UDR (UDR) 8-K Other events

EXHIBIT 99.1

ITEM 6. SELECTED FINANCIAL DATA

     The following table sets forth selected consolidated financial and other information as of and for each of the years in the five-year period ended December 31, 2002. The table should be read in conjunction with our consolidated financial statements and the notes thereto, and Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

UNITED DOMINION REALTY TRUST, INC.
SELECTED FINANCIAL DATA
(in thousands, except per share data and apartment homes owned)

			Years ended December 31,
			2002*			2001*			2000*			1999*			1998*
Operating Data(a)
	Rental income		$	583,964		$	551,009		$	524,240		$	483,817		$	346,599
	Income before minority interests and discontinued operations			13,550			26,661			17,690			28,696			3,826
	Income from discontinued operations, net of minority interests			40,157			36,698			59,025			65,416			70,047
	Net income			53,229			61,828			76,615			93,622			72,332
	Distributions to preferred shareholders			27,424			31,190			36,891			37,714			23,593
	Net income available to common shareholders			25,805			27,142			42,653			55,908			48,739
	Common distributions declared			118,888			108,956			110,225			109,607			107,758
	Weighted average number of common shares outstanding - basic			106,078			100,339			103,072			103,604			99,966
	Weighted average number of common shares outstanding - diluted			106,078			100,339			103,072			103,604			99,966
	Weighted average number of common shares, OP Units, and common share equivalents - diluted			127,838			120,728			123,005			124,127			103,793
	Per share:
		Income/(loss) from continuing operations available to common shareholders, net of minority interests	$	(0.14	)	$	(0.10	)	$	(0.16	)	$	(0.09	)	$	(0.21	)
		Income from discontinued operations, net of minority interests		0.38			0.37			0.57			0.63			0.70
		Basic earnings per share		0.24			0.27			0.41			0.54			0.49
		Diluted earnings per share		0.24			0.27			0.41			0.54			0.49
		Common distributions declared		1.11			1.08			1.07			1.06			1.05
Balance Sheet Data(a)
	Real estate owned, at carrying value		$	3,967,483		$	3,907,667		$	3,836,320		$	3,953,045		$	3,952,752
	Accumulated depreciation			748,733			646,366			509,405			395,864			316,630
	Total real estate owned, net of accumulated depreciation			3,218,750			3,261,301			3,326,915			3,557,181			3,636,122
	Total assets			3,276,136			3,348,091			3,453,957			3,688,317			3,762,940
	Secured debt			1,015,740			974,177			866,115			1,000,136			1,072,185
	Unsecured debt			1,041,900			1,090,020			1,126,215			1,127,169			1,045,564
	Total debt			2,057,640			2,064,197			1,992,330			2,127,305			2,117,749
	Shareholders’ equity			1,001,271			1,042,725			1,218,892			1,310,212			1,374,121
	Number of common shares outstanding			106,605			103,133			102,219			102,741			103,639
Other Data(a)
	Cash Flow Data
	Cash provided by operating activities		$	226,700		$	224,411		$	224,160		$	190,602		$	140,597
	Cash (used in)/provided by investing activities			(65,062	)		(64,055	)		58,705			(103,836	)		(263,864	)
	Cash (used in)/provided by financing activities			(163,127	)		(166,020	)		(280,238	)		(105,169	)		148,875
	Funds from Operations(b)
	Net income		$	53,229		$	61,828		$	76,615		$	93,622		$	72,332
	Adjustments:
		Distributions to preferred shareholders		(27,424	)		(31,190	)		(36,891	)		(37,714	)		(23,593	)
		Real estate depreciation, net of other partnerships’ interest		148,422			133,041			130,097			99,150			75,751
		Minority interests of unitholders in operating partnership		(936	)		(694	)		(1,401	)		(755	)		1,541
		Real estate depreciation related to unconsolidated entities		471			1,105			251			181			—
	Discontinued Operations:
		Real estate depreciation		9,308			17,165			21,423			21,392			23,836
		Minority interests of unitholders in operating partnership		2,645			2,661			4,286			5,189			—
		Gains on sales of depreciable property		(32,698	)		(24,714	)		(31,450	)		(37,995	)		(27,099	)
	Funds from operations - basic		$	153,017		$	159,202		$	162,930		$	143,070		$	122,768

7

	Years ended December 31,
	2002*			2001*			2000*			1999*			1998*
Adjustment:
Distributions to preferred shareholders - Series D (Convertible)		15,779			15,428			15,300			15,154			986
Funds from operations - diluted	$	168,796		$	174,630		$	178,230		$	158,224		$	123,754
Adjustment:
Recurring capital expenditures		(32,341	)		(31,535	)		(24,794	)		(43,528	)		(25,019	)
Adjusted Funds from Operations - diluted(c)	$	136,455		$	143,095		$	153,436		$	114,696		$	98,735
Apartment Homes Owned
Total apartment homes owned at December 31		74,480			77,567			77,219			82,154			86,893
Weighted average number of apartment homes owned during the year		76,567			76,487			80,253			85,926			70,724

(a)	In 1998, United Dominion completed the following statutory mergers: (i) ASR Investments Corporation Inc. on March 27, 1998 for an aggregate purchase price of $323 million and; (ii) American Apartment Communities II on December 7, 1998 for an aggregate purchase price of $794 million.
(b)	Funds from operations (“FFO”) is defined as net income (computed in accordance with generally accepted accounting principles), excluding gains (losses) from sales of depreciable property, plus depreciation and amortization, less preferred dividends and after adjustments for unconsolidated partnerships and joint ventures. This definition conforms with the National Association of Real Estate Investment Trust’s definition issued in April 2002. United Dominion considers FFO in evaluating property acquisitions and its operating performance and believes that FFO should be considered along with, but not as an alternative to, net income and cash flows as a measure of United Dominion’s activities in accordance with generally accepted accounting principles and is not necessarily indicative of cash available to fund cash needs. For 2001, FFO includes a non-recurring charge of $8.6 million related to workforce reductions, other severance costs, executive office relocation costs, and the write down of seven undeveloped land sites along with United Dominion’s investment in an online apartment leasing company. For 2000, FFO includes a non-recurring charge of $3.7 million related to the settlement of litigation and an organizational charge.
(c)	Adjusted funds from operations is defined as FFO less recurring capital expenditures for our stabilized portfolio.

*Reclassified to conform to current year presentation as described in Note 3 to the consolidated financial statements.

8

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULE

UNITED DOMINION REALTY TRUST, INC.

	Page
FINANCIAL STATEMENTS FILED AS PART OF THIS REPORT
Report of Ernst & Young LLP, Independent Auditors		10
Consolidated Balance Sheets at December 31, 2002 and 2001		11
Consolidated Statements of Operations for each of the three years in the period ended December 31, 2002		12
Consolidated Statements of Cash Flows for each of the three years in the period ended December 31, 2002		13
Consolidated Statements of Shareholders’ Equity for each of the three years in the period ended December 31, 2002		14
Notes to Consolidated Financial Statements		16
SCHEDULE FILED AS PART OF THIS REPORT
Schedule III—Summary of Real Estate Owned		38

     All other schedules are omitted since the required information is not present or is not present in amounts sufficient to require submission of the schedule, or because the information required is included in the financial statements and notes thereto.

9

Report of Ernst & Young LLP, Independent Auditors

The Board of Directors and Shareholders
United Dominion Realty Trust, Inc.

     We have audited the accompanying consolidated balance sheets of United Dominion Realty Trust, Inc. (the “Company”) as of December 31, 2002 and 2001, and the related consolidated statements of operations, shareholders’ equity, and cash flows for each of the three years in the period ended December 31, 2002. Our audits also included the financial statement schedule listed in the Index at Item 15(a). These financial statements and schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.

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

     In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of United Dominion Realty Trust, Inc. at December 31, 2002 and 2001, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2002, in conformity with accounting principles generally accepted in the United States. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.

     As discussed in Note 15 to the consolidated financial statements, in 2003, the Company adopted the provisions of Statement of Financial Accounting Standards No. 145, “Rescission of FASB Statement No. 4, 44 and 64, Amendment of FASB Statement No. 13, and Technical Correction.” As discussed in Note 3 and Note 16 to the consolidated financial statements, in 2002 the Company adopted the provisions of Statement of Financial Accounting Standards No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets.” As discussed in Note 1 to the consolidated financial statements, in 2001 the Company changed its method of accounting for derivative financial instruments.

ERNST & YOUNG LLP                

Richmond, Virginia
January 27, 2003,
except for Note 14, as to which the date is
February 27, 2003,
Note 15, as to which the date is
May 12, 2003, and
Notes 2, 3, and 16, as to which the date is
February 13, 2004

10

UNITED DOMINION REALTY TRUST, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except for share data)

					December 31,
					2002*			2001*
ASSETS
Real estate owned (Note 2):
	Real estate held for investment				$	3,842,145		$	3,466,888
				Less: accumulated depreciation		(734,845	)		(586,121	)
						3,107,300			2,880,767
	Real estate under development					28,892			40,240
	Real estate held for disposition (net of accumulated depreciation of $13,888 and $60,245) (Note 3)					82,558			340,294
	Total real estate owned, net of accumulated depreciation					3,218,750			3,261,301
Cash and cash equivalents						3,152			4,641
Restricted cash						11,445			23,358
Deferred financing costs, net						17,548			15,605
Investment in unconsolidated development joint venture (Note 4)						—			3,355
Other assets						23,805			33,776
Real estate held for disposition assets						1,436			6,055
	Total assets				$	3,276,136		$	3,348,091
LIABILITIES AND SHAREHOLDERS’ EQUITY
Secured debt (Note 5)					$	1,015,740		$	923,736
Secured debt - real estate held for disposition (Note 5)						—			50,441
Unsecured debt (Note 6)						1,041,900			1,090,020
Real estate taxes payable						29,299			24,820
Accrued interest payable						11,907			16,779
Security deposits and prepaid rent						20,943			18,554
Distributions payable						35,141			33,457
Accounts payable, accrued expenses, and other liabilities						49,458			65,872
Real estate held for disposition liabilities						1,261			6,022
	Total liabilities					2,205,649			2,229,701
Minority interests						69,216			75,665
Shareholders’ equity (Note 7):
	Preferred stock, no par value; $25 liquidation preference, 25,000,000 shares authorized;
		5,416,009 shares 8.60% Series B Cumulative Redeemable issued and outstanding (5,416,009 in 2001)				135,400			135,400
		8,000,000 shares 7.50% Series D Cumulative Convertible Redeemable issued and outstanding (8,000,000 in 2001)				175,000			175,000
	Common stock, $1 par value; 150,000,000 shares authorized 106,605,259 shares issued and outstanding (103,133,279 in 2001)					106,605			103,133
	Additional paid-in capital					1,140,786			1,098,029
	Distributions in excess of net income					(541,428	)		(448,345	)
	Deferred compensation - unearned restricted stock awards					(2,504	)		(1,312	)
	Notes receivable from officer-shareholders					(2,630	)		(4,309	)
	Accumulated other comprehensive loss, net (Note 8)					(9,958	)		(14,871	)
			Total shareholders’ equity			1,001,271			1,042,725
	Total liabilities and shareholders’ equity				$	3,276,136		$	3,348,091

*Reclassified to conform to current year presentation as described in Note 3 to the consolidated financial statements.

See accompanying notes to consolidated financial statements.

11

UNITED DOMINION REALTY TRUST, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)

			Years ended December 31,
			2002*			2001*			2000*
REVENUES
	Rental income		$	583,964		$	551,009		$	524,240
	Non-property income			1,806			4,593			5,326
		Total revenues		585,770			555,602			529,566
EXPENSES
	Rental expenses:
		Real estate taxes and insurance		63,251			58,472			56,506
		Personnel		59,355			55,759			53,960
		Utilities		33,570			33,682			29,760
		Repairs and maintenance		36,717			32,104			29,043
		Administrative and marketing		21,329			19,982			19,096
		Property management		17,240			17,107			18,392
		Other operating expenses		1,203			1,376			1,305
	Real estate depreciation			149,848			134,680			131,571
	Interest			130,791			139,470			149,728
	General and administrative			19,343			21,730			15,724
	Other depreciation and amortization			4,073			3,308			4,059
	Impairment loss on investments			—			2,648			—
	Loss/(gain) on early debt retirement			35,500			3,219			(988	)
	Litigation settlement charges			—			—			2,700
	Severance costs and other organizational charges			—			5,404			1,020
		Total expenses		572,220			528,941			511,876
Income before minority interests and discontinued operations				13,550			26,661			17,690
Minority interests of outside partnerships				(1,414	)		(2,225	)		(1,501	)
Minority interests of unitholders in operating partnerships				936			694			1,401
Income before discontinued operations, net of minority interests				13,072			25,130			17,590
Income from discontinued operations, net of minority interests				40,157			36,698			59,025
Net income				53,229			61,828			76,615
Distributions to preferred shareholders - Series A and B				(11,645	)		(15,762	)		(21,591	)
Distributions to preferred shareholders - Series D (Convertible)				(15,779	)		(15,428	)		(15,300	)
(Premium) / discount on preferred share repurchases				—			(3,496	)		2,929
Net income available to common shareholders			$	25,805		$	27,142		$	42,653
Earnings/(loss) per common share - basic and diluted:
	Loss from continuing operations available to common shareholders, net of minority interests		$	(0.14	)	$	(0.10	)	$	(0.16	)
	Income from discontinued operations, net of minority interests		$	0.38		$	0.37		$	0.57
	Net income available to common shareholders		$	0.24		$	0.27		$	0.41
Common distributions declared per share			$	1.11		$	1.08		$	1.07
Weighted average number of common shares outstanding - basic and diluted				106,078			100,339			103,072

*Reclassified to conform to current year presentation as described in Note 3 to the consolidated financial statements.

See accompanying notes to consolidated financial statements.

12

UNITED DOMINION REALTY TRUST, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands, except per share data)

				Years ended December 31,
				2002			2001			2000
Operating Activities
	Net income			$	53,229		$	61,828		$	76,615
	Adjustments to reconcile net income to net cash provided by operating activities:
		Depreciation and amortization			163,328			155,327			157,361
		Impairment loss on real estate and investments			—			5,436			—
		Gains on sales of land and depreciable property			(32,698	)		(24,748	)		(31,450	)
		Minority interests			3,122			4,192			4,386
		(Gain)/loss on early debt retirement			36,965			3,471			(831	)
		Amortization of deferred financing costs and other			5,256			965			2,551
		Changes in operating assets and liabilities:
			Decrease in operating liabilities		(15,265	)		(3,188	)		(2,333	)
			Decrease in operating assets		12,763			21,128			17,861
Net cash provided by operating activities					226,700			224,411			224,160
Investing Activities
	Proceeds from sales of real estate investments, net				284,834			109,713			160,257
	Proceeds received for excess expenditures over investment contribution in development joint venture				—			—			30,176
	Acquisition of real estate assets, net of liabilities assumed				(282,600	)		(74,372	)		(4,635	)
	Development of real estate assets				(22,763	)		(53,607	)		(84,431	)
	Capital expenditures and other major improvements—real estate assets, net of escrow reimbursement				(42,827	)		(53,096	)		(41,496	)
	Capital expenditures-non-real estate assets				(1,706	)		(1,442	)		(1,166	)
	Other investing activities				—			8,749			—
Net cash (used in)/provided by investing activities					(65,062	)		(64,055	)		58,705
Financing Activities
	Proceeds from the issuance of secured debt				324,282			225,171			67,285
	Scheduled principal payments on secured debt				(11,176	)		(55,130	)		(62,575	)
	Non-scheduled principal payments and prepayment penalties on secured debt				(294,662	)		(52,182	)		(100,793	)
	Proceeds from the issuance of unsecured debt				198,476			—			248,035
	Payments and prepayment premiums on unsecured debt				(210,413	)		(21,307	)		(214,984	)
	Net repayment of revolving bank debt				(54,400	)		(14,200	)		(33,200	)
	Payment of financing costs				(5,510	)		(4,807	)		(5,648	)
	Proceeds from the issuance of common stock				60,252			66,319			7,660
	Proceeds from the issuance of performance shares				—			1,236			—
	Distributions paid to minority interests				(8,926	)		(12,868	)		(10,272	)
	Cash paid to buy out minority interests				—			(4,267	)		(341	)
	Distributions paid to preferred shareholders				(27,424	)		(34,308	)		(36,909	)
	Distributions paid to common shareholders				(117,116	)		(108,511	)		(110,098	)
	Repurchases of common and preferred stock				(16,510	)		(151,166	)		(28,398	)
Net cash used in financing activities					(163,127	)		(166,020	)		(280,238	)
Net (decrease)/increase in cash and cash equivalents					(1,489	)		(5,664	)		2,627
Cash and cash equivalents, beginning of year					4,641			10,305			7,678
Cash and cash equivalents, end of year				$	3,152		$	4,641		$	10,305
Supplemental Information:
	Interest paid during the period			$	135,223		$	148,863		$	152,434
	Issuance of restricted stock awards				2,904			1,363			830
	Non-cash transactions:
		Secured debt assumed with the acquisition of properties			41,636			18,230			10,130
		Reduction in secured debt from the disposition of properties			35,885			28,315			45,088
		Conversion of operating partnership minority interests to common stock (92,159 shares in 2002, 74,271 shares in 2001, and 19,156 shares in 2000)			1,252			643			247

See accompanying notes to consolidated financial statements.

13

UNITED DOMINION REALTY TRUST, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(In thousands, except per share data)

			Preferred Stock						Common Stock
															Paid-in
			Shares			Amount			Shares			Amount			Capital
Balance, December 31, 1999				18,114,860		$	427,872			102,740,777		$	102,741		$	1,083,687
Comprehensive Income
	Net income
	Comprehensive income
	Issuance of common shares to employees, officers, and director-shareholders									5,000			5			158
	Issuance of common shares through dividend reinvestment and stock purchase plan									767,513			767			6,538
	Purchase of common and preferred stock			(706,631	)		(17,666	)		(1,398,866	)		(1,399	)		(9,333	)
	Issuance of restricted stock awards									85,670			86			744
	Adjustment for cash purchase and conversion of minority interests of unitholders in operating partnerships									19,156			19			(407	)
	Principal repayments on notes receivable from officer-shareholders
	Common stock distributions declared ($1.07 per share)
	Preferred stock distributions declared—Series A ($2.31 per share)
	Preferred stock distributions declared—Series B ($2.15 per share)
	Preferred stock distributions declared—Series D ($1.91 per share)
	Amortization of deferred compensation
Balance, December 31, 2000				17,408,229		$	410,206			102,219,250		$	102,219		$	1,081,387
Comprehensive Income
	Net income
	Other comprehensive income:
		Cumulative effect of a change in accounting principle
		Unrealized loss on derivative financial instruments
	Comprehensive income
	Issuance of common shares to employees, officers, and director-shareholders									257,158			258			2,318
	Issuance of common shares through dividend reinvestment and stock purchase plan									332,243			332			4,054
	Issuance of common shares through public offering									4,100,000			4,100			52,316
	Purchase of common and preferred stock			(91,900	)		(2,298	)		(3,962,076	)		(3,962	)		(47,362	)
	Redemption of Series A preferred stock			(3,900,320	)		(97,508	)								3,496
	Issuance of restricted stock awards									112,443			112			1,251
	Adjustment for cash purchase and conversion of minority interests of unitholders in operating partnerships									74,271			74			569
	Principal repayments on notes receivable from officer-shareholders
	Common stock distributions declared ($1.08 per share)
	Preferred stock distributions declared—Series A ($1.05 per share)
	Preferred stock distributions declared—Series B ($2.15 per share)
	Preferred stock distributions declared—Series D ($1.93 per share)
	Amortization of deferred compensation
Balance, December 31, 2001				13,416,009		$	310,400			103,133,279		$	103,133		$	1,098,029

[Additional columns below]

[Continued from above table, first column(s) repeated]

						Deferred
						Compensation -						Accumulated
			Distributions in			Unearned			Notes Receivable			Other
			Excess of			Restricted			from Officer-			Comprehensive
			Net Income			Stock Awards			Shareholders			Loss			Total
Balance, December 31, 1999			$	(296,030	)	$	(305	)	$	(7,753	)	$	—		$	1,310,212
Comprehensive Income
	Net income			76,615												76,615
	Comprehensive income			76,615												76,615
	Issuance of common shares to employees, officers, and director-shareholders															163
	Issuance of common shares through dividend reinvestment and stock purchase plan															7,305
	Purchase of common and preferred stock															(28,398	)
	Issuance of restricted stock awards						(830	)								—
	Adjustment for cash purchase and conversion of minority interests of unitholders in operating partnerships															(388	)
	Principal repayments on notes receivable from officer-shareholders									192						192
	Common stock distributions declared ($1.07 per share)			(110,225	)											(110,225	)
	Preferred stock distributions declared—Series A ($2.31 per share)			(9,473	)											(9,473	)
	Preferred stock distributions declared—Series B ($2.15 per share)			(12,118	)											(12,118	)
	Preferred stock distributions declared—Series D ($1.91 per share)			(15,300	)											(15,300	)
	Amortization of deferred compensation						307									307
Balance, December 31, 2000			$	(366,531	)	$	(828	)	$	(7,561	)	$	—		$	1,218,892
Comprehensive Income
	Net income			61,828												61,828
	Other comprehensive income:
		Cumulative effect of a change in accounting principle											(3,848	)		(3,848	)
		Unrealized loss on derivative financial instruments											(11,023	)		(11,023	)
	Comprehensive income			61,828									(14,871	)		46,957
	Issuance of common shares to employees, officers, and director-shareholders															2,576
	Issuance of common shares through dividend reinvestment and stock purchase plan															4,386
	Issuance of common shares through public offering															56,416
	Purchase of common and preferred stock															(53,622	)
	Redemption of Series A preferred stock			(3,496	)											(97,508	)
	Issuance of restricted stock awards						(1,363	)								—
	Adjustment for cash purchase and conversion of minority interests of unitholders in operating partnerships															643
	Principal repayments on notes receivable from officer-shareholders									3,252						3,252
	Common stock distributions declared ($1.08 per share)			(108,956	)											(108,956	)
	Preferred stock distributions declared—Series A ($1.05 per share)			(4,111	)											(4,111	)
	Preferred stock distributions declared—Series B ($2.15 per share)			(11,651	)											(11,651	)
	Preferred stock distributions declared—Series D ($1.93 per share)			(15,428	)											(15,428	)
	Amortization of deferred compensation						879									879
Balance, December 31, 2001			$	(448,345	)	$	(1,312	)	$	(4,309	)	$	(14,871	)	$	1,042,725

14

UNITED DOMINION REALTY TRUST, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY—(Continued)
(In thousands, except per share data)

			Preferred Stock				Common Stock
													Paid-in
			Shares		Amount		Shares			Amount			Capital
Comprehensive Income
	Net income
	Other comprehensive income:
		Unrealized gain on derivative financial instruments (Note 8)
	Comprehensive income
	Issuance of common shares to employees, officers, and director-shareholders							1,000,592			1,001			10,782
	Issuance of common shares through dividend reinvestment and stock purchase plan							152,343			152			2,347
	Issuance of common shares through public offering							3,166,800			3,167			41,139
	Purchase of common stock							(1,145,412	)		(1,146	)		(15,369	)
	Issuance of restricted stock awards							205,498			205			2,699
	Adjustment for cash purchase and conversion of minority interests of unitholders in operating partnerships							92,159			93			1,159
	Principal repayments on notes receivable from officer-shareholders
	Common stock distributions declared ($1.11 per share)
	Preferred stock distributions declared—Series B ($2.15 per share)
	Preferred stock distributions declared—Series D ($1.98 per share)
	Amortization of deferred compensation
Balance, December 31, 2002				13,416,009	$	310,400		106,605,259		$	106,605		$	1,140,786

[Additional columns below]

[Continued from above table, first column(s) repeated]

						Deferred
						Compensation -						Accumulated
			Distributions in			Unearned			Notes Receivable			Other
			Excess of			Restricted			from Officer-			Comprehensive
			Net Income			Stock Awards			Shareholders			Loss			Total
Comprehensive Income
	Net income			53,229												53,229
	Other comprehensive income:
		Unrealized gain on derivative financial instruments (Note 8)											4,913			4,913
	Comprehensive income			53,229									4,913			58,142
	Issuance of common shares to employees, officers, and director-shareholders															11,783
	Issuance of common shares through dividend reinvestment and stock purchase plan															2,499
	Issuance of common shares through public offering															44,306
	Purchase of common stock															(16,515	)
	Issuance of restricted stock awards						(2,904	)								—
	Adjustment for cash purchase and conversion of minority interests of unitholders in operating partnerships															1,252
	Principal repayments on notes receivable from officer-shareholders									1,679						1,679
	Common stock distributions declared ($1.11 per share)			(118,888	)											(118,888	)
	Preferred stock distributions declared-Series B ($2.15 per share)			(11,645	)											(11,645	)
	Preferred stock distributions declared-Series D ($1.98 per share)			(15,779	)											(15,779	)
	Amortization of deferred compensation						1,712									1,712
Balance, December 31, 2002			$	(541,428	)	$	(2,504	)	$	(2,630	)	$	(9,958	)	$	1,001,271

See accompanying notes to consolidated financial statements.

15

UNITED DOMINION REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2002

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization and formation

     United Dominion Realty Trust, Inc., a Virginia corporation, was formed in 1972. United Dominion operates within one defined business segment with activities related to the ownership, management, development, acquisition, renovation, and disposition of multifamily apartment communities nationwide. At December 31, 2002, United Dominion owned 260 communities with 74,480 completed apartment homes and had three communities with 616 apartment homes under development.

Basis of presentation

     The accompanying consolidated financial statements include the accounts of United Dominion and its subsidiaries, including United Dominion Realty, L.P. (the “Operating Partnership”), and Heritage Communities, L.P. (the “Heritage OP”), (collectively, “United Dominion”). As of December 31, 2002, there were 100,984,826 units in the Operating Partnership outstanding, of which 94,616,256 units or 93.7% were owned by United Dominion and 6,368,570 units or 6.3% were owned by non-affiliated limited partners. As of December 31, 2002, there were 3,492,889 units in the Heritage OP outstanding, of which 3,115,471 units or 89.2% were owned by United Dominion and 377,418 units or 10.8% were owned by non-affiliated limited partners. The consolidated financial statements of United Dominion include the minority interests of the unitholders in the operating partnerships. All significant inter-company accounts and transactions have been eliminated in consolidation.

Income taxes

     United Dominion is operated as, and elects to be taxed as, a real estate investment trust (“REIT”) under the Internal Revenue Code of 1986, as amended (the “Code”). Generally, a REIT complies with the provisions of the Code if it meets certain requirements concerning its income and assets, as well as if it distributes at least 90% (95% prior to 2001) of its REIT taxable income to its shareholders and will not be subject to U.S. federal income taxes if it distributes at least 100% of its income. Accordingly, no provision has been made for federal income taxes. However, United Dominion is subject to certain state and local excise or franchise taxes, for which provision has been made.

     The differences between net income available to common shareholders for financial reporting purposes and taxable income before dividend deductions relate primarily to temporary differences, principally real estate depreciation and the tax deferral of certain gains on property sales. The differences in depreciation result from differences in the book and tax basis of certain real estate assets and the differences in the methods of depreciation and lives of the real estate assets.

     The following table reconciles United Dominion’s net income to REIT taxable income for the three years ended December 31, 2002(dollars in thousands):

	2002			2001			2000
Net income	$	53,229		$	61,828		$	76,615
Minority interest expense		(1,137	)		(1,442	)		(2,851	)
Depreciation and amortization expense		49,513			45,327			62,828
(Loss)/gain on the disposition of properties		(186	)		343			10,120
Revenue recognition timing differences		1,272			589			780
Impairment loss, not deductible for tax		—			2,788			—
Investment loss, not deductible for tax		—			2,648			—
Other expense timing differences		(3,914	)		2,787			(2,414	)
REIT taxable income before dividends	$	98,777		$	114,868		$	145,078
Dividend deduction	$	111,965		$	140,146		$	147,116

16

UNITED DOMINION REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2002

     For income tax purposes, distributions paid to common shareholders consist of ordinary income, capital gains and return of capital, or a combination thereof. For the three years ended December 31, 2002, distributions declared per common share were taxable as follows:

	2002		2001		2000
Ordinary income	$	0.55	$	0.74	$	0.81
Long-term capital gain		0.14		0.11		0.15
Unrecaptured section 1250 gain		0.11		0.07		0.11
Return of capital		0.31		0.16		—
	$	1.11	$	1.08	$	1.07

Use of estimates

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

Reclassifications

     Certain reclassifications have been made to amounts in prior years’ financial statements to conform with current year presentation.

Real estate

     Real estate assets held for investment are carried at historical cost less accumulated depreciation and any recorded impairment losses.

     Expenditures for ordinary repairs and maintenance costs are charged to expense as incurred. Expenditures for improvements, renovations, and replacements related to the acquisition and improvement of real estate assets are capitalized at cost and depreciated over their estimated useful lives if the value of the existing asset will be materially enhanced or the life of the related asset will be substantially extended beyond the original life expectancy.

     United Dominion recognizes impairment losses on long-lived assets used in operations when there is an event or change in circumstance that indicates an impairment in the value of an asset and the undiscounted future cash flows are not sufficient to recover the asset’s carrying value. If such indicators of impairment are present, an impairment loss is recognized based on the excess of the carrying amount of the asset over its fair value.

     For long-lived assets to be disposed of, impairment losses are recognized when the fair value of the asset less estimated cost to sell is less than the carrying value of the asset. Properties classified as real estate held for disposition generally represent properties that are under contract for sale. Real estate held for disposition is carried at the lower of cost, net of accumulated depreciation, or fair value, less the cost to dispose, determined on an asset by asset basis. Expenditures for ordinary repairs and maintenance costs on held for disposition properties are charged to expense as incurred. Expenditures for improvements, renovations, and replacements related to held for disposition properties are capitalized at cost. Depreciation is not recorded on real estate held for disposition.

     Depreciation is computed on a straight-line basis over the estimated useful lives of the related assets which is 35 years for buildings, 10 to 35 years for major improvements, and 3 to 10 years for furniture, fixtures, equipment, and other assets.

     All development projects and related carrying costs are capitalized and reported on the Consolidated Balance Sheet as “Real estate under development.” As each building in a project is completed and becomes available for lease-up, the total cost of the building is transferred to real estate held for investment and the assets are depreciated over their estimated useful lives. The cost of development projects includes interest, real estate taxes, insurance, and allocated development overhead during the construction period.

     Interest, real estate taxes, and incremental labor and support costs for personnel working directly on the development site are capitalized as part of the real estate under development to the extent that such charges do not cause the carrying value of the asset to exceed its net realizable value. During 2002, 2001, and 2000, total interest capitalized was $0.9 million, $2.9 million, and $3.6 million, respectively.

17

UNITED DOMINION REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2002

Cash and cash equivalents

     Cash and cash equivalents include all cash and liquid investments with maturities of three months or less when purchased.

Restricted cash

     Restricted cash consists of escrow deposits held by lenders for real estate taxes, insurance and replacement reserves, and security deposits.

Deferred financing costs

     Deferred financing costs include fees and other external costs incurred to obtain debt financings and are generally amortized on a straight-line basis, which approximates the effective interest method, over a period not to exceed the term of the related debt. Unamortized financing costs are written-off when debt is retired before its maturity date. During 2002, 2001, and 2000, amortization expense was $4.5 million, $3.6 million, and $5.0 million, respectively.

Investments in unconsolidated development joint ventures

     Investments in unconsolidated joint ventures are accounted for using the equity method when major business decisions require approval by the other partners and United Dominion does not have control of the assets. Investments are recorded at cost and subsequently adjusted for equity in net income (loss) and cash contributions and distributions. United Dominion eliminates intercompany profits on sales of services that are provided to the venture. Differences between the carrying value of investments and the underlying equity in net assets of the investee are due to capitalized interest on the investment balance and capitalized development and leasing costs that are recovered by United Dominion through fees during construction (see Note 4—Investment in Unconsolidated Development Joint Venture).

Revenue recognition

     United Dominion’s apartment homes are leased under operating leases with terms generally of one year or less. Rental income is recognized after it is earned and collectibility is reasonably assured.

Advertising costs

     All advertising costs are expensed as incurred and reported on the Consolidated Statements of Operations within the line item “Administrative and marketing.” During 2002, 2001, and 2000, total advertising expense was $11.0 million, $9.6 million, and $9.3 million, respectively.

Interest rate swap agreements

     Statements of Financial Accounting Standards No. 133 and 138,“Accounting for Certain Derivative Instruments and Hedging Activities”became effective on January 1, 2001. The accounting standards require companies to carry all derivative instruments, including certain embedded derivatives, in the Consolidated Balance Sheet at fair value. The accounting for changes in the fair value of a derivative instrument depends on whether it has been designated and qualifies as part of a hedging relationship and on the type of hedging relationship. For those derivative instruments that are designated and qualify as hedging instruments, a company must designate the hedging instrument, based on the exposure being hedged, as either a fair value hedge, cash flow hedge, or a hedge of a net investment in a foreign operation. At December 31, 2002 and 2001, all of United Dominion’s derivative financial instruments are interest rate swap agreements that are designated as cash flow hedges of debt with variable interest rate features and are qualifying hedges for financial reporting purposes. For derivative instruments that qualify as cash flow hedges, the effective portion of the gain or loss on the derivative instrument is reported as a component of other comprehensive income and reclassified into earnings during the same period or periods during which the hedged transaction affects earnings. The remaining gain or loss on the derivative instrument in excess of the cumulative change in the present value of future cash flows of the hedged item, if any, is recognized in current earnings during the period of change. The adoption of Statements 133 and 138 on January 1, 2001, resulted in a cumulative effect of an accounting change of a $3.8 million loss, all of which was recorded directly to other comprehensive income.

     As part of United Dominion’s overall interest rate risk management strategy, we use derivative financial instruments as a means to artificially fix variable rate debt or to hedge anticipated financing transactions. United Dominion’s derivative

18

UNITED DOMINION REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2002

transactions used for interest rate risk management include various interest rate swaps with indices that relate to the pricing of specific financial instruments of United Dominion. Because of the close correlation between the hedging instrument and the underlying cash flow exposure being hedged, fluctuations in the value of the derivative instruments are generally offset by changes in the cash flow of the underlying exposures. As a result, United Dominion believes that it has appropriately controlled the risk so that derivatives used for interest rate risk management will not have a material unintended effect on consolidated earnings. United Dominion does not enter into derivative financial instruments for trading purposes.

     The fair value of United Dominion’s derivative instruments is reported on balance sheet at their current fair value. Estimated fair values for interest rate swaps rely on prevailing market interest rates. These fair value amounts should not be viewed in isolation, but rather in relation to the values of the underlying hedged transactions and investments and to the overall reduction in exposure to adverse fluctuations in interest rates. Each interest rate swap agreement is designated with all or a portion of the principal balance and term of a specific debt obligation. The interest rate swaps involve the periodic exchange of payments over the life of the related agreements. Amounts received or paid on the interest rate swaps are recorded on an accrual basis as an adjustment to the related interest expense of the outstanding debt based on the accrual method of accounting. The related amounts payable to and receivable from counterparties are included in other liabilities and other assets, respectively.

     Prior to the adoption of Statements 133 and 138 on January 1, 2001, United Dominion also used interest rate swap contracts for hedging purposes. For interest rate swaps, the net amounts paid or received and net amounts accrued through the end of the accounting period were included in interest expense. The fair value of the interest rate swap contracts were not recorded on the Consolidated Balance Sheet and unrealized gains or losses were not recognized in the Consolidated Statements of Operations. Gains and losses on any contracts terminated early were deferred and amortized to income over the remaining average life of the terminated contract.

Comprehensive income

     Comprehensive income, which is defined as all changes in equity during each period except for those resulting from investments by or distributions to shareholders, is displayed in the accompanying Statements of Shareholders’ Equity. Other comprehensive income consists of gains or losses from derivative financial instruments.

Stock-based compensation

     United Dominion has elected to follow the intrinsic value method under Accounting Principles Board Opinion No. 25,“Accounting for Stock Issued to Employees”(“APB 25”) in accounting for its employee stock options because the alternative fair value accounting provided for under Statement 123,“Accounting for Stock-Based Compensation,”requires the use of option valuation models that were not developed for use in valuing employee stock options. Under APB 25, because the exercise price of United Dominion’s employee stock options equals the market price of the underlying stock on the date of grant, no compensation cost has been recognized.

Minority interests in operating partnerships

     Interests in operating partnerships held by limited partners are represented by operating partnership units (“OP Units”). The operating partnerships’ income is allocated to holders of OP Units based upon net income available to common shareholders and the weighted average number of OP Units outstanding to total common shares plus OP Units outstanding during the period. Capital contributions, distributions, and profits and losses are allocated to minority interests in accordance with the terms of the individual partnership agreements. OP Units can be exchanged for cash or shares of United Dominion’s common stock on a one-for-one basis, at the option of United Dominion. OP Units, as a percentage of total OP Units and shares outstanding, was 6.2% at December 31, 2002 and 6.8% at December 31, 2001 and 2000.

Minority interests in other partnerships

     United Dominion has limited partners in certain real estate partnerships acquired in certain merger transactions. Net income for these partnerships is allocated based on the percentage interest owned by these limited partners in each respective real estate partnership.

19

UNITED DOMINION REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2002

Earnings per share

     Basic earnings per common share is computed based upon the weighted average number of common shares outstanding during the year. Diluted earnings per common share is computed based upon common shares outstanding plus the effect of dilutive stock options and other potentially dilutive common stock equivalents. The dilutive effect of stock options and other potentially dilutive common stock equivalents is determined using the treasury stock method based on United Dominion’s average stock price.

     The following table sets forth the computation of basic and diluted earnings per share(dollars in thousands, except per share amounts):

	2002		2001		2000
Numerator for basic and diluted earnings per share—net income available to common shareholders	$	25,805	$	27,142	$	42,653
Denominator:
Denominator for basic earnings per share—weighted average common shares outstanding		106,078		100,339		103,072
Effect of dilutive securities:
Employee stock options and non-vested restricted stock awards		—		—		—
Denominator for dilutive earnings per share		106,078		100,339		103,072
Basic earnings per share	$	0.24	$	0.27	$	0.41
Diluted earnings per share	$	0.24	$	0.27	$	0.41

     The effect of the conversion of the operating partnership units and convertible preferred stock is not dilutive and is therefore not included as a dilutive security in the earnings per share computation. The weighted average effect of the conversion of the operating partnership units for the years ended December 31, 2002, 2001, and 2000 was 6,999,384 shares, 7,281,835 shares, and 7,489,435 shares, respectively. The weighted average effect of the conversion of the convertible preferred stock for the years ended December 31, 2002, 2001, and 2000 was 12,307,692 shares.

Impact of recently issued accounting standards

     In November 2002, the FASB issued Interpretation 45, “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others.” This statement requires that a liability for the fair value of a guarantee be recognized at the time the obligation is undertaken. The statement also requires that the liability be measured over the term of the related guarantee. This statement is effective for all guarantees entered into subsequent to December 31, 2002. For all guarantees entered into prior to December 31, 2002, there is to be no change in accounting; however, disclosure of management’s estimate of its future obligation under the guarantee is to be made. As of December 31, 2002, management estimates that its likelihood of funding its guarantor obligations is remote and the impact to United Dominion would be immaterial.

     In January 2003, the FASB issued Interpretation 46,“Consolidation of Variable Interest Entities.” This statement refines the identification process of variable interest entities and how an entity assesses its interests in a variable interest entity to decide whether to consolidate that entity. United Dominion, from time to time, enters into partnership and joint venture arrangements, which may be required to be consolidated under this statement. United Dominion is currently assessing the impact that this statement will have on its consolidated financial statements.

20

UNITED DOMINION REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2002

2. REAL ESTATE OWNED

     United Dominion operates in 57 markets dispersed throughout 20 states. At December 31, 2002, our largest apartment market was Dallas, Texas, where we owned 6.6% of our apartment homes, based upon carrying value. Excluding Dallas, United Dominion did not own more than 5.9% of its apartment homes in any one market, based upon carrying value.

     The following table summarizes real estate held for investment at December 31,(dollars in thousands):

	2002*			2001*
Land and land improvements	$	702,436		$	622,355
Buildings and improvements		2,933,248			2,660,249
Furniture, fixtures, and equipment		206,209			184,006
Construction in progress		252			278
Real estate held for investment		3,842,145			3,466,888
Accumulated depreciation		(734,845	)		(586,121	)
Real estate held for investment, net	$	3,107,300		$	2,880,767

     The following is a reconciliation of the carrying amount of real estate held for investment at December 31, (dollars in thousands):

	2002*			2001*			2000*
Balance at beginning of year	$	3,466,888		$	3,252,146		$	3,577,848
Real estate acquired		323,989			91,093			14,898
Capital expenditures		51,366			62,665			46,299
Transfers from development		31,548			63,772			68,025
Transfers to held for disposition, net		(31,646	)		—			(448,760	)
Impairment loss on real estate		—			(2,788	)		—
Disposal of fully depreciated assets		—			—			(6,164	)
Balance at end of year	$	3,842,145		$	3,466,888		$	3,252,146

     The following is a reconciliation of accumulated depreciation for real estate held for investment at December 31, (dollars in thousands):

	2002*			2001*			2000*
Balance at beginning of year	$	586,121		$	450,362		$	373,164
Depreciation expense for the year(a)		160,332			153,113			154,419
Transfers to held for disposition, net		(11,608	)		(17,354	)		(71,057	)
Disposal of fully depreciated assets		—			—			(6,164	)
Balance at end of year	$	734,845		$	586,121		$	450,362

(a)	Includes $1,176, $1,268, and $1,425 for 2002, 2001, and 2000, respectively, related to depreciation on non-real estate assets located at United Dominion’s apartment communities, classified as “Other depreciation and amortization” on the Consolidated Statements of Operations.
*	Reclassified to conform to current year presentation as described in Note 3 to the consolidated financial statements.

     The following is a summary of real estate held for investment by major geographic markets, reclassified to conform to current year presentation as described in Note 3 to the consolidated financial statements (in order of carrying value, excluding real estate held for disposition and real estate under development) at December 31, 2002 (dollars in thousands):

21

UNITED DOMINION REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2002

	Number of		Initial
	Apartment		Acquisition		Carrying		Accumulated
	Communities		Cost		Value		Depreciation		Encumbrances
Dallas, TX		15	$	225,658	$	262,197	$	44,093	$	50,188
Houston, TX		22		178,188		231,886		43,338		57,954
Phoenix, AZ		11		181,480		216,888		36,248		61,371
Orlando, FL		14		167,524		205,970		51,337		92,000
Raleigh, NC		11		179,935		203,887		42,345		58,593
Metropolitan DC		7		148,403		165,606		15,711		70,676
Mid Cities, TX		10		142,462		158,031		27,474		39,056
Tampa, FL		10		132,927		153,925		33,972		57,405
Columbus, OH		6		111,315		149,247		20,425		56,576
San Francisco, CA		4		136,504		141,245		14,625		21,112
Charlotte, NC		10		109,961		139,050		37,295		12,043
Southern California		5		107,816		130,459		11,270		11,484
Nashville, TN		8		83,987		120,572		25,088		—
Greensboro, NC		8		85,362		104,653		23,258		—
Monterey Peninsula, CA		9		95,091		98,264		11,478		2,581
Richmond, VA		8		74,856		97,759		35,060		66,657
Wilmington, NC		6		64,213		91,247		23,812		—
Baltimore, MD		7		80,141		89,345		18,775		28,410
Atlanta, GA		6		57,669		72,547		19,544		30,446
Columbia, SC		6		52,795		62,716		19,781		5,000
Jacksonville, FL		3		44,787		58,974		16,654		23,202
Norfolk, VA		6		42,741		54,727		20,186		7,359
Lansing, MI		4		50,237		50,185		6,117		31,570
Seattle, WA		3		31,953		34,291		5,006		25,830
Other Western		5		144,232		151,649		14,844		46,720
Other Pacific		8		122,608		124,176		14,036		55,177
Other Southwestern		7		92,897		99,013		14,559		9,765
Other Florida		7		60,564		91,040		22,143		—
Other North Carolina		8		61,677		75,865		25,722		11,550
Other Southeastern		4		56,716		69,273		15,050		35,021
Other Midwestern		8		62,593		67,421		8,650		26,320
Other Mid-Atlantic		5		37,618		42,835		10,703		12,542
Other Northeastern		2		14,732		18,253		5,113		5,167
Richmond Corporate		—		6,597		7,325		670		3,965
Commercial		—		1,624		1,624		463		—
		253	$	3,247,863	$	3,842,145	$	734,845	$	1,015,740

     The following is a summary of real estate held for disposition by major category, reclassified to conform the current year presentation as described in Note 3 to the consolidated financial statements, at December 31, 2002(dollars in thousands):

			Initial
	Number of		Acquisition		Carrying		Accumulated
	Properties		Cost		Value		Depreciation		Encumbrances
Apartments		7	$	72,640	$	79,474	$	11,836	$	—
Commercial		2		7,682		8,399		2,052		—
Land		3		9,629		8,573		—		—
			$	89,951	$	96,446	$	13,888	$	—

22

UNITED DOMINION REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2002

     The following is a summary of real estate under development by major category, reclassified to conform the current year presentation as described in Note 3 to the consolidated financial statements, at December 31, 2002(dollars in thousands):

			Initial
	Number of		Acquisition		Carrying		Accumulated
	Properties		Cost		Value		Depreciation		Encumbrances
Apartments		3	$	21,269	$	21,269	$	—	$	—
Land		6		7,623		7,263		—		—
			$	28,892	$	28,892	$	—	$	—
Total Real Estate Owned			$	3,366,706	$	3,967,483	$	748,733	$	1,015,740

     United Dominion is pursuing its strategy of exiting markets where long-term growth prospects are limited and the redeployment of capital would enhance future growth rates and economies of scale. During the first quarter of 2002, United Dominion placed nine assets, with an aggregate net book value of $89.3 million, under contract for sale and reclassified them as real estate held for disposition. These sales closed in the second quarter of 2002 and resulted in our withdrawal from Naples, Florida; Tucson, Arizona; Las Vegas, Nevada; and substantially all of Memphis, Tennessee. Although these sales resulted in an aggregate net gain of $11.5 million, certain of these assets were sold at net selling prices below their net book values at March 31, 2002. As a result, United Dominion recorded an aggregate $2.3 million impairment loss during the first quarter for the write down of a portfolio of five apartment communities in Memphis, Tennessee.

     During the first quarter of 2001, management performed an analysis of the carrying value of all undeveloped land parcels in connection with United Dominion’s plans to accelerate the disposition of these sites. As a result, an aggregate $2.8 million impairment loss was recognized on seven undeveloped sites in selected markets. An impairment loss was indicated as a result of the net book value of the assets being greater than the estimated fair market value less the cost of disposal.

     During the second quarter of 2000, management transferred approximately $197 million of assets from real estate held for disposition to real estate held for investment and, as a result, approximately $10 million in depreciation expense was recognized on the communities transferred in order to reflect depreciation on these properties while they were classified in real estate held for disposition. Furthermore, approximately $5 million of additional depreciation expense was recognized on these assets during 2000 subsequent to their transfer to real estate held for investment. Depreciation expense in 2000 was further increased by the impact of over $150 million in development completions in late 1999 and 2000 and approximately $200 million in acquisitions and capital improvements in 1999 and 2000.

3. INCOME FROM DISCONTINUED OPERATIONS

     United Dominion adopted SFAS No. 144,“Accounting for the Impairment or Disposal of Long-Lived Assets,”as of January 1, 2002. SFAS No. 144 requires, among other things, that the primary assets and liabilities and the results of operations of United Dominion’s real properties which have been sold subsequent to January 1, 2002, or are held for disposition subsequent to January 1, 2002, be classified as discontinued operations and segregated in United Dominion’s Consolidated Statements of Operations and Balance Sheets. Properties classified as real estate held for disposition generally represent properties that are under contract for sale and are expected to close within the next twelve months. For purposes of these financial statements, SFAS No. 144 results in the presentation of the net operating results of those properties sold or classified as held for disposition through September 30, 2003, as discontinued operations for all periods presented. The adoption of SFAS No. 144 does not have an impact on net income available to common shareholders. SFAS No. 144 only results in the reclassification of the operating results of all properties sold or classified as held for disposition through September 30, 2003 within the Consolidated Statements of Operations for the years ended December 31, 2002, 2001, and 2000, and the reclassification of the assets and liabilities within the Consolidated Balance Sheets for the years ended December 31, 2002 and 2001.

     For the nine months ended September 30, 2003, United Dominion sold six communities with a total of 1,675 apartment homes and two commercial properties with a total of 181,503 square feet. At September 30, 2003, United Dominion had one community with 252 apartment homes and a net book value of $4.6 million and one parcel of land with a net book value of $3.8 million included in real estate held for disposition. During 2002, United Dominion sold 25 communities with a total of 6,990 apartment homes, one parcel of land, and one commercial property with 143,000 square feet. During 2001, United Dominion sold nine communities with 1,889 apartment homes and five parcels of land. The results of operations for these properties and the

23

UNITED DOMINION REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2002

interest expense associated with the secured debt on these properties are classified on the Consolidated Statements of Operations in the line item entitled “Income from discontinued operations, net of minority interests.”

     The following is a summary of income from discontinued operations for the years ended December 31, (dollars in thousands):

	2002			2001			2000
Rental income	$	44,908		$	68,816		$	103,028
Rental expenses		19,479			28,816			42,848
Real estate depreciation		9,308			17,165			21,423
Interest		2,150			4,909			6,312
Loss on early debt retirement		1,465			218			157
Impairment loss on real estate		2,301			2,788			—
Other expenses		101			275			427
		34,804			54,171			71,167
Income before gain on sale of land and depreciable property, and minority interests		10,104			14,645			31,861
Net gain on sale of land and depreciable property		32,698			24,714			31,450
Income before minority interests		42,802			39,359			63,311
Minority interests on income from discontinued operations		(2,645	)		(2,661	)		(4,286	)
Income from discontinued operations, net of minority interests	$	40,157		$	36,698		$	59,025

4. INVESTMENT IN UNCONSOLIDATED DEVELOPMENT JOINT VENTURE

     In June 2000, United Dominion completed the formation of a joint venture that would invest approximately $101 million to develop five apartment communities with a total of 1,438 apartment homes. United Dominion owned a 25% interest in the joint venture and served as the managing partner. Prior to establishing the joint venture, United Dominion commenced construction on all five of the projects. Upon closing of the venture in June 2000, United Dominion contributed the projects in return for its equity interest of approximately $8 million in the venture and was reimbursed for approximately $35 million of development outlays that were incurred prior to closing the joint venture. We recognized fee income for services provided by United Dominion to the joint venture, to the extent of the outside partner’s interest, of approximately $0.6 million, $2.6 million, and $3.0 million for the years ended December 31, 2002, 2001, and 2000, respectively. In December 2001, United Dominion purchased three of the five apartment communities with 794 apartment homes for a total aggregate cost of approximately $61 million. In June 2002, United Dominion purchased the remaining two apartment communities with 644 apartment homes for approximately $52 million. United Dominion’s interest in the gains on the sale of these properties by the joint venture to United Dominion was recorded as a reduction of its basis in the assets and; therefore, is not reflected in the Consolidated Statements of Operations.

     The following is a summary of the operating results of the joint venture as of December 31,(dollars in thousands):

		2002			2001			2000
Rental income		$	2,774		$	9,841		$	1,930
Expenses:
Depreciation and amortization			1,101			3,684			268
Mortgage interest			1,114			3,826			1,557
Operating and other expenses			1,958			4,260			549
	Total expenses		4,173			11,770			2,374
Loss before gains on sales of investments			(1,399	)		(1,929	)		(444	)
Gains on sales of depreciable property			7,588			913			—
Net income/(loss)		$	6,189		$	(1,016	)	$	(444	)

24

UNITED DOMINION REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2002

5. SECURED DEBT

     Secured debt on continuing and discontinued operations, which encumbers $1.5 billion or 38.3% of United Dominion’s real estate owned ($2.4 billion or 61.7% of United Dominion’s real estate owned is unencumbered) consists of the following at December 31, 2002 (dollars in thousands):

						Weighted			Weighted		Number of
						Average			Average		Communities
		Principal Outstanding				Interest Rate			Years to Maturity		Encumbered
		2002		2001		2002			2002		2002
Fixed Rate Debt
Mortgage notes payable (a)		$	187,927	$	450,643		7.55	%		6.6		13
Tax-exempt secured notes payable			61,278		65,806		6.68	%		11.6		8
Fannie Mae credit facilities			288,875		—		6.40	%		8.0		9
Fannie Mae credit facilities—swapped			17,000		17,000		6.74	%		14.8		—
	Total fixed rate secured debt		555,080		533,449		6.83	%		8.2		30
Variable Rate Debt
Mortgage notes payable			11,752		15,082		4.72	%		7.3		3
Tax-exempt secured notes payable			7,770		19,915		1.50	%		25.2		1
Fannie Mae credit facilities			370,469		405,731		1.98	%		14.1		51
Freddie Mac credit facility			70,669		—		1.79	%		8.1		8
	Total variable rate secured debt		460,660		440,728		2.01	%		13.2		63
Total Secured Debt		$	1,015,740	$	974,177		4.65	%		10.4		93

(a) Includes fair value adjustments aggregating $2.2 million in 2002 and $7.9 million in 2001, recorded in connection with the assumption of debt associated with two acquisitions consummated in 1998.

Fixed Rate Debt

     Mortgage notes payable. Fixed rate mortgage notes payable are generally due in monthly installments of principal and interest and mature at various dates from January 2004 through June 2034 and carry interest rates ranging from 6.66% to 8.50%.

     Tax-exempt secured notes payable. Fixed rate mortgage notes payable that secure tax-exempt housing bond issues mature at various dates through November 2025 and carry interest rates ranging from 6.09% to 7.90%. Interest on these notes is generally payable in semi-annual installments.

     Secured credit facilities. At December 31, 2002, United Dominion’s fixed rate secured credit facilities consisted of $305.9 million of the $676.3 million outstanding on an $860 million aggregate commitment under four revolving secured credit facilities with Fannie Mae. The Fannie Mae credit facilities are for an initial term of ten years, bear interest at floating and fixed rates, and can be extended for an additional five years at United Dominion’s discretion. In order to limit a portion of its interest rate exposure, United Dominion has two interest rate swap agreements associated with the Fannie Mae credit facilities. These agreements have an aggregate notional value of $17.0 million under which United Dominion pays a fixed rate of interest and receives a variable rate on the notional amount. The interest rate swap agreements effectively change United Dominion’s interest rate exposure on $17.0 million of secured debt from a variable rate to a weighted average fixed rate of 6.74%.

Variable Rate Debt

     Mortgage notes payable. Variable rate mortgage notes payable are generally due in monthly installments of principal and interest and mature at various dates from January 2005 through September 2027. At December 31, 2002, these notes had interest rates ranging from 4.18% to 5.23%.

     Tax-exempt secured notes payable. Variable rate mortgage notes payable which secure tax-exempt housing bond issues mature in July 2028. At December 31, 2002, this note had an interest rate of 1.50%. Interest on this note is payable in semi-annual installments.

     Secured credit facilities. At December 31, 2002, United Dominion’s variable rate secured credit facilities consisted of $370.5 million outstanding on the Fannie Mae credit facilities and $70.7 million outstanding on the Freddie Mac credit facility. At

25

UNITED DOMINION REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2002

December 31, 2002, the variable rate Fannie Mae credit facilities had a weighted average floating rate of interest of 1.98% and the Freddie Mac credit facility had a weighted average floating rate of interest of 1.79%.

     The aggregate maturities of secured debt for the fifteen years subsequent to December 31, 2002 are as follows (dollars in thousands):

		Fixed						Variable
		Mortgage		Tax-Exempt		Credit		Mortgage		Tax-Exempt		Credit
Year		Notes		Notes		Facilities		Notes		Notes		Facilities		Total
	2003	$	5,854	$	13,213		—	$	438		—		—	$	19,505
	2004		54,096		5,820		—		460		—		—		60,376
	2005		18,720		873		—		4,998		—		—		24,591
	2006		30,457		933		—		3,847		—		—		35,237
	2007		6,797		630		—		148		—		—		7,575
	2008		1,364		5,453		—		154		—		—		6,971
	2009		23,754		579		—		161		—		—		24,494
	2010		26,485		626	$	138,875		169		—		—		166,155
	2011		704		671		50,000		177		—	$	70,669		122,221
	2012		761		723		100,000		185		—		—		101,669
	2013		823		3,847		—		194		—		—		4,864
	2014		891		835		—		202		—		—		1,928
	2015		963		13,350		—		212		—		52,956		67,481
	2016		1,042		579		—		222		—		134,513		136,356
	2017		1,127		626		—		185		—		—		1,938
Thereafter			14,089		12,520		17,000		—	$	7,770		183,000		234,379
		$	187,927	$	61,278	$	305,875	$	11,752	$	7,770	$	441,138	$	1,015,740

     For the year ended December 31, 2002, United Dominion recognized $18.4 million of expenses as a result of prepayment penalties incurred from the refinancing of certain secured loans, using proceeds from the Fannie Mae and Freddie Mac credit facilities and the early payoff of loans on the sale of properties. For the year ended December 31, 2001, United Dominion recognized $3.2 million of expenses related to prepayment penalties for the early payoff of loans on the sale of properties. These prepayment penalties were funded by proceeds of the new credit facilities, proceeds from the related asset sales, and from the release of cash escrows retained by former lenders of $14.0 million and $10.3 million for the years ended December 31, 2002 and 2001, respectively.

26

UNITED DOMINION REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2002

6. UNSECURED DEBT

     A summary of unsecured debt at December 31, 2002 and 2001 is as follows (dollars in thousands):

		2002		2001
Commercial Banks
	Borrowings outstanding under an unsecured credit facility due August 2003 (a)	$	175,800	$	230,200
	Borrowings outstanding under an unsecured term loan due May 2004—2005 (b)		100,000		100,000
Senior Unsecured Notes—Other
	7.60% Medium-Term Notes due January 2002		—		46,750
	7.65% Medium-Term Notes due January 2003 (c)		10,000		10,000
	7.22% Medium-Term Notes due February 2003		11,815		11,815
	8.63% Notes due March 2003		78,005		78,030
	7.98% Notes due March 2002–2003 (d)		7,428		14,857
	5.05% City of Portland, OR Bonds due October 2003		7,345		7,345
	7.67% Medium-Term Notes due January 2004		46,585		53,510
	7.73% Medium-Term Notes due April 2005		21,100		22,400
	7.02% Medium-Term Notes due November 2005		49,760		49,760
	7.95% Medium-Term Notes due July 2006		85,374		103,179
	7.07% Medium-Term Notes due November 2006		25,000		25,000
	7.25% Notes due January 2007		92,265		105,020
	ABAG Tax-Exempt Bonds due August 2008		46,700		46,700
	8.50% Monthly Income Notes due November 2008		29,081		57,400
	6.50% Notes due June 2009 (e)		200,000		—
	8.50% Debentures due September 2024 (f)		54,118		124,920
	Other (g)		1,524		3,134
			766,100		759,820
	Total Unsecured Debt	$	1,041,900	$	1,090,020

(a)

United Dominion has a $375 million three-year unsecured bank revolving credit facility that matures in August 2003. As of December 31, 2002, $175.8 million was outstanding under the bank credit facility leaving $199.2 million of unused capacity. Under the bank credit facility, United Dominion may borrow at a rate of LIBOR plus 1.1% and pays a facility fee, which is equal to 0.25% of the commitment. The bank credit facility is subject to customary financial covenants and limitations. As of December 31, 2002, management believes that United Dominion is in compliance with all covenants and limitations.

The following is a summary of short-term bank borrowings under United Dominion’s bank credit facility at December 31, (dollars in thousands):

	2002			2001			2000
Total revolving credit facilities at December 31	$	375 ,000		$	375,000		$	375,000
Borrowings outstanding at December 31		175,800			230,200			244,400
Weighted average daily borrowings during the year		156,493			248,367			195,128
Maximum daily borrowings during the year		311,600			347,200			308,000
Weighted average interest rate during the year		2.9	%		5.2	%		7.3	%
Weighted average interest rate at December 31		2.5	%		3.2	%		7.7	%
Weighted average interest rate at December 31—after giving effect to swap agreements		5.6	%		6.1	%		7.5	%

At December 31, 2002, United Dominion had five interest rate swap agreements associated with commercial bank borrowings with an aggregate notional value of $105 million under which United Dominion paid a fixed rate of interest and received a variable rate of interest on the notional amounts. The interest rate swaps, which mature in August 2003 and July 2004, effectively change United Dominion’s interest rate exposure on the $105 million of borrowings from a variable rate to a weighted average fixed rate of approximately 7.47%. At December 31, 2002, 2001, and 2000, the weighted average interest rate of commercial borrowings, after giving effect to swap agreements, was 5.6%, 6.1%, and 7.5%, respectively.

27

UNITED DOMINION REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2002

(b)	As of December 31, 2002, United Dominion had five interest rate swap agreements associated with borrowings under the term loan with an aggregate notional value of $100 million under which United Dominion pays a fixed rate of interest and receives a variable rate of interest on the notional amounts. The interest rate swaps, which mature in May 2003 and May 2004, effectively change United Dominion’s interest rate exposure on these borrowings from a variable rate to a weighted average fixed rate of approximately 8.17%.
(c)	United Dominion has one interest rate swap agreement associated with these unsecured notes with an aggregate notional value of $10 million under which United Dominion pays a fixed rate of interest and receives a variable rate on the notional amount. The interest rate swap agreement, which matures in January 2003, effectively changes United Dominion’s interest rate exposure on the $10 million from a variable rate to a fixed rate of 7.65%.
(d)	Payable annually in three equal principal installments of $7.4 million.
(e)	In June 2002, United Dominion issued $200 million of 6.50% senior unsecured notes due in June 2009. The net proceeds of $198.5 million from the sale were used to reduce outstanding debt under United Dominion’s $375 million unsecured revolving credit facility.
(f)	Includes an investor put feature that grants a one-time option to redeem the debentures in September 2004.
(g)	Includes $1.5 million and $3.0 million at December 31, 2002 and 2001, respectively, of deferred gains from the termination of interest rate risk management agreements.

     For the year ended December 31, 2002, United Dominion recognized $18.6 million of expenses as a result of premiums paid for the redemption of certain higher coupon notes and debentures and the write-off of deferred financing costs. For the year ended December 31, 2001, United Dominion recognized $0.3 million of expenses related to the write-off of deferred financing costs and the repurchase of certain notes.

7. SHAREHOLDERS’ EQUITY

Preferred Stock

     The Series B Cumulative Redeemable Preferred Stock (Series B) has no stated par value and a liquidation preference of $25 per share. With no voting rights and no stated maturity, Series B is not subject to any sinking fund or mandatory redemption and is not convertible into any other securities of United Dominion. The Series B is not redeemable prior to May 29, 2007. On or after this date, the Series B may be redeemed for cash at the option of United Dominion, in whole or in part, at a redemption price of $25 per share plus accrued and unpaid dividends. The redemption price is payable solely out of the sale proceeds of other capital stock of United Dominion. All dividends due and payable on the Series B have been accrued or paid as of the end of each fiscal year.

     The Series D Convertible Redeemable Preferred Stock (Series D) has no stated par value and a liquidation preference of $25 per share. The Series D has no voting rights, no stated maturity, is not subject to any sinking fund or mandatory redemption, and is convertible into 1.5385 shares of common stock at the option of the holder of the Series D at any time at $16.25 per share. United Dominion has the right to cause the holder of the Series D to convert the Series D to common shares at $16.25 based on twenty trading days at or above $17.06 for the life of the security. United Dominion has the right to purchase 2 million shares of the Series D in accordance with a predetermined schedule, provided that the volume weighted average price of our common shares is $16.25 for a twenty day trading period. The repurchase price payable will be computed in accordance with the table below, expressed as a percentage of the liquidation preference, determined by the period in which the Series D repurchase date occurs, together with all accrued and unpaid dividends to and including the repurchase date:

Series D Repurchase
Date Occurs During Period	Repurchase Price
January 1, 2003 to June 30, 2003		101.0	%
July 1, 2003 to December 6, 2003		100.5	%

     After December 7, 2003, United Dominion may, at its option, redeem at any time all or part of the Series D at a price per share of $25, payable in cash, plus all accrued and unpaid dividends, provided that the current market price of our common stock at least equals the conversion price, initially set at $16.25 per share. The redemption is payable solely out of the sale proceeds of other capital stock. In addition, United Dominion may not redeem, in any consecutive twelve-month period, a number of shares of Series D having an aggregate liquidation preference of more than $100 million.

     On June 15, 2001, United Dominion completed the redemption of all of its outstanding 9.25% Series A Cumulative Redeemable Preferred Stock at $25 per share plus accrued dividends.

28

UNITED DOMINION REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2002

Officers’ Stock Purchase and Loan Plan

     As of December 31, 2002, United Dominion has $2.6 million of notes receivable from certain officers and directors of United Dominion (original principal balances of $3.0 million), at an interest rate of 7.0% that mature between June 2004 and October 2005. The purpose of the loans was for the borrowers to purchase shares of United Dominion’s common stock pursuant to United Dominion’s 1991 Stock Purchase and Loan Plan. The loans are evidenced by promissory notes between the borrowers and United Dominion and are secured by a pledge of the shares of common stock (241,750 shares with a market value of $4.0 million at December 31, 2002). The notes require that dividends received on the shares be applied towards payment of the notes.

     In addition, United Dominion entered into a Servicing and Purchase Agreement (the “Servicing Agreement”) with Sun Trust Bank (the “Bank”) whereby United Dominion has agreed to act as servicing agent for and to purchase certain loans made by the Bank to officers and directors of United Dominion (the “Borrowers”) to finance the purchase of shares of United Dominion’s common stock. The loans are evidenced by promissory notes (“Notes”) between each Borrower and the Bank. The Servicing Agreement provides that the Bank can require United Dominion to purchase the Notes upon an event of default by the Borrower or United Dominion under the Servicing Agreement and at certain other times during the term of the Servicing Agreement. The aggregate outstanding principal balance of the Notes as of December 31, 2002 was $11.1 million (original principal balance was $11.7 million), and all of the Notes mature during 2004. Because certain of the Borrowers elected floating rate loans and others elected fixed rate loans, the interest rates on these loans as of December 31, 2002 ranged from 3.63% to 7.68%. Each Borrower entered into a Participation Agreement with United Dominion that requires that all cash dividends received on the shares (1,037,998 shares at December 31, 2002 with a closing market value of $17.0 million) be applied towards payment of the Notes. Based upon the fact that 100% of all cash dividend payments are paid to amortize the Notes and that the Notes are recourse to the Borrowers, United Dominion believes that its exposure to liability under the Notes is remote.

Dividend Reinvestment and Stock Purchase Plan

     United Dominion’s Dividend Reinvestment and Stock Purchase Plan (the “Stock Purchase Plan”) allows common and preferred shareholders the opportunity to purchase, through the reinvestment of cash dividends, additional shares of United Dominion’s common stock. As of December 31, 2002, 9,590,060 shares of common stock had been issued under the Stock Purchase Plan. Shares in the amount of 4,409,940 were reserved for further issuance under the Stock Purchase Plan at December 31, 2002. During 2002, 152,343 shares were issued under the Stock Purchase Plan for a total consideration of approximately $2.5 million.

Restricted Stock Awards

     United Dominion’s 1999 Long-Term Incentive Plan (“LTIP”) authorizes the granting of restricted stock awards to employees, officers, and directors of United Dominion. The total restricted stock awards under the LTIP may not exceed 15% of the total number of available shares, or 600,000. Deferred compensation expense is recorded over the vesting period and is based upon the value of the common stock on the date of issuance. As of December 31, 2002, 440,601 shares of restricted stock have been issued under the LTIP.

Shareholder Rights Plan

     United Dominion’s 1998 Shareholder Rights Plan is intended to protect long-term interests of shareholders in the event of an unsolicited, coercive, or unfair attempt to take over the company. The plan authorized a dividend of one Preferred Share Purchase Right (the “Rights) on each share of common stock outstanding. Each Right, which is not currently exercisable, will entitle the holder to purchase 1/1,000 of a share of a new series of United Dominion’s preferred stock, to be designated as Series C Junior Participating Cumulative Preferred Stock, at a price to be determined upon the occurrence of the event, and for which the holder must be paid $45 should the take over occur. Under the Plan, the rights will be exercisable if a person or group acquires more than 15% of United Dominion’s common stock, or announces a tender offer that would result in the ownership of 15% of United Dominion’s common stock.

29

UNITED DOMINION REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2002

8. FINANCIAL INSTRUMENTS

     The following estimated fair values of financial instruments were determined by United Dominion using available market information and appropriate valuation methodologies. Considerable judgment is necessary to interpret market data and develop estimated fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts United Dominion would realize on the disposition of the financial instruments. The use of different market assumptions or estimation methodologies may have a material effect on the estimated fair value amounts. The carrying amounts and estimated fair value of United Dominion’s financial instruments at December 31, 2002 and 2001, are summarized as follows(dollars in thousands):

	2002						2001
	Carrying			Fair			Carrying			Fair
	Amount			Value			Amount			Value
Secured debt	$	1,015,740		$	1,051,182		$	974,177		$	1,013,136
Unsecured debt		1,041,900			1,106,362			1,090,020			1,109,380
Interest rate swap agreements		(9,636	)		(9,636	)		(14,931	)		(14,931	)

     The following methods and assumptions were used by United Dominion in estimating the fair values set forth above.

Cash and cash equivalents

     The carrying amount of cash and cash equivalents approximates fair value.

Secured and unsecured debt

     Estimated fair value is based on mortgage rates, tax-exempt bond rates, and corporate unsecured debt rates believed to be available to United Dominion for the issuance of debt with similar terms and remaining lives. The carrying amount of United Dominion’s variable rate secured debt approximates fair value at December 31, 2002 and 2001. The carrying amounts of United Dominion’s borrowings under variable rate unsecured debt arrangements, short-term revolving credit agreements, and lines of credit approximate their fair values at December 31, 2002 and 2001.

Derivative financial instruments

     The following table presents the fair values of United Dominion’s derivative financial instruments outstanding, based on external market quotations, as of December 31, 2002 (dollars in thousands):

Notional		Fixed			Type of	Effective		Contract		Fair
Amount		Rate			Contract	Date		Maturity		Value
Secured Debt:
FNMA
$	7,000		6.48	%	Swap		06/30/99		06/30/04	$	(511	)
	10,000		6.92	%	Swap		12/01/99		04/01/04		(664	)
	17,000		6.74	%							(1,175	)
Unsecured Debt:
Bank Credit Facility
	5,000		8.85	%	Swap		06/26/95		07/01/04		(377	)
	25,000		7.49	%	Swap		11/01/00		08/01/03		(845	)
	25,000		7.49	%	Swap		11/01/00		08/01/03		(845	)
	25,000		7.31	%	Swap		12/01/00		08/01/03		(815	)
	25,000		7.31	%	Swap		12/04/00		08/01/03		(815	)
	105,000		7.47	%							(3,697	)
Bank Term Loan
	25,000		7.64	%	Swap		11/15/00		05/15/03		(531	)
	20,000		7.64	%	Swap		11/15/00		05/15/03		(425	)
	23,500		8.82	%	Swap		11/15/00		05/15/04		(1,696	)
	23,000		8.82	%	Swap		11/15/00		05/15/04		(1,660	)
	8,500		7.41	%	Swap		12/04/00		05/15/03		(172	)
	100,000		8.17	%							(4,484	)
Medium-Term Notes
	10,000		7.65	%	Swap		01/26/99		01/27/03		(280	)
$	232,000									$	(9,636	)

30

UNITED DOMINION REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2002

     For the year ended December 31, 2002, United Dominion recognized $4.9 million of net unrealized gains in comprehensive income and a $0.05 million gain in net income related to the ineffective portion of United Dominion’s hedging instruments. In addition, United Dominion has recognized $9.6 million of derivative financial instrument liabilities on the Consolidated Balance Sheet.

     As of December 31, 2002, United Dominion expects to reclassify $7.7 million of net losses on derivative instruments from accumulated other comprehensive loss to earnings (interest expense which, combined with the interest paid on the underlying debt, results in interest expense at the fixed rates shown above) during the next twelve months on the related hedged transactions.

Risk of counterparty non-performance

     United Dominion has not obtained collateral or other security to support financial instruments. In the event of non-performance by the counterparty, United Dominion’s credit loss on its derivative instruments is limited to the value of the derivative instruments that are favorable to United Dominion at December 31, 2002, of which we have none. However, such non-performance is not anticipated as the counterparties are highly rated credit quality U.S. financial institutions and management believes that the likelihood of realizing material losses from counterparty non-performance is remote.

9. EMPLOYEE BENEFIT PLANS

Profit Sharing Plan

     The United Dominion Realty Trust, Inc. Profit Sharing Plan (the “Plan”) is a defined contribution plan covering all eligible full-time employees. Under the Plan, United Dominion makes discretionary profit sharing and matching contributions to the Plan as determined by the Compensation Committee of the Board of Directors. Aggregate provisions for contributions, both matching and discretionary, which are included in United Dominion’s Consolidated Statements of Operations for the three years ended December 31, 2002, 2001, and 2000 were $0.9 million, $0.7 million, and $1.3 million, respectively.

Stock Option Plan

     In May 2001, the shareholders of United Dominion approved the 1999 Long-Term Incentive Plan (the “LTIP”), which supersedes the 1985 Stock Option Plan. With the approval of the LTIP, no additional grants will be made under the 1985 Stock Option Plan. The LTIP authorizes the granting of awards which may take the form of options to purchase shares of common stock, stock appreciation rights, restricted stock, dividend equivalents, other stock-based awards, any other right or interest relating to common stock or cash. The Board of Directors reserved 4 million shares for issuance upon the grant or exercise of awards under the LTIP. Of the 4 million shares reserved, 3.4 million shares are for stock-based awards, such as stock options, with the remaining 600,000 shares reserved for restricted stock awards. The LTIP generally provides, among other things, that options are granted at exercise prices not lower than the market value of the shares on the date of grant and that options granted must be exercised within ten years. The maximum number of shares of stock that may be issued subject to incentive stock options is 10 million shares. Shares under options that expire or are cancelable are available for subsequent grant.

     Pro forma information regarding net income and earnings per share is required by Statement 123“Accounting for Stock-Based Compensation”(“SFAS No. 123”), and has been determined as if United Dominion had accounted for its employee stock options under the fair value method of accounting as defined in SFAS No. 123.

     The fair value for these options was estimated at the date of grant using a Black-Scholes option pricing model with the following weighted average assumptions for 2002, 2001, and 2000:

	2002			2001			2000
Risk free interest rate		4.1	%		3.2	%		5.2	%
Dividend yield		7.7	%		9.1	%		7.2	%
Volatility factor		0.177			0.171			0.164
Weighted average expected life (years)		4			3			7

31

UNITED DOMINION REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2002

     The weighted average fair value of options granted during 2002, 2001, and 2000 was $0.84, $0.46, and $0.65 per option, respectively.

     For purposes of the pro forma disclosures, the estimated fair value of the options is amortized to expense over the options’ vesting period. United Dominion’s pro forma information is as follows (dollars in thousands, except per share amounts):

		2002		2001		2000
Net income available to common shareholders, as reported		$	25,805	$	27,142	$	42,653
Deduct:
Total stock option compensation expense determined under the fair value method for all awards, net of related tax effects			380		449		948
Pro forma net income		$	25,425	$	26,693	$	41,705
Earnings per common share—basic
	As reported	$	0.24	$	0.27	$	0.41
	Pro forma		0.24		0.27		0.40
Earnings per common share—diluted
	As reported	$	0.24	$	0.27	$	0.41
	Pro forma		0.24		0.26		0.40

     A summary of United Dominion’s stock option activity during the three years ended December 31, 2002 is provided in the following table:

	Number			Weighted Average		Range of
	Outstanding			Exercise Price		Exercise Prices
Balance, December 31, 1999		4,215,592		$	12.09	$	9.19 - $15.38
Granted		653,300			9.91		9.88 - 10.75
Exercised		(11,584	)		9.19		9.19
Forfeited		(364,363	)		12.95		9.63 - 15.25
Balance, December 31, 2000		4,492,945		$	11.71	$	9.19 - $15.38
Granted		1,289,484			11.96		10.81 - 14.20
Exercised		(356,408	)		11.02		9.19 - 14.25
Forfeited		(813,649	)		11.52		9.63 - 15.38
Balance, December 31, 2001		4,612,372		$	11.90	$	9.63 - $15.38
Granted		129,150			14.26		14.15 - 14.88
Exercised		(1,000,592	)		11.68		9.63 - 15.38
Forfeited		(87,999	)		11.04		9.63 - 15.25
Balance, December 31, 2002		3,652,931		$	12.01		9.63 - 15.38
Exercisable at December 31,
2000		2,692,997			12.35		9.19 - 15.38
2001		1,968,265			12.38		9.63 - 15.38
2002		2,793,811			11.97		9.63 - 15.38

     The weighted average remaining contractual life on all options outstanding is 6.2 years. 1,141,644 of share options had exercise prices between $13.13 and $15.38, 1,086,000 of share options had exercise prices between $11.15 and $12.40, and 1,425,287 of share options had exercise prices between $9.63 and $10.88.

     At December 31, 2002 and 2001, stock-based awards for 3,149,350 and 3,278,500 shares of common stock, respectively, were available for future grants under the 1999 LTIP’s existing authorization and no option shares were available for future grants under the 1985 Stock Option Plan.

32

UNITED DOMINION REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2002

10. RESTRUCTURING CHARGES

     During the first quarter of 2001, United Dominion announced the appointment of a new chief executive officer and senior management structure. The new management team began a comprehensive review of the organizational structure of United Dominion and its operations. As a result of this review, United Dominion recorded a charge of $5.4 million related to workforce reductions and other miscellaneous costs. These charges are included in the Consolidated Statements of Operations within the line item “Severance costs and other organizational charges.” All charges came under consideration subsequent to the appointment of United Dominion’s new CEO in February 2001 and were approved by management and the Board of Directors in March 2001. All of the $5.4 million charge was paid during 2001.

     The planned workforce reductions resulted in a charge of $4.5 million during the first quarter of 2001 and in the planned termination of approximately 200 full-time equivalent positions, or 10% of total staffing in corporate functions, including senior management and general and administrative functions, and in apartment operations. Employee termination benefits included severance packages and related benefits and outplacement services for employees terminated. United Dominion also recognized $0.4 million related to relocation costs associated with the new executive offices in Denver and $0.5 million related to other miscellaneous costs.

     In addition, management performed an analysis of the carrying value of all undeveloped land parcels in connection with United Dominion’s plans to accelerate the disposition of these sites. As a result, an aggregate $2.8 million impairment loss was recognized on seven undeveloped sites in selected markets. An impairment loss was indicated as a result of the net book value of the assets being greater than the estimated fair market value less the cost of disposal. United Dominion also recognized a $0.4 million charge for the write down of its investment in an online apartment leasing company.

11. COMMITMENTS AND CONTINGENCIES

Commitments

Real Estate Under Development

     United Dominion is committed to completing its real estate currently under development, which has an estimated cost to complete of $59.0 million at December 31, 2002.

Ground and Operating Leases

     United Dominion is party to several ground leases relating to operating communities. In addition, United Dominion is party to various other operating leases related to the operation of its regional offices. Future minimum lease payments for non-cancelable ground and operating leases at December 31, 2002 are as follows(dollars in thousands):

		Ground Leases		Operating Leases
2003		$	1,022	$	526
2004			1,022		485
2005			1,022		311
2006			1,022		102
2007			1,022		59
Thereafter			23,105		4
	Total	$	28,215	$	1,487

     United Dominion incurred $2.0 million, $2.3 million, and $2.6 million of rent expense for the years ended December 31, 2002, 2001, and 2000, respectively.

33

UNITED DOMINION REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2002

Contingencies

Out-Performance Program

     In May 2001, the shareholders of United Dominion approved the Out-Performance Program (the “Program”) pursuant to which executives and other key officers of United Dominion were given the opportunity to invest in United Dominion by purchasing performance shares (“Out-Performance Partnership Shares” or “OPPSs”) of the Operating Partnership for an initial investment of $1.27 million (the full market value of the OPPSs at inception, as determined by an independent investment banking firm). The Program measures United Dominion’s performance over a 28-month period beginning February 2001.

     The Program is designed to provide participants with the possibility of substantial returns on their investment if United Dominion’s total return, considering the reinvestment of dividend income as well as share price appreciation, on its common stock during the measurement period exceeds the greater of (a) industry average (defined as the total cumulative return of the Morgan Stanley REIT Index over the same period) or (b) a 30% total return (12% annualized) (the “minimum return”).

     At the conclusion of the measurement period, if United Dominion’s total return satisfies these criteria, the holders of the OPPSs will receive distributions and allocations of income and loss from the Operating Partnership equal to the distributions and allocations that would be received on the number of interests in the Operating Partnership (“OP Units”) obtained by:

i.	determining the amount by which the cumulative total return of United Dominion’s common stock over the measurement period exceeds the greater of the cumulative total return of the peer group index (the Morgan Stanley REIT Index) or the minimum return (such being the “excess return”);
ii.	multiplying 4% of the excess return by United Dominion’s market capitalization (defined as the average number of shares and OP Units outstanding over the 28-month period multiplied by the daily closing price of United Dominion’s common stock) up to a maximum of 2% of market capitalization; and
iii.	dividing the number obtained in (ii) by the market value of one share of United Dominion common stock on the valuation date, determined by the volume-weighted average price of the common stock for the 20 trading days immediately preceding the valuation date.

     If, on the valuation date, the cumulative total return of United Dominion’s common stock does not meet the minimum return or the total return of the peer group and there is no excess return, then the holders of the OPPSs will forfeit their entire initial investment of $1.27 million. The OPPSs, unlike United Dominion’s other OP Units, are not convertible into common stock except upon a change of control of United Dominion or upon the death of the participant. It is this feature, combined with the fact that management paid market value for the shares, that we believe makes this program better than previous programs, such as stock options, that were likewise designed to motivate and retain executives and key management. It ensures that management’s goals are perpetually aligned with the shareholders since the OP Units can not be conveyed or disposed of except as outlined previously. Accordingly, the contingently issuable OPPSs are not included in common stock and common stock equivalents in the calculation of earnings per share. Based upon results through December 31, 2002, 1,578,534 OPPSs would have been issued had the Program terminated on that date. However, since the ultimate determination of OPPSs to be issued will not occur until June 2003, and the number of OPPSs is determinable only upon future events, the financial statements do not reflect any additional impact for these events.

Legal Matters

     United Dominion and its subsidiaries are engaged in various litigations and have a number of unresolved claims pending. The ultimate liability in respect of such litigations and claims cannot be determined at this time. United Dominion is of the opinion that such liability, to the extent not provided for through insurance or otherwise, is not likely to be material in relation to the consolidated financial statements of United Dominion.

34

UNITED DOMINION REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2002

12. INDUSTRY SEGMENTS

     United Dominion owns and operates multifamily apartment communities throughout the United States that generate rental and other property related income through the leasing of apartment units to a diverse base of tenants. United Dominion separately evaluates the performance of each of its apartment communities. However, because each of the apartment communities has similar economic characteristics, facilities, services, and tenants, the apartment communities have been aggregated into a single apartment communities segment. All segment disclosure is included in or can be derived from United Dominion’s consolidated financial statements.

     There are no tenants that contributed 10% or more of United Dominion’s total revenues during 2002, 2001, or 2000.

13. UNAUDITED SUMMARIZED CONSOLIDATED QUARTERLY FINANCIAL DATA

     Summarized consolidated quarterly financial data for the year ended December 31, 2002 is as follows(dollars in thousands, except per share amounts):

	Three Months Ended
	March 31(a)*			June 30*		September 30(b)*			December 31(c)*
Rental income (d)	$	142,913		$	144,873	$	146,855		$	149,323
Income/(loss) before minority interests and discontinued operations		(4,863	)		13,563		(1,245	)		6,095
Gain on sale of land and depreciable property		919			11,826		19,128			825
Income from discontinued operations, net of minority interests		2,885			14,494		21,519			1,258
Net income/(loss) available to common shareholders		(8,538	)		20,513		13,602			227
Earnings/(loss) per common share:
Basic	$	(0.08	)	$	0.19	$	0.13		$	0.00
Diluted		(0.08	)		0.19		0.13			0.00

(a)	The first quarter of 2002 includes $15.8 million of expense associated with the refinancing of certain mortgages using proceeds from the new Fannie Mae and Freddie Mac credit facilities.
(b)	The third quarter of 2002 includes $12.6 million of expense due to premiums paid for the redemption of certain higher coupon bonds.
(c)	The fourth quarter of 2002 includes $5.2 million of expense due to premiums paid for the redemption of certain higher coupon bonds.
(d)	Represents income from continuing operations.

     Summarized consolidated quarterly financial data for the year ended December 31, 2001 is as follows(dollars in thousands, except per share amounts):

	Three Months Ended
	March 31(a)*			June 30*		September 30*		December 31(b)*
Rental income (c)	$	135,716		$	136,808	$	138,421	$	140,064
Income/(loss) before minority interests and discontinued operations		(1,268	)		10,315		10,839		6,775
Gain/(loss) on sale of land and depreciable property		4,102			20,646		—		(34	)
Income from discontinued operations, net of minority interests		7,235			22,089		3,324		4,050
Net income/(loss) available to common shareholders		(3,308	)		20,136		6,778		3,536
Earnings/(loss) per common share:
Basic	$	(0.03	)	$	0.20	$	0.07	$	0.04
Diluted		(0.03	)		0.20		0.07		0.04

(a)	The first quarter of 2001 includes $8.6 million of non-recurring charges related to workforce reductions, other severance costs, executive relocation costs, and the write down of land and our investment in an online apartment leasing company.
(b)	The fourth quarter of 2001 includes a $2.2 million charge related to the write down of our investment in a web-based property management and leasing system.
(c)	Represents income from continuing operations.

*Reclassified to conform to current year presentation as described in Note 3 to the consolidated financial statements.

35

UNITED DOMINION REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2002

14. SUBSEQUENT EVENTS

     On January 30, 2003, United Dominion completed the sale of 2.0 million shares of common stock at a public offering price of $15.71 per share, resulting in net proceeds to United Dominion of approximately $31 million. The proceeds will be used to repay debt and for general corporate purposes.

     On February 27, 2003, United Dominion completed the sale of $150 million of 4.50% medium-term notes due in March 2008 under a new $300 million medium-term note program. The net proceeds from the issuance of approximately $149 million are anticipated to be used to repay amounts outstanding on United Dominion’s $375 million unsecured revolving credit facility.

15. ADOPTION OF SFAS 145 AND OTHER EVENTS

     On January 1, 2003, United Dominion adopted Statement of Financial Accounting Standards No. 145, “Rescission of FASB Statement No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Correction” (SFAS 145). The provisions of SFAS 145 related to the rescission of SFAS No. 4 require United Dominion to reclassify prior period items that do not meet the extraordinary classification into continuing operations. During the three years ended December 31, 2002, the Company has incurred such expenses and in compliance with SFAS 145 has reported those expenses as a component of continuing operations for each period presented and in its quarterly reports filed since December 31, 2002.

     Subsequent to March 31, 2003, United Dominion sold 3.1 million shares of its common stock in a public offering and received approximately $50.9 million in net proceeds from the offering.

16. ADOPTION OF SFAS 144 AND OTHER EVENTS

     On January 1, 2002, United Dominion adopted SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets.” SFAS No. 144 requires, among other things, that the primary assets and liabilities and the results of operations of United Dominion’s real properties which have been sold subsequent to January 1, 2002, or are held for disposition subsequent to January 1, 2002, be classified as discontinued operations and segregated in United Dominion’s Consolidated Statements of Operations and Balance Sheets. For purposes of these financial statements, SFAS No. 144 results in the presentation of the net operating results of those properties sold or classified as held for disposition through September 30, 2003, as discontinued operations for all periods presented. The adoption of SFAS No. 144 does not have an impact on net income available to common shareholders. SFAS No. 144 only results in the reclassification of the operating results of all properties sold or classified as held for disposition through September 30, 2003 within the Consolidated Statements of Operations for the years ended December 31, 2002, 2001, and 2000, and the reclassification of the assets and liabilities within the Consolidated Balance Sheets for the years ended December 31, 2002 and 2001.

     In March 2003, United Dominion negotiated a new $500 million unsecured revolving credit facility to replace our $375 million unsecured revolver and $100 million unsecured term loan. The credit facility’s interest rate is 25 and 30 basis points lower than the previous unsecured revolver and term loan, respectively.

     In April 2003, United Dominion completed the sale of 3.0 million shares of common stock at a public offering price of $16.97 per share, resulting in net proceeds to United Dominion of approximately $49.2 million. The proceeds were used to acquire additional apartment communities.

     In May 2003, United Dominion completed the sale of an additional 100,000 shares of common stock at a public offering price of $16.97 per share in connection with the exercise of the underwriter’s over-allotment option on the April 2003 offering. The net proceeds of $1.6 million were used for general corporate purposes.

     In May 2003, United Dominion exercised its right to redeem 2.0 million shares of its Series D Cumulative Redeemable Preferred Stock that were subsequently converted by the holder into 3,076,923 shares of common stock at a price of $16.25 per share.

     In June 2003, United Dominion issued $56.9 million of our new Series E Cumulative Convertible Preferred Stock (“Series E”) and 1,617,815 Preferred Operating Partnership Units (“OP Units”) totaling $26.9 million as partial consideration for the purchase of four communities in Southern California. Each share of Series E and OP Units were priced at $16.61 per share and dividends on the Series E and OP Units carry a fixed coupon of 8.0% until such time as the common share dividend is equal to or exceeds this amount for four consecutive quarters, at which time the Series E and OP Units will be entitled to receive dividends equivalent to the dividends paid to holders of United Dominion’s common stock.

36

UNITED DOMINION REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2002

     In July 2003, United Dominion completed the sale of an additional $50 million of 4.50% medium-term notes due in March 2008 under our medium-term note program. The net proceeds from the issuance of approximately $49.9 million were used to repay amounts outstanding on United Dominion’s $500 million unsecured revolving credit facility.

     In September 2003, United Dominion completed the sale of 4.0 million shares of common stock at a public offering price of $18.40 per share. United Dominion also granted the underwriter an option to purchase an additional 600,000 shares to cover over-allotments. The net proceeds from the offering of approximately $72.3 million were used for general corporate purposes, including funding future acquisitions and development, with the remaining balance used to reduce outstanding variable rate debt under our unsecured credit facilities.

     In October 2003, United Dominion completed the sale of $75 million of 5.13% senior unsecured notes due in January 2014 under our medium-term note program. The net proceeds from the issuance of $74.5 million were used to repay amounts outstanding on United Dominion’s $500 million unsecured revolving credit facility.

     In October 2003, United Dominion completed the sale of 600,000 shares of common stock at a public offering price of $18.40 per share in connection with the exercise of the over-allotment option granted to the underwriters for United Dominion’s September 2003 offering of 4.0 million shares of common stock. The net proceeds from the offering of $10.8 million were used for general corporate purposes, including funding future acquisitions and development, with the remaining balance used to reduce outstanding variable rate debt under our unsecured credit facilities.

     In November 2003, United Dominion completed the sale of $50 million of 4.25% senior unsecured notes due in January 2009. The net proceeds from the issuance of $49.8 million were used to fund acquisitions of apartment communities.

     In December 2003, United Dominion exercised its right to redeem 4.0 million shares of its Series D Cumulative Redeemable Preferred Stock that were subsequently converted by the holder into 6,153,846 shares of common stock at a price of $16.25 per share.

     In January 2004, United Dominion completed the sale of $75 million of 5.13% senior unsecured notes due in January 2014. These notes represent a re-opening of the 5.13% senior notes due January 2014 issued by United Dominion in October 2003, and these notes will constitute a single series of notes, bringing the aggregate principal amount outstanding of the 5.13% senior notes to $150 million. The net proceeds of approximately $73.9 million from this issuance were used to repay secured and unsecured debt obligations maturing in the first quarter of 2004

37

Schedule III
Summary of Real Estate Owned
(in thousands)

									Cost of			Gross Amount at
			Initial Costs						Improvements			Which Carried at Close of Period
							Total		Capitalized
			Land and		Buildings		Initial		Subsequent			Land and		Buildings
			Land		and		Acquisition		to Acquisition			Land		and
	Encumbrances		Improvements		Improvements		Costs		(Net of Disposals)			Improvements		Improvements
Preston Oaks	$	—	$	1,784	$	6,416	$	8,200	$	841		$	1,949	$	7,092
Rock Creek		—		4,077		15,823		19,900		4,771			4,652		20,019
Windridge		—		3,414		14,027		17,441		3,272			4,056		16,657
Catalina		—		1,543		5,632		7,175		907			1,678		6,404
Wimbledon Court		—		1,809		10,930		12,739		2,316			2,847		12,208
Lakeridge		—		1,631		5,669		7,300		1,261			1,826		6,735
Summergate		—		1,171		3,929		5,100		875			1,406		4,569
Oak Forest		23,540		5,631		23,294		28,925		10,805			6,378		33,352
Oaks Of Lewisville		12,265		3,727		13,563		17,290		3,946			4,540		16,696
Kelly Crossing		—		2,497		9,156		11,653		1,724			2,986		10,391
Highlands Of Preston		—		2,151		8,168		10,319		1,838			2,492		9,665
The Summit		8,575		1,932		9,041		10,973		1,513			2,333		10,153
Springfield		5,808		3,075		6,823		9,898		1,160			3,275		7,783
Meridian		—		6,013		29,094		35,107		864			6,380		29,591
Mandolin I		—		2,663		20,975		23,638		446			2,783		21,301
DALLAS, TX		50,188		43,118		182,540		225,658		36,539			49,581		212,616
Woodtrail		—		1,543		5,457		7,000		2,556			1,740		7,816
Park Trails		—		1,145		4,105		5,250		1,004			1,248		5,006
Green Oaks		—		5,314		19,626		24,940		3,291			5,940		22,291
Sky Hawk		—		2,298		7,158		9,456		2,005			2,718		8,743
South Grand At Pecan Grove		19,509		4,058		14,756		18,814		4,880			4,857		18,837
Breakers		—		1,527		5,298		6,825		2,329			1,920		7,234
Braesridge		10,255		3,048		10,962		14,010		2,511			3,493		13,028
Skylar Pointe		—		3,604		11,593		15,197		4,315			3,728		15,784
Stone Canyon		—		899		—		899		9,439			1,324		9,014
Briar Park		—		329		2,794		3,123		242			351		3,014
Chelsea Park		5,390		1,991		5,788		7,779		2,161			2,442		7,498
Clear Lake Falls		—		1,090		4,535		5,625		—			1,163		4,462
Country Club Place		4,900		499		6,520		7,019		1,068			666		7,421
Arbor Ridge		5,531		1,689		6,684		8,373		629			2,069		6,933
London Park		6,125		2,019		6,667		8,686		1,986			2,455		8,217
Marymont		—		1,151		4,155		5,306		858			1,174		4,990
Nantucket Square		—		1,068		4,833		5,901		(392	)		1,075		4,434
Riverway		—		523		2,828		3,351		256			553		3,054
Riviera Pines		6,244		1,414		6,454		7,868		1,056			1,470		7,454
The Gallery		—		769		3,359		4,128		261			794		3,595
Towne Lake		—		1,334		5,309		6,643		1,495			1,609		6,529
The Legend at Park 10		—		1,995		—		1,995		11,748			3,926		9,817
HOUSTON, TX		57,954		39,307		138,881		178,188		53,698			46,715		185,171
Vista Point		—		1,587		5,613		7,200		1,493			1,727		6,966
Sierra Palms		—		4,639		17,361		22,000		582			4,748		17,834
Northpark Village		—		1,519		13,537		15,056		1,857			1,876		15,037
Stonegate		5,180		735		7,940		8,675		1,067			905		8,837
Finisterra		—		1,274		26,392		27,666		615			1,341		26,940
La Privada		15,400		7,303		18,508		25,811		2,122			7,845		20,088
Terracina		22,413		3,757		34,781		38,538		6,771			4,582		40,727
Woodland Park		—		3,017		6,706		9,723		1,030			3,226		7,527
Sierra Foothills		12,691		2,728		—		2,728		18,771			4,842		16,657
Villagio at McCormick Ranch		5,687		3,333		5,976		9,309		860			3,720		6,449
Sierra Canyon		—		1,810		12,964		14,774		240			1,821		13,193
PHOENIX, AZ		61,371		31,702		149,778		181,480		35,408			36,633		180,255
Fisherman’s Village		—		2,387		7,459		9,846		3,624			3,144		10,326
Seabrook		—		1,846		4,155		6,001		2,816			2,268		6,549
Dover Village		—		2,895		6,456		9,351		3,891			3,441		9,801
Lakeside North		12,440		1,533		11,076		12,609		5,093			2,263		15,439
Regatta Shore		—		757		6,607		7,364		3,947			1,535		9,776
Alafaya Woods		8,725		1,653		9,042		10,695		2,297			2,111		10,881
Vinyards		8,475		1,840		11,572		13,412		3,309			2,424		14,297
Andover Place		13,230		3,692		7,757		11,449		3,273			4,503		10,219

[Additional columns below]

[Continued from above table, first column(s) repeated]

	Total
	Carrying		Accumulated		Date of		Date
	Value (A)		Depreciation (B)		Construction		Acquired
Preston Oaks	$	9,041	$	1,750		1980		12/31/96
Rock Creek		24,671		5,312		1979		12/31/96
Windridge		20,713		4,432		1980		12/31/96
Catalina		8,082		1,586		1982		12/31/96
Wimbledon Court		15,055		2,858		1983		12/31/96
Lakeridge		8,561		1,784		1984		12/31/96
Summergate		5,975		1,234		1984		12/31/96
Oak Forest		39,730		8,462		1996/98		12/31/96
Oaks Of Lewisville		21,236		4,736		1983		03/27/97
Kelly Crossing		13,377		2,563		1984		06/18/97
Highlands Of Preston		12,157		2,148		1985		03/27/98
The Summit		12,486		2,136		1983		03/27/98
Springfield		11,058		1,767		1985		03/27/98
Meridian		35,971		1,948		2000/02	01/27/98 & 12/28/01
Mandolin I		24,084		1,377		2001		12/28/01
DALLAS, TX		262,197		44,093
Woodtrail		9,556		2,562		1978		12/31/96
Park Trails		6,254		1,344		1983		12/31/96
Green Oaks		28,231		5,275		1985		06/25/97
Sky Hawk		11,461		2,524		1984		05/08/97
South Grand At Pecan Grove		23,694		4,605		1985		09/26/97
Breakers		9,154		1,976		1985		09/26/97
Braesridge		16,521		3,081		1982		09/26/97
Skylar Pointe		19,512		4,084		1979		11/20/97
Stone Canyon		10,338		1,426		1998		12/17/97
Briar Park		3,365		538		1987		03/27/98
Chelsea Park		9,940		1,716		1983		03/27/98
Clear Lake Falls		5,625		844		1980		03/27/98
Country Club Place		8,087		1,538		1985		03/27/98
Arbor Ridge		9,002		1,622		1983		03/27/98
London Park		10,672		1,958		1983		03/27/98
Marymont		6,164		931		1983		03/27/98
Nantucket Square		5,509		765		1983		03/27/98
Riverway		3,607		670		1985		03/27/98
Riviera Pines		8,924		1,235		1979		03/27/98
The Gallery		4,389		579		1968		03/27/98
Towne Lake		8,138		1,542		1984		03/27/98
The Legend at Park 10		13,743		2,523		1998		05/19/98
HOUSTON, TX		231,886		43,338
Vista Point		8,693		1,844		1986		12/31/96
Sierra Palms		22,582		3,859		1996		12/31/96
Northpark Village		16,913		3,254		1983		03/27/98
Stonegate		9,742		1,785		1978		03/27/98
Finisterra		28,281		4,619		1997		03/27/98
La Privada		27,933		3,914		1987		03/27/98
Terracina		45,309		8,346		1984		05/28/98
Woodland Park		10,753		1,873		1979		06/09/98
Sierra Foothills		21,499		4,406		1998		02/18/98
Villagio at McCormick Ranch		10,169		1,470		1980		01/18/01
Sierra Canyon		15,014		878		2001		12/28/01
PHOENIX, AZ		216,888		36,248
Fisherman’s Village		13,470		3,951		1984		12/29/95
Seabrook		8,817		2,848		1984		02/20/96
Dover Village		13,242		4,651		1981		03/31/93
Lakeside North		17,702		5,573		1984		04/14/94
Regatta Shore		11,311		3,602		1988		06/30/94
Alafaya Woods		12,992		4,008		1988/90		10/21/94
Vinyards		16,721		5,162		1984/86		10/31/94
Andover Place		14,722		3,864		1988	09/29/95 & 09/30/96

38

									Cost of		Gross Amount at
			Initial Costs						Improvements		Which Carried at Close of Period
							Total		Capitalized
			Land and		Buildings		Initial		Subsequent		Land and		Buildings
			Land		and		Acquisition		to Acquisition		Land		and
	Encumbrances		Improvements		Improvements		Costs		(Net of Disposals)		Improvements		Improvements
Los Altos		12,199		2,804		12,348		15,152		2,879		3,347		14,684
Lotus Landing		—		2,185		8,638		10,823		2,061		2,414		10,470
Seville On The Green		—		1,283		6,498		7,781		1,918		1,456		8,243
Arbors @ Lee Vista		13,383		3,976		16,920		20,896		1,869		4,386		18,379
Heron Lake		8,603		1,447		9,288		10,735		1,276		1,619		10,392
Ashton @ Waterford		14,945		3,872		17,538		21,410		193		3,911		17,692
ORLANDO, FL		92,000		32,170		135,354		167,524		38,446		38,822		167,148
Dominion On Spring Forest		—		1,257		8,586		9,843		4,013		1,717		12,139
Dominion Park Green		—		500		4,322		4,822		1,825		716		5,931
Dominion On Lake Lynn		16,250		3,622		12,405		16,027		3,582		4,152		15,457
Dominion Courtney Place		—		1,115		5,119		6,234		3,337		1,450		8,121
Dominion Walnut Ridge		9,515		1,791		11,969		13,760		2,303		2,176		13,887
Dominion Walnut Creek		17,050		3,170		21,717		24,887		3,691		3,730		24,848
Dominion Ramsgate		—		908		6,819		7,727		957		1,041		7,643
Copper Mill		—		1,548		16,067		17,615		1,094		1,828		16,881
Trinity Park		15,778		4,580		17,576		22,156		1,236		4,631		18,761
Meadows at Kildaire		—		2,846		20,768		23,614		1,768		6,875		18,507
Oaks at Weston		—		9,944		23,306		33,250		146		9,945		23,451
RALEIGH, NC		58,593		31,281		148,654		179,935		23,952		38,261		165,626
Dominion Middle Ridge		14,198		3,311		13,283		16,594		1,133		3,423		14,304
Dominion Lake Ridge		9,142		2,366		8,387		10,753		1,124		2,524		9,353
Presidential Greens		20,153		11,238		18,790		30,028		159		11,238		18,949
Taylor Place		—		6,418		13,411		19,829		823		6,456		14,196
Ridgewood Apartments		12,512		5,612		20,086		25,699		303		5,613		20,389
Ridgewood Townhomes		—		4,507		16,263		20,771		37		4,507		16,301
Greens At Falls Run		—		2,731		5,300		8,031		925		2,878		6,078
Manor At England Run		14,671		3,195		13,505		16,700		12,697		4,869		24,528
METROPOLITAN DC		70,676		39,378		109,025		148,403		17,203		41,508		124,098
Autumnwood		—		2,412		8,688		11,100		1,465		2,737		9,828
Cobblestone		—		2,925		10,528		13,453		3,134		3,182		13,405
Pavillion		—		4,428		19,033		23,461		1,833		4,771		20,523
Oak Park		16,236		3,966		22,228		26,194		758		5,549		21,403
Parc Plaza		—		1,684		5,279		6,963		1,610		2,163		6,410
Summit Ridge		7,700		1,726		6,308		8,034		1,648		2,214		7,468
Greenwood Creek		—		1,958		8,551		10,509		1,678		2,302		9,885
Derby Park		11,130		3,121		11,765		14,886		1,623		3,762		12,747
Aspen Court		3,990		776		4,945		5,721		1,017		1,099		5,639
The Cliffs		—		3,484		18,657		22,141		803		3,655		19,289
ARLINGTON, TX		39,056		26,480		115,982		142,462		15,569		31,434		126,597
Bay Cove		—		2,929		6,578		9,507		3,678		3,334		9,851
Summit West		—		2,176		4,710		6,886		2,572		2,470		6,988
Pinebrook		—		1,780		2,458		4,238		3,217		2,010		5,445
Lakewood Place		10,300		1,395		10,647		12,042		1,517		1,633		11,926
Hunters Ridge		10,232		2,462		10,942		13,404		1,956		2,993		12,367
Bay Meadow		—		2,893		9,254		12,147		2,727		3,437		11,437
Cambridge		—		1,791		7,166		8,957		1,605		2,106		8,456
Laurel Oaks		—		1,362		6,542		7,904		1,303		1,544		7,663
Parker’s Landing		29,453		10,178		37,869		48,047		1,658		9,298		40,407
Sugar Mill Creek		7,420		2,242		7,553		9,795		765		2,385		8,175
TAMPA, FL		57,405		29,208		103,719		132,927		20,998		31,210		122,715
Sycamore Ridge		13,160		4,068		15,433		19,501		1,238		4,226		16,513
Heritage Green		—		2,990		11,392		14,382		9,405		3,134		20,653
Alexander Court		—		1,573		—		1,573		21,370		6,218		16,725
Governour’s Square		28,459		7,513		28,695		36,208		3,053		7,825		31,436
Hickory Creek		—		3,421		13,539		16,960		984		3,493		14,451
Britton Woods		14,957		3,477		19,214		22,691		1,882		4,030		20,543
COLUMBUS, OH		56,576		23,042		88,273		111,315		37,932		28,926		120,321
2000 Post Street		—		9,861		44,578		54,439		690		9,926		45,203
Birch Creek		7,630		4,365		16,696		21,061		1,367		4,614		17,814
Highlands Of Marin		—		5,996		24,868		30,864		919		6,079		25,704
Marina Playa		13,482		6,224		23,916		30,140		1,765		6,461		25,444
SAN FRANCISCO, CA		21,112		26,446		110,058		136,504		4,741		27,080		114,165

[Additional columns below]

[Continued from above table, first column(s) repeated]

	Total
	Carrying		Accumulated		Date of		Date
	Value (A)		Depreciation (B)		Construction		Acquired
Los Altos		18,031		4,046		1990		10/31/96
Lotus Landing		12,884		2,419		1985		07/01/97
Seville On The Green		9,699		1,955		1986		10/21/97
Arbors @ Lee Vista		22,765		3,719		1991		12/31/97
Heron Lake		12,011		2,096		1989		03/27/98
Ashton @ Waterford		21,603		3,443		2000		05/28/98
ORLANDO, FL		205,970		51,337
Dominion On Spring Forest		13,856		6,104		1978/81		05/21/91
Dominion Park Green		6,647		2,726		1987		09/27/91
Dominion On Lake Lynn		19,609		5,018		1986		12/01/92
Dominion Courtney Place		9,571		3,290		1979/81		07/08/93
Dominion Walnut Ridge		16,063		4,744		1982/84		03/04/94
Dominion Walnut Creek		28,578		7,992		1985/86		05/17/94
Dominion Ramsgate		8,684		1,976		1988		08/15/96
Copper Mill		18,709		3,660		1997		12/31/96
Trinity Park		23,392		4,005		1987		02/28/97
Meadows at Kildaire		25,382		2,042		2000		05/25/00
Oaks at Weston		33,396		788		2001		06/28/02
RALEIGH, NC		203,887		42,345
Dominion Middle Ridge		17,727		3,593		1990		06/25/96
Dominion Lake Ridge		11,877		2,599		1987		02/23/96
Presidential Greens		30,187		738		1938		05/15/02
Taylor Place		20,652		621		1962		04/17/02
Ridgewood Apartments		26,002		431		1988		08/26/02
Ridgewood Townhomes		20,808		340		1983		08/26/02
Greens At Falls Run		8,956		1,845		1989		05/04/95
Manor At England Run		29,397		5,544		1990		05/04/95
METROPOLITAN DC		165,606		15,711
Autumnwood		12,565		2,455		1984		12/31/96
Cobblestone		16,587		3,354		1984		12/31/96
Pavillion		25,294		4,710		1979		12/31/96
Oak Park		26,952		5,730		1982/98		12/31/96
Parc Plaza		8,573		1,829		1986		10/30/97
Summit Ridge		9,682		1,883		1983		03/27/98
Greenwood Creek		12,187		2,160		1984		03/27/98
Derby Park		16,509		2,926		1984		03/27/98
Aspen Court		6,738		1,272		1986		03/27/98
The Cliffs		22,944		1,155		1992		01/29/02
ARLINGTON, TX		158,031		27,474
Bay Cove		13,185		4,690		1972		12/16/92
Summit West		9,458		3,482		1972		12/16/92
Pinebrook		7,455		3,081		1977		09/28/93
Lakewood Place		13,559		3,991		1986		03/10/94
Hunters Ridge		15,360		3,864		1992		06/30/95
Bay Meadow		14,874		3,275		1985		12/09/96
Cambridge		10,562		2,205		1985		06/06/97
Laurel Oaks		9,207		1,958		1986		07/01/97
Parker’s Landing		49,705		6,102		1991		12/07/98
Sugar Mill Creek		10,560		1,324		1988		12/07/98
TAMPA, FL		153,925		33,972
Sycamore Ridge		20,739		2,840		1997		07/02/98
Heritage Green		23,787		3,613		1998		07/02/98
Alexander Court		22,943		3,598		1999		07/02/98
Governour’s Square		39,261		5,032		1967		12/07/98
Hickory Creek		17,944		2,329		1988		12/07/98
Britton Woods		24,573		3,013		1991		04/20/01
COLUMBUS, OH		149,247		20,425
2000 Post Street		55,129		5,055		1987		12/07/98
Birch Creek		22,428		2,520		1968		12/07/98
Highlands Of Marin		31,783		3,334		1991		12/07/98
Marina Playa		31,905		3,716		1971		12/07/98
SAN FRANCISCO, CA		141,245		14,625

39

										Cost of		Gross Amount at
			Initial Costs							Improvements		Which Carried at Close of Period
							Total			Capitalized
			Land and		Buildings		Initial			Subsequent		Land and		Buildings
			Land		and		Acquisition			to Acquisition		Land		and
	Encumbrances		Improvements		Improvements		Costs			(Net of Disposals)		Improvements		Improvements
The Highlands		—		321		2,830		3,151			2,871		709		5,313
Emerald Bay		—		626		4,723		5,349			4,850		1,267		8,932
Dominion Peppertree		—		1,546		7,699		9,245			1,797		1,807		9,235
Dominion Crown Point		—		2,122		22,339		24,461			2,213		3,897		22,777
Dominion Harris Pond		—		887		6,728		7,615			1,436		1,231		7,820
Dominion Mallard Creek		—		699		6,488		7,187			982		796		7,373
Chateau Village		—		1,046		6,979		8,025			2,538		1,467		9,096
Dominion At Sharon		—		667		4,856		5,523			1,098		908		5,713
Providence Court		—		1		22,048		22,049			9,760		7,519		24,290
Stoney Pointe		12,043		1,500		15,856		17,356			1,544		1,770		17,130
CHARLOTTE, NC		12,043		9,415		100,546		109,961			29,089		21,371		117,679
Pine Avenue		11,484		2,158		8,888		11,046	��		2,635		2,827		10,854
The Grand Resort		—		8,884		35,707		44,591			17,337		11,775		50,153
Grand Terrace		—		2,144		6,595		8,739			1,237		2,227		7,749
Windemere at Sycamore Highland		—		5,810		23,450		29,260			86		5,809		23,537
Rancho Vallecitos		—		3,303		10,877		14,180			1,348		3,402		12,126
SOUTHERN CALIFORNIA		11,484		22,299		85,517		107,816			22,643		26,040		104,419
Legacy Hill		—		1,148		5,868		7,016			3,062		1,446		8,632
Hickory Run		—		1,469		11,584		13,053			1,997		1,729		13,321
Carrington Hills		—		2,117		—		2,117			24,677		3,736		23,058
Brookridge		—		707		5,461		6,168			1,340		939		6,569
Club At Hickory Hollow		—		2,140		15,231		17,371			2,195		2,702		16,864
Breckenridge		—		766		7,714		8,480			913		952		8,441
Williamsburg		—		1,376		10,931		12,307			1,715		1,642		12,380
Colonnade		—		1,460		16,015		17,475			686		1,609		16,552
NASHVILLE, TN		—		11,183		72,804		83,987			36,585		14,755		105,817
Beechwood		—		1,409		6,087		7,496			1,099		1,674		6,921
Steeplechase		—		3,208		11,514		14,722			12,697		3,925		23,494
Northwinds		—		1,558		11,736		13,294			1,178		1,749		12,723
Deerwood Crossings		—		1,540		7,989		9,529			1,378		1,686		9,221
Dutch Village		—		1,198		4,826		6,024			854		1,287		5,591
Lake Brandt		—		1,547		13,489		15,036			932		1,824		14,144
Park Forest		—		680		5,770		6,450			677		864		6,263
Deep River Pointe		—		1,671		11,140		12,811			476		1,814		11,473
GREENSBORO, NC		—		12,811		72,551		85,362			19,291		14,823		89,830
Boronda Manor		296		1,946		8,982		10,928			331		1,970		9,289
Garden Court		139		888		4,188		5,076			226		895		4,407
Harding Park Townhomes		71		550		2,051		2,601			102		573		2,130
Cambridge Court		436		3,039		12,883		15,922			684		3,121		13,485
Laurel Tree		175		1,304		5,115		6,419			222		1,318		5,323
Pine Grove		194		1,383		5,784		7,167			224		1,391		6,000
The Pointe At Harden Ranch		815		6,388		23,854		30,242			800		6,424		24,618
The Pointe At Northridge		274		2,044		8,029		10,073			366		2,085		8,354
The Pointe At Westlake		181		1,329		5,334		6,663			218		1,348		5,533
MONTEREY PENINSULA, CA		2,581		18,871		76,220		95,091			3,173		19,125		79,139
Dominion Olde West		—		1,965		12,204		14,169			2,482		2,382		14,269
Dominion Creekwood		—		—		—		—			1,164		50		1,114
Dominion Laurel Springs		—		465		3,120		3,585			1,365		639		4,311
Dominion English Hills		20,044		1,979		11,524		13,503			5,440		2,816		16,127
Dominion Gayton Crossing		10,400		826		5,148		5,974			6,354		1,165		11,163
Dominion West End		16,493		2,059		15,049		17,108			2,848		2,701		17,255
Courthouse Green		8,085		732		4,702		5,434			2,350		1,101		6,683
Waterside At Ironbridge		11,635		1,844		13,239		15,083			900		2,008		13,975
RICHMOND, VA		66,657		9,870		64,986		74,856			22,903		12,862		84,897
Cape Harbor		—		1,892		18,113		20,005			1,596		2,271		19,330
Mill Creek		—		1,404		4,489		5,893			13,823		1,941		17,775
The Creek		—		418		2,506		2,924			1,833		489		4,268
Forest Hills		—		1,028		5,421		6,449			2,511		1,208		7,752
Clear Run		—		875		8,741		9,616			5,945		1,281		14,280
Crosswinds		—		1,096		18,230		19,326			1,326		1,215		19,437
WILMINGTON, NC		—		6,713		57,500		64,213			27,034		8,405		82,842

[Additional columns below]

[Continued from above table, first column(s) repeated]

	Total
	Carrying		Accumulated		Date of		Date
	Value (A)		Depreciation (B)		Construction		Acquired
The Highlands		6,022		3,754		1970		01/17/84
Emerald Bay		10,199		4,473		1972		02/06/90
Dominion Peppertree		11,042		3,526		1987		12/14/93
Dominion Crown Point		26,674		6,336		1987/2000		07/01/94
Dominion Harris Pond		9,051		2,604		1987		07/01/94
Dominion Mallard Creek		8,169		2,188		1989		08/16/94
Chateau Village		10,563		2,998		1974		08/15/96
Dominion At Sharon		6,621		1,615		1984		08/15/96
Providence Court		31,809		5,887		1997		09/30/97
Stoney Pointe		18,900		3,914		1991		02/28/97
CHARLOTTE, NC		139,050		37,295
Pine Avenue		13,681		1,325		1987		12/07/98
The Grand Resort		61,928		5,822		1971		12/07/98
Grand Terrace		9,976		1,179		1986		06/30/99
Windemere at Sycamore Highland		29,346		158		2001		11/21/02
Rancho Vallecitos		15,528		2,786		1988		10/13/99
SOUTHERN CALIFORNIA		130,459		11,270
Legacy Hill		10,078		3,136		1977		11/06/95
Hickory Run		15,050		3,765		1989		12/29/95
Carrington Hills		26,794		4,739		1999		12/06/95
Brookridge		7,508		2,077		1986		03/28/96
Club At Hickory Hollow		19,566		4,205		1987		02/21/97
Breckenridge		9,393		1,976		1986		03/27/97
Williamsburg		14,022		2,596		1986		05/20/98
Colonnade		18,161		2,594		1998		01/07/99
NASHVILLE, TN		120,572		25,088
Beechwood		8,595		2,618		1985		12/22/93
Steeplechase		27,419		5,332		1990/97		03/07/96
Northwinds		14,472		3,282		1989/97		08/15/96
Deerwood Crossings		10,907		2,680		1973		08/15/96
Dutch Village		6,878		1,725		1970		08/15/96
Lake Brandt		15,968		3,671		1995		08/15/96
Park Forest		7,127		1,542		1987		09/26/96
Deep River Pointe		13,287		2,408		1997		10/01/97
GREENSBORO, NC		104,653		23,258
Boronda Manor		11,259		1,308		1979		12/07/98
Garden Court		5,302		640		1973		12/07/98
Harding Park Townhomes		2,703		302		1984		12/07/98
Cambridge Court		16,606		2,049		1974		12/07/98
Laurel Tree		6,641		819		1977		12/07/98
Pine Grove		7,391		794		1963		12/07/98
The Pointe At Harden Ranch		31,042		3,525		1986		12/07/98
The Pointe At Northridge		10,439		1,225		1979		12/07/98
The Pointe At Westlake		6,881		816		1975		12/07/98
MONTEREY PENINSULA, CA		98,264		11,478
Dominion Olde West		16,651		7,082		1978/82/84/85/87	12/31/84 & 8/27/91
Dominion Creekwood		1,164		260		1984		08/27/91
Dominion Laurel Springs		4,950		2,051		1972		09/06/91
Dominion English Hills		18,943		7,813		1969/76		12/06/91
Dominion Gayton Crossing		12,328		6,119		1973		09/28/95
Dominion West End		19,956		5,137		1989		12/28/95
Courthouse Green		7,784		3,838		1974/78		12/31/84
Waterside At Ironbridge		15,983		2,760		1987		09/30/97
RICHMOND, VA		97,759		35,060
Cape Harbor		21,601		4,755		1996		08/15/96
Mill Creek		19,716		4,848		1986/98		09/30/91
The Creek		4,757		2,206		1973		06/30/92
Forest Hills		8,960		3,271		1964/69		06/30/92
Clear Run		15,561		4,299		1987/89		07/22/94
Crosswinds		20,652		4,433		1990		02/28/97
WILMINGTON, NC		91,247		23,812

40

									Cost of			Gross Amount at
			Initial Costs						Improvements			Which Carried at Close of Period
							Total		Capitalized
			Land and		Buildings		Initial		Subsequent			Land and		Buildings
			Land		and		Acquisition		to Acquisition			Land		and
	Encumbrances		Improvements		Improvements		Costs		(Net of Disposals)			Improvements		Improvements
Gatewater Landing		—		2,078		6,085		8,163		1,465			2,184		7,444
Dominion Kings Place		4,325		1,565		7,007		8,572		953			1,653		7,872
Dominion At Eden Brook		7,390		2,361		9,384		11,745		1,406			2,466		10,685
Dominion Great Oaks		11,446		2,920		9,100		12,020		3,889			4,281		11,628
Dominion Constant Friendship		—		903		4,669		5,572		845			1,049		5,368
Lakeside Mill		5,249		2,666		10,109		12,775		615			2,694		10,696
Tamar Meadow		—		4,145		17,149		21,294		31			4,145		17,180
BALTIMORE, MD		28,410		16,638		63,503		80,141		9,204			18,472		70,873
Stanford Village		—		885		2,808		3,693		1,426			1,197		3,922
Griffin Crossing		—		1,510		7,544		9,054		1,786			1,873		8,967
Gwinnett Square		8,851		1,924		7,376		9,300		2,121			2,204		9,217
Dunwoody Pointe		9,870		2,763		6,903		9,666		4,900			3,342		11,224
Riverwood		11,725		2,986		11,088		14,074		4,093			3,485		14,682
Waterford Place		—		1,579		10,303		11,882		552			1,668		10,766
ATLANTA, GA		30,446		11,647		46,022		57,669		14,878			13,769		58,778
Gable Hill		—		825		5,307		6,132		1,592			1,194		6,530
St. Andrews Commons		—		1,429		9,371		10,800		1,893			1,882		10,811
Forestbrook		5,000		395		2,902		3,297		1,879			555		4,621
Waterford		—		958		6,948		7,906		1,672			1,292		8,286
Hampton Greene		—		1,363		10,118		11,481		1,559			1,901		11,139
Rivergate		—		1,123		12,056		13,179		1,326			1,439		13,066
COLUMBIA, SC		5,000		6,093		46,702		52,795		9,921			8,263		54,453
Greentree		12,455		1,634		11,227		12,861		4,244			2,349		14,756
Westland		10,747		1,834		14,865		16,699		4,042			2,668		18,073
Antlers		—		4,034		11,193		15,227		5,901			4,907		16,221
JACKSONVILLE, FL		23,202		7,502		37,285		44,787		14,187			9,924		49,050
Forest Lake At Oyster Point		—		780		8,862		9,642		2,061			1,187		10,516
Woodscape		—		799		7,209		8,008		2,591			1,803		8,796
Eastwind		—		155		5,317		5,472		1,477			403		6,546
Dominion Waterside At Lynnhaven		—		1,824		4,107		5,931		1,363			2,033		5,261
Heather Lake		—		617		3,400		4,017		3,661			1,020		6,658
Dominion Yorkshire Downs		7,359		1,089		8,582		9,671		833			1,260		9,244
NORFOLK, VA		7,359		5,264		37,477		42,741		11,986			7,706		47,021
2900 Place		—		1,819		5,593		7,412		467			1,825		6,054
Brandywine Creek		14,140		4,666		17,514		22,180		(1,889	)		4,755		15,536
Lakewood		4,130		1,113		3,878		4,991		563			1,232		4,322
Nemoke Trail		13,300		3,431		12,223		15,654		807			3,495		12,966
LANSING, MI		31,570		11,029		39,208		50,237		(52	)		11,307		38,878
Arbor Terrace		9,800		1,453		11,995		13,448		645			1,499		12,594
Crowne Pointe		8,330		2,486		6,437		8,923		1,192			2,523		7,592
Hilltop		7,700		2,174		7,408		9,582		501			2,316		7,767
SEATTLE, WA		25,830		6,113		25,840		31,953		2,338			6,338		27,953
Greensview, Aurora, CO		—		6,450		24,405		30,855		2,234			6,010		27,079
Mountain View, Aurora, CO		—		6,402		21,569		27,971		2,097			6,369		23,699
The Reflections, Aurora, CO		—		6,305		27,202		33,507		783			6,411		27,879
Foothills Tennis Village, Roseville, CA		15,820		3,618		14,542		18,160		679			3,731		15,108
Woodlake Village, Sacramento, CA		30,900		6,772		26,967		33,739		1,624			7,020		28,343
OTHER WESTERN		46,720		29,547		114,685		144,232		7,417			29,541		122,108
Lancaster Commons, Salem, OR		7,910		2,485		7,451		9,936		448			2,509		7,875
Tualatin Heights, Tualatin, OR		10,090		3,273		9,134		12,407		792			3,376		9,823
University Park, Portland, OR		—		3,007		8,191		11,198		420			3,020		8,598
Evergreen Park, Vancouver, WA		5,127		3,878		9,973		13,851		894			3,916		10,829
Aspen Creek, Puyallup, WA		6,746		1,178		9,116		10,294		326			1,268		9,352
Beaumont, Tacoma, WA		10,640		2,339		12,559		14,898		511			2,393		13,016
Stonehaven, Federal Way, WA		8,660		6,471		29,536		36,007		312			6,479		29,840
Campus Commons, Pullman, WA		6,004		1,144		12,873		14,017		(2,135	)		1,256		10,626
OTHER PACIFIC		55,177		23,775		98,833		122,608		1,568			24,217		99,959
Inn @ Los Patios, San Antonio, TX		—		3,005		11,545		14,550		(1,490	)		3,005		10,055

[Additional columns below]

[Continued from above table, first column(s) repeated]

	Total
	Carrying		Accumulated		Date of		Date
	Value (A)		Depreciation (B)		Construction		Acquired
Gatewater Landing		9,628		3,046		1970		12/16/92
Dominion Kings Place		9,525		2,898		1983		12/29/92
Dominion At Eden Brook		13,151		3,944		1984		12/29/92
Dominion Great Oaks		15,909		4,595		1974		07/01/94
Dominion Constant Friendship		6,417		1,670		1990		05/04/95
Lakeside Mill		13,390		2,511		1989		12/10/99
Tamar Meadow		21,325		111		1990		11/22/02
BALTIMORE, MD		89,345		18,775
Stanford Village		5,119		2,275		1985		09/26/89
Griffin Crossing		10,840		3,224		1987/89		06/08/94
Gwinnett Square		11,421		2,842		1985		03/29/95
Dunwoody Pointe		14,566		4,304		1980		10/24/95
Riverwood		18,167		4,981		1980		06/26/96
Waterford Place		12,434		1,918		1985		04/15/98
ATLANTA, GA		72,547		19,544
Gable Hill		7,724		3,161		1985		12/04/89
St. Andrews Commons		12,693		4,281		1986		05/20/93
Forestbrook		5,176		2,457		1974		07/01/93
Waterford		9,578		2,897		1985		07/01/94
Hampton Greene		13,040		3,679		1990		08/19/94
Rivergate		14,505		3,306		1989		08/15/96
COLUMBIA, SC		62,716		19,781
Greentree		17,105		5,314		1986		07/22/94
Westland		20,741		5,747		1990		05/09/96
Antlers		21,128		5,593		1985		05/28/96
JACKSONVILLE, FL		58,974		16,654
Forest Lake At Oyster Point		11,703		3,483		1986		08/15/95
Woodscape		10,599		4,899		1974/76		12/29/87
Eastwind		6,949		3,148		1970		04/04/88
Dominion Waterside At Lynnhaven		7,294		1,761		1966		08/15/96
Heather Lake		7,678		5,002		1972/74		03/01/80
Dominion Yorkshire Downs		10,504		1,893		1987		12/23/97
NORFOLK, VA		54,727		20,186
2900 Place		7,879		890		1966		12/07/98
Brandywine Creek		20,291		2,505		1974		12/07/98
Lakewood		5,554		714		1974		12/07/98
Nemoke Trail		16,461		2,008		1978		12/07/98
LANSING, MI		50,185		6,117
Arbor Terrace		14,093		2,454		1996		03/27/98
Crowne Pointe		10,115		1,325		1987		12/07/98
Hilltop		10,083		1,227		1985		12/07/98
SEATTLE, WA		34,291		5,006
Greensview, Aurora, CO		33,089		3,291		1987/2002		12/07/98
Mountain View, Aurora, CO		30,068		3,785		1973		12/07/98
The Reflections, Aurora, CO		34,290		1,145		1981/96		04/30/02
Foothills Tennis Village, Roseville, CA		18,839		2,192		1988		12/07/98
Woodlake Village, Sacramento, CA		35,363		4,431		1979		12/07/98
OTHER WESTERN		151,649		14,844
Lancaster Commons, Salem, OR		10,384		1,374		1992		12/07/98
Tualatin Heights, Tualatin, OR		13,199		1,710		1989		12/07/98
University Park, Portland, OR		11,618		1,329		1987		03/27/98
Evergreen Park, Vancouver, WA		14,745		1,945		1988		03/27/98
Aspen Creek, Puyallup, WA		10,620		1,401		1996		12/07/98
Beaumont, Tacoma, WA		15,409		2,734		1996		06/14/00
Stonehaven, Federal Way, WA		36,319		1,109		1989/90		05/28/02
Campus Commons, Pullman, WA		11,882		2,434		1972		03/27/98
OTHER PACIFIC		124,176		14,036
Inn @ Los Patios, San Antonio, TX		13,060		1,486		1990		08/15/98

41

											Cost of			Gross Amount at
					Initial Costs						Improvements			Which Carried at Close of Period
									Total		Capitalized
					Land and		Buildings		Initial		Subsequent			Land and		Buildings
					Land		and		Acquisition		to Acquisition			Land		and
			Encumbrances		Improvements		Improvements		Costs		(Net of Disposals)			Improvements		Improvements
Pecan Grove, Austin, TX				—		1,407		5,293		6,700		621			1,478		5,843
Anderson Mill, Austin, TX				9,765		3,135		11,170		14,305		3,667			3,498		14,474
Red Stone Ranch, Cedar Park, TX				—		1,897		17,526		19,423		209			5,386		14,246
Barton Creek Landing, Austin, TX				—		3,151		14,269		17,420		491			3,151		14,760
Turtle Creek, Little Rock, AR				—		1,913		7,087		9,000		1,064			2,207		7,857
Shadow Lake, Little Rock, AR				—		2,523		8,976		11,499		1,554			2,851		10,202
OTHER SOUTHWESTERN				9,765		17,031		75,866		92,897		6,116			21,576		77,437
Mallards Of Wedgewood, Lakeland, FL				—		959		6,865		7,824		2,025			1,252		8,597
Brantley Pines, Ft. Myers, FL				—		1,893		8,248		10,141		5,081			844		14,378
Ashlar, Ft. Myers, FL				—		3,952		11,718		15,670		16,456			7,594		24,532
The Groves, Port Orange, FL				—		790		4,767		5,557		1,862			1,444		5,975
Lakeside, Port Orange, FL				—		2,404		6,420		8,824		1,411			2,586		7,649
Mallards Of Brandywine, Deland, FL				—		766		5,408		6,174		1,283			990		6,467
LakePointe, Melbourne, FL				—		1,434		4,940		6,374		2,358			1,782		6,950
OTHER FLORIDA				—		12,198		48,366		60,564		30,476			16,492		74,548
Washington Park, Centerville, OH				—		2,012		7,565		9,577		1,095			2,150		8,522
Fountainhead, Dayton, OH				—		391		1,420		1,811		195			391		1,615
Jamestown Of Toledo, Toledo, OH				5,110		1,800		7,054		8,854		903			1,892		7,865
Sunset Village, Flint, MI				—		797		1,829		2,626		432			869		2,189
American Heritage, Waterford, MI				3,640		1,021		3,958		4,979		256			1,031		4,204
Ashton Pines, Waterford, MI				—		1,822		8,014		9,836		572			1,848		8,560
Kings Gate, Sterling Heights, MI				4,620		1,181		4,828		6,009		390			1,241		5,158
Lancaster Lake, Clarkson, MI				12,950		4,238		14,663		18,901		985			4,334		15,552
OTHER MIDWESTERN				26,320		13,262		49,331		62,593		4,828			13,756		53,665
Colony Village, New Bern, NC				—		346		3,037		3,383		2,120			573		4,930
Brynn Marr, Jacksonville, NC				—		433		3,822		4,255		2,727			730		6,252
Liberty Crossing, Jacksonville, NC				—		840		3,873		4,713		3,068			1,440		6,341
Bramblewood, Goldsboro, NC				—		402		3,151		3,553		1,636			588		4,601
Cumberland Trace, Fayetteville, NC				—		632		7,896		8,528		1,014			704		8,838
Village At Cliffdale, Fayetteville, NC				11,550		941		15,498		16,439		1,437			1,175		16,701
Morganton Place, Fayetteville, NC				—		819		13,217		14,036		696			887		13,845
Woodberry, Asheville, NC				—		389		6,381		6,770		1,490			992		7,268
OTHER NORTH CAROLINA				11,550		4,802		56,875		61,677		14,188			7,089		68,776
Jamestown Of St. Matthews, ST. Matthews, KY				11,970		3,866		14,422		18,288		1,312			3,975		15,625
Patriot Place, Florence, SC				—		212		1,601		1,813		5,802			1,506		6,109
River Place, Macon, GA				6,142		1,097		7,492		8,589		2,233			1,803		9,019
The Trails At Mount Moriah, Memphis, TN				16,909		5,931		22,095		28,026		3,210			6,489		24,747
OTHER SOUTHEASTERN				35,021		11,106		45,610		56,716		12,557			13,773		55,500
Greens At Hollymead, Charlottesville, VA				—		965		5,250		6,215		717			1,058		5,874
Brittingham Square, Salisbury, MD				—		650		4,962		5,612		710			815		5,507
Greens At Schumaker Pond, Salisbury, MD				—		710		6,118		6,828		961			871		6,918
Greens At Cross Court, Easton, MD				—		1,182		4,544		5,726		1,112			1,368		5,470
Greens At Hilton Run, Lexington Park, MD				12,542		2,754		10,483		13,237		1,717			3,087		11,867
OTHER MID-ATLANTIC				12,542		6,261		31,357		37,618		5,217			7,199		35,636
Dover Country, Dover, DE				—		2,008		6,365		8,373		2,731			2,362		8,742
Greens At Cedar Chase, Dover, DE				5,167		1,528		4,830		6,358		791			1,722		5,427
OTHER NORTHEASTERN				5,167		3,537		11,195		14,732		3,521			4,084		14,169
	TOTAL APARTMENTS		$	1,011,775	$	599,099	$	2,640,543	$	3,239,642	$	593,554		$	701,057	$	3,132,139
REAL ESTATE HELD FOR DISPOSITION
Apartments
Knolls At Newgate			$	—	$	1,726	$	3,530	$	5,256	$	1,871		$	1,871	$	5,256
Paradise Falls				—		1,622		6,171		7,793		3,023			1,845		8,971
Silk Oak, Fresno, CA				—		2,325		4,566		6,891		(1,376	)		1,731		3,784
Sunflower, San Antonio, TX				—		2,209		7,891		10,100		953			2,350		8,703
Parke 33, Lakeland, FL				—		3,857		13,055		16,912		(155	)		3,838		12,919
International Village, Speedway, IN				—		3,934		11,479		15,413		1,584			4,005		12,992
Regency Park South, Indianapolis, IN				—		2,643		7,632		10,275		934			2,727		8,482
		Total Apartments		—		18,316		54,324		72,640		6,834			18,367		61,107
Commercial
Gloucester Exchange				—		404		2,278		2,682		647			609		2,720

[Additional columns below]

[Continued from above table, first column(s) repeated]

			Total
			Carrying		Accumulated		Date of		Date
			Value (A)		Depreciation (B)		Construction		Acquired
Pecan Grove, Austin, TX				7,321		1,256		1984		12/31/96
Anderson Mill, Austin, TX				17,972		4,385		1984		03/27/97
Red Stone Ranch, Cedar Park, TX				19,632		1,995		2000		06/14/00
Barton Creek Landing, Austin, TX				17,911		694		1986		03/28/02
Turtle Creek, Little Rock, AR				10,064		2,025		1985		12/31/96
Shadow Lake, Little Rock, AR				13,053		2,718		1984		12/31/96
OTHER SOUTHWESTERN				99,013		14,559
Mallards Of Wedgewood, Lakeland, FL				9,849		2,801		1985		07/27/95
Brantley Pines, Ft. Myers, FL				15,222		6,030		1986		08/11/94
Ashlar, Ft. Myers, FL				32,126		4,347		1999/2000		12/24/97
The Groves, Port Orange, FL				7,419		2,202		1989		12/13/95
Lakeside, Port Orange, FL				10,235		1,929		1985		07/01/97
Mallards Of Brandywine, Deland, FL				7,457		1,734		1985		07/01/97
LakePointe, Melbourne, FL				8,732		3,100		1984		09/24/93
OTHER FLORIDA				91,040		22,143
Washington Park, Centerville, OH				10,672		1,526		1998		12/07/98
Fountainhead, Dayton, OH				2,006		298		1966		12/07/98
Jamestown Of Toledo, Toledo, OH				9,757		1,286		1965		12/07/98
Sunset Village, Flint, MI				3,058		507		1940		12/07/98
American Heritage, Waterford, MI				5,235		659		1968		12/07/98
Ashton Pines, Waterford, MI				10,408		1,247		1987		12/07/98
Kings Gate, Sterling Heights, MI				6,399		767		1973		12/07/98
Lancaster Lake, Clarkson, MI				19,886		2,360		1988		12/07/98
OTHER MIDWESTERN				67,421		8,650
Colony Village, New Bern, NC				5,503		3,260		1972/74		12/31/84
Brynn Marr, Jacksonville, NC				6,982		4,025		1973/77		12/31/84
Liberty Crossing, Jacksonville, NC				7,781		4,025		1972/74		11/30/90
Bramblewood, Goldsboro, NC				5,189		2,998		1980/82		12/31/84
Cumberland Trace, Fayetteville, NC				9,542		2,257		1973		08/15/96
Village At Cliffdale, Fayetteville, NC				17,876		3,998		1992		08/15/96
Morganton Place, Fayetteville, NC				14,732		3,107		1994		08/15/96
Woodberry, Asheville, NC				8,260		2,052		1987		08/15/96
OTHER NORTH CAROLINA				75,865		25,722
Jamestown Of St. Matthews, ST. Matthews, KY				19,600		2,438		1968		12/07/98
Patriot Place, Florence, SC				7,615		4,075		1974		10/23/85
River Place, Macon, GA				10,822		3,552		1988		04/08/94
The Trails At Mount Moriah, Memphis, TN				31,236		4,985		1990		01/09/98
OTHER SOUTHEASTERN				69,273		15,050
Greens At Hollymead, Charlottesville, VA				6,932		1,737		1990		05/04/95
Brittingham Square, Salisbury, MD				6,322		1,670		1991		05/04/95
Greens At Schumaker Pond, Salisbury, MD				7,789		2,079		1988		05/04/95
Greens At Cross Court, Easton, MD				6,838		1,703		1987		05/04/95
Greens At Hilton Run, Lexington Park, MD				14,954		3,514		1988		05/04/95
OTHER MID-ATLANTIC				42,835		10,703
Dover Country, Dover, DE				11,104		3,381		1970		07/01/94
Greens At Cedar Chase, Dover, DE				7,149		1,732		1988		05/04/95
OTHER NORTHEASTERN				18,253		5,113
	TOTAL APARTMENTS		$	3,833,196	$	733,712
REAL ESTATE HELD FOR DISPOSITION
Apartments
Knolls At Newgate			$	7,127	$	2,147		1972		07/01/94
Paradise Falls				10,816		2,204		1986		12/31/96
Silk Oak, Fresno, CA				5,515		885		1985		12/07/98
Sunflower, San Antonio, TX				11,053		2,110		1980		12/31/96
Parke 33, Lakeland, FL				16,757		437		2001		06/28/02
International Village, Speedway, IN				16,997		2,502		1968		12/07/98
Regency Park South, Indianapolis, IN				11,209		1,551		1968		12/07/98
		Total Apartments		79,474		11,836
Commercial
Gloucester Exchange				3,329		1,506		1974		11/12/87

42

										Cost of			Gross Amount at
				Initial Costs						Improvements			Which Carried at Close of Period
								Total		Capitalized
				Land and		Buildings		Initial		Subsequent			Land and		Buildings
				Land		and		Acquisition		to Acquisition			Land		and
		Encumbrances		Improvements		Improvements		Costs		(Net of Disposals)			Improvements		Improvements
Pacific South Center			—		1,000		4,000		5,000		70			1,020		4,050
	Total Commercial		—		1,404		6,278		7,682		717			1,629		6,770
Land
Fossil Creek			—		4,008		—		4,008		(289	)		3,719		—
Parke 33 II			—		1,732		—		1,732		—			1,732		—
Villa Toscana			—		3,889		—		3,889		(767	)		3,122		—
	Total Land		—		9,629		—		9,629		(1,056	)		8,573		—
		$	—	$	29,349	$	60,602	$	89,951	$	6,495		$	28,569	$	67,877
REAL ESTATE UNDER DEVELOPMENT
Apartments
Mandolin II, Dallas, TX		$	—	$	1,160	$	4,236	$	5,396	$	—		$	1,160	$	4,236
Rancho Cucamongo, Rancho Cucamongo, CA			—		13,557		249		13,806		—			13,557		249
2000 Post III, San Francisco, CA			—		1,756		311		2,067		—			1,756		311
	Total Apartments		—		16,473		4,796		21,269		—			16,473		4,796
Land
Copper Mill II			—		833		—		833		—			833		—
Parker’s Landing Phase II			—		1,167		—		1,167		—			1,167		—
Wimbledon Court II			—		602		—		602		—			602		—
Coit Road			—		2,806		—		2,806		—			2,806		—
Coit Road II			—		1,995		—		1,995		—			1,995		—
Mountain View Phase II			—		220		—		220		—			220		—
	Total Land		—		7,623		—		7,623		—			7,623		—
		$	—	$	24,096	$	4,796	$	28,892	$	—		$	24,096	$	4,796
COMMERCIAL HELD FOR INVESTMENT
Hanover Village		$	—	$	1,624	$	—	$	1,624	$	—		$	1,104	$	520
	Total Commercial		—		1,624		—		1,624		—			1,104		520
Richmond - Corporate			3,965		245		6,352		6,597		728			277		7,048
		$	3,965	$	1,869	$	6,352	$	8,221	$	728		$	1,381	$	7,568
TOTAL REAL ESTATE OWNED		$	1,015,740	$	654,413	$	2,712,293	$	3,366,706	$	600,777		$	755,103	$	3,212,380

[Additional columns below]

[Continued from above table, first column(s) repeated]

		Total
		Carrying		Accumulated		Date of		Date
		Value (A)		Depreciation (B)		Construction		Acquired
Pacific South Center			5,070		546		1965		08/28/86
	Total Commercial		8,399		2,052
Land
Fossil Creek			3,719		—
Parke 33 II			1,732		—
Villa Toscana			3,122		—
	Total Land		8,573		—
		$	96,446	$	13,888
REAL ESTATE UNDER DEVELOPMENT
Apartments
Mandolin II, Dallas, TX		$	5,396	$	—
Rancho Cucamongo, Rancho Cucamongo, CA			13,806		—
2000 Post III, San Francisco, CA			2,067		—
	Total Apartments		21,269		—
Land
Copper Mill II			833		—
Parker’s Landing Phase II			1,167		—
Wimbledon Court II			602		—
Coit Road			2,806		—
Coit Road II			1,995		—
Mountain View Phase II			220		—
	Total Land		7,623		—
		$	28,892	$	—
COMMERCIAL HELD FOR INVESTMENT
Hanover Village		$	1,624	$	463		—		06/30/86
	Total Commercial		1,624		463
Richmond - Corporate			7,325		670		1999		11/30/99
		$	8,949	$	1,133
TOTAL REAL ESTATE OWNED		$	3,967,483	$	748,733

(A)	The aggregate cost for federal income tax purposes was approximately $3.3 billion at December 31, 2002.
(B)	The depreciable life for buildings is 35 years.

43

Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends
(Dollars in thousands)

			Years ended December 31,
			2002*			2001*			2000*			1999*			1998*
Income before discontinued operations, net of minority interests			$	13,072		$	25,130		$	17,590		$	28,206		$	2,285
Add:
	Portion of rents representative of the interest factor			691			794			866			928			569
	Minority interests			478			1,531			(267	)		490			1,541
	Loss on equity investment in joint venture			—			254			111			—			—
	Interest on indebtedness from continuing operations			130,791			139,470			149,728			144,418			95,084
		Earnings	$	145,032		$	167,179		$	168,028		$	174,042		$	99,479
Fixed charges and preferred stock dividend:
	Interest on indebtedness from continuing operations		$	130,791		$	139,470		$	149,728		$	144,418		$	95,084
	Capitalized interest			931			2,925			3,650			5,153			3,360
	Portion of rents representative of the interest factor			691			794			866			928			569
		Fixed charges		132,413			143,189			154,244			150,499			99,013
Add:
	Preferred stock dividend			27,424			31,190			36,891			37,714			23,593
		Combined fixed charges and preferred stock dividend	$	159,837		$	174,379		$	191,135		$	188,213		$	122,606
Ratio of earnings to fixed charges				1.10	x		1.17	x		1.09	x		1.16	x		1.00	x
Ratio of earnings to combined fixed charges and preferred stock dividend				—			—			—			—			—

For the year ended December 31, 2002, the ratio of earnings to combined fixed charges and preferred stock dividend was deficient of achieving a 1:1 ratio by $14.8 million.

For the year ended December 31, 2001, the ratio of earnings to combined fixed charges and preferred stock dividend was deficient of achieving a 1:1 ratio by $7.2 million.

For the year ended December 31, 2000, the ratio of earnings to combined fixed charges and preferred stock dividend was deficient of achieving a 1:1 ratio by $23.1 million.

For the year ended December 31, 1999, the ratio of earnings to combined fixed charges and preferred stock dividend was deficient of achieving a 1:1 ratio by $14.2 million.

For the year ended December 31, 1998, the ratio of earnings to combined fixed charges and preferred stock dividend was deficient of achieving a 1:1 ratio by $23.1 million.

* Reclassified to conform to current year presentation as described in Note 3 to the consolidated financial statements.

44