, the physical characteristics of the site are suitable for apartment use. Most factors, including its topography, location, accessibility, and availability of utilities are positive attributes. The site is more than adequate to accommodate the uses permitted by zoning.

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Springhill Lake Apartments Description and Analysis of the Land

Site Plan

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Springhill Lake Apartments Description and Analysis of the Improvements

Description and Analysis of the Improvements

The following description is based on our inspection of the property, a discussion with the property managers, and a review of original building plans (incomplete) that were housed in the subject’s management office. Field measurements of select improvements were taken to determine an approximate gross building area. A copy of the site plan follows this section.

Exterior Description

Name of Property		Springhill Lake Apartments
General Property Type		Apartment
Property Sub Type		Garden
Property Class		B
Size
	Number of Apartment Units	2,899
	Units per Acre (Density)	18.9
	Gross Building Area (GBA)	3,245,000 square feet
	Rentable Floor Area (RFA)	2,750,537 square feet
	Building Efficiency Ratio	85%
	Source of Square Footage Information
	Building plans were incomplete, and “as built” plans and location surveys were not available. Gross building and individual unit rentable areas are based upon information and construction drawings provided by management. We have relied upon measurement information provided by property management.
Current Occupancy		95% (153 vacant units)
Number of Buildings		248 garden style plus 120 townhouse; one leasing center, one day care center, and two retail buildings.
Stories		Three-story garden and two-story townhouse. Day care is one-story, leasing center and retail buildings are two-story.
Structural Frame		Masonry block and wood frame.
Exterior Walls/Windows		Brick; original single pane in aluminum frames
Construction Class		Class C, Average quality, Multiple Residences (per Marshall Valuation Service)
Year Built		nine phases between 1962 and 1969 (40 years actual age)

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Springhill Lake Apartments Description and Analysis of the improvements

Estimated Economic Life	55 years (per Marshall Valuation Service)
Foundation	Slab on grade
Basement	None
Roof	Pitched, composition shingle. The interior inspection of the subject suggests no leakage at the date of inspection.

Unit Mix

According to property management, the subject contains 52 different unit types, which vary in terms of size, unit amenities, and condition (updated versus non-updated). Each unit type has a different rental rate. The unit types are summarized in the Unit Status Report prepared by management, a copy of which may be found in Addendum D. Within those unit types, there are 27 floor plans. Based upon discussions with brokers and investors regarding prospective purchaser analysis, we have consolidated the unit mix to 10 primary types, based upon the number of bedrooms and bathrooms, and used a weighted average size per type.

UNIT MIX

			Unit Size		Rentable Floor
Unit Type	Units		(SF)		Area (SF)
One Bedroom/1 Bath		662		783		518,346
One Bedroom/1 Bath & Den		316		872		275,552
Two Bedroom/1 Bath		1,280		971		1,242,880
Two Bedroom/1 Bath & Den		266		1,073		285,418
Two Bedroom/2 Bath		32		1,029		32,928
Two Bedroom/2 Bath & Den		30		1,294		38,820
Three Bedroom/1.5 Bath		182		1,122		204,204
Three Bedroom/1.5 Bath TH		116		1,113		129,108
Four Bedroom/2.5 Bath TH		4		1,478		5,912
Four Bedroom/2 Bath		11		1,579		17,369
Total / Weighted Average		2,899		949		2,750,537

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Springhill Lake Apartments Description and Analysis of the Improvements

Unit Descriptions

Entry Type	Common exterior entrances, unit entries from interior hallways in garden style buildings. Individual exterior entrances in townhouse style buildings.
Interior Walls	Plasterboard
Floor Cover	Wall to wall carpeting
Ceiling Heights	Standard
Kitchen Equipment	Average grade cabinets with plastic laminated countertops; Stainless steel sink with single lever faucet; Electric/Gas range and oven combination with exhaust fan and hood Dishwasher and waste disposal
Laundry Facilities	In-unit washers and dryers in approximately 425 units, with the balance served by 153 common area laundry rooms with coin operated washers and dryers.
Bathroom Fixtures	Average grade three fixture bathrooms with combination tub/shower
Garages	No garages or carports.
Unit Amenities	The majority of units have balconies or patios. Some upgraded units have ceiling fans, upgraded carpet and lighting. All units are provided with vertical blinds.

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Springhill Lake Apartments Description and Analysis of the Improvements

Mechanical Systems

Heating	Combination of individual self-contained units and central hot water boiler systems. Individual air handlers distribute warmed air with interior ducts. Central boilers are gas-fired, with ability to convert to oil-fired.
Air Conditioning	Combination of individual self-contained units and central system.
Hot Water	Combination of individual units and central gas-fired boiler systems. Mix of electric and gas fired.
Utility Metering	A minority of the units (40 townhouses) are individually metered and all utilities are paid by the tenants. One section of townhouses (32 units) and one section of flats (176 units) are separately metered for all electric (lighting and air conditioning). The majority of units are served by central heating and cooling paid by the landlord. Electric for lighting is submetered and paid by all tenants. Water and sewer are centrally metered and paid by owner.
Elevators	None
Sprinklers	Sprinkler systems are located in boiler rooms and common areas and one garden apartment building. Individual units have smoke detectors and fire extinguishers are in building stairwells.
Security System	Each building has a call-box linked to the telephone of the units.
Cable TV; Internet	Cable hook-up available.
Condition	The appraisal inspection was limited to a visual examination of the building components. It is not possible to ascertain the integrity of concealed structural components or the serviceability of mechanical systems; inspections of this type are beyond the scope of the investigation required for this assignment. Mechanical systems are reportedly in average condition.

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Springhill Lake Apartments Description and Analysis of the Improvements

Commercial Suites and Non-Residential Buildings

Address		Tenant	Use	RBA		GBA
9230	Springhill Ln	F.O.P. Greenbelt	community office		1,400
9234	Springhill Ln	Hunan China, Inc.	carryout		980
9240	Springhill Ln	Young Sik Yoon	convenience store		3,500
9250	Springhill Ln	AIMCO	Management office		1,410
9244	Springhill Ln	AIMCO	Management office		960
9246	Springhill Ln	AIMCO	Management office		843
9248	Springhill Ln	AIMCO	Management office		853
		Subtotal Springhill Lake Shopping Center			9,946		12,416
9220	Springhill Ln	Giant of Maryland, Inc.	office/training				12,000
6237	Springhill Dr	Prince George’s County	day care - children				3,642
6220	Springhill Dr	AIMCO	leasing center				3,456
		Total					31,514

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Springhill Lake Apartments Description and Analysis of the Improvements

Site Improvements

Parking
Number of Spaces	3,857 spaces on site, plus street parking.
Type	Surface
Parking Ratio	1.33 spaces per dwelling unit.
Adequacy	Appears adequate, though may be below zoning requirements.
Condition	Good
Project Amenities	Two outdoor swimming pools with bathhouse, community room, tennis courts, basketball courts, playground and picnic-barbecue areas.
Landscaping
Attractive and well-maintained.
Drainage and Retention
Adequate; storm sewer drainage systems allow site water to be collected and drained through surface drains located in parking areas. A storm water management pond is on site, located behind the leasing office.

Improvements Analysis

Condition	The condition of the improvements is average. The property has been reasonably well maintained.
Deferred Maintenance	During our inspection we observed settlement cracks in the brick exteriors of two buildings. In addition, we observed cracked and peeling paint on exterior wood surfaces, missing soffit and fascia, damaged or missing downspouts and gutters, leaking water pipes, and roof shingles on certain buildings that have exceeded their useful life. We have discussed deferred maintenance and property inspection reports in more depth at the end of this section.
History of Maintenance	The historical maintenance expenses reported to us are consistent with the expenses of comparable properties.
Quality of Construction	The quality of construction is average and typical of garden apartments built during the 1960’s.

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Springhill Lake Apartments Description and Analysis of the Improvements

Functional Utility	The design of the buildings and the individual floor plans are considered to be functional and attractive. Floor plans include walk-in closets with above average storage. The buildings were constructed in 9 phases with each phase supported by a central heating and cooling system. Central heating and cooling systems are typical in this submarket. The subject unit mix is primarily one-bedroom and two-bedroom units. The single largest style is two-bedroom with one bath (44%). Most of the average and good quality apartment complexes in the subject’s submarket have a more balanced mix of studio, one-, two-, and three-bedroom units. Two bedroom units with only one bath are typical of the market. However, investors prefer a more balanced mix and one which includes two-bedroom units with two baths. The subject’s average unit size is similar to competitive market rate complexes.
Personal Property	See Extraordinary Assumptions.
ADA Compliance	According to on-site management, the property is not ADA compliant. There is one handicapped accessible unit.
Environmental	No hazardous substances were observed during our inspection of the improvements; however, we are not qualified to detect such substances. Unless otherwise stated, it is assumed that no hazardous conditions are present at the subject. See Extraordinary Assumptions.

Summary of Improvements Description

In comparison to other apartment communities in the region, the subject is rated as follows:

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Springhill Lake Apartments Description and Analysis of the Improvements

IMPROVEMENTS RATINGS

Design and Appearance	Average
Age and Condition	Average/Fair
Room Sizes and Layouts	Average
Bathrooms	Average
Kitchens	Average
Garages	N/A
Unit Amenities	Average
Project Amenities	Above Average

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Springhill Lake Apartments Description and Analysis of the Improvements

     Unit Floor Plans

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Springhill Lake Apartments Description and Analysis of the Improvements

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Springhill Lake Apartments Description and Analysis of the Improvements

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Springhill Lake Apartments Description and Analysis of the Improvements

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Springhill Lake Apartments Description and Analysis of the Improvements

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Springhill Lake Apartments Description and Analysis of the Improvements

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Springhill Lake Apartments Description and Analysis of the Improvements

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Springhill Lake Apartments Description and Analysis of the Improvements

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Springhill Lake Apartments Description and Analysis of the Improvements

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Springhill Lake Apartments Description and Analysis of the Improvements

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Springhill Lake Apartments Real Estate Tax Analysis

Real Estate Tax Analysis

Real estate tax assessments are administered by Maryland State Department of Assessments and Taxation and are estimated by jurisdiction on a county basis for the subject. The property is located in Prince George’s County. Real estate taxes in this state and this jurisdiction represent ad valorem taxes, meaning a tax applied in proportion to value. The real estate taxes for an individual property may be determined by dividing the assessed value for a property by 100, then multiplying the estimate by the composite rate. The composite rate is based on a consistent state tax rate throughout this state, in addition to one or more local taxing district rates.

The assessed values are based upon the current conversion assessment rate of 100% of Assessor’s market value.

For reference purposes, the subject has been assigned eighteen property tax identification numbers as summarized in the following table, which also shows the current full cash and assessed values.

SPRINGHILL LAKE APARTMENTS TAX ACCOUNTS

										7/2004
Account (21-)	Tax Map Reference	Acreage		2004 Land FCV		2004 Imp FCV		2004 Total FCV		Assessment
2397438	Map 26, Grid B3, Block B, Par 12		0.4871	$	486,000	$	480,600	$	966,600	$	922,466
2397404	Map 26, Grid C3, Section 1, Pt Par 1 EQ		1.6346	$	177,500	$	207,500	$	385,000	$	385,000
2397412	Map 26, Grid C3, Section 1, Pt Par 2 EQ		8.2057	$	892,900	$	7,938,600	$	8,831,500	$	7,400,566
2399632	Map 26, Grid C3, Section 1, Pt Par 2 EQ		8.6583	$	593,500	$	530,900	$	1,124,400	$	1,044,066
2397446	Map 26, Grid B3, Section 1, Pt Par 3 EQ		1.0969	$	40,300	$	0	$	40,300	$	40,300
2323210	Map 26, Grid C4, Section 1, Pt Par 1 EQ		4.1037	$	410,700	$	3,817,100	$	4,227,800	$	3,173,466
2323228	Map 26, Grid C3, Section 1, Pt Par 2 EQ		3.0379	$	303,500	$	1,921,600	$	2,225,100	$	1,670,233
2323236	Map 26, Grid B3, Section 1, Pt Par 1 EQ		1.4144	$	153,500	$	1,626,600	$	1,780,100	$	1,336,166
2394187	Map 26, Grid B4, Section 2, Par 4		11.08	$	1,206,600	$	13,188,800	$	14,395,400	$	10,730,666
2403681	Map 26, Grid C4, Section 3, Block A, Par 6		15.09	$	1,643,300	$	16,464,800	$	18,108,100	$	13,735,300
2324275	Map 26, Grid B4, Section 4, Block A, Par 7		6.41	$	698,000	$	7,837,000	$	8,535,000	$	6,405,733
2324267	Map 26, Grid B3, Section 2, Block A, Par 5		2.06	$	224,300	$	1,572,500	$	1,796,800	$	1,367,466
2322915	Map 26, Grid B3, Section 5, Block B, Par 8		18.58	$	2,023,300	$	20,605,400	$	22,628,700	$	16,983,700
2322923	Map 26, Grid B3, Section 5, Block C, Par 9		3.87	$	387,700	$	3,992,000	$	4,379,700	$	3,287,166
2396968	Map 26, Grid B4, Section 6, Block B, Par 10		22.87	$	2,291,200	$	20,515,400	$	22,806,600	$	17,974,066
2394963	Map 26, Grid B4, Section 7, Block B, Par 11		20.79	$	2,264,000	$	22,888,000	$	25,152,000	$	18,411,400
2318715	Map 26, Grid C4, Section 8, Block A, Par 13		8.73	$	950,600	$	8,640,100	$	9,590,700	$	7,573,900
2371409	Map 26, Grid B3, Section 9, Block C, Par 14		15.18	$	1,520,800	$	11,013,600	$	12,534,400	$	9,906,800
18			153.30	$	16,267,700	$	143,240,500	$	159,508,200	$	122,348,460

State law requires that all real property be revalued at least every three years. The subject was reviewed to determine a new market value effective January 1, 2004, for the cycle beginning July 1, 2004. The schedule for the next assessment would become effective January 1, 2007. To lessen the impact of increases in value, state law provides that any increase in the new market value over the old market value be phased in during the three-year cycle in equal amounts. The following is the Assessor’s full cash value (phase-in) for the subject.

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Springhill Lake Apartments Real Estate Tax Analysis

TAX HISTORY

					Full Cash		Assessed
Tax Year	Land		Improvements		Value		Value		Taxes
2003-2004	$	16,267,700	$	87,503,600	$	103,771,300	$	103,771,300	$	1,972,649
2004-2005	$	16,267,700	$	143,240,500	$	159,508,200	$	122,348,460	$	2,325,844
2005-2006	$	16,267,700	$	143,240,500	$	159,508,200	$	140,929,234	$	2,679,065
2006-2007	$	16,267,700	$	143,240,500	$	159,508,200	$	159,508,200	$	3,032,251

Real estate taxes are due July 1^st of each year and can be paid at a discount, and without penalty, up until October 1^st of that year. Tax rates are reviewed once a year and are determined before the July 1^st due date by the respective taxing districts.

The composite tax rate for the subject is $1.901 per $100 of assessed value.

For the current tax year, July 1, 2004 through June 30, 2005, the estimated real estate taxes for the subject are the assessed value of $122,348,460, divided by $100, then multiplied by the composite rate of $1.901 for a total of $2,325,844. This reflects $802.29 per unit.

Based on our valuation of the subject, the Assessor’s market value for this assessment fiscal year is low.

In order to thoroughly analyze the appropriate real estate tax expense associated with the subject, we surveyed and compared several competitive apartment properties, summarized below:

TAX SUMMARY OF COMPARABLE PROPERTIES

						Assessed
						Value Per				Taxes Per
No.	Property Name	Units		Assessed Value		Unit		Annual Taxes		Unit
1	Lakeside North, 402 Ridge Rd.		276	$	14,622,400	$	52,980	$	277,972	$	1,007
2	Greenway Village, 7232 Hanover Pkwy.		320	$	15,547,200	$	48,585	$	295,552	$	924
3	Seven Springs Village, 9300 Cherry Hill Rd.		983	$	66,635,700	$	67,788	$	1,266,745	$	1,289
4	University Square,157 Westway Dr.		495	$	29,589,600	$	59,777	$	562,498	$	1,136
	Subject		2,899	$	159,508,200	$	55,022	$	2,325,844	$	802

Conclusion

The previous table indicates that tax valuations per unit range from $48,585 to $67,788 per unit. This provides an indication that the subject’s tax valuation is in line with other comparable apartments in the market area. It is not atypical for properties to be assessed at something less than market value.

The most recent session of the Maryland legislature passed a new law that prevents local jurisdictions in the State from increasing residential and commercial assessments mid-cycle (House Bill 8921/Senate Bill 208). Local governments can appeal an assessment only under the following circumstances:

Page 53

Springhill Lake Apartments Real Estate Tax Analysis

Ø	Within 45 days of issuance of a new Assessment Notice,
Ø	New home construction,
Ø	Rezoning, and
Ø	Creation of a new subdivision.

Therefore, the subject’s tax liability is established for the next three years, regardless of a change in operation or transfer of ownership at a higher price. Taxes will increase approximately 13% to 15% annually due to the phase-in.

As previously noted, the next County reassessment is scheduled for 2007, at which time the tax liability will likely increase. Our survey of brokers indicates that most investors are aware that some apartment properties are under-assessed in the current market of rising property values. However, competition among investors is so strong that many ignore this in their analyses.

Investors today are described as viewing the market on a short term basis. They take the position that the property will “remain under the radar screen” and not be reassessed at the sale price, or they assume that rents will increase sufficiently to cover the increased expense. On the other hand, increasing rents would indicate an increased assessment on the following reassessment.

In conclusion, we believe the expectation of increasing expenses 3 to 4 years out is a very long time in today’s short-term mentality. Such risks, along with the other risks associated with property ownership, are reflected in overall capitalization rates and no further adjustment is required in our analysis.

Page 54

Springhill Lake Apartments Highest and Best Use Analyses

Highest and Best Use Analyses

Process

Before an opinion of value can be developed, the highest and best use of the property must be determined for both the subject site as though vacant and for the property as improved. The highest and best use must be:

n	Legally permissible under the zoning laws and other restrictions that apply to the site.
n	Physically possible for the site.
n	Financially feasible.
n	Capable of producing the highest value from among the permissible, possible, and financially feasible uses.

As Though Vacant

Legally Permissible

The site is zoned R-18 (majority of property) & C-A (one parcel), which is for multifamily medium density residential & ancillary commercial uses. Permitted uses include multifamily and small-scale commercial. There are no other legal or regulatory restrictions that would limit the potential uses of the property. The only permitted uses under zoning that are consistent with prevailing land use patterns in the area are multifamily, and small-scale commercial uses.

Physically Possible

The physical characteristics of the site should reasonably accommodate any use that is not restricted by its size of 153.30 acres, or 6,677,687 square feet. The property has adequate frontage, depth, accessibility and visibility, and is physically suited to the uses permitted by zoning.

Financially Feasible

The Apartment Market Analysis, presented previously, indicates that there is currently strong demand for multi-family housing in the market area. In our opinion, a newly constructed apartment community on the site would have a value commensurate with its cost. Therefore, multifamily is financially feasible.

Maximally Productive

Considering all reasonably probable development scenarios and potential values that could be created versus the cost of development of each, we conclude that no use of the site would be as profitable as multifamily. Thus, multifamily is the maximally productive use of the property.

Page 55

Springhill Lake Apartments Highest and Best Use Analyses

Multifamily is the only use that meets the four tests of highest and best use. Accordingly, it is concluded to be the highest and best use of the site as though vacant.

As Improved

The site has been developed with an apartment community which is the highest and best use of the site as if it were vacant. The improvements are typical of other apartment complexes in the market area. The improvements are in average condition overall and are average in curb appeal. Overall the property is at market standard.

The building is 95% occupied and produces a significant positive cash flow that we expect will continue. Therefore, multifamily is concluded to be financially feasible.

There are no alternative uses that could provide a higher present value than multifamily. Demolition of the existing improvements and redevelopment of the site would not be financially feasible. We conclude that multifamily is maximally productive and therefore the highest and best use of the site as improved.

Most Probable Buyer

Taking into account the size and class of the property, the likely buyer is a national investor such as a REIT, particularly, one with existing holdings in Washington, DC or the Maryland Suburbs.

Page 56

Springhill Lake Apartments Valuation Methodology

VALUATION ANALYSIS

Valuation Methodology

     The traditional methods of processing market data into a value indication include:

n	Cost Approach.
n	Sales Comparison Approach.
n	Income Capitalization Approach.

The cost approach assumes that an informed purchaser would pay no more than the cost of producing a substitute property with the same utility. This approach is particularly applicable when the improvements being appraised are relatively new and represent the highest and best use of the land, or when the property has unique or specialized improvements for which there is little or no sales data from comparable properties.

The sales comparison approach assumes that an informed purchaser would pay no more for a property than the cost of acquiring another existing property with the same utility. This approach is especially appropriate when an active market provides sufficient reliable data that can be verified from authoritative sources. The sales comparison approach is less reliable in an inactive market, or when estimating the value of properties for which no real comparable sales data are available. It is also questionable when sales data cannot be verified with principals to the transaction.

The income capitalization approach reflects the market’s perception of a relationship between a property’s potential income and its market value, a relationship expressed as a capitalization rate. This approach converts the anticipated benefits (dollar income or amenities) to be derived from the ownership of property into a value indication through capitalization. This approach is widely applied when appraising income-producing properties.

We utilize the sales comparison and income capitalization approaches in the valuation of the property. The cost approach is omitted because the property is forty years old, beyond the age at which market participants typically use this methodology to price and value assets. Therefore, the cost approach is not applicable to the assignment, and omission of this approach does not constitute departure under USPAP.

Page 57

Springhill Lake Apartments Insurable Value

Insurable Value

At the client’s request, we develop an estimate of insurable value. Based on typical insurance underwriting requirements, this estimate includes the replacement cost new of the building improvements of $185,564,785, in which direct and indirect costs, but not entrepreneurial incentive, are included. The estimate also excludes all site improvement costs.

Insurance exclusions estimated at 8.0% of replacement cost new are deducted from replacement cost new of the building improvements, based on costs of indestructible components contained in MVS. As shown below, insurable value of the subject is estimated at $171,000,000.

ESTIMATE OF INSURABLE VALUE

Replacement Cost New - Building Improvements	$	185,564,785
Plus: Indirect Cost - 0%
Adjusted RCN - - Building Improvements
Less: Insurance Exclusions
Basement Excavation - 2%
Foundation Below Ground - 2%
Piping Below Ground - 4%
Total Exclusions - 8%		-14,845,183
Insurable Value	$	170,719,602
Rounded To	$	171,000,000

Page 58

Springhill Lake Apartments Sales Comparison Approach

Sales Comparison Approach

The sales comparison approach is a set of procedures in which a value indication is developed by comparing the subject to similar properties that have recently sold or are listed for sale. The steps taken to apply the sales comparison approach are:

n	Research recent sales of comparable properties.
n	Select sales most similar to the subject and assemble pertinent data.
n	Compare the sales to the subject under various elements of comparison and adjust the sale prices to compensate for differences that affect value.
n	Reconcile the adjusted prices of the sales into a value indication for the subject.

To apply the sales comparison approach, we surveyed sales activity throughout the Suburban Maryland area to identify sale properties that are similar to the subject in physical and economic characteristics. Out of all data reviewed, the following sales are selected as the best indicators of the subject’s value. We choose price per unit as the most appropriate unit of comparison because market participants typically compare sale prices and property values on this basis. Detailed write-ups of the sales are in the addenda.

Page 59

Springhill Lake Apartments Sales Comparison Approach

SUMMARY OF COMPARABLE IMPROVED SALES

		Sale	Year		Pct.			Number of		Price per		NOI/		Cap
No.	Name/Address	Date	Built		Occup.			Units		Unit		Unit		Rate
1	River Pointe Apartments	Pending		1970		96	%		170	$	70,588	$	5,566		7.89	%
	8318 Indian Head Highway Fort Washington Prince George’s, MD
	Comments: Between 1999 and 2001, management completed $8,000 per unit renovation that included new kitchen cabinets, dishwashers, bath vanities and medicine cabinets, wall to wall carpet, and microwave ovens and breakfast bars in three and four bedroom units. Exterior capital improvements included the resurfacing of parking areas, painting of exterior trim of buildings, installation of new signage and awnings, sealing of windows, renovation of community room and repair of damaged sidewalk areas. According to the broker, an additional $11,000 per unit was expended between 2001 and 2004 for renovations. Income information based on trailing 12 months.
2	Ashford at Woodlake Apartments	02/26/04		1974		96	%		534	$	83,895				7.50	%
	14001 Castle Boulevard Silver Spring Montgomery, MD
	Comments: Cap rate includes allocation for reserves estimated at $300 per unit by broker. Property last sold in 1998 for $43,951 per unit.
3	Castlegate Apartments (Fmr. Country Club Apts.)	01/20/04		1981		85	%		376	$	85,771	$	7,075		8.25	%
	18801-13901 Castle Boulevard Silver Spring Montgomery, MD
	Comments: At the time of sale, occupancy was 85% and the management operations had experience signifcant terunover. The buyer was confident that stabilized occupancy could be acheived in the short-term. The stabilized pro forma effective gross income was $4,246,066, while expenses were projected to be $1,685,702 ($4,483/Unit), including a $250/unit allocation for reserves. The pro forma net operating income is estimated to be $2,660,364 ($7,075/Unit). Given the 15% vacancy level, the capitalization rate on existing numbers is closer to a 7.0%. After the sale, the property name was changed from Country Club Apartments to Castlegate Apartments. Property last sold in 1998 for $55,186 per unit.
4	Owings Manor Apartments	06/17/03		1965		90	%		791	$	64,475				7.00	%
	5 Brookebury Drive Owings Mills Baltimore, MD
	Comments: Though this community is outside of the Suburban Maryland market, it was included because of its size and physical similarity to the subject. Average rents at time of sale were $793. The vacancy rate was 10%. Capitalization rate of 7% reportedly after allocation for reserves. Property previously sold in August 2000 for $42,000 perunit.
5	Cider Mill Apartments	10/01/02		1971-1973		88	%		864	$	85,301	$	7,080		8.30	%
	18205 Lost Knife Circle Gaithersburg Montgomery, MD
	Comments: Consideration included the assumption of a $40.9 million existing mortgage, $21.0 million from the Company’s line of credit, and $11.8 million of Operating Partnership Units in Home Properties of New York, L.P. (OP Units). For purposes of determining the number of OP Units issued, a value of $36 per unit was negotiated. The OP Units are exchangeable for shares of HME common stock on a one-for-one basis. The mortgage carries an interest rate of 7.7% and matures in 2010. The property was in average condition and Home Properties expects to spend approximately $8 million on improvements over the next few years to enhance landscaping and signage, correct deferred maintenance, upgrade kitchens and baths, and build a community center. In some of the larger apartments, a second bathroom will be added, as well as a washer and dryer. The first year unleveraged return on this acquisition is expected to be 8.3%. The return is calculated after allocating 3% of rental revenues for management and overhead expenses and before normalized capital expenditures of approximately $525 per unit annually.
	SUBJECT			1962-1969		95	%		2,899			$	5,404

Page 60

Springhill Lake Apartments Sales Comparison Approach

Comparable Improved Sales Map

Analysis and Adjustment of Sales

The adjustment process is typically applied through either quantitative or qualitative analysis, or a combination of the two. Quantitative adjustments are often developed as dollar or percentage amounts and are most credible when there are sufficient data to perform a paired sales or statistical analysis. While we present numerical adjustments in the Improved Sales Adjustment Grid that follows, they are based on qualitative judgment rather than empirical data as there is not sufficient data to develop a sound quantified estimate within a reasonable degree of confidence. Our qualitative adjustments are based on a scale calibrated in 5% increments, with a minor adjustment considered to be 5% and a substantial adjustment considered to be 25%.

Our rating of each comparable sale in relation to the subject is the basis for the adjustments. If the comparable is superior to the subject, its sale price is adjusted downward to reflect the subject’s relative inferiority; if the comparable is inferior, its price is adjusted upward. The elements of comparison are:

Real Property Rights Conveyed

This adjustment is generally applied to reflect the transfer of property rights different from those being appraised, such as differences between properties owned in fee simple and in leased fee

For this analysis, no adjustments are required.

Page 61

Springhill Lake Apartments Sales Comparison Approach

Financing Terms

This adjustment is generally applied to a property that transfers with atypical financing such as having assumed an existing mortgage at a favorable interest rate. Conversely, a property may be encumbered with an above-market mortgage, which has no prepayment clause or a very costly prepayment clause. Such atypical financing often plays a role in the negotiated sale price.

For this analysis, no adjustments are required.

Conditions of Sale

This adjustment category reflects extraordinary motivations of the buyer or seller to complete the sale. Examples include a purchase for assemblage involving anticipated incremental value, or a quick sale for cash. This adjustment category may also reflect a distress-related sale, or a corporation recording a non-market price.

For this analysis, no adjustments are required.

Expenditures at Purchase

This adjustment is appropriate in situations where the sale price has been influenced by expenditures that the buyer intended to make immediately after purchase. Examples include buyer-paid sales commissions, costs to cure deferred maintenance, and costs to remediate environmental contamination.

For this analysis, no adjustments are required.

The previous adjustments, if required, are applied sequentially in the order discussed.

Time — Market Conditions

Real estate values normally change over time. The rate of change fluctuates due to investors’ perceptions of prevailing market conditions. This adjustment category reflects value changes, if any, that have occurred between the date of the sale and the effective date of the appraisal

For this analysis, we adjusted Sales 2 through 5 upward 5% annually to account for improved market conditions for apartment properties. Four of the five sales have previously sold and the following table illustrates the change in real estate values since the time of the last sales.

				Previous				Previous		Annual
Sale No.	Name	Recent Sale		Sale		Recent Date		Date		Appreciation
1	River Pointe	$	12,000,000	$	7,557,500		4/2004		1/2001		20	%
2	Ashford at Woodlake	$	44,800,000	$	23,470,000		2/2004		8/1998		18	%
3	Castlegate	$	32,900,000	$	11,478,723		12/2003		8/1998		12	%
4	Owings Manor	$	51,000,000	$	33,222,000		6/2003		8/2000		14	%

Page 62

Springhill Lake Apartments Sales Comparison Approach

Time — Market Conditions adjustments are applied after the previous adjustments but before any of the following adjustments.

Location

A property’s location greatly affects its value. This adjustment category considers general market area influences as well as a property’s accessibility and visibility from a main thoroughfare. Differing rent levels or land values are typically good indications that a location adjustment is required.

For this analysis, Sales 1 and 4 require upward adjustments of 5% and 10%, respectively for the subject’s superior location in Greenbelt, where transportation and proximity to employment centers is superior and incomes are generally higher. Conversely, a moderate downward adjustment is required to Sale 5 for the subject’s inferior neighborhood demographics compared to those of Gaithersburg.

Physical Characteristics

This adjustment category generally reflects differences between the subject and the comparables in quality of construction, age, condition, amenities, functional utility, ceiling height or any other physical characteristics that influence sale prices.

For this analysis, each sale is adjusted downward 5% to 10% for the subject’s inferior age/condition/appeal. Sales 1 and 4 are adjusted upward 5% each for the subject’s larger average unit size.

Finally, size regression adjustments reflect the effect of supply and demand upon selling prices. The demand for smaller communities is generally greater, due to the larger pool of buyers, thus increased competition between purchasers. The subject is an unusually large community and the number of prospective bidders with the wherewithal to acquire a property of this size is less than for more typical transactions (less than 1,000 units). Our investigation found no recent sales of very large communities that are considered reliable indicators. Therefore, we surveyed market participants, including brokers and investors, regarding their perceptions of the likely impact on sale price for a transaction of this size. The consensus of opinion was that supply and demand forces would indicate some downward adjustment; however, demand for apartment complexes is strong and they perceive only a slight adjustment as appropriate. We thus make a slight downward adjustment to sales 2 through 5 and a moderate adjustment to Sale 1 for the larger than typical size of the subject community.

Economic Characteristics

This adjustment category generally reflects material differences between the subject’s net operating income and the net operating income of the comparables on a per unit basis. Characteristics that affect the net operating income of a property include occupancy level, contract rental rates, and operating expenses.

The subject, like many apartment communities in this submarket, has suites leased to commercial tenants. The sale comparables have varying levels of commercial tenants.

Page 63

Springhill Lake Apartments Sales Comparison Approach

Typically these suites are for the convenience of tenants and are leased on a short term basis. Investors generally view these commercial tenants as an enhancement to the marketability of their residential apartments and not for income production. Rental rates generally are similar to residential apartments on a per square foot basis. The subject’s four commercial suites represent less than 1% of income. Therefore, we have made no adjustment.

Value Indication — Sales Comparison Approach

Based on the preceding analysis and adjustments, the comparable sales provide value indications ranging from $68,945 to $73,814 per unit. It is our opinion that the applicable unit value is $71,000 per unit, or $205,829,000. As will be discussed further in the income capitalization approach, we must deduct the present value of Giant’s below-market lease, which expires in June 2007, estimated to be $270,000. This results in the following estimate of value by the sales comparison approach:

2,899 units @ $75,000/unit	$	205,829,000
Less Present Value of Giant’s Below-Market Lease		-$270,000
Value Indication	$	205,559,470
Rounded To:	$	206,000,000

Page 64

Springhill Lake Apartments Sales Comparison Approach

IMPROVED SALES ADJUSTMENT GRID

		Subject			Comparable 1				Comparable 2				Comparable 3				Comparable 4				Comparable 5
Property Name	Springhill Lake				River Pointe			Ashford at Woodlake				Castlegate Apartments				Owings Manor				Cider Mill Apartments
	Apartments			Apartments				Apartments				(Fmr. Country Club Apts.)				Apartments
Key Number						3965				128				1410				3152				5250
Address	9164 Edmonston			8318 Indian Head				14001 Castle				18801-13901 Castle				5 Brookebury Drive				18205 Lost Knife
	Road			Highway				Boulevard				Boulevard								Circle
City	Greenbelt			Fort Washington				Silver Spring				Silver Spring				Owings Mills				Gaithersburg
County, State	Prince George's, MD			Prince George'S, MD				Montgomery, MD				Montgomery, MD				Baltimore, MD				Montgomery, MD
Sale Date					Pending					02/26/04				01/20/04				06/17/03				10/01/02
Sale Price					$	12,000,000			$	44,800,000			$	32,250,000			$	51,000,000			$	73,700,000
Rentable Floor Area			2,750,537			138,005				564,551				372,512				609,046				720,576
Average Unit Size			949			1,057				1,021				779				812				834
Units			2,899			170				534				376				791				864
Building Quality	Average			Average				Average				Average				Average				Good
Price Per Unit					$	70,588			$	83,895			$	85,771			$	64,475			$	85,301
PROPERTY RIGHTS
$ADJUSTMENT					$	0.00			$	0.00			$	0.00			$	0.00			$	0.00
% ADJUSTMENT						0	%			0	%			0	%			0	%			0	%
ADJUSTED PRICE					$	70,588.24			$	83,895.13			$	85,771.28			$	64,475.35			$	85,300.93
FINANCING TERMS
$ADJUSTMENT					$	0.00			$	0.00			$	0.00			$	0.00			$	0.00
% ADJUSTMENT						0	%			0	%			0	%			0	%			0	%
ADJUSTED PRICE					$	70,588.24			$	83,895.13			$	85,771.28			$	64,475.35			$	85,300.93
CONDITIONS OF SALE
$ADJUSTMENT					$	0.00			$	0.00			$	0.00			$	0.00			$	0.00
% ADJUSTMENT						0	%			0	%			0	%			0	%			0	%
ADJUSTED PRICE					$	70,588.24			$	83,895.13			$	85,771.28			$	64,475.35			$	85,300.93
EXPENDITURES AT PURCHASE
$ADJUSTMENT					$	0.00			$	0.00			$	0.00			$	0.00			$	0.00
% ADJUSTMENT						0	%			0	%			0	%			0	%			0	%
ADJUSTED PRICE					$	70,588.24			$	83,895.13			$	85,771.28			$	64,475.35			$	85,300.93
TIME/MARKET CONDITIONS
Annualized % adjustment: 5%						0	%			1	%			1	%			4	%			8	%
ADJUSTED PRICE					$	70,762.29			$	84,515.73			$	86,840.48			$	67,195.68			$	91,926.35
CUMULATIVE ADJUSTMENT FACTOR						1.00				1.01				1.01				1.04				1.08
LOCATION					Inferior				Comparable				Comparable				Inferior				Superior
$ADJUSTMENT					$	3,538.11			$	0.00			$	0.00			$	6,719.57			-$	9,192.64
% ADJUSTMENT						5	%			0	%			0	%			10	%			-10	%
AGE/CONDITION/APPEAL					Superior				Superior				Superior				Superior				Superior
$ADJUSTMENT					-$	3,538.11			-$	8,451.57			-$	8,684.05				3,359.78			-$	9,192.64
% ADJUSTMENT						-5	%			-10	%			-10	%			-5	%			-10	%
AVERAGE UNIT SIZE/UNIT MIX					Inferior				Comparable				Comparable				Inferior				Comparable
$ADJUSTMENT					$	3,538.11			$	0.00			$	0.00			$	3,359.78			$	0.00
% ADJUSTMENT						5	%			0	%			0	%			5	%			0	%
COMMUNITY SIZE					Superior				Superior				Superior				Superior				Superior
$ADJUSTMENT					-$	7,076.23			-$	4,225.79			-$	4,342.02				3,359.78			-$	4,596.32
% ADJUSTMENT						-10	%			-5	%			-5	%			-5	%			-5	%
ECONOMIC CHARACTERISTICS					Comparable				Comparable				Comparable				Comparable				Comparable
$ADJUSTMENT					$	0.00			$	0.00			$	0.00			$	0.00			$	0.00
% ADJUSTMENT						0	%			0	%			0	%			0	%			0	%
NET $ ADJUSTMENT					-$	3,538.11			-$	12,677.36			-$	13,026.07			$	3,359.78			-$	22,981.59
NET % ADJUSTMENT						-5	%			-15	%			-15	%			5	%			-25	%
ADJUSTED PRICE					$	67,224			$	71,838			$	73,814			$	70,555			$	68,945

Range: Min - $67,224/Mean - $70,475/Max - $73,814
Indicated Subject Value: 2,899 Units @ $71,000 Per Unit = $205,829,000
Less Present Value of Giant’s Below-Market Lease: -$270,000 = $205,559,000
Rounded To: $206,000,000

Page 65

Springhill Lake Apartments Income Capitalization Approach

Income Capitalization Approach

The income capitalization approach consists of methods and techniques used to analyze a property’s capacity to generate economic benefits and converts those benefits to an indication of present value. The steps taken to apply the income capitalization approach are:

n	Estimate potential gross income. This involves analyzing the subject’s current leases to establish the potential income from leased space and then estimating market rent to apply to the subject’s vacant space.
n	Estimate vacancy and credit loss.
n	Estimate operating expenses.
n	Calculate net operating income by deducting vacancy and credit loss and operating expenses from gross income.
n	Select a capitalization rate from the market to use in direct capitalization.
n	Perform a discounted cash flow analysis to estimate value through yield analysis, if applicable.
n	Reconcile a value indication for the income capitalization approach.

The two generally accepted techniques used in this approach are direct capitalization and discounted cash flow analysis.

Direct capitalization is a method used to convert a single year’s expected income into an indication of value in one direct step, by dividing the net operating income by an appropriate capitalization rate.

Discounted cash flow (DCF) analysis is a method in which future benefits – periodic cash flow and net resale value – are converted to a value indication by discounting them to present value at an appropriate yield rate.

In this analysis, we use only the direct capitalization method since investors in this property type rely most on this method.

Page 66

Springhill Lake Apartments Income Capitalization Approach

Economic Profile of Property

The property contains 2,899 apartment units. As of the effective date of the appraisal, (based upon a Unit Status Report dated April 19, 2004 provided by management) there are 153 vacant units, reflecting a vacancy rate of 5% and an occupancy rate of 95%. Leases for residential units are typically one year in length and accessory commercial suites are 3 to 5 years. In our opinion, the property is at stabilized occupancy because the occupancy rate and rental rates are within market norms. Current occupancy information of the residential portion, including models, is summarized as follows:

OVERALL OCCUPANCY

	% of Units			Units
Total Units		100	%		2,899
Vacant Units		5	%		153
Occupied Units		95	%		2,746
Models					1
Tenant Occupied					2,745

The subject contains 52 different unit types, which vary in terms of size, unit amenities, and condition (updated versus non-updated). Each unit type has a different rental rate. The unit types are summarized in a table in Addendum D. Within those unit types, there are 27 floor plans. Based upon discussions with brokers and investors regarding prospective purchaser analysis, we have consolidated the unit mix to 10 primary types, based upon the number of bedrooms and bathrooms, and used a weighted average size per primary type.

The ten unit types have asking rents ranging from $903 to $1,594 per month. The weighted average asking rent is $1,038 per month, or $1.09 per square foot, which is approximately 6% greater than the weighted average contract rent of $977 per month, or $1.03 per square foot. The following tables summarizes asking rents and percentage occupancy rates for each unit type.

AVERAGE CONTRACT RENT

Per Unit per Month	(2,746 tenant occupied units)	$	977
Per SF per Month	(2,607,411 tenant occupied SF)	$	1.03

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Springhill Lake Apartments Income Capitalization Approach

ASKING RENTS AND UNIT OCCUPANCY

			Unit						%
	Asking		Size		Asking Rent per				Occupancy
Unit Type	Rent		(SF)		SF		Units		by Unit
One Bedroom/1 Bath	$	903		783	$	1.15		662		95	%
One Bedroom/1 Bath & Den	$	978		872	$	1.12		316		94	%
Two Bedroom/1 Bath	$	1,032		971	$	1.06		1,280		94	%
Two Bedroom/1 Bath & Den	$	1,085		1073	$	1.01		266		95	%
Two Bedroom/2 Bath	$	1,140		1029	$	1.11		32		100	%
Two Bedroom/2 Bath & Den	$	1,216		1294	$	0.94		30		100	%
Three Bedroom/1.5 Bath	$	1,322		1122	$	1.18		182		94	%
Three Bedroom/1.5 Bath TH	$	1,345		1113	$	1.21		116		97	%
Four Bedroom/2.5 Bath TH	$	1,594		1478	$	1.08		4		100	%
Four Bedroom/2 Bath	$	1,591		1579	$	1.01		11		100	%
Weighted Average / Total	$	1,038		949	$	1.09		2,899		95	%

The allocation of expenses between the tenants and the owner varies by section. A minority of the units (40 townhouses) is individually metered and all utilities are paid by the tenants. One section of townhouses (32 units) and one section of flats (176 units) are separately metered for all electric (lighting and air conditioning). The majority of units are served by central heating and cooling paid by the landlord. Electric for lighting is sub-metered and paid by all tenants. Water and sewer are centrally metered and paid by owner. The following table summarizes the primary arrangement for utilities:

TENANT-PAID EXPENSES

Expense	Symbol	Owner	Tenant
Electric	E		X
Heat	H	X
Hot Water	HW	X
Cooking Gas/Electric	C	X
Water	W	X
Sewer	S	X

Market Rental Estimate

Market rent is the rental income that the property would most probably command in the open market, as indicated by current rents paid and asked for comparable space as of the date of the appraisal. To estimate market rent, we conducted a search of the market to ascertain rental rates, terms, concessions, and tenant expense responsibilities, etc., for similar properties. The following table summarizes the competitive properties that are selected as the best indicators of market rent for the subject. Please refer to the addenda for detailed data sheets for each competitive property.

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Springhill Lake Apartments Income Capitalization Approach

COMPETITIVE PROPERTIES

							Year		Distance to
No.	Name	Units		Occupancy			Built		Subject
1	Greenway Village		320		95	%		1967/R1992	3 miles east
2	Woodland Landing		443		98	%		1969	5 miles east
3	Brittany Place		592		98	%		1966	3 miles east
4	Lakeside North		276		100	%		1965	2 miles northeast
5	University Square		495		98	%		1968	2 miles east
6	Glen Oaks		463		95	%		1977	3 miles east
7	Chesapeake Landing		173		99	%		1974	6 miles south
8	Barclay Square		180		99	%		1962	6 miles northwest
9	Muirfield at Montpelier		386		90	%		1969/R2001	8 miles north
10	Fernwood Gardens		159		99	%		1966	5 miles south
11	Falkland Chase		450		99	%		1937/R1987	10 miles northwest
	Subject		2,899		95	%		1962-1969

Analysis of Comparable Rentals

An opinion of market rent is developed for each unit type in the subject based on an analysis of rental rates for similar types of units in the competitive properties. We analyze each comparable in relation to the subject and make adjustments under the following elements of comparison:

	ELEMENTS OF COMPARISON
Utilities	Differences in the allocation of utility expenses between tenant and owner, including responsibility for electric, gas, and water/sewer utilities as well as energy costs for heating and domestic hot water.
Unit Size	Effects on rental rates attributable to differences in unit square footages.
Location	Differences in the desirability of locations due to variations in market area demographics, accessibility to employment, neighborhood support services, and neighborhood amenities, etc.
Appeal, Age, Condition	Differences in age, quality, physical condition, functional utility and overall market appeal of the units and overall property.
Amenities	Effects on rental rates attributable to differences in unit amenities and project amenities.

Our estimate of market rent for the 10 basic unit types is developed in the following rental comparison grids.

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Springhill Lake Apartments Income Capitalization Approach

UNIT TYPE — ONE BEDROOM/1 BATH

											Adjustments
	Rent				Rent										Appeal				Adjusted
	Per				Per		Tenant		Util-		Unit		Loca-		Age		Amen-		Rent
Property Name	Mo		SF		SF		Pays		ities		Size		tion		Cond.		ities		Per Mo
Greenway Village	$	850		685	$	1.24		0		-$10	$	30			-$	25	$	10	$	855
Woodland Landing	$	900		810	$	1.11		0		-$10					-$	25	$	10	$	875
Brittany Place	$	940		776	$	1.21		E							-$	25	$	10	$	925
Lakeside North	$	895		555	$	1.61		E			$	70		-$50	-$	25	$	20	$	910
University Square	$	1,000		730	$	1.37		E			$	15		-$50	-$	30			$	935
Glen Oaks	$	1,202		935	$	1.29		0		-$10	-$	45			-$	150			$	997
Subject				783				E

Adjusted Monthly Rents from Comparables	Range: $855 - $997	Average: $916
Subject — Rent Roll		Average: $815
Subject — Typical Recent Leases			$849
Subject — Asking Rent			$903
Subject — Occupancy Rate of Unit Type			95	%
ESTIMATED MARKET RENT	($1.15 per SF )		$900

UNIT TYPE — ONE BEDROOM/1 BATH & DEN

									Adjustments
	Rent				Rent										Appeal				Adjusted
	Per				Per		Tenant		Util-		Unit		Loca-		Age		Amen-		Rent
Property Name	Mo		SF		SF		Pays		ities		Size		tion		Cond.		ities		Per Mo
Greenway Village	$	950		926	$	1.03		0		-$10	-$	15			-$	25	$	10	$	910
Woodland Landing	$	935		900	$	1.04		0		-$10					-$	25	$	10	$	910
Brittany Place	$	1,070		920	$	1.16		E							-$	25	$	10	$	1,055
Lakeside North	$	1,040		765	$	1.36		E			$	30		-$50	-$	25	$	20	$	1,015
University Square	$	1,130		858	$	1.32		E						-$50	-$	30			$	1,050
Glen Oaks	$	1,297		1,050	$	1.24		0		-$10	-$	55			-$	150			$	1,082
Subject				872				E

Adjusted Monthly Rents from Comparables	Range: $910 - $1,082	Average: $1,004
Subject — Rent Roll		Average:    $886
Subject — Typical Recent Leases			$929
Subject — Asking Rent			$978
Subject — Occupancy Rate of Unit Type			94	%
ESTIMATED MARKET RENT	($1.12 per SF )		$980

UNIT TYPE — TWO BEDROOM/1 BATH

									Adjustments
	Rent				Rent										Appeal				Adjusted
	Per				Per		Tenant		Util-		Unit		Loca-		Age		Amen-		Rent
Property Name	Mo		SF		SF		Pays		ities		Size		tion		Cond.		ities		Per Mo
Greenway Village	$	950		926	$	1.03		0		-$20					-$	25	$	10	$	915
Woodland Landing	$	1,010		980	$	1.03		0		-$20					-$	25	$	10	$	975
Brittany Place	$	1,130		955	$	1.18		E							-$	25	$	10	$	1,115
Lakeside North	$	1,040		765	$	1.36		E			$	40		-$50	-$	25	$	20	$	1,025
University Square	$	1,150		884	$	1.30		E			$	15		-$50	-$	30			$	1,085
Glen Oaks	$	1,297		1,050	$	1.24		0		-$20	-$	15			-$	150			$	1,112
Subject				971				E

Adjusted Monthly Rents from Comparables	Range: $915 - $1,115	Average: $1,038
Subject — Rent Roll		Average: $935
Subject — Typical Recent Leases			$969
Subject — Asking Rent			$1,032
Subject — Occupancy Rate of Unit Type			94	%
ESTIMATED MARKET RENT	($1.06 per SF )		$1,032

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Springhill Lake Apartments Income Capitalization Approach

UNIT TYPE — TWO BEDROOM/1 BATH & DEN

									Adjustments
	Rent				Rent										Appeal				Adjusted
	Per				Per		Tenant		Util-		Unit		Loca-		Age		Amen-		Rent
Property Name	Mo		SF		SF		Pays		ities		Size		tion		Cond.		ities		Per Mo
Greenway Village	$	950		926	$	1.03		0		-$20	$	130			-$	25	$	10	$	1,045
Woodland Landing	$	1,055		1,080	$	0.98		0		-$20					-$	25	$	10	$	1,020
Brittany Place	$	1,235		1,090	$	1.13		E							-$	25	$	10	$	1,220
Lakeside North	$	1,040		765	$	1.36		E			$	60		-$50	-$	25	$	20	$	1,045
University Square	$	1,285		1,012	$	1.27		E			$	10		-$50	-$	30			$	1,215
Glen Oaks	$	1,496		1,312	$	1.14		0		-$20	-$	100			-$	150			$	1,226
Subject				1,073				E

Adjusted Monthly Rents from Comparables	Range: $1,020- $1,226	Average: $1,129
Subject — Rent Roll		Average: $1,023
Subject — Typical Recent Leases			$1,059
Subject — Asking Rent			$1,085
Subject — Occupancy Rate of Unit Type			95	%
ESTIMATED MARKET RENT	($1.01 per SF )		$1,085

UNIT TYPE — TWO BEDROOM/2 BATH

									Adjustments
	Rent				Rent										Appeal				Adjusted
	Per				Per		Tenant		Util-		Unit		Loca-		Age		Amen-		Rent
Property Name	Mo		SF		SF		Pays		ities		Size		tion		Cond.		ities		Per Mo
Greenway Village	$	950		926	$	1.03		0		-$20	$	70			-$	25	$	10	$	985
Woodland Landing	$	1,010		980	$	1.03		0		-$20	$	60			-$	25	$	10	$	1,035
Brittany Place	$	1,130		955	$	1.18		E			$	65			-$	25	$	10	$	1,180
Glen Oaks	$	1,402		1,200	$	1.17		0		-$20	-$	35			-$	150			$	1,197
Barclay Square	$	1,158		871	$	1.33		0		-$20	$	30			-$	25	$	10	$	1,153
Lakeside North	$	1,040		765	$	1.36		E			$	83		-$50	-$	25	$	20	$	1,068
Subject				1,029				E

Adjusted Monthly Rents from Comparables	Range: $985 - $1,197	Average: $1,103
Subject — Rent Roll		Average: $1,049
Subject — Typical Recent Leases			$1,063
Subject — Asking Rent			$1,140
Subject — Occupancy Rate of Unit Type			100	%
ESTIMATED MARKET RENT	($1.07 per SF )		$1,100

UNIT TYPE — TWO BEDROOM/2 BATH & DEN

									Adjustments
	Rent				Rent										Appeal				Adjusted
	Per				Per		Tenant		Util-		Unit		Loca-		Age		Amen-		Rent
Property Name	Mo		SF		SF		Pays		ities		Size		tion		Cond.		ities		Per Mo
Greenway Village	$	1,060		1,100	$	0.96		0		-$20	$	90			-$	25	$	10	$	1,115
Woodland Landing	$	1,200		1,146	$	1.05		0		-$20	$	15			-$	25	$	10	$	1,180
Brittany Place	$	1,255		1,090	$	1.15		E			$	90			-$	25	$	10	$	1,330
University Square	$	1,420		1,038	$	1.37		E			$	50		-$50	-$	30			$	1,390
Glen Oaks	$	1,496		1,312	$	1.14		0		-$20					-$	150			$	1,326
Barclay Square	$	1,208		977	$	1.24		0		-$20	$	60			-$	25	$	10	$	1,233
Subject				1,294				E

Adjusted Monthly Rents from Comparables	Range: $1,115 - $1,390	Average: $1,262
Subject — Rent Roll		Average: $1,129
Subject — Typical Recent Leases			$1,169
Subject — Asking Rent			$1,216
Subject — Occupancy Rate of Unit Type			100	%
ESTIMATED MARKET RENT	($0.94 per SF )		$1,215

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Springhill Lake Apartments Income Capitalization Approach

UNIT TYPE — THREE BEDROOM/1.5 BATH

									Adjustments
	Rent				Rent										Appeal				Adjusted
	Per				Per		Tenant		Util-		Unit		Loca-		Age		Amen-		Rent
Property Name	Mo		SF		SF		Pays		ities		Size		tion		Cond.		ities		Per Mo
Greenway Village	$	1,060		1,100	$	0.96		0		-$30					-$	25	$	10	$	1,015
Woodland Landing	$	1,200		1,146	$	1.05		0		-$30		- $17			-$	25	$	10	$	1,138
Brittany Place	$	1,409		1,024	$	1.38		E				$10			-$	25	$	10	$	1,404
University Square	$	1,420		1,038	$	1.37		E				- $40		-$50	-$	30			$	1,300
Glen Oaks	$	1,601		1,430	$	1.12		0		-$30		- $80			-$	150			$	1,341
Lakeside North	$	1,260		912	$	1.38		E				$20		-$50	-$	25	$	20	$	1,225
Subject				1,122				E

Adjusted Monthly Rents from Comparables	Range: $1,015 - $1,404	Average: $1,237
Subject — Rent Roll		Average: $1,254
Subject — Typical Recent Leases			$1,149
Subject — Asking Rent			$1,322
Subject — Occupancy Rate of Unit Type			94	%
ESTIMATED MARKET RENT	($1.11 per SF )		$1,250

UNIT TYPE — THREE BEDROOM/1.5 BATH TH

									Adjustments
	Rent				Rent										Appeal				Adjusted
	Per				Per		Tenant		Util-		Unit		Loca-		Age		Amen-		Rent
Property Name	Mo		SF		SF		Pays		ities		Size		tion		Cond.		ities		Per Mo
Muirfield at Montpelier	$	1,350		1,465	$	0.92		E		—	-$	35	$	80	-$	50	$	10	$	1,355
Fernwood Gardens	$	1,275		980	$	1.30		E		—	-$	65	$	80	$	30	$	30	$	1,350
Falkland Chase	$	1,843		1,431	$	1.29	E,H,HW,C,W,S		$	70	-$	15	-$	200	-$	200	$	20	$	1,518
Subject				1,113				E

Adjusted Monthly Rents from Comparables	Range: $1,350- $1,518	Average: $1,408
Subject — Rent Roll		Average: $1,231
Subject — Typical Recent Leases			$1,374
Subject — Asking Rent			$1,345
Subject — Occupancy Rate of Unit Type			97	%
ESTIMATED MARKET RENT	($1.24 per SF )		$1,375

UNIT TYPE — FOUR BEDROOM/2.5 BATH TH

									Adjustments
	Rent				Rent										Appeal				Adjusted
	Per				Per		Tenant		Util-		Unit		Loca-		Age		Amen-		Rent
Property Name	Mo		SF		SF		Pays		ities		Size		tion		Cond.		ities		Per Mo
Muirfield at Montpelier	$	1,350		1,465	$	0.92		E			$	150	$	80	-$	50	$	10	$	1,540
Fernwood Gardens	$	1,275		980	$	1.30		E			$	125	$	80	$	30	$	30	$	1,540
Falkland Chase	$	1,843		1,431	$	1.29	E,H,HW,C,W,S		$	70	$	145	-$	200	-$	200	$	20	$	1,678
Subject				1,478				E

Adjusted Monthly Rents from Comparables	Range: $1,540 - $1,678	Average: $1,586
Subject — Rent Roll		Average: $1,452
Subject — Typical Recent Leases			$1,449
Subject — Asking Rent			$1,594
Subject — Occupancy Rate of Unit Type			100	%
ESTIMATED MARKET RENT	($1.04 per SF )		$1,540

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Springhill Lake Apartments Income Capitalization Approach

UNIT TYPE — FOUR BEDROOM/2 BATH

									Adjustments
	Rent				Rent										Appeal				Adjusted
	Per				Per		Tenant		Util-		Unit		Loca-		Age		Amen-		Rent
Property Name	Mo		SF		SF		Pays		ities		Size		tion		Cond.		ities		Per Mo
University Square	$	1,509		1,166	$	1.29		E			$	20		-$50		-$30			$	1,449
Chesapeake Landing	$	1,190		1,420	$	0.84		E			$	10		$80		-$25	$	10	$	1,265
Barclay Square	$	1,500		1,347	$	1.11		0		-$40	$	10				-$25	$	20	$	1,465
Subject				1,579				E

Adjusted Monthly Rents from Comparables	Range: $1,265 - $1,465	Average: $1,393
Subject — Rent Roll		Average: $1,446
Subject — Typical Recent Leases			$1,564
Subject — Asking Rent			$1,591
Subject — Occupancy Rate of Unit Type			100	%
ESTIMATED MARKET RENT	($0.92 per SF )		$1,450

Market Rental Conclusions

The previous grids show adjustments are required to the comparable rentals to account for differences in utility structure, unit size (including differences in number of bedrooms and bathrooms), location, age/condition/appeal, and community and unit amenities.

In deriving market rents for the subject, we placed most weight on the subject’s current average asking rents and actual contract rents, as well as on Greenway Village, Woodland Landing, Brittany Place, and Lakeside North for the subject’s one- through three-bedroom garden units, based on similarity of location, age/condition, and amenities. In determining market rents for the townhouses and four bedroom garden units, we relied on the subject’s current average asking rents, and the adjusted rents of the comparables, since there is limited supply in the market and demand is high. We found that, as with the subject, three- and four-bedroom rentals in the market are fewer and thus rarely turned over, causing managers to ask for higher rents.

Based on the preceding analysis, we estimate market rent for the ten unit types as follows:

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Springhill Lake Apartments Income Capitalization Approach

CONCLUDED MARKET RENTAL RATES

	Market
	Rent per		Market
Unit Type	Month		Rent per SF
One Bedroom/1 Bath	$	900	$	1.15
One Bedroom/1 Bath & Den	$	980	$	1.12
Two Bedroom/1 Bath	$	1,032	$	1.06
Two Bedroom/1 Bath & Den	$	1,085	$	1.01
Two Bedroom/2 Bath	$	1,100	$	1.07
Two Bedroom/2 Bath & Den	$	1,215	$	0.94
Three Bedroom/1.5 Bath	$	1,250	$	1.11
Three Bedroom/1.5 Bath TH	$	1,375	$	1.24
Four Bedroom/2.5 Bath TH	$	1,540	$	1.04
Four Bedroom/2 Bath	$	1,450	$	0.92

Market rent for the overall property is estimated at $35,949,720 per year as shown in the table below.

MARKET RENT FOR OVERALL PROPERTY

							Market Rent for Vacant
	Market		Market Rent for All Units				Units
	Rent per				Total Rent per				Total Rent per
Unit Type	Month		Units		Month		Units		Month
One Bedroom/1 Bath	$	900		662	$	595,800		36	$	32,400
One Bedroom/1 Bath & Den	$	980		316	$	309,680		20	$	19,600
Two Bedroom/1 Bath	$	1,032		1,280	$	1,320,960		71	$	73,272
Two Bedroom/1 Bath & Den	$	1,085		266	$	288,610		12	$	13,020
Two Bedroom/2 Bath	$	1,100		32	$	35,200		0
Two Bedroom/2 Bath & Den	$	1,215		30	$	36,450		0
Three Bedroom/1.5 Bath	$	1,250		182	$	227,500		11	$	13,750
Three Bedroom/1.5 Bath TH	$	1,375		116	$	159,500		3	$	4,125
Four Bedroom/2.5 Bath TH	$	1,540		4	$	6,160		0
Four Bedroom/2 Bath	$	1,450		11	$	15,950		0
	$	1,033		2,899	$	2,995,810		153	$	156,167
	Annual Total:				$	35,949,720			$	1,874,004
					$1,033 per Unit;				$	1.09 per SF

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Springhill Lake Apartments Income Capitalization Approach

Estimate of Gross Income

Potential Gross Rent

The subject’s potential gross rent for the first forecast year is based on the average of contract rents in place (including 153 vacant units at market rent) and the estimated market rent for the overall property, estimated previously. This is reasonable because, over the course of the year, rental income will increase as leases roll over and are recast at the current market rent. Based on the calculations in the following table, the resulting estimate of potential gross rent is $35,000,000 (rounded).

POTENTIAL GROSS RENT

	# Apt		Avg Rent per		Total Monthly		Annual
	Units		Month		Rent		Rent
PART 1: Contract Rent for Occupied Units Plus
Market Rent for Vacant Units
Contract Rent — Tenant Occupied Units based on Current Rent Roll		2,746	$	977	$	2,682,071	$	32,184,852
Market Rent for Vacant Units		153	$	1,021	$	156,167	$	1,874,004
Total		2,899			$	2,838,238	$	34,058,856
PART 2: Market Rent for All Units		2,899	$	1,033	$	2,995,810	$	35,949,720
PART 3: Average of Parts 1 and 2		2,899	$	1,006			$	35,004,288
POTENTIAL GROSS RENT							$	35,004,288
ROUNDED							$	35,000,000

The first forecast year is the 12-month period following the effective date of the appraisal, starting April 1, 2004 and ending March 31, 2005. Since the property is stabilized, as discussed previously, we use the first forecast year when applying direct capitalization.

Vacancy and Collection Loss

This category consists of the rent loss caused by physical vacancy and credit loss, including concessions and tenant discounts, projected for the subject. Prior to 2003, vacancy levels in the submarket were under 2%. The 2003 year-end vacancy rate in this submarket was 3.8% and the subject’s peer group (i.e., primary competition) is 3%.

Credit loss includes income lost from rental discounts, such as those given to county teachers, military, and other Federal employees. It also includes income lost from rent specials.

For the subject, we estimate a stabilized vacancy and collection loss at -7% based on 5% vacancy and 2% credit loss. The subject’s historical vacancy and collection loss has ranged from 4.3% in 2001 to 5.8% in 2003. Deducting vacancy and collection loss from potential gross income, we arrive at effective gross income.

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Springhill Lake Apartments Income Capitalization Approach

Other Income

This category includes any other income from the property, such as from laundry facilities, vending machines, storage space rentals, tenant fees, and other miscellaneous sources. Total other income is projected at $1,400,000, or 4% of potential gross income, net of vacancy and collection loss, based on historical receipts at the subject that have ranged between 3.5% and 4.5% per year for the last three years, as shown in the following table.

SUBJECT’S ITEMIZED OTHER INCOME

	2001			2002			2003
Utilities Reimbursements	$	7,455		$	41,701		$	219,320
Laundry	$	372,024		$	391,497		$	458,503
Cable TV	$	62,893		$	63,295		$	96,967
Telephone	$	69,624		$	52,445		$	42,505
Corporate Units		-$6,970		$	28,696			- $2,095
Parking	$	1,150		$	8,288		$	4,272
Misc. Tenant Charges	$	7,601
Late Charges	$	219,927		$	185,690		$	210,168
NSF Charges	$	19,440		$	16,000		$	17,640
Pay Telephone Commission	$	243		$	202		$	362
Admin Fees-Resident Charge							$	9,488
Keys, Locks, Lock Changes	$	2,764		$	8,734		$	3,728
Transfer Fee	$	2,610		$	9,464		$	4,100
Misc. Resident Charges	$	11,569		$	97,978		$	6,107
Non-Refundable Admin Fees							$	550
Storage Space	$	880		$	9,939		$	12,917
Cleaning & Damage Fees	$	10,862		$	13,166		$	16,464
Deposit Forfeitures	$	15,936		$	8,476			- $758
Legal Fees	$	108,193		$	68,657		$	136,785
Non-Refundable Pet Fees	$	4,925		$	3,739		$	2,850
Pet Damage Charges							$	199
Lease Cancellation Fees	$	60,638		$	159,798		$	132,734
Application Fees	$	59,409		$	45,368		$	76,912
Monthly Pet Rent	$	2,443		$	9,217		$	9,992
Miscellaneous Income	$	27,292		$	12,862
Fee Adjustments								-$16,337
	$	1,060,908		$	1,235,212		$	1,443,373
Percent of PGI		3.5	%		3.9	%		4.5	%

Other income was added to effective gross income to arrive at total effective gross income.

Commercial Income

There are four commercial tenants at the subject; the balance of the commercial space is occupied by management. The Giant lease represents an unoccupied renewal leased at a below-market, fixed rate until 2007. Management reports that there are no pass-through charges or additional rent. Landlords generally view these small commercial establishments as convenience amenities for tenants. The following table summarizes

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the current contract terms of commercial tenants. Lease terms are profiled in Addendum D.

SUBJECT COMMERCIAL LEASE SUMMARY

Address	Tenant	Use	Area		Expires	Annual		$/SF/Yr		$/Mo		$/SF/Mo
6237 Springhill Dr.	Giant Food	Office		12,000	30-Jun-07	$	27,600	$	2.30	$	2,300	$	0.19
6237 Springhill Dr.	Board of Ed. Of PG County	Child Care		3,642	31-Jul-11	$	76,380	$	20.97	$	6,365	$	1.75
9234 Springhill Ln.	Hunan China Carryout	Retail		980	30-Aug-07	$	13,896	$	14.18	$	1,158	$	1.18
9240 Springhill Ln.	Convenience Store	Retail		3,500	30-Jun-04	$	33,852	$	9.67	$	2,821	$	0.81
				20,122		$	151,728			$	12,644

Source: Leases and property owner/management

     The following table summarizes comparable commercial leases in the submarket.

COMMERCIAL LEASE COMPARABLES

Property	Use	Area		Annual		$/SF/Yr		$/Mo		$/SF/Mo
Largo Plaza, Upper Marlboro	Retail		2,375	$	52,250	$	22.00	$	4,354	$	1.83
Hickory Ridge, Columbia	Retail		550	$	14,300	$	26.00	$	1,192	$	2.17
Burtonsville Crossing	Retail		1,504	$	31,298	$	20.81	$	2,608	$	1.73
Aerospace Plaza, Greenbelt	Retail		1,882	$	47,050	$	25.00	$	3,921	$	2.08
Greenway Center, Greenbelt	Retail		3,400	$	91,800	$	27.00	$	7,650	$	2.25
8513 Ardwick Ardmore Rd., Landover	Office		4,500	$	63,315	$	14.07	$	5,276	$	1.17
9410 Annapolis Rd., Lanham	Office		7,000	$	98,000	$	14.00	$	8,167	$	1.17
9418 Annapolis Rd., Lanham	Office		900	$	12,150	$	13.50	$	1,013	$	1.13
4700 Berwyn House Rd., College Park	Office		4,000	$	48,000	$	12.00	$	4,000	$	1.00
8713-19 Greenbelt Rd., Greenbelt	Office		9,065	$	125,913	$	13.89	$	10,493	$	1.16
3408-20 Hamilton St., Hyattsville	Office		2,150	$	21,500	$	10.00	$	1,792	$	0.83
4811 Kenilworth Ave., Hyattsville	Office		2,450	$	19,600	$	8.00	$	1,633	$	0.67
10611 New Hampshire Ave., Silver Spring	Office		2,500	$	33,000	$	13.20	$	2,750	$	1.10
3321-31 Toledo Ter., Hyattsville	Office		3,900	$	54,600	$	14.00	$	4,550	$	1.17
La Petite Academy, Crofton	Child Care		7,284	$	146,044	$	20.05	$	12,170	$	1.67
Kinder Care Learning Ctr., Gaithersburg	Child Care		6,387	$	155,971	$	24.42	$	12,998	$	2.04
Kindercare, Columbia	Child Care		14,616	$	216,024	$	14.78	$	18,002	$	1.23

These comparables would require adjustment for location, expense structure and physical characteristics. Considering the data available, the three existing contract rates (day care and retail) appear reasonable and are considered generally reflective of the market.

Due to its location and lack of visibility, we believe market rent for the Giant space would be below the range of multi-tenant office buildings in the submarket. We conclude that market rent would be $8,000 per month, full service, or $96,000 per year. Combining the Giant space at market with the contract rates of the other three commercial suites indicates a monthly gross income of $18,344, or total commercial rent of $220,128 annually.

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The present value of Giant’s below-market lease is estimated to be $270,000, as shown in the following table. We deducted this amount from the value derived by the sales comparison approach previously, and will likewise deduct it from the stabilized value derived from the Income Capitalization Approach at the end of this section.

Period	Market Rent		Contract Rent		Difference		PV Factor*		Loss
Year 1	$	96,000	$	27,600	$	68,400		-1.0000	-$	68,400
Year 2	$	96,000	$	27,600	$	68,400		-0.9620	-$	65,801
Year 3	$	96,000	$	27,600	$	68,400		-0.9250	-$	63,270
Year 4	$	96,000	$	27,600	$	68,400		-0.8890	-$	60,808
Last 2 months	$	16,000	$	4,600	$	11,400		-0.9870	-$	11,252
			Present Value of Giant Lease:						-$	269,530

*    Based on market-derived annual interest of 4%

Total Effective Gross Income (EGI)

The subject’s effective gross income was $30,374,259 in 2001, $31,485,563 in 2002, and $31,840,365 in 2003. The EGI has averaged $31,233,396 during the last three years. Total EGI is projected to be $34,170,128 for the 12-month period following the effective date of the appraisal.

The Income Reconstruction Chart, below, reflects our stabilized income projections for the first forecast year as well as historical information provided by the property owner. Copies of financial reports for the subject are in the addenda.

INCOME RECONSTRUCTION CHART

										Forecast Year
										04/01/04- 03/31/05
Historic Income / Expenses									Category	(Stabilized Basis)
2001			2002			2003							Per
Actual			Actual			Actual			Gross Income	Amount			Unit
$	30,626,651		$	31,610,409		$	32,112,591		Potential Gross Income	$	35,000,000		$	12,073
-$	1,313,300		-$	$1,461,629		-$	1,864,641		Vacancy/Collection Loss -7%	-$	2,450,000		-$	845
$	29,313,351		$	30,148,780		$	30,247,950		Effective Gross Income	$	32,550,000		$	11,228
$	1,060,908		$	1,235,212		$	1,443,373		Other Income (4% of PGI)	$	1,400,000		$	483
Included in PGI			$	101,571		$	149,042		Commercial Income	$	220,128		$	76
$	30,374,259		$	31,485,563		$	31,840,365		Total Effective Gross Income	$	34,170,128		$	11,787
									Expenses
$	1,820,313		$	1,838,185		$	1,871,997		Real Estate Taxes	$	2,237,556		$	772
$	529,682		$	501,162		$	619,740		Insurance	$	579,800		$	200
$	4,153,847		$	4,008,487		$	4,215,770		Utilities	$	4,826,835		$	1,665
$	4,381,702		$	4,427,495		$	6,863,047		Repairs And Maintenance	$	5,928,455		$	2,045
$	2,069,362		$	2,282,556		$	2,333,871		General And Administrative	$	2,522,130		$	870
$	1,048,350		$	935,978		$	953,410		Management Fees : 3.00%	$	1,025,104		$	354
									Replacement Reserves: $300	$	869,700		$	300
$	14,003,256		$	13,993,863		$	16,857,835		Total Expenses	$	17,989,580		$	6,205
	46.1	%		44.4	%		52.9	%	Operating Expense Ratio		52.6	%		52.6	%
$	16,371,003		$	17,491,700		$	14,982,530		Net Operating Income	$	16,180,548		$	5,581

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Springhill Lake Apartments Income Capitalization Approach

Analysis of Operating Expenses

Historical expenses of the subject are reported in the Income Reconstruction Chart. Projected expenses are for the 12 month period following the effective date of the appraisal, assuming typical professional management. We estimate expenses on a per dwelling unit basis as follows.

EXPENSE ANALYSIS PER UNIT

	IREM		Comparable		Comparable		Subject
	Washington DC		Properties		Properties		per Unit
Expense Category	Gardens		(Minimum)		(Maximum)		(Projected)
Real Estate Taxes	$	776	$	504	$	1,312	$	772
Insurance	$	143	$	62	$	406	$	200
Utilities	$	1,173	$	155	$	1,403	$	1,665
Repairs And Maintenance	$	1,009	$	910	$	1,657	$	2,045
General And Administrative	$	978	$	572	$	1,146	$	870
Management Fees	$	523	$	406	$	547	$	354
Replacement Reserves							$	300
Total Operating Expenses	$	4,602	$	2,609	$	6,471	$	6,205

Source: IREM 2003 Edition and files of Integra Realty Resources. The preceding total operating expenses do not equal the sum of the individual categories due to the survey process.

Real Estate Taxes

This expense category, which has been addressed in detail in the Real Estate Tax Analysis section of the report, includes all local, county, and state assessments for real property. Real estate taxes for the subject are estimated to be $2,237,556, or $771.84 per unit, which is higher than the history of the subject, but in line with comparable properties and with IREM published expense data.

As mentioned previously, taxes are due July 1st; therefore the estimated tax liability is adjusted to reflect a blended rate for the pro forma year. The tax liability estimation is derived by multiplying the current (2003) annual taxes of $493,173 by three months (from the effective date to the end of the tax year, April through June 2003), then multiplying the estimated 2004 annual taxes of $1,744,383 by nine months, then adding the two totals together for a total amount of $2,237,556.

2003-2004 Tax Year
Total Tax	No. of Months		Pro Rata Tax
$1,972,692	April-June	3	$	493,173.10
2004-2005 Tax Year
Total Tax	No. of Months
$2,325,844	July-March	9	$	1,744,383.17
		12	$	2,237,556.27

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Springhill Lake Apartments Income Capitalization Approach

Insurance

This expense category includes property and casualty insurance for the subject Based on the subject’s historical financials and market expenses, we estimate this expense at $579,800, or $200 per unit, in line with the history of the subject, of comparable properties, and with IREM published expense data.

Utilities

Total utility charges include water, sewer, natural gas, and electricity expenses. The owner is responsible for water and sewer and the majority of gas and the tenants are responsible for electricity (see Subject Status at beginning of this section). We estimate this expense at $4,826,835, or $1,665 per unit, which is higher than the history of the subject, comparable properties and IREM published expense data. We project utility expenses to be higher because of price caps expiring for Maryland utility companies on June 1, 2003. The Maryland Public Service Commission released estimates in changes to utility bills for Maryland commercial customers, which will be as high as 35% for mid-sized companies dealing with PEPCO, the subject’s supplier. Therefore, our projected gas and electric expenses reflect a significant increase over historicals.

Repairs/Maintenance

This expense category includes repairs and maintenance expenses, including salaries, independent contractors and miscellaneous costs associated with general repairs as well as cleaning and repainting of apartment units upon rollover. We estimate this expense at 5,928,455, or $2,045 per unit, in line with the history of the subject, but higher than the experience of comparable properties, and with IREM published expense data.

General/Administrative

These expenses include the costs of marketing and advertising, legal, accounting, and telephone expenses. This category includes other operating expenses that are not separately identified in the previous categories. It also includes payroll costs and related taxes, insurance and benefits, attributable to on-site leasing personnel, as well as income loss from employee and model units. We estimate this expense at $2,522,130, or $870 per unit, which is an increase from the history of the subject, but in line with comparable properties, and lower than IREM published expense data.

Management

This expense item represents the sum paid for, or the value of, management services. Management fees are considered to be an expense of operation, no matter if the services are contracted or provided by the property owner. We estimate this expense at a rate of 3.0% of effective gross income, or $1,205,104 overall.

Replacement Reserves

This expense category accounts for the cost of periodic replacement of capital items, such kitchen appliances, HVAC units and roof. We estimate this expense at $300 per unit or $869,700 overall.

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Springhill Lake Apartments Income Capitalization Approach

Total Operating Expenses

Total operating expenses are estimated to be $17,989,580, or $6,205 per unit. For the preceding three years, the expenses were $16,857,835, $14,003,256, and $13,993,863 since 2001. The operating expenses of comparable properties range from $3,183 to $4,889 per unit as shown in the Expense Report in the addenda. Compared to the past, the subject’s future operating expenses are projected be higher, in part, because of higher projected utility expenses.

DETAILED EXPENSES

Description	2001		2002		2003		Projection		Per Unit
FIXED EXPENSES
Real Estate Taxes	$	1,820,313	$	1,838,185	$	1,871,997	$	2,237,556	$	771.84
Insurance	$	529,682	$	501,162	$	619,740	$	579,800	$	200.00
OPERATIONAL EXPENSES
Gas	$	1,640,657	$	1,373,388	$	1,579,110	$	1,739,400	$	600.00
Electric	$	1,218,627	$	1,489,897	$	1,317,407	$	1,739,400	$	600.00
Fuel Oil/Coal	$	110,038			$	32,084	$	43,485	$	15.00
Water/Sewer	$	1,184,525	$	1,145,202	$	1,287,169	$	1,304,550	$	450.00
Subtotal Utilities	$	4,153,847	$	4,008,487	$	4,215,770	$	4,826,835	$	1,665.00
Trash Removal	$	129,762	$	184,797	$	195,934	$	202,930	$	70.00
Pest Control	$	80,330	$	59,799	$	64,035	$	72,475	$	25.00
Grounds/Maintenance	$	214,035	$	359,192	$	326,373	$	376,870	$	130.00
Building Maintenance and Repairs	$	644,217	$	739,976	$	2,463,168	$	1,884,350	$	650.00
Interior & Exterior Decorating	$	1,186,945	$	1,139,257	$	1,669,990	$	1,449,500	$	500.00
Cleaning	$	416,018	$	431,653	$	739,771	$	579,800	$	200.00
Equipment/Supplies	$	284,522	$	493,125	$	500,326	$	318,890	$	110.00
Pool Maintenance	$	66,829	$	67,675	$	68,715	$	72,475	$	25.00
Pkg. Area Maint & Snow Removal	$	24,892	$	37,138	$	49,258	$	72,475	$	25.00
Other R&M	$	10,735	$	31,652	$	39,815	$	28,990	$	10.00
Maintenance Payroll	$	1,189,512	$	746,314	$	611,682	$	710,255	$	245.00
Grounds Person Payroll	$	133,905	$	136,917	$	133,980	$	159,445	$	55.00
Subtotal Repairs/Maintenance	$	4,381,702	$	4,427,495	$	6,863,047	$	5,928,455	$	2,045.00
Manager & Employee Salaries	$	897,950	$	920,583	$	823,351	$	971,165	$	335.00
Security	$	36,987	$	28,233	$	39,237	$	28,990	$	10.00
Payroll Taxes and Benefits	$	492,358	$	577,793	$	501,245	$	550,810	$	190.00
Office/Employee Units (including Model)	$	38,483	$	8,927	$	42,202	$	57,980	$	20.00
Advertising	$	106,194	$	73,490	$	89,835	$	86,970	$	30.00
Leasing Commissions	$	5,789	$	54,184	$	107,617	$	144,950	$	50.00
Legal/Accounting/Collections	$	250,409	$	256,438	$	260,116	$	260,910	$	90.00
Misc. Taxes, Licenses, permits	$	208,036	$	180,295	$	161,433	$	173,940	$	60.00
Office/Telephone/Postage	$	231,497	$	171,556	$	248,715	$	217,425	$	75.00
Interest Income	-$	198,549	-$	63,407	-$	31,821	$	0	$	0.00
Miscellaneous	$	208	$	74,464	$	91,935	$	28,990	$	10.00
Subtotal Administrative	$	2,069,362	$	2,282,556	$	2,333,871	$	2,522,130	$	870.00
Management	$	1,048,350	$	935,978	$	953,410	$	1,025,104	$	353.61
Capital Items (Reserves)							$	869,700	$	300.00
Total Expenses	$	14,003,256	$	13,993,863	$	16,857,835	$	17,989,580	$	6,205.44

Net Operating Income (NOI)

The stabilized net operating income for the subject, calculated by deducting the projected operating expenses from the projected effective gross income, is $16,180,548. For the previous three years, NOI has been $14,982,530, $16,371,003 and $17,491,700 since 2001.

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Springhill Lake Apartments Income Capitalization Approach

Capitalization Rate Analysis

We use three methods to estimate a capitalization rate applicable to the stabilized NOI for the subject: review of investor surveys, extraction of rates from comparable sales, and the band of investment method. Investor surveys summarized below indicate a range of capitalization rates for apartment properties of 7.25% to 8.23% with a central tendency of 7.75%. Rates have been moving downward over the past 10 quarters, and this trend is expected to stabilize in the near term.

CAPITALIZATION RATE SURVEYS – APARTMENT PROPERTIES

	Viewpoint	Viewpoint
	Year End 2003	Year End 2003	Korpacz	ACLI
	National	National	1Q-2004	4Q-2003
	Urban	Suburban	National	National
	Multifamily	Multifamily	Apartment	Apartment
Range	6%-10.5%	6.3%-9.5%	5.5%-9.25%	NA
Average	8.23%	8.04%	7.25%	7.50%

CAPITALIZATION RATE TRENDS — APARTMENT PROPERTIES

Quarter/Year

KORP — Korpacz Real Estate Investor Survey — National Apartment Market

ACLI — American Council of Life Insurers Investment Bulletin — Apartment Properties

The second method, extraction of capitalization rates from comparable sales, is considered reliable when recent comparable sales are available. The table below summarizes the sales that provide the best indications of a capitalization rate for the subject.

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Springhill Lake Apartments Income Capitalization Approach

Capitalization Rate Analysis

		Year	Sale	Overall					Price per
No.	Property Name	Built	Date	Cap Rate			Units		Unit
1	River Pointe Apartments, Fort Washington, MD	1970	4/04		7.89	%		170	$	70,588
2	Ashford at Woodlake Apartments, Silver Spring, MD	1974	2/04		7.50	%		534	$	83,895
3	Castlegate Apartments (Fmr. Country Club Apts.), Silver Spring, MD	1981	1/04		8.25	%		376	$	85,771
4	Owings Manor Apartments, Owings Mills, MD	1965	6/03		7.00	%		791	$	64,475
5	Cider Mill Apartments, Gaithersburg, MD	1971-1973	10/02		8.30	%		864	$	85,301
6	Cheverly Crossing, Hyattsville, MD	1972	11/03		8.00	%		100	$	121,000
7	Falkland Chase, Silver Spring, MD	1937	9/03		6.50	%		450	$	58,500
8	Mews at Kennebec, Oxon Hill, MD	1962	8/03		8.00	%		294	$	40,136
	Average(Mean)				7.68	%

The sales show capitalization rates ranging from 7.00% — 8.30% with an average of 7.68%.

Additionally, we spoke with two brokers active in apartment acquisitions in the suburban Washington, DC market area. Both stated that properties of similar vintage and condition as the subject are being purchased on cap rates in the high 6’s to the low 7’s percentile. Based on an analysis of the sales combined with trends in investor surveys, a capitalization rate in the range of 7% to 7.5% appears reasonable.

The third method, band of investment, derives a capitalization rate from the weighted average of the mortgage and equity demands on net income generated from the property. This method involves an estimate of typical financing terms based on a survey of lenders active in this property type as well as an estimated rate of return on equity capital sufficient to attract investors. Utilizing this method, a capitalization rate of 7.65% is indicated for the subject.

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Springhill Lake Apartments Income Capitalization Approach

BAND OF INVESTMENT METHOD

LENDER SURVEY

					Amort.		Interest
Lender	Date	LTV Ratio			(Years)		Rate
KeyBank	03/22/04		75.00	%		20		4.34	%
Morgan Stanley	03/22/04		75.00	%		20		5.02	%
Archon Financial	03/22/04		75.00	%		20		4.38	%
Realtyrates.com	1st Quarter		75.00	%		27		6.65	%

MORTGAGE / EQUITY ASSUMPTIONS

Loan to Value Ratio	80	%
Interest rate	5.1000	%
Amortization (Years)	25
Mortgage Constant	7.0852	%
Equity Ratio	20	%
Equity Dividend Rate	10.0000	%

WEIGHTED AVERAGE OF MORTGAGE AND EQUITY REQUIREMENTS

Mortgage Requirement	80% x 7.0852%	5.6681	%
Equity Requirement	20% x 10.0000%	2.0000	%
Capitalization Rate		7.6681	%
Capitalization Rate (Rounded)		7.65	%

To reconcile the results of the three methods, we note that the probable buyer is a national investor. The comparable sales indicate that these investors are purchasing apartment properties at capitalization rates ranging from 6.5% to 8.25%, with the most recent transaction reflecting a capitalization rate of 8%. These investors tend to maximize leverage, thus less weight is given to the band of investment method. On balance, we conclude to a capitalization rate of 7.5% for the subject.

However, all of the market data cited pertains to the typical garden apartment complex. The subject is an unusually large community and the number of prospective bidders with the wherewithal to acquire a property of this size is significantly less than for more typical transactions (less than 1,000 units). Market data of recent sales of very large communities that are considered reliable indicators is very limited. Therefore, we surveyed market participants, including brokers and investors, regarding likely overall capitalization rates for a transaction of this size. The consensus of opinion was that larger properties, like the subject, would reflect a 15- to 25-basis point increase over typical capitalization rates. Applying a 25-basis point upward adjustment to our market typical conclusion of 7.5% indicates a capitalization rate of 7.75% for the subject.

Value Indication — Direct Capitalization

When we apply the capitalization rate of 7.75% to the stabilized net operating income of $16,180,548, we arrive at a stabilized value indication of $208,781,267. Deducting the present value of Giant’s below-market lease of $270,000 (rounded), brings the “as is” value indication to $208,511,267, rounded to $208,500,000.

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Springhill Lake Apartments Income Capitalization Approach

Effective Gross Income	$	34,170,128
Less Expenses	$	17,989,580
Net Operating Income	$	16,180,548
Capitalization Rate		7.75	%
Stabilized Value Indication	$	208,781,267
Adjustments
Less Present Value Of Giant’s Below-Market Lease	-$	270,000
As Is Value Indication	$	208,511,267
Rounded To	$	208,500,000

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Springhill Lake Apartments Reconciliation

Reconciliation

Reconciliation involves the analysis of alternative value indications to determine a final value conclusion. Reconciliation is required because different value indications can result from the use of multiple approaches and within the application of a single approach. The values indicated by our analyses are:

Cost Approach		N/A
Sales Comparison Approach	$	206,000,000	($71,059 /Unit)
Income Capitalization Approach	$	208,500,000	($71,921 /Unit)

Cost Approach

The cost approach is not applicable and is not used in our analysis.

Sales Comparison Approach

The sales comparison approach is most reliable in an active market when a sufficient number of sales are available for analysis. In this case, the subject’s market has been very active and there a number of recent sales similar in age, design and market appeal. However, the subject is believed to be the largest community in the Washington suburban market. The quantity and quality of market data of very large communities is very limited. Because of differences between the subject and the sales, significant adjustments are required, thus reducing the reliability of this approach. As a result, the sales comparison approach is used primarily as support for the value derived from the income capitalization approach.

Income Capitalization Approach

The income capitalization approach is usually given greatest weight in valuing investment properties because it simulates the thought process of market participants in the investment property arena. The reliability of this approach is enhanced by the large quantity of market data that is available to develop estimates of rental rates, operating expenses, and capitalization rates. Therefore, we give the income capitalization approach primary emphasis in our opinion of value.

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Springhill Lake Apartments Reconciliation

Conclusion of Value

Based on the preceding analysis and subject to the definitions, assumptions, and limiting conditions expressed herein, it is our opinion that the market value of the leased fee estate of the subject as of April 20, 2004, is:

TWO HUNDRED EIGHT MILLION FIVE HUNDRED THOUSAND
DOLLARS
($208,500,000).

The preceding value conclusion is subject to the following Extraordinary Assumptions:

1.	Based upon the age of the improvements, there is the possibility that they contain asbestos and/or lead paint. Also, the site presently contains underground fuel storage tanks used for the storage of heating fuel. Our estimate of value is based upon the site being free of environmental hazards, which would negatively impact value.
2.	The value conclusions do not consider the contributory benefit of furniture, fixtures, and equipment such as leasing office and community room furniture, office furniture and equipment, and recreational amenities.
3.	Building plans were incomplete, and “as built” plans and location surveys were not available. Gross building and individual unit rentable areas are based upon information and construction drawings provided by management. We have relied upon measurement information provided by property management. Gross and rentable areas of the subject and comparables should be considered as the best estimates available for description purposes, but should not be relied upon for any other purpose.

Exposure Time

Exposure time is the estimated length of time that the subject would have been offered on the market prior to a hypothetical sale of the property on the effective date of the appraisal. Based on data obtained from sales transactions and interviews with market participants, it is our opinion that the probable exposure time for the property at the concluded market value is six months.

Marketing Period

Marketing period is an opinion of the amount of time it might to take to sell the subject at the concluded market value during the period immediately following the effective date of the appraisal. Because we foresee no significant changes in market conditions in the near term, it is our opinion that a reasonable marketing period for the subject is the same as its exposure time. Therefore, we estimate the subject’s marketing period to be six months.

Page 87

Springhill Lake Apartments Certification

CERTIFICATION

We certify that, to the best of our knowledge and belief:

1.	The statements of fact contained in this report are true and correct.
2.	The reported analyses, opinions, and conclusions are limited only by the reported assumptions and limiting conditions, and are our personal, impartial, and unbiased professional analyses, opinions, and conclusions.
3.	We have no present or prospective interest in the property that is the subject of this report and no personal interest with respect to the parties involved.
4.	We have no bias with respect to the property that is the subject of this report or the parties involved with this assignment.
5.	Our engagement in this assignment was not contingent upon developing or reporting predetermined results.
6.	Our compensation for completing this assignment is not contingent upon the development or reporting of a predetermined value or direction in value that favors the cause of the client, the amount of the value opinion, the attainment of a stipulated result, or the occurrence of a subsequent event directly related to the intended use of this appraisal.
7.	Our analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the requirements of the Code of Professional Ethics and Standards of Professional Appraisal Practice of the Appraisal Institute, which includes the Uniform Standards of Professional Appraisal Practice (USPAP), and also in conformity with the appraisal regulations issued in connection with the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA).
8.	Patrick C. Kerr, MAI, SRA, and Jennifer L. McCoun made a personal inspection of the property that is the subject of this report on April 19 and 20, 2004.
9.	No one provided significant real property appraisal assistance to the person(s) signing this certification.
10.	This appraisal is not based on a requested minimum valuation, a specific valuation, or the approval of a loan.
11.	We have not relied on unsupported conclusions relating to characteristics such as race, color, religion, national origin, gender, marital status, familial status, age, receipt of public assistance income, handicap, or an unsupported conclusion that homogeneity of such characteristics is necessary to maximize value.
12.	It is our opinion that the subject does not include any enhancement in value as a result of any natural, cultural, recreational or scientific influences retrospective or prospective.
13.	We have experience in appraising properties similar to the subject and are in compliance with the Competency Rule of USPAP.
14.	The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives.

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Springhill Lake Apartments Certification

15. As of the date of this report, Patrick C. Kerr, MAI, SRA, has completed the continuing education program of the Appraisal Institute.

Patrick C. Kerr, MAI, SRA
Managing Director
Certified General Real Estate Appraiser
Maryland Certificate #1100

Jennifer L. McCoun
Analyst
Real Estate Appraiser Trainee
Maryland License #11740

Page 89

Statement of Limiting Conditions and
Appraiser’s Certification

DEFINITION OF MARKET VALUE: The most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller, each acting prudently, knowledgeably and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby: (1) buyer and seller are typically motivated; (2) both parties are well informed or well advised, and each acting in what he considers his own best interest; (3) a reasonable time is allowed for exposure in the open market; (4) payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto; and (5) the price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions* granted by anyone associated with the sale.

*Adjustments to the comparables must be made for special or creative financing or sales concessions. No adjustments are necessary for those costs which are normally paid by sellers as a result of tradition or law in a market area; these costs are readily identifiable since the seller pays these costs in virtually all sales transactions. Special or creative financing adjustments can be made to the comparable property by comparisons to financing terms offered by a third Party institutional lender that is not already involved in the property or transaction. Any adjustment should not be calculated on a mechanical dollar for dollar cost of the financing or concession but the dollar amount of any adjustment should approximate the market’s reaction to the financing or concessions based on the appraiser’s judgment.

STATEMENT OF LIMITING CONDITIONS AND APPRAISER’S CERTIFICATION

CONTINGENT AND LIMITING CONDITIONS: The appraiser’s certification that appears in the appraisal report is subject to the following conditions:

1. The appraiser will not be responsible for matters of a legal nature that affect either the property being appraised or the title to it. The appraiser assumes that the title is good and marketable and, therefore, will not render any opinions about the title. The property is appraised on the basis of it being under responsible ownership.

2. The appraiser has provided a sketch in the appraisal report to show approximate dimensions of the improvements and the sketch is included only to assist the reader of the report in visualizing the property and understanding the appraiser’s determination of its size.

3. The appraiser has examined the available flood maps that are provided by the Federal Emergency Management Agency (or other data sources) and has noted in the appraisal report whether the subject site is located in an identified Special Flood Hazard Area. Because the appraiser is not a surveyor, he or she makes no guarantees, express or implied, regarding this determination.

4. The appraiser will not give testimony or appear in court because he or she made an appraisal of the property in question, unless specific arrangements to do so have been made beforehand.

5. The appraiser has estimated the value of the land in the cost approach at its highest and best use and the improvements at their contributory value. These separate valuations of the land and improvements must not be used in conjunction with any other appraisal and are invalid if they are so used.

6. The appraiser has noted in the appraisal report any adverse conditions (such as, needed repairs, depreciation, the presence of hazardous wastes, toxic substances, etc.) observed during the inspection of the subject property or that he or she became aware of during the normal research involved in performing the appraisal. Unless otherwise stated in the appraisal report, the appraiser has no knowledge of any hidden or unapparent conditions of the property or adverse environmental conditions (including the presence of hazardous wastes, toxic substances, etc.) that would make the property more or less valuable, and has assumed that there are no such conditions and makes no guarantees or warranties, express or implied, regarding the condition of the property. The appraiser will not be responsible for any such conditions that do exist or for any engineering or testing that might be required to discover whether such conditions exist. Because the appraiser is not an expert in the field of environmental hazards, the appraisal report must not be considered as an environmental assessment of the property.

7. The appraiser obtained the information, estimates, and opinions that were expressed in the appraisal report from sources that he or she considers to be reliable and believes them to be true and correct. The appraiser does not assume responsibility for the accuracy of such items that were furnished by other parties.

8. The appraiser will not disclose the contents of the appraisal report except as provided for in the Uniform Standards of Professional Appraisal Practice.

9. The appraiser has based his or her appraisal report and valuation conclusion for an appraisal that is subject to satisfactory completion, repairs, or alterations on the assumption that completion of the improvements will be performed in a workmanlike manner.

10. The appraiser must provide his or her prior written consent before the lender/client, specified in the appraisal report can distribute the appraisal report (including conclusions about the property value, the appraiser’s identity and professional designations, and references to any professional appraisal organizations or the firm with which the appraiser is associated) to anyone other than the borrower; the mortgagee or its successors and assigns; the mortgage insurer: consultants; professional appraisal organizations: any state or federally approved financial institution: or any department, agency, or instrumentality of the United States or any state or the District of Columbia; except that the lender,/client may distribute the property description section of the report only to data collection or reporting service(s) without, having to obtain the appraiser’s prior written consent. The appraiser’s written consent and approval must also be obtained before the appraisal can be conveyed by anyone to the public through advertising, public relations, news, sales, or other media.

Freddie Mac Form 439 (6/93, 10/98), Page 1 of 2 [Fannie Mae Form 1004B (6/93)]

APPRAISER’S CERTIFICATION: The Appraiser certifies and agrees that:

1. I have researched the subject market area and halve selected a minimum of three recent sales of properties most Similar and Proximate to the subject property for consideration in the sales comparison analysis and have made a dollar adjustment when appropriate to reflect the market reaction to those items of significant variation if a significant item in a comparable property is superior to, or more favorable than, the subject property. I have made a negative adjustment to reduce the adjusted sales price of the comparable and, if a significant item in a comparable property is inferior to or less favorable than the subject property, I have made a positive adjustment to increase the adjusted sales price of the comparable.

2. I have taken into consideration the factors that have an impact on value in my development of the estimate of market value in the appraisal report. I have not knowingly withheld any significant information from the appraisal report and I believe, to the best of my knowledge, that all statements and information in the appraisal report are true and correct.

3. I stated in the appraisal report only my own personal, unbiased, and professional analysis, opinions, and conclusions, which; are subject only to the contingent and limiting conditions specified in this form.

4. I have no present or prospective interest in the property that is the subject to this report, and I have no present or prospective personal interest or bias with respect to the participants in the transaction. I did not base, either partially or completely, my analysis and/or the estimate of market value in the appraisal report on the race, color, religion, sex, handicap, familial status, or national origin of either the prospective owners or occupants of the subject property or of the present owners or occupants of the properties in the vicinity of the subject property.

5. I have no present or contemplated future interest in the subject property, and neither my current or future employment nor my compensation for performing this appraisal is contingent on the appraised value of the property.

6. I was not required to report a predetermined value or direction in value that favors the cause of the client or any related party, the amount of the value estimate, the attainment of a specific result, or the occurrence of a subsequent event in order to receive my compensation and for employment for performing the appraisal. I did not base the appraisal report on a requested minimum valuation, a specific valuation, or the need to approve a specific mortgage loan.

7. I performed this appraisal in conformity with the Uniform Standards of Professional Appraisal Practice that were adopted and promulgated by the Appraisal Standards Board of the Appraisal Foundation and that were in place as of the effective date of this appraisal, with the exception of the departure provision of those Standards, which does not apply. I acknowledge that an estimate of a reasonable time for exposure in the open market is a condition in the definition of market value and the estimate I developed is consistent with the marketing time noted in the neighborhood section of this report, unless I have otherwise stated in the reconciliation section.

8. I have personally inspected the interior and exterior areas of the subject property and the exterior of all properties listed as comparables in the appraisal report. I further certify that I have noted any apparent or known adverse conditions in the subject improvements, on the subject site, or on any site within the immediate vicinity of the subject property of which I am aware and have made adjustments for these adverse conditions in my analysis of the property value to the extent that I had market evidence to support them. I have also commented about the effect of the adverse conditions on the marketability of the subject property.

9. I personally prepared all conclusions and opinions about the real estate that were set forth in the appraisal report. If I relied on significant professional assistance from any individual or individuals in the performance of the appraisal or the preparation of the appraisal report, I have named such individual(s) and disclosed the specific tasks performed by them in the reconciliation section of this appraisal report. I certify that any individual so named is qualified to perform the tasks. I have not authorized anyone to make a change to any item in the report; therefore, if an unauthorized change is made to the appraisal report, I will take no responsibility for it.

SUPERVISORY APPRAISER’S CERTIFICATION: If a supervisory appraiser signed the appraisal report, he or she certifies and agrees that: I directly supervise the appraiser who prepared the appraisal report, have reviewed the appraisal report, agree with the statements and conclusions of the appraiser, agree to be bound by the appraiser’s certifications numbered 4 through 7 above. and am taking full responsibility for the appraisal and the appraisal report.

ADDRESS OF PROPERTY APPRAISED: 9164 Edmonston Road, Greenbelt, MD 20770

APPRAISER:		SUPERVISORY APPRAISER (only if required):
Signature:	/s/ Patrick C. Kerr, MAI, SRA	Signature:
Name:	Patrick C. Kerr, MAI, SRA	Name:
Date Signed:	5/6/04	Date Signed:
State Certification #:	1100	State Certification #:
or State License #:		or State License #:
State:	Maryland	State:
Expiration Date of Certification or License:	12/31/06	Expiration Date of Certification or License:
		o Did      o Did Not Inspect Property

Freddie Mac Form 439 (6/93, 10/98), Page 2 of 2 [Fannie Mae Form 1004B (6/93)]

Springhill Lake Apartments Assumptions and Limiting Conditions

ASSUMPTIONS AND LIMITING CONDITIONS

In conducting this appraisal, we have assumed, except as otherwise noted in our report, as follows:

1.	The title is marketable and free and clear of all liens, encumbrances, encroachments, easements and restrictions. The property is under responsible ownership and competent management and is available for its highest and best use.
2.	There are no existing judgments or pending or threatened litigation that could affect the value of the property.
3.	There are no hidden or undisclosed conditions of the land or of the improvements that would render the property more or less valuable. Furthermore, there is no asbestos in the property.
4.	The revenue stamps placed on any deed referenced herein to indicate the sale price are in correct relation to the actual dollar amount of the transaction.
5.	The property is in compliance with all applicable building, environmental, zoning, and other federal, state and local laws, regulations and codes.
6.	The information furnished by others is believed to be reliable, but no warranty is given for its accuracy.

Our appraisal report is subject to the following limiting conditions, except as otherwise noted in our report.

1.	An appraisal is inherently subjective and represents our opinion as to the value of the property appraised.
2.	The conclusions stated in our appraisal apply only as of the effective date of the appraisal, and no representation is made as to the affect of subsequent events.
3.	No changes in any federal, state or local laws, regulations or codes (including, without limitation, the Internal Revenue Code) are anticipated.
4.	No environmental impact studies were either requested or made in conjunction with this appraisal, and we reserve the right to revise or rescind any of the value opinions based upon any subsequent environmental impact studies. If any environmental impact statement is required by law, the appraisal assumes that such statement will be favorable and will be approved by the appropriate regulatory bodies.
5.	We are not required to give testimony or to be in attendance in court or any government or other hearing with reference to the property without written contractual arrangements having been made relative to such additional employment.
6.	We have made no survey of the property and assume no responsibility in connection with such matters. Any sketch or survey of the property included in this report is for illustrative purposes only and should not be considered to be scaled accurately for size. The appraisal covers the property as described in this report, and the areas and dimensions set forth are assumed to be correct.

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Springhill Lake Apartments Assumptions and Limiting Conditions

7.	No opinion is expressed as to the value of subsurface oil, gas or mineral rights, if any, and we have assumed that the property is not subject to surface entry for the exploration or removal of such materials, unless otherwise noted in our appraisal.
8.	We accept no responsibility for considerations requiring expertise in other fields. Such considerations include, but are not limited to, legal descriptions and other legal matters, geologic considerations, such as soils and seismic stability, and civil, mechanical, electrical, structural and other engineering and environmental matters.
9.	The distribution of the total valuation in this report between land and improvements applies only under the reported highest and best use of the property. The allocations of value for land and improvements must not be used in conjunction with any other appraisal and are invalid if so used. This appraisal report shall be considered only in its entirety. No part of this appraisal report shall be utilized separately or out of context.
10.	Neither all nor any part of the contents of this report (especially any conclusions as to value, the identity of the appraisers, or any reference to the Appraisal Institute) shall be disseminated through advertising media, public relations media, news media or any other means of communication (including without limitation prospectuses, private offering memoranda and other offering material provided to prospective investors) without prior written consent from Integra Realty Resources.
11.	Information, estimates and opinions contained in this report, obtained from sources outside of the office of the undersigned, are assumed to be reliable and have not been independently verified.
12.	Any income and expense estimates contained in this appraisal report are used only for the purpose of estimating value and do not constitute predictions of future operating results.
13.	If the property is subject to one or more leases, any estimate of residual value contained in the appraisal may be particularly affected by significant changes in the condition of the economy, of the real estate industry, or of the appraised property at the time these leases expire or otherwise terminate.
14.	No consideration has been given to personal property located on the premises or to the cost of moving or relocating such personal property; only the real property has been considered.
15.	The current purchasing power of the dollar is the basis for the value stated in our appraisal; we have assumed that no extreme fluctuations in economic cycles will occur.
16.	The value found herein is subject to these and to any other assumptions or conditions set forth in the body of this report but which may have been omitted from this list of Assumptions and Limiting Conditions.
17.	The analyses contained in this report necessarily incorporate numerous estimates and assumptions regarding property performance, general and local business and economic conditions, the absence of material changes in the competitive environment and other matters. Some estimates or assumptions, however, inevitably will not materialize, and unanticipated events and circumstances may occur;

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Springhill Lake Apartments Assumptions and Limiting Conditions

	therefore, actual results achieved during the period covered by our analysis will vary from our estimates, and the variations may be material.
18.	The Americans with Disabilities Act (ADA) became effective January 26, 1992. We have not made a specific survey or analysis of this property to determine whether the physical aspects of the improvements meet the ADA accessibility guidelines. In as much as compliance matches each owner’s financial ability with the cost to cure the non-conforming physical characteristics of a property, we cannot comment on compliance to ADA. Given that compliance can change with each owner’s financial ability to cure non-accessibility, the value of the subject does not consider possible non-compliance. Specific study of both the owner’s financial ability and the cost to cure any deficiencies would be needed for the Department of Justice to determine compliance.
19.	This appraisal report has been prepared for the exclusive benefit of GMAC Commercial Mortgage Corporation, 200 Witmer Road, Horsham, PA, and Freddie Mac. It may not be used or relied upon by any other party. All parties who use or rely upon any information in this report without our written consent do so at their own risk.
20.	No studies have been provided to us indicating the presence or absence of hazardous materials on the site or in the improvements, and our valuation is predicated upon the property being free and clear of any environment hazards.
21.	We have not been provided with any evidence or documentation as to the presence or location of any flood plain areas and/or wetlands. Wetlands generally include swamps, marshes, bogs, and similar areas. We are not qualified to detect such areas. The presence of flood plain areas and/or wetlands may affect the value of the property, and the value conclusion is predicated on the assumption that wetlands are non-existent or minimal.

The preceding value conclusion is subject to the following Extraordinary Assumptions:

1.	Based upon the age of the improvements, there is the possibility that they contain asbestos and/or lead paint. Also, the site presently contains underground fuel storage tanks used for the storage of heating fuel. Our estimate of value is based upon the site being free of environmental hazards, which would negatively impact value.
2.	The value conclusions do not consider the contributory benefit of furniture, fixtures, and equipment such as leasing office and community room furniture, office furniture and equipment, and recreational amenities.
3.	Building plans were incomplete, and “as built” plans and location surveys were not available. Gross building and individual unit rentable areas are based upon information and construction drawings provided by management. We have relied upon measurement information provided by property management. Gross and rentable areas of the subject and comparables should be considered as the best estimates available for description purposes, but should not be relied upon for any other purpose.

Page 93