Associated Estates Realty 8-K Quarter and Full Year 2012 Earnings Release

Exhibit 99.2

Associated Estates Realty Corporation

Fourth Quarter 2012

Earnings Release and Supplemental Financial Data

Southpoint Village Apartments
100 Village Circle Way	Phone:	(888) 231-8547
Durham, NC 27713	Web Site:	southpointvillage.com

For more information, please contact:

Jeremy Goldberg

(216) 797-8715

Associated Estates Realty Corporation

Fourth Quarter 2012

Supplemental Financial Information

Table of Contents	Page
Earnings Release	3
Financial and Operating Highlights	6
Condensed Consolidated Balance Sheets	9
Consolidated Statements of Operations and Comprehensive Income	10
Reconciliation of Funds from Operations (FFO) and Funds Available for Distribution (FAD)	11
Discontinued Operations - QTD	12
Discontinued Operations - YTD	13
Development Pipeline	14
Overview of Operating Expenses Related to Repairs and Maintenance and Capitalized Expenditures	15
Construction and Other Services, General and Administrative Expense, Development
Costs and Personnel - Allocated	16
Same Community Data	17
Sequential Property Revenue	20
Sequential Property Operating Expenses	21
Sequential Property Net Operating Income (Property NOI)	22
Fourth Quarter Property Revenue	23
Fourth Quarter Property Operating Expenses	24
Fourth Quarter Property Net Operating Income (Property NOI)	25
Year-to-Date Property Revenue	26
Year-to-Date Property Operating Expenses	27
Year-to-Date Property Net Operating Income (Property NOI)	28
Debt Structure	29
2013 Financial Outlook	30
Definitions of Non-GAAP Financial Measures	31

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: This news release contains forward-looking statements based on current judgments and knowledge of management, which are subject to certain risks, trends and uncertainties that could cause actual results to vary from those projected, including but not limited to, expectations regarding the Company's 2013 performance, which are based on certain assumptions. Accordingly, readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date of this news release. These forward-looking statements are intended to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The words "expects," "projects," "believes," "plans," "anticipates" and similar expressions are intended to identify forward-looking statements. Investors are cautioned that the Company's forward-looking statements involve risks and uncertainty that could cause actual results to differ from estimates or projections contained in these forward-looking statements, including without limitation the following: changes in the economic climate in the markets in which the Company owns and manages properties, including interest rates, the overall level of economic activity, the availability of consumer credit and mortgage financing, unemployment rates and other factors; elimination or limitations to federal government support for Fannie Mae and/or Freddie Mac that might result in significantly reduced availability of mortgage financing sources as well as increases in interest rates for mortgage financing; the ability of the Company to refinance debt on favorable terms at maturity; risks of a lessening of demand for the multifamily units owned by the Company; competition from other available multifamily units and changes in market rental rates; the failure of development projects or redevelopment activities to achieve expected results due to, among other causes, construction and contracting risks, unanticipated increases in materials and/or labor, and delays in project completion and/or lease-up that result in increased costs and/or reduce the profitability of a completed project; increases in property and liability insurance costs; unanticipated increases in real estate taxes and other operating expenses; weather conditions that adversely affect operating expenses; expenditures that cannot be anticipated such as utility rate and usage increases and unanticipated repairs; inability of the Company to control operating expenses or achieve increases in revenue; shareholder ownership limitations that may discourage a takeover otherwise considered favorably by shareholders; the results of litigation filed or to be filed against the Company; changes in tax legislation; risks of personal injury claims and property damage related to mold claims that are not covered by the Company's insurance; catastrophic property damage losses that are not covered by the Company's insurance; the ability to acquire properties at prices consistent with the Company's investment criteria; risks associated with property acquisitions such as failure to achieve expected results or matters not discovered in due diligence; risks related to the perception of residents and prospective residents as to the attractiveness, convenience and safety of the Company's properties or the neighborhoods in which they are located; and other uncertainties and risk factors addressed in documents filed by the Company with the Securities and Exchange Commission, including, without limitation, the Company's Annual Report on Form 10-K and the Company's Quarterly Reports on Form 10-Q.

2

Associated Estates Realty Corporation

Fourth Quarter Earnings

ASSOCIATED ESTATES REALTY CORPORATION REPORTS FOURTH QUARTER

AND FULL YEAR RESULTS

Apartment Fundamentals Remain Strong

Fourth Quarter Same Community NOI up 7.9%

2013 Same Community NOI Guidance of 5.75% at the Midpoint

Cleveland, Ohio - February 5, 2013 - Associated Estates Realty Corporation (NYSE, NASDAQ: AEC) announced today its financial results for the fourth quarter and full year 2012. Funds from Operations (FFO) for the fourth quarter of 2012 was $0.34 per common share (diluted), compared with $0.26 per common share (diluted), for the fourth quarter of 2011, a 30.8% increase. FFO as adjusted for the fourth quarter of 2012 was $0.35 per common share (diluted), after adjusting for $332,000 of prepayment costs associated with the repayment of two mortgages on December 31, 2012 and the write-off of deferred financing fees totaling $356,000. There were no such adjustments in the fourth quarter of 2011.

Net income applicable to common shares was $6.9 million or $0.14 per common share (diluted) for the quarter ended December 31, 2012. This compared with a net loss applicable to common shares of $2.2 million or $(0.05) per common share (diluted) for the quarter ended December 31, 2011.

"We had a very solid year. Our portfolio of properties is uniquely positioned for continued strong performance," said Jeffrey I. Friedman, President and Chief Executive Officer. “Achieving our investment grade ratings was an important milestone and significantly enhances our financial flexibility,” Friedman continued.

A reconciliation of net income (loss) attributable to the Company to FFO, and to FFO as adjusted, is included on page 11.

Quarterly Same Community Portfolio Results

Net operating income (NOI) for the fourth quarter of 2012 for the Company's same community portfolio increased 7.9% when compared with the fourth quarter of 2011. Revenue increased 6.7% and property operating expenses increased 4.7%. Physical occupancy was 96.0% at the end of the fourth quarter versus 95.2% at the end of the fourth quarter of 2011. Average monthly net rent collected per unit for the same community properties was $1,076 compared with $1,010 for the fourth quarter of 2011, a 6.5% increase.

Full Year Performance

FFO as adjusted for the year ended December 31, 2012, increased 23.3% to $1.27 per common share (diluted) over 2011 FFO per common share (diluted) after adjusting for loan prepayment costs and the write-off of deferred financing fees which totaled $2.4 million. This was partially offset by a credit to expense of $279,000 in the first quarter for a refund of defeasance costs on a previously defeased loan. FFO as adjusted for the year ended December 31, 2011, was $1.03 per common share (diluted).

For the year ended December 31, 2012, net income applicable to common shares was $30.6 million, or $0.66 per common share (diluted), compared to net income applicable to common shares of $5.3 million, or $0.13 per common share (diluted), for the year ended December 31, 2011.

A reconciliation of net income (loss) attributable to the Company to FFO, and FFO as adjusted, is included on page 11.

For the year ended December 31, 2012, revenue for the Company's same community portfolio increased 6.0% and expenses grew 4.8%, resulting in a 6.9% increase in the Company's same community NOI compared to the year ended December 31, 2011.

3

Associated Estates Realty Corporation

Fourth Quarter Earnings

Additional quarterly and year-to-date financial information, including performance by region for the Company's portfolio, is included on pages 17 through 28.

2013 Outlook

Same community outlook for 2013:

• Revenue Growth        4.00% to 5.00%

• Expense Growth        2.00% to 3.00%

• Property NOI Growth        5.25% to 6.25%

Detailed assumptions relating to the Company's guidance can be found on page 30.

Transactional Activity

On November 7, 2012, the Company sold Muirwood Bennell, a 164-unit property located in Columbus, OH for $7.3 million. This sale brought the aggregate 2012 disposition proceeds to $67.3 million. These sales consisted of six properties having an average age of 25 years, with a total of 1,356 units.

Quarterly Dividend on Common Shares

The Company announced on December 6, 2012, that a quarterly dividend of $0.19 per share had been declared on the Company's common shares. It was paid on February 1, 2013, to shareholders of record on January 15, 2013.  The dividend represents a 5.6% increase over the prior $0.18 per quarter dividend.

Capital Markets and Liquidity Activity

On October 19, 2012, as previously announced, the Company made certain modifications to its unsecured term loan, including increasing the amount to $150 million from $125 million and extending the maturity date to January 2018.

On October 17, 2012, the Company repaid the construction loan on its recently completed Vista Germantown property totaling $21.7 million. Additionally, on December 31, 2012, the Company prepaid two property specific mortgages. Inclusive of $332,000 of prepayment penalties, the total amount to fund these two prepayments was $33.6 million.

On January 22, 2013, the Company announced that it completed the issuance of $150 million of unsecured Senior Notes. The notes were offered in a private placement with two maturity tranches: $63 million 8-year maturity at 4.02% and $87 million 10-year maturity at 4.45%.  The $150 million total issuance has a weighted average term of 9.2 years at a weighted average interest rate of 4.27%. Proceeds from the issuance were used to repay borrowings under the Company's unsecured credit facility, including amounts borrowed in December to prepay the two mortgages noted above.

4

Associated Estates Realty Corporation

Fourth Quarter Earnings

Conference Call

A conference call to discuss the results will be held on February 6, 2013 at 2:00 p.m. Eastern. To participate in the call:

Via Telephone: The dial-in number is 800-860-2442, and the passcode is “Estates.” The call will be archived through February 21, 2013. The dial-in number for the replay is 877-344-7529 and the conference number for the replay is 10023231.

Via the Internet (listen only): Access the Company's website at AssociatedEstates.com. Please log on at least 15 minutes prior to the scheduled start time in order to register, download and install any necessary audio software. Select the "Fourth Quarter 2012 Earnings Conference Call" link. The webcast will be archived for 90 days.

Upcoming Events

The Company announced today its participation in Citi's 2013 Global Property CEO Conference scheduled for Sunday, March 3 through Wednesday, March 6 in Hollywood, FL.

Jeffrey I. Friedman, President and Chief Executive Officer, will participate in a roundtable discussion with investors, moderated by Eric Wolfe of Citi Investment Research & Analysis. As part of the conference, Friedman will also conduct meetings with various investors. A copy of all presentation materials to be used at the conference will be posted to the Investors section of the Company's website.

5

Associated Estates Realty Corporation

Financial and Operating Highlights

For the Three and Twelve Months Ended December 31, 2012 and 2011

(Unaudited; in thousands, except per share and ratio data)

	Three Months Ended						Twelve Months Ended
	December 31,						December 31,
OPERATING INFORMATION	2012			2011			2012			2011
Total revenue	$	46,964		$	39,903		$	174,868		$	165,067
Property revenue	$	46,581		$	39,101		$	173,822		$	148,198
Net income (loss) attributable to AERC	$	6,911		$	(2,213	)	$	30,592		$	5,328
Per share - basic	$	0.14		$	(0.05	)	$	0.66		$	0.13
Per share - diluted	$	0.14		$	(0.05	)	$	0.66		$	0.13
Funds from Operations (FFO) (1)	$	16,981		$	10,930		$	57,179		$	42,707
FFO as adjusted (1)	$	17,669		$	10,930		$	59,330		$	42,707
FFO per share - diluted	$	0.34		$	0.26		$	1.23		$	1.03
FFO as adjusted per share - diluted	$	0.35		$	0.26		$	1.27		$	1.03
Funds Available for Distribution (FAD) (1)	$	15,715		$	8,868		$	52,820		$	36,417
Dividends per share	$	0.18		$	0.17		$	0.71		$	0.68
Payout ratio - FFO	52.9		%	65.4		%	57.7		%	66.0		%
Payout ratio - FFO as adjusted	51.4		%	65.4		%	55.9		%	66.0		%
Payout ratio - FAD	58.1		%	81.0		%	62.8		%	78.2		%
General and administrative expense	$	4,426		$	4,214		$	16,995		$	15,944
Development costs	$	64		$	178		$	864		$	435
Personnel - allocated	$	1,108		$	906		$	4,099		$	3,455
Costs associated with acquisitions	$	32		$	236		$	798		$	539
Interest expense (2)	$	6,574		$	7,544		$	26,568		$	28,829
Interest coverage ratio (3)	3.38:1			2.30:1			2.98:1			2.34:1
Fixed charge coverage ratio (4)	3.38:1			2.30:1			2.98:1			2.34:1
General and administrative expense to property revenue	9.5		%	10.8		%	9.8		%	10.8		%
Personnel - allocated to property revenue	2.4		%	2.3		%	2.4		%	2.3		%
Interest expense to property revenue (2)	14.1		%	19.3		%	15.3		%	19.5		%
Property NOI (5)	$	29,261		$	24,042		$	105,591		$	89,156
ROA (6)	7.9		%	7.7		%	7.9		%	7.7		%
Same Community revenue increase	6.7		%	4.3		%	6.0		%	3.8		%
Same Community expense increase	4.7		%	5.0		%	4.8		%	1.2		%
Same Community NOI increase	7.9		%	4.0		%	6.9		%	5.7		%
Same Community operating margins	62.6		%	61.9		%	60.8		%	60.3		%

(1) See page 11 for a reconciliation of net income (loss) attributable to AERC to these non-GAAP measurements and page 31 for our definition of these non-GAAP measurements.

(2) Excludes amortization of financing fees for the three and twelve months of $495 and $2,119 for 2012 and $507 and $1,940 for 2011.  The three and twelve months ended December 31, 2012 excludes $688 and $2.4 million of prepayment costs. In addition the twelve months ended December 31, 2012 excludes $(279) for refunds on previously defeased loan.

(3) Is calculated as EBITDA divided by interest expense, including capitalized interest and amortization of deferred financing costs and excluding prepayment costs/refunds.  Individual line items in this calculation include results from discontinued operations where applicable.  See page 32 for a reconciliation of net income (loss) applicable to common shares to EBITDA and our definition of EBITDA.

(4) Represents interest expense, including capitalized interest, and preferred stock dividend payment coverage, excluding prepayment costs/refunds.  Individual line items in this calculation include discontinued operations where applicable.

(5) See page 33 for a reconciliation of net income (loss) attributable to AERC to this non-GAAP measurement and our definition of this non-GAAP measurement.

(6) ROA is calculated as trailing twelve month Property NOI divided by average gross real estate assets, excluding properties currently under development or held for sale.  Gross real estate assets for acquired properties are prorated based upon the percentage of time owned.

6

Associated Estates Realty Corporation

Financial and Operating Highlights

Fourth Quarter 2012

(Unaudited; in thousands, except per share and ratio data)

	December 31,			December 31,
CAPITALIZATION DATA	2012			2011
Net real estate assets	$	1,139,917		$	986,834
Total assets	$	1,172,477		$	1,018,493
Debt	$	716,778		$	664,788
Noncontrolling redeemable interest	$	3,078		$	2,763
Total shareholders' equity attributable to AERC	$	403,398		$	308,793
Common shares outstanding	49,527			42,331
Share price, end of period	$	16.12		$	15.95
Total capitalization	$	1,515,153		$	1,339,967
Undepreciated book value of real estate assets	$	1,511,647		$	1,345,439
Debt to undepreciated book value of real estate assets	47.4		%	49.4		%
Secured debt to undepreciated book value	24.9		%	35.8		%
Annual dividend (1)	$	0.72		$	0.68
Annual dividend yield based on share price, end of period	4.5		%	4.3		%

(1) Dividend was increased from $0.18 per share per quarter to $0.19 per share per quarter effective with the dividend payable on February 1, 2013.

7

Associated Estates Realty Corporation

Financial and Operating Highlights

Fourth Quarter 2012

		Number of
PORTFOLIO INFORMATION	Properties	Units	Average Age
Company Portfolio:
Same Community:
Midwest	27	6,362	19
Mid-Atlantic	9	2,803	11
Southeast	7	2,469	13
Southwest	1	222	13
Total Same Community	44	11,856	16
Acquisitions	7	1,852	7
Development (1)	1	242	—
Total Company Portfolio	52	13,950	14

(1) Reflects a 242-unit community located in Nashville, Tennessee.

8

Associated Estates Realty Corporation

Condensed Consolidated Balance Sheets

Fourth Quarter 2012

(Unaudited; dollar amount in thousands)

	December 31,			December 31,
	2012			2011
ASSETS
Real estate assets
Investment in real estate	$	1,501,198		$	1,323,139
Construction in progress	10,449			22,300
Less:  Accumulated depreciation	(371,730		)	(358,605		)
Net real estate	1,139,917			986,834
Cash and cash equivalents	4,740			4,328
Restricted cash	4,429			6,901
Other assets	23,391			20,430
Total assets	$	1,172,477		$	1,018,493
LIABILITIES AND SHAREHOLDERS' EQUITY
Mortgage notes payable	$	376,278		$	481,788
Unsecured revolving credit facility	190,500			58,000
Unsecured term loan	150,000			125,000
Total debt	716,778			664,788
Accounts payable and other liabilities	49,223			42,149
Total liabilities	766,001			706,937
Noncontrolling redeemable interest	1,734			1,734
Equity
Common shares, without par value; $.10 stated value; 91,000,000 authorized
49,526,639 issued and outstanding at December 31, 2012, and 46,570,763
issued and 42,330,899 outstanding at December 31, 2011, respectively	4,953			4,657
Paid-in capital	634,587			583,172
Accumulated distributions in excess of accumulated net income	(233,208		)	(228,545		)
Accumulated other comprehensive loss	(2,934		)	(405		)
Less:  Treasury shares, at cost, 0 and 4,239,864 shares
at December 31, 2012 and December 31, 2011, respectively	—			(50,086		)
Total shareholders' equity attributable to AERC	403,398			308,793
Noncontrolling interest	1,344			1,029
Total equity	404,742			309,822
Total liabilities and equity	$	1,172,477		$	1,018,493

9

Associated Estates Realty Corporation

Consolidated Statements of Operations and Comprehensive Income

Three and Twelve Months Ended December 31, 2012 and 2011

(Unaudited; dollar and share amounts in thousands)

	Three Months Ended						Twelve Months Ended
	December 31,						December 31,
	2012			2011			2012			2011
REVENUE
Property revenue	$	46,581		$	39,101		$	173,822		$	148,198
Office revenue	383			—			1,046			—
Construction and other services	—			802			—			16,869
Total revenue	46,964			39,903			174,868			165,067
EXPENSES
Property operating and maintenance	17,320			15,059			68,231			59,042
Depreciation and amortization	14,632			12,973			54,306			50,321
Construction and other services	(6		)	1,845			176			19,297
General and administrative	4,426			4,214			16,995			15,944
Development costs	64			178			864			435
Costs associated with acquisitions	32			236			798			539
Total expenses	36,468			34,505			141,370			145,578
Operating income	10,496			5,398			33,498			19,489
Interest expense	(7,757		)	(8,051		)	(30,838		)	(30,769		)
Income (loss) from continuing operations	2,739			(2,653		)	2,660			(11,280		)
Income from discontinued operations:
Operating income, net of interest expense	162			443			1,102			2,051
Gain on disposition of properties	4,030			—			26,849			14,597
Income from discontinued operations	4,192			443			27,951			16,648
Net income (loss)	6,931			(2,210		)	30,611			5,368
Net income attributable to noncontrolling redeemable interest	(20		)	(3		)	(19		)	(40		)
Net income (loss) attributable to AERC	$	6,911		$	(2,213	)	$	30,592		$	5,328
Earnings per common share - basic:
Income (loss) from continuing operations applicable to common shares	$	0.05		$	(0.06	)	$	0.06		$	(0.27	)
Income from discontinued operations	0.09			0.01			0.60			0.40
Net income (loss) attributable to AERC - basic	$	0.14		$	(0.05	)	$	0.66		$	0.13
Earnings per common share - diluted:
Income (loss) from continuing operations applicable to common shares	$	0.05		$	(0.06	)	$	0.06		$	(0.27	)
Income from discontinued operations	0.09			0.01			0.60			0.40
Net income (loss) attributable to AERC - diluted	$	0.14		$	(0.05	)	$	0.66		$	0.13
Other comprehensive income:
Net income (loss)	$	6,931		$	(2,210	)	$	30,611		$	5,368
Change in fair value and reclassification of hedge instruments	—			(405		)	(2,529		)	(405		)
Total comprehensive income (loss)	6,931			(2,615		)	28,082			4,963
Comprehensive income attributable to noncontrolling interests	(20		)	(3		)	(19		)	(40		)
Total comprehensive income (loss) attributable to AERC	$	6,911		$	(2,618	)	$	28,063		$	4,923
Weighted average shares outstanding - basic	49,478			42,255			46,063			41,657
Weighted average shares outstanding - diluted	49,984			42,255			46,553			41,657

10

Associated Estates Realty Corporation

Reconciliation of Funds from Operations (FFO) and Funds Available for Distribution (FAD)

For the Three and Twelve Months Ended December 31, 2012 and 2011

(In thousands; except per share data)

		Three Months Ended						Twelve Months Ended
		December 31,						December 31,
		2012			2011			2012			2011
CALCULATION OF FFO AND FAD
Net income (loss) attributable to AERC		$	6,911		$	(2,213	)	$	30,592		$	5,328
Add:	Depreciation - real estate assets	12,868			11,435			48,547			44,006
	Amortization of intangible assets	1,232			1,708			4,889			7,970
Less:	Gain on disposition of properties	(4,030		)	—			(26,849		)	(14,597		)
	Funds from Operations (FFO) (1)	16,981			10,930			57,179			42,707
Add:	Prepayment costs	688			—			2,430			—
Less:	Refund of defeasance costs on previously defeased loan	—			—			(279		)	—
	Funds from Operations as adjusted (1)	17,669			10,930			59,330			42,707
Add:	Depreciation - other assets	532			511			2,108			1,954
	Amortization of deferred financing fees	495			513			2,128			1,970
Less:	Recurring fixed asset additions (2)	(2,981		)	(3,086		)	(10,746		)	(10,214		)
	Funds Available for Distribution (FAD) (1)	$	15,715		$	8,868		$	52,820		$	36,417
Weighted average shares outstanding - diluted (3)		49,984			42,255			46,553			41,657
PER SHARE INFORMATION:
FFO - diluted		$	0.34		$	0.26		$	1.23		$	1.03
FFO as adjusted - diluted		$	0.35		$	0.26		$	1.27		$	1.03
Dividends		$	0.18		$	0.17		$	0.71		$	0.68
Payout ratio - FFO		52.9		%	65.4		%	57.7		%	66.0		%
Payout ratio - FFO as adjusted		51.4		%	65.4		%	55.9		%	66.0		%
Payout ratio - FAD		58.1		%	81.0		%	62.8		%	78.2		%

(1) See page 31 for our definition of these non-GAAP measurements.  Individual line items included in FFO and FAD calculations include results from discontinued operations where applicable.

(2) Fixed asset additions exclude development, investment, revenue enhancing and non-recurring capital additions.

(3) The Company has excluded 135 stock options for the three and twelve months ended December 31, 2012 as their inclusion would be anti-dilutive. The Company has also excluded 536 and 538 common share equivalents from the three and twelve months ended December 31, 2011 calculation, used in the computation of earnings per share and FFO per share, as they would be anti-dilutive to the loss from continuing operations.

11

Associated Estates Realty Corporation

Discontinued Operations ⁽¹⁾

Three Months Ended December 31, 2012 and 2011

(Unaudited; dollar amounts in thousands)

	Three Months Ended
	December 31,
	2012		2011
REVENUE
Property Revenue	$	203	$	2,784
EXPENSES
Property operating and maintenance	41		1,338
Depreciation and amortization	—		681
Total expenses	41		2,019
Operating income	162		765
Interest expense	—		(322		)
Gain on disposition of properties	4,030		—
Income from discontinued operations	$	4,192	$	443

(1) The Company reports the results of operations and gain/loss related to the sale of real estate assets as discontinued operations. Real estate assets that are classified as held for sale are also reported as discontinued operations. The Company generally classifies properties held for sale when all significant contingencies surrounding the closing have been resolved. In many transactions, these contingencies are not satisfied until the actual closing of the transaction. Interest expense included in discontinued operations is limited to interest on mortgage debt specifically associated with properties sold or classified as held for sale.

Included in the table above are six properties disposed of in 2012 and two properties disposed of in 2011.

12

Associated Estates Realty Corporation

Discontinued Operations ⁽¹⁾

Twelve Months Ended December 31, 2012 and 2011

(Unaudited; dollar amounts in thousands)

	Twelve Months Ended
	December 31,
	2012			2011
REVENUE
Property revenue	$	5,334		$	14,101
EXPENSE
Property operating and maintenance	2,748			7,028
Depreciation and amortization	1,238			3,609
Total expenses	3,986			10,637
Operating income	1,348			3,464
Interest expense	(246		)	(1,413		)
Gain on disposition of properties	26,849			14,597
Income from discontinued operations	$	27,951		$	16,648

(1) The Company reports the results of operations and gain/loss related to the sale of real estate assets as discontinued operations. Real estate assets that are classified as held for sale are also reported as discontinued operations. The Company generally classifies properties held for sale when all significant contingencies surrounding the closing have been resolved. In many transactions, these contingencies are not satisfied until the actual closing of the transaction. Interest expense included in discontinued operations is limited to interest on mortgage debt specifically associated with properties sold or classified as held for sale.

Included in the table above are six properties disposed of in 2012 and two properties disposed of in 2011.

13

Associated Estates Realty Corporation

Development Pipeline

As of December 31, 2012

(Unaudited; dollar amounts in thousands)

This table includes forward-looking statements based on current judgments and current knowledge of management, which are subject to certain risks, trends and uncertainties that could cause results to vary from those projected.  Please see the paragraph on forward-looking statements on page 2 of this document for a list of risk factors.

Completed Development

				Total						Actual Dates for
	Ownership		Total	Capital		Cost to		Total		Construction	Initial	Construction	Stabilized	%
Completed	%		Units	Cost		Date		Debt		Start	Occupancy	Completion	Operations (2)	Occupied
Vista Germantown	90.0	%	242	$	36,447	$	36,447	$	—	Q4 2010	Q1 2012	Q3 2012	Q4 2012	97.1%
Nashville, TN
Total			242	$	36,447	$	36,447	$	—

Current Development

Total

Estimated

Estimated Dates for

Under

Ownership

Total

Capital

Cost to

Total

Construction

Initial

Construction

Stabilized

%

%

Construction

%

Units

Cost (1)

Date

Debt

Start

Occupancy

Completion

Operations (2)

Leased

Occupied

San Raphael Phase II

100.0

%

99

$

13,750

$

4,933

$

—

Q2 2012

Q3 2013

Q4 2013

Q1 2014

N/A

N/A

Dallas, TX

Bethesda

97.0% (4)

140

$

53,400

$

15,762

$

—

Q4 2012

Q4 2014

Q1 2015

Q3 2015

N/A

N/A

Bethesda, MD

Total

239

$

67,150

$

20,695

$

—

Future Development Pipeline - Unimproved Land

			Estimated Number
Name	Location	Ownership %	of Units (3)	Cost to Date
Turtle Creek	Dallas, Texas	100.0%	250	$	8,563
The Desmond on Wilshire	Los Angeles, California	100.0%	175	$	18,886
Total			425	$	27,449

(1) Total capital cost represents estimated costs for projects under development inclusive of all capitalized costs in accordance with GAAP.

(2) We define stabilized occupancy as the earlier of the attainment of 93.0% physical occupancy or one year after the completion of construction.

(3) Based on current projections as of February 5, 2013.

(4) Ownership percentage based on current equity of the joint venture and is subject to change based on potential total equity. Joint venture partner contribution is $350 as of December 31, 2012.

14

Associated Estates Realty Corporation

Overview of Operating Expenses Related to Repairs and Maintenance and Capitalized Expenditures

(In thousands; except estimated GAAP useful life and cost per unit)

		Twelve Months Ended
	Estimated	December 31, 2012
	GAAP Useful			Cost Per
	Life (Years)	Amount		Unit (1)
OPERATING EXPENSES RELATED TO REPAIRS AND MAINTENANCE
Repairs and maintenance (2)		$	11,196	$	818
Maintenance personnel labor cost (2)		7,209		526
Total Operating Expenses Related to Repairs and Maintenance		18,405		1,344
CAPITAL EXPENDITURES
Recurring Capital Expenditures (3)
Amenities	5	299		22
Appliances	5	1,191		87
Building improvements	14	2,407		176
Carpet and flooring	5	3,194		233
Office/Model	5	87		6
HVAC and mechanicals	15	924		67
Landscaping and grounds	14	2,241		164
Unit improvements	5	62		5
Total Recurring Capital Expenditures - Properties		10,405		760
Corporate capital expenditures		341		25
Total Recurring Capital Expenditures		10,746		785
Total Recurring Capital Expenditures and Repairs and Maintenance		$	29,151	$	2,129
Total Recurring Capital Expenditures		$	10,746
Investment/Revenue Enhancing/Non-Recurring Expenditures (4)
Building improvements - unit upgrades	Various	486
Building improvements - other	20	1,018
Ground improvements	Various	136
Total Investment/Revenue Enhancing/Non-Recurring Expenditures		1,640
Grand Total Capital Expenditures		$	12,386

(1) Calculated using weighted average units owned during the twelve months ended December 31, 2012 of 13,694.

(2) Included in property operating and maintenance expense in the Consolidated Statements of Operations and Comprehensive Income.

(3) See page 33 for our definition of recurring fixed asset additions.

(4) See page 33 for our definition of investment/revenue enhancing and/or non-recurring fixed asset additions.

15

Associated Estates Realty Corporation

Construction and Other Services, General and Administrative Expense, Development

Costs and Personnel - Allocated

For the Three and Twelve Months Ended December 31, 2012 and 2011

(Unaudited; in thousands)

	Three Months Ended						Twelve Months Ended
	December 31,						December 31,
	2012			2011			2012			2011
Construction and Other Services
Revenue	$	—		$	802		$	—		$	16,869
Expense	(6		)	1,845			176			19,297
Construction and other services net income (loss)	$	6		$	(1,043	)	$	(176	)	$	(2,428	)
General and Administrative, Development Costs
and Personnel - Allocated
General and administrative expense (1)	$	4,426		$	4,214		$	16,995		$	15,944
Development costs	64			178			864			435
Personnel - allocated (2)	1,108			906			4,099			3,455
Total expense	$	5,598		$	5,298		$	21,958		$	19,834

(1) As reported per the Consolidated Statement of Operations and Comprehensive Income.

(2) Represents general and administrative expense allocations to property operating and maintenance expenses.

16

Associated Estates Realty Corporation

Same Community Data ⁽¹⁾

Operating Results for the Last Five Quarters

(Unaudited; in thousands, except unit totals and per unit amounts)

	Quarter Ended
	December 31,			September 30,			June 30,			March 31,			December 31,
	2012			2012			2012			2012			2011
Property Revenue	$	41,120		$	41,094		$	40,198		$	39,284		$	38,553
Property Operating and
Maintenance Expenses
Personnel - on site	3,518			3,537			3,523			3,659			3,373
Personnel - allocated	979			976			949			923			895
Advertising	403			428			422			411			398
Utilities	1,939			2,104			1,870			1,951			1,940
Repairs and maintenance	2,207			2,770			2,720			2,373			2,136
Real estate taxes and insurance	5,236			5,542			5,353			5,199			4,749
Other operating	1,107			1,128			1,102			1,103			1,207
Total Expenses	15,389			16,485			15,939			15,619			14,698
Property Net Operating Income	$	25,731		$	24,609		$	24,259		$	23,665		$	23,855
Operating Margin	62.6		%	59.9		%	60.3		%	60.2		%	61.9		%
Personnel - Allocated to
Property Revenue	2.4		%	2.4		%	2.4		%	2.3		%	2.3		%
Total Number of Units	12,328			12,328			12,328			12,328			12,328
NOI Per Unit	$	2,087		$	1,996		$	1,968		$	1,920		$	1,935
Average Net Rents Per Unit (2)	$	1,122		$	1,112		$	1,094		$	1,086		$	1,088
Average Net Rent Collected Per Unit (3)	$	1,076		$	1,072		$	1,051		$	1,030		$	1,010
Physical Occupancy - End of Period (4)	96.0		%	97.2		%	97.0		%	97.2		%	95.2		%

(1) The results for all quarters include Waterstone at Wellington, which was acquired June 2011 and Dwell Vienna Metro, which was acquired in August 2011, but excludes The Brixton, which was acquired in October 2011.

(2) Represents gross potential rents less concessions.

(3) Represents gross potential rents less vacancies and concessions.

(4) Is defined as number of units occupied divided by total number of units.

17

Associated Estates Realty Corporation

Same Community Data ⁽¹⁾

Operating Results for the Twelve Months Ended December 31, 2012 and 2011

(Unaudited; in thousands, except unit totals and per unit amounts)

	Twelve Months Ended
	December 31,
	2012			2011
Property Revenue	$	152,275		$	143,597
Property Operating and Maintenance Expenses
Personnel - on site	13,594			12,773
Personnel - allocated	3,604			3,355
Advertising	1,541			1,452
Utilities	7,465			7,394
Repairs and maintenance	9,499			9,092
Real estate taxes and insurance	19,800			18,442
Other operating	4,234			4,510
Total Expenses	59,737			57,018
Property Net Operating Income	$	92,538		$	86,579
Operating Margin	60.8		%	60.3		%
Personnel - Allocated to Property Revenue	2.4		%	2.3		%
Total Number of Units	11,856			11,856
NOI Per Unit	$	7,805		$	7,303
Average Net Rents Per Unit (2)	$	1,080		$	1,038
Average Net Rent Collected Per Unit (3)	$	1,035		$	977
Physical Occupancy - End of Period (4)	96.0		%	95.2		%

(1) The results shown for both years exclude Waterstone at Wellington, which was acquired in June 2011, Dwell Vienna Metro, which was acquired in August 2011 and The Brixton, which was acquired in October 2011.

(2) Represents gross potential rents less concessions.

(3) Represents gross potential rents less vacancies and concessions.

(4) Is defined as number of units occupied divided by total number of units.

18

Associated Estates Realty Corporation

Same Community Data

As of December 31, 2012 and 2011

(Unaudited)

			Net Rent Collected						Net Rents						Average Rent						Physical				Turnover
			per Unit (1)						per Unit (2)						per Unit (3)						Occupancy (4)				Ratio (5)
	No. of	Average	Q4		Q4		%		Q4		Q4		%		Q4		Q4		%		Q4		Q4		Q4		Q4
	Units	Age (6)	2012		2011		Change		2012		2011		Change		2012		2011		Change		2012		2011		2012		2011
Midwest Properties
Indiana	836	16	$	871	$	852	2.2	%	$	904	$	886	2.0	%	$	913	$	923	(1.1	)%	96.1	%	97.7	%	46.9	%	33.0	%
Southeast Michigan	1,778	19	899		836		7.5	%	936		871		7.5	%	946		923		2.5	%	95.5	%	97.0	%	44.1	%	41.2	%
Western Michigan	438	21	818		762		7.3	%	844		781		8.1	%	846		807		4.8	%	98.6	%	98.9	%	53.0	%	43.8	%
Central Ohio	2,007	21	912		851		7.2	%	946		897		5.5	%	949		910		4.3	%	96.3	%	95.6	%	46.0	%	46.8	%
Northeastern Ohio	1,303	17	1,049		978		7.3	%	1,096		1,034		6.0	%	1,102		1,061		3.9	%	95.1	%	96.2	%	61.4	%	47.0	%
Total Midwest	6,362	19	925		867		6.7	%	961		908		5.8	%	968		939		3.1	%	96.0	%	96.6	%	49.2	%	43.3	%
Mid-Atlantic Properties
Maryland	315	26	1,472		1,403		4.9	%	1,548		1,520		1.8	%	1,565		1,547		1.2	%	96.8	%	96.5	%	36.8	%	47.0	%
Metro DC	602	17	1,591		1,520		4.7	%	1,658		1,647		0.7	%	1,675		1,667		0.5	%	96.8	%	95.7	%	38.5	%	51.8	%
Northern Virginia	1,272	7	1,517		1,422		6.7	%	1,583		1,535		3.1	%	1,600		1,570		1.9	%	95.6	%	95.5	%	56.6	%	53.1	%
Southeast Virginia	864	6	1,132		1,095		3.4	%	1,188		1,189		(0.1	)%	1,202		1,235		(2.7	)%	95.7	%	95.1	%	46.8	%	56.5	%
Total Mid-Atlantic	3,053	11	1,418		1,347		5.3	%	1,483		1,458		1.7	%	1,498		1,492		0.4	%	96.0	%	95.5	%	48.2	%	53.2	%
Southeast Properties
Central Florida	288	9	1,031		989		4.2	%	1,073		1,038		3.4	%	1,087		1,147		(5.2	)%	97.9	%	96.9	%	50.0	%	51.4	%
Southeast Florida	1,206	14	1,267		1,211		4.6	%	1,323		1,310		1.0	%	1,337		1,428		(6.4	)%	96.4	%	95.7	%	48.8	%	47.8	%
Georgia	1,197	14	849		736		15.4	%	892		915		(2.5	)%	912		1,055		(13.6	)%	95.1	%	85.5	%	48.5	%	57.5	%
Total Southeast	2,691	12	1,056		976		8.2	%	1,104		1,105		(0.1	)%	1,121		1,232		(9.0	)%	95.9	%	91.3	%	48.8	%	52.5	%
Southwest Properties
Texas	222	13	937		887		5.6	%	976		932		4.7	%	997		1,030		(3.2	)%	97.7	%	97.3	%	52.3	%	59.5	%
Total Southwest	222	13	937		887		5.6	%	976		932		4.7	%	997		1,030		(3.2	)%	97.7	%	97.3	%	52.3	%	59.5	%
Total/Average Same
Community	12,328	15	$	1,076	$	1,010	6.5	%	$	1,122	$	1,088	3.1	%	$	1,133	$	1,142	(0.8	)%	96.0	%	95.2	%	48.9	%	48.0	%

(1) Represents gross potential rents less vacancies and concessions for all units divided by the number of units in a market.

(2) Represents gross potential rents less concessions for all units divided by the number of units in a market.

(3) Represents gross potential rents for all units divided by the number of units in a market.

(4) Represents physical occupancy at the end of the quarter.

(5) Represents the number of units turned over for the quarter, divided by the number of units in a market, annualized.

(6) Age shown in years.

19

Associated Estates Realty Corporation

Sequential Property Revenue

For the Three Months Ended December 31, 2012 and September 30, 2012

(Unaudited; in thousands, except unit totals)

		Q4		Q3		Q4		Q3
	No. of	Physical		Physical		2012		2012		Increase/			%
Property Revenue	Units	Occupancy (1)		Occupancy (1)		Revenue		Revenue		(Decrease)			Change
Same Community
Midwest Properties
Indiana	836	96.1	%	98.3	%	$	2,256	$	2,267	$	(11	)	(0.5	)%
Southeast Michigan	1,778	95.5	%	97.5	%	4,958		4,882		76			1.6	%
Western Michigan	438	98.6	%	97.0	%	1,140		1,132		8			0.7	%
Central Ohio	2,007	96.3	%	97.7	%	5,696		5,683		13			0.2	%
Northeast Ohio	1,303	95.1	%	97.4	%	4,288		4,293		(5		)	(0.1	)%
Total Midwest Properties	6,362	96.0	%	97.6	%	18,338		18,257		81			0.4	%
Mid-Atlantic Properties
Maryland	315	96.8	%	98.4	%	1,408		1,421		(13		)	(0.9	)%
Metro DC	602	96.8	%	97.2	%	2,932		2,950		(18		)	(0.6	)%
Northern Virginia	1,272	95.6	%	97.2	%	5,982		5,961		21			0.4	%
Southeast Virginia	864	95.7	%	96.4	%	3,017		3,064		(47		)	(1.5	)%
Total Mid-Atlantic Properties	3,053	96.0	%	97.1	%	13,339		13,396		(57		)	(0.4	)%
Southeast Properties
Central Florida	288	97.9	%	96.9	%	913		914		(1		)	(0.1	)%
Southeast Florida	1,206	96.4	%	97.2	%	4,715		4,723		(8		)	(0.2	)%
Georgia	1,197	95.1	%	95.7	%	3,163		3,169		(6		)	(0.2	)%
Total Southeast Properties	2,691	95.9	%	96.5	%	8,791		8,806		(15		)	(0.2	)%
Southwest Properties
Texas	222	97.7	%	96.8	%	652		635		17			2.7	%
Total Southwest Properties	222	97.7	%	96.8	%	652		635		17			2.7	%
Total Same Community	12,328	96.0	%	97.2	%	41,120		41,094		26			0.1	%
Acquisitions (2)
North Carolina	760	94.3	%	95.7	%	2,438		1,788		650			36.4	%
Texas	620	95.5	%	95.8	%	1,976		1,721		255			14.8	%
Development
Tennessee	242	97.1	%	90.5	%	1,047		888		159			17.9	%
Total Property Revenue	13,950	95.9	%	97.0	%	$	46,581	$	45,491	$	1,090		2.4	%

(1) Represents physical occupancy at the end of the quarter.

(2) We define acquisition properties as acquired properties which have been owned less than one year.

20

Associated Estates Realty Corporation

Sequential Property Operating Expenses

For the Three Months Ended December 31, 2012 and September 30, 2012

(Unaudited; in thousands, except unit totals)

		Q4		Q3		Q4		Q3
	No. of	Physical		Physical		2012		2012		Increase/			%
Property Operating Expenses	Units	Occupancy (1)		Occupancy (1)		Expenses		Expenses		(Decrease)			Change
Same Community
Midwest Properties
Indiana	836	96.1	%	98.3	%	$	843	$	969	$	(126	)	(13.0	)%
Southeast Michigan	1,778	95.5	%	97.5	%	1,954		2,084		(130		)	(6.2	)%
Western Michigan	438	98.6	%	97.0	%	467		505		(38		)	(7.5	)%
Central Ohio	2,007	96.3	%	97.7	%	2,442		2,512		(70		)	(2.8	)%
Northeast Ohio	1,303	95.1	%	97.4	%	1,586		1,547		39			2.5	%
Total Midwest Properties	6,362	96.0	%	97.6	%	7,292		7,617		(325		)	(4.3	)%
Mid-Atlantic Properties
Maryland	315	96.8	%	98.4	%	471		500		(29		)	(5.8	)%
Metro DC	602	96.8	%	97.2	%	809		999		(190		)	(19.0	)%
Northern Virginia	1,272	95.6	%	97.2	%	1,867		1,926		(59		)	(3.1	)%
Southeast Virginia	864	95.7	%	96.4	%	897		1,039		(142		)	(13.7	)%
Total Mid-Atlantic Properties	3,053	96.0	%	97.1	%	4,044		4,464		(420		)	(9.4	)%
Southeast Properties
Central Florida	288	97.9	%	96.9	%	347		396		(49		)	(12.4	)%
Southeast Florida	1,206	96.4	%	97.2	%	1,958		2,119		(161		)	(7.6	)%
Georgia	1,197	95.1	%	95.7	%	1,476		1,599		(123		)	(7.7	)%
Total Southeast Properties	2,691	95.9	%	96.5	%	3,781		4,114		(333		)	(8.1	)%
Southwest Properties
Texas	222	97.7	%	96.8	%	272		290		(18		)	(6.2	)%
Total Southwest Properties	222	97.7	%	96.8	%	272		290		(18		)	(6.2	)%
Total Same Community	12,328	96.0	%	97.2	%	15,389		16,485		(1,096		)	(6.6	)%
Acquisitions (2)
North Carolina	760	94.3	%	95.7	%	825		611		214			35.0	%
Texas	620	95.5	%	95.8	%	821		843		(22		)	(2.6	)%
Development
Tennessee	242	97.1	%	90.5	%	285		331		(46		)	(13.9	)%
Total Property Operating Expenses	13,950	95.9	%	97.0	%	$	17,320	$	18,270	$	(950	)	(5.2	)%

(1) Represents physical occupancy at the end of the quarter.

(2) We define acquisition properties as acquired properties which have been owned less than one year.

21

Associated Estates Realty Corporation

Sequential Property Net Operating Income (Property NOI)

For the Three Months Ended December 31, 2012 and September 30, 2012

(Unaudited; in thousands, except unit totals)

		Q4		Q3		Q4		Q3
	No. of	Physical		Physical		2012		2012		Increase/			%
Property NOI (1)	Units	Occupancy (2)		Occupancy (2)		NOI		NOI		(Decrease)			Change
Same Community
Midwest Properties
Indiana	836	96.1	%	98.3	%	$	1,413	$	1,298	$	115		8.9	%
Southeast Michigan	1,778	95.5	%	97.5	%	3,004		2,798		206			7.4	%
Western Michigan	438	98.6	%	97.0	%	673		627		46			7.3	%
Central Ohio	2,007	96.3	%	97.7	%	3,254		3,171		83			2.6	%
Northeast Ohio	1,303	95.1	%	97.4	%	2,702		2,746		(44		)	(1.6	)%
Total Midwest Properties	6,362	96.0	%	97.6	%	11,046		10,640		406			3.8	%
Mid-Atlantic Properties
Maryland	315	96.8	%	98.4	%	937		921		16			1.7	%
Metro DC	602	96.8	%	97.2	%	2,123		1,951		172			8.8	%
Northern Virginia	1,272	95.6	%	97.2	%	4,115		4,035		80			2.0	%
Southeast Virginia	864	95.7	%	96.4	%	2,120		2,025		95			4.7	%
Total Mid-Atlantic Properties	3,053	96.0	%	97.1	%	9,295		8,932		363			4.1	%
Southeast Properties
Central Florida	288	97.9	%	96.9	%	566		518		48			9.3	%
Southeast Florida	1,206	96.4	%	97.2	%	2,757		2,604		153			5.9	%
Georgia	1,197	95.1	%	95.7	%	1,687		1,570		117			7.5	%
Total Southeast Properties	2,691	95.9	%	96.5	%	5,010		4,692		318			6.8	%
Southwest Properties
Texas	222	97.7	%	96.8	%	380		345		35			10.1	%
Total Southwest Properties	222	97.7	%	96.8	%	380		345		35			10.1	%
Total Same Community	12,328	96.0	%	97.2	%	25,731		24,609		1,122			4.6	%
Acquisitions (3)
North Carolina	760	94.3	%	95.7	%	1,613		1,177		436			37.0	%
Texas	620	95.5	%	95.8	%	1,155		878		277			31.5	%
Development
Tennessee	242	97.1	%	90.5	%	762		557		205			36.8	%
Total Property NOI	13,950	95.9	%	97.0	%	$	29,261	$	27,221	$	2,040		7.5	%

(1) See page 33 for a reconciliation of net income (loss) attributable to AERC to this non-GAAP measurement and for our definition of this non-GAAP measurement.

(2) Represents physical occupancy at the end of the quarter.

(3) We define acquisition properties as acquired properties which have been owned less than one year.

22

Associated Estates Realty Corporation

Fourth Quarter Property Revenue

For the Three Months Ended December 31, 2012 and 2011

(Unaudited; in thousands, except unit totals)

		2012		2011		Q4		Q4
	No. of	Physical		Physical		2012		2011		Increase/		%
Property Revenue	Units	Occupancy (1)		Occupancy (1)		Revenue		Revenue		(Decrease)		Change
Same Community
Midwest Properties
Indiana	836	96.1	%	97.7	%	$	2,256	$	2,202	$	54	2.5	%
Southeast Michigan	1,778	95.5	%	97.0	%	4,958		4,607		351		7.6	%
Western Michigan	438	98.6	%	98.9	%	1,140		1,058		82		7.8	%
Central Ohio	2,007	96.3	%	95.6	%	5,696		5,290		406		7.7	%
Northeast Ohio	1,303	95.1	%	96.2	%	4,288		3,971		317		8.0	%
Total Midwest Properties	6,362	96.0	%	96.6	%	18,338		17,128		1,210		7.1	%
Mid-Atlantic Properties
Maryland	315	96.8	%	96.5	%	1,408		1,348		60		4.5	%
Metro DC	602	96.8	%	95.7	%	2,932		2,822		110		3.9	%
Northern Virginia	1,272	95.6	%	95.5	%	5,982		5,616		366		6.5	%
Southeast Virginia	864	95.7	%	95.1	%	3,017		2,914		103		3.5	%
Total Mid-Atlantic Properties	3,053	96.0	%	95.5	%	13,339		12,700		639		5.0	%
Southeast Properties
Central Florida	288	97.9	%	96.9	%	913		877		36		4.1	%
Southeast Florida	1,206	96.4	%	95.7	%	4,715		4,515		200		4.4	%
Georgia	1,197	95.1	%	85.5	%	3,163		2,722		441		16.2	%
Total Southeast Properties	2,691	95.9	%	91.3	%	8,791		8,114		677		8.3	%
Southwest Properties
Texas	222	97.7	%	97.3	%	652		611		41		6.7	%
Total Southwest Properties	222	97.7	%	97.3	%	652		611		41		6.7	%
Total Same Community	12,328	96.0	%	95.2	%	41,120		38,553		2,567		6.7	%
Acquisitions (2)
North Carolina	760	94.3	%	N/A		2,438		N/A		2,438		N/A
Texas	620	95.5	%	96.0	%	1,976		546		1,430		N/A
Development
Tennessee	242	97.1	%	N/A		1,047		2		1,045		N/A
Total Property Revenue	13,950	95.9	%	93.3	%	$	46,581	$	39,101	$	7,480	19.1	%

(1) Represents physical occupancy at the end of the quarter.

(2) We define acquisition properties as acquired properties which have been owned less than one year.

23

Associated Estates Realty Corporation

Fourth Quarter Property Operating Expenses

For the Three Months Ended December 31, 2012 and 2011

(Unaudited; in thousands, except unit totals)

		2012		2011		Q4		Q4
	No. of	Physical		Physical		2012		2011		Increase/			%
Property Operating Expenses	Units	Occupancy (1)		Occupancy (1)		Expenses		Expenses		(Decrease)			Change
Same Community
Midwest Properties
Indiana	836	96.1	%	97.7	%	$	843	$	824	$	19		2.3	%
Southeast Michigan	1,778	95.5	%	97.0	%	1,954		1,787		167			9.3	%
Western Michigan	438	98.6	%	98.9	%	467		427		40			9.4	%
Central Ohio	2,007	96.3	%	95.6	%	2,442		2,182		260			11.9	%
Northeast Ohio	1,303	95.1	%	96.2	%	1,586		1,427		159			11.1	%
Total Midwest Properties	6,362	96.0	%	96.6	%	7,292		6,647		645			9.7	%
Mid-Atlantic Properties
Maryland	315	96.8	%	96.5	%	471		497		(26		)	(5.2	)%
Metro DC	602	96.8	%	95.7	%	809		845		(36		)	(4.3	)%
Northern Virginia	1,272	95.6	%	95.5	%	1,867		1,788		79			4.4	%
Southeast Virginia	864	95.7	%	95.1	%	897		955		(58		)	(6.1	)%
Total Mid-Atlantic Properties	3,053	96.0	%	95.5	%	4,044		4,085		(41		)	(1.0	)%
Southeast Properties
Central Florida	288	97.9	%	96.9	%	347		329		18			5.5	%
Southeast Florida	1,206	96.4	%	95.7	%	1,958		1,932		26			1.3	%
Georgia	1,197	95.1	%	85.5	%	1,476		1,470		6			0.4	%
Total Southeast Properties	2,691	95.9	%	91.3	%	3,781		3,731		50			1.3	%
Southwest Properties
Texas	222	97.7	%	97.3	%	272		235		37			15.7	%
Total Southwest Properties	222	97.7	%	97.3	%	272		235		37			15.7	%
Total Same Community	12,328	96.0	%	95.2	%	15,389		14,698		691			4.7	%
Acquisitions (2)
North Carolina	760	94.3	%	N/A		825		N/A		825			N/A
Texas	620	95.5	%	96.0	%	821		258		563			N/A
Development
Tennessee	242	97.1	%	N/A		285		103		182			N/A
Total Property Operating Expenses	13,950	95.9	%	93.3	%	$	17,320	$	15,059	$	2,261		15.0	%

(1) Represents physical occupancy at the end of the quarter.

(2) We define acquisition properties as acquired properties which have been owned less than one year.

24

Associated Estates Realty Corporation

Fourth Quarter Property Net Operating Income (Property NOI)

For the Three Months Ended December 31, 2012 and 2011

(Unaudited; in thousands, except unit totals)

		2012		2011		Q4		Q4
	No. of	Physical		Physical		2012		2011			Increase/		%
Property NOI (1)	Units	Occupancy (2)		Occupancy (2)		NOI		NOI			(Decrease)		Change
Same Community
Midwest Properties
Indiana	836	96.1	%	97.7	%	$	1,413	$	1,378		$	35	2.5	%
Southeast Michigan	1,778	95.5	%	97.0	%	3,004		2,820			184		6.5	%
Western Michigan	438	98.6	%	98.9	%	673		631			42		6.7	%
Central Ohio	2,007	96.3	%	95.6	%	3,254		3,108			146		4.7	%
Northeast Ohio	1,303	95.1	%	96.2	%	2,702		2,544			158		6.2	%
Total Midwest Properties	6,362	96.0	%	96.6	%	11,046		10,481			565		5.4	%
Mid-Atlantic Properties
Maryland	315	96.8	%	96.5	%	937		851			86		10.1	%
Metro DC	602	96.8	%	95.7	%	2,123		1,977			146		7.4	%
Northern Virginia	1,272	95.6	%	95.5	%	4,115		3,828			287		7.5	%
Southeast Virginia	864	95.7	%	95.1	%	2,120		1,959			161		8.2	%
Total Mid-Atlantic Properties	3,053	96.0	%	95.5	%	9,295		8,615			680		7.9	%
Southeast Properties
Central Florida	288	97.9	%	96.9	%	566		548			18		3.3	%
Southeast Florida	1,206	96.4	%	95.7	%	2,757		2,583			174		6.7	%
Georgia	1,197	95.1	%	85.5	%	1,687		1,252			435		34.7	%
Total Southeast Properties	2,691	95.9	%	91.3	%	5,010		4,383			627		14.3	%
Southwest Properties
Texas	222	97.7	%	97.3	%	380		376			4		1.1	%
Total Southwest Properties	222	97.7	%	97.3	%	380		376			4		1.1	%
Total Same Community	12,328	96.0	%	95.2	%	25,731		23,855			1,876		7.9	%
Acquisitions (3)
North Carolina	760	94.3	%	N/A		1,613		N/A			1,613		N/A
Texas	620	95.5	%	96.0	%	1,155		288			867		N/A
Development
Tennessee	242	97.1	%	N/A		762		(101		)	863		N/A
Total Property NOI	13,950	95.9	%	93.3	%	$	29,261	$	24,042		$	5,219	21.7	%

(1) See page 33 for a reconciliation of net income (loss) attributable to AERC to this non-GAAP measurement and for our definition of this non-GAAP measurement.

(2) Represents physical occupancy at the end of the quarter.

(3) We define acquisition properties as acquired properties which have been owned less than one year.

25

Associated Estates Realty Corporation

Year-to-Date Property Revenue

For the Twelve Months Ended December 31, 2012 and 2011

(Unaudited; in thousands, except unit totals)

		2012		2011		YTD		YTD
	No. of	Physical		Physical		2012		2011		Increase/		%
Property Revenue	Units	Occupancy (1)		Occupancy (1)		Revenues		Revenues		(Decrease)		Change
Same Community
Midwest Properties
Indiana	836	96.1	%	97.7	%	$	9,020	$	8,571	$	449	5.2	%
Southeast Michigan	1,778	95.5	%	97.0	%	19,281		17,868		1,413		7.9	%
Western Michigan	438	98.6	%	98.9	%	4,444		4,130		314		7.6	%
Central Ohio	2,007	96.3	%	95.6	%	22,337		20,807		1,530		7.4	%
Northeast Ohio	1,303	95.1	%	96.2	%	16,767		15,667		1,100		7.0	%
Total Midwest Properties	6,362	96.0	%	96.6	%	71,849		67,043		4,806		7.2	%
Mid-Atlantic Properties
Maryland	315	96.8	%	96.5	%	5,633		5,404		229		4.2	%
Metro DC	352	97.4	%	95.5	%	5,626		5,407		219		4.1	%
Northern Virginia	1,272	95.6	%	95.5	%	23,327		22,032		1,295		5.9	%
Southeast Virginia	864	95.7	%	95.1	%	12,056		11,644		412		3.5	%
Total Mid-Atlantic Properties	2,803	96.0	%	95.5	%	46,642		44,487		2,155		4.8	%
Southeast Properties
Central Florida	288	97.9	%	96.9	%	3,611		3,433		178		5.2	%
Southeast Florida	984	96.3	%	95.8	%	15,314		14,706		608		4.1	%
Georgia	1,197	95.1	%	85.5	%	12,322		11,549		773		6.7	%
Total Southeast Properties	2,469	95.9	%	90.9	%	31,247		29,688		1,559		5.3	%
Southwest Properties
Texas	222	97.7	%	97.3	%	2,537		2,379		158		6.6	%
Total Southwest Properties	222	97.7	%	97.3	%	2,537		2,379		158		6.6	%
Total Same Community	11,856	96.0	%	95.2	%	152,275		143,597		8,678		6.0	%
Acquisitions (2)
Southeast Florida	222	96.4	%	95.0	%	3,446		1,710		1,736		N/A
Metro DC	250	96.0	%	96.0	%	5,976		2,343		3,633		N/A
North Carolina	760	94.3	%	N/A		4,555		N/A		4,555		N/A
Texas	620	95.5	%	96.0	%	5,018		546		4,472		N/A
Development
Tennessee	242	97.1	%	N/A		2,552		2		2,550		N/A
Total Property Revenue	13,950	95.9	%	95.2	%	$	173,822	$	148,198	$	25,624	17.3	%

(1) Represents physical occupancy at the end of the quarter.

(2) The Company defines acquisition properties as acquired properties which have been owned less than one year.

26

Associated Estates Realty Corporation

Year-to-Date Property Operating Expenses

For the Twelve Months Ended December 31, 2012 and 2011

(Unaudited; in thousands, except unit totals)

		2012		2011		YTD		YTD
	No. of	Physical		Physical		2012		2011		Increase/			%
Property Operating Expenses	Units	Occupancy (1)		Occupancy (1)		Expenses		Expenses		(Decrease)			Change
Same Community
Midwest Properties
Indiana	836	96.1	%	97.7	%	$	3,591	$	3,480	$	111		3.2	%
Southeast Michigan	1,778	95.5	%	97.0	%	7,982		7,690		292			3.8	%
Western Michigan	438	98.6	%	98.9	%	1,927		1,801		126			7.0	%
Central Ohio	2,007	96.3	%	95.6	%	9,832		9,096		736			8.1	%
Northeast Ohio	1,303	95.1	%	96.2	%	6,253		5,922		331			5.6	%
Total Midwest Properties	6,362	96.0	%	96.6	%	29,585		27,989		1,596			5.7	%
Mid-Atlantic Properties
Maryland	315	96.8	%	96.5	%	1,956		2,039		(83		)	(4.1	)%
Metro DC	352	97.4	%	95.5	%	1,650		1,642		8			0.5	%
Northern Virginia	1,272	95.6	%	95.5	%	7,517		7,094		423			6.0	%
Southeast Virginia	864	95.7	%	95.1	%	3,936		3,789		147			3.9	%
Total Mid-Atlantic Properties	2,803	96.0	%	95.5	%	15,059		14,564		495			3.4	%
Southeast Properties
Central Florida	288	97.9	%	96.9	%	1,481		1,342		139			10.4	%
Southeast Florida	984	96.3	%	95.8	%	6,445		6,076		369			6.1	%
Georgia	1,197	95.1	%	85.5	%	6,039		5,907		132			2.2	%
Total Southeast Properties	2,469	95.9	%	90.9	%	13,965		13,325		640			4.8	%
Southwest Properties
Texas	222	97.7	%	97.3	%	1,128		1,140		(12		)	(1.1	)%
Total Southwest Properties	222	97.7	%	97.3	%	1,128		1,140		(12		)	(1.1	)%
Total Same Community	11,856	96.0	%	95.2	%	59,737		57,018		2,719			4.8	%
Acquisitions (2)
Southeast Florida	222	96.4	%	95.0	%	1,666		888		778			N/A
Metro DC	250	96.0	%	96.0	%	2,029		770		1,259			N/A
North Carolina	760	94.3	%	N/A		1,544		N/A		1,544			N/A
Texas	620	95.5	%	96.0	%	2,324		258		2,066			N/A
Development
Tennessee	242	97.1	%	N/A		931		108		823			N/A
Total Property Operating Expenses	13,950	95.9	%	95.2	%	$	68,231	$	59,042	$	9,189		15.6	%

(1) Represents physical occupancy at the end of the quarter.

(2) The Company defines acquisition properties as acquired properties which have been owned less than one year.

27

Associated Estates Realty Corporation

Year-to-Date Property Net Operating Income (Property NOI)

For the Twelve Months Ended December 31, 2012 and 2011

(Unaudited; in thousands, except unit totals)

		2012		2011		YTD		YTD
	No. of	Physical		Physical		2012		2011			Increase/		%
Property NOI (1)	Units	Occupancy (2)		Occupancy (2)		NOI		NOI			(Decrease)		Change
Same Community
Midwest Properties
Indiana	836	96.1	%	97.7	%	$	5,429	$	5,091		$	338	6.6	%
Southeast Michigan	1,778	95.5	%	97.0	%	11,299		10,178			1,121		11.0	%
Western Michigan	438	98.6	%	98.9	%	2,517		2,329			188		8.1	%
Central Ohio	2,007	96.3	%	95.6	%	12,505		11,711			794		6.8	%
Northeast Ohio	1,303	95.1	%	96.2	%	10,514		9,745			769		7.9	%
Total Midwest Properties	6,362	96.0	%	96.6	%	42,264		39,054			3,210		8.2	%
Mid-Atlantic Properties
Maryland	315	96.8	%	96.5	%	3,677		3,365			312		9.3	%
Metro DC	352	97.4	%	95.5	%	3,976		3,765			211		5.6	%
Northern Virgina	1,272	95.6	%	95.5	%	15,810		14,938			872		5.8	%
Southeast Virginia	864	95.7	%	95.1	%	8,120		7,855			265		3.4	%
Total Mid-Atlantic Properties	2,803	96.0	%	95.5	%	31,583		29,923			1,660		5.5	%
Southeast Properties
Central Florida	288	97.9	%	96.9	%	2,130		2,091			39		1.9	%
Southeast Florida	984	96.3	%	95.8	%	8,869		8,630			239		2.8	%
Georgia	1,197	95.1	%	85.5	%	6,283		5,642			641		11.4	%
Total Southeast Properties	2,469	95.9	%	90.9	%	17,282		16,363			919		5.6	%
Southwest Properties
Texas	222	97.7	%	97.3	%	1,409		1,239			170		13.7	%
Total Southwest Properties	222	97.7	%	97.3	%	1,409		1,239			170		13.7	%
Total Same Community	11,856	96.0	%	95.2	%	92,538		86,579			5,959		6.9	%
Acquisitions (3)
Southeast Florida	222	96.4	%	95.0	%	1,780		822			958		N/A
Metro DC	250	96.0	%	96.0	%	3,947		1,573			2,374		N/A
North Carolina	760	94.3	%	N/A		3,011		N/A			3,011		N/A
Texas	620	95.5	%	96.0	%	2,694		288			2,406		N/A
Development
Tennessee	242	97.1	%	N/A		1,621		(106		)	1,727		N/A
Total Property NOI	13,950	95.9	%	95.2	%	$	105,591	$	89,156		$	16,435	18.4	%

(1) See page 33 for a reconciliation of net income (loss) attributable to AERC to this non-GAAP measurement and for the Company's definition of this non-GAAP measurement.

(2) Represents physical occupancy at the end of the quarter.

(3) The Company defines acquisition properties as acquired properties which have been owned less than one year.

28

Associated Estates Realty Corporation

Debt Structure

As of December 31, 2012

(Dollar amounts in thousands)

	Balance		Percentage		Weighted
	Outstanding		of		Average
	December 31, 2012		Total Debt		Interest Rate
Fixed Rate Debt:
Secured	$	376,278	52.5	%	5.4	%
Total Fixed Rate Debt	376,278		52.5	%	5.4	%
Variable Rate Debt Hedged:
Unsecured - term loan (1)	125,000		17.4	%	1.9	%
Total Variable Rate Debt Hedged	125,000		17.4	%	1.9	%
Variable Rate Debt Unhedged:
Unsecured - revolver	190,500		26.6	%	1.7	%
Unsecured - term loan	25,000		3.5	%	1.9	%
Total Variable Rate Debt Unhedged	215,500		30.1	%	1.7	%
TOTAL DEBT	$	716,778	100.0	%	3.7	%
Interest coverage ratio (2)	2.98:1
Fixed charge coverage ratio (3)	2.98:1
Weighted average maturity	3.9 years

Scheduled Principal Maturities:	Secured		Unsecured		Total
2013	$	130,498	$	—	$	130,498
2014	44,538		—		44,538
2015	20,313		—		20,313
2016	43,699		190,500		234,199
2017	—		—		—
Thereafter	137,230		150,000		287,230
Total	$	376,278	$	340,500	$	716,778

(1) The Company entered into a forward starting swap in December 2011 related to this debt fixing the rate beginning in June 2013 until June 2016 at a rate of 1.26% plus the credit spread which was 1.70% as of December 31, 2012, or an all-in-rate of 2.96%. The loan matures in January 2018.

(2) Is calculated as EBITDA divided by interest expense, including capitalized interest and amortization of deferred financing costs and excluding prepayment costs/credits. Individual line items in this calculation include results from discontinued operations where applicable.  See page 32 for a reconciliation of net income (loss) applicable to common shares to EBITDA and our definition of EBITDA.

(3) Represents interest expense, including capitalized interest and preferred stock dividend payment coverage, excluding costs/credits.  Individual line items in this calculation include discontinued operations where applicable.

29

Associated Estates Realty Corporation

2013 Financial Outlook

As of February 5, 2013

This table includes forward-looking statements based on current judgments and current knowledge of management, which are subject to certain risks, trends and uncertainties that could cause results to vary from those projected.  Please see the paragraph on forward-looking statements on page 2 of this document for a list of risk factors.

Earnings Guidance Per Common Share
Expected net income attributable to AERC		$0.77 to $0.81
Expected real estate depreciation and amortization		1.13
Expected gains on disposition of properties		-0.61
Expected Funds from Operations (1)		$1.29 to $1.33
Same Community Portfolio
Revenue growth		4.0% to 5.0%
Expense growth		2.0% to 3.0%
Property NOI (2) growth		5.25% to 6.25%
Transactions
Acquisitions	$0 to $100.0 million
Dispositions	$60.0 to $100.0 million
Development	$60.0 to $70.0 million
Corporate Expenses
General and administrative expense	$17.5 to $18.0 million
Development costs		$0.8 to $1.2 million
Costs associated with acquisitions		$0 to $0.2 million
Debt
Capitalized interest	$2.5 million
Expensed interest (3)	$29.9 to $30.2 million
Capital Structure(4)
Weighted average shares outstanding		50.2 million

(1) See page 31 for our definition of this non-GAAP measurement.

(2) See page 33 for our definition of this non-GAAP measurement.

(3) Includes $2.1 million of deferred financing costs.

(4) Earnings guidance reflects no common share issuances.

30

Associated Estates Realty Corporation

Definitions of Non-GAAP Financial Measures

The foregoing supplemental financial data includes certain non-GAAP financial measures that we believe are helpful in understanding our business, as further described below.  Our definition and calculation of these non-GAAP financial measures may differ from those of other REITs, and may, therefore, not be comparable.

Funds from Operations ("FFO")

We define FFO in accordance with the definition adopted by the Board of Governors of the National Association of Real Estate Investment Trusts ("NAREIT").  This definition includes all operating results, both recurring and non-recurring, except those results defined as "extraordinary items" under GAAP, adjusted for depreciation on real estate assets and amortization of intangible assets, excludes impairment write-downs of depreciable real estate and gains and losses from the disposition of properties and land.  FFO does not represent cash generated from operating activities in accordance with GAAP and is not necessarily indicative of cash available to fund cash needs and should not be considered an alternative to net income as an indicator of our operating performance or as an alternative to cash flow as a measure of liquidity.  We generally consider FFO to be a useful measure for reviewing our comparative operating and financial performance because FFO can help one compare the operating performance of a company's real estate between periods or as compared to different REITs.

Funds from Operations ("FFO") as Adjusted

We define FFO as adjusted as FFO, as defined above, excluding $688 and $2.4 million of prepayment costs associated with debt repayments for the three and twelve months ended December 31, 2012 and $(279) of refunds for a previously defeased loan for the twelve months ended December 31, 2012. In accordance with GAAP, these prepayment costs and refunds on the previously defeased loan are included in interest expense in the Company's Consolidated Statement of Operations and Comprehensive Income. We are providing this calculation as an alternative FFO calculation as we consider it a more appropriate measure of comparing the operating performance of a company's real estate between periods or as compared to different REITs.

Funds Available for Distribution ("FAD")

We define FAD as FFO as adjusted, as defined above, plus depreciation other and amortization of deferred financing fees less recurring fixed asset additions.  Fixed asset additions exclude development, investment, revenue enhancing and non-recurring capital additions.  We consider FAD to be an appropriate supplemental measure of the performance of an equity REIT because, like FFO and FFO as adjusted, it captures real estate performance by excluding gains or losses from the disposition of properties and land and depreciation on real estate assets and amortization of intangible assets.  Unlike FFO and FFO as adjusted, FAD also reflects the recurring capital expenditures that are necessary to maintain the associated real estate.

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Associated Estates Realty Corporation

Definitions of Non-GAAP Financial Measures

Earnings Before Interest, Income Taxes, Depreciation and Amortization ("EBITDA")

EBITDA is defined as earnings before interest, income taxes, depreciation and amortization.  We consider EBITDA to be an appropriate supplemental measure of our performance because it eliminates depreciation, income taxes and interest which permits investors to view income from operations unclouded by non-cash depreciation or the cost of debt.  Below is a reconciliation of net income (loss) applicable to common shares to EBITDA.

	Three Months Ended						Twelve Months Ended
	December 31,						December 31,
(In thousands)	2012			2011			2012			2011
Net income (loss) applicable to common shares	$	6,911		$	(2,213	)	$	30,592		$	5,328
Interest expense (1)	7,757			8,373			31,084			32,182
Gain on disposition of properties	(4,030		)	—			(26,849		)	(14,597		)
Depreciation and amortization	14,632			13,654			55,544			53,930
Income taxes	88			48			363			225
Total EBITDA	$	25,358		$	19,862		$	90,734		$	77,068

(1) The three and twelve months ended December 31, 2012, include $688 and $2.4 million of prepayment costs and the twelve months ended December 31, 2012 include $(279) for refunds on a previously defeased loan.

Net Operating Income ("NOI")

NOI is determined by deducting property operating and maintenance expenses, direct property management and service company expense and construction and other services expense from total revenue.  We consider NOI to be an appropriate supplemental measure of our performance because it reflects the operating performance of our real estate portfolio and management and service company at the property and management service company level and is used to assess regional property and management and service company level performance.  NOI should not be considered an alternative to net income as a measure of performance or cash generated from operating activities in accordance with GAAP and, therefore, it should not be considered indicative of cash available to fund cash needs.

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Associated Estates Realty Corporation

Definitions of Non-GAAP Financial Measures

Property Net Operating Income ("Property NOI")

Property NOI is determined by deducting property operating and maintenance expenses from total property revenue.  We consider Property NOI to be an appropriate supplemental measure of our performance because it reflects the operating performance of our real estate portfolio at the property level and is used to assess regional property level performance.  Property NOI should not be considered an alternative to net income as a measure of performance or cash generated from operating activities in accordance with GAAP and, therefore, it should not be considered indicative of cash available to fund cash needs. The following is a reconciliation of Property NOI to total consolidated net income (loss) attributable to AERC.

	Three Months Ended						Twelve Months Ended
	December 31,						December 31,
(In thousands)	2012			2011			2012			2011
Property NOI	$	29,261		$	24,042		$	105,591		$	89,156
Office NOI	383			—			1,046			—
Construction and other services net income (loss)	6			(1,043		)	(176		)	(2,428		)
Depreciation and amortization	(14,632		)	(12,973		)	(54,306		)	(50,321		)
General and administrative expense	(4,426		)	(4,214		)	(16,995		)	(15,944		)
Development costs	(64		)	(178		)	(864		)	(435		)
Costs associated with acquisitions	(32		)	(236		)	(798		)	(539		)
Interest expense	(7,757		)	(8,051		)	(30,838		)	(30,769		)
Income (loss) from continuing operations	2,739			(2,653		)	2,660			(11,280		)
Income from discontinued operations:
Operating Income, net of interest expense	162			443			1,102			2,051
Gain on disposition of properties	4,030			—			26,849			14,597
Income from discontinued operation	4,192			443			27,951			16,648
Net income (loss)	6,931			(2,210		)	30,611			5,368
Net income attributable to noncontrolling redeemable interest	(20		)	(3		)	(19		)	(40		)
Consolidated net income (loss) attributable to AERC	$	6,911		$	(2,213	)	$	30,592		$	5,328

Recurring Fixed Asset Additions

We consider recurring fixed asset additions to a property to be capital expenditures made to replace worn out assets so as to maintain the property's value.

Investment/Revenue Enhancing and/or Non-Recurring Fixed Asset Additions

We consider investment/revenue enhancing and/or non-recurring fixed assets to be capital expenditures if such improvements increase the value of the property and/or enable us to increase rents.

Same Community Properties

Same Community properties are conventional multifamily residential apartments which were owned and operational for the entire periods presented.

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