APARTMENT INVESTMENT & MANAGEMENT CO - 10-K Annual Report

Back to GetFilings.com

1

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------

FORM 10-K

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 OF THE
SECURITIES EXCHANGE ACT OF 1934

FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998
OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 OF THE
SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM TO

COMMISSION FILE NUMBER 1-13232

APARTMENT INVESTMENT AND MANAGEMENT COMPANY
(Exact name of registrant as specified in its charter)

MARYLAND 84-1259577
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization) 80222-4348
1873 SOUTH BELLAIRE STREET, SUITE 1700, (Zip Code)
DENVER, CO
(Address of principal executive offices)

---------------------

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

Securities registered pursuant to Section 12(b) of the Act:

NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
------------------- ---------------------

Class A Common Stock New York Stock Exchange
Class C Cumulative Preferred Stock New York Stock Exchange
Class D Cumulative Preferred Stock New York Stock Exchange
Class G Cumulative Preferred Stock New York Stock Exchange
Class H Cumulative Preferred Stock New York Stock Exchange
Class K Convertible Cumulative Preferred Stock New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: NONE

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

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]

As of March 11, 1999, there were 61,656,837 shares of Class A Common Stock
and no shares of Class B Common Stock outstanding. The aggregate market value of
the voting and non-voting common stock held by non-affiliates of the registrant,
was approximately $2,289.0 million as of March 11, 1999.
---------------------

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the proxy statement for the registrant's 1999 annual meeting of
stockholders are incorporated by reference into Part III of this Annual Report.

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
2

APARTMENT INVESTMENT AND MANAGEMENT COMPANY

TABLE OF CONTENTS

ANNUAL REPORT ON FORM 10-K
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998

ITEM PAGE
- ---- ----

PART I
1. Business.................................................... 1
1998 Developments........................................... 2
Financial Information About Industry Segments............... 6
Operating and Financial Strategies.......................... 6
Growth Strategies........................................... 7
Property Management Strategies.............................. 8
Taxation of the Company..................................... 8
Competition................................................. 8
Regulation.................................................. 9
Insurance................................................... 10
Employees................................................... 10
2. Properties.................................................. 11
3. Legal Proceedings........................................... 12
4. Submission of Matters to a Vote of Security Holders......... 12

PART II

Market for the Registrant's Common Equity and Related
5. Stockholder Matters....................................... 13
6. Selected Financial Data..................................... 15
Management's Discussion and Analysis of Financial Condition
7. and Results of Operations................................. 16
Quantitative and Qualitative Disclosures About Market
7a. Risk...................................................... 27
8. Financial Statements and Supplementary Data................. 28
Changes in and Disagreements with Accountants on Accounting
9. and Financial Disclosure.................................. 28

PART III

10. Directors and Executive Officers of the Registrant.......... 28
11. Executive Compensation...................................... 31
Security Ownership of Certain Beneficial Owners and
12. Management................................................ 31
13. Certain Relationships and Related Transactions.............. 31

PART IV

Exhibits, Financial Statement Schedules and Reports on Form
14. 8-K....................................................... 32

3

PART I

INTRODUCTION

The Private Securities Litigation Reform Act of 1995 provides a "safe
harbor" for forward-looking statements in certain circumstances. Certain
information included in this Report, the company's Annual Report to Shareholders
and other filings (collectively "SEC Filings") under the Securities Act of 1933,
as amended, and the Securities Exchange Act of 1934, as amended (as well as
information communicated orally or in writing between the dates of such SEC
Filings) contains or may contain information that is forward looking, including,
without limitation, statements regarding the effect of acquisitions, the
Company's future financial performance and the effect of government regulations.
Actual results may differ materially from those described in the forward looking
statements and will be affected by a variety of risks and factors including,
without limitation, national and local economic conditions, the general level of
interest rates, terms of governmental regulations that affect the company and
interpretations of those regulations, the competitive environment in which the
company operates, financing risks, including the risk that the company's cash
flows from operations may be insufficient to meet required payments of principal
and interest, real estate risks, including variations of real estate values and
the general economic climate in local markets and competition for tenants in
such markets, acquisition and development risks, including failure of such
acquisitions to perform in accordance with projections, and possible
environmental liabilities, including costs which may be incurred due to
necessary remediation of contamination of properties presently owned or
previously owned by the company. In addition, the company's continued
qualification as a real estate investment trust involves the application of
highly technical and complex provisions of the Internal Revenue Code. Readers
should carefully review the company's financial statements and the notes
thereto, as well as the risk factors described in the SEC filings.

ITEM 1. BUSINESS.

Apartment Investment and Management Company ("AIMCO"), a Maryland
corporation formed on January 10, 1994, is a self-administered and self-managed
REIT engaged in the ownership, acquisition, development, expansion and
management of multi-family apartment properties. As of December 31, 1998, we
owned or managed 379,363 apartment units in 2,147 properties located in 49
states, the District of Columbia and Puerto Rico. On July 24, 1994, AIMCO
completed its initial public offering and engaged in a business combination and
consummated a series of related transactions which enabled it to continue and
expand the property management and related businesses of Property Asset
Management, L.L.C., Limited Liability Company, and its affiliated companies, and
PDI Realty Enterprises, Inc. (collectively, the "AIMCO Predecessors"). Based on
apartment unit data compiled by the National Multi Housing Council, we believe
that, as of December 31, 1998, we were the largest owner and manager of
multifamily apartment properties in the United States. As of December 31, 1998,
we:

- owned or controlled 63,086 units in 242 apartment properties;

- held an equity interest in 170,243 units in 902 apartment properties; and

- managed 146,034 units in 1,003 apartment properties for third party
owners and affiliates.

We conduct substantially all of our operations through our operating
partnership, AIMCO Properties, L.P. Through wholly owned subsidiaries, we act as
the sole general partner of the AIMCO operating partnership. As of December 31,
1998, we owned approximately an 83% interest in the AIMCO operating partnership.
We manage apartment properties for third parties and affiliates through
unconsolidated subsidiaries that we refer to as the "management companies."
Generally, when we refer to "we," "us" or the "Company" in this annual report on
Form 10-K, we are referring to AIMCO, the AIMCO operating partnership, the
management companies and their respective subsidiaries. We refer to interests in
the AIMCO operating partnership that are held by third parties as "OP Units."

1
4

The Company's principal executive offices are located at 1873 South
Bellaire Street, Suite 1700, Denver, Colorado 80222-4348 and its telephone
number is (303) 757-8101.

1998 DEVELOPMENTS

Ambassador Acquisition

On May 8, 1998, Ambassador Apartments, Inc. ("Ambassador") was merged with
and into AIMCO, with AIMCO being the surviving corporation. The purchase price
of $713.6 million was comprised of $90.3 million in cash, $372.0 million of
assumed debt and up to approximately 6.6 million shares of Class A Common Stock
valued at $251.3 million. Pursuant to the Ambassador merger agreement, each
outstanding share of Ambassador common stock was converted into the right to
receive 0.553 shares of AIMCO Class A Common Stock. Concurrently, all
outstanding options to purchase Ambassador common stock were converted into cash
or options to purchase AIMCO Class A Common Stock, at the same conversion ratio.
Contemporaneously with the consummation of the Ambassador merger, a subsidiary
of the AIMCO operating partnership merged with Ambassador's operating
partnership and each outstanding unit of limited partnership interest in the
Ambassador operating partnership was converted into the right to receive 0.553
OP Units. Prior to the merger, Ambassador was a self-administered and
self-managed real estate investment trust engaged in the ownership and
management of garden-style apartment properties leased primarily to middle
income tenants. Ambassador owned 52 apartment communities with a total of 15,728
units located in Arizona, Colorado, Florida, Georgia, Illinois, Tennessee and
Texas, and managed one property containing 252 units for an unrelated third
party.

Insignia Acquisition

On October 1, 1998, Insignia Financial Group, Inc., a Delaware corporation,
was merged with and into AIMCO with AIMCO being the surviving corporation. The
purchase price of $1,125.7 million was comprised of the issuance of up to
approximately 8.9 million shares of Class E Cumulative Convertible Preferred
Stock (the "Class E Preferred Stock") valued at $301.2 million, $670.1 million
in assumed debt and liabilities (including the $50 million special dividend,
assumed liabilities of Insignia Properties Trust and transaction costs), $149.5
million in assumed mandatory redeemable convertible preferred securities, and
$4.9 million in cash. The merger was accounted for as a purchase. The Class E
Preferred Stock entitled the holders thereof to receive the same cash dividends
per share as holders of Class A Common Stock. In addition, on January 15, 1999,
holders of Class E Preferred Stock received a special dividend in an aggregate
amount of approximately $50 million, and all outstanding shares of Class E
Preferred Stock automatically converted into an equal number of shares of Class
A Common Stock.

As a result of the Insignia merger, AIMCO acquired; (i) Insignia's
interests in Insignia Properties Trust, a Maryland REIT ("IPT"), which was a
majority owned subsidiary of Insignia; (ii) Insignia's interest in Insignia
Properties, L.P., IPT's operating partnership ("IPLP"); (iii) 100% of the
ownership of the Insignia entities that provide multifamily property management
and partnership administrative services; (iv) Insignia's interest in multifamily
co-investments; (v) Insignia's ownership of subsidiaries that control
multifamily properties not included in IPT; (vi) Insignia's limited partner
interests in public and private syndicated real estate limited partnerships; and
(vii) assets incidental to the foregoing businesses (collectively, the "Insignia
Multifamily Business").

IPT Merger

As a result of the Insignia merger, AIMCO acquired approximately 51% of the
outstanding shares of beneficial interest of IPT. On February 26, 1999, IPT was
merged into AIMCO. Pursuant to the merger, each of the outstanding shares of IPT
that were not held by AIMCO were converted into the right to receive 0.3601
shares of AIMCO Class A Common Stock, resulting in the issuance of approximately
4.3 million shares of AIMCO Class A Common Stock (valued at approximately $158.8
million).

2
5

Individual Property Acquisitions

During the year ended December 31, 1998, the Company purchased or acquired
control of 30 properties consisting of 6,707 apartment units for total
consideration of $316.5 million. The Company's purchase price consisted of
$172.3 million in assumed mortgage obligations, $96.0 million in cash, and $48.2
million of OP Units.

Tender Offers

During 1998, the Company made separate offers to the limited partners of
308 partnerships to acquire their limited partnerships interests. The Company
paid approximately $84.5 million in cash and OP Units to acquire limited
partnership interests pursuant to the offers.

Property Dispositions

In 1998, the Company sold eleven properties for an aggregate sales price of
$85.3 million. Cash proceeds to the Company from the sales were used to repay a
portion of the Company's outstanding short-term indebtedness. The results of
operations of six of these properties were accounted for by the Company under
the equity method. The Company recognized a gain of approximately $4.7 million
on the disposition of the five consolidated properties.

Debt Assumptions and Financings

During the year ended December 31, 1998, the Company assumed or incurred
new non-recourse indebtedness totalling $544.4 million in connection with the
acquisition of 82 apartment properties.

In January 1998, the Company entered into a new $50 million credit
agreement with Bank of America National Trust and Savings Association and Bank
Boston, N.A. The AIMCO operating partnership is the borrower under the credit
agreement, but all obligations thereunder are guaranteed by AIMCO and certain of
its subsidiaries. In October 1998, the Company amended and restated the credit
agreement. The agreement now provides for a revolving credit facility of up to
$100 million, including a swing line of up to $30 million. The credit facility
matures on September 30, 1999, unless extended, at the discretion of the
lenders. The credit agreement also provides for the conversion of the revolving
facility into a three-year term loan. Under the credit agreement, as amended in
January 1999, loans bear interest at LIBOR or Bank of America's reference rate,
at the election of the Company, plus an applicable margin. The margins range
from 2.25% to 2.75% for a LIBOR rate borrowing and 0.75% to 1.25% for a base
rate borrowing, both dependant upon the total balance outstanding relative to
the calculated borrowing base value. The balance outstanding under the credit
facility was $84.3 million as of December 31, 1998.

In February 1998, the AIMCO operating partnership, entered into a five year
$50 million secured credit facility agreement with Washington Mortgage Financial
Group, Ltd. AIMCO and certain subsidiaries guaranteed loans under the agreement
and the guarantees were secured by certain of their assets, including four
apartment properties and two mortgage notes. Under the agreement, advances to
the AIMCO operating partnership were funded with the proceeds from the sale to
investors of mortgage-backed securities issued by Fannie Mae and secured by the
advance and an interest in the collateral. The interest rate on each advance was
determined by investor bids for such mortgage-backed securities, plus a margin.
In February 1999, the Company terminated the credit facility and repaid all
outstanding borrowings with proceeds from new long-term, fully amortizing
indebtedness secured by certain properties that previously secured the credit
facility.

In October 1998, the AIMCO operating partnership and AIMCO entered into an
interim term loan agreement with Lehman Brothers Inc. and one of its affiliates,
and borrowed $300 million thereunder. The loan is unsecured and matures on
September 30, 1999. The proceeds were used to finance the Insignia merger and
related fees and expenses, to refinance existing indebtedness, and for general
working capital purposes. The loan bears interest at a base rate or the rate at
which eurodollar deposits for one month are offered in the interbank eurodollar
market, plus, in either case, a margin which averages 1.375% to 2.208% in the
case of base rate loans, and 2.375% to 3.208% in the case of eurodollar loans.
The base rate will be the higher of

3
6

(i) the primary rate of Citibank, N.A., (ii) the secondary market rate for three
month certificates of deposit plus 1%, or (iii) the federal funds effective rate
plus 0.5%. In November 1998, the Company used proceeds of $100 million from the
sale of AIMCO's Class J Cumulative Preferred Stock to pay down the loan. As of
December 31, 1998, there was $196 million of indebtedness outstanding under the
loan agreement. In February 1999, net proceeds of $115.0 million from the sale
of 5,000,000 shares of AIMCO's Class K Convertible Cumulative Preferred Stock
were used to further pay down the loan.

In October 1998, as a result of the acquisition of Insignia, AIMCO,
directly or through its subsidiaries, became the owner of approximately 51% of
IPT. Prior to the acquisition, IPT's operating partnership had entered into a
$50 million revolving credit agreement with Lehman Commercial Paper, Inc., as
syndication agent, and First Union National Bank, as administrative agent.
Borrowings under the credit agreement may be used to finance certain permitted
investments and refinance certain other investments. The credit agreement
matures on December 30, 2000. The credit agreement provides for interest at an
annual rate equal to (i) 2.50% plus a rate based on LIBOR or (ii) 0.50% plus a
base rate that is the higher of the prime rate or the Federal Funds rate. As of
December 31, 1998, there was $30 million outstanding under the credit agreement.

In December 1998, the Company completed the refinancing of $222 million in
variable rate tax-exempt debt assumed in conjunction with the May 1998 merger
with Ambassador. The debt was secured by 27 properties located in Texas,
Arizona, Tennessee and Illinois. Through the refinancing, the Company converted
the previous tax-exempt debt to $204 million in fixed rate, fully amortizing
tax-exempt debt secured by 26 properties. The new debt has a weighted average
interest rate of 5.8% and matures in 23 years. The Company also incurred $7.1
million of taxable debt secured by three of the properties, repaid $11.4 million
of the previous tax-exempt debt, released $21.5 million in cash reserves and
impound accounts held by the prior mortgagors, and released two properties that
served as additional collateral for the previous debt.

In February and March 1999, the Company incurred in the aggregate $83.4
million of long-term, fixed rate, fully amortizing mortgage debt secured by 13
properties in separate loan transactions. The Company used the $81.5 million of
net proceeds from the financings to repay debt under the interim loan agreement
with Lehman Brothers Inc., to repay debt under its credit facility with Bank of
America National Trust and Savings Association and Bank, Boston, N.A. and to
provide working capital. As of March 11, 1999, the balance outstanding under the
interim loan agreement was $25 million, under the credit facility was $74.8
million, and under the IPT credit agreement was $45 million. The amount
available under the credit facility at March 11, 1999 was $24 million and under
the IPT credit agreement was $5 million.

4
7

Equity Offerings

In 1998, the Company raised proceeds of over $391 million in three public
offerings and three private placements of equity securities. These transactions
are summarized below:

NUMBER
OF TOTAL PROCEEDS DIVIDEND OR
SHARES IN DISTRIBUTION
TRANSACTION TYPE DATE OR UNITS MILLIONS RATE
- ----------- ------- --------- --------- -------------- -----------------

Class D Cumulative Preferred
Stock of AIMCO................. Public Feb. 1998 4,200,000 $105.00 8.75%
Class G Cumulative Preferred
Stock of AIMCO................. Public Jul. 1998 4,050,000 $101.25 9.375%
Class H Cumulative Preferred
Stock of AIMCO................. Public Aug. 1998 2,000,000 $ 50.00 9.5%
Class J Cumulative Convertible
Preferred Stock of AIMCO....... Private Nov. 1998 1,250,000 $100.00 (1)
Preferred Partnership Units of
Ambassador Apartments, L.P..... Private Dec. 1998 1,400,000 $ 30.85 7.75%
Warrants to purchase AIMCO Class
A Common Stock................. Private Dec. 1998 875,000 $ 4.15 N/A
-------
TOTAL PROCEEDS 1998............................................... $391.25
Class K Convertible Cumulative
Preferred Stock of AIMCO....... Public Feb. 1999 5,000,000 $125.00 (2)

- ---------------

(1) Holders of Class J Preferred Stock are entitled to receive cash dividends at
the rate of 7% per annum of the $100 liquidation preference (equivalent to
$7 per annum per share) for the period from November 6, 1998 until November
15, 1998, 8% per annum of the $100 liquidation preference (equivalent to $8
per annum per share) for the period from November 15, 1998 until November
15, 1999, 9% per annum of the $100 liquidation preference (equivalent to $9
per annum per share) for the period from November 15, 1999 until November
15, 2000, and 9 1/2% per annum of the $100 liquidation preference
(equivalent to $9.50 per annum per share) thereafter.

(2) For three years from the date of original issuance, the Class K Preferred
Stock dividend will be in an amount per share equal to the greater of (i)
$2.00 per year (equivalent to 8% of the $25 liquidation preference), or (ii)
the cash dividends payable on the number of shares of Class A Common Stock
(or portion thereof) into which a share of Class K Preferred Stock is
convertible. Beginning with the third anniversary of the date of original
issuance, the Class K Preferred Stock dividend per share will be increased
to the greater of (i) $2.50 per year (equivalent to 10% of the $25
liquidation preference), or (ii) the cash dividends payable on the number of
shares of Class A Common Stock (or portion thereof) into which a share of
Class K Preferred Stock is convertible.

Pending acquisitions

In the ordinary course of business, the Company engages in discussions and
negotiations regarding the acquisition of apartment properties (including
interests in entities that own apartment properties). The Company frequently
enters into contracts and nonbinding letters of intent with respect to the
purchase of properties. These contracts are typically subject to certain
conditions and permit the Company to terminate the contract in its sole and
absolute discretion if it is not satisfied with the results of its due diligence
investigation of the properties. The Company believes that such contracts
essentially result in the creation of an option on the subject properties and
give the Company greater flexibility in seeking to acquire properties. As of
March 8, 1999, the Company had under contract or letter of intent an aggregate
of 32 multi-family apartment properties with a maximum aggregate purchase price
of $571.1 million, including estimated capital improvements, which, in some
cases, may be paid in the form of assumption of existing debt. All such
contracts are subject to termination by the Company as described above. No
assurance can be given that any

5
8

of these possible acquisitions will be completed or, if completed, that they
will be accretive on a per share basis.

FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS

The Company operates in one industry segment, the ownership and management
of real estate properties. See the consolidated financial statements and notes
thereto included elsewhere in this Annual Report on Form 10-K for financial
information relating to the Company.

OPERATING AND FINANCIAL STRATEGIES

The Company's operating and financing strategies to attempt to meet its
objective of providing long-term, predictable funds from operations ("FFO") per
share of Class A Common Stock, less an allowance for Capital Replacements of
$300 per apartment unit, include the following:

- Acquisition of Properties at Less Than Replacement Cost. AIMCO attempts
to acquire properties at a significant discount to their replacement
cost.

- Geographic Diversification. AIMCO operates in 49 states, the District of
Columbia and Puerto Rico. This geographic diversification insulates the
Company, to some degree, from inevitable downturns in any one market.

- Market Growth. The Company seeks to operate in markets where population
and employment growth are expected to exceed the national average and
where it believes it can become a regionally significant owner or manager
of properties. For the period from 1996 through 1999, annual population
and employment growth rates in AIMCO's five largest regional markets are
forecasted to be 2.2% and 3.6%, respectively.

- Product Diversification. The Company's portfolio of apartment properties
spans a wide range of apartment community types, both within and among
markets.

- Capital Replacement. AIMCO believes that the physical condition and
amenities of its apartment communities are important factors in its
ability to maintain and increase rental rates. The Company allocates
approximately $300 annually per owned apartment unit for capital
replacements, and reserves unexpended amounts for future capital
replacements.

- Debt Financing. AIMCO's strategy is generally to incur debt to increase
its return on equity while maintaining acceptable interest coverage
ratios. AIMCO seeks to maintain a ratio of free cash flow to combined
interest expense and preferred stock dividends of between 2:1 and 3:1,
and a ratio of earnings before interest, income taxes, depreciation and
amortization (with certain adjustments and after a provision of
approximately $300 per owned apartment unit) to debt service of at least
2:1, and to match debt maturities to the character of the assets
financed. For the year ended December 31, 1998, the Company was within
these targets. The Company uses predominantly long-term, fixed-rate and
self-amortizing non-recourse debt in order to avoid the refunding or
repricing risks of short-term borrowings. The Company also uses
short-term debt financing to fund acquisitions and generally expects to
refinance such borrowings with proceeds from equity offerings or
long-term debt financings. As of December 31, 1998, approximately 25.2%
of AIMCO's outstanding debt was short-term debt and 74.8% was long-term
debt. As of March 11, 1999, approximately 9.5% of AIMCO's outstanding
debt was short-term debt and 90.5% was long-term debt.

- Dispositions. From time to time, the Company sells properties that do not
meet its return on investment criteria or that are located in areas where
AIMCO does not believe that the long-term neighborhood values justify the
continued investment in the properties.

- Dividend Policy. AIMCO pays dividends on its Class A Common Stock to
share its profitability with its stockholders. The Company distributed
65.8%, 66.5% and 72.3% of FFO to holders of Class A Common Stock for the
years ended December 31, 1998, 1997 and 1996, respectively. It is the
present policy of the Board of Directors to increase the dividend
annually in an amount equal to one-half of the
6
9

projected increase in FFO, adjusted for capital replacements, subject to
minimum distribution requirements to maintain its REIT status.

GROWTH STRATEGIES

The Company seeks growth through two primary sources -- acquisitions and
internal expansion.

Acquisition Strategies.

The Company believes its acquisition strategies will increase profitability
and predictability of earnings by increasing its geographic diversification,
economies of scale and opportunities to provide ancillary services to tenants at
its properties. Since AIMCO's initial public offering in July 1994, the Company
has completed numerous acquisition transactions, expanding its portfolio of
owned or managed properties from 132 apartment properties with 29,343 units to
2,147 apartment properties with 379,363 units as of December 31, 1998. The
Company acquires additional properties primarily in three ways:

- Direct Acquisitions. AIMCO may directly, including through mergers and
other business combinations, acquire individual properties or portfolios
of properties and controlling interests in entities that own or control
such properties or portfolios. To date, a significant portion of AIMCO's
growth has resulted from the acquisition of other companies that owned or
controlled properties.

- Acquisition of Managed Properties. AIMCO believes that its property
management operations support its acquisition activities. Since AIMCO's
initial public offering, the Company has acquired from its managed
portfolio 15 properties comprising 4,432 units for total consideration of
$155.4 million.

- Increasing its Interest in Partnerships. For properties where AIMCO owns
a general partnership interest in the property-owning partnership, the
Company may seek to acquire, subject to its fiduciary duties, the
interests in the partnership held by third parties for cash or, in some
cases, in exchange for OP Units. AIMCO has completed tender offers with
respect to 308 partnerships and has purchased additional interests in
such partnerships for cash and for OP Units.

Internal Growth Strategies.

The Company pursues internal growth primarily through the following
strategies:

- Revenue Increases. The Company increases rents where feasible and seeks
to improve occupancy rates.

- Redevelopment of Properties. The Company believes redevelopment of
selected properties in superior locations provides advantages over
development of new properties. AIMCO believes that redevelopment
generally allows the Company to maintain rents comparable to new
properties and, compared to development of new properties, can be
accomplished with relatively lower financial risk, in less time and with
reduced delays due to governmental regulation.

- Expansion of Properties. The Company believes that expansion within or
adjacent to properties already owned or managed by the Company also
provides growth opportunities at lower risk than new development. Such
expansion can offer cost advantages to the extent common area amenities
and on-site management personnel can service the property expansions.

- Conversion of Affordable Properties; Improvement of Performance. The
Company believes that it may be able to significantly increase its return
from its portfolio of affordable properties by improving operations at
some of its properties or by converting some of these properties to
conventional properties.

- Ancillary Services. The Company's management believes that its ownership
and management of properties provides it with unique access to a customer
base for the sale of additional services which

7
10

generate incremental revenues. The Company currently provides cable
television, telephone services, appliance rental, and carport, garage and
storage space rental at certain properties.

- Controlling Expenses. Cost reductions are accomplished by local focus on
the regional operating center level and by exploiting economies of scale.
As a result of the size of its portfolio and its creation of regional
concentrations of properties, the Company has the ability to leverage
fixed costs for general and administrative expenditures and certain
operating functions, such as insurance, information technology and
training, over a large property base.

PROPERTY MANAGEMENT STRATEGIES

AIMCO seeks to improve the operating results from its property management
business by, among other methods, combining centralized financial control and
uniform operating procedures with localized property management decision-making
and market knowledge. AIMCO's management operations are organized into 35
regional operating centers. Each of the regional operating centers is supervised
by a Regional Vice-President.

TAXATION OF THE COMPANY

The Company has elected to be taxed as a REIT under the Internal Revenue
Code of 1986, as amended, commencing with its taxable year ended December 31,
1994, and the Company intends to continue to operate in such a manner. The
Company's current and continuing qualification as a REIT depends on its ability
to meet the various requirements imposed by the Internal Revenue Code, through
actual operating results, distribution levels and diversity of stock ownership.

If the Company qualifies for taxation as a REIT, it will generally not be
subject to U.S. federal corporate income tax on its net income that is currently
distributed to stockholders. This treatment substantially eliminates the "double
taxation" (at the corporate and stockholder levels) that generally results from
investment in a corporation. If the Company fails to qualify as a REIT in any
taxable year, its taxable income will be subject to U.S. federal income tax at
regular corporate rates (including any applicable alternative minimum tax). Even
if the Company qualifies as a REIT, it may be subject to certain state and local
income taxes and to U.S. federal income and excise taxes on its undistributed
income.

If in any taxable year the Company fails to qualify as a REIT and incurs
additional tax liability, the Company may need to borrow funds or liquidate
certain investments in order to pay the applicable tax and the Company would not
be compelled to make distributions under the Code. Unless entitled to relief
under certain statutory provisions, the Company would also be disqualified from
treatment as a REIT for the four taxable years following the year during which
qualification is lost. Although the Company currently intends to operate in a
manner designed to qualify as a REIT, it is possible that future economic,
market, legal, tax or other considerations may cause the Company to fail to
qualify as a REIT or may cause the Board of Directors to revoke the REIT
election.

The Company and its stockholders may be subject to state or local taxation
in various state or local jurisdictions, including those in which it or they
transact business or reside. The state and local tax treatment of the Company
and its stockholders may not conform to the U.S. federal income tax treatment.

COMPETITION

There are numerous housing alternatives that compete with the Company's
properties in attracting residents. The Company's properties compete directly
with other multi-family rental apartments and single family homes that are
available for rent in the markets in which the Company's properties are located.
The Company's properties also compete for residents with new and existing homes
and condominiums. The number of competitive properties in a particular area
could have a material effect on the Company's ability to lease apartment units
at its properties and on the rents charged. The Company competes with numerous
real estate companies in acquiring, developing and managing multi-family
apartment properties and seeking tenants to occupy its properties. In addition,
the Company competes with numerous property management companies in the markets
where the properties managed by the Company are located.
8
11

REGULATION

General

Multifamily apartment properties are subject to various laws, ordinances
and regulations, including regulations relating to recreational facilities such
as swimming pools, activity centers and other common areas. Changes in laws
increasing the potential liability for environmental conditions existing on
properties or increasing the restrictions on discharges or other conditions, as
well as changes in laws affecting development, construction and safety
requirements, may result in significant unanticipated expenditures, which would
adversely affect the Company's cash flows from operating activities. In
addition, future enactment of rent control or rent stabilization laws or other
laws regulating multi-family housing may reduce rental revenue or increase
operating costs in particular markets.

HUD Enforcement

A significant number of properties owned by the Company are subject to
regulation by HUD. Under its regulations, HUD reserves the right to approve the
owner and the manager of HUD-insured and HUD-assisted properties, as well as
their "principals" (e.g., general partners, stockholders with a 10% or greater
interest, officers and directors) in connection with the acquisition of a
property, participation in HUD programs or the award of a management contract.
This approval process is commonly referred to as "2530 Clearance." HUD monitors
the performance of properties with HUD-insured mortgage loans. HUD also monitors
compliance with applicable regulations, and takes performance and compliance
into account in approving the acquisition of management of HUD-assisted
properties. In the event of instances of unsatisfactory performance or
regulatory violations, the HUD office with jurisdiction over the applicable
property has the authority to enter a "flag" into the computerized 2530
Clearance system. If one or more flags have been entered, a decision whether to
grant 2530 Clearance is then subject to review by HUD's Multifamily
Participation Review Committee in Washington, D.C. (the "2530 Committee"). As a
result of certain mortgage defaults and unsatisfactory ratings received by NHP
Incorporated in years prior to its acquisition by AIMCO in December 1997, HUD
believes that the 2530 Committee must review any application for 2530 Clearance
filed by AIMCO. On December 18, 1998, AIMCO received approval of approximately
fifty 2530 applications and had no unresolved flags in the 2530 system as of
December 31, 1998.

AIMCO believes that the 2530 Committee will continue to apply the 2530
clearance process to large management portfolios such as AIMCO's with discretion
and flexibility. While there can be no assurance, AIMCO believes that the
unsatisfactory reviews and the mortgage defaults will not have a material impact
on its results of operations or financial condition. If HUD were to disapprove
AIMCO as property manager for one or more affordable properties, AIMCO's ability
to obtain property management revenues from new affordable properties would be
impaired.

Laws Benefitting Disabled Persons

Under the Americans with Disabilities Act of 1990, all places of public
accommodation are required to meet certain Federal requirements related to
access and use by disabled persons. These requirements became effective in 1992.
A number of additional Federal, state and local laws may also require
modifications to the Company's properties, or restrict certain further
renovations of the properties, with respect to access thereto by disabled
persons. For example, the Fair Housing Amendments Act of 1988 requires apartment
properties first occupied after March 13, 1990 to be accessible to the
handicapped. Noncompliance with these laws could result in the imposition of
fines or an award of damages to private litigants and also could result in an
order to correct any non-complying feature, which could result in substantial
capital expenditures. Although the Company believes that its properties are
substantially in compliance with present requirements, it may incur
unanticipated expenses to comply with these laws.

Regulation of Affordable Housing

As of December 31, 1998, the Company owned or controlled 12 properties,
held an equity interest in 462 properties and managed for third parties and
affiliates 578 properties that benefit from governmental

9
12

programs intended to provide housing to people with low or moderate incomes.
These programs, which are usually administered by the United States Department
of Housing and Urban Development ("HUD") or state housing finance agencies,
typically provide mortgage insurance, favorable financing terms or rental
assistance payments to the property owners. As a condition to the receipt of
assistance under these programs, the properties must comply with various
requirements, which typically limit rents to pre-approved amounts. If permitted
rents on a property are insufficient to cover costs, a sale of the property may
become necessary, which could result in a loss of management fee revenue. The
Company must obtain the approval of HUD in order to manage, or acquire a
significant interest in, a HUD-assisted or HUD-insured property. The Company can
make no assurance that it will always receive such approval.

Environmental

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

INSURANCE

Management believes that the Company's properties are covered by adequate
fire, flood and property insurance provided by reputable companies and with
commercially reasonable deductibles and limits.

EMPLOYEES

The Company has a staff of employees performing various acquisition,
redevelopment and management functions. The Company, through the AIMCO operating
partnership and the management companies, has approximately 13,000 employees,
most of whom are employed at the property level. None of the employees are
represented by a union, and the Company has never experienced a work stoppage.
The Company believes it maintains satisfactory relations with its employees.

10
13

ITEM 2. PROPERTIES.

The Company's properties are located in 49 states, Puerto Rico and the
District of Columbia. The properties are managed by four Division
Vice-Presidents controlling 35 regional operating centers. The following table
sets forth information for the regional operating centers as of December 31,
1998:

REGIONAL
OPERATING NUMBER OF NUMBER OF
CENTER DIVISION PROPERTIES UNITS
- --------- --------- ---------- ---------

Chicago, IL................................................. Far West 60 11,744
Denver, CO.................................................. Far West 73 11,478
Kansas City, MO............................................. Far West 97 13,138
Los Angeles, CA............................................. Far West 69 10,239
Oakland, CA................................................. Far West 80 8,931
Phoenix, AZ................................................. Far West 51 13,138
San Diego, CA............................................... Far West 36 5,291
----- -------
466 73,959
Allentown, PA............................................... East 48 7,493
Columbia, SC................................................ East 57 10,011
Greenville, SC.............................................. East 70 8,650
Philadelphia, PA............................................ East 37 11,804
MLG Sub ROC 2............................................... East 27 8,061
Richmond, VA................................................ East 43 11,420
Rockville, MD............................................... East 84 13,053
Maine Sub ROC 1............................................. East 70 2,328
Tarrytown, NY............................................... East 67 9,582
----- -------
503 82,402
Atlanta, GA................................................. Southeast 63 11,896
Boca Raton, FL.............................................. Southeast 35 7,797
Miami, FL................................................... Southeast 49 10,454
Mobile, AL.................................................. Southeast 62 10,136
Nashville, TN............................................... Southeast 63 11,589
Orlando, FL................................................. Southeast 52 12,786
Tampa, FL................................................... Southeast 53 13,075
----- -------
377 77,733
Austin, TX.................................................. West 55 10,452
Columbus, OH................................................ West 57 8,774
Dallas I, TX................................................ West 65 12,773
Dallas II, TX............................................... West 68 13,153
Houston I, TX............................................... West 49 10,458
Houston II, TX.............................................. West 58 13,818
Indianapolis, IN............................................ West 43 9,675
----- -------
395 79,103

11
14

REGIONAL
OPERATING NUMBER OF NUMBER OF
CENTER DIVISION PROPERTIES UNITS
- --------- --------- ---------- ---------

Portfolio:
Senior Living Sub ROC 1..................................... Oxford 8 1,638
Affordable Midwest.......................................... Oxford 44 5,711
Conventional Mideast........................................ Oxford 23 6,342
Conventional Midwest........................................ Oxford 45 10,725
Conventional South.......................................... Oxford 41 10,210
----- -------
161 34,626
Other....................................................... 245 31,540
----- -------
2,147 379,363
===== =======

At December 31, 1998, the Company owned or controlled 242 properties
containing 63,086 units. These properties contain, on average, 261 apartment
units, with the largest property containing 2,113 apartment units. These
properties offer residents a range of amenities, including swimming pools,
clubhouses, spas, fitness centers, tennis courts and saunas. Many of the
apartment units offer design and appliance features such as vaulted ceilings,
fireplaces, washer and dryer hook-ups, cable television, balconies and patios.
In addition, at December 31, 1998, the Company held an equity interest in 902
properties containing 170,243 units, and managed 1,003 other properties
containing 146,034 units. The Company's 2,147 properties contain, on average,
177 apartment units, with the largest property containing 2,899 apartment units.

Substantially all of the properties owned or controlled by the Company are
encumbered by mortgage indebtedness or serve as collateral for the Company's
indebtedness. At December 31, 1998, the Company had aggregate mortgage
indebtedness totaling $1,242.4 million, which was secured by 197 properties with
a combined net book value of $2,185.7 million, having an aggregate weighted
average interest rate of 7.1%. As of December 31, 1998, approximately 25.2% of
AIMCO's outstanding debt was short-term debt and 74.8% was long-term debt. As of
March 11, 1999, approximately 9.5% of AIMCO's outstanding debt was short-term
debt and 90.5% was long-term debt. See the financial statements included
elsewhere in this Annual Report on Form 10-K for additional information about
the Company's indebtedness.

ITEM 3. LEGAL PROCEEDINGS.

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

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

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

None.

12
15

PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS.

AIMCO's Class A Common Stock has been listed and traded on the NYSE under
the symbol "AIV" since July 22, 1994. The following table sets forth the
quarterly high and low sales prices of the Class A Common Stock, as reported on
the NYSE, and the dividends paid by the Company for the periods indicated.

DIVIDENDS
PAID
QUARTER ENDED HIGH LOW (PER SHARE)
------------- ---- --- -----------

1996
March 31, 1996............................................ $21 1/8 $19 3/8 $ 0.425
June 30, 1996............................................. 21 18 3/8 0.425
September 30, 1996........................................ 22 18 3/8 0.425
December 31, 1996......................................... 28 3/8 21 1/8 0.425
1997
March 31, 1997............................................ 30 1/2 25 1/2 0.4625
June 30, 1997............................................. 29 3/4 26 0.4625
September 30, 1997........................................ 36 3/16 28 1/8 0.4625
December 31, 1997......................................... 38 32 0.4625
1998
March 31, 1998............................................ 38 9/16 34 1/4 0.5625
June 30, 1998............................................. 39 7/8 36 1/2 0.5625
September 30, 1998........................................ 41 31 0.5625
December 31, 1998......................................... 37 3/8 30 0.5625
1999
March 31, 1999 (thru March 11, 1999)...................... 41 5/8 35 3/4 0.625(1)

- ---------------

(1) On January 20, 1999, the Company's Board of Directors declared a cash
dividend of $0.625 per share of Class A Common Stock, paid on February 12,
1999 to stockholders of record on February 6, 1998.

On March 11, 1999, there were 61,656,837 shares of Class A Common Stock
outstanding, held by 1,575 stockholders of record.

AIMCO, as a REIT, is required to distribute annually to holders of common
stock at least 95% of its "real estate investment trust taxable income," which,
as defined by the Internal Revenue Code and Treasury regulations, is generally
equivalent to net taxable ordinary income. AIMCO measures its economic
profitability and intends to pay regular dividends to its stockholders based on
FFO during the relevant period. However, the future payment of dividends by
AIMCO will be at the discretion of the Board of Directors and will depend on
numerous factors including AIMCO's financial condition, its capital
requirements, the annual distribution requirements under the provisions of the
Internal Revenue Code applicable to REITs and such other factors as the Board of
Directors deems relevant.

From time to time, AIMCO issues shares of Class A Common Stock in exchange
for OP Units tendered to the AIMCO operating partnership for redemption in
accordance with the terms and provisions of the agreement of limited partnership
of the AIMCO operating partnership. Such shares are issued based on an exchange
ratio of one share for each OP Unit. The shares are issued in exchange for OP
Units in private transactions exempt from registration under the Securities Act
of 1933, as amended (the "Securities Act"), pursuant to Section 4(2) thereof.
During 1998, a total of 275,405 shares of Class A Common Stock were issued in
exchange for OP Units.

On November 6, 1998, AIMCO sold 1,000,000 shares of its Class J Cumulative
Convertible Preferred Stock ("Class J Preferred Stock") in a private placement
for approximately $100.0 million, all of which was used to repay indebtedness
under its interim term loan agreement with Lehman Brothers, Inc. In addition, on

13
16

the same date, AIMCO issued 250,000 shares of Class J Preferred Stock to the
AIMCO operating partnership in a private placement in exchange for 250,000 Class
J Partnership Preferred Units of the AIMCO operating partnership. The shares
were sold in a private transaction exempt from registration under the Securities
Act, pursuant to Section 4(2) thereof.

On December 14, 1998, the Company sold to AEW Targeted Securities Fund,
L.P. (i) 1,400,000 Class B partnership preferred units of a subsidiary of the
AIMCO operating partnership for $30.85 million, and (ii) a warrant to purchase
875,000 shares of Class A Common Stock for $4.15 million. The partnership units
may be redeemed at the option of the holders at any time, and at the option of
the Company under certain circumstances. Any redemption of the units may be
satisfied by delivery of cash, Class A Common Stock or OP Units. The warrant has
an exercise price of $40 per share. The warrant may be exercised at any time,
and expires upon a redemption of the Class B partnership preferred units. The
Company used all of the $35 million of proceeds from these transactions for
general corporate purposes. The partnership units and warrant were sold in
private transactions exempt from registration under the Securities Act, pursuant
to Section 4(2) thereof.

14
17

ITEM 6. SELECTED FINANCIAL DATA

The historical selected financial data for AIMCO for the years ended
December 31, 1998, 1997 and 1996 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" included herein. The historical
selected financial data for AIMCO for the year ended December 31, 1995 and the
period from January 10, 1994 (the date of inception) through December 31, 1994
and for the AIMCO Predecessors for the period January 1, 1994 through July 28,
1994 is based on audited financial statements.

AIMCO
THE COMPANY PREDECESSORS
-------------------------------------------------------------------------- --------------
FOR THE PERIOD FOR THE PERIOD
JANUARY 10, JANUARY 1,
1994 1994
FOR THE YEAR ENDED DECEMBER 31, THROUGH THROUGH
--------------------------------------------------------- DECEMBER 31, JULY 28,
1998 1997 1996 1995 1994 1994
------------ ------------ ------------ ------------ -------------- --------------

OPERATING DATA:
RENTAL PROPERTY OPERATIONS:
Rental and other income......... $ 377,139 $ 193,006 $ 100,516 $ 74,947 $ 24,894 $ 5,805
Property operating expenses..... (147,541) (76,168) (38,400) (30,150) (10,330) (2,263)
Owned property management
expenses...................... (11,013) (6,620) (2,746) (2,276) (711) --
Depreciation.................... (84,635) (37,741) (19,556) (15,038) (4,727) (1,151)
---------- ---------- ---------- -------- -------- -------
133,950 72,477 39,814 27,483 9,126 2,391
---------- ---------- ---------- -------- -------- -------
SERVICE COMPANY BUSINESS:
Management fees and other
income........................ 24,103 13,937 8,367 8,132 3,217 6,533
Management and other expenses... (16,764) (10,373) (5,560) (5,150) (2,211) (6,173)
Corporate overhead allocation... (196) (588) (590) (581) -- --
---------- ---------- ---------- -------- -------- -------
7,143 2,976 2,217 2,401 1,006 360
---------- ---------- ---------- -------- -------- -------
General and administrative
expenses...................... (14,650) (5,396) (1,512) (1,804) (977) (36)
Interest expense................ (89,424) (51,385) (24,802) (13,322) (1,576) (4,214)
Interest income................. 30,450 8,676 523 658 123 --
Equity in losses of
unconsolidated partnerships... (4,854) (1,798) -- -- -- --
Equity in earnings of
unconsolidated subsidiaries... 11,570 4,636 -- -- -- --
Minority interest in other
entities...................... (468) 1,008 (111) -- -- --
Amortization of goodwill........ (8,735) (948) (500) (428) -- --
---------- ---------- ---------- -------- -------- -------
Income from operations.......... 64,982 30,246 15,629 14,988 7,702 (1,499)
Gain on disposition of
properties.................... 4,674 2,720 44 -- -- --
---------- ---------- ---------- -------- -------- -------
Income (loss) before
extraordinary item and
minority interest in operating
partnership................... 69,656 32,966 15,673 14,988 7,702 (1,499)
Extraordinary item -- early
extinguishment of debt........ -- (269) -- -- -- --
---------- ---------- ---------- -------- -------- -------
Income (loss) before minority
interest in operating
partnership................... 69,656 32,697 15,673 14,988 7,702 (1,499)
Minority interest in operating
partnership................... (5,182) (4,064) (2,689) (1,613) (559) --
---------- ---------- ---------- -------- -------- -------
Net income (loss)............... $ 64,474 $ 28,633 $ 12,984 $ 13,375 $ 7,143 $(1,499)
========== ========== ========== ======== ======== =======

15
18

AIMCO
THE COMPANY PREDECESSORS
-------------------------------------------------------------------------- --------------
FOR THE PERIOD FOR THE PERIOD
JANUARY 10, JANUARY 1,
1994 1994
FOR THE YEAR ENDED DECEMBER 31, THROUGH THROUGH
--------------------------------------------------------- DECEMBER 31, JULY 28,
1998 1997 1996 1995 1994 1994
------------ ------------ ------------ ------------ -------------- --------------

OTHER INFORMATION:
Total owned or controlled
properties (end of period).... 242 147 94 56 48 4
Total owned or controlled
apartment units (end of
period)....................... 63,086 40,039 23,764 14,453 12,513 1,711
Total equity apartment units
(end of period)............... 170,243 83,431 19,045 19,594 20,758 29,343
Units under management (end of
period)....................... 146,034 69,587 19,045 19,594 20,758 29,343
Basic earnings per common
share......................... $ 0.84 $ 1.09 $ 1.05 $ 0.86 $ 0.42 N/A
Diluted earnings per common
share......................... $ 0.80 $ 1.08 $ 1.04 $ 0.86 $ 0.42 N/A
Dividends paid per common
share......................... $ 2.25 $ 1.85 $ 1.70 $ 1.66 $ 0.29 N/A
BALANCE SHEET INFORMATION:
Real estate, before accumulated
depreciation.................. $2,802,598 $1,657,207 $ 865,222 $477,162 $406,067 $47,500
Real estate, net of accumulated
depreciation.................. 2,573,718 1,503,922 745,145 448,425 392,368 33,270
Total assets.................... 4,268,285 2,100,510 827,673 480,361 416,739 39,042
Total mortgages and notes
payable....................... 1,660,715 808,530 522,146 268,692 141,315 40,873
Mandatorily redeemable 1994
Cumulative Senior Preferred
Stock......................... -- -- -- -- 96,600 --
Company-obligated mandatory
redeemable convertible
preferred securities of a
subsidiary trust.............. 149,500 -- -- -- -- --
Stockholders' equity............ 1,902,564 1,045,300 215,749 169,032 140,319 (9,345)

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.

OVERVIEW

The following discussion and analysis of the results of operations and
financial condition of the Company should be read in conjunction with the
financial statements incorporated by reference in Item 8 of this Annual Report
on Form 10-K.

RESULTS OF OPERATIONS

Comparison of the Year Ended December 31, 1998 to the Year Ended December 31,
1997

Net Income

The Company recognized net income of $64.5 million, and net income
attributable to common stockholders of $37.9 million, for the year ended
December 31, 1998, compared to net income and net income attributable to common
stockholders of $28.6 million and $26.3 million, respectively, for the year
ended December 31, 1997. Net income attributable to common stockholders
represents net income less dividends on preferred stock.

The increase in net income attributable to common stockholders of $11.6
million, or 44.1%, was primarily the result of the following:

- the increase in net "same store" property results;

- the acquisition of 11,706 units in 44 apartment communities during 1997;

16
19

- the acquisition of 22,459 units in 82 apartment communities during 1998;

- the acquisition of NHP Incorporated ("NHP") in December 1997;

- the acquisition of Ambassador Apartments, Inc. in May 1998;

- the acquisition of the Insignia Multi-family Business in October 1998;
and

- receipt of interest income on general partner loans to unconsolidated
real estate partnerships and notes receivable.

The effect of the above on net income was partially offset by the sale of
five properties in 1998 and five properties in 1997. These factors are discussed
in more detail in the following paragraphs.

Rental Property Operations

Rental and other property revenues from the Company's owned or controlled
properties totaled $377.1 million for the year ended December 31, 1998, compared
to $193.0 million for the year ended December 31, 1997, an increase of $184.1
million, or 95.4%. Rental and other property revenues consisted of the following
(in thousands):

1998 1997
-------- --------

1997 acquisitions........................................... $124,266 $ 36,871
1998 acquisitions........................................... 92,033 --
"Same store" properties..................................... 150,476 136,219
1997 dispositions........................................... -- 4,092
1998 dispositions........................................... 304 8,106
Properties in lease-up after the completion of an expansion
or renovation............................................. 10,060 7,718
-------- --------
Total............................................. $377,139 $193,006
======== ========

Property operating expenses consist of on-site payroll costs, utilities
(net of reimbursements received from tenants), contract services, turnover
costs, repairs and maintenance, advertising and marketing, property taxes and
insurance. Property operating expenses totaled $147.5 million for the year ended
December 31, 1998, compared to $76.2 million for the year ended December 31,
1997, an increase of $71.3 million, or 93.6%. Property operating expenses
consisted of the following (in thousands):

1998 1997
-------- -------

1997 acquisitions........................................... $ 48,570 $15,389
1998 acquisitions........................................... 35,386 --
"Same store" properties..................................... 59,993 52,870
1997 dispositions........................................... -- 1,972
1998 dispositions........................................... 348 3,592
Properties in lease-up after the completion of an expansion
or renovation............................................. 3,244 2,345
-------- -------
Total............................................. $147,541 $76,168
======== =======

Owned property management expenses, representing the costs of managing the
Company's owned or controlled properties, totaled $11.0 million for the year
ended December 31, 1998, compared to $6.6 million for the year ended December
31, 1997, an increase of $4.4 million, or 66.7%. The increase resulted from
acquisitions of properties in 1997 and 1998 and acquisitions of controlling
interests in properties through the NHP, Ambassador and Insignia mergers.

17
20

Service Company Business

Income from the service company business was $7.1 million for the year
ended December 31, 1998, compared to $3.0 million for the year ended December
31, 1997, an increase of $4.1 million or 136.7%. The increase was primarily due
to management contracts acquired in the Insignia merger that are held by the
Company, as well as the transfer of majority-owned management contracts from the
management companies to the AIMCO operating partnership. When the Company owns
at least a 40% interest in a real estate partnership, the management contract
with that real estate partnership is assigned to the AIMCO operating
partnership. In addition, the increase is partially due to additional
partnership and administrative fees resulting from the acquisition of
partnership interests during 1998. The commercial asset management and brokerage
businesses were reorganized as part of the management companies at the start of
1998. The insurance portion of operations and also property management services
were reorganized as part of the management companies, effective July 1, 1998.
The Company's share of income from service company businesses consisted of the
following (in thousands):

1998 1997
-------- -------
(IN THOUSANDS)

Properties managed
Management fees and other income.......................... $ 18,718 $ 9,353
Management and other expenses............................. (13,472) (9,498)
-------- -------
5,246 (145)
-------- -------
Commercial asset management
Management and other income............................... -- 245
Management and other expenses............................. -- (275)
-------- -------
-- (30)
-------- -------
Reinsurance operations
Revenues.................................................. 993 4,228
Expenses.................................................. (255) (360)
-------- -------
738 3,868
-------- -------
Other
Revenues.................................................. 4,392 111
Expenses.................................................. (3,037) (240)
-------- -------
1,355 (129)
-------- -------
Corporate overhead allocation............................... (196) (588)
-------- -------
$ 7,143 $ 2,976
======== =======

General and Administrative Expenses

General and administrative expenses totaled $14.7 million for the year
ended December 31, 1998, compared to $5.4 million for the year ended December
31, 1997, an increase of $9.3 million, or 172.2%. The increase in general and
administrative expenses is primarily due to additional corporate costs and
additional employee salaries associated with the purchase of NHP Real Estate
Companies in June 1997 and the mergers with NHP Incorporated in December 1997,
Ambassador Apartments, Inc. in May 1998 and Insignia Financial Group, Inc. in
October 1998. In addition, due to the growth of the Company, several new
departments have been added including legal, tax and Limited Partnership
administration, as well as increased levels of personnel in the accounting and
finance departments.

Interest Expense

Interest expense, which includes the amortization of deferred finance
costs, totaled $89.4 million for the year ended December 31, 1998, compared to
$51.4 million for the year ended December 31, 1997, an increase of $38.0 million
or 73.9%. The increase was primarily due to interest expense incurred in
connection with the

18
21

acquisition of interests in Ambassador Apartments, Inc. and Insignia Financial
Group, Inc. and interest expense incurred in connection with 1998 and 1997
acquisitions.

Interest income

Interest income totaled $30.4 million for the year ended December 31, 1998,
compared to $8.7 million for the year ended December 31, 1997. The increase is
primarily due to interest earned on the increased average outstanding balances
of general partner loans and notes receivable.

COMPARISON OF THE YEAR ENDED DECEMBER 31, 1997 TO THE YEAR ENDED DECEMBER 31,
1996

The Company recognized net income of $28.6 million and net income
attributable to common stockholders of $26.3 million for the year ended December
31, 1997 compared to net income and net income attributable to common
stockholders of $13.0 million for the year ended December 31, 1996. Net income
attributable to common stockholders represents net income less dividends on
preferred stock. The increase in net income allocable to common stockholders of
$13.3 million, or 102.3%, was primarily the result of the following:

- the acquisition of 10,484 units in 42 apartment communities primarily
during November and December 1996;

- the acquisitions of 11,706 units in 44 apartment communities during 1997;

- the acquisition of interests in the NHP Partnerships including the period
June through December 1997;

- the acquisition of NHP Partnerships in December 1997;

- interest income on general partner loans to unconsolidated real estate
partnerships; and

- the increase in net "same store" property results.

The effect of the above on net income was partially offset by the sale of
four properties in August 1996 and five properties in October 1997. These
factors are discussed in more detail in the following paragraphs.

Rental Property Operations

Rental and other property revenues from the Company's owned or controlled
properties totaled $193.0 million for the year ended December 31, 1997, compared
to $100.5 million for the year ended December 31, 1996, an increase of $92.5
million, or 92.0%. Rental and other property revenues consisted of the following
(in thousands):

1997 1996
-------- --------

1996 acquisitions........................................... $ 68,505 $ 14,970
1997 acquisitions........................................... 22,163 --
"Same store" properties..................................... 78,724 75,069
Acquisitions of interests in the NHP Partnerships........... 15,592 --
1996 dispositions........................................... -- 3,363
1997 dispositions........................................... 4,092 4,719
Properties in lease-up after the completion of an expansion
or renovation............................................. 3,930 2,395
-------- --------
Total............................................. $193,006 $100,516
======== ========

Average monthly rent per occupied unit for the same store properties
increased to $571 at December 31, 1997 from $560 at December 31, 1996, an
increase of 2.0%. Weighted average physical occupancy for the properties
increased to 94.8% at December 31, 1997, from 94.5% at December 31, 1996, an
increase of 0.3%.

19
22

Property operating expenses totaled $76.2 million for the year ended
December 31, 1997, compared to $38.4 million for the year ended December 31,
1996, an increase of $37.8 million, or 98.4%. Property operating expenses
consisted of the following (in thousands):

1997 1996
------- -------

1996 acquisitions........................................... $28,911 $ 5,258
1997 acquisitions........................................... 8,402 --
"Same store" properties..................................... 28,009 28,234
Acquisition of interests in the NHP Partnerships............ 7,304 --
1996 dispositions........................................... -- 1,793
1997 dispositions........................................... 1,972 2,300
Properties in lease-up after the completion of an expansion
or renovation............................................. 1,570 815
------- -------
Total............................................. $76,168 $38,400
======= =======

Owned property management expenses, representing the costs of managing the
Company's owned properties, totaled $6.6 million for the year ended December 31,
1997, compared to $2.7 million for the year ended December 31, 1996, an increase
of $3.9 million or 144.4%. The increase resulted from the acquisition of
properties in 1996 and 1997 and the acquisition of interests in the NHP
Partnerships.

Service Company Business

Income from the service company business was $3.0 million for the year
ended December 31, 1997 compared to $2.2 million for the year ended December 31,
1996, an increase of $0.8 million or 36.4%. The increase is due to the
acquisition by the Company of property management businesses in August and
November 1996, the acquisition of partnership interests which provide for
certain partnership and administrative fees, and a captive insurance subsidiary
acquired in connection with the acquisition of the NHP Real Estate Companies in
June 1997, which were offset by the expiration of the Company's commercial asset
management contracts on March 31, 1997. The Company's share of income from
service company businesses consisted of the following (in thousands):

1997 1996
------- -------

Properties managed
Management fees and other income.......................... $ 9,353 $ 5,679
Management and other expenses............................. (9,498) (4,623)
------- -------
(145) 1,056
------- -------
Commercial asset management
Management and other income............................... 245 1,026
Management and other expenses............................. (275) (339)
------- -------
(30) 687
------- -------
Reinsurance operations
Revenues.................................................. 4,228 1,267
Expenses.................................................. (360) (282)
------- -------
3,868 985
------- -------
Brokerage and other
Revenues.................................................. 111 395
Expenses.................................................. (240) (316)
------- -------
(129) 79
------- -------
Corporate overhead allocation............................... (588) (590)
------- -------
$ 2,976 $ 2,217
======= =======

20
23

Income (loss) from the management of properties for third parties and
affiliates was $(0.1) million for the year ended December 31, 1997 compared to
$1.1 million for the year ended December 31, 1996, a decrease of $1.2 million,
or 109.1%.

Losses from commercial asset management were $30,000 for the year ended
December 31, 1997 compared to income of $0.7 million for the year ended December
31, 1996. The decrease is primarily due to the expiration of certain commercial
management contracts in March 1997.

Income from the reinsurance operations for the year ended December 31, 1997
increased by $2.9 million from the year ended December 31, 1996, due to
increased premiums collected from a larger work force, improved loss experience
and the closure of claims for less than the amounts previously reserved, as well
as the acquisition of the NHP Real Estate Companies, which included the
acquisition of a captive insurance company.

General and Administrative Expenses

General and administrative expenses totaled $5.4 million for the year ended
December 31, 1997 compared to $1.5 million for the year ended December 31, 1996,
an increase of $3.9 million, or 260.0%. The increase in general and
administrative expenses is primarily due to the purchase of the NHP Real Estate
Companies in June 1997 and the merger with NHP Incorporated in December 1997.

Interest Expense

Interest expense, which includes the amortization of deferred finance
costs, totaled $51.4 million for the year ended December 31, 1997, compared to
$24.8 million for the year ended December 31, 1996, an increase of $26.6 million
or 107.3%. The increase was primarily due to interest expense incurred in
connection with the acquisition of interests in the NHP Real Estate Companies
and NHP and interest expense incurred in connection with 1997 and 1996
acquisitions.

Interest Income

Interest income totaled $8.7 million for the year ended December 31, 1997,
compared to $0.5 million for the year ended December 31, 1996. The increase is
primarily due to interest earned on general partner loans to unconsolidated real
estate partnerships acquired in 1997.

LIQUIDITY AND CAPITAL RESOURCES

At December 31, 1998, the Company had $71.3 million in cash and cash
equivalents and $55.8 million of restricted cash, primarily consisting of
reserves and impounds held by lenders for capital expenditures, property taxes
and insurance. In addition, cash, cash equivalents and restricted cash is held
by partnerships and subsidiaries which are not presented on a consolidated
basis. The Company's principal demands for liquidity include normal operating
activities, payments of principal and interest on outstanding debt, capital
improvements, acquisitions of or investments in properties, dividends paid to
its stockholders and distributions paid to limited partners. The Company
considers its cash provided by operating activities to be adequate to meet
short-term liquidity demands.

As of December 31, 1998, 89% of the Company's owned or controlled
properties and 53% of its total assets were encumbered by debt. The Company had
total outstanding indebtedness of $1,660.7 million, of which $1,350.4 million
was secured by properties. The Company's indebtedness is comprised of $843.8
million of secured long-term financing, $398.6 million of secured tax-exempt
bonds and $418.3 in secured and unsecured short-term financing. As of December
31, 1998, approximately 27.8% of the Company's indebtedness bears interest at
variable rates. As of March 11, 1999, approximately 9.5% of the Company's
indebtedness bears interest at variable rates. General Motors Acceptance
Corporation had made 85 loans (the "GMAC Loans") to property owning partnerships
of the Company, each of which is secured by the property owned by such
partnership. The 85 GMAC Loans had an aggregate outstanding principal balance of
$175.2 million as of December 31, 1998. Certain GMAC Loans are
cross-collateralized with certain other GMAC Loans. Other

21
24

than certain GMAC Loans, none of the Company's debt is subject to
cross-collateralization provisions. The weighted average interest rate on the
Company's long-term, secured, tax-exempt notes payable was 7.0% with a weighted
average maturity of 11.7 years as of December 31, 1998. The weighted average
interest rate on the Company's secured and unsecured short-term financing was
7.2% as of December 31, 1998.

In February 1999, the $50 million credit facility with Washington Mortgage
Financial Group, Ltd. was terminated and all outstanding indebtedness was repaid
with the proceeds from new, long-term, fully amortizing indebtedness secured by
properties that previously secured the credit facility.

In February and March 1999, the Company incurred in the aggregate $83.4
million of long-term, fixed rate, fully amortizing mortgage debt secured by 13
properties in separate loan transactions. The Company used the $81.5 million of
net proceeds from the financings to repay debt under the interim loan agreement
with Lehman Brothers Inc., to repay debt under its credit facility with Bank of
America National Trust and Savings Association and Bank Boston, N.A. and to
provide working capital. As of March 11, 1999, the balance outstanding under the
interim loan agreement was $25 million, under the credit facility was $74.8
million, and under the IPT credit agreement was $45 million. The amount
available under the credit facility at March 11, 1999 was $24 million.

The Company expects to meet its long-term liquidity requirements, such as
refinancing debt and property acquisitions, through long-term borrowings, both
secured and unsecured, the issuance of debt or equity securities (including OP
Units) and cash generated from operations. In August 1998, AIMCO and the AIMCO
operating partnership filed a shelf registration statement with the Securities
and Exchange Commission ("SEC") with respect to an aggregate of $1,268 million
of debt and equity securities of AIMCO (of which $268 million was carried
forward from AIMCO's 1997 shelf registration statement) and $500 million of debt
securities of the AIMCO operating partnership. The registration statement was
declared effective by the SEC on December 10, 1998. As of December 31, 1998, the
Company had $1,268 million available and the AIMCO operating partnership had
$500 million available from this registration statement. On February 18, 1999,
the Company raised net proceeds of $120.6 million in a public offering. The
offering reduced the amount remaining available to AIMCO under the shelf
registration statement to $1,143 million. All proceeds were used to further
reduce the balance outstanding under the Lehman interim loan. The Company
expects to finance pending acquisition of real estate interests with the
issuance of equity securities and debt.

CAPITAL EXPENDITURES

For the year ended December 31, 1998, the Company spent $29.0 million for
Capital Replacements (expenditures for routine maintenance of a property), $28.1
million for Initial Capital Expenditures ("ICE", expenditures at a property that
have been identified, at the time the property is acquired, as expenditures to
be incurred within one year of the acquisition), and $20.1 million for
construction and capital enhancements (amenities that add a material new feature
or revenue source at a property). These expenditures were funded by borrowings
under the Company's primary credit facility, working capital reserves and net
cash provided by operating activities. During 1999, the Company will provide an
allowance for capital replacements of $300 per apartment unit. ICE and capital
enhancements will primarily be funded by cash from operating activities and
borrowings under the Company's primary credit facility.

22
25

The Company's accounting treatment of various capital and maintenance costs
is detailed in the following table:

DEPRECIABLE LIFE
EXPENDITURE ACCOUNTING TREATMENT IN YEARS
- ----------- -------------------- ----------------

Initial capital expenditures........................ capitalize 5 to 30
Capital enhancements................................ capitalize 5 to 30
Capital replacements:
Carpet/vinyl replacement............................ capitalize 5
Carpet cleaning..................................... expense N/A
Major appliance replacement (refrigerators, stoves, capitalize 5
dishwashers, washers/dryers)......................
Cabinet replacement................................. capitalize 5
Major new landscaping............................... capitalize 5
Seasonal plantings and landscape replacements....... expense N/A
Roof replacements................................... capitalize 30
Roof repairs........................................ expense N/A
Model furniture..................................... capitalize 5
Office equipment.................................... capitalize 5
Exterior painting, significant...................... capitalize 5
Interior painting................................... expense N/A
Parking lot repairs................................. expense N/A
Parking lot repaving................................ capitalize 30
Equipment repairs................................... expense N/A
General policy for capitalization................... capitalize amounts various
in excess of $250

FUNDS FROM OPERATIONS

The Company measures its economic profitability based on FFO, less a
reserve for Capital Replacements of $300 per apartment unit. The Company's
management believes that FFO, less such a reserve, provides investors with an
understanding of the Company's ability to incur and service debt and make
capital expenditures. The Board of Governors of the National Association of Real
Estate Investment Trusts ("NAREIT") defines FFO as net income (loss), computed
in accordance with generally accepted accounting principles ("GAAP"), excluding
gains and losses from debt restructuring and sales of property, plus real estate
related depreciation and amortization (excluding amortization of financing
costs), and after adjustments for unconsolidated partnerships and joint
ventures. The Company calculates FFO based on the NAREIT definition, as adjusted
for minority interest in the AIMCO operating partnership, amortization of
goodwill, the non-cash deferred portion of the income tax provision for
unconsolidated subsidiaries and less the payment of dividends on preferred
stock. FFO should not be considered an alternative to net income or net cash
flows from operating activities, as calculated in accordance with GAAP, as an
indication of the Company's performance or as a measure of liquidity. FFO is not
necessarily indicative of cash available to fund future cash needs. In addition,
there can be no assurance that the Company's basis for computing FFO is
comparable with that of other real estate investment trusts.

23
26

For the years ended December 31, 1998, 1997 and 1996, the Company's FFO is
calculated as follows (amounts in thousands):

1998 1997 1996
--------- --------- --------

Income before minority interest in operating
partnership...................................... $ 69,656 $ 32,697 $ 15,673
Extraordinary item................................. -- 269 --
Gain on disposition of properties.................. (4,674) (2,720) (44)
Real estate depreciation, net of minority
interests........................................ 80,369 33,751 19,056
Real estate depreciation related to unconsolidated
entities......................................... 34,840 9,864 --
Amortization of goodwill........................... 11,401 948 500
Amortization of recoverable amount of management
contracts........................................ 14,776 1,587 --
Deferred taxes..................................... 9,215 4,894 --
Preferred stock dividends.......................... (20,701) (135) --
Preferred OP Unit distribution..................... (136) -- --
--------- --------- --------
Funds From Operations (FFO)........................ $ 194,746 $ 81,155 $ 35,185
========= ========= ========
Weighted average number of common shares, common
share equivalents and OP Units outstanding:
Common stock..................................... 45,187 24,055 12,411
Common stock equivalents......................... 2,437 381 16
Preferred stock convertible into common stock.... 2,463 1,006 --
OP Units......................................... 6,732 3,677 2,567
--------- --------- --------
56,819 29,119 14,994
========= ========= ========
CASH FLOW INFORMATION:
Cash flow provided by operating activities......... $ 148,414 $ 73,032 $ 38,806
Cash flow used in investing activities............. (328,321) (717,663) (88,144)
Cash flow provided by financing activities......... 214,124 668,549 60,129

CONTINGENCIES

HUD Enforcement

In October 1997, NHP received a subpoena from the HUD Inspector General,
which requested documents relating to any arrangement whereby NHP or any of its
affiliates provides or has provided compensation to owners of HUD multi-family
projects in exchange for or in connection with property management of a HUD
project. AIMCO believes that other owners and managers of HUD projects have
received similar subpoenas. Documents provided by AIMCO to the HUD Inspector
General relating to certain of NHP acquisitions of property management rights
for HUD projects may be responsive to the subpoena. AIMCO believes that its
operations are in compliance, in all material respects, with all laws, rules and
regulations relating to HUD-assisted or HUD-insured properties. Effective
February 13, 1998, counsel for AIMCO and the U.S. Attorney for the Northern
District of California entered into a Tolling Agreement related to certain civil
claims the government may have against AIMCO. Although no action has been
initiated against AIMCO or, to AIMCO's knowledge, any owner of a HUD property
managed by AIMCO, if any such action is taken in the future, it could ultimately
affect existing arrangements with respect to HUD projects, affect AIMCO's
ability to receive 2530 Clearances or otherwise have a material adverse effect
on AIMCO's results of operations. HUD also has the authority to suspend or deny
property owners and managers from participation in HUD programs with respect to
additional assistance within a geographic region through imposition of a Limited
Denial of Participation by any HUD office or nationwide for violations of HUD
regulatory requirements.

24
27

Year 2000 Compliance

GENERAL DESCRIPTION OF THE YEAR 2000 ISSUE AND THE NATURE AND EFFECTS OF
THE YEAR 2000 ON INFORMATION TECHNOLOGY (IT) AND NON-IT SYSTEMS

The Year 2000 issue is the result of computer programs being written using
two digits rather than four digits to define the applicable year. Any of the
Company's computer programs or hardware that have date-sensitive software or
embedded chips may recognize a date using "00" as the year 1900 rather than the
year 2000. This could result in a system failure or miscalculations causing
disruptions of operations, including, among other things, a temporary inability
to process transactions, send invoices, or engage in similar normal business
activities.

Over the past two years, the Company has determined that it will be
required to modify or replace significant portions of its software and certain
hardware so that those systems will properly utilize dates beyond December 31,
1999. The Company presently believes that with modifications or replacements of
existing software and certain hardware, the Year 2000 issue can be mitigated.
However, if such modifications and replacements are not made, or are not
completed in time, the Year 2000 issue could have a material impact on the
operations of the Company.

The Company's plan to resolve Year 2000 issues involves four phases:
assessment, remediation, testing, and implementation. To date, the Company has
fully completed its assessment of all information systems that could be
significantly affected by the Year 2000, and has begun the remediation, testing
and implementation phases on both hardware and software systems. Assessments are
continuing in regards to embedded systems. The status of each is detailed below.

STATUS OF PROGRESS IN BECOMING YEAR 2000 COMPLIANT, INCLUDING TIMETABLE FOR
COMPLETION OF EACH REMAINING PHASE

COMPUTER HARDWARE

During 1997 and 1998, AIMCO identified all of the computer systems at risk
and formulated a plan to repair or replace each of the affected systems. During
1997, when AIMCO merged with NHP, the mainframe system used by NHP was Year 2000
compliant. In August 1998, the Year-2000 compliant system became fully
functional for the entire Company.

In addition to the mainframe, PC-based network servers, routers and desktop
PCs were analyzed for compliance. AIMCO has begun to replace each of the
non-compliant network connections and desktop PCs and, as of December 31, 1998,
had completed approximately 75% of this effort.

The total cost to replace the PC-based network servers, routers and desktop
PCs is expected to be approximately $1.5 million, of which $1.3 million has been
incurred to date. The remaining network connections and desktop PCs are expected
to be upgraded to Year 2000 compliant systems by March 31, 1999.

COMPUTER SOFTWARE

AIMCO utilizes a combination of off-the-shelf, commercially available
software programs as well as custom-written programs that are designed to fit
specific needs. Both of these types of programs were studied, and implementation
plans written and executed with the intent of repairing or replacing any
non-compliant software programs.

In 1997, when AIMCO merged with NHP, the core financial system used by NHP
was Year 2000 compliant. During 1998, AIMCO integrated all of its core financial
systems to this compliant system for general ledger and financial reporting
purposes.

In 1997, AIMCO determined that the software used for property management
and rent collection was not Year 2000 compliant. During 1998, AIMCO implemented
a Year 2000 compliant system at each of its owned or managed properties, at a
cost of $1.4 million. During 1998, AIMCO acquired 82 properties and acquired the
Insignia multi-family business. Insignia owned or managed 1,100 properties. As
properties are
25
28

acquired, AIMCO converts the existing property management and rent collection
systems to AIMCO's Year 2000 compliant systems. The estimated additional costs
to convert such systems at all recently acquired properties, including those
acquired from Insignia, is $200,000, and the implementation and testing process
is expected to be completed by March 31, 1999.

The final software area is the office software and server operating
systems. AIMCO has upgraded all non-compliant office software systems on each PC
and has upgraded 80% of the server operating systems. The remaining server
operating systems are planned to be upgraded to be Year 2000 compliant by March
31, 1999.

OPERATING EQUIPMENT

AIMCO has operating equipment, primarily at the property sites, which
needed to be evaluated for Year 2000 compliance. In September 1997, AIMCO began
taking a census and inventory of embedded systems (including those devices that
use time to control systems and machines at specific properties, for example,
elevators, heating, ventilating and air conditioning systems, security and alarm
systems, etc.)

The Company has chosen to focus its attention mainly upon security systems,
elevators, heating, ventilating and air conditioning systems, telephone systems
and switches, and sprinkler systems. While this area is the most difficult to
fully research adequately, management has not yet found any major non-
compliance issues that put AIMCO at risk financially or operationally. AIMCO
intends to have a third-party conduct an audit of these systems and report their
findings by March 31, 1999.

Any of the above operating equipment that has been found to be
non-compliant to date has been replaced or repaired. To date, these have
consisted only of security systems and phone systems. As of December 31, 1998,
AIMCO has evaluated approximately 86% of the operating equipment for Year 2000
compliance.

The total cost incurred as of December 31, 1998 to replace or repair the
operating equipment was approximately $70,000. AIMCO estimates the cost to
replace or repair any remaining operating equipment is approximately $325,000,
and AIMCO expects to be completed by April 30, 1999.

AIMCO continues to have "awareness campaigns" throughout the organization
designed to raise awareness and report any possible compliance issues regarding
operating equipment within the enterprise.

NATURE AND LEVEL OF IMPORTANCE OF THIRD PARTIES AND THEIR EXPOSURE TO THE
YEAR 2000

AIMCO continues to conduct surveys of its banking and other vendor
relationships to assess risks regarding their Year 2000 readiness. AIMCO has
banking relationships with three major financial institutions, all of which have
indicated their compliance efforts will be complete before May 1999. AIMCO has
updated data transmission standards with two of the three financial
institutions. AIMCO's contingency plan in this regard is to move accounts from
any institution that cannot be certified Year 2000 compliant by June 1, 1999.

The Company does not rely heavily on any single vendor for goods and
services, and does not have significant suppliers and subcontractors who share
information systems with the Company (external agents). To date, the Company is
not aware of any external agent with a Year 2000 compliance issue that would
materially impact the Company's results of operations, liquidity, or capital
resources. However, the Company has no means of ensuring that external agents
will be Year 2000 compliant.

Management does not believe that the inability of external agents to
complete their Year 2000 remediation process in a timely manner will have a
material impact on the financial position or results of operations of the
Company. However, the effect of non-compliance by external agents is not readily
determinable.

COSTS TO ADDRESS YEAR 2000

The total cost of the Year 2000 project is estimated at $3.5 million and is
being funded from operating cash flows. To date, the Company has incurred
approximately $2.8 million ($0.6 million expensed and $2.2 million capitalized
for new systems and equipment) related to all phases of the Year 2000 project.
Of the total remaining project costs, approximately $0.5 million is attributable
to the purchase of new software and
26
29

operating equipment, which will be capitalized. The remaining $0.2 million
relates to repair of hardware and software and will be expensed as incurred.

RISKS ASSOCIATED WITH THE YEAR 2000

Management believes it has an effective program in place to resolve the
Year 2000 issue in a timely manner. As noted above, the Company has not yet
completed all necessary phases of the Year 2000 program. In the event that the
Company does not complete any additional phases, certain worst case scenarios
could occur. The worst case scenarios include elevators, security and heating,
ventilating and air conditioning systems that read incorrect dates and operate
with incorrect schedules (e.g., elevators will operate on Monday as if it were
Sunday). Although such a change would be annoying to residents, it is not
business critical.

In addition, disruptions in the economy generally resulting from Year 2000
issues could also adversely affect the Company. The Company could be subject to
litigation for, among other things, computer system failures, equipment
shutdowns or a failure to properly date business records. The amount of
potential liability and lost revenue cannot be reasonably estimated at this
time.

CONTINGENCY PLANS ASSOCIATED WITH THE YEAR 2000

The Company has contingency plans for certain critical applications and is
working on such plans for others. These contingency plans involve, among other
actions, manual workarounds and selecting new relationships for such activities
as banking relationships and elevator operating systems.

INFLATION

Substantially all of the leases at the Company's apartment properties are
for a period of six months or less, allowing, at the time of renewal, for
adjustments in the rental rate and the opportunity to re-lease the apartment
unit at the prevailing market rate. The short term nature of these leases
generally serves to minimize the risk to the Company of the adverse effect of
inflation and the Company does not believe that inflation has had a material
adverse impact on its revenues.

ITEM 7a. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

The Company had $462.0 million of variable rate debt outstanding at
December 31, 1998, which represents 27.8% of the Company's total outstanding
debt. Based on this level of debt, an increase in interest rates of 1% would
result in the Company's income and cash flows being reduced by $4.6 million on
an annual basis. As of March 11, 1999, approximately 9.5% of the Company's
indebtedness bears interest at variable rates. At December 31, 1998, the Company
had $1,198.7 million of fixed rate debt outstanding, of which debt in an
aggregate amount of $39.8 million, $46.4 million, $41.0 million, $107.0 million
and $54.9 million will mature in the years 1999, 2000, 2001, 2002 and 2003,
respectively.

From time to time, the Company enters into interest rate lock agreements to
obtain what the Company considers advantageous pricing for future anticipated
debt issuances.

The estimated aggregate fair value of the Company's cash and cash
equivalents, receivables, payables and short-term secured and unsecured debt as
of December 31, 1998 is assumed to approximate their carrying value due to their
relatively short terms. Management further believes that, after consideration of
interest rate agreements, the fair market value of the Company's secured
tax-exempt bond debt and secured long-term debt approximates their carrying
value, based on market comparisons to similar types of debt instruments having
similar maturities.
27
30

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The independent auditor's reports, consolidated financial statements and
schedules listed in the accompanying index are filed as part of this report and
incorporated herein by this reference. See "Index to Financial Statements" on
page F-1.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

None.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The information regarding the Company's Directors required by this item is
presented under the caption "Board of Directors and Officers" in AIMCO's proxy
statement for its 1999 annual meeting of stockholders and is incorporated herein
by reference.

The directors and executive officers of the Company as of March 11, 1999
are:

NAME AGE POSITION WITH THE COMPANY
- ---- --- -------------------------

Terry Considine................ 51 Chairman of the Board of Directors and Chief
Executive Officer
Peter K. Kompaniez............. 54 Vice Chairman, President and Director
Joel F. Bonder................. 50 Executive Vice President, General Counsel and
Secretary
Patrick J. Foye................ 42 Executive Vice President
Robert Ty Howard............... 41 Executive Vice President -- Ancillary Services
Steven D. Ira.................. 48 Executive Vice President and Co -- Founder
Paul J. McAuliffe.............. 42 Executive Vice President -- Capital Markets
Thomas W. Toomey............... 38 Executive Vice President -- Finance and
Administration
Harry G. Alcock................ 35 Senior Vice President -- Acquisitions
Troy D. Butts.................. 34 Senior Vice President and Chief Financial Officer
Richard S. Ellwood............. 67 Director, Chairman, Audit Committee
J. Landis Martin............... 53 Director, Chairman, Compensation Committee
Thomas L. Rhodes............... 59 Director
John D. Smith.................. 70 Director

Terry Considine. Mr. Considine has been Chairman of the Board of Directors
and Chief Executive Officer of the Company since July 1994. He is the sole owner
of Considine Investment Co. and prior to July 1994 was owner of approximately
75% of Property Asset Management, L.L.C., Limited Liability Company, a Colorado
limited liability company, and its related entities (collectively, "PAM"), one
of the Company's predecessors. Mr. Considine serves as Chairman and director of
Asset Investors Corporation and Commercial Asset, Inc., two other public real
estate investment trusts. Mr. Considine has been and remains involved as a
principal in a variety of real estate activities, including the acquisition,
renovation, development and disposition of properties. Mr. Considine has also
controlled entities engaged in other businesses such as television broadcasting,
gasoline distribution and environmental laboratories. Mr. Considine received a
B.A. from Harvard College, a J.D. from Harvard Law School and was formerly
admitted as a member of the Massachusetts Bar (inactive).

Mr. Considine has had substantial multifamily real estate experience. From
1975 through July 1994, partnerships or other entities in which Mr. Considine
had controlling interests invested in approximately 35 multifamily apartment
properties and commercial real estate properties. Six of these real estate
assets (four of which were multifamily apartment properties and two of which
were office properties) did not generate sufficient cash flow to service their
related indebtedness and were foreclosed upon by their lenders, causing

28
31

pre-tax losses of approximately $11.9 million to investors and losses of
approximately $2.7 million to Mr. Considine.

Peter K. Kompaniez. Mr. Kompaniez has been Vice Chairman and a director of
AIMCO since July 1994 and was appointed President in July 1997. Mr. Kompaniez
has also served as Chief Operating Officer of NHP and President of NHP Partners
since June 1997. Since September 1993, Mr. Kompaniez has owned 75% of PDI Realty
Enterprises, Inc., a Delaware corporation ("PDI"), one of AIMCO's predecessors,
and serves as its President and Chief Executive Officer. From 1986 to 1993, he
served as President and Chief Executive Officer of Heron Financial Corporation
("HFC"), a United States holding company for Heron International, N.V's real
estate and related assets. While at HFC, Mr. Kompaniez administered the
acquisition, development and disposition of approximately 8,150 apartment units
(including 6,217 units that have been acquired by AIMCO) and 3.1 million square
feet of commercial real estate. Prior to joining HFC, Mr. Kompaniez was a senior
partner with the law firm of Loeb and Loeb where he had extensive real estate
and REIT experience. Mr. Kompaniez received a B.A. from Yale College and a J.D.
from the University of California (Boalt Hall).

Joel F. Bonder. Mr. Bonder was appointed Executive Vice President General
Counsel and Secretary of AIMCO effective December 1997. Prior to joining AIMCO,
Mr. Bonder served as Senior Vice President and General Counsel of NHP from April
1994 until December 1997. Mr. Bonder served as Vice President and Deputy General
Counsel of NHP Incorporated from June 1991 to March 1994 and as Associate
General Counsel of NHP from 1986 to 1991. From 1983 to 1985, Mr. Bonder
practiced with the Washington, D.C. law firm of Lane & Edson, PC. From 1979 to
1983, Mr. Bonder practiced with the Chicago law firm of Ross and Hardies. Mr.
Bonder received a B.A. from the University of Rochester and a J.D. from
Washington University School of Law.

Patrick J. Foye. Mr. Foye was appointed Executive Vice President of AIMCO
in May 1998. He is responsible for acquisitions of partnership securities,
consolidation of minority interest, and corporate and other acquisitions. Prior
to joining AIMCO, Mr. Foye was a Mergers and Acquisitions Partner in the law
firm of Skadden, Arps, Slate, Meagher & Flom LLP from 1989 to 1998 and was
Managing Partner of the Firm's Brussels, Budapest and Moscow offices from 1992
through 1994. Mr. Foye received a B.A. from Fordham College, a J.D. from Fordham
Law School and was Associate Editor of the Fordham Law Review. Mr. Foye is also
Deputy Chairman of the Long Island Power Authority ("LIPA"). Mr. Foye is also a
member of the New York State Privatization Council.

Robert Ty Howard. Mr. Howard was appointed Executive Vice
President -- Ancillary Services in February 1998. Prior to joining AIMCO, Mr.
Howard served as an officer and/or director of four affiliated companies, Hecco
Ventures, Craig Corporation, Reading Company and Decurion Corporation. Prior to
joining AIMCO, Mr. Howard was responsible for venture investment, financing,
mergers and acquisitions activities and investments in commercial real estate,
both nationally and internationally. From 1983 to 1987, he was employed by
Spieker Properties. Mr. Howard received a B.A. from Amherst College, a J.D. from
Harvard Law School and an M.B.A. from Stanford University Graduate School of
Business.

Steven D. Ira. Mr. Ira is a Co-Founder of AIMCO and has served as Executive
Vice President since July 1994. From 1987 until July 1994, he served as
President of PAM. Prior to merging his firm with PAM in 1987, Mr. Ira acquired
extensive experience in property management. Between 1977 and 1981 he supervised
the property management of over 3,000 apartment and mobile home units in
Colorado, Michigan, Pennsylvania and Florida, and in 1981 he joined with others
to form the property management firm of McDermott, Stein and Ira. Mr. Ira served
for several years on the National Apartment Manager Accreditation Board and is a
former president of both the National Apartment Association and the Colorado
Apartment Association. Mr. Ira is the sixth individual elected to the Hall of
Fame of the National Apartment Association in its 54-year history. He holds a
Certified Apartment Property Supervisor (CAPS) and a Certified Apartment Manager
designation from the National Apartment Association, a Certified Property
Manager (CPM) designation from the National Institute of Real Estate Management
(IREM) and is a member of the Boards of Directors of the National Multi-Housing
Council, the National Apartment

29
32

Association and the Apartment Association of Metro Denver. Mr. Ira received a
B.S. from Metropolitan State College in 1975.

Paul J. McAuliffe. Mr. McAuliffe was appointed Executive Vice
President -- Capital Markets in February 1999. Prior to joining AIMCO, Mr.
McAuliffe was Senior Managing Director of Secured Capital Corp and prior to that
time had been a Managing Director of Smith Barney, Inc. from 1993 to 1996, where
he was the senior member of the underwriting team that lead AIMCO's initial
public offering in 1994. Mr. McAuliffe was also a Managing Director and head of
the real estate group at CS First Boston from 1990 to 1993 and he was a
Principal in the real estate group at Morgan Stanley & Co. Inc. where he worked
from 1983 to 1990. Mr. McAuliffe received a B.A. from Columbia College and an
M.B.A. from University of Virginia, Darden School.

Thomas W. Toomey. Mr. Toomey has served as Senior Vice President -- Finance
and Administration of AIMCO since January 1996 and was promoted to Executive
Vice President -- Finance and Administration in March 1997. From 1990 until
1995, Mr. Toomey served in a similar capacity with Lincoln Property Company
("LPC") as Vice President/Senior Controller and Director of Administrative
Services of Lincoln Property Services where he was responsible for LPC's
computer systems, accounting, tax, treasury services and benefits
administration. From 1984 to 1990, he was an audit manager with Arthur Andersen
& Co. where he served real estate and banking clients. Mr. Toomey received a
B.S. in Business Administration/Finance from Oregon State University.

Harry G. Alcock. Mr. Alcock has served as a Vice President since July 1996,
and was promoted to Senior Vice President -- Acquisitions in October 1997, with
responsibility for acquisition and financing activities since July 1994. From
June 1992 until July 1994, Mr. Alcock served as Senior Financial Analyst for PDI
and HFC. From 1988 to 1992, Mr. Alcock worked for Larwin Development Corp., a
Los Angeles based real estate developer, with responsibility for raising debt
and joint venture equity to fund land acquisitions and development. From 1987 to
1988, Mr. Alcock worked for Ford Aerospace Corp. He received his B.S. from San
Jose State University.

Troy D. Butts. Mr. Butts has served as Senior Vice President and Chief
Financial Officer of AIMCO since November 1997. Prior to joining AIMCO, Mr.
Butts served as a Senior Manager in the audit practice of the Real Estate
Services Group for Arthur Andersen LLP in Dallas, Texas. Mr. Butts was employed
by Arthur Andersen LLP for ten years and his clients were primarily
publicly-held real estate companies, including office and multi-family real
estate investment trusts. Mr. Butts holds a Bachelor of Business Administration
degree in Accounting from Angelo State University and is a Certified Public
Accountant.

Richard S. Ellwood. Mr. Ellwood was appointed a director of AIMCO in July
1994. Mr. Ellwood is currently Chairman of the Audit Committee and a member of
the Compensation Committee. Mr. Ellwood is the founder and President of R.S.
Ellwood & Co., Incorporated, a real estate investment banking firm. Prior to
forming R.S. Ellwood & Co., Incorporated in 1987, 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 and Florida
East Coast Industries, Inc.

J. Landis Martin. Mr. Martin was appointed a director of AIMCO in July 1994
and became Chairman of the Compensation Committee on March 19, 1998. Mr. Martin
is a member of the Audit Committee. Mr. Martin has served as President and Chief
Executive Officer and a director of NL Industries, Inc., a manufacturer of
titanium dioxide, since 1987. Mr. Martin has served as Chairman of Tremont
Corporation, a holding company operating through its affiliates Titanium Metals
Corporation and NL Industries, Inc., since August 1990 and as Chief Executive
Officer and a Director of Tremont since 1988. Mr. Martin has served as Chairman
of TIMET, an integrated producer of titanium since 1987 and Chief Executive
Officer since January 1995. From 1990 until its acquisition by a predecessor of
Haliburton Company ("Haliburton") in 1994, Mr. Martin served as Chairman of the
Board and Chief Executive Officer of Baroid Corporation, an

30
33

oilfield service company. In addition to Tremont, NL and TIMET, Mr. Martin is a
director of Haliburton, which is engaged in the petroleum services, hydrocarbon
and engineering industries.

Thomas L. Rhodes. Mr. Rhodes was appointed a Director of AIMCO in July 1994
and is currently a Member of the Audit and Compensation Committees (and served
as Chairman of the Compensation Committee prior to March 19, 1998). Mr. Rhodes
has served as the President and Director of National Review magazine since
November 30, 1992, where he has also served as a Director since 1988. From 1976
to 1992, he held various positions at Goldman, Sachs & Co. and was elected a
General Partner in 1986 and served as a General Partner from 1987 until November
27, 1992. He is currently Vice Chairman of the Board, and a Director of Asset
Investors and Commercial Assets. He also serves as a Director of Delphi
Financial Group and its subsidiaries, Delphi International Ltd., Oracle
Reinsurance Company and The Lynde and Harry Bradley Foundation and is a Trustee
of the Heritage Foundation.

John D. Smith. Mr. Smith was appointed a director of AIMCO in November
1994. Mr. Smith is a member of the Compensation Committee and the Audit
Committee. Mr. Smith is Principal and President of John D. Smith Developments.
Mr. Smith has been a shopping center developer, owner and consultant for over
8.6 million square feet of shopping center projects including Lenox Square in
Atlanta, Georgia. Mr. Smith is a Trustee and former President of the
International Council of Shopping Centers and was selected to be a member of the
American Society of Real Estate Counselors. Mr. Smith served as a director for
Pan-American Properties, Inc. (National Coal Board of Great Britain) formerly
known as Continental Illinois Properties. He also serves as a director of
American Fidelity Assurance Companies and is retained as an advisor by Shop
System Study Society, Tokyo, Japan.

Information required by this item is presented under the caption "Other
Matters-Section 16(a) Compliance" in the Company's proxy statement for its 1999
annual meeting of stockholders and is incorporated herein by reference.

ITEM 11. EXECUTIVE COMPENSATION

The information required by this item is presented under the captions
"Summary Compensation Table," "Option/SAR Grants in Last Fiscal Year" and
"Aggregate Option/SAR Exercises in Last Fiscal Year and Fiscal Year-end
Options/SAR Values" in AIMCO's proxy statement for its 1999 annual meeting of
stockholders and is incorporated herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The information required by this item is presented under the caption
"Security Ownership of Certain Beneficial Owners and Management" in AIMCO's
proxy statement for its 1999 annual meeting of stockholders and is incorporated
herein by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information required by this item is presented under the caption
"Certain Relationships and Transactions" in AIMCO's proxy statement for its 1999
annual meeting of stockholders and is incorporated herein by reference.

31
34

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(a) (1) The financial statements listed in the Index to Financial
Statements on Page F-1 of this report are filed as part of this report and
incorporated herein by reference.

(a) (2) The financial statement schedules listed in the Index to Financial
Statements on Page F-1 of this report are filed as part of this report and
incorporated herein by reference.

(a) (3) The Exhibit Index is included on page 33 of this report and
incorporated herein by reference.

(b) Reports on Form 8-K for the quarter ended December 31, 1998:

Current Report on Form 8-K, dated October 1, 1998, relating to the
completion of the merger of Insignia Financial Group, Inc. with and into
Apartment Investment and Management Company; the conversion of each share of
Class A Common Stock of Insignia Financial Group, Inc. into the right to receive
0.262 shares of Class E Cumulative Convertible Preferred Stock of Apartment
Investment and Management Company; Apartment Investment and Management Company
and AIMCO Properties, L.P.'s entering into an unsecured interim term loan
agreement with an affiliate of Lehman Brothers Inc.; and Apartment Investment
and Management Company's amendment and restatement of its revolving credit
facility with Bank of America National Trust and Savings Association and
BankBoston, N.A.

Current Report on Form 8-K, dated November 2, 1998 (and Amendment Nos. 1, 2
and 3 thereto, filed November 24, 1998, December 7, 1998 and December 14, 1998,
respectively), relating to the acquisition of five multifamily residential
properties from Cirque Property, L.C.; the acquisition of interests in nine
multifamily restricted properties from affiliates of Realty Investment Co.; and
the acquisition of the SunLake Apartments from a related party. The Report
includes the Combined Historical Summary of Gross Income and Direct Operating
Expenses of Cirque Apartment Communities for the year ended December 31, 1997
and the three months ended March 31, 1998 (unaudited), together with the Report
of Independent Auditors; the Combined Historical Summary of Gross Income and
Direct Operating Expenses of Realty Investment Apartment Communities I for the
year ended December 31, 1997 and the six months ended June 30, 1998 (unaudited),
together with the Independent Auditors' Report; the Combined Historical Summary
of Gross Income and Direct Operating Expenses of Realty Investment Apartment
Communities II for the year ended December 31, 1997 and the six months ended
June 30, 1998 (unaudited), together with the Independent Auditors' Report; the
Historical Summary of Gross Income and Direct Operating Expenses of Sun Lake
Apartments for the years ended December 31, 1997, 1996 and 1995 and the nine
months ended September 30, 1998 (unaudited), together with the Independent
Auditor's Report; and certain pro forma financial information.

Current Report on Form 8-K, dated December 21, 1998, relating to the
Company's entering into an Acquisition and Contribution Agreement and Joint
Escrow Instructions with Calhoun Beach Associates II Limited Partnership,
including the Historical Summary of Gross Income and Direct Operating Expenses
of Calhoun Beach Club Apartments for the year ended December 31, 1997 and the
nine months ended September 30, 1998 (unaudited), together with the Independent
Auditor's Report, and certain pro forma information.

32
35

INDEX TO EXHIBITS

EXHIBIT NO. DESCRIPTION
----------- -----------

2.1 -- Second Amended and Restated Agreement and Plan of Merger,
dated as of January 22, 1999, by and between Apartment
Investment and Management Company and Insignia Properties
Trust (Exhibit 2.2 to the Current Report on Form 8-K of
Insignia Properties Trust, dated February 11, 1999, is
incorporated herein by this reference)
2.2 -- Agreement and Plan of Merger, dated as of December 23,
1997, by and between Apartment Investment and Management
Company and Ambassador Apartments, Inc. (Exhibit 2.1 to
AIMCO's Current Report on Form 8-K, dated December 23,
1997, is incorporated herein by this reference)
2.3 -- Amended and Restated Agreement and Plan of Merger, dated
as of May 26, 1998, by and among Apartment Investment and
Management Company, AIMCO Properties, L.P., Insignia
Financial Group, Inc., and Insignia/ESG Holdings, Inc.
(Exhibit 2.1 to AIMCO's Registration Statement on Form
S-4, filed August 5, 1998, is incorporated herein by this
reference)
3.1 -- Charter
3.2 -- Bylaws
4.1 -- Amended and Restated Declaration of Trust of IFT
Financing I (formerly Insignia Financing I), dated as of
November 1, 1996, among Insignia Financial Group, Inc.,
as Sponsor, First Union National Bank of South Carolina,
as Property Trustee, First Union Bank of Delaware, as
Delaware Trustee and Andrew I. Farkas, John K. Lines and
Ronald Uretta as Regular Trustees (Exhibit 4.2 to Form
S-3 of Insignia Financial Group, Inc. dated December 10,
1996, is incorporated herein by this reference)
4.2 -- Indenture for the 6.5% Convertible Subordinated
Debentures, dated as of November 1, 1996, between
Insignia Financial Group, Inc., as Issuer and First Union
National Bank of South Carolina, as Trustee (Exhibit 4.3
to Form S-3 of Insignia Financial Group, Inc., dated
December 10, 1996, is incorporated herein by this
reference)
4.3 -- First Supplemental Indenture, dated as of October 1,
1998, by and among Apartment Investment and Management
Company, Insignia Financial Group, Inc. and First Union
National Bank (formerly First Union National Bank of
South Carolina), as trustee.
10.1 -- Amended and Restated Credit Agreement (Unsecured
Revolver-to-Term Facility), dated as of October 1, 1998,
among AIMCO Properties, L.P., Bank of America National
Trust and Savings Association, and BankBoston, N.A.
(Exhibit 10.1 to AIMCO's Current Report on Form 8-K,
dated October 1, 1998, is incorporated herein by this
reference)
10.2 -- First Amendment to Credit Agreement, dated as of November
6, 1998, by and among AIMCO Properties, L.P., the
financial institutions listed on the signature pages
thereof and Bank of America National Trust and Savings
Association
10.3 -- Promissory Note, dated October 1, 1998, in the principal
amount of $65,000,000 issued by AIMCO Properties, L.P. to
Bank of America National Trust and Savings Association,
and BankBoston, N.A. (Exhibit 10.2 to AIMCO's Current
Report on Form 8-K, dated October 1, 1998, is
incorporated herein by this reference)
10.4 -- Promissory Note, dated October 1, 1998, in the principal
amount of $35,000,000 issued by AIMCO Properties, L.P. to
Bank of America National Trust and Savings Association,
and BankBoston, N.A. (Exhibit 10.3 to AIMCO's Current
Report on Form 8-K, dated October 1, 1998, is
incorporated herein by this reference)
10.5 -- Swing Line Promissory Note, dated October 1, 1998, in the
principal amount of $30,000,000, issued by AIMCO
Properties, L.P. to Bank of America National Trust and
Savings Association, and BankBoston, N.A. (Exhibit 10.4
to AIMCO's Current Report on Form 8-K, dated October 1,
1998, is incorporated herein by this reference)

33
36

EXHIBIT NO. DESCRIPTION
----------- -----------

10.6 -- Payment Guaranty of Non-Preferred Stock Subsidiaries,
dated as of October 1, 1998, by Apartment Investment and
Management Company, AIMCO Holdings QRS, Inc., AIMCO/OTC
QRS, Inc., AIMCO Holdings, L.P., AIMCO-GP, Inc.,
AIMCO-LP, Inc., AIMCO Properties Finance Corp., AIMCO
Somerset, Inc., Ambassador II, L.P., Ambassador X, L.P.,
Ambassador IV, Inc., Ambassador V, Inc., Ambassador
Florida Partners Inc. and A.J. Two, Inc. (Exhibit 10.5 to
AIMCO's Quarterly Report on Form 10-Q for the quarterly
period ending September 30, 1998, is incorporated herein
by this reference)
10.7 -- Payment Guaranty of Preferred Stock Subsidiaries, dated
as of October 1, 1998, by Property Asset Management
Services, Inc., Property Asset Management Services, L.P.,
NHP Management Company and Property Asset Management
Services-California, L.L.C. (Exhibit 10.6 to AIMCO's
Quarterly Report on Form 10-Q for the quarterly period
ending September 30, 1998, is incorporated herein by this
reference)
10.8 -- Payment Guaranty of Non-Preferred Stock Subsidiaries,
dated as of October 1, 1998, by CPF XIV/St. Charleston,
Inc., CPF XIV/Torrey Pines, Inc., CPF XIV/ Sun River,
Inc., CPF XIV/Lakeside Place, Inc., ConCap CCP/IV
Stratford Place Properties, Inc., ConCap CCP/IV River's
Edge Properties, Inc., PRA, Inc. and National Property
Investors, Inc. (Exhibit 10.7 to AIMCO's Quarterly Report
on Form 10-Q for the quarterly period ending September
30, 1998, is incorporated herein by this reference)
10.9 -- Third Amended and Restated Agreement of Limited
Partnership of AIMCO Properties, L.P., dated as of July
29, 1994 as amended and restated as of October 1, 1998
(Exhibit 10.8 to AIMCO's Quarterly Report on Form 10-Q
for the quarterly period ending September 30, 1998, is
incorporated herein by this reference)
10.10 -- First Amendment to the Third Amended and Restated
Agreement of Limited Partnership of AIMCO Properties,
L.P., dated as of November 6, 1998 (Exhibit 10.9 to
AIMCO's Quarterly Report on Form 10-Q for the quarterly
period ending September 30, 1998, is incorporated herein
by this reference)
10.11 -- Second Amendment to the Third Amended and Restated
Agreement of Limited Partnership of AIMCO Properties,
L.P., dated as of December 30, 1998 (Exhibit 10.1 to
Amendment No. 1 to AIMCO's Current Report on Form 8-K/A,
filed February 11, 1999, is incorporated herein by this
reference)
10.12 -- Third Amendment to the Third Amended and Restated
Agreement of Limited Partnership of AIMCO Properties,
L.P., dated as of February 18, 1999
10.13 -- Credit Agreement dated December 30, 1997, by and among
Insignia Properties, L.P., Lehman Commercial Paper Inc.,
as lending agent, First Union National Bank, as
administrative agent, and the lenders from time to party
thereto (Exhibit 10.8 to Form S-4 of Insignia Properties
Trust, filed May 28, 1998, is incorporated herein by this
reference)
10.14 -- Unconditional Guaranty, dated as of December 30, 1997,
made by Insignia Properties Trust in favor of First Union
National Bank (Exhibit 10.9 to Form S-4 of Insignia
Properties Trust, filed May 28, 1998, is incorporated
herein by this reference)
10.15 -- Shareholders Agreement, dated October 1, 1998, by and
among Apartment Investment and Management Company, Andrew
L. Farkas, James A. Aston and Frank M. Garrison (Exhibit
10.4 to AIMCO's Schedule 13D filed on October 15, 1998,
is incorporated herein by this reference)
10.16 -- $300,000,000 Interim Term Loan Agreement, dated as of
October 1, 1998, among Apartment Investment and
Management Company, AIMCO Properties, L.P., the several
lenders from time to time parties thereto, Lehman
Brothers, Inc., and Lehman Commercial Paper Inc.
10.17 -- Subsidiaries Guarantee, dated as October 1, 1998, made by
each of the entities that are signatories thereto in
favor of Lehman Commercial Paper Inc. as administrative
agent for the several banks and other financial
institutions or entities from time to time parties to the
Interim Term Loan Agreement

34
37

EXHIBIT NO. DESCRIPTION
----------- -----------

10.18 -- Preferred Stock Subsidiaries' Guarantee, dated as of
October 1, 1998, made by each of the entities that are
signatories thereto in favor of Lehman Commercial Paper
Inc., as administrative agent for the several banks and
other financial institutions or entities from time to
time parties to the Interim Loan Agreement
10.19 -- Common Stock Purchase Agreement made as of August 26,
1997, by and between Apartment Investment and Management
Company and ABKB/LaSalle Securities Limited Partnership
(Exhibit 99.1 to AIMCO's Current Report on Form 8-K,
dated August 26, 1997, is incorporated herein by this
reference)
10.20 -- Purchase and Sale Agreement and Joint Escrow
Instructions, made and entered into as of August 22,
1997, by and between AIMCO Properties, L.P. and each of
the parties identified on Exhibit "A" attached thereto
(collectively, the "Winthrop Sellers") (Exhibit 99.3 to
AIMCO's Current Report on Form 8-K, dated October 15,
1997, is incorporated herein by this reference)
10.21 -- Letter Agreement, dated October 15, 1997 by and between
AIMCO Properties, L.P. and the Winthrop Sellers (Exhibit
99.6 to AIMCO's Current Report on Form 8-K, dated October
15, 1997, is incorporated herein by this reference)
10.22 -- Summary of Arrangement for Sale of Stock to Executive
Officers (Exhibit 10.104 to AIMCO's Annual Report on Form
10-K for the fiscal year 1996, is incorporated herein by
this reference) *
10.23 -- Apartment Investment and Management Company 1997 Stock
Award and Incentive Plan (Annex A to AIMCO's Proxy
Statement for the Annual Meeting of Stockholders to be
held on April 24, 1997, is incorporated herein by this
reference) *
10.24 -- Amendment No. 1 to the Apartment Investment and
Management Company 1997 Stock Award and Incentive Plan
(Annex A to AIMCO's Proxy Statement for Annual Meeting of
Stockholders to be held on May 8, 1998, is incorporated
herein by this reference) *
10.25 -- Apartment Investment and Management Company 1998
Incentive Compensation Plan (Annex B to AIMCO's Proxy
Statement for Annual Meeting of Stockholders to be held
on May 8, 1998, is incorporated herein by this reference)
*
10.26 -- Employment Contract, executed on July 29, 1994, by and
between AIMCO Properties, L.P. and Peter Kompaniez
(Exhibit 10.44A to AIMCO's Annual Report on Form 10-K for
the fiscal year 1994, is incorporated herein by this
reference)*
10.27 -- Real Estate Acquisition Agreement, dated as of May 22,
1997, by and among Apartment Investment and Management
Company, AIMCO Properties, L.P., Demeter Holdings
Corporation, Phemus Corporation, Capricorn Investors,
L.P., J. Roderick Heller, III and NHP Partners LLC
(Exhibit 2.1 to AIMCO's Current Report on Form 8-K, dated
June 3, 1997, is incorporated herein by this reference)
10.28 -- Contribution Agreement, dated as of January 31, 1998, by
and between Apartment Investment and Management Company
and Terry Considine and Peter K. Kompaniez (Exhibit 2.1
to AIMCO's Current Report on Form 8-K, dated January 31,
1998, is incorporated herein by this reference)*
10.29 -- Amended and Restated Assignment and Assumption Agreement,
dated as of December 7, 1998, by and among Insignia
Properties, L.P. and AIMCO Properties, L.P. (Exhibit 10.1
to the Current Report on Form 8-K of Insignia Properties
Trust, dated February 11, 1999, is incorporated herein by
this reference)

35
38

EXHIBIT NO. DESCRIPTION
----------- -----------

10.30 -- Amended and Restated Indemnification Agreement, dated as
of May 26, 1998, by and between Apartment Investment and
Management Company and Insignia/ESG Holdings, Inc.
(Exhibit 2.2 to AIMCO's Registration Statement on Form
S-4, filed August 5, 1998, is incorporated herein by this
reference.)
10.31 -- Form of Restricted Stock Agreement (1997 Stock Award and
Incentive Plan) (Exhibit 10.11 to AIMCO's Quarterly
Report on Form 10-Q for the quarterly period ending
September 30, 1997, is incorporated herein by this
reference)*
10.32 -- Apartment Investment and Management Company Non-Qualified
Employee Stock Option Plan, adopted August 29, 1996
(Exhibit 10.8 to AIMCO's Quarterly Report on Form 10/Q-A
for the quarterly period ending September 30, 1996, is
incorporated herein by this reference)*
10.33 -- Amended and Restated Apartment Investment and Management
Company Non-Qualified Employee Stock Option Plan (Annex B
to AIMCO's Proxy Statement for the Annual Meeting of
Stockholders to be held on April 24, 1997, is
incorporated herein by this reference)*
10.34 -- Employment Contract executed on July 29, 1994 by and
between AIMCO Properties, LP and Terry Considine (Exhibit
10.44C to AIMCO's Annual Report on Form 10-K for the
fiscal year 1994, is incorporated herein by this
reference)*
10.35 -- Employment Contract executed on July 29, 1994 by and
between AIMCO Properties, LP and Steven D. Ira (Exhibit
10.44D to AIMCO's Annual Report on Form 10-K for the
fiscal year 1994, is incorporated herein by this
reference)*
10.36 -- The 1994 Stock Incentive Plan for Officers, Directors and
Key Employees of Ambassador Apartments, Inc., Ambassador
Apartments, L.P. and Subsidiaries (Exhibit 10.40 to
Ambassador Apartments, Inc. Annual Report on Form 10-K
for the fiscal year 1997, is incorporated herein by this
reference)*
10.37 -- Amendment to the 1994 Stock Incentive Plan for Officers,
Directors and Key Employees of Ambassador Apartments,
Inc., Ambassador Apartments, L.P. and Subsidiaries
(Exhibit 10.41 to Ambassador Apartments, Inc. Annual
Report on Form 10-K for the fiscal year 1997, is
incorporated herein by this reference)*
10.38 -- The 1996 Stock Incentive Plan for Officers, Directors and
Key Employees of Ambassador Apartments, Inc., Ambassador
Apartments, L.P. and Subsidiaries, as amended March 20,
1997 (Exhibit 10.42 to Ambassador Apartments, Inc. Annual
Report on Form 10-K for the fiscal year 1997, is
incorporated herein by this reference)*
10.39 -- Insignia 1992 Stock Incentive Plan, as amended through
March 28, 1994 and November 13, 1995 (Exhibit 10.1 to
Insignia Financial Group, Inc. Annual Report on Form 10-K
for the fiscal year 1997, is incorporated herein by this
reference)*
10.40 -- NHP Incorporated 1990 Stock Option Plan (Exhibit 10.9 to
NHP Incorporated Annual Report on Form 10-K for the
fiscal year 1995, is incorporated herein by this
reference)*
10.41 -- NHP Incorporated 1995 Incentive Stock Option Plan
(Exhibit 10.10 to NHP Incorporated Annual Report on Form
10-K for the fiscal year 1995, is incorporated herein by
this reference)*
10.42 -- Form of Incentive Stock Option Agreement (1997 Stock
Award and Incentive Plan)*
21.1 -- List of Subsidiaries
23.1 -- Consent of Ernst & Young LLP
27.1 -- Financial Data Schedule
99.1 -- Agreement re: disclosure of long-term debt instruments

- ---------------

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

* Management contract or compensatory plan or arrangement.

36
39

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, on the 11th day of
March, 1999.

APARTMENT INVESTMENT AND
MANAGEMENT COMPANY

/s/ TERRY CONSIDINE

------------------------------------
Terry Considine
Chairman of the Board
And Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the date indicated.

SIGNATURE TITLE DATE
--------- ----- ----

/s/ TERRY CONSIDINE Chairman of the Board and Chief March 11, 1999
- ----------------------------------------------------- Executive Officer
Terry Considine

/s/ PETER K. KOMPANIEZ Vice Chairman, President and March 11, 1999
- ----------------------------------------------------- Director
Peter K. Kompaniez

/s/ THOMAS W. TOOMEY Executive Vice President of March 11, 1999
- ----------------------------------------------------- Finance and Administration
Thomas W. Toomey

/s/ PATRICK FOYE Executive Vice President March 11, 1999
- -----------------------------------------------------
Patrick Foye

/s/ TROY D. BUTTS Senior Vice President and Chief March 11, 1999
- ----------------------------------------------------- Financial Officer
Troy D. Butts

/s/ RICHARD S. ELLWOOD Director March 11, 1999
- -----------------------------------------------------
Richard S. Ellwood

/s/ J. LANDIS MARTIN Director March 11, 1999
- -----------------------------------------------------
J. Landis Martin

/s/ THOMAS L. RHODES Director March 11, 1999
- -----------------------------------------------------
Thomas L. Rhodes

/s/ JOHN D. SMITH Director March 11, 1999
- -----------------------------------------------------
John D. Smith

37
40

INDEX TO FINANCIAL STATEMENTS

APARTMENT INVESTMENT AND MANAGEMENT COMPANY

PAGE
----

FINANCIAL STATEMENTS:
Report of Independent Auditors............................ F-2
Consolidated Balance Sheets as of December 31, 1998 and
1997................................................... F-3
Consolidated Statements of Income for the Years Ended
December 31, 1998, 1997 and 1996....................... F-4
Consolidated Statements of Stockholders' Equity for the
Years Ended December 31, 1998, 1997 and 1996........... F-5
Consolidated Statements of Cash Flow for the Years Ended
December 31, 1998, 1997 and 1996....................... F-6
Notes to Consolidated Financial Statements................ F-10

FINANCIAL STATEMENT SCHEDULES:
Schedule III -- Real Estate and Accumulated
Depreciation........................................... F-34
Schedule IV -- Mortgage Loans on Real Estate.............. F-41
All other schedules are omitted because they are not
applicable or the required information is shown in the
financial statements or notes thereto.

F-1
41

REPORT OF INDEPENDENT AUDITORS

Stockholders and Board of Directors
Apartment Investment and Management Company

We have audited the accompanying consolidated balance sheets of Apartment
Investment and Management Company as of December 31, 1998 and 1997, and the
related consolidated statements of income, stockholders' equity and cash flows
for each of the three years in the period ended December 31, 1998. Our audits
also included the consolidated financial statement schedules listed in the Index
at Item 14(a)(2). These financial statements and schedules are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements and schedules based on our audits.

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

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
Apartment Investment and Management Company at December 31, 1998 and 1997, and
the consolidated results of its operations and its cash flows for each of the
three years in the period ended December 31, 1998 in conformity with generally
accepted accounting principles. Also, in our opinion, the related consolidated
financial statement schedules when considered in relation to the basic financial
statements taken as a whole, present fairly, in all material respects the
information set forth therein.

/s/ ERNST & YOUNG LLP

Denver, Colorado
March 11, 1999

F-2
42

APARTMENT INVESTMENT AND MANAGEMENT COMPANY

CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 1998 AND 1997
(IN THOUSANDS, EXCEPT SHARE DATA)

ASSETS

1998 1997
---------- ----------

Real Estate, net of accumulated depreciation of $228,880 and
$153,285.................................................. $2,573,718 $1,503,922
Property held for sale...................................... 27,304 6,284
Investments in and notes receivable from unconsolidated
subsidiaries.............................................. 198,417 84,459
Investments in and notes receivable from unconsolidated real
estate partnerships....................................... 1,036,479 212,150
Cash and cash equivalents................................... 71,305 37,088
Restricted cash............................................. 55,826 24,229
Notes receivable............................................ 33,708 --
Goodwill.................................................... 128,658 125,239
Investments in securities................................... -- 22,144
Other assets................................................ 142,870 84,995
---------- ----------
$4,268,285 $2,100,510
========== ==========

LIABILITIES AND STOCKHOLDERS' EQUITY

Secured notes payable....................................... $ 843,791 $ 681,421
Secured tax-exempt bond financing........................... 398,602 74,010
Unsecured short-term financing.............................. 310,300 --
Secured short-term financing................................ 108,022 53,099
---------- ----------
Total indebtedness................................. 1,660,715 808,530
---------- ----------
Accounts payable, accrued and other liabilities............. 208,300 88,170
Resident security deposits and prepaid rents................ 12,654 10,213
---------- ----------
Total liabilities.................................. 1,881,669 906,913
---------- ----------
Commitments and contingencies............................... -- --
Company-obligated mandatory redeemable convertible preferred
securities of a subsidiary trust.......................... 149,500 --
Minority interest in other entities......................... 185,705 36,335
Minority interest in operating partnership.................. 148,847 111,962
Stockholders' equity
Preferred Stock........................................... 792,468 135,000
Class A Common Stock, $.01 par value, 484,027,500 shares
and 150,000,000 shares authorized, 48,451,388 and
40,439,218 shares issued and outstanding,
respectively............................................ 485 403
Class B Common Stock, $.01 par value, 100,000 and 262,500
shares authorized, none and 162,500 shares issued and
outstanding............................................. -- 2
Additional paid-in capital................................ 1,246,962 977,601
Notes receivable on common stock purchases................ (49,658) (35,095)
Distributions in excess of earnings....................... (87,693) (30,928)
Unrealized loss on investments............................ -- (1,683)
---------- ----------
Total stockholders' equity......................... 1,902,564 1,045,300
---------- ----------
$4,268,285 $2,100,510
========== ==========

See accompanying notes to consolidated financial statements.

F-3
43

APARTMENT INVESTMENT AND MANAGEMENT COMPANY

CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
(IN THOUSANDS, EXCEPT PER SHARE DATA)

1998 1997 1996
--------- -------- --------

RENTAL PROPERTY OPERATIONS
Rental and other property revenues.......................... $ 377,139 $193,006 $100,516
Property operating expenses................................. (147,541) (76,168) (38,400)
Owned property management expense........................... (11,013) (6,620) (2,746)
Depreciation................................................ (84,635) (37,741) (19,556)
--------- -------- --------
Income from property operations............................. 133,950 72,477 39,814
--------- -------- --------
SERVICE COMPANY BUSINESS
Management fees and other income............................ 24,103 13,937 8,367
Management and other expenses............................... (16,764) (10,373) (5,560)
Corporate overhead allocation............................... (196) (588) (590)
--------- -------- --------
Income from service company business........................ 7,143 2,976 2,217
--------- -------- --------
General and administrative expenses......................... (14,650) (5,396) (1,512)
Interest expense............................................ (89,424) (51,385) (24,802)
Interest income............................................. 30,450 8,676 523
Equity in losses of unconsolidated real estate
partnerships.............................................. (4,854) (1,798) --
Equity in earnings of unconsolidated subsidiaries........... 11,570 4,636 --
Minority interest in other entities......................... (468) 1,008 (111)
Amortization of goodwill.................................... (8,735) (948) (500)
--------- -------- --------
Income from operations...................................... 64,982 30,246 15,629
Gain on disposition of properties........................... 4,674 2,720 44
--------- -------- --------
Income before extraordinary item and minority interest in
operating partnership..................................... 69,656 32,966 15,673
Extraordinary item -- early extinguishment of debt.......... -- (269) --
--------- -------- --------
Income before minority interest in operating partnership.... 69,656 32,697 15,673
Minority interest in operating partnership.................. (5,182) (4,064) (2,689)
--------- -------- --------
Net income.................................................. 64,474 28,633 12,984
Net income attributable to preferred stockholders........... 26,533 2,315 --
--------- -------- --------
Net income attributable to common stockholders.............. $ 37,941 $ 26,318 $ 12,984
========= ======== ========
Comprehensive Income
Net income.................................................. $ 64,474 $ 28,633 $ 12,984
Other comprehensive income:
Net unrealized gains on investment in securities.......... -- (1,683) --
--------- -------- --------
Comprehensive income........................................ $ 64,474 $ 26,950 $ 12,984
========= ======== ========
Basic earnings per common share............................. $ 0.84 $ 1.09 $ 1.05
========= ======== ========
Diluted earnings per common share........................... $ 0.80 $ 1.08 $ 1.04
========= ======== ========
Weighted average common shares outstanding.................. 45,187 24,055 12,411
========= ======== ========
Weighted average common shares and common share equivalents
outstanding............................................... 47,624 24,436 12,427
========= ======== ========
Dividends paid per common share............................. $ 2.25 $ 1.85 $ 1.70
========= ======== ========

See accompanying notes to consolidated financial statements.

F-4
44

APARTMENT INVESTMENT AND MANAGEMENT COMPANY

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
(IN THOUSANDS)

CLASS A CLASS B
PREFERRED STOCK COMMON STOCK COMMON STOCK NOTES
----------------- --------------- --------------- ADDITIONAL RECEIVABLE
SHARES SHARES SHARES PAID-IN FROM
ISSUED AMOUNT ISSUED AMOUNT ISSUED AMOUNT CAPITAL OFFICERS
------ -------- ------ ------ ------ ------ ---------- ----------

BALANCE DECEMBER 31, 1995..................... -- $ -- 11,847 $118 585 $ 6 $ 175,211 $ --
Net proceeds from of Class A Common Stock..... -- -- 1,265 13 -- -- 28,123 --
Conversion of Class B Common Stock to Class A
Common Stock................................. -- -- 260 3 (260) (3) -- --
Conversion of Operating Partnership Units to
Class A Common Stock......................... -- -- 212 2 -- -- 3,797 --
Class A Common Stock issued as consideration
for real estate acquired..................... -- -- 704 7 -- -- 15,287 --
Purchase of stock by officers................. -- -- 895 9 -- -- 18,568 (7,140)
Repurchase of Class A Common Stock............ -- -- (206) (2) -- -- (4,253) --
Stock options exercised....................... -- -- 3 -- -- -- 58 --
Net Income.................................... -- -- -- -- -- -- -- --
Dividends paid -- Class A Common Stock........ -- -- -- -- -- -- -- --
------ -------- ------ ---- ---- --- ---------- --------
BALANCE DECEMBER 31, 1996..................... -- -- 14,980 150 325 3 236,791 (7,140)
Net proceeds from issuance of Class A Common
Stock........................................ -- -- 16,367 164 -- -- 509,950 --
Net proceeds from issuance of Preferred
Stock........................................ 750 75,000 -- -- -- -- -- --
Net proceeds from issuance of Class C
Preferred Stock.............................. 2,400 60,000 -- -- -- -- (1,890) --
Repurchase of Class A Common Stock from
officer...................................... -- -- -- -- -- -- (67) 67
Conversion of Class B Common Stock to Class A
Common Stock................................. -- -- 163 1 (163) (1) -- --
Conversion of operating partnership units to
Class A Common Stock......................... -- -- 562 6 -- -- 8,615 --
Purchase of stock by officers................. -- -- 1,149 11 -- -- 34,704 (33,517)
Repayment of notes receivable from officers... -- -- -- -- -- -- -- 14,540
Stock options exercised....................... -- -- 442 4 -- -- 8,411 (9,045)
Warrants exercised............................ -- -- 16 -- -- -- 303 --
Class A Common Stock issued as consideration
for NHP common stock......................... -- -- 6,760 67 -- -- 180,784 --
Net income.................................... -- -- -- -- -- -- -- --
Dividends paid -- Class A Common Stock........ -- -- -- -- -- -- -- --
Dividends paid -- Class B Preferred Stock..... -- -- -- -- -- -- -- --
Unrealized loss on investments................ -- -- -- -- -- -- -- --
------ -------- ------ ---- ---- --- ---------- --------
BALANCE DECEMBER 31, 1997..................... 3,150 135,000 40,439 403 162 2 977,601 (35,095)
Net proceeds from issuances of Preferred
Stock........................................ 11,250 356,250 -- -- -- -- (15,353) --
Repurchase of Class A Common Stock............ -- -- (303) (3) -- -- (11,064) --
Conversion of Class B Common Stock to Class A
Common Stock................................. -- -- 162 2 (162) (2) -- --
Conversion of operating partnership units to
Class A Common Stock......................... -- -- 275 3 -- -- 5,792 --
Purchase of stock by officers and awards of
restricted stock............................. -- -- 640 7 -- -- 23,619 (23,471)
Repayment of notes receivable from officers... -- -- -- -- -- -- -- 8,908
Stock options and warrants exercised.......... -- -- 658 7 -- -- 11,008 --
Class A Common Stock issued as consideration
for Ambassador common stock.................. -- -- 6,580 66 -- -- 251,209 --
Class E Preferred Stock issued as
consideration for Insignia common stock...... 8,424 301,218 -- -- -- -- -- --
Issuance of warrants to purchase Class A
Common Stock................................. -- -- -- -- -- -- 4,150 --
Net Income.................................... -- -- -- -- -- -- -- --
Dividends paid -- Class A Common Stock........ -- -- -- -- -- -- -- --
Dividends paid -- Preferred Stock............. -- -- -- -- -- -- -- --
Unrealized gain (loss) on investments......... -- -- -- -- -- -- -- --
------ -------- ------ ---- ---- --- ---------- --------
BALANCE DECEMBER 31, 1998..................... 22,824 $792,468 48,451 $485 -- $-- $1,246,962 $(49,658)
====== ======== ====== ==== ==== === ========== ========

UNREALIZED
DISTRIBUTIONS GAIN
IN EXCESS (LOSS) ON
OF EARNINGS INVESTMENTS TOTAL
------------- ----------- ----------

BALANCE DECEMBER 31, 1995..................... $ (6,303) $ -- $ 169,032
Net proceeds from of Class A Common Stock..... -- -- 28,136
Conversion of Class B Common Stock to Class A
Common Stock................................. -- -- --
Conversion of Operating Partnership Units to
Class A Common Stock......................... -- -- 3,799
Class A Common Stock issued as consideration
for real estate acquired..................... -- -- 15,294
Purchase of stock by officers................. -- -- 11,437
Repurchase of Class A Common Stock............ -- -- (4,255)
Stock options exercised....................... -- -- 58
Net Income.................................... 12,984 -- 12,984
Dividends paid -- Class A Common Stock........ (20,736) -- (20,736)
-------- ------- ----------
BALANCE DECEMBER 31, 1996..................... (14,055) -- 215,749
Net proceeds from issuance of Class A Common
Stock........................................ -- -- 510,114
Net proceeds from issuance of Preferred
Stock........................................ -- -- 75,000
Net proceeds from issuance of Class C
Preferred Stock.............................. -- -- 58,110
Repurchase of Class A Common Stock from
officer...................................... -- -- --
Conversion of Class B Common Stock to Class A
Common Stock................................. -- -- --
Conversion of operating partnership units to
Class A Common Stock......................... -- -- 8,621
Purchase of stock by officers................. -- -- 1,198
Repayment of notes receivable from officers... -- -- 14,540
Stock options exercised....................... -- -- (630)
Warrants exercised............................ -- -- 303
Class A Common Stock issued as consideration
for NHP common stock......................... -- -- 180,851
Net income.................................... 28,633 -- 28,633
Dividends paid -- Class A Common Stock........ (44,660) -- (44,660)
Dividends paid -- Class B Preferred Stock..... (846) -- (846)
Unrealized loss on investments................ -- (1,683) (1,683)
-------- ------- ----------
BALANCE DECEMBER 31, 1997..................... (30,928) (1,683) 1,045,300
Net proceeds from issuances of Preferred
Stock........................................ -- -- 340,897
Repurchase of Class A Common Stock............ -- -- (11,067)
Conversion of Class B Common Stock to Class A
Common Stock................................. -- -- --
Conversion of operating partnership units to
Class A Common Stock......................... -- -- 5,795
Purchase of stock by officers and awards of
restricted stock............................. -- -- 155
Repayment of notes receivable from officers... -- -- 8,908
Stock options and warrants exercised.......... -- -- 11,015
Class A Common Stock issued as consideration
for Ambassador common stock.................. -- -- 251,275
Class E Preferred Stock issued as
consideration for Insignia common stock...... -- -- 301,218
Issuance of warrants to purchase Class A
Common Stock................................. -- -- 4,150
Net Income.................................... 64,474 -- 64,474
Dividends paid -- Class A Common Stock........ (94,835) -- (94,835)
Dividends paid -- Preferred Stock............. (26,404) -- (26,404)
Unrealized gain (loss) on investments......... -- 1,683 1,683
-------- ------- ----------
BALANCE DECEMBER 31, 1998..................... $(87,693) $ -- $1,902,564
======== ======= ==========

See accompanying notes to consolidated financial statements.

F-5
45

APARTMENT INVESTMENT AND MANAGEMENT COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOW
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
(IN THOUSANDS)

1998 1997 1996
--------- --------- --------

CASH FLOWS FROM OPERATING ACTIVITIES
Net income................................................ $ 64,474 $ 28,633 $ 12,984
--------- --------- --------
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization........................... 101,610 43,520 21,209
Gain on disposition of properties....................... (4,674) (2,720) (44)
Minority interest in operating partnership.............. 5,182 4,064 2,689
Minority interests in other entities.................... 468 (1,008) 111
Equity in losses of unconsolidated partnerships......... 4,854 1,798 --
Equity in earnings of unconsolidated subsidiaries....... (11,570) (4,636) --
Extraordinary loss on early extinguishment of debt...... -- 269 --
Changes in operating assets and operating liabilities... (11,930) 3,112 1,857
--------- --------- --------
Total adjustments................................... 83,940 44,399 25,822
--------- --------- --------
Net cash provided by operating activities........... 148,414 73,032 38,806
--------- --------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of real estate................................... (155,456) (376,315) (26,032)
Additions to real estate.................................. (77,336) (26,719) (19,663)
Proceeds from sale of property held for sale.............. 36,468 22,095 17,147
Additions to property held for sale....................... (2,339) (247) (5,718)
Purchase of NHP common stock, notes receivable, general
limited partnership interests and other assets.......... (56,760) (199,146) (53,878)
Contributions to unconsolidated subsidiaries.............. (13,032) (59,787) --
Advances to unconsolidated partnerships................... -- (42,879) --
Purchase of/additions to notes receivable................. (81,587) (60,575) --
Proceeds from repayments of notes receivable.............. 29,290 -- --
Cash received in connection with acquisitions............. 60,777 -- --
Cash paid for merger related costs........................ (78,568) -- --
Distributions from investments in real estate
partnerships............................................ 15,673 -- --
Purchase of investments held for sale..................... (4,935) (19,881) --
Redemptions of OP Units................................... (516) -- --
Dividends received from unconsolidated subsidiaries....... -- 45,791 --
--------- --------- --------
Net cash used in investing activities............... (328,321) (717,663) (88,144)
--------- --------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from secured notes payable borrowings............ 102,115 225,436 --
Principal repayments on secured notes payable............. (93,469) (12,512) (28,463)
Proceeds from secured tax-exempt bond financing........... 210,720 -- 58,010
Principal repayments on secured tax-exempt bond
financing............................................... (224,395) (1,487) (48,703)
Proceeds from (payoff of) unsecured short-term
financing............................................... -- (12,579) 12,500
Proceeds from secured short-term financing................ 57,140 19,050 30,119
Repayments on secured short-term financing................ (34,333) -- --
Net borrowings (paydowns) on the revolving credit
facilities.............................................. (46,262) (162,008) 40,800
Payment of loan costs, including proceeds and costs from
interest rate hedges.................................... (7,407) (6,387) (3,464)
Proceeds from issuance of Class A Common Stock............ -- 510,114 28,136
Proceeds from issuances of Preferred Stock................ 340,897 133,110 --
Proceeds from exercises of employee stock options and
warrants................................................ 11,015 871 --
Proceeds from partnership preferred units in a subsidiary
and warrants to purchase Class A Common Stock........... 35,000 -- --
Proceeds from issuance of high performance units.......... 1,988 -- --
Principal repayments received on notes due from officers
on Class A Common Stock purchases....................... 8,951 25,957 --
Repurchase of common stock................................ (11,066) (4,255)
Payment of common stock dividends......................... (94,835) (44,660) (20,736)
Payment of distributions to minority interest in operating
partnership............................................. (12,651) (5,510) (3,815)
Payment of distributions to minority interest in other
entities................................................ (2,880) -- --
Payment of preferred stock dividends...................... (26,404) (846) --
--------- --------- --------
Net cash provided by financing activities........... 214,124 668,549 60,129
--------- --------- --------
NET INCREASE IN CASH AND CASH EQUIVALENTS................... 34,217 23,918 10,791
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR.............. 37,088 13,170 2,379
--------- --------- --------
CASH AND CASH EQUIVALENTS AT END OF YEAR.................... $ 71,305 $ 37,088 $ 13,170
========= ========= ========

See accompanying notes to consolidated financial statements.

F-6
46

APARTMENT INVESTMENT AND MANAGEMENT COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOW
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
(IN THOUSANDS, EXCEPT SHARE AND PARTNERSHIP UNIT DATA)

1998 1997 1996
------- ------- -------

SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid............................................. $91,795 $51,076 $22,869

NON CASH INVESTING AND FINANCING ACTIVITIES

PURCHASE OF REAL ESTATE, CASH COLLATERAL AND PROPERTY MANAGEMENT BUSINESSES

1998 1997 1996
-------- -------- -------

Secured notes payable assumed in connection with purchase of
real estate............................................... $115,151 $140,451 $31,796
Secured short-term financing assumed in connection with
purchase of real estate................................... -- 9,600 5,072
Real estate, restricted cash, cash collateral and property
management businesses contributed in exchange for
interests in AIMCO Properties, L.P. ...................... 34,756 55,906 15,279
Real estate purchased in exchange for 90,000 partnership
preferred units of AIMCO Properties, L.P.................. 9,000 -- --
Assumption of operating liabilities......................... 857 -- --
Accrual of contingent consideration......................... 4,500 -- --
Common Stock issued in consideration for purchase of real
estate.................................................... -- -- 15,294

PURCHASE OF INSIGNIA FINANCIAL GROUP, INC.

In October 1998, the company acquired all the common stock of Insignia
Financial Group, Inc. in exchange for up to approximately 8.9 million shares of
Class E Cumulative Convertible Preferred Stock with a recorded value of
approximately $301.2 million (see Note 4).

The aggregate purchase price consisted of the following:

Real estate................................................. $ 59,593
Investment in unconsolidated real estate partnerships....... 799,177
Investment in unconsolidated subsidiaries................... 68,168
Restricted cash............................................. 1,339
Notes receivable............................................ 30,257
Other assets................................................ 66,081
Secured notes payable....................................... 29,002
Secured short-term financing................................ 331,948
Account payable, accrued and other liabilities.............. 157,061
Mandatory redeemable convertible preferred securities of a
subsidiary trust.......................................... 149,500
Minority interest in other entities......................... 112,170
Stockholders' equity........................................ 301,218

F-7
47

PURCHASE OF AMBASSADOR APARTMENTS, INC.

In May 1998, the Company acquired all of the common stock of Ambassador
Apartments, Inc. in exchange for approximately 6.6 million shares of Class A
Common Stock with a recorded value of $251.3 million (see Note 4).

The aggregate purchase price consisted of the following:

Real estate................................................. $713,596
Investment in unconsolidated real estate partnerships....... 2,290
Restricted cash............................................. 35,523
Accounts receivable......................................... 7,953
Deferred financing costs.................................... 4,359
Other assets................................................ 2,319
Secured notes payable....................................... 37,162
Secured tax-exempt bond financing........................... 334,881
Secured short-term financing................................ 31,550
Unsecured short-term financing.............................. 2,513
Account payable, accrued and other liabilities.............. 15,199
Resident security deposits and prepaid rents................ 8,898
Minority interest in other partnerships..................... 5,752
Minority interest in AIMCO Properties, L.P.................. 147
Stockholders' equity........................................ 251,274

PURCHASE OF NHP AND REAL ESTATE COMPANIES

In 1997, the company acquired NHP Partners, Inc., NHP Partners Two Limited
Partners and their subsidiaries (collectively, the "NHP Real Estate Companies")
and all of the common stock of NHP Incorporated ("NHP") in exchange for
approximately 6.8 million shares of Class A Common Stock with a recorded value
of $180.9 million, $141.3 million in cash and warrants to purchase 399,999
shares of Class A Common Stock in a series of related transactions (see Notes 5
and 6).

The aggregate purchase price consisted of the following:

Assets purchased............................................ $638,944
Liabilities assumed......................................... 312,555
Cash paid................................................... 141,328
Stock issued................................................ 180,851
Stock options issued........................................ 4,210

REDEMPTION OF OPERATING PARTNERSHIP UNITS

In 1998, 275,405 operating partnership units with a recorded value of
$5,650 were redeemed in exchange for an equal number of shares of Class A Common
Stock.

In 1997, 565,101 operating partnership units with a recorded value of
$8,621 were redeemed in exchange for an equal number of shares of Class A Common
Stock.

In 1996, 211,392 operating partnership units with a recorded value of
$3,799 were redeemed in exchange for an equal number of shares of Class A Common
Stock.

RECEIPT OF NOTES PAYABLE FROM OFFICERS

In 1998, the company issued notes receivable from officers for a total of
$23.5 million in connection with their purchase of approximately 600,000 shares
of Class A Common Stock.

F-8
48

In 1997, the company received promissory notes from officers for a total of
$42.6 million in connection with the sale of approximately 1.5 million shares of
Class A Common Stock.

CONVERSION OF CLASS B COMMON STOCK

In 1998, 162,500 shares of Class B Common Stock were converted to Class A
Common Stock upon achievement of the 1998 target results for a total recorded
value of $2. As a result, all previously issued and outstanding shares of Class
B Common Stock have now been converted to Class A Common Stock.

In 1997, 162,500 shares of Class B Common Stock were converted to Class A
Common Stock upon achievement of the 1997 target results for a total recorded
value of $2.

In 1996, 260,000 shares of Class B Common Stock were converted to Class A
Common Stock upon achievement of the 1995 and 1996 target results (130,000
shares respectively for each year) for a total recorded value of $3.

OTHER

In 1998, the company's operating partnership issued an additional 194,208
partnership units with a recorded value of $4,045 in connection with the
purchase of certain partnership interests.

In 1997, the company's operating partnership issued an additional 216,564
partnership units with a recorded value of $7,469 in connection with the
purchase of certain partnership interests.

In 1998, the company obtained control of real estate partnerships which
became consolidated. The non-cash effects are as follows:

Real estate................................................. $22,089
Investments in and notes receivable from unconsolidated real
estate partnerships....................................... 16,683
Secured notes payable....................................... 4,679
Accounts payable, accrued and other liabilities............. 727

During the year ended December 31, 1998, the company contributed certain
assets and liabilities to unconsolidated subsidiaries and unconsolidated
partnerships as follows:

Investment in unconsolidated subsidiaries................... $38,579
Investment in unconsolidated partnerships................... 3,361
Restricted cash............................................. 552
Accounts receivable......................................... 13,972
Other assets................................................ 14,440
Accounts payable, accrued and other liabilities............. 62,011

F-9
49

APARTMENT INVESTMENT AND MANAGEMENT COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998, 1997, AND 1996

NOTE 1 ORGANIZATION

Apartment Investment and Management Company ("AIMCO" or the "Company"), a
Maryland corporation formed on January 10, 1994, is a self-administered and
self-managed REIT engaged in the ownership, acquisition, development, expansion
and management of multi-family apartment properties. As of December 31, 1998,
the Company owned or managed 379,363 apartment units in 2,147 properties located
in 49 states, the District of Columbia and Puerto Rico. On July 24, 1994, AIMCO
completed its initial public offering and engaged in a business combination and
consummated a series of related transactions which enabled it to continue and
expand the property management and related businesses of Property Asset
Management, L.L.C., Limited Liability Company, and its affiliated companies, and
PDI Realty Enterprises, Inc. (collectively, the "AIMCO Predecessors"). Based on
apartment unit data compiled by the National Multi-Housing Council, we believe
that, as of December 31, 1998, AIMCO was the largest owner and manager of
multi-family apartment properties in the United States. As of December 31, 1998,
AIMCO:

- owned or controlled 63,086 units in 242 apartment properties;

- held an equity interest in 170,243 units in 902 apartment properties; and

- managed 146,034 units in 1,003 apartment properties for third party
owners and affiliates.

AIMCO conducts substantially all of its operations through its operating
partnership, AIMCO Properties, L.P. (the "AIMCO operating partnership"). Through
wholly owned subsidiaries, AIMCO acts as the sole general partner of the AIMCO
operating partnership. As of December 31, 1998, AIMCO owned approximately an 83%
interest in the AIMCO operating partnership. AIMCO manages apartment properties
for third parties and affiliates through unconsolidated subsidiaries referred to
as the "management companies".

At December 31, 1998, AIMCO had 48,451,388 shares of Class A Common Stock
outstanding and the AIMCO operating partnership had 9,763,488 common units
outstanding, for a combined total of 58,214,876 shares and units.

NOTE 2 BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of
AIMCO, the AIMCO operating partnership, majority owned subsidiaries and
controlled real estate limited partnerships. Interests held by limited partners
in real estate partnerships controlled by the Company and interests held by the
minority shareholders of Insignia Properties Trust are reflected as Minority
Interests in Other Entities. All significant intercompany balances and
transactions have been eliminated in consolidation.

Interests in the AIMCO operating partnership held by limited partners other
than AIMCO are referred to as "OP Units". The AIMCO operating partnership's
income is allocated to holders of OP Units based on the weighted average number
of OP Units outstanding during the period. The AIMCO operating partnership
records the issuance of OP Units and the assets acquired in purchase
transactions based on the market price of the Company's Class A Common Stock at
the date of execution of the purchase contract. The holders of the OP Units
receive distributions, prorated from the date of admittance, in an amount
equivalent to the dividends paid to holders of Class A Common Stock. During
1998, 1997 and 1996, the weighted average ownership interest in the AIMCO
operating partnership held by the OP Unit holders was 12.4%, 13.2% and 17.1%,
respectively.

F-10
50
APARTMENT INVESTMENT AND MANAGEMENT COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

After holding the OP Units for one year, the limited partners generally
have the right to redeem their OP Units for cash. Notwithstanding that right,
the AIMCO operating partnership may elect to acquire some or all of the OP Units
tendered for redemption in exchange for shares of Class A Common Stock in lieu
of cash.

Investments in and Notes Receivable from Unconsolidated Subsidiaries

The Company has investments in numerous subsidiaries. Investments in
entities in which the Company does not have control are accounted for under the
equity method. Under the equity method, the Company's pro-rata share of the
earnings or losses of the entity for the periods being presented is included in
earnings (losses) from unconsolidated subsidiaries (see Note 5).

Investments in and Notes Receivable from Unconsolidated Real Estate
Partnerships

The Company owns general and limited partnership interests in numerous
partnerships that own multi-family apartment properties. Investments in real
estate partnerships in which the Company does not have control, are accounted
for under the equity method. Under the equity method, the Company's pro-rata
share of the earnings or losses of the entity for the periods being presented is
included in earnings (losses) from unconsolidated partnerships (see Note 6).

Real Estate and Depreciation

Real estate is recorded at cost, less accumulated depreciation, unless
considered impaired. If events or circumstances indicate that the carrying
amount of a property may be impaired, the Company will make an assessment of its
recoverability by estimating the future undiscounted cash flows, excluding
interest charges, of the property. If the carrying amount exceeds the aggregate
future cash flows, the Company would recognize an impairment loss to the extent
the carrying amount exceeds the fair value of the property. As of December 31,
1998, management believes that no impairments exist based on periodic reviews.
No impairment losses were recognized for the years ended December 31, 1998, 1997
and 1996.

Expenditures in excess of $250 that maintain an existing asset which has a
useful life of more than one year are capitalized as capital replacement
expenditures and depreciated over the estimated useful life of the asset.

Depreciation is calculated on the straight-line method based on a fifteen
to thirty year life for buildings and improvements and five years for furniture,
fixtures and equipment.

Initial Capital Expenditures ("ICE") are those costs considered necessary
by the Company in its investment decision to correct deferred maintenance or
improve a property. Capital enhancements are costs incurred that add a material
new feature or increase the revenue potential of a property. ICE and capital
enhancement costs are capitalized and depreciated over the estimated useful
lives of the related assets.

Direct costs associated with the acquisition of ownership or control of
properties are capitalized as a cost of the assets acquired, and are depreciated
over the estimated useful lives of the related assets. Expenditures for ordinary
repairs, maintenance and apartment turnover costs are expensed as incurred.

Redevelopment

The Company capitalizes direct and indirect costs (including interest,
taxes and other costs) in connection with the redevelopment of its owned or
controlled properties and land under development. Interest of $2.8 million, $1.3
million and $0.8 million was capitalized for the years ended December 31, 1998,
1997 and 1996, respectively.

F-11
51
APARTMENT INVESTMENT AND MANAGEMENT COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Property Held For Sale

Property held for sale is recorded at the lower of carrying amount or fair
value less costs to sell. Upon management's determination that a property is to
be sold, the Company ceases depreciation of the property's assets.

Cash Equivalents

The Company considers highly liquid investments with an original maturity
of three months or less to be cash equivalents.

Restricted Cash

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

Goodwill

The Company records goodwill in connection with purchase business
combinations where the aggregate purchase price exceeds the fair value of the
assets acquired. Goodwill is amortized on a straight-line basis over a period of
20 years, which represents its estimated useful life. The carrying amount of
goodwill is reviewed if facts and circumstances suggest that it may be impaired.
Management believes that goodwill is not impaired at December 31, 1998.

Other Assets

Fees and costs incurred in obtaining financing are capitalized and are
included in other assets. Such costs are amortized over the terms of the related
loan agreements and are charged to interest expense.

Certain intangible assets are included in other assets and consist of costs
associated with the purchase of property management businesses, including
property management contracts, legal and other acquisition costs. These costs
are amortized on a straight-line basis over terms ranging from five to twenty
years.

Revenue Recognition

The Company's properties have operating leases with apartment residents
with terms generally of six months or less. Rental revenues and property
management and asset management fees are recognized when earned.

The Company recognizes interest income on notes receivable as earned, in
accordance with the terms of the notes. Interest income is not recorded on
individual notes receivable if management believes the interest is not
collectible.

Income Taxes

AIMCO has elected to be taxed as a real estate investment trust ("REIT") as
defined under the Internal Revenue Code of 1986, as amended. In order for AIMCO
to qualify as a REIT, at least 95% of AIMCO's gross income in any year must be
derived from qualifying sources. The activities of unconsolidated subsidiaries
engaged in the service company business are not qualifying sources.

As a REIT, AIMCO generally will not be subject to U.S. Federal income taxes
at the corporate level if it distributes at least 95% of its REIT taxable income
to its stockholders. REITs are also subject to a number of other organizational
and operational requirements. If AIMCO fails to qualify as a REIT in any taxable
year, its taxable income will be subject to U.S. Federal income tax at regular
corporate rates (including any

F-12
52
APARTMENT INVESTMENT AND MANAGEMENT COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

applicable alternative minimum tax). Even if AIMCO qualifies as a REIT, it may
be subject to certain state and local income taxes and to U.S. Federal income
and excise taxes on its undistributed income.

For income tax purposes, distributions paid to stockholders consist of
ordinary income, capital gains, return of capital or a combination thereof.
Earnings and profits, which determine the taxability of dividends to
stockholders, differ from net income reported for financial reporting purposes
due to differences for U.S. Federal tax purposes in the estimated useful lives
used to compute depreciation and the carrying value (basis) of the investments
in properties.

For the years ended December 31, 1998, 1997 and 1996, distributions paid
per share were taxable as follows:

1998 1997 1996
-------------------- -------------------- --------------------
AMOUNT PERCENTAGE AMOUNT PERCENTAGE AMOUNT PERCENTAGE
------ ---------- ------ ---------- ------ ----------

Ordinary income................ $0.90 40% $1.74 94% $1.45 85%
Return of capital.............. 1.33 59% -- -- 0.25 15%
Capital Gains.................. -- -- 0.04 2% -- --
Unrecaptured SEC.1250 Gain..... 0.02 1% 0.07 4% -- --
----- --- ----- --- ----- ---
$2.25 100% $1.85 100% $1.70 100%
===== === ===== === ===== ===

Earnings Per Share

Earnings per share is calculated based on the weighted average number of
shares of common stock, common stock equivalents and dilutive convertible
securities outstanding during the period (see Note 17).

Fair Value of Financial Instruments

The estimated aggregate fair value of the Company's cash and cash
equivalents, receivables, payables and short-term secured and unsecured debt as
of December 31, 1998 is assumed to approximate their carrying value due to their
relatively short terms. Management further believes that, after consideration of
interest rate agreements, the fair market value of the Company's secured
tax-exempt bond debt and secured long-term debt approximate their carrying
value, based on market comparisons to similar types of debt instruments having
similar maturities.

In valuing its investments in securities at their quoted market price, the
Company has recognized unrealized losses on investments of $1.7 million as of
December 31, 1997, which are included as a component of stockholders' equity.
Due to a reorganization, Property Asset Management Services, Inc. ("PAMS,
Inc."), a subsidiary of the Company, is no longer consolidated. All unrealized
losses on investments in 1997 were related to PAMS, Inc. As PAMS, Inc. is not
consolidated at December 31, 1998, there are no unrealized losses on
investments.

Interest Rate Lock and Interest Rate Swap Agreements

Interest rate lock agreements related to planned refinancings of identified
variable rate indebtedness are accounted for as anticipatory hedges. Upon the
refinancing of such indebtedness, any gain or loss associated with the
termination of the interest rate lock agreement is deferred and recognized over
the life of the refinanced indebtedness.

Reclassifications

Certain items included in the 1997 and 1996 consolidated financial
statements have been reclassified to conform with the 1998 presentation.

F-13
53
APARTMENT INVESTMENT AND MANAGEMENT COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Use of Estimates

The preparation of the Company's consolidated financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts included in the
financial statements and accompanying notes thereto. Actual results could differ
from those estimates.

NOTE 3 REAL ESTATE

Real estate at December 31, 1998 and 1997, is as follows (in thousands):

1998 1997
---------- ----------

Land........................................................ $ 413,577 $ 265,570
Buildings and improvements.................................. 2,389,021 1,391,637
---------- ----------
2,802,598 1,657,207
Accumulated depreciation.................................... (228,880) (153,285)
---------- ----------
$2,573,718 $1,503,922
========== ==========

During the years ended December 31, 1998 and 1997, the Company purchased or
acquired control of 82 properties (22,459 units) and 59 properties (17,191
units), respectively, and disposed of five properties (1,468 units) and five
properties (916 units), respectively, as described below.

The Company directly acquired 30 apartment communities in unrelated
transactions during 1998 (not including those acquired in connection with the
mergers with Ambassador Apartments, Inc. and Insignia Financial Group, Inc. (see
Note 4)). The aggregate consideration paid by the Company of $316.5 million
consisted of $96.0 million in cash, 1.2 million OP Units with a total recorded
value of $48.2 million, and the assumption of $172.3 million of secured
long-term indebtedness.

In 1997, as a result of the acquisition of the NHP Real Estate Companies
and related tender offers to limited partners, the Company acquired a
controlling interest in 15 partnerships, which own 5,285 units located in 15
apartment communities. The portion of the aggregate purchase price for the NHP
Real Estate Companies allocated to these 15 partnerships was approximately
$269.3 million, including the assumption of approximately $212.3 million of
mortgage indebtedness.

In October 1997, the Company acquired a portfolio of 35 residential
apartment properties. The aggregate purchase price of $263.0 million, including
transaction costs, was comprised of $115.6 million in cash, the assumption of
$8.3 million in mortgage indebtedness and the incurrence of $139.1 million of
new indebtedness secured by the properties. The Company has also budgeted an
additional $16.0 million in initial capital expenditures related to these
properties.

During 1998, the Company sold five apartment properties containing 1,468
units to unaffiliated third parties. Cash proceeds from the sales of
approximately $40.1 million were used to repay a portion of the Company's
outstanding indebtedness. The Company recognized a gain of approximately $4.7
million on the disposition of these five properties.

During 1997, the Company sold five apartment properties containing 916
units to unaffiliated third parties. Cash proceeds from the sales of
approximately $22.7 million were used to repay a portion of the Company's
outstanding indebtedness. The Company recognized a gain of approximately $2.8
million on the disposition of these five properties.

F-14
54
APARTMENT INVESTMENT AND MANAGEMENT COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 4 MERGERS

Ambassador Merger

On May 8, 1998, Ambassador was merged with and into AIMCO, with AIMCO being
the surviving corporation. The merger was accounted for as a purchase. The
purchase price of $713.6 million was comprised of $90.3 million in cash, $372.0
million of assumed debt and approximately 6.6 million shares of Class A Common
Stock valued at $251.3 million. Pursuant to the Ambassador merger agreement,
each outstanding share of Ambassador common stock not owned by AIMCO was
converted into the right to receive 0.553 shares of Class A Common Stock.
Concurrently, all outstanding options to purchase Ambassador common stock were
converted into cash or options to purchase Class A Common Stock, at the same
conversion ratio. Contemporaneously with the consummation of the Ambassador
merger, a subsidiary of the AIMCO operating partnership merged with Ambassador's
operating partnership and each outstanding unit of limited partnership interest
in the Ambassador operating partnership was converted into the right to receive
0.553 OP Units. Prior to its acquisition by AIMCO, Ambassador was a
self-administered and self-managed real estate investment trust engaged in the
ownership and management of garden-style apartment properties leased primarily
to middle income tenants. Ambassador owned 52 apartment communities with a total
of 15,728 units located in Arizona, Colorado, Florida, Georgia, Illinois,
Tennessee and Texas, and managed one property containing 252 units for an
unrelated third party.

Insignia Merger

On October 1, 1998, Insignia Financial Group, Inc., a Delaware corporation,
was merged with and into AIMCO with AIMCO being the surviving corporation. The
merger was accounted for as a purchase. The purchase price of $1,125.7 million
was comprised of the issuance of up to approximately 8.9 million shares of Class
E Cumulative Convertible Preferred Stock (the "Class E Preferred Stock") valued
at $301.2 million, $670.1 million in assumed debt and liabilities (including the
$50 million special dividend, assumed liabilities of Insignia Properties Trust
and transaction costs), $149.5 million in assumed mandatory redeemable
convertible preferred securities, and $4.9 million in cash. The Class E
Preferred Stock entitled the holders thereof to receive the same cash dividends
per share as holders of Class A Common Stock. On January 15, 1999, holders of
Class E Preferred Stock received a special dividend in an aggregate amount of
approximately $50 million, and all outstanding shares of Class E Preferred Stock
automatically converted into an equal number of shares of Class A Common Stock.

As a result of the Insignia merger, AIMCO acquired: (i) Insignia's
interests in Insignia Properties Trust, ("IPT"), a Maryland REIT, which was a
majority owned subsidiary of Insignia; (ii) Insignia's interest in Insignia
Properties, L.P. ("IPLP"), IPT's operating partnership; (iii) 100% of the
ownership of the Insignia entities that provide multifamily property management
and partnership administrative services; (iv) Insignia's interest in
multi-family coinvestments; (v) Insignia's ownership of subsidiaries that
control multi-family properties not included in IPT; (vi) Insignia's limited
partner interests in public and private syndicated real estate limited
partnerships; and (vii) assets incidental to the foregoing businesses
(collectively, the "Insignia Multi-family Business"). Insignia owned or managed
in excess of 170,000 apartment units.

IPT Merger

As a result of the Insignia merger, AIMCO acquired approximately 51% of the
outstanding shares of beneficial interest of IPT. On February 26, 1999, IPT was
merged into AIMCO (see Note 24).

NOTE 5 INVESTMENTS IN AND NOTES RECEIVABLE FROM UNCONSOLIDATED SUBSIDIARIES

In order to satisfy certain requirements of the Internal Revenue Code
applicable to AIMCO's status as a REIT, certain assets of the Company are held
through corporations in which the AIMCO operating

F-15
55
APARTMENT INVESTMENT AND MANAGEMENT COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

partnership holds non-voting preferred stock that represents a 95% economic
interest, and certain officers and/or directors of AIMCO hold, directly or
indirectly, all of the voting common stock, representing a 5% economic interest.
As a result of the controlling ownership interest in the unconsolidated
subsidiaries held by others, AIMCO accounts for its interest in the
unconsolidated subsidiaries using the equity method. As of December 31, 1998,
the unconsolidated subsidiaries included AIMCO/NHP Holdings, Inc. ("ANHI"),
AIMCO/NHP Properties, Inc. ("ANPI"), NHP Management Company ("NHPMC"), and NHP
A&R Services, Inc. ("NHPA&R").

In May and September of 1997, the Company acquired an aggregate of
approximately 6.9 million shares of common stock ("NHP Common Stock") of NHP. On
December 8, 1997, the Company acquired the remaining shares of NHP Common Stock
in a merger transaction accounted for as a purchase (the "NHP Merger"). Pursuant
to the NHP Merger, each outstanding share of NHP Common Stock was converted into
either (i) 0.74766 shares of Class A Common Stock or (ii) at the stockholder's
option, 0.37383 shares of Class A Common Stock and $10.00 in cash. As a result
of the NHP Merger, AIMCO issued approximately 6.8 million shares of Class A
Common Stock, valued at $180.8 million, and paid $86.5 million in cash. The
total cost of the purchase was $349.5 million.

In connection with the purchase of NHP and Insignia, the Company acquired
NHP's and Insignia's property management businesses, as well as several other
businesses, including a membership purchasing organization, home health care
services, and insurance services. Immediately following both the NHP merger and
the Insignia merger, AIMCO completed reorganizations which resulted in those
businesses being conducted by unconsolidated subsidiaries.

As of December 31, 1998 and 1997, AIMCO's investment in and notes
receivable from unconsolidated subsidiaries totaled $198.4 million and $84.5
million, respectively, which consisted of $114.0 million and $50.0 million,
respectively, in notes receivable, advances of $20.4 million in 1998, and $64.0
million and $34.5 million, respectively, in preferred stock of the
unconsolidated subsidiaries.

The following table provides selected combined financial information for
the Company's unconsolidated subsidiaries as of and for the years ended December
31, 1998 and 1997 (in thousands):

1998 1997
-------- --------

Management contracts........................................ $122,291 $ 51,441
Goodwill.................................................... 42,889 45,494
Total assets................................................ 236,976 119,936
Total liabilities........................................... 169,560 83,663
Stockholders' equity........................................ 67,416 36,273
Total liabilities and stockholders' equity.................. 236,976 119,936
Service company revenues.................................... 99,845 23,776
Service company expenses.................................... (70,771) (11,733)
Interest expense............................................ (7,699) (2,902)
Net income before discontinued operations................... 12,177 3,430
Net income.................................................. 12,177 3,636

NOTE 6 INVESTMENT IN AND NOTES RECEIVABLE FROM UNCONSOLIDATED REAL ESTATE
PARTNERSHIPS

In connection with the purchase of the NHP Real Estate Companies, the
Company acquired general and limited partnership interests in partnerships that
own in excess of 82,000 conventional and affordable apartment units in 519
apartment properties. The Company's ownership interests in these partnerships
ranges from 1% to 100%, and the provisions of the partnership agreements give
the Company varying degrees of control.

F-16
56
APARTMENT INVESTMENT AND MANAGEMENT COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Subsequent to the acquisition of the NHP Real Estate Companies, AIMCO
contributed interests in certain of the limited partnerships which it controlled
to AIMCO/NHP Partners, L.P. ("ANPLP"), a partnership in which the Company owns a
99% limited partnership interest. A limited liability company owned by certain
officers of the Company is the 1% general partner of ANPLP. Based on the
provisions of the partnership agreement for ANPLP, the Company does not possess
control of the partnership.

In connection with the Insignia merger, and through IPT, Insignia's
controlled subsidiary, the Company acquired general and limited partnership
interests in partnerships that are unconsolidated (see Note 4). The Company's
ownership interests in these unconsolidated partnerships ranges from 1% to 47%.
Based on the provisions of the partnership agreements, the Company does not
possess control of these partnerships.

During 1998 and 1997, the Company has made separate offers to the limited
partners of approximately 300 partnerships to acquire their limited partnership
interests. The Company paid approximately $84.5 million and $59 million during
1998 and 1997, respectively, in connection with such tender offers.

At December 31, 1998 and 1997, AIMCO's investment in and notes receivable
from unconsolidated real estate partnerships totaled $1,036.5 million and $212.1
million, respectively.

The following table provides selected combined financial information for
the Company's unconsolidated partnerships as of and for the years ended December
31, 1998 and 1997 (in thousands):

1998 1997
---------- ----------

Real estate, net of accumulated depreciation................ $3,705,342 $2,252,702
Total assets................................................ 4,221,817 2,707,328
Secured notes payable....................................... 3,234,310 2,951,989
Partners' capital (deficit)................................. 673,958 (805,776)
Total liabilities and partners' capital (deficit)........... 4,221,817 2,707,328
Rental and other property revenues.......................... 873,531 501,384
Property operating expenses................................. (524,010) (303,547)
Depreciation expense........................................ (151,569) (63,384)
Interest expense............................................ (220,134) (154,027)
Net loss before gain on disposition of properties........... (12,468) (11,019)
Net income (loss)........................................... (12,468) 7,900

NOTE 7 SECURED NOTES PAYABLE

The following table summarizes the Company's secured notes payable at
December 31, 1998 and 1997, all of which are non-recourse to the Company (in
thousands):

1998 1997
-------- --------

Fixed rate, ranging from 5.99% to 8.75%, fully-amortizing
notes maturing at various dates through 2032.............. $659,953 $561,056
Fixed rate, ranging from 6.96% to 10.63%, non-amortizing
notes maturing at various dates through 2027.............. 178,258 106,424
Floating rate, ranging from 5.0% to 7.1% at December 31,
1998, non-amortizing notes maturing at various dates
through 2025.............................................. 5,580 13,941
-------- --------
$843,791 $681,421
======== ========

F-17
57
APARTMENT INVESTMENT AND MANAGEMENT COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

As of December 31, 1998, the scheduled principal payments for the Company's
secured notes payable are as follows (in thousands):

1999........................................................ $ 27,020
2000........................................................ 40,702
2001........................................................ 34,939
2002........................................................ 100,435
2003........................................................ 47,851
Thereafter.................................................. 592,844
--------
$843,791
========

NOTE 8 SECURED TAX-EXEMPT BOND FINANCING

In December 1998, the Company completed the refinancing of $222 million in
variable rate tax-exempt debt assumed in conjunction with the May 1998 merger
with Ambassador Apartments, Inc. The debt was secured by 27 properties located
in Texas, Arizona, Tennessee and Illinois. Through the refinancing, the Company
converted the previous tax-exempt debt to $204 million in fixed rate, fully
amortizing tax-exempt debt secured by 26 properties. The new debt has a weighted
average interest rate of 5.8% and matures in 23 years. The Company also incurred
$7.1 million of taxable debt secured by three of the properties, repaid $11.4
million of the previous tax-exempt debt, released $21.5 million in cash reserves
and impound accounts held by the prior mortgagors, and released two properties
that served as additional collateral for the previous debt.

The following table summarizes the Company's secured tax-exempt bond
financing at December 31, 1998 and 1997, all of which is non-recourse to the
Company (in thousands):

1998 1997
-------- -------

7.0% fully-amortizing bonds, due July 2016.................. $ 45,237 $46,498
6.9% fully-amortizing bonds, due July 2016.................. 9,267 9,529
Fixed rate fully-amortizing bonds, ranging from 5.1% to
5.8%, due December 2021................................... 159,555 --
Fixed rate fully-amortizing bonds, ranging from 6.5% to
7.3%, due at various dates through 2028................... 78,926 --
Fixed rate non-amortizing bonds, ranging from 5.0% to 6.8%,
due at various dates through 2017......................... 55,747 --
4.2% interest-only bonds, due July 2016..................... -- 5,958
6.0% interest-only bonds, secured by a letter of credit in
the amount of $5,350, due September 1998.................. -- 5,325
5.4% interest-only bonds, due December 2002................. -- 6,700
4.0% interest-only bonds, due December 2020................. 4,525 --
Variable rate bonds, ranging from 4.9% to 5.3%, due December
2021...................................................... 45,345 --
-------- -------
Total............................................. $398,602 $74,010
======== =======

F-18
58
APARTMENT INVESTMENT AND MANAGEMENT COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

As of December 31, 1998, the scheduled principal payments for the Company's
secured tax-exempt bonds are as follows (in thousands):

1999........................................................ $ 14,408
2000........................................................ 11,978
2001........................................................ 7,702
2002........................................................ 8,132
2003........................................................ 8,610
Thereafter.................................................. 347,772
--------
$398,602
========

NOTE 9 UNSECURED SHORT-TERM FINANCING

In January 1998, the Company entered into a new $50 million unsecured
credit agreement with Bank of America National Trust and Savings Association and
Bank Boston, N.A. The AIMCO operating partnership is the borrower under the
credit agreement, but all obligations thereunder are guaranteed by AIMCO and
certain of its subsidiaries. In October 1998, the Company amended and restated
the credit agreement. The agreement now provides for a revolving credit facility
of up to $100 million, including a swing line of up to $30 million. The credit
facility matures on September 30, 1999, unless extended, at the discretion of
the lenders. The credit agreement provides for the conversion of the revolving
facility into a three-year term loan. Under the credit agreement, as amended in
January 1999, loans bear interest at LIBOR or Bank of America's reference rate,
at the election of the Company, plus an applicable margin. The margins range
from 2.25% to 2.75% for a LIBOR rate borrowing and 0.75% to 1.25% for a base
rate borrowing, both dependant upon the total balance outstanding relative to
the calculated borrowing base value. The balance outstanding under the credit
facility was $84.3 million as of December 31, 1998.

In October 1998, the AIMCO operating partnership and AIMCO entered into an
interim term loan agreement with Lehman Brothers Inc. and one of its affiliates,
and borrowed $300 million thereunder. The loan is unsecured and matures on
September 30, 1999. The proceeds were used to finance the Insignia merger and
related fees and expenses, to refinance existing indebtedness, and for general
working capital purposes. The loan bears interest at a base rate or the rate at
which eurodollar deposits for one month are offered in the interbank eurodollar
market, plus, in either case, a margin which averages 1.375% to 2.208% in the
case of base rate loans, and 2.375% to 3.208% in the case of eurodollar loans.
The base rate will be the higher of (i) the primary rate of Citibank, N.A., (ii)
the secondary market rate for three month certificates of deposit plus 1%, or
(iii) the federal funds effective rate plus 0.5%. As of December 31, 1998, there
was $196 million of indebtedness outstanding under the loan agreement.

In October 1998, as a result of the acquisition of Insignia, AIMCO,
directly or through its subsidiaries, became the owner of approximately 51% of
IPT. Prior to the acquisition, IPT's operating partnership had entered into a
$50 million revolving credit agreement with Lehman Commercial Paper, Inc., as
syndication agent, and First Union National Bank, as administrative agent.
Borrowings under the credit agreement may be used to finance certain permitted
investments and refinance certain other investments. The credit agreement
matures on December 30, 2000. The credit agreement provides for interest at an
annual rate equal to (i) 2.50% plus a rate based on LIBOR or (ii) 0.50% plus a
base rate that is the higher of the prime rate or the Federal Funds rate. As of
December 31, 1998, there was $30 million outstanding under the credit agreement.

F-19
59
APARTMENT INVESTMENT AND MANAGEMENT COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The following table summarizes the Company's unsecured short-term financing
at December 31, 1998 (in thousands):

1998
--------

Floating rate credit facility, interest at 7.30% at December
31, 1998, expiring September 1999......................... $ 84,300
Floating rate interim term loan, interest at 7.30% at
December 31, 1998, expiring September 1999................ 196,000
Floating rate credit facility, interest at 7.91% at December
31, 1998, expiring December 2000.......................... 30,000
--------
Total............................................. $310,300
========

At December 31, 1998, the total unused commitments under the Company's
unsecured short-term financing arrangements were $35.7 million.

At March 11, 1999, $144.8 million remained outstanding on the Company's
unsecured short-term financing and unused commitments aggregated $29 million.

NOTE 10 SECURED SHORT-TERM FINANCING

The Company utilizes a variety of secured short-term financing instruments
to manage its working capital needs and to finance real estate investments. In
February 1998, the AIMCO operating partnership entered into a five year $50
million secured credit facility agreement with Washington Mortgage Financial
Group, Ltd. AIMCO and certain subsidiaries guaranteed loans under the agreement
and the guarantees were secured by assets including four apartment properties
and two mortgage notes. Under the agreement, advances to the AIMCO operating
partnership were funded with the proceeds from the sale to investors of
mortgage-backed securities issued by Fannie Mae and secured by the advance and
an interest in the collateral. The interest rate on each advance was determined
by investor bids for such mortgage-backed securities, plus a margin. In February
1999, the Company terminated the credit facility agreement (see Note 24).

In December 1998, the Company acquired Calhoun Beach Club Apartments for
$77.1 million, of which $53.5 million was financed with short-term indebtedness.
The debt incurred was in the form of a short-term bridge loan bearing interest
at 8.63% and maturing in April 1999. The Company intends to replace the short-
term debt with a fixed rate, fully amortizing note in 1999.

In January 1998, the Company replaced its secured credit facility with Bank
of America National Trust and Savings Association with a new unsecured revolving
credit facility (see Note 9).

F-20
60
APARTMENT INVESTMENT AND MANAGEMENT COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The following table summarizes the Company's secured short-term financing
at December 31, 1998 and 1997 (in thousands):

1998 1997
-------- -------

Floating rate credit facility, interest at 5.70% at December
31, 1998, expiring February 2003.......................... $ 50,000 $ --
Floating rate interest-only notes, having a stated interest
rate of 8.63% at December 31, 1998, due April 1999........ 53,500 --
Floating rate interest-only notes, having a stated interest
rate of 7.62% at December 31, 1998, due March 1999........ 4,522 --
Floating rate credit facility, interest at 7.33% at December
31, 1997, replaced in January 1998........................ -- 33,500
Floating rate interest-only note, repaid February 1998...... -- 19,050
Other....................................................... -- 549
-------- -------
$108,022 $53,099
======== =======

NOTE 11 COMMITMENTS AND CONTINGENCIES

Legal

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

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

HUD Approval and Enforcement

A significant number of affordable units included as assets of AIMCO
properties are subject to regulation by the U.S. Department of Housing and Urban
Development ("HUD"). Under its regulations, HUD reserves the right to approve
the owner and the manager of HUD-insured and HUD-assisted properties, as well as
their "principals" (e.g., general partners, stockholders with a 10% or greater
interest, officers and directors) in connection with the acquisition of a
property, participation in HUD programs or the award of a management contract.
This approval process is commonly referred to as "2530 Clearance." HUD monitors
the performance of properties with HUD-insured mortgage loans. HUD also monitors
compliance with applicable regulations, and takes performance and compliance
into account in approving the acquisition of management of HUD-assisted
properties. In the event of instances of unsatisfactory performance or
regulatory violations, the HUD office with jurisdiction over the applicable
property has the authority to enter a "flag" into the computerized 2530
Clearance system. If one or more flags have been entered, a decision whether to
grant 2530 Clearance is then subject to review by HUD's Multi-family
Participation Review Committee in Washington, D.C. (the "2530 Committee"). As a
result of certain mortgage defaults and unsatisfactory ratings received by NHP
in years prior to its acquisition in December 1997 by AIMCO, HUD believes that
the 2530 Committee must review any application for 2530 Clearance filed by
AIMCO. On December 18, 1998, AIMCO received

F-21
61
APARTMENT INVESTMENT AND MANAGEMENT COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

approval of approximately fifty 2530 applications and had no unresolved flags in
the 2530 system as of December 31, 1998.

In October 1997, NHP received a subpoena from the HUD Inspector General,
which requested documents relating to any arrangement whereby NHP or any of its
affiliates provides or has provided compensation to owners of HUD multi-family
projects in exchange for or in connection with property management of a HUD
project. AIMCO believes that other owners and managers of HUD projects have
received similar subpoenas. Documents provided by AIMCO to the HUD Inspector
General relating to certain NHP acquisitions of property management rights for
HUD projects may be responsive to the subpoena. AIMCO believes that its
operations are in compliance, in all material respects, with all laws, rules and
regulations relating to HUD-assisted or HUD-insured properties. Effective
February 13, 1998, counsel for AIMCO and the U.S. Attorney for the Northern
District of California entered into a Tolling Agreement related to certain civil
claims the government may have against AIMCO. Although no action has been
initiated against AIMCO or, to AIMCO's knowledge, any owner of a HUD property
managed by AIMCO, if any such action is taken in the future, it could ultimately
affect existing arrangements with respect to HUD projects, affect AIMCO's
ability to receive 2530 Clearances or otherwise have a material adverse effect
on AIMCO's results of operations. HUD also has the authority to suspend or deny
property owners and managers from participation in HUD programs with respect to
additional assistance within a geographic region through imposition of a Limited
Denial of Participation by any HUD office or nationwide for violations of HUD
regulatory requirements.

AIMCO believes that the 2530 Committee will continue to apply the 2530
Clearance process to large management portfolios such as AIMCO's with discretion
and flexibility. While there can be no assurance, AIMCO believes that the
unsatisfactory reviews and the mortgage defaults will not have a material impact
on its results of operations or financial condition. If HUD were to disapprove
AIMCO as property manager for one or more affordable properties, AIMCO's ability
to obtain property management revenues from new affordable properties would be
impaired.

Environmental

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

Operating Leases

The Company is obligated under office space and equipment under
noncancelable operating leases. In addition, the Company subleases certain of
its office space to tenants under noncancelable subleases. Approximate minimum
annual rentals under operating leases and approximate minimum payments to be

F-22
62
APARTMENT INVESTMENT AND MANAGEMENT COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

received under annual subleases for the five years ending after December 31,
1998 are as follows (in thousands):

OPERATING LEASE SUBLEASE
PAYMENTS PAYMENTS
--------------- --------

1999........................................................ $10,600 $ 2,100
2000........................................................ 10,400 2,100
2001........................................................ 8,800 1,600
2002........................................................ 3,700 --
2003........................................................ 2,200 --
Thereafter.................................................. 3,000 --
------- -------
Total....................................................... $38,700 $ 5,800
======= =======

Under the Company's current operating structure, substantially all of the
office space and equipment subject to the operating leases described above are
for the use of its regional operating centers, which are operated by certain of
the Company's unconsolidated subsidiaries (see Note 5). Rent expense recognized
by the unconsolidated subsidiaries totaled $6.2 million in 1998. Rent expense
recognized by the Company totaled $0.7 million and $0.6 million in 1997 and
1996, respectively. Sublease income for the unconsolidated subsidiaries for 1998
was approximately $2.7 million. There was no sublease income for 1997 and 1996.

NOTE 12 TRUST BASED CONVERTIBLE PREFERRED SECURITIES

In connection with the Insignia merger, the Company assumed the obligations
under the Trust Based Convertible Preferred Securities (the "Securities") with
an aggregate liquidation amount of $149.5 million. The Securities will mature on
September 30, 2016 and require distributions at the rate of 6.5% per annum, with
quarterly distributions payable in arrears. The Securities are convertible by
the holders at any time through September 30, 2016 and may be redeemed by the
Company on or after November 1, 1999. Each $50 of liquidation value of the
Securities can be converted into Class A Common Stock at a conversion price of
$49.61, which equates to 1.007 shares of Class A Common Stock.

NOTE 13 TRANSACTIONS INVOLVING MINORITY INTERESTS

On December 14, 1998, the Company sold, in a private placement, 1.4 million
Class B partnership preferred units of a subsidiary of the AIMCO operating
partnership for $30.85 million. The partnership units may be redeemed at the
option of the holders at any time, and at the option of the Company under
certain circumstances. Any redemption of the units may be satisfied by delivery
of cash, Class A Common Stock or OP Units.

On December 30, 1998, the Company acquired Calhoun Beach Club Apartments, a
351 unit, high-rise apartment community and 83,300 square feet of commercial
space for approximately $77.1 million. The Company paid cash of $6.0 million;
assumed $53.5 million in mortgage debt; issued 90,000 preferred operating
partnership units valued at $9.0 million; issued approximately 100,300 common
operating partnership units valued at $4.1 million; and withheld, as contingent
consideration, approximately 109,800 common operating partnership units valued
at approximately $4.5 million.

NOTE 14 REGISTRATION STATEMENTS

In April 1997, AIMCO filed a shelf registration statement with the
Securities and Exchange Commission which provides for the offering of, on a
delayed or continuous basis, debt securities, Class A Common Stock, preferred
stock and warrants with an aggregate value of up to $1.0 billion. The shelf
registration statement was declared effective in May 1997.

F-23
63
APARTMENT INVESTMENT AND MANAGEMENT COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

In August 1998, AIMCO and the AIMCO operating partnership filed a shelf
registration statement with the Securities and Exchange Commission with respect
to an aggregate of $1,268 million of debt and equity securities of AIMCO (of
which $268 million was carried forward from AIMCO's 1997 shelf registration
statement) and $500 million of debt securities of the AIMCO operating
partnership. The registration statement was declared effective by the SEC on
December 10, 1998. As of December 31, 1998, the Company had $1,268 million
available and the AIMCO operating partnership had $500 million available from
this registration statement. The Company expects to finance pending acquisitions
of real estate interests with the issuance of equity and debt securities under
the shelf registration statement.

NOTE 15 STOCKHOLDERS' EQUITY

Preferred Stock

At December 31, 1998 and 1997, the Company had the following classes of
preferred stock outstanding:

1998 1997
-------- --------

Class B Cumulative Convertible Preferred Stock, $.01 par
value, 750,000 shares authorized, 750,000 and 750,000
shares issued and outstanding............................. $ 75,000 $ 75,000
Class C Cumulative Preferred Stock, $.01 par value,
2,760,000 shares authorized, 2,400,000 and 2,400,000
shares issued and outstanding; dividends payable at 9.0%,
per annum................................................. 60,000 60,000
Class D Cumulative Preferred Stock, $.01 par value,
4,600,000 shares authorized, 4,200,000 and no shares
issued and outstanding; dividends payable at 8.75%, per
annum..................................................... 105,000 --
Class G Cumulative Preferred Stock, $.01 par value,
4,050,000 shares authorized, 4,050,000 and no shares
issued and outstanding; dividends payable at 9.375%, per
annum..................................................... 101,250 --
Class H Cumulative Preferred Stock, $.01 par value,
2,300,000 shares authorized, 2,000,000 and no shares
issued and outstanding; dividends payable at 9.5%, per
annum..................................................... 50,000 --
Class J Cumulative Convertible Preferred Stock, $.01 par
value, 2,000,000 shares authorized, 1,000,000 and no
shares issued and outstanding............................. 100,000 --
Class E Cumulative Convertible Preferred Stock, $.01 par
value, 10,000,000 shares authorized, 8,423,658 and no
shares issued and outstanding............................. 301,218 --
-------- --------
$792,468 $135,000
======== ========

All classes of preferred stock, except the Class E Cumulative Convertible
Preferred Stock (the "Class E Preferred Stock"), are on equal parity and are
senior to the Class E Preferred Stock, the Class A Common Stock, and the Class B
Common Stock. The Class E Preferred Stock is senior to the Class A Common Stock
and the Class B Common Stock. All the classes of preferred stock have no voting
rights.

Holders of the Class B Cumulative Convertible Preferred Stock (the "Class B
Preferred Stock") are entitled to receive, when, as and if declared by the Board
of Directors, quarterly cash dividends per share equal to the greater of
$1.78125 or the cash dividends declared on the number of shares of Class A
Common Stock into which one share of Class B Preferred Stock is convertible.
Each share of Class B Preferred Stock is convertible at the option of the
holder, beginning August 1998, into 3.28407 shares of Class A Common Stock,
subject to certain anti-dilution adjustments.

Holders of Class J Cumulative Convertible Preferred Stock (the "Class J
Preferred Stock") are entitled to receive cash dividends at the rate of 7% per
annum of the $100 liquidation preference (equivalent to $7 per annum per share)
for the period beginning on November 6, 1998 and lasting until November 15,
1998, 8% per

F-24
64
APARTMENT INVESTMENT AND MANAGEMENT COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

annum of the $100 liquidation preference(equivalent to $8 per annum per share)
for the period beginning on and including November 15, 1998 and lasting until
November 15, 1999, 9% per annum of the $100 liquidation preference (equivalent
to $9 per annum per share) for the period beginning on and including November
15, 1999 and lasting until November 15, 2000, and 9 1/2% per annum of the $100
liquidation preference (equivalent to $9.50 per annum per share) thereafter.

The Company may convert any or all of the Class J Preferred Stock into
Class A Common Stock at a conversion rate of 2.5 shares of Class A Common Stock
for each share of Class J Preferred Stock, plus unpaid dividends accrued on the
shares redeemed (a) on or after November 6, 2002, if the market price of the
Class A Common Stock in the five most recent trading days, as defined, is equal
to or greater than $40 or; (b) at any time on or prior to November 6, 2002, if
the internal rate of return, as defined, exceeds 12.5%.

The Class E Preferred Stock was issued in connection with the Insignia
merger. Holders of Class E Preferred Stock were entitled to receive the same
cash dividends per share as holders of Class A Common Stock. In addition, on
January 15, 1999, holders of Class E Preferred Stock received a special dividend
in an aggregate amount of approximately $50 million, and all outstanding shares
of Class E Preferred Stock automatically converted into an equal number of
shares of Class A Common Stock.

Common Stock

During 1998 and 1997, the Company issued approximately 600,000 and
1,149,900 shares, respectively, of Class A Common Stock to certain executive
officers (or entities controlled by them) at market prices. In exchange for the
shares purchased, the executive officers (or entities controlled by them)
executed notes payable totaling $23.5 million and $33.5 million, respectively.
Total payments on such notes from officers in 1998 and 1997 were $8.9 million
and $14.5 million, respectively. In addition, in 1998, the Company issued
approximately 40,000 restricted shares of Class A Common Stock to certain
executive officers.

Concurrent with AIMCO's initial public offering in July 1994, 650,000
shares of AIMCO common stock held by four of the Company's executive officers
were reclassified as AIMCO Class B Common Stock ("Class B Common Stock"). The
Class B Common Stock is convertible into Class A Common Stock, subject to
certain conditions. In 1998, 1997 and 1996, respectively, 162,500, 162,500, and
260,000 shares of Class B Common Stock were converted into Class A Common Stock
upon the satisfaction of the requisite financial conditions for 1994 through
1998. As of December 31, 1998, all previously issued and outstanding shares of
Class B Common Stock had been converted to Class A Common Stock.

NOTE 16 STOCK OPTION PLANS AND STOCK WARRANTS

The Company has elected to follow Accounting Principles Board Opinion No.
25, Accounting for Stock Issued to Employees ("APB 25") and related
interpretations in accounting for its employee stock options because, as
discussed below, the alternative fair value accounting provided for under
Statement of Financial Accounting Standards No. 123, Accounting for Stock-Based
Compensation ("SFAS 123"), requires use of option valuation models that were not
developed for use in valuing employee stock options and warrants. Under APB 25,
because the exercise price of the Company's employee stock options and warrants
equals the market price of the underlying stock on the date of grant, no
compensation expense is recognized.

The Company has adopted the 1994 Stock Option Plan of Apartment Investment
and Management Company (the "1994 Plan"), the Apartment Investment and
Management Company 1996 Stock Award and Incentive Plan (the "1996 Plan"), the
Apartment Investment and Management Company 1997 Stock Award and Incentive Plan
(the "1997 Plan") and the Apartment Investment and Management Company Non-
Qualified Employee Stock Option Plan (the "Non-Qualified Plan") to attract and
retain officers, key employees and independent directors. The 1994 Plan provides
for the granting of a maximum of 150,000 options to purchase common shares. The
1996 Plan provides for the granting of a maximum of 500,000 options

F-25
65
APARTMENT INVESTMENT AND MANAGEMENT COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

to purchase common shares. The 1997 Plan provides for the granting of a maximum
of 20,000,000 options to purchase common shares. The Non-Qualified Plan provides
for the granting of a maximum of 500,000 options to purchase common shares. The
1994 Plan, the 1996 Plan, the 1997 Plan and the Non-Qualified Plan allow for the
grant of incentive and non-qualified stock options, and are administered by the
Compensation Committee of the Board of Directors. The 1994 Plan also provides
for a formula grant of the non-qualified stock options to the independent
directors to be administered by the Board of Directors to the extent necessary.
The exercise price of the options granted may not be less than the fair market
value of the common stock at the date of grant. The term of the incentive and
non-qualified options is ten years from the date of grant. The options vest over
a one to five-year period from the date of grant. Terms may be modified at the
discretion of the Compensation Committee of the Board of Directors.

Pro forma information regarding net income and earnings per share is
required by SFAS 123, which also requires that the information be determined as
if the Company had accounted for its employee stock options and warrants granted
subsequent to December 31, 1994 under the fair value method. The fair value for
these options and warrants were estimated at the date of grant using a
Black-Scholes valuation model with the following weighted average assumptions:

1998 1997 1996
------------ ------------ ------------

Range of risk free interest rates.......... 5.2% to 7.5% 5.2% to 7.5% 5.2% to 7.5%
Expected dividend yield.................... 6.0% 6.0% 7.8%
Volatility factor of the expected market
price of the Company's common stock...... 0.183 0.175 0.194
Weighted average expected life of
options.................................. 4.5 years 4.5 years 4.5 years

The Black-Scholes valuation model was developed for use in estimating the
fair value of traded options and warrants which have no vesting restrictions and
are fully transferable. In addition, the valuation model requires the input of
highly subjective assumptions including the expected stock price volatility.
Because the Company's stock options and warrants have characteristics
significantly different from those of traded options and warrants, and because
changes in the subjective input assumptions can materially affect the fair value
estimate, in management's opinion, the existing model does not necessarily
provide a reliable single measure of the fair value of its employee stock
options and warrants.

For purposes of pro forma disclosures, the estimated fair values of the
options are amortized over the options' vesting period. The Company's pro forma
information for the years ended December 31, 1998, 1997 and 1996 is as follows
(in thousands, except per share information):

1998 1997 1996
------- ------- -------

Pro forma income attributable to common stockholders.... $34,443 $26,096 $12,201
Pro forma basic earnings per common share............... $ 0.76 $ 1.00 $ 0.98
Pro forma diluted earnings per common share............. $ 0.75 $ 1.00 $ 0.98

The effects of applying SFAS 123 in calculating pro forma income
attributable to common stockholders and pro forma basic earnings per share may
not necessarily be indicative of the effects of applying SFAS 123 to future
years' earnings.

F-26
66
APARTMENT INVESTMENT AND MANAGEMENT COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The following table summarizes the option and warrants activity for the
years ended December 31, 1998, 1997 and 1996:

1998 1997 1996
-------------------- -------------------- -------------------
WEIGHTED WEIGHTED WEIGHTED
OPTIONS AVERAGE OPTIONS AVERAGE OPTIONS AVERAGE
AND EXERCISE AND EXERCISE AND EXERCISE
WARRANTS PRICE WARRANTS PRICE WARRANTS PRICE
--------- -------- --------- -------- -------- --------

Outstanding at beginning of year...................... 1,184,000 $30.01 505,000 $20.74 108,000 $18.00
Granted............................................... 5,578,000 38.91 127,000 30.88 422,600 20.75
Assumed in connection with acquisitions............... 671,000 25.99 995,000 26.75 -- --
Exercised............................................. (647,000) 19.88 (437,000) 18.11 (2,600) 18.50
Forfeited............................................. (50,000) 20.25 (6,000) 18.50 (23,000) 17.50
--------- ------ --------- ------ ------- ------
Outstanding at end of year............................ 6,736,000 $37.82 1,184,000 $30.01 505,000 $20.74
Exercisable at end of year............................ 1,293,000 $25.19 690,000 $19.95 425,000 $20.25
Weighted-average fair value of options and warrants
granted during the year............................. $ 3.71 $ 3.24 $ 1.01

At December 31, 1998, exercise prices for outstanding and exercisable
options range from $12.36 to $43.85 and warrants range from $3.96 to $51.67, and
the remaining weighted-average contractual life of the options and warrants is
9.06 years.

On June 3, 1997, AIMCO issued warrants (the "NHP Warrants") exercisable to
purchase an aggregate of 399,999 shares of Class A Common Stock at $36 per share
at any time prior to June 3, 2002. The NHP Warrants were issued as part of the
consideration for the NHP Real Estate Companies.

On December 2, 1997, AIMCO issued warrants (the "Oxford Warrants")
exercisable to purchase up to an aggregate of 500,000 shares of Class A Common
Stock at $41 per share. The Oxford Warrants were issued to affiliates of Oxford
Realty Financial Group, Inc., a Maryland corporation ("Oxford"), in connection
with the amendment of certain agreements pursuant to which the Company manages
properties controlled by Oxford or its affiliates. The actual number of shares
of Class A Common Stock for which the Oxford Warrants will be exercisable is
based on certain performance criteria with respect to the Company's management
arrangements with Oxford for each of the five years ending December 31, 2001.
The Oxford Warrants are exercisable for six years after the determination of
such criteria for each of the five years.

In connection with the Insignia merger, the Company assumed warrants that
will allow the holders to purchase shares of Class A Common Stock at prices
ranging from approximately $4 to $52 per share at any time prior to September
30, 1999. At December 31, 1998, warrants representing approximately 359,000
shares were available for exercise.

On December 14, 1998, the Company sold, in a private placement, a warrant
to purchase 875,000 shares of Class A Common Stock for $4.15 million. The
warrant has an exercise price of $40 per share. The warrant may be exercised at
any time, and expires upon a redemption of the Class B partnership preferred
units (see Note 13).

NOTE 17 EARNINGS PER SHARE

In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128, Earnings Per Share ("SFAS 128"),
which replaced Accounting Principles Board Opinion No. 15 ("APB 15"). As
required, the Company adopted SFAS 128 as of December 31, 1997 and restated
earnings per share information for prior interim and annual periods.

The Class B Common Stock is not included in the computation of earnings per
share until such time as all the conditions required for conversion into Class A
Common Stock have been met. The Class B Preferred Stock, Class E Preferred Stock
and the Class J Preferred Stock is convertible (see Note 15). The Class C

F-27
67
APARTMENT INVESTMENT AND MANAGEMENT COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Preferred Stock, the Class D Preferred Stock, the Class G Preferred Stock, and
the Class H Preferred Stock are not convertible.

The following table illustrates the calculation of basic and diluted
earnings per share for the years ended December 31, 1998, 1997 and 1996 (in
thousands, except per share data):

1998 1997 1996
-------- -------- --------

Numerator:
Net income.................................................. $ 64,474 $ 28,633 $ 12,984
Preferred stock dividends................................... (26,533) (2,315) --
-------- -------- --------
Numerator for basic and diluted earnings per share -- income
attributable to common stockholders....................... $ 37,941 $ 26,318 $ 12,984
-------- -------- --------
Denominator:
Denominator for basic earnings per share -- weighted average
number of shares of common stock outstanding.............. 45,187 24,055 12,411
Effect of dilutive securities:
Class E Preferred Stock..................................... 2,119 -- --
Employee stock options...................................... 318 381 14
Warrants.................................................... -- -- 2
-------- -------- --------
Dilutive potential common shares............................ 2,437 381 16
-------- -------- --------
Denominator for diluted earnings per share.................. 47,624 24,436 12,427
-------- -------- --------
Basic earnings per common share:
Operations................................................ $ 0.74 $ 0.99 $ 1.05
Gain on disposition of properties......................... 0.10 0.11 --
Extraordinary item........................................ -- (0.01) --
-------- -------- --------
Total............................................. $ 0.84 $ 1.09 $ 1.05
-------- -------- --------
Diluted earnings per common share:
Operations................................................ $ 0.70 $ 0.98 $ 1.04
Gain on dispositions of properties........................ 0.10 0.11 --
Extraordinary item........................................ -- (0.01) --
-------- -------- --------
Total............................................. $ 0.80 $ 1.08 $ 1.04
-------- -------- --------

NOTE 18 RECENT ACCOUNTING DEVELOPMENTS

In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, Accounting for Derivative Instruments
and Hedging Activities ("Statement 133"). Statement 133 requires recording all
derivative instruments as assets or liabilities, measured at fair value.
Statement 133 is effective beginning after 1999. The Company has elected not to
early adopt the provisions of Statement 133 as of December 31, 1998 and when
Statement 133 is adopted, the Company does not expect the Statement to have a
significant impact on its financial position and results of operations.

NOTE 19 TRANSACTIONS WITH AFFILIATES

In January 1998, AIMCO's operating partnership sold an aggregate of 15,000
of its Class I High Performance Partnership Units ("the "High Performance
Units") to a joint venture formed by fourteen members of AIMCO's senior
management, and to three of its independent directors for $2.1 million in cash.
The High Performance Units have nominal value unless the Company's total return,
defined as dividend income plus share price appreciation, over the three year
period ending December 31, 2000, is at least 30% and

F-28
68
APARTMENT INVESTMENT AND MANAGEMENT COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

exceeds the industry average, as determined by a peer group index, by at least
15% (the "Total Return"). At the conclusion of the three year period, if the
Company's Total Return satisfies these criteria, the holders of the High
Performance Units will receive distributions and allocations of income and loss
from the AIMCO operating partnership in the same amounts and at the same times
as would holders of a number of OP Units equal to the quotient obtained by
dividing the product of (i)(a) 15% of the amount by which the Company's
cumulative Total Return over the three year period exceeds the greater of 115%
of a peer group index or 30% (such excess being the "Excess Return"), multiplied
by (b) the weighted average market value of the Company's outstanding Class A
Common Stock and OP Units, by (ii) the market value of one share of Class A
Common Stock at the end of the three year period. The three year measurement
period will be shortened in the event of a change of control of the Company.
Unlike OP Units, the High Performance Units are not redeemable or convertible
into Class A Common Stock unless a change of control of the Company occurs.
Because there is substantial uncertainty that the High Performance Units will
have more than nominal value due to the required Total Return over the three
year term, the Company has not recorded any value to the High Performance Units.
If the measurement period had ended December 31, 1998, the Excess Return would
have been $0 and the value of the High Performance Units would have been $0, and
such High Performance Units would have had no dilutive effect on net income per
share.

Interest income earned on notes receivable from affiliates for the year
ended December 31, 1998 was $26.1 million. Fees earned based on services
provided by the Company, as general partner, to real estate partnerships for
customary services including refinancing, construction supervisory and
disposition fees for the year ended December 31, 1998 were $6.4 million.
Interest income on notes receivable from affiliates and fees earned by the
Company for the years ended December 31, 1997 and 1996 were not significant.

NOTE 20 EMPLOYEE BENEFIT PLANS

The Company offers medical, dental, life and long-term disability benefits
to employees of the Company through insurance coverage of Company-sponsored
plans. The medical and dental plans are self-funded and are administered by
independent third parties. In addition, the Company also participates in a
401(k) defined-contribution employee savings plan. Employees who have completed
six months of service are eligible to participate. The Company matches 50% of
the participant's contributions to the plan up to a maximum of 6% of the
participant's prior year compensation.

F-29
69
APARTMENT INVESTMENT AND MANAGEMENT COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 21 UNAUDITED SUMMARIZED CONSOLIDATED QUARTERLY INFORMATION

Summarized unaudited consolidated quarterly information for 1998 and 1997
is provided below (amounts in thousands, except per share amounts).

QUARTER
---------------------------------------
YEAR ENDED DECEMBER 31, 1998 FIRST SECOND THIRD FOURTH
- ---------------------------- ------- ------- -------- --------

Revenue from property operations..................... $71,336 $89,928 $104,436 $111,439
Income from property operations...................... 28,918 33,701 33,943 37,388
Revenue from service company business................ 4,821 4,741 4,406 10,135
Company's share of income from service company
business........................................... 992 1,183 1,775 1,475
Income before extraordinary item and minority
interest in operating partnership.................. 23,930 14,594 17,745 13,387
Net income........................................... 21,642 13,620 16,582 12,630
Basic earnings per common share...................... $ 0.44 $ 0.19 $ 0.19 $ 0.05
Diluted earnings per common share.................... $ 0.43 $ 0.19 $ 0.19 $ 0.05
Weighted average common shares outstanding........... 41,128 45,298 47,062 47,261
Weighted average common shares and common share
equivalents outstanding............................ 41,310 45,539 47,403 56,244

QUARTER
---------------------------------------
YEAR ENDED DECEMBER 31, 1997 FIRST SECOND THIRD FOURTH
- ---------------------------- ------- ------- -------- --------

Revenue from property operations..................... $38,040 $41,679 $ 47,364 $ 65,923
Income from property operations...................... 14,808 15,971 17,375 24,323
Revenue from service company business................ 2,444 3,161 3,568 4,764
Company's share of income from service company
business........................................... 551 1,480 773 (776)
Income before minority interest in operating
partnership........................................ 5,694 6,039 7,963 13,270
Net income........................................... 4,584 5,264 6,967 11,818
Basic earnings per share............................. $ 0.28 $ 0.26 $ 0.25 $ 0.30
Diluted earnings per share........................... $ 0.28 $ 0.26 $ 0.25 $ 0.29
Weighted average common shares outstanding........... 16,454 20,366 24,425 34,771
Weighted average common shares and common share
equivalents outstanding............................ 16,586 20,504 24,609 35,190

NOTE 22 INDUSTRY SEGMENTS

The Company adopted Financial Accounting Standards Board ("FASB") Statement
No. 131, Disclosures about Segments of an Enterprise and Related Information
("Statement 131") in the fourth quarter of 1998. Statement No. 131 superseded
FASB Statement No. 14, Financial Reporting for Segments of a Business
Enterprise. Statement 131 establishes standards for the way public business
enterprises report information regarding reportable operating segments. The
adoption of Statement 131 did not affect the results of operations or financial
position of the Company.

The Company owns and operates multi-family apartment communities throughout
the United States and Puerto Rico which generated rental and other property
related income through the leasing of apartment units to a diverse base of
tenants. The Company separately evaluates the performance of each of its
apartment communities. However, because each of the apartment communities have
similar economic characteristics, facilities, services and tenants, the
apartment communities have been aggregated into a single apartment

F-30
70
APARTMENT INVESTMENT AND MANAGEMENT COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

communities segment. All segment disclosures are included in or can be derived
from the Company's consolidated financial statements.

All revenues are from external customers and no revenues are generated from
transactions with other segments. There are no tenants which contributed 10% or
more of the Company's total revenues during 1998, 1997 or 1996.

NOTE 23 PRO FORMA FINANCIAL STATEMENTS (UNAUDITED)

The unaudited pro forma condensed consolidated statements of operations for
the years ended December 31, 1998 and 1997 have been prepared as if each of the
following transactions had occurred on January 1, 1997: (i) the NHP stock
purchases and the NHP Merger (see Note 5); (ii) the acquisition of the NHP Real
Estate Companies (see Note 6); (iii) a reorganization of the interests held by
the NHP Real Estate Companies (see Note 5); (iv) the (a) 1997 property
acquisitions, (b) the acquisition of the Controlled NHP Partnerships and (c) the
acquisition of the Winthrop Portfolio, the related issuance of Class A Common
Stock and OP Units, the incurrence of indebtedness to finance such acquisitions,
and the refinancing of such indebtedness; (v) the 1998 property acquisitions;
(vi) the 1998 property dispositions; (vii) the sale of (a) 2,015,000 shares of
Class A Common Stock in February 1997, (b) 2,300,000 shares of Class A Common
Stock in May 1997, (c) 5,052,418 shares of Class A Common Stock in August and
September 1997, and (d) 7,000,000 shares of Class A Common Stock in October
1997, and the application of the aggregate net proceeds thereof to repay
indebtedness and fund the purchase of additional shares of NHP common stock;
(viii) the sale of 750,000 shares of Class B Preferred Stock in August 1997, and
the application of the net proceeds thereof to repay indebtedness; (ix) the sale
of 2,400,000 shares of Class C Preferred Stock in December 1997 and the
application of the net proceeds thereof to pay indebtedness; (x) the sale of
4,200,000 shares of Class D Cumulative Preferred Stock and the application of
the net proceeds thereof to pay indebtedness; (xi) the sale of 4,050,000 shares
of Class G Cumulative Preferred Stock and the application of the net proceeds
thereof to pay indebtedness; (xii) the sale of 2,000,000 shares of Class H
Cumulative Preferred Stock and the application of the net proceeds thereof to
pay indebtedness; (xiii) the sale of 1,000,000 shares of Class J Cumulative
Convertible Preferred Stock and the application of the net proceeds thereof to
repay indebtedness; (xiv) the Company's receipt of a dividend from ANHI from
proceeds ANHI received from ANHI stock transfers; (xv) the Ambassador Merger
(Note 4); (xvi) the purchase of third-party notes payable secured by four
properties in which the NHP Real Estate Companies own an interest, and the
conversion of such notes payable into loans from the general partner; (xvii) the
purchase of land leased by two partnerships in which the NHP Real Estate
Companies own an interest; and (xviii) the Insignia merger (Note 4).

The pro forma information is not necessarily indicative of what the
Company's results of operations would have been assuming the completion of the
described transactions at the beginning of the periods indicated, nor does it
purport to project the Company's results of operations for any future period.

F-31
71
APARTMENT INVESTMENT AND MANAGEMENT COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)

1998 1997
-------- --------

Income from property operations............................. $155,741 $140,744
-------- --------
Company's share of loss from service company business....... (1,162) (12,628)
-------- --------
Income (loss) before minority interest in operating
partnership............................................... 44,443 (2,946)
-------- --------
Net income.................................................. $ 43,669 $ 2,393
======== ========
Net income attributable to preferred stockholders........... $ 40,994 $ 41,174
======== ========
Net income (loss) attributable to common stockholders....... $ 2,675 $(38,781)
======== ========
Basic earnings (loss) per share............................. $ 0.05 $ (0.70)
Diluted earnings (loss) per share........................... $ 0.05 $ (0.70)
Weighted average number of common shares outstanding........ 56,735 55,109
Weighted average number of common shares and common share
equivalents outstanding................................... 57,400 55,953

NOTE 24 SUBSEQUENT EVENTS

Dividend declared

AIMCO's Board of Directors declared a one-time special dividend of $5.582
per share of the Class E Preferred Stock, paid on January 15, 1999 to holders of
record on December 31, 1998. Upon payment of this special dividend totaling
approximately $50 million in the aggregate, each share of Class E Preferred
Stock was automatically converted into one share of Class A Common Stock.
Approximately 8.4 million shares of Class E Preferred stock were issued and
approximately 0.5 million shares were reserved for options and warrants in
October 1998 in connection with the Insignia merger.

On January 20, 1999, the Board of Directors declared a quarterly cash
dividend of $0.625 per common share for the quarter ended December 31, 1998,
paid on February 12, 1999, to stockholders of record on February 5, 1999. The
increased dividend is equivalent to an annualized dividend rate of $2.50 per
common share, an 11% increase from the previous annual dividend rate of $2.25.

Insignia Properties Trust

As a result of the Insignia merger, AIMCO acquired approximately 51% of the
outstanding shares of beneficial interest of IPT. On February 26, 1999, IPT was
merged into AIMCO. Pursuant to the merger, each of the outstanding shares of IPT
that were not held by AIMCO were converted into the right to receive 0.3601
shares of Class A Common Stock for each share of IPT common stock, resulting in
the issuance of approximately 4.3 million shares of Class A Common Stock (with a
recorded value of approximately $158.8 million).

Stock Offering

On February 18, 1999, AIMCO issued 5,000,000 shares of newly created Class
K Convertible Cumulative Preferred Stock, par value $.01 per share ("Class K
Preferred Stock") in a public offering. The net proceeds of $120.6 million were
used to repay certain indebtedness and for working capital. For three years,
holders of the Class K Preferred Stock are entitled to receive, when, as and if
declared by the Board of Directors, annual cash dividends in an amount per share
equal to the greater of (i) $2.00 per year (equivalent to 8% of the liquidation
preference), or (ii) the cash dividends payable on the number of shares of Class
A

F-32
72
APARTMENT INVESTMENT AND MANAGEMENT COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Common Stock into which a share of Class K Preferred Stock is convertible.
Beginning with the third anniversary of the date of original issuance, holders
of Class K Preferred Stock will be entitled to receive an amount per share equal
to the greater of (i) $2.50 per year (equivalent to 10% of the liquidation
preference), or (ii) the cash dividends payable on the number of Class A Common
Stock into which a share of Class K Preferred is convertible. The Class K
Preferred Stock is senior to the Class A Common Stock as to dividends and
liquidation. Upon any liquidation, dissolution or winding up of AIMCO, before
payment or distributions by AIMCO shall be made to any holders of Class A Common
Stock, the holders of the Class K Preferred Stock shall be entitled to receive a
liquidation preference of $25 per share, plus accumulated, accrued and unpaid
dividends.

Debt Refinancing

In February 1999, the Company terminated its $50 million credit facility
with Washington Mortgage Financial Group, Ltd. and repaid all outstanding
borrowings with proceeds from new long-term, fully amortizing indebtedness
secured by certain properties that previously secured the credit facility.

In February and March 1999, the Company incurred in the aggregate $83.4
million of long-term, fixed rate, fully amortizing mortgage debt secured by 13
properties in separate loan transactions. The Company used the $81.5 million of
net proceeds from the financings to repay debt under the interim loan agreement
with Lehman Brothers Inc., to repay debt under its credit facility with Bank of
America National Trust and Savings Association and Bank Boston, N.A. and to
provide working capital. As of March 11, 1999, the balance outstanding under the
interim loan agreement was $25 million, under the credit facility was $74.8
million, and under the IPT credit agreement was $45 million. The amount
available under the credit facility at March 11, 1999 was $24 million.

F-33
73

SCHEDULE III

APARTMENT INVESTMENT AND MANAGEMENT COMPANY
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1998
(IN THOUSANDS EXCEPT UNIT DATA)

INITIAL COST COST
---------------------- CAPITALIZED
BUILDINGS SUBSEQUENT
DATE YEAR NUMBER AND TO
PROPERTY NAME ACQUIRED LOCATION BUILT OF UNITS LAND IMPROVEMENTS ACQUISITION
- ------------- -------- --------------------- --------- -------- ------- ------------ -----------

100 Forest Place......... 10/97 OakPark, IL 1986 234 $ 3,463 $ 19,624 $ 528
40th North............... 7/94 Phoenix, AZ 1970 556 2,546 14,437 1,539
Anchorage................ 11/96 League City, TX 1985 264 523 9,097 403
Arbor Crossing........... 5/97 Lithonia, GA 1988 240 1,879 10,647 1,169
Arbor Station............ 4/98 Montgomery, AL 1987 264 1,627 9,218 577
Arbors................... 5/98 Deland, FL 1983 224 1,872 7,925 307
Arbors................... 10/97 Tempe, AZ 1971 200 1,092 6,189 310
Ashford Plantation....... 12/95 Atlanta, GA 1975 211 2,770 9,956 578
Aspen Hills.............. 5/98 Austin, TX 1986 344 3,281 13,917 590
Atriums of Plantation.... 8/98 Plantation, FL 1980 210 1,807 9,756 519
Bay Club................. 4/97 Aventura, FL 1990 702 10,530 60,830 1,719
Beacon Hill.............. 10/97 Chamblee, GA 1978 120 928 5,261 243
Bent Oaks................ 5/98 Austin, TX 1979 146 1,444 5,834 222
Blossomtree.............. 10/97 Scottsdale, AZ 1970 125 535 3,029 225
Bluffs................... 9/83 Boulder, CO 1971 232 696 7,779 909
Boardwalk................ 12/95 Tamarac, FL 1986 291 3,350 8,196 1,049
Brandywine............... 4/83 St. Petersburg, FL 1971 477 1,423 11,336 1,810
Brant Rock............... 10/97 Houston, TX 1984 84 337 1,908 128
Breasview................ 5/98 San Antonio, TX 1982 396 3,200 17,051 765
Brentwood................ 11/96 Lake Jackson, TX 1980 104 200 3,092 428
Bridgewater.............. 11/96 Tomball, TX 1978 206 333 4,033 551
Broadmoor Apartments..... 5/98 Austin, TX 1985 200 1,606 7,360 208
Brookdale Lakes.......... 5/98 Naperville, IL 1990 200 1,923 15,430 857
Brookside Village........ 4/96 Tustin, CA 1970 628 2,498 14,180 20,286
Calhoun Beach............ 12/98 Minneapolis, MN 1928/1998 351 11,567 65,546 2,633
Cambridge Heights........ 5/97 Natchez, MS 1979 94 249 1,413 74
Cape Cod................. 5/98 San Antonio, TX 1985 244 1,951 8,324 317
Captiva Club............. 12/96 Tampa, FL 1975 357 1,500 7,085 7,052
Casa Anita............... 3/98 Phoenix, AZ 1986 224 1,125 6,404 68
Cedar Creek.............. 5/98 San Antonio, TX 1979 392 1,630 10,051 328
Chesapeake............... 12/96 Houston, TX 1983 320 775 7,317 655
Citrus Grove............. 6/98 Redlands, CA 1985 198 1,118 6,333 107
Citrus Sunset............ 3/98 Vista, CA 1985 96 663 3,758 53
Cleveland Properties..... 10/98 Strongsville, OH 1975 0 646 3,652 91
Cobble Creek............. 3/98 Tucson, AZ 1980 301 1,299 7,395 269
Colonade
Gardens/Ferntree........ 10/97 Phoenix, AZ 1973 196 765 4,337 203
Colony................... 9/98 Bradenton, FL 1986 166 1,121 6,350 144
Copper Chase............. 12/96 Katy, TX 1982 316 1,484 11,530 478
Copperfield.............. 11/96 Houston, TX 1983 196 702 7,003 (574)
Coral Cove............... 5/98 Tampa, FL 1985 200 1,614 5,875 241
Coral Gardens............ 4/93 Las Vegas, NV 1983 670 3,190 12,745 2,047

DECEMBER 31, 1998
-----------------------------------------------------------------------------------
TOTAL COST
BUILDINGS NET OF
AND ACCUMULATED ACCUMULATED
PROPERTY NAME LAND IMPROVEMENTS TOTAL DEPRECIATION DEPRECIATION ENCUMBRANCES
- ------------- ----------- ------------ --------- ------------ ------------ ------------

100 Forest Place......... $ 3,463 $ 20,152 $ 23,615 $ 1,186 $ 22,429 $ 15,281
40th North............... 2,546 15,976 18,522 2,998 15,524 10,521
Anchorage................ 523 9,500 10,023 3,290 6,733 4,821
Arbor Crossing........... 1,880 11,815 13,695 866 12,829 5,191
Arbor Station............ 1,627 9,795 11,422 176 11,246 --(2)
Arbors................... 1,872 8,232 10,104 221 9,883 3,816
Arbors................... 1,092 6,499 7,591 323 7,268 7,605
Ashford Plantation....... 2,770 10,534 13,304 1,449 11,855 7,289
Aspen Hills.............. 3,281 14,507 17,788 504 17,284 9,800
Atriums of Plantation.... 1,807 10,275 12,082 195 11,886 7,767
Bay Club................. 10,530 62,549 73,079 3,923 69,156 49,000
Beacon Hill.............. 928 5,504 6,432 236 6,196 3,590
Bent Oaks................ 1,444 6,056 7,500 181 7,319 4,400
Blossomtree.............. 535 3,254 3,789 158 3,631 2,092
Bluffs................... 696 8,688 9,384 5,396 3,988 4,522
Boardwalk................ 3,350 9,245 12,595 1,299 11,296 9,267(2)
Brandywine............... 1,423 13,146 14,569 5,217 9,352 6,407
Brant Rock............... 337 2,036 2,373 91 2,282 1,210
Breasview................ 3,200 17,816 21,016 523 20,493 14,025
Brentwood................ 200 3,520 3,720 242 3,478 1,779
Bridgewater.............. 333 4,584 4,917 1,190 3,727 4,150
Broadmoor Apartments..... 1,606 7,568 9,174 226 8,948 6,000
Brookdale Lakes.......... 1,923 16,287 18,210 482 17,728 13,600
Brookside Village........ 7,263 29,701 36,964 2,706 34,258 --(2)
Calhoun Beach............ 11,698 68,048 79,746 -- 79,746 53,500
Cambridge Heights........ 249 1,487 1,736 113 1,623 1,555
Cape Cod................. 1,951 8,641 10,592 273 10,319 6,800
Captiva Club............. 1,500 14,137 15,637 591 15,046 --(2)
Casa Anita............... 1,125 6,472 7,597 219 7,378 4,101
Cedar Creek.............. 1,630 10,379 12,009 262 11,747 --(2)
Chesapeake............... 775 7,972 8,747 692 8,055 --(2)
Citrus Grove............. 1,118 6,440 7,558 211 7,347 --(2)
Citrus Sunset............ 663 3,811 4,474 107 4,367 3,594
Cleveland Properties..... 646 3,743 4,389 55 4,334 --(4)
Cobble Creek............. 1,299 7,664 8,963 253 8,710 6,998
Colonade
Gardens/Ferntree........ 765 4,540 5,305 226 5,079 --
Colony................... 1,121 6,494 7,615 121 7,494 3,331
Copper Chase............. 1,484 12,008 13,492 3,736 9,756 5,525
Copperfield.............. 572 6,559 7,131 1,178 5,953 3,453
Coral Cove............... 1,614 6,116 7,730 182 7,548 3,965
Coral Gardens............ 3,190 14,792 17,982 3,766 14,216 10,996

F-34
74

INITIAL COST COST
---------------------- CAPITALIZED
BUILDINGS SUBSEQUENT
DATE YEAR NUMBER AND TO
PROPERTY NAME ACQUIRED LOCATION BUILT OF UNITS LAND IMPROVEMENTS ACQUISITION
- ------------- -------- --------------------- --------- -------- ------- ------------ -----------

Country Club Villas...... 7/94 Amarillo, TX 1984 282 1,049 5,951 749
Country Club West........ 5/98 Greeley, CO 1986 288 1,646 17,029 637
Courtney Park............ 5/98 Fort Collins, CO 1986 248 2,570 15,336 505
Coventry Square.......... 11/96 Houston, TX 1983 270 975 6,355 684
Crossings at Bell........ 1/98 Amarillo, TX 1976 160 483 2,737 1,092
Crossings of Bellevue.... 5/98 Nashville, TN 1985 300 2,096 14,754 747
Crossroads............... 5/98 Phoenix, AZ 1982 316 1,447 12,788 456
Crows Nest............... 11/96 League City, TX 1984 176 795 5,400 247
Cypress Landing.......... 12/96 Savannah, GA 1984 200 386 7,911 983
Cypress Ridge............ 5/98 Houston, TX 1979 268 1,477 4,179 262
Dolphins Landing......... 12/96 Corpus Christi, TX 1980 218 1,740 5,589 662
Dunwoody Park............ 7/94 Dunwoody, GA 1980 318 1,838 10,538 966
Eagles Nest.............. 5/98 San Antonio, TX 1973 226 1,339 5,365 380
Eaglewood/Woods.......... 6/98 Memphis, TN 1983 584 750 16,544 (3,702)
Easton Village........... 11/96 Houston, TX 1983 146 440 6,584 284
Eden Crossing............ 11/94 Pensacola, FL 1985 200 1,111 6,332 653
Elm Creek................ 5/97 Elmhurst, IL 1986 372 5,339 30,253 6,939
Emerald Ridge............ 2/98 Tyler, TX 1984 484 1,469 8,324 469
Fairways................. 7/94 Chandler, AZ 1986 352 1,830 10,403 6,844
Ferntree................. 10/98 Phoenix, AZ 1970 219 1,243 7,046 10
Fieldcrest............... 10/98 Jacksonville, FL 1982 240 1,331 7,544 14
Fishermans Landing....... 9/98 Temple Terrace, FL 1986 256 1,643 9,311 153
Fisherman's Landing...... 12/97 Bradenton, FL 1984 200 1,275 7,225 571
Fishermans Wharf......... 11/96 Clute, TX 1981 360 830 9,969 407
Foothills................ 10/97 Tucson, AZ 1982 270 1,203 6,817 166
Foxbay................... 10/97 Tucson, AZ 1983 232 700 3,966 478
Foxchase................. 5/97 Alexandria, VA 1947 2,113 39,390 68,354 6,692
Foxtree.................. 10/97 Tempe, AZ 1976 487 2,505 14,194 687
Frankford Place.......... 7/94 Carrollton, TX 1982 274 1,125 6,382 854
Franklin Oaks............ 5/98 Franklin, TN 1987 468 3,467 22,753 1,369
Freedom Place Club....... 10/97 Jacksonville, FL 1988 352 2,289 12,970 388
Garden Terrace........... 7/94 Bowie, TX 1978 20 49 280 28
Greens of Naperville..... 5/97 Naperville, IL 1986 400 3,756 21,284 (227)
Greentree................ 12/96 Carrollton, TX 1983 365 1,909 14,842 1,442
Hampton Hill............. 11/96 Houston, TX 1984 332 1,574 8,408 1,218
Harbor Cove.............. 5/98 San Antonio, TX 1980 256 1,845 7,563 328
Hastings Place........... 11/96 Houston, TX 1984 176 734 3,382 307
Haverhill Commons........ 5/98 W. Palm Beach, FL 1986 222 2,389 8,372 443
Hazeltree................ 10/97 Phoenix, AZ 1970 310 997 5,650 689
Heather Ridge............ 5/98 Phoenix, AZ 1983 252 1,914 8,568 316
Heather Ridge............ 12/96 Arlington, TX 1983 180 655 5,455 (1,077)
Hidden Lake Apts......... 5/98 Tampa, FL 1983 267 1,613 7,241 357
Hiddentree............... 10/97 East Lansing, MI 1966 261 1,470 8,330 908
Highland Park............ 12/96 Fort Worth, TX 1985 500 3,234 19,536 (2,331)
Hillmeade................ 11/94 Nashville, TN 1985 288 2,872 16,066 1,449
Hunters Glen............. 4/98 Austell, GA 1983 72 301 1,704 69
Islandtree............... 10/97 Savannah, GA 1985 216 1,267 7,181 445
Jefferson Place.......... 11/94 Baton Rouge, LA 1985 234 2,696 15,115 1,397
La Jolla de San
Antonio................. 5/98 San Antonio, TX 1975 300 1,196 10,676 1,975
La Jolla de Tucson
Apts.................... 5/98 Tucson, AZ 1978 223 2,944 7,196 (431)
Lake Crossing............ 5/97 Austell, GA 1988 300 2,046 11,596 401

DECEMBER 31, 1998
-----------------------------------------------------------------------------------
TOTAL COST
BUILDINGS NET OF
AND ACCUMULATED ACCUMULATED
PROPERTY NAME LAND IMPROVEMENTS TOTAL DEPRECIATION DEPRECIATION ENCUMBRANCES
- ------------- ----------- ------------ --------- ------------ ------------ ------------

Country Club Villas...... 1,049 6,700 7,749 1,228 6,521 3,955
Country Club West........ 1,646 17,666 19,312 446 18,866 11,253
Courtney Park............ 2,570 15,841 18,411 401 18,010 9,979
Coventry Square.......... 975 7,039 8,014 2,679 5,335 3,005
Crossings at Bell........ 483 3,829 4,312 156 4,156 --(2)
Crossings of Bellevue.... 2,096 15,501 17,597 387 17,210 8,540
Crossroads............... 1,447 13,244 14,691 378 14,313 7,000
Crows Nest............... 795 5,647 6,442 1,708 4,734 2,856
Cypress Landing.......... 386 8,894 9,280 2,670 6,610 4,274
Cypress Ridge............ 1,477 4,441 5,918 177 5,741 4,250
Dolphins Landing......... 1,740 6,251 7,991 591 7,400 --(2)
Dunwoody Park............ 1,838 11,504 13,342 2,136 11,206 7,338
Eagles Nest.............. 1,339 5,745 7,084 260 6,824 4,805
Eaglewood/Woods.......... 750 12,842 13,592 1,325 12,267 --(2)
Easton Village........... 590 6,718 7,308 1,352 5,956 2,863
Eden Crossing............ 1,111 6,985 8,096 1,193 6,903 5,786
Elm Creek................ 5,339 37,192 42,531 2,388 40,143 --(2)
Emerald Ridge............ 1,469 8,793 10,262 435 9,827 6,176
Fairways................. 1,830 17,247 19,077 2,111 16,966 6,229
Ferntree................. 1,243 7,056 8,299 67 8,232 2,826
Fieldcrest............... 1,331 7,558 8,889 108 8,781 5,745
Fishermans Landing....... 1,643 9,464 11,107 177 10,930 5,688
Fisherman's Landing...... 1,275 7,796 9,071 298 8,773 --
Fishermans Wharf......... 830 10,376 11,206 4,230 6,976 3,498(2)
Foothills................ 1,203 6,983 8,186 354 7,832 3,835
Foxbay................... 700 4,444 5,144 208 4,936 3,176
Foxchase................. 16,175 98,261 114,436 5,955 108,481 65,879
Foxtree.................. 2,505 14,881 17,386 736 16,650 8,845
Frankford Place.......... 1,125 7,236 8,361 1,409 6,952 3,896
Franklin Oaks............ 3,467 24,122 27,589 668 26,921 17,700
Freedom Place Club....... 2,289 13,358 15,647 618 15,029 6,935
Garden Terrace........... 49 308 357 61 296 --
Greens of Naperville..... 3,756 21,057 24,813 1,308 23,505 12,724(2)
Greentree................ 1,909 16,284 18,193 4,697 13,496 7,358(2)
Hampton Hill............. 2,130 9,070 11,200 4,173 7,027 4,094
Harbor Cove.............. 1,845 7,891 9,736 250 9,486 5,900
Hastings Place........... 734 3,689 4,423 1,166 3,257 2,626
Haverhill Commons........ 2,389 8,815 11,204 241 10,963 9,100
Hazeltree................ 997 6,339 7,336 294 7,042 4,034
Heather Ridge............ 1,914 8,884 10,798 248 10,550 6,000
Heather Ridge............ 655 4,378 5,033 593 4,440 2,603
Hidden Lake Apts......... 1,613 7,598 9,211 219 8,992 --
Hiddentree............... 1,470 9,238 10,708 573 10,135 4,390
Highland Park............ 3,234 17,205 20,439 8,294 12,145 9,270
Hillmeade................ 2,872 17,515 20,387 2,930 17,457 10,788
Hunters Glen............. 301 1,773 2,074 65 2,009 1,111
Islandtree............... 1,267 7,626 8,893 322 8,571 4,191
Jefferson Place.......... 2,697 16,511 19,208 2,803 16,405 9,281
La Jolla de San
Antonio................. 2,670 11,177 13,847 337 13,510 8,855
La Jolla de Tucson
Apts.................... 1,470 8,239 9,709 869 8,840 5,820
Lake Crossing............ 2,047 11,996 14,043 947 13,096 9,765

F-35
75

INITIAL COST COST
---------------------- CAPITALIZED
BUILDINGS SUBSEQUENT
DATE YEAR NUMBER AND TO
PROPERTY NAME ACQUIRED LOCATION BUILT OF UNITS LAND IMPROVEMENTS ACQUISITION
- ------------- -------- --------------------- --------- -------- ------- ------------ -----------

Lakehaven I.............. 5/97 Carol Stream, IL 1984 144 1,071 6,069 298
Lakehaven II............. 5/97 Carol Stream, IL 1985 348 2,680 15,189 604
Landmark................. 5/98 Albuquerque, NM 1965 101 780 4,455 224
Las Brisas............... 12/95 San Antonio, TX 1983 176 1,100 5,454 (2,476)
Las Brisas............... 7/94 Casa Grande, AZ 1985 132 573 3,260 3,127
Legend Oaks/The
Woodlands............... 5/98 Tampa, FL 1983 416 2,723 12,243 686
Lexington................ 7/94 San Antonio, TX 1981 72 311 1,764 125
Los Arboles.............. 9/97 Chandler, AZ 1985 232 1,662 9,418 449
Madera Point............. 5/98 Phoenix, AZ 1986 256 924 12,733 420
Meadow Creek............. 4/85 Boulder, CO 1972 332 1,387 10,027 919
Meadows.................. 12/96 Austin, TX 1983 100 417 4,563 673
Mesa Ridge............... 5/98 San Antonio, TX 1986 200 1,159 6,594 371
Mills.................... 5/98 Houston, TX 1979 708 7,075 18,750 774
Montecito................ 7/94 Austin, TX 1985 268 1,268 7,194 1,809
Morton Towers............ 9/97 Miami Beach, FL 1960 1,277 8,736 49,774 21,136
Mountainview............. 5/98 Colorado Springs, CO 1985 252 1,935 14,647 613
Newberry Park............ 5/97 Chicago, IL 1985 84 181 1,027 (3)
Newport.................. 7/94 Avondale, AZ 1986 204 800 4,554 508
Oak Falls................ 11/96 Spring, TX 1983 144 514 3,585 398
Ocean Oaks Apartments.... 5/98 Port Orange, FL 1988 296 2,694 11,157 443
Old Farm................. 12/98 Lexington, KY 1985 330 1,893 10,725 43
Olmos Club............... 10/97 San Antonio, TX 1983 134 322 1,825 120
Olympiad................. 11/94 Montgomery, AL 1986 176 1,046 5,958 558
Orchidtree............... 10/97 Scottsdale, AZ 1971 278 2,314 13,112 303
Palencia................. 5/98 Tampa, FL 1985 420 3,448 14,666 737
Paradise Palms........... 7/94 Phoenix, AZ 1970 130 647 3,684 469
Park @ Cedar Lawn........ 11/96 Galveston, TX 1985 192 769 5,073 358
Park Colony.............. 5/98 Norcross, GA 1984 352 3,335 17,990 491
Parliament Bend.......... 7/94 San Antonio, TX 1980 232 765 4,342 662
Peachtree Park........... 1/96 Atlanta, GA 1962/1995 295 4,681 12,957 1,898
Penn Square.............. 12/94 Albuquerque, NM 1982 210 1,128 6,478 592
Peppermill Place......... 11/96 Houston, TX 1983 224 406 3,957 441
Pine Creek............... 10/97 Clio, MI 1978 233 852 4,830 318
Pine Shadows............. 5/98 Phoenix, AZ 1983 272 2,490 11,143 402
Pinebrook................ 10/98 Jacksonville, FL 1974 208 856 4,854 6
Pleasant Ridge........... 11/94 Little Rock, AR 1982 200 1,660 9,464 811
Pleasant Valley Point.... 11/94 Little Rock, AR 1985 112 907 5,069 890
Point West............... 5/97 Lenexa, KS 1985 172 979 5,548 (16)
Polo Park................ 10/97 Midland, TX 1983 184 800 4,532 325
Prairie Hills............ 7/94 Albuquerque, NM 1985 360 1,680 9,633 589
Pride Gardens............ 5/97 Flora, MS 1975 76 265 1,502 169
Prime Crest.............. 5/98 Austin, TX 1973 148 1,160 3,508 209
Privado Park............. 5/98 Phoenix, AZ 1984 352 2,054 15,236 389
Quail Ridge.............. 5/98 Tucson, AZ 1974 253 2,015 8,559 400
Quailtree................ 10/97 Phoenix, AZ 1978 184 659 3,735 247
Raintree................. 10/98 Pensacola, FL 1971 168 417 2,359 91
Rancho Sunset............ 3/98 Escondido, CA 1985 344 3,103 16,755 933
Randol Crossing.......... 12/96 Fort Worth, TX 1984 160 782 5,742 670
Redhill Plaza............ 6/97 Tustin, CA 1971 392 1,515 3,735 2
Ridgecrest............... 12/96 Denton, TX 1983 152 612 5,642 (1,125)

DECEMBER 31, 1998
-----------------------------------------------------------------------------------
TOTAL COST
BUILDINGS NET OF
AND ACCUMULATED ACCUMULATED
PROPERTY NAME LAND IMPROVEMENTS TOTAL DEPRECIATION DEPRECIATION ENCUMBRANCES
- ------------- ----------- ------------ --------- ------------ ------------ ------------

Lakehaven I.............. 1,071 6,367 7,438 404 7,034 --(1)(2)
Lakehaven II............. 2,680 15,793 18,473 1,013 17,460 --(1)(2)
Landmark................. 780 4,679 5,459 148 5,311 --(2)
Las Brisas............... 573 3,505 4,078 657 3,421 --(3)
Las Brisas............... 1,100 5,860 6,960 797 6,163 3,302
Legend Oaks/The
Woodlands............... 2,723 12,929 15,652 383 15,269 --(2)
Lexington................ 311 1,889 2,200 362 1,838 1,038
Los Arboles.............. 1,662 9,867 11,529 491 11,038 --(3)
Madera Point............. 924 13,153 14,077 348 13,729 8,067
Meadow Creek............. 1,398 10,935 12,333 4,089 8,244 7,716
Meadows.................. 417 5,236 5,653 1,372 4,281 2,062
Mesa Ridge............... 1,159 6,965 8,124 241 7,883 5,100
Mills.................... 7,075 19,524 26,599 589 26,010 14,575
Montecito................ 1,268 9,003 10,271 1,542 8,729 4,895
Morton Towers............ 13,182 66,464 79,646 2,632 77,014 12,913
Mountainview............. 1,935 15,260 17,195 449 16,746 --(2)
Newberry Park............ 158 1,047 1,205 82 1,123 8,495
Newport.................. 800 5,062 5,862 1,002 4,860 2,531
Oak Falls................ 514 3,983 4,497 1,181 3,316 2,702
Ocean Oaks Apartments.... 2,694 11,600 14,294 317 13,977 10,295
Old Farm................. 1,893 10,768 12,661 47 12,614 9,919
Olmos Club............... 322 1,945 2,267 82 2,185 1,242
Olympiad................. 1,046 6,516 7,562 1,146 6,416 5,158
Orchidtree............... 2,314 13,415 15,729 677 15,052 7,227
Palencia................. 3,448 15,403 18,851 564 18,287 --(2)
Paradise Palms........... 647 4,153 4,800 782 4,018 2,273
Park @ Cedar Lawn........ 769 5,431 6,200 1,396 4,806 2,537
Park Colony.............. 3,335 18,481 21,816 446 21,370 --(2)
Parliament Bend.......... 765 5,004 5,769 963 4,807 --(3)
Peachtree Park........... 4,683 14,853 19,536 1,636 17,900 9,396
Penn Square.............. 1,128 7,070 8,198 1,240 6,958 4,189
Peppermill Place......... 406 4,398 4,804 1,196 3,608 3,541
Pine Creek............... 852 5,148 6,000 217 5,783 2,380
Pine Shadows............. 2,490 11,545 14,035 321 13,714 --(2)
Pinebrook................ 857 4,859 5,716 58 5,658 3,626
Pleasant Ridge........... 1,661 10,274 11,935 1,799 10,136 6,700
Pleasant Valley Point.... 907 5,959 6,866 1,030 5,836 3,370
Point West............... 979 5,532 6,511 367 6,144 5,580
Polo Park................ 800 4,857 5,657 226 5,431 2,268
Prairie Hills............ 1,680 10,222 11,902 1,938 9,964 7,134
Pride Gardens............ 265 1,671 1,936 121 1,815 890
Prime Crest.............. 1,160 3,717 4,877 134 4,743 2,400
Privado Park............. 2,054 15,625 17,679 438 17,241 9,200
Quail Ridge.............. 2,015 8,959 10,974 262 10,712 6,400
Quailtree................ 659 3,982 4,641 195 4,446 2,198
Raintree................. 417 2,450 2,867 36 2,831 2,640
Rancho Sunset............ 3,103 17,688 20,791 502 20,289 13,787
Randol Crossing.......... 782 6,412 7,194 1,988 5,206 2,427
Redhill Plaza............ 1,515 3,737 5,252 279 4,973 --
Ridgecrest............... 612 4,517 5,129 2,037 3,092 2,451

F-36
76

INITIAL COST COST
---------------------- CAPITALIZED
BUILDINGS SUBSEQUENT
DATE YEAR NUMBER AND TO
PROPERTY NAME ACQUIRED LOCATION BUILT OF UNITS LAND IMPROVEMENTS ACQUISITION
- ------------- -------- --------------------- --------- -------- ------- ------------ -----------

Rio Cancion.............. 10/98 Tucson, AZ 1983 379 2,832 16,090 146
Rivercrest............... 10/97 Tucson, AZ 1984 310 751 4,253 139
Riverside................ 7/94 Littleton, CO 1987 248 1,553 8,829 938
Riverwalk................ 12/95 Little Rock, AR 1988 262 1,075 9,295 520
Royal Crest.............. 5/98 Austin, TX 1973 204 1,709 6,176 302
Royal Gardens............ 10/98 Hemet, CA 1987 137 521 2,817 141
Royal Palms.............. 7/94 Mesa, AZ 1985 152 832 4,731 244
San Marina............... 3/98 Phoenix, AZ 1986 399 1,926 10,954 267
Sand Castles............. 10/97 League City, TX 1987 136 978 5,541 267
Sand Pebble.............. 10/97 El Paso, TX 1983 208 861 4,879 309
Sandalwood............... 5/98 Houston, TX 1979 352 2,142 7,394 289
Sandpiper Cove........... 5/97 Boynton Beach, FL 1987 416 4,006 22,701 2,432
Sawgrass................. 7/97 Orlando, FL 1986 208 1,443 8,158 477
Seaside Point............ 11/96 Galveston, TX 1985 102 295 2,994 406
Seasons.................. 10/95 San Antonio, TX 1976 280 974 5,749 728
Shadetree................ 10/97 Tempe, AZ 1965 123 591 3,349 376
Shadow Creek
Apartments.............. 5/98 Phoenix, AZ 1984 266 2,599 11,085 314
Shadow Lake.............. 10/97 Greensboro, NC 1988 136 1,054 5,972 336
Shallow Creek............ 5/98 San Antonio, TX 1982 208 1,390 6,678 301
Signature Point.......... 11/96 League City, TX 1994 304 2,160 13,627 (431)
Silktree................. 10/97 Phoenix, AZ 1979 86 421 2,383 145
Silver Ridge............. 10/98 Maplewood, MN 1986 186 650 3,677 91
Snug Harbor.............. 12/95 Las Vegas, NV 1990 64 750 2,966 300
Somerset Village......... 5/96 West Valley City, UT 1985 486 4,375 17,600 1,035
South Willow............. 7/94 West Jordan, UT 1987 440 2,218 12,612 1,085
Southgate Village........ 10/98 Bedford Heights, OH 1987 152 384 2,169 91
Southridge............... 12/96 Greenville, TX 1984 160 565 5,787 700
Spectrum Pointe.......... 7/94 Marietta, GA 1984 196 1,029 5,903 578
Stirling Court........... 11/96 Houston, TX 1984 228 946 5,958 396
Stonebrook............... 6/97 Sanford, FL 1991 244 1,583 9,046 418
Stoney Brook............. 11/96 Houston, TX 1972 113 579 3,871 529
Stonybrook............... 5/98 Tucson, AZ 1983 411 2,503 11,565 554
Summerchase.............. 5/97 Van Buren, AR 1974 72 170 962 145
Summit Creek............. 5/98 Austin, TX 1985 164 1,331 5,007 236
Sun Grove................ 7/94 Peoria, AZ 1986 86 659 3,749 161
Sun Katcher.............. 12/95 Jacksonville, FL 1972 360 578 3,440 5,830
Sun Lake................. 5/98 Lake Mary, FL 1986 600 5,574 24,277 1,076
Sunbury Downs............ 11/96 Houston, TX 1982 240 565 4,380 297
Sunchase Clearwater...... 11/94 Clearwater, FL 1985 461 2,177 19,641 1,597
Sunchase East............ 11/94 Orlando, FL 1985 296 927 8,361 857
Sunchase North........... 11/94 Orlando, FL 1985 324 1,013 9,142 974
Sunchase Tampa........... 11/94 Tampa, FL 1985 216 757 6,831 782
Sundown Village.......... 3/98 Tucson, AZ 1984/1994 330 2,214 12,582 161
Sunlake.................. 9/98 Brandon, FL 1986 88 189 1,086 3,126
Sunset Village........... 3/98 Oceanside, CA 1987 114 1,128 6,392 44
Surrey Oaks.............. 10/97 Bedford, TX 1983 152 628 3,560 265
Swiss Village............ 11/96 Houston, TX 1972 360 1,011 11,310 (625)
Tall Timbers............. 10/97 Houston, TX 1982 256 1,238 7,016 349
Tara Bridge.............. 5/97 Jonesboro, GA 1988 220 1,610 9,124 335
Tatum Gardens............ 5/98 Phoenix, AZ 1985 128 1,229 5,326 282
The Bluffs............... 12/98 Laffayette, IN 1982 181 979 5,549 0

DECEMBER 31, 1998
-----------------------------------------------------------------------------------
TOTAL COST
BUILDINGS NET OF
AND ACCUMULATED ACCUMULATED
PROPERTY NAME LAND IMPROVEMENTS TOTAL DEPRECIATION DEPRECIATION ENCUMBRANCES
- ------------- ----------- ------------ --------- ------------ ------------ ------------

Rio Cancion.............. 2,832 16,236 19,068 551 18,517 12,990
Rivercrest............... 751 4,392 5,143 220 4,923 2,801
Riverside................ 1,554 9,766 11,320 1,850 9,470 5,884
Riverwalk................ 1,075 9,815 10,890 1,269 9,621 5,555
Royal Crest.............. 1,709 6,478 8,187 217 7,970 3,400
Royal Gardens............ 521 2,958 3,479 28 3,451 2,414
Royal Palms.............. 832 4,975 5,807 939 4,868 3,463
San Marina............... 1,926 11,221 13,147 375 12,772 7,912
Sand Castles............. 978 5,808 6,786 265 6,521 3,081
Sand Pebble.............. 861 5,188 6,049 243 5,806 2,690
Sandalwood............... 2,142 7,683 9,825 277 9,548 4,700
Sandpiper Cove........... 4,006 25,133 29,139 1,774 27,365 13,376
Sawgrass................. 1,443 8,635 10,078 504 9,574 4,778
Seaside Point............ 295 3,400 3,695 873 2,822 2,075
Seasons.................. 982 6,469 7,451 866 6,585 4,472
Shadetree................ 591 3,725 4,316 176 4,140 2,048
Shadow Creek
Apartments.............. 2,599 11,399 13,998 329 13,669 6,965
Shadow Lake.............. 1,054 6,308 7,362 268 7,094 3,216
Shallow Creek............ 1,390 6,979 8,369 204 8,165 4,600
Signature Point.......... 2,160 13,196 15,356 2,122 13,234 7,306
Silktree................. 421 2,528 2,949 125 2,824 1,547
Silver Ridge............. 650 3,768 4,418 55 4,363 4,525
Snug Harbor.............. 751 3,26 4,016 463 3,553 2,028
Somerset Village......... 4,375 18,635 23,010 1,866 21,144 8,311
South Willow............. 2,218 13,697 15,915 2,585 13,330 8,149
Southgate Village........ 384 2,260 2,644 33 2,611 2,520
Southridge............... 565 6,487 7,052 2,374 4,678 2,083
Spectrum Pointe.......... 1,029 6,481 7,510 1,145 6,365 4,238
Stirling Court........... 946 6,354 7,300 3,047 4,253 3,546
Stonebrook............... 1,583 9,465 11,048 632 10,416 5,395
Stoney Brook............. 679 4,300 4,979 960 4,019 --
Stonybrook............... 2,503 12,119 14,622 370 14,252 5,598(1)
Summerchase.............. 170 1,107 1,277 77 1,200 670
Summit Creek............. 1,331 5,243 6,574 181 6,393 3,524
Sun Grove................ 659 3,910 4,569 756 3,813 --(3)
Sun Katcher.............. 578 9,270 9,848 702 9,146 --(2)
Sun Lake................. 5,574 25,353 30,927 665 30,262 15,102(2)
Sunbury Downs............ 565 4,677 5,242 1,186 4,056 2,433
Sunchase Clearwater...... 2,177 21,238 23,415 2,781 20,634 17,074
Sunchase East............ 927 9,218 10,145 1,592 8,553 8,960
Sunchase North........... 1,013 10,116 11,129 1,715 9,414 12,019
Sunchase Tampa........... 757 7,613 8,370 1,319 7,051 7,184
Sundown Village.......... 2,214 12,743 14,957 431 14,526 8,464
Sunlake.................. 189 4,212 4,401 329 4,072 --
Sunset Village........... 1,128 6,436 7,564 182 7,382 5,549
Surrey Oaks.............. 628 3,825 4,453 177 4,276 2,290
Swiss Village............ 1,011 10,685 11,696 4,343 7,353 4,490
Tall Timbers............. 1,238 7,365 8,603 336 8,267 4,080
Tara Bridge.............. 1,610 9,459 11,069 747 10,322 6,800
Tatum Gardens............ 1,229 5,608 6,837 170 6,667 3,426
The Bluffs............... 979 5,549 6,528 -- 6,528 --

F-37
77

INITIAL COST COST
---------------------- CAPITALIZED
BUILDINGS SUBSEQUENT
DATE YEAR NUMBER AND TO
PROPERTY NAME ACQUIRED LOCATION BUILT OF UNITS LAND IMPROVEMENTS ACQUISITION
- ------------- -------- --------------------- --------- -------- ------- ------------ -----------

The Bradford............. 10/97 Midland, TX 1982 264 705 3,996 (789)
The Breakers............. 10/98 Daytona Beach, FL 1985 258 1,008 5,710 14
The Falls of Bells
Ferry................... 5/98 Marietta, GA 1987 720 8,270 34,528 1,125
The Hills................ 10/97 Austin, TX 1983 329 1,367 7,747 235
The Park................. 10/98 Melbourne, FL 1983 120 719 4,072 8
The Pines................ 10/97 Palm Bay, FL 1984 216 601 3,406 16
The Stratford............ 5/98 San Antonio, TX 1979 269 1,920 10,567 573
Tierra Bonita............ 5/98 Tucson, AZ 1986 410 2,081 9,489 747
Timbermill............... 10/95 San Antonio, TX 1982 296 778 4,674 667
Timbertree............... 10/97 Phoenix, AZ 1980 387 2,334 13,229 459
Township at Highlands.... 11/96 Littleton, CO 1986 119 1,058 11,166 2,910
Trails of Ashford........ 5/98 Houston, TX 1979 514 3,237 14,123 485
Twinbridge............... 10/97 Tucson, AZ 1982 104 310 1,757 76
University
Center -- Phase I....... 10/98 Friedly, MN 1987 -- 139 780 91
University
Center -- Phase IV...... 10/98 Friedly, MN 1987 -- 225 1,265 91
Victoria Station......... 6/98 Victoria, TX 1997 224 425 3946 1,330
Villa La Paz............. 6/98 Sun City, CA 1990 96 573 3,096 189
Villa Ladera............. 1/96 Albuquerque, NM 1985 280 1,765 10,013 975
Village Creek at
Brookhill............... 7/94 Westminster, CO 1987 324 2,446 13,901 959
Village Crossing......... 5/98 W. Palm Beach, FL 1986 289 2,259 8,251 436
Village of Pennbrook..... 10/98 Levitown, PA 1970 722 5,533 31,345 91
Vista Ventana
Apartments.............. 5/98 Phoenix, AZ 1982 275 2,196 10,327 417
Walnut Springs........... 12/96 San Antonio, TX 1983 224 851 8,076 448
Waterford................ 11/96 Houston, TX 1984 312 533 5,693 781
Waterways Village........ 6/97 Aventura, FL 1991 180 4,504 11,702 314
Weatherly................ 10/98 Stone Mountain, GA 1984 274 1,275 6,887 350
Weslayan I............... 10/96 Houston, TX 1983 25 130 376 (10)
West 135th Street........ 8/98 New York, NY 1979 242 258 9660 3,246
West Way Village......... 5/98 Houston, TX 1979 276 3,353 6,816 425
Whispering Pines......... 10/98 Madison, WI 1986 186 719 4,046 91
Wickertree............... 10/97 Phoenix, AZ 1983 226 1,225 6,944 189
Wildflower............... 10/97 Midland, TX 1982 264 705 3,996 635
Williams Cove............ 7/94 Irving, TX 1984 260 1,227 6,972 508
Williamsburg............. 5/98 Rolling Meadows, IL 1985 379 3,103 14,471 986
Windridge................ 5/98 San Antonio, TX 1983 286 1,374 8,228 340
Windsor Landing.......... 10/97 Morrow, GA 1991 200 1,641 9,298 158
Windward at the
Villages................ 10/97 W. Palm Beach, FL 1988 196 1,595 9,037 314
Woodhill Associates...... 12/96 Denton, TX 1985 352 1,578 13,199 1,191
Woodhollow............... 10/97 Austin, TX 1974 108 658 3,728 163
Woodland Ridge........... 12/96 Irving, TX 1984 130 1,021 4,507 459
Woodlands/Odessa......... 7/94 Odessa, TX 1982 240 676 3,835 677
Woodlands/Tyler.......... 7/94 Tyler, TX 1984 256 1,029 5,845 545
Yorktree................. 10/97 Carolstream, IL 1972 293 1,968 11,151 712
------ ------- --------- -------
63,086 423,098 2,188,020 186,481
------ ------- --------- -------
Other Land and Assets.... -- 3,860 1,139 --
------ ------- --------- -------
63,086 426,958 2,189,159 186,481
====== ======= ========= =======

DECEMBER 31, 1998
-----------------------------------------------------------------------------------
TOTAL COST
BUILDINGS NET OF
AND ACCUMULATED ACCUMULATED
PROPERTY NAME LAND IMPROVEMENTS TOTAL DEPRECIATION DEPRECIATION ENCUMBRANCES
- ------------- ----------- ------------ --------- ------------ ------------ ------------

The Bradford............. 519 3,393 3,912 147 3,765 1,631
The Breakers............. 1,008 5,724 6,732 40 6,692 3,773
The Falls of Bells
Ferry................... 8,270 35,653 43,923 1,023 42,900 27,685
The Hills................ 1,367 7,982 9,349 348 9,001 8,144
The Park................. 719 4,080 4,799 58 4,741 2,728
The Pines................ 601 3,422 4,023 49 3,974 2,226
The Stratford............ 1,920 11,140 13,060 364 12,696 5,945
Tierra Bonita............ 2,081 10,236 12,317 325 11,992 6,000
Timbermill............... 778 5,341 6,119 767 5,352 --(2)
Timbertree............... 2,334 13,688 16,022 685 15,337 7,843
Township at Highlands.... 1,059 14,075 15,134 2,520 12,614 9,500
Trails of Ashford........ 3,237 14,608 17,845 463 17,382 9,050
Twinbridge............... 310 1,833 2,143 91 2,052 1,131
University
Center -- Phase I....... 139 871 1,010 13 997 --(4)
University
Center -- Phase IV...... 225 1,356 1,581 20 1,561 --(4)
Victoria Station......... 425 5,276 5,701 437 5,264 3,339
Villa La Paz............. 573 3,285 3,858 108 3,750 --(2)
Villa Ladera............. 1,765 10,988 12,753 1,368 11,385 5,502
Village Creek at
Brookhill............... 2,446 14,860 17,306 2,631 14,675 --(3)
Village Crossing......... 2,259 8,687 10,946 230 10,716 7,000
Village of Pennbrook..... 5,533 31,436 36,969 452 36,517 19,300
Vista Ventana
Apartments.............. 2,196 10,744 12,940 305 12,635 6,400
Walnut Springs........... 851 8,524 9,375 2,478 6,897 4,811
Waterford................ 533 6,474 7,007 1,759 5,248 3,973
Waterways Village........ 4,504 12,016 16,520 789 15,731 7,771
Weatherly................ 1,275 7,237 8,512 84 8,428 4,642
Weslayan I............... 130 366 496 184 312 --
West 135th Street........ 259 12,905 13,164 895 12,269 1,054
West Way Village......... 3,353 7,241 10,594 317 10,277 4,846
Whispering Pines......... 719 4,137 4,856 61 4,795 --
Wickertree............... 1,225 7,133 8,358 362 7,996 4,123
Wildflower............... 705 4,631 5,336 199 5,137 2,065
Williams Cove............ 1,227 7,480 8,707 1,459 7,248 3,822
Williamsburg............. 3,103 15,457 18,560 446 18,114 12,535
Windridge................ 1,374 8,568 9,942 293 9,649 6,270
Windsor Landing.......... 1,641 9,456 11,097 418 10,679 5,421
Windward at the
Villages................ 1,595 9,351 10,946 467 10,479 4,615
Woodhill Associates...... 1,578 14,390 15,968 4,679 11,289 5,770
Woodhollow............... 658 3,891 4,549 167 4,382 2,082
Woodland Ridge........... 1,021 4,966 5,987 1,628 4,359 2,060
Woodlands/Odessa......... 676 4,512 5,188 806 4,382 --(2)
Woodlands/Tyler.......... 1,029 6,390 7,419 1,224 6,195 4,156
Yorktree................. 1,968 11,863 13,831 501 13,330 6,604
----------- --------- --------- ------- --------- ---------
409,722 2,387,877 2,797,599 228,880 2,568,719 1,300,365
----------- --------- --------- ------- --------- ---------
Other Land and Assets.... 3,855 1,144 4,999 -- 4,999
----------- --------- --------- ------- --------- ---------
413,577 2,389,021 2,802,598 228,880 2,573,718 1,300,365
=========== ========= ========= ======= ========= =========

F-38
78

- ---------------

(1) Debt is owned by AIMCO and is therefore eliminated in consolidation.

(2) Pledged as security under one of the Company's credit facilities.

(3) Pledged as additional collateral for secured tax-exempt financing.

(4) Commercial Property.

F-39
79

APARTMENT INVESTMENT AND MANAGEMENT COMPANY

REAL ESTATE AND ACCUMULATED DEPRECIATION
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
(IN THOUSANDS)

1998 1997 1996
---------- ---------- --------

REAL ESTATE
Balance at beginning of year............................ $1,657,207 $ 865,222 $477,162
Additions during the year:
Real estate acquisitions............................. 1,116,643 786,571 388,574
Additions............................................ 80,368 26,808 17,993
Sales/transfers to held for sale..................... (51,620) (21,394) (18,507)
---------- ---------- --------
Balance at end of year.................................. $2,802,598 $1,657,207 $865,222
========== ========== ========
ACCUMULATED DEPRECIATION
Balance at beginning of year............................ $ 153,285 $ 120,077 $ 28,737
Additions during the year:
Depreciation......................................... 84,635 37,741 19,556
Additions............................................ -- -- 73,189
Sales/transfers to held for sale..................... (9,040) (4,533) (1,405)
---------- ---------- --------
Balance at end of year.................................. $ 228,880 $ 153,285 $120,077
========== ========== ========

F-40
80

APARTMENT INVESTMENT AND MANAGEMENT COMPANY

SCHEDULE IV -- MORTGAGE LOANS ON REAL ESTATE
DECEMBER 31, 1998
(IN THOUSANDS)

PRINCIPAL AMOUNT
CARRYING OF LOANS SUBJECT
FACE AMOUNT OF TO OR DELINQUENT
INTEREST MATURITY PAYMENT PRIOR AMOUNT MORTGAGE PRINCIPAL OR
DESCRIPTION RATE DATE TERMS LIENS OF MORTGAGE (3)(4) INTEREST
- ----------- -------- -------- -------- -------- ----------- --------- ----------------

FIRST TRUST DEEDS
Golf Course
Princeton Meadows, New Jersey........... 12.50% Sep-01 (1) $ $ 1,567 $ 1,585(5) $ --
Hotels
Pensacola, Florida...................... 11.25% Nov-02 (8)(15) -- 1,652 1,655(5) --
Pensacola, Florida...................... 11.00% Nov-02 (9)(15) -- 1,297 1,287 --
Jacksonville, Florida................... 11.00% Nov-02 (10)(15) -- 2,274 2,278(5) --
Industrial
Aiken, South Carolina -- Warehouse...... 8.00% Dec-07 (20)(16) -- 531 215 --
Cleveland, Ohio -- Warehouse............ 6.25% Oct-08 (11)(16) -- 1,700 1,705(5) --
Houston, Texas -- Office/Warehouse...... 8.00% Dec-07 (1)(16) -- 1,301 1,145 --
Indianapolis,
Indiana -- Office/Showroom............ 7.30% Oct-08 (12)(16) -- 275 217 --
Indianapolis, Indiana -- Warehouse...... 7.71% Jun-08 (1)(16) -- 5,500 4,841 --
Jackson, Tennessee -- Warehouse......... 10.50% Dec-07 (1)(16) -- 2,185 1,781 --
Memphis, Tennessee -- Warehouse......... 8.00% Jan-08 (1)(16) -- 1,000 881 --
Manufactured Home Parks
Cheyenne, Wyoming....................... 9.07% Dec-03 (1)(17) -- 1,900 1,673 --
Denton and Tyler, Texas................. 8.90% Dec-03 (1)(17) -- 5,000 4,407 --
Retail Stores
Des Moines and Cedar Rapids, Iowa....... 9.00% Dec-03 (21) -- 3,500 3,491 --
-------- ------- ------- ------
TOTAL FIRST TRUST DEEDS........... $ -- $29,682 $27,161 $ --
======== ======= ======= ======
SECOND TRUST DEEDS
Apartments
South Bend, Indiana..................... 12.50% Jun-95 (2) $ 3,970 $ 1,350 $ 675 $ 675
Huntsville, Alabama..................... 12.50% Dec-00 (1) 9,401 1,570 1,908(5) --
Duplexes
Santa Monica and Pacific Palisades,
California............................ 12.00% Sep-98 (1) 1,800 455 383 383(6)
-------- ------- ------- ------
TOTAL SECOND TRUST DEEDS.......... $ 15,171 $ 3,375 $ 2,966 $1,058
======== ======= ======= ======
THIRD TRUST DEEDS
Apartment
Plainsboro, New Jersey.................. 11.25% Jan-02 (13) $ 30,399 $ 875 $ 875 --
-------- ------- ------- ------
TOTAL THIRD TRUST DEEDS........... $ 30,399 $ 875 $ 875 $ --
======== ======= ======= ======
PROMISSORY NOTES RECEIVABLE
J. Schultz, an Individual................ 8.00% May-00 (1) $ -- $ 75 $ 76(5) $ --
Angeles Partners XIV, California Limited
Partnership............................. 12.00% Mar-02 (18) -- 433 433 433
Fox Crest Apartments, Waukegan,
Illinois................................ 12.50% Mar-03 (18) 6,283 4,764 -- 4,764
Warner Center............................ 5.70% Jan-15 (19) 134,609 1,858 2,265(5) --
General Reserve.......................... -- (68) (68) --
-------- ------- ------- ------
TOTAL PROMISSORY NOTES
RECEIVABLE....................... $140,892 $ 7,062 $ 2,706 $5,197
======== ======= ======= ======

FACE
AMOUNT CARRYING PRINCIPAL AMOUNT OF LOANS
PRIOR OF AMOUNT OF SUBJECT TO OR DELINQUENT
DESCRIPTION LIENS MORTGAGE MORTGAGE(3)(4) PRINCIPAL OR INTEREST
- ----------- -------- -------- -------------- -------------------------

SUMMARY
TOTAL FIRST TRUST DEEDS.......................... $ -- $29,682 $27,161 $ --
TOTAL SECOND TRUST DEEDS......................... 15,171 3,375 2,966 1,058
TOTAL THIRD TRUST DEEDS.......................... 30,399 875 875 --
TOTAL PROMISSORY NOTES RECEIVABLE................ 140,892 7,062 2,706 5,197
-------- ------- ------- ------
TOTAL............................................ $186,462 $40,994 $33,708 $6,255
======== ======= ======= ======

F-41
81

- ---------------

(1) Note requires periodic interest only payments through maturity, when the
principal balance is payable in full.

(2) The note matured in June of 1995. The borrower is currently in default and
is not making the required interest only payments.

(3) Reconciliation of notes receivable:

Balance at October 1, 1998.................................. $29,405
Additions:
New Loans(7).............................................. 3,558
Accrued Interest.......................................... 964
Deductions:
Premium Amortization...................................... (25)
Principal Collections..................................... (194)
-------
Balance at December 31, 1998................................ $33,708
=======

(4) The carrying amount for Federal income tax purposes is approximately
$39,216.

(5) The carrying amount of the mortgage is greater than the face amount due to
the inclusion of accrued interest.

(6) Nolana Apartments made interest only payments through December 31, 1998.

(7) Amount includes Cleveland, Ohio -- Warehouse for $1,700, and Warner Center
for $1,858.

(8) Monthly principal and interest payments of $16 are required through the
maturity date at which time the balance of $1,617 is payable in full.

(9) Monthly principal and interest payments of $12 are required through the
maturity date at which time the balance of $1,268 is payable in full.

(10) Monthly principal and interest payments of $22 are required through the
maturity date at which time the balance of $2,222 is payable in full.

(11) Monthly principal and interest payments of $12 are required through the
maturity date at which time the balance of $1,119 is payable in full.

(12) Monthly principal and interest payments of $2 are required through the
maturity date at which time the balance of $188 is payable in full.

(13) An initial interest payment of $3 is required. Thereafter, monthly
principal and interest payments of $8 are required through the maturity
date at which time the balance of $860 is payable in full.

(14) The first mortgage loans on these properties are not held by the Company.
Accordingly, the amounts of the prior liens at December 31, 1998 are
estimated.

(15) A prepayment penalty ranging from 1% to 3% of the outstanding principal
balance will be assessed if the loan is prepaid prior to the maturity date.

(16) A prepayment penalty ranging from 1% to 3% of the outstanding principal
balance will be assessed if the loan is prepaid four or more years prior to
the maturity date.

(17) A prepayment penalty ranging from 1% to 3% of the outstanding principal
balance will be assessed if the loan is prepaid prior to one year before
the maturity date.

(18) Annual principal and interest payments based upon available Net Cash Flow,
as defined, are required throughout the maturity date at which time all
remaining unpaid accrued interest and principal are payable in full.

(19) Semi-annual principal and interest payments based upon available Net Cash
Flow, as defined, are required throughout the maturity date at which time
all remaining unpaid accrued interest and principal are payable in full.

(20) Monthly principal and interest payments of $6 are required through the
maturity date.

(21) Monthly principal and interest payments of $72 are required through the
maturity date.

F-42
82

INDEX TO EXHIBITS

EXHIBIT NO. DESCRIPTION
----------- -----------

2.1 -- Second Amended and Restated Agreement and Plan of Merger,
dated as of January 22, 1999, by and between Apartment
Investment and Management Company and Insignia Properties
Trust (Exhibit 2.2 to the Current Report on Form 8-K of
Insignia Properties Trust, dated February 11, 1999, is
incorporated herein by this reference)
2.2 -- Agreement and Plan of Merger, dated as of December 23,
1997, by and between Apartment Investment and Management
Company and Ambassador Apartments, Inc. (Exhibit 2.1 to
AIMCO's Current Report on Form 8-K, dated December 23,
1997, is incorporated herein by this reference)
2.3 -- Amended and Restated Agreement and Plan of Merger, dated
as of May 26, 1998, by and among Apartment Investment and
Management Company, AIMCO Properties, L.P., Insignia
Financial Group, Inc., and Insignia/ESG Holdings, Inc.
(Exhibit 2.1 to AIMCO's Registration Statement on Form
S-4, filed August 5, 1998, is incorporated herein by this
reference)
3.1 -- Charter
3.2 -- Bylaws
4.1 -- Amended and Restated Declaration of Trust of IFT
Financing I (formerly Insignia Financing I), dated as of
November 1, 1996, among Insignia Financial Group, Inc.,
as Sponsor, First Union National Bank of South Carolina,
as Property Trustee, First Union Bank of Delaware, as
Delaware Trustee and Andrew I. Farkas, John K. Lines and
Ronald Uretta as Regular Trustees (Exhibit 4.2 to Form
S-3 of Insignia Financial Group, Inc. dated December 10,
1996, is incorporated herein by this reference)
4.2 -- Indenture for the 6.5% Convertible Subordinated
Debentures, dated as of November 1, 1996, between
Insignia Financial Group, Inc., as Issuer and First Union
National Bank of South Carolina, as Trustee (Exhibit 4.3
to Form S-3 of Insignia Financial Group, Inc., dated
December 10, 1996, is incorporated herein by this
reference)
4.3 -- First Supplemental Indenture, dated as of October 1,
1998, by and among Apartment Investment and Management
Company, Insignia Financial Group, Inc. and First Union
National Bank (formerly First Union National Bank of
South Carolina), as trustee.
10.1 -- Amended and Restated Credit Agreement (Unsecured
Revolver-to-Term Facility), dated as of October 1, 1998,
among AIMCO Properties, L.P., Bank of America National
Trust and Savings Association, and BankBoston, N.A.
(Exhibit 10.1 to AIMCO's Current Report on Form 8-K,
dated October 1, 1998, is incorporated herein by this
reference)
10.2 -- First Amendment to Credit Agreement, dated as of November
6, 1998, by and among AIMCO Properties, L.P., the
financial institutions listed on the signature pages
thereof and Bank of America National Trust and Savings
Association
10.3 -- Promissory Note, dated October 1, 1998, in the principal
amount of $65,000,000 issued by AIMCO Properties, L.P. to
Bank of America National Trust and Savings Association,
and BankBoston, N.A. (Exhibit 10.2 to AIMCO's Current
Report on Form 8-K, dated October 1, 1998, is
incorporated herein by this reference)
10.4 -- Promissory Note, dated October 1, 1998, in the principal
amount of $35,000,000 issued by AIMCO Properties, L.P. to
Bank of America National Trust and Savings Association,
and BankBoston, N.A. (Exhibit 10.3 to AIMCO's Current
Report on Form 8-K, dated October 1, 1998, is
incorporated herein by this reference)
10.5 -- Swing Line Promissory Note, dated October 1, 1998, in the
principal amount of $30,000,000, issued by AIMCO
Properties, L.P. to Bank of America National Trust and
Savings Association, and BankBoston, N.A. (Exhibit 10.4
to AIMCO's Current Report on Form 8-K, dated October 1,
1998, is incorporated herein by this reference)

83

EXHIBIT NO. DESCRIPTION
----------- -----------

10.6 -- Payment Guaranty of Non-Preferred Stock Subsidiaries,
dated as of October 1, 1998, by Apartment Investment and
Management Company, AIMCO Holdings QRS, Inc., AIMCO/OTC
QRS, Inc., AIMCO Holdings, L.P., AIMCO-GP, Inc.,
AIMCO-LP, Inc., AIMCO Properties Finance Corp., AIMCO
Somerset, Inc., Ambassador II, L.P., Ambassador X, L.P.,
Ambassador IV, Inc., Ambassador V, Inc., Ambassador
Florida Partners Inc. and A.J. Two, Inc. (Exhibit 10.5 to
AIMCO's Quarterly Report on Form 10-Q for the quarterly
period ending September 30, 1998, is incorporated herein
by this reference)
10.7 -- Payment Guaranty of Preferred Stock Subsidiaries, dated
as of October 1, 1998, by Property Asset Management
Services, Inc., Property Asset Management Services, L.P.,
NHP Management Company and Property Asset Management
Services-California, L.L.C. (Exhibit 10.6 to AIMCO's
Quarterly Report on Form 10-Q for the quarterly period
ending September 30, 1998, is incorporated herein by this
reference)
10.8 -- Payment Guaranty of Non-Preferred Stock Subsidiaries,
dated as of October 1, 1998, by CPF XIV/St. Charleston,
Inc., CPF XIV/Torrey Pines, Inc., CPF XIV/ Sun River,
Inc., CPF XIV/Lakeside Place, Inc., ConCap CCP/IV
Stratford Place Properties, Inc., ConCap CCP/IV River's
Edge Properties, Inc., PRA, Inc. and National Property
Investors, Inc. (Exhibit 10.7 to AIMCO's Quarterly Report
on Form 10-Q for the quarterly period ending September
30, 1998, is incorporated herein by this reference)
10.9 -- Third Amended and Restated Agreement of Limited
Partnership of AIMCO Properties, L.P., dated as of July
29, 1994 as amended and restated as of October 1, 1998
(Exhibit 10.8 to AIMCO's Quarterly Report on Form 10-Q
for the quarterly period ending September 30, 1998, is
incorporated herein by this reference)
10.10 -- First Amendment to the Third Amended and Restated
Agreement of Limited Partnership of AIMCO Properties,
L.P., dated as of November 6, 1998 (Exhibit 10.9 to
AIMCO's Quarterly Report on Form 10-Q for the quarterly
period ending September 30, 1998, is incorporated herein
by this reference)
10.11 -- Second Amendment to the Third Amended and Restated
Agreement of Limited Partnership of AIMCO Properties,
L.P., dated as of December 30, 1998 (Exhibit 10.1 to
Amendment No. 1 to AIMCO's Current Report on Form 8-K/A,
filed February 11, 1999, is incorporated herein by this
reference)
10.12 -- Third Amendment to the Third Amended and Restated
Agreement of Limited Partnership of AIMCO Properties,
L.P., dated as of February 18, 1999
10.13 -- Credit Agreement dated December 30, 1997, by and among
Insignia Properties, L.P., Lehman Commercial Paper Inc.,
as lending agent, First Union National Bank, as
administrative agent, and the lenders from time to party
thereto (Exhibit 10.8 to Form S-4 of Insignia Properties
Trust, filed May 28, 1998, is incorporated herein by this
reference)
10.14 -- Unconditional Guaranty, dated as of December 30, 1997,
made by Insignia Properties Trust in favor of First Union
National Bank (Exhibit 10.9 to Form S-4 of Insignia
Properties Trust, filed May 28, 1998, is incorporated
herein by this reference_)
10.15 -- Shareholders Agreement, dated October 1, 1998, by and
among Apartment Investment and Management Company, Andrew
L. Farkas, James A. Aston and Frank M. Garrison (Exhibit
10.4 to AIMCO's Schedule 13D filed on October 15, 1998,
is incorporated herein by this reference)
10.16 -- $300,000,000 Interim Term Loan Agreement, dated as of
October 1, 1998, among Apartment Investment and
Management Company, AIMCO Properties, L.P., the several
lenders from time to time parties thereto, Lehman
Brothers, Inc., and Lehman Commercial Paper Inc.
10.17 -- Subsidiaries Guarantee, dated as October 1, 1998, made by
each of the entities that are signatories thereto in
favor of Lehman Commercial Paper Inc. as administrative
agent for the several banks and other financial
institutions or entities from time to time parties to the
Interim Term Loan Agreement

84

EXHIBIT NO. DESCRIPTION
----------- -----------

10.18 -- Preferred Stock Subsidiaries' Guarantee, dated as of
October 1, 1998, made by each of the entities that are
signatories thereto in favor of Lehman Commercial Paper
Inc., as administrative agent for the several banks and
other financial institutions or entities from time to
time parties to the Interim Loan Agreement
10.19 -- Common Stock Purchase Agreement made as of August 26,
1997, by and between Apartment Investment and Management
Company and ABKB/LaSalle Securities Limited Partnership
(Exhibit 99.1 to AIMCO's Current Report on Form 8-K,
dated August 26, 1997, is incorporated herein by this
reference)
10.20 -- Purchase and Sale Agreement and Joint Escrow
Instructions, made and entered into as of August 22,
1997, by and between AIMCO Properties, L.P. and each of
the parties identified on Exhibit "A" attached thereto
(collectively, the "Winthrop Sellers") (Exhibit 99.3 to
AIMCO's Current Report on Form 8-K, dated October 15,
1997, is incorporated herein by this reference)
10.21 -- Letter Agreement, dated October 15, 1997 by and between
AIMCO Properties, L.P. and the Winthrop Sellers (Exhibit
99.6 to AIMCO's Current Report on Form 8-K, dated October
15, 1997, is incorporated herein by this reference)
10.22 -- Summary of Arrangement for Sale of Stock to Executive
Officers (Exhibit 10.104 to AIMCO's Annual Report on Form
10-K for the fiscal year 1996, is incorporated herein by
this reference) *
10.23 -- Apartment Investment and Management Company 1997 Stock
Award and Incentive Plan (Annex A to AIMCO's Proxy
Statement for the Annual Meeting of Stockholders to be
held on April 24, 1997, is incorporated herein by this
reference) *
10.24 -- Amendment No. 1 to the Apartment Investment and
Management Company 1997 Stock Award and Incentive Plan
(Annex A to AIMCO's Proxy Statement for Annual Meeting of
Stockholders to be held on May 8, 1998, is incorporated
herein by this reference) *
10.25 -- Apartment Investment and Management Company 1998
Incentive Compensation Plan (Annex B to AIMCO's Proxy
Statement for Annual Meeting of Stockholders to be held
on May 8, 1998, is incorporated herein by this reference)
*
10.26 -- Employment Contract, executed on July 29, 1994, by and
between AIMCO Properties, L.P. and Peter Kompaniez
(Exhibit 10.44A to AIMCO's Annual Report on Form 10-K for
the fiscal year 1994, is incorporated herein by this
reference)*
10.27 -- Real Estate Acquisition Agreement, dated as of May 22,
1997, by and among Apartment Investment and Management
Company, AIMCO Properties, L.P., Demeter Holdings
Corporation, Phemus Corporation, Capricorn Investors,
L.P., J. Roderick Heller, III and NHP Partners LLC
(Exhibit 2.1 to AIMCO's Current Report on Form 8-K, dated
June 3, 1997, is incorporated herein by this reference)
10.28 -- Contribution Agreement, dated as of January 31, 1998, by
and between Apartment Investment and Management Company
and Terry Considine and Peter K. Kompaniez (Exhibit 2.1
to AIMCO's Current Report on Form 8-K, dated January 31,
1998, is incorporated herein by this reference)*
10.29 -- Amended and Restated Assignment and Assumption Agreement,
dated as of December 7, 1998, by and among Insignia
Properties, L.P. and AIMCO Properties, L.P. (Exhibit 10.1
to the Current Report on Form 8-K of Insignia Properties
Trust, dated February 11, 1999, is incorporated herein by
this reference)

85

EXHIBIT NO. DESCRIPTION
----------- -----------

10.30 -- Amended and Restated Indemnification Agreement, dated as
of May 26, 1998, by and between Apartment Investment and
Management Company and Insignia/ESG Holdings, Inc.
(Exhibit 2.2 to AIMCO's Registration Statement on Form
S-4, filed August 5, 1998, is incorporated herein by this
reference.)
10.31 -- Form of Restricted Stock Agreement (1997 Stock Award and
Incentive Plan) (Exhibit 10.11 to AIMCO's Quarterly
Report on Form 10-Q for the quarterly period ending
September 30, 1997, is incorporated herein by this
reference)*
10.32 -- Apartment Investment and Management Company Non-Qualified
Employee Stock Option Plan, adopted August 29, 1996
(Exhibit 10.8 to AIMCO's Quarterly Report on Form 10/Q-A
for the quarterly period ending September 30, 1996, is
incorporated herein by this reference)*
10.33 -- Amended and Restated Apartment Investment and Management
Company Non-Qualified Employee Stock Option Plan (Annex B
to AIMCO's Proxy Statement for the Annual Meeting of
Stockholders to be held on April 24, 1997, is
incorporated herein by this reference)*
10.34 -- Employment Contract executed on July 29, 1994 by and
between AIMCO Properties, LP and Terry Considine (Exhibit
10.44C to AIMCO's Annual Report on Form 10-K for the
fiscal year 1994, is incorporated herein by this
reference)*
10.35 -- Employment Contract executed on July 29, 1994 by and
between AIMCO Properties, LP and Steven D. Ira (Exhibit
10.44D to AIMCO's Annual Report on Form 10-K for the
fiscal year 1994, is incorporated herein by this
reference)*
10.36 -- The 1994 Stock Incentive Plan for Officers, Directors and
Key Employees of Ambassador Apartments, Inc., Ambassador
Apartments, L.P. and Subsidiaries (Exhibit 10.40 to
Ambassador Apartments, Inc. Annual Report on Form 10-K
for the fiscal year 1997, is incorporated herein by this
reference)*
10.37 -- Amendment to the 1994 Stock Incentive Plan for Officers,
Directors and Key Employees of Ambassador Apartments,
Inc., Ambassador Apartments, L.P. and Subsidiaries
(Exhibit 10.41 to Ambassador Apartments, Inc. Annual
Report on Form 10-K for the fiscal year 1997, is
incorporated herein by this reference)*
10.38 -- The 1996 Stock Incentive Plan for Officers, Directors and
Key Employees of Ambassador Apartments, Inc., Ambassador
Apartments, L.P. and Subsidiaries, as amended March 20,
1997 (Exhibit 10.42 to Ambassador Apartments, Inc. Annual
Report on Form 10-K for the fiscal year 1997, is
incorporated herein by this reference)*
10.39 -- Insignia 1992 Stock Incentive Plan, as amended through
March 28, 1994 and November 13, 1995 (Exhibit 10.1 to
Insignia Financial Group, Inc. Annual Report on Form 10-K
for the fiscal year 1997, is incorporated herein by this
reference)*
10.40 -- NHP Incorporated 1990 Stock Option Plan (Exhibit 10.9 to
NHP Incorporated Annual Report on Form 10-K for the
fiscal year 1995, is incorporated herein by this
reference)*
10.41 -- NHP Incorporated 1995 Incentive Stock Option Plan
(Exhibit 10.10 to NHP Incorporated Annual Report on Form
10-K for the fiscal year 1995, is incorporated herein by
this reference)*
10.42 -- Form of Incentive Stock Option Agreement (1997 Stock
Award and Incentive Plan)*
21.1 -- List of Subsidiaries
23.1 -- Consent of Ernst & Young LLP
27.1 -- Financial Data Schedule
99.1 -- Agreement re: disclosure of long-term debt instruments

- ---------------

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

* Management contract or compensatory plan or arrangement.