PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED OCTOBER 15, 1996)
    
   
                                                  FILED PURSUANT TO RULE 424B(3)
    
 
   
                                     [LOGO]
 
                                2,750,000 SHARES
    
 
                       AMLI RESIDENTIAL PROPERTIES TRUST
 
                                 COMMON SHARES
                               ------------------
 
    Amli Residential Properties Trust (the "Company") is a self-administered and
self-managed real estate investment trust (a "REIT") that was formed in February
1994  to  engage in  the business  of owning,  managing, leasing,  acquiring and
developing institutional quality apartment communities. The Company  wholly-owns
or  has a co-investment interest  in and operates a  portfolio of 46 multifamily
residential apartment communities,  comprised of 16,229  apartment homes, 34  of
which,  totalling 12,775  apartment homes, were  stabilized as  of September 30,
1996 and 12 of which, totalling 3,454 apartment homes, were under development or
in lease-up as of such date. The Company's communities and the communities owned
through co-investment joint  ventures are  located in  seven major  metropolitan
markets in the Southwest, Southeast and Midwest regions of the United States.
 
   
    All  of the common  shares of beneficial  interest of the  Company, $.01 par
value per share (the "Common Shares"), offered hereby (the "Offering") are being
offered by the  Company. The  Common Shares  are listed  on the  New York  Stock
Exchange  (the "NYSE") under the  symbol "AML." The last  reported sale price of
the Common Shares on the NYSE on November 20, 1996 was $22.00. See "Price  Range
of Common Shares and Distribution History."
    
 
    To ensure that the Company maintains its qualification as a REIT for federal
income   tax  purposes,  it  expects  to   continue  to  pay  regular  quarterly
distributions to its shareholders. In addition, the Declaration of Trust of  the
Company  restricts the  ownership of more  than 5%  of the Common  Shares by any
person or affiliated group, with certain exceptions.
                           --------------------------
THESE SECURITIES  HAVE  NOT  BEEN  APPROVED OR  DISAPPROVED  BY  THE  SECURITIES
 AND    EXCHANGE    COMMISSION    OR   ANY    STATE    SECURITIES   COMMISSION,
  NOR  HAS   THE   SECURITIES   AND   EXCHANGE   COMMISSION   OR   ANY   STATE
    SECURITIES  COMMISSION  PASSED UPON  THE ACCURACY  OR ADEQUACY  OF THIS
     PROSPECTUS   SUPPLEMENT   OR   THE   ACCOMPANYING   PROSPECTUS.   ANY
             REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
 
   


                                            Price to            Underwriting          Proceeds to
                                             Public             Discount(1)            Company(2)
                                                                         
Per Share...........................         $21.75                $1.14                 $20.61
Total(3)............................      $59,812,500            $3,135,000           $56,677,500

    
 
(1)  The  Company  has  agreed to  indemnify  the  Underwriters  against certain
    liabilities, including  liabilities under  the Securities  Act of  1933,  as
    amended. See "Underwriting."
 
   
(2) Before deducting expenses estimated at $299,000 payable by the Company.
    
 
   
(3)  The Company has granted to the  Underwriters a 30-day option to purchase up
    to an  aggregate  of  412,500  additional  Common  Shares  solely  to  cover
    over-allotments. If all of such Common Shares are purchased, the total Price
    to   Public,  Underwriting  Discount,  and  Proceeds  to  Company  would  be
    $68,784,375, $3,605,250 and $65,179,125, respectively. See "Underwriting."
    
                           --------------------------
 
   
    The Common Shares are offered by the several Underwriters, subject to  prior
sale,  when, as and if delivered to and accepted by them, subject to approval of
certain legal  matters  by  counsel  for  the  Underwriters  and  certain  other
conditions.  The Underwriters  reserve the right  to withdraw,  cancel or modify
such offer  and to  reject orders  in  whole or  in part.  It is  expected  that
delivery of the Common Shares offered hereby will be made in New York, New York,
on or about November 27, 1996.
    
                           --------------------------
 
LEHMAN BROTHERS
            DEAN WITTER REYNOLDS INC.
                        MERRILL LYNCH & CO.
                                                         EVEREN SECURITIES, INC.
 
   
The date of this Prospectus Supplement is November 21, 1996.
    

[The  inside front cover shows a partial map of the United States indicating the
cities  in  which  AMLI's  headquarters,  AMLI's  regional  offices  and  AMLI's
communities are located.]
 


                                      # OF APARTMENT HOMES
REGION
- ------------------------------------  --------------------
                                           
Southeast...........................      4,694         29%
Southwest...........................      7,477         46%
Midwest.............................      4,058         25%
                                      ---------        ---
Total...............................     16,229        100%

 
includes communities under development
 
[The  inside front cover shows a picture of AMLI at Pleasant Hill in Atlanta and
of AMLI at Chevy Chase in Chicago.]
 
    IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR  EFFECT
TRANSACTIONS  WHICH STABILIZE OR MAINTAIN THE  MARKET PRICE OF THE COMMON SHARES
AT A LEVEL ABOVE  THAT WHICH MIGHT  OTHERWISE PREVAIL IN  THE OPEN MARKET.  SUCH
TRANSACTIONS   MAY  BE  EFFECTED  ON  THE   NEW  YORK  STOCK  EXCHANGE,  IN  THE
OVER-THE-COUNTER MARKET OR  OTHERWISE. SUCH  STABILIZING, IF  COMMENCED, MAY  BE
DISCONTINUED AT ANY TIME.
 
                                      S-2

                         PROSPECTUS SUPPLEMENT SUMMARY
 
   
    THE  FOLLOWING SUMMARY  IS QUALIFIED  IN ITS  ENTIRETY BY  THE MORE DETAILED
INFORMATION AND  FINANCIAL STATEMENTS,  INCLUDING THE  NOTES THERETO,  APPEARING
ELSEWHERE  IN  THIS PROSPECTUS  SUPPLEMENT  AND THE  ACCOMPANYING  PROSPECTUS OR
INCORPORATED HEREIN AND  THEREIN BY REFERENCE.  UNLESS INDICATED OTHERWISE,  THE
INFORMATION  CONTAINED IN THIS PROSPECTUS SUPPLEMENT  ASSUMES NO EXERCISE OF THE
UNDERWRITERS' OVER-ALLOTMENT OPTION. UNLESS THE CONTEXT REQUIRES OTHERWISE,  ALL
REFERENCES  TO THE  "COMPANY" OR  "AMLI" IN  THIS PROSPECTUS  SUPPLEMENT AND THE
ACCOMPANYING  PROSPECTUS  SHALL   BE  DEEMED   TO  INCLUDE   THE  COMPANY,   ITS
PREDECESSORS,  AND THOSE ENTITIES IN  WHICH THE COMPANY HOLDS  A MAJORITY OF THE
ECONOMIC INTERESTS, INCLUDING AMLI RESIDENTIAL PROPERTIES, L.P. (THE  "OPERATING
PARTNERSHIP"),   AMLI  MANAGEMENT  COMPANY   (THE  "MANAGEMENT  COMPANY"),  AMLI
INSTITUTIONAL ADVISORS,  INC. ("AIA")  AND AMLI  RESIDENTIAL CONSTRUCTION,  INC.
("AMRESCON"). THE MANAGEMENT COMPANY, AIA AND AMRESCON ARE COLLECTIVELY REFERRED
TO AS THE "SERVICE COMPANIES."
    
 
                                  THE COMPANY
 
    Amli   Residential  Properties  Trust   ("AMLI"  or  the   "Company")  is  a
self-administered and  self-managed  real  estate investment  trust  (a  "REIT")
engaged in the development, acquisition and management of upscale, institutional
quality multifamily apartment communities in seven major metropolitan markets in
the  Southeast, Southwest and  Midwest regions of the  United States. Founded in
1980, AMLI became a publicly traded  company through an initial public  offering
in February, 1994.
 
    As part of its core strategy, AMLI differentiates itself through an internal
growth strategy focused on branding its product and services, an external growth
strategy   balanced  between   both  development   and  acquisition,  geographic
diversification in three regions  and seven core  cities, and accessing  capital
from   both  the  public  markets  and  from  co-investment  relationships  with
institutional partners.  Since  its initial  public  offering, the  Company  has
formed  strategic  alliances with  five institutional  investors in  13 separate
institutional joint  ventures representing  a  total anticipated  investment  of
approximately $300 million.
 
    As  of September 30, 1996,  AMLI owned or had  co-investment interests in 46
multifamily  apartment  communities  (the  "Communities")  comprised  of  16,229
apartment  homes. Thirty-four  of these communities,  totalling 12,775 apartment
homes, were stabilized as  of September 30, 1996.  An additional 12  communities
were  under development or  in lease-up as  of such date.  When completed, these
development communities  will  total 3,454  apartment  homes. In  addition,  the
Company  owns  land  for  future  development  of  four  additional  communities
totalling approximately 1,674 apartment homes.
 
                             COMPETITIVE ADVANTAGES
 
    The Company  seeks  to  increase  cash  flow  by  intensively  managing  the
Communities,   selectively  developing  and  acquiring  additional  high-quality
multifamily  communities  and  advising  and  co-investing  with   institutional
partners.  In  pursuit  of  these  strategies,  the  Company  benefits  from the
following competitive advantages:
 
    DEVELOPMENT AND ACQUISITION  EXPERTISE.   AMLI has  extensive experience  in
both  the acquisition and  development of upscale  multifamily communities. AMLI
focuses on  institutional quality  multifamily communities  having  high-quality
construction, amenities, location and market position. The Company believes that
over time these communities will realize returns exceeding national averages for
multifamily  properties  due to  higher expected  annual  growth in  cash flows,
reduced on-going maintenance costs and capital expenditures, and higher relative
levels of residual  values. The Company  develops in markets  where the  Company
believes  there is an imbalance between the demand for and the supply of quality
rental housing. The  Company applies  a long-term ownership  perspective to  the
development  process  utilizing  high-quality  building  materials  and  designs
communities which satisfy the  current needs of  residents and anticipate  their
future  needs.  AMLI  acquires assets  at  times when  capitalization  rates are
attractive and  enhanced performance  from the  target communities  is  possible
through application of the Company's management expertise.
 
    INSTITUTIONAL   CO-INVESTMENTS.     AMLI  actively   acquires  and  develops
multifamily communities  in  co-investment  joint  ventures  with  institutional
investment partners such as insurance companies, endowments,
 
                                      S-3

foundations,  and public  and private pension  funds. The  Company believes that
co-investment partnerships  create  an  opportunity to  leverage  the  Company's
acquisition, development and management expertise and generate higher returns on
its  invested equity capital. Since its initial public offering, AMLI has formed
13 such co-investment joint ventures, several of which involve new  development,
representing a total anticipated project cost of approximately $300 million. The
Company's  invested  capital in  these 13  joint ventures  is expected  to total
approximately $40.6 million. In connection with its co-investment business,  the
Company  has established  strategic alliances  with Allstate  Insurance Company,
Erie Insurance Group, The New  York Common Retirement Fund, Northwestern  Mutual
Life Insurance Company and The Rockefeller Foundation.
 
    AMLI-REGISTERED  TRADEMARK- BRAND.   All of the  Communities are operated by
the Company  under  the AMLI-Registered  Trademark-  brand name.  AMLI  believes
promoting  its brand  name creates  an awareness  in the  marketplace of quality
rental  living  and  extraordinary  customer   service  for  both  current   and
prospective residents. To maximize the effectiveness of the
AMLI-Registered  Trademark- brand name, the Company has a wide range of programs
and  practices  to  maintain  uniformly  high  quality  service  and  consistent
apartment quality at all of the Communities.
 
                              RECENT DEVELOPMENTS
 
DEVELOPMENT ACTIVITIES
 
    The  Company  is  currently  in  the  process  of  developing  12  apartment
communities, containing  a  total of  3,454  apartment homes  (the  "Development
Communities"). Seven of the Development Communities, containing a total of 1,628
apartment  homes,  are being  developed on  a  wholly-owned basis  (the "Company
Development Communities")  and five  communities, containing  a total  of  1,826
apartment  homes, are  being developed on  behalf of joint  ventures between the
Company   and   institutional    partners   (the   "Co-Investment    Development
Communities").  The aggregate construction cost  for the Development Communities
is anticipated to be approximately $217.1 million, $99.1 million for the Company
Development Communities  and $118.0  million for  the Co-Investment  Development
Communities.  Additionally, the  Company has acquired  four parcels  of land for
future  development  encompassing  an  aggregate  of  106  acres.  The   Company
anticipates  developing  approximately 1,674  apartment  homes on  these parcels
either for its  own account  or on  behalf of  one or  more co-investment  joint
ventures.
 
ACQUISITION ACTIVITIES
 
    In  1996,  the  Company  acquired two  Communities  located  in metropolitan
Chicago containing a total  of 1,080 apartment homes  for an aggregate  purchase
price   of  approximately  $81.6  million.  One  Community  was  acquired  in  a
co-investment joint  venture with  Allstate Insurance  Company, the  other in  a
co-investment  joint  venture  with  Erie  Insurance  Group.  These acquisitions
significantly expanded the Company's market presence in the Chicago metropolitan
area.
 
CO-INVESTMENT ACTIVITIES
 
    In September 1996, the Company announced that it had entered into two  joint
ventures  with a new institutional partner, The New York Common Retirement Fund,
for the development of a multifamily  community in each of metropolitan  Chicago
and  Ft. Worth.  The aggregate development  budget for these  two communities is
approximately $48.2  million.  The New  York  Common Retirement  Fund  is  being
advised  in these joint ventures by  Heitman Capital Management Corporation. The
Company anticipates entering  into one  or more additional  joint ventures  with
this institutional investor.
 
FINANCING ACTIVITIES
 
    During  1996, the Company completed  two significant transactions which have
improved the Company's capital structure:
 
    - The Company directly  issued 1.2 million  shares of convertible  preferred
      shares  of beneficial interest during the  first quarter of 1996. Proceeds
      to the Company from this offering were approximately $24 million and  were
      applied  to pay down variable rate  borrowings under the Company's primary
      lines of credit.
 
                                      S-4

    - During the second quarter  of 1996, the  Company secured three  long-term,
      fixed  rate loans totalling approximately $86  million. These loans have a
      weighted average maturity of  nine years and  a weighted average  interest
      rate  of 7.56%. This financing was used  in part to repay two shorter term
      mortgage loans.  As  a  result  of the  repayment  of  these  loans,  four
      previously mortgaged Communities became unencumbered.
 
UICI INVESTMENT IN THE COMPANY
 
   
    On  November 6, 1996, UICI, a  NASDAQ National Market traded holding company
with interests in insurance, financial services and technology and total  assets
of approximately $1.2 billion, acquired, through a stock for stock exchange, all
of  the outstanding capital stock  of Amli Realty Co.  ("ARC"), a predecessor of
the Company and the  Company's largest shareholder.  Separately, on November  4,
1996,  UICI, through one of its  affiliates, acquired 500,000 Common Shares from
an existing shareholder of the Company. As a result of these transactions, UICI,
after completion of the Offering,  will beneficially own approximately 14.3%  of
the Company. The Chairman of UICI and its largest shareholder, Ronald L. Jensen,
has  had an  association with  members of AMLI's  senior management  for over 20
years, was one of ARC's original founders, and served on its Board of  Directors
from 1980 through 1982.
    
 
                                THE COMMUNITIES
 
STABILIZED COMMUNITIES
 
    The  Communities  include  34 stabilized  multifamily  apartment communities
containing 12,775 apartment homes operated under the AMLI-Registered  Trademark-
brand  name. Twenty-four of the  stabilized Communities, containing an aggregate
of 9,600 apartment homes, are directly  owned by the Company (the  "Wholly-Owned
Communities")  and ten Communities,  containing an aggregate  of 3,175 apartment
homes, are  owned  through  co-investment  joint  ventures  (the  "Co-Investment
Communities").  The stabilized Communities are  located in the markets described
in the table below:
 
                             STABILIZED COMMUNITIES


                                                                                                WHOLLY-OWNED       CO-INVESTMENT
                                                                           TOTAL                COMMUNITIES        COMMUNITIES
                                                                   ----------------------  ----------------------  -----------
                                                                       NO.                     NO.                     NO.
LOCATION                                                               --         UNITS        --         UNITS        --
- -----------------------------------------------------------------               ---------               ---------
                                                                                                    
Dallas/Ft. Worth, Texas..........................................          11       4,088          11       4,088          --
Atlanta, Georgia.................................................           6       2,812           4       2,420           2
Chicago, Illinois................................................           5       1,694           1         253           4
Austin, Texas....................................................           4       1,523           3         935           1
Indianapolis, Indiana............................................           1         996           1         996          --
Eastern Kansas...................................................           4         908           4         908          --
Houston, Texas...................................................           3         754          --          --           3
                                                                           --                      --                      --
                                                                                ---------               ---------
    Total........................................................          34      12,775          24       9,600          10
                                                                           --                      --                      --
                                                                           --                      --                      --
                                                                                ---------               ---------
                                                                                ---------               ---------
 

 
LOCATION                                                             UNITS
- -----------------------------------------------------------------  ---------
                                                                
Dallas/Ft. Worth, Texas..........................................         --
Atlanta, Georgia.................................................        392
Chicago, Illinois................................................      1,441
Austin, Texas....................................................        588
Indianapolis, Indiana............................................         --
Eastern Kansas...................................................         --
Houston, Texas...................................................        754
 
                                                                   ---------
    Total........................................................      3,175
 
                                                                   ---------
                                                                   ---------

 
    As of September 30, 1996, the average age of the stabilized Communities  was
approximately   7.9  years,  the  average   occupancy  rate  of  the  stabilized
Communities was 94.1%, and  the average monthly rental  rate per apartment  home
was $679.
 
                                      S-5

DEVELOPMENT COMMUNITIES
 
    The  Development Communities consist of 12 multifamily apartment communities
or new phases of existing Communities  which upon completion will contain  3,454
apartment  homes. See "Growth Strategies-Development  Strategy" for a discussion
of the Company's development activities.  The Development Communities are  under
development in the markets described in the table below:
 
                            DEVELOPMENT COMMUNITIES


                                                                                                                           CO-
                                                                                                      COMPANY          INVESTMENT
                                                                                                    DEVELOPMENT        DEVELOPMENT
                                                                               TOTAL                COMMUNITIES        COMMUNITIES
                                                                       ----------------------  ----------------------  -----------
                                                                           NO.                     NO.                     NO.
LOCATION                                                                   --         UNITS        --         UNITS        --
- ---------------------------------------------------------------------               ---------               ---------
                                                                                                        
Atlanta, Georgia.....................................................           5       1,882           2         712           3
Dallas/Ft. Worth, Texas..............................................           4       1,112           3         728           1
Chicago, Illinois....................................................           1         272          --          --           1
Eastern Kansas.......................................................           2         188           2         188          --
                                                                               --                      --                      --
                                                                                    ---------               ---------
    Total............................................................          12       3,454           7       1,628           5
                                                                               --                      --                      --
                                                                               --                      --                      --
                                                                                    ---------               ---------
                                                                                    ---------               ---------
 

 
LOCATION                                                                 UNITS
- ---------------------------------------------------------------------  ---------
                                                                    
Atlanta, Georgia.....................................................      1,170
Dallas/Ft. Worth, Texas..............................................        384
Chicago, Illinois....................................................        272
Eastern Kansas.......................................................         --
 
                                                                       ---------
    Total............................................................      1,826
 
                                                                       ---------
                                                                       ---------

 
                                  THE OFFERING
 
   

                                 
Common Shares Offered(1)..........  2,750,000
Common Shares Outstanding After
  the Offering(2)(3)..............  18,548,892
Use of Proceeds...................  The  proceeds  of the  Offering  will be  used  to repay
                                    indebtedness and to provide funds for future development
                                    and acquisition activities.
New York Stock Exchange Symbol....  AML

    
 
- ---------
   
(1) Assumes  the  Underwriters' (as  defined  herein) over-allotment  option  to
    purchase up to 412,500 Common Shares is not exercised. See "Underwriting."
    
 
(2)  Includes 2,901,154 Common Shares reserved for issuance, as of September 30,
    1996, upon  the exchange  of outstanding  ownership units  in the  Operating
    Partnership   and  1,100,000   Common  Shares  issuable   upon  exchange  of
    outstanding preferred shares of beneficial interest of the Company. See "The
    Company."  Pursuant   to  the   partnership  agreement   of  the   Operating
    Partnership,  each ownership unit in the Operating Partnership (each, an "OP
    Unit") is exchangeable for one Common Share.
 
   
(3) Excludes 159,190 Common  Shares issuable upon the  exercise of employee  and
    Trustee  options ("Options")  granted by  the Company  pursuant to  the Amli
    Residential  Properties  Option   Plan,  15,190  of   which  are   currently
    exercisable  and  144,000 of  which  become exercisable  in  February, 1997.
    Excludes 53,140 OP Units issued  by the Operating Partnership subsequent  to
    September  30, 1996  and 33,200  Common Shares  issued by  the Company after
    September 30, 1996 under the Company's Executive Share Purchase Plan.
    
 
                                      S-6

                                  THE COMPANY
 
    AMLI  is a self-administered  and self-managed real  estate investment trust
engaged in the development, acquisition and management of upscale, institutional
quality multifamily apartment communities in seven major metropolitan markets in
the Southeast, Southwest and  Midwest regions of the  United States. Founded  in
1980,  AMLI became a publicly traded  company through an initial public offering
in February, 1994.
 
    As part of its core strategy, AMLI differentiates itself through an internal
growth strategy focused on branding its product and services, an external growth
strategy  balanced  between   both  development   and  acquisition,   geographic
diversification  in three regions  and seven core  cities, and accessing capital
from  both  the  public  markets  and  from  co-investment  relationships   with
institutional  partners.  Since its  initial  public offering,  the  Company has
formed strategic  alliances with  five institutional  investors in  13  separate
institutional  joint  ventures representing  a  total anticipated  investment of
approximately $300 million.
 
    As of September 30,  1996, AMLI owned or  had co-investment interests in  46
multifamily   apartment  communities   comprised  of   16,229  apartment  homes.
Thirty-four  of  these  Communities,  totalling  12,775  apartment  homes,  were
stabilized  as of  September 30, 1996.  An additional 12  Communities were under
development or in lease-up  as of such date.  When completed, these  Development
Communities will total 3,454 apartment homes. In addition, the Company owns land
for  future development  of four additional  communities totalling approximately
1,674 apartment homes.
 
    AMLI is the sole general partner of, and controls a majority of the  limited
partnership  interests in, Amli Residential Properties, L.P., a Delaware limited
partnership (the "Operating Partnership") through which it owns its interests in
the Communities.  As of  September 30,  1996,  the Company  owned 81.6%  of  the
outstanding  partnership interests ("OP Units") in the Operating Partnership. OP
Units are convertible  into Common Shares  on a one-for-one  basis. The  Company
conducts all its business through the Operating Partnership and its subsidiaries
and affiliates.
 
    The Company's headquarters offices are located at 125 S. Wacker Drive, Suite
3100,  Chicago, Illinois 60606,  and its telephone number  is (312) 443-1477. In
addition, AMLI has regional offices in both Dallas and Atlanta.
 
                               GROWTH STRATEGIES
 
    The Company  seeks  to  increase  cash  flow  by  intensively  managing  the
Communities,   selectively  developing  and  acquiring  additional  high-quality
multifamily  communities,  and  advising  and  co-investing  with  institutional
partners.  The  Company  believes that,  over  time, a  portfolio  consisting of
high-quality properties, which the Company believes is typical of its portfolio,
will realize returns exceeding national averages for multifamily properties  due
to  expected higher  annual growth in  cash flows,  reduced on-going maintenance
costs and capital expenditures,  and higher relative  levels of residual  market
values.
 
GROWTH FROM PROPERTY OPERATIONS
 
    The  Company seeks  to increase  cash flow  at the  Communities through rent
increases while maintaining  high occupancy rates  and aggressive management  of
its operating expenses. As of September 30, 1996, the weighted average occupancy
rate  of the  stabilized Communities was  94.1%, and the  average monthly rental
rate per apartment home  was $679, or  $0.80 per square  foot. The Company  owns
multifamily  communities  with service,  lifestyle  and physical  amenities that
residents value and that support higher rental rates. Typical services that  are
provided at the Communities, which are customary for similar upscale multifamily
properties,  include pet care or plant watering for out-of-town tenants; on-site
overnight delivery  drop-off boxes;  on-site pick-up  of dry  cleaning or  other
items;  occasional social  events for residents  designed to provide  a sense of
community; frequent maintenance programs; and a policy of guaranteeing attention
to any maintenance or repair request from a tenant within 48 hours.
 
    AMLI believes that a key element of its continued success is its ability  to
create brand loyalty in the mind of the resident customer. All communities owned
and  operated by  the Company use  the AMLI-Registered Trademark-  brand name as
part of the strategy to promote brand identity for quality living, as well as to
create franchise value.
 
                                      S-7

The Company believes that the  AMLI-Registered Trademark- brand name creates  an
awareness  in  the marketplace  such that  customers of  the Company  equate the
AMLI-Registered  Trademark-  brand  with  quality  multifamily  communities  and
exceptional customer service.
 
    The  Company believes the expertise and  experience of its on-site personnel
are essential to the success of its brand strategy and cash flow growth from the
Communities. A wide range of programs and practices are in place to ensure  that
the  Company's on-site  personnel provide uniformly  high-quality service. These
programs and practices include  the following: (i) incentive-based  compensation
that  rewards employees  who achieve  superior results;  (ii) extensive training
programs focusing on marketing, selling skills and negotiating techniques; (iii)
requiring leasing  agents to  have a  strong knowledge  of the  Communities  and
competing  properties; (iv)  periodic unit  inspections designed  to ensure that
vacant apartments are rent-ready and attractive  to show; (v) a newsletter  that
creates  a sense of a  team and gives special  recognition to employees who have
made outstanding contributions  or who have  experienced a significant  personal
event;  (vi)  manager training  programs that  focus  on the  financial analysis
applicable  to  apartment  communities;  (vii)  development  training  for   all
maintenance  staff to further skills and  knowledge of industry practices (viii)
annual incentive group  trips for  managers, leasing  personnel and  maintenance
employees;  and (ix) written manuals  describing various policies and procedures
that are to  be observed  by employees. In  addition, the  Company has  training
facilities  in  Dallas  and Atlanta  that  are  used for  training  programs and
seminars for management, leasing and maintenance employees.
 
    By establishing critical mass in each of its markets, the Company expects to
achieve economies of scale in its operations, resulting in reduced operating and
administrative  expenses  without  reductions  in  service.  In  addition,   the
relatively  low average age of the  Communities contributes to reduced operating
and maintenance  expenses.  At  September  30, 1996,  the  average  age  of  the
stabilized  Communities was 7.9 years. The  Company also believes that attention
to landscaping and physical appearance contributes to reducing resident turnover
and enhances the rental rates and occupancy levels of the Communities.
 
   
    Additionally, AMLI has a dedicated team whose function is to evaluate new or
enhanced products, features or services that might be incorporated in either the
apartment homes or the Communities to produce complementary income from property
operations and maximize customer/resident  satisfaction within the  Communities.
Some  of  the  products, features  and  services  either in  existence  or being
considered include the construction of  carports and garages, private phone  and
cable  systems,  custom rental  insurance,  energy efficient  lighting programs,
water submetering, bulk purchases of utilities and card key systems for  laundry
facilities.
    
 
DEVELOPMENT STRATEGY
 
    The  Company actively pursues the development of new properties. The Company
seeks to develop multifamily properties  that meet an identified market  demand,
are  well-located in markets the  Company believes will experience above-average
growth rates and produce  first-year stabilized cash on  cash returns of 125  to
200  basis points higher than capitalization  rates available on acquisitions in
these markets.  The  Company's  management has  significant  experience  in  the
development  of  multifamily properties  and believes  that this  expertise will
permit it to successfully capitalize on new development opportunities.
 
    The Company has identified certain  sub-markets within its seven  identified
cities  where  strong  multifamily  property demand  exceeds  the  level  of new
construction. The  Company  currently  has development  under  way  in  Chicago,
Atlanta,  Dallas and Kansas City. In addition, the Company owns a land parcel in
each of  Chicago,  Atlanta,  Austin  and Dallas,  which  in  the  aggregate  are
comprised  of  106 acres,  on which  it expects  to develop  approximately 1,674
apartment homes.
 
                                      S-8

    The following table summarizes the Company's development activities for  the
period  from the  date of  its initial  public offering  in February,  1994 (the
"Initial Offering") through September 30, 1996:
 
                          AMLI DEVELOPMENT ACTIVITIES
 


                                                     NO. OF COMMUNITIES
                                                        DEVELOPED OR           NO. OF APARTMENT         ESTIMATED
YEAR                                                UNDER DEVELOPMENT(1)             HOMES        DEVELOPMENT BUDGET(2)
- ----------------------------------------------  -----------------------------  -----------------  ----------------------
                                                                                         
1994..........................................                    2                      734         $     37,600,000
1995..........................................                    5                    1,280               75,900,000
1996..........................................                    6                    1,672              114,600,000
                                                                 --
                                                                                       -----      ----------------------
    Total.....................................                   13                    3,686         $    228,100,000
                                                                 --
                                                                 --
                                                                                       -----      ----------------------
                                                                                       -----      ----------------------

 
- ---------
(1) Represents the  number of  Communities for which  development was  commenced
    during  the applicable  year. Of  the Communities  developed by  the Company
    since the Initial Offering, eight Communities were developed by the  Company
    for its own account and five for co-investment joint ventures. The Company's
    ownership  interest in these co-investment joint ventures ranges from 25% to
    40%.
 
(2) The Company's share of the total estimated development budget is expected to
    be $148.7 million.
 
    AMLI's development philosophy is to  design communities and apartment  homes
that  meet  the needs  of both  current and  prospective residents.  The Company
builds to hold and manage for  long-term investment and, as such, utilizes  high
quality,  long-lasting building products for exterior and interior construction.
The Communities are extensively landscaped to enhance curb appeal and to  create
an  attractive living  environment for  the residents.  The apartment  homes are
designed and appointed with features in select units such as more closet  space,
larger kitchens with mirrored backsplashes and upgraded appliance packages, nine
foot  ceilings,  crown  molding,  built-in  work  spaces,  additional  wiring to
accommodate private  phone  and  cable systems,  garden-style  tubs  and  double
vanities.
 
ACQUISITION STRATEGY
 
    The  Company actively pursues the acquisition of new properties. The Company
seeks to acquire,  directly or through  co-investments, multifamily  communities
that are available at attractive prices, capable of enhanced performance through
application  of the Company's management expertise and that are in the Company's
target markets. The Company follows a strategy of acquiring (directly or through
co-investments) institutional  quality  apartment communities,  which  typically
have high-quality construction, amenities, location and market position, and are
therefore  attractive investments for institutional investors, such as insurance
companies, endowments, foundations and pension funds.
 
    The following table summarizes the Company's acquisition activities for  the
period from the date of the Initial Offering through September 30, 1996:
 
                          AMLI ACQUISITION ACTIVITIES
 


                                                          NO. OF COMMUNITIES     NO. OF APARTMENT    TOTAL ACQUISITION
YEAR                                                          ACQUIRED(1)              HOMES             COSTS(2)
- ------------------------------------------------------  -----------------------  -----------------  -------------------
                                                                                           
1994..................................................                 8                 2,184        $    99,428,000
1995..................................................                 3                   794        $    51,763,000
1996..................................................                 2                 1,080        $    82,152,000
                                                                      --
                                                                                         -----      -------------------
    Total.............................................                13                 4,058        $   233,343,000
                                                                      --
                                                                      --
                                                                                         -----      -------------------
                                                                                         -----      -------------------

 
- ---------
(1)  Of  these  acquisitions,  five Communities  were  acquired  by  the Company
    directly and  eight  through  co-investment joint  ventures.  The  Company's
    ownership  interest in these co-investment joint ventures ranges from 15% to
    40%.
 
(2) The Company's share of the total acquisition costs was $104.5 million.
 
                                      S-9

    The Company currently focuses on acquiring properties in selected markets in
the Southwest, Southeast and Midwest regions of the United States. The Company's
acquisition  teams  consist  of  experienced  finance,  development  and   asset
management  professionals working  together to  identify opportunities, evaluate
property information, negotiate and successfully execute favorable  transactions
for  the Company. The Company's acquisition process is driven by thorough market
research. Successful  acquisitions  are  based  upon  a  knowledge  and  careful
analysis of employment, population and income trends, quality of infrastructure,
retail  and commercial services, transportation and utility systems, schools and
property tax  policies.  The  Company's acquisition  teams  review  and  monitor
economic  data and economic  development information and  maintain close contact
with real  estate owners,  developers,  brokers, lenders,  insurance  companies,
government  agencies and other institutions to identify potential properties for
acquisition by the Company.
 
INSTITUTIONAL CO-INVESTMENTS
 
    AMLI actively acquires and develops multifamily communities in co-investment
joint  ventures  with  institutional  investment  partners  such  as   insurance
companies,  endowments, foundations, and  public and private  pension funds. The
Company believes that these co-investment partnerships create an opportunity  to
leverage  the Company's  acquisition, development and  management experience and
generate higher returns on its invested capital.
 
    AMLI  differentiates  itself  from  other  multifamily  REITs  through   its
co-investment  business  and  its  established relationships  with  a  number of
institutional partners. By  co-investing, AMLI  is able to  (i) generate  higher
returns  on  its equity  investment  (as compared  to  wholly-owned communities)
through the receipt of  supplemental acquisition, development, construction  and
other  fee income; (ii) build market share and thereby benefit from economies of
scale; (iii)  expand the  AMLI-Registered Trademark-  brand identity;  and  (iv)
diversify its sources of capital for its acquisition and development activities.
In  addition to the incremental fee income,  AMLI receives its pro rata share of
the real estate  income generated by  the on-going operation  of each  community
owned   through  a  co-investment  joint   venture.  All  of  the  Co-Investment
Communities   are   managed   by   the   Company   and   operated   under    the
AMLI-Registered Trademark- brand name.
 
    While  each co-investment is  structured individually, in  a typical venture
the Company (i) acts as the general  partner or managing member of the  venture;
(ii)  handles the  administration of the  venture; (iii)  manages the day-to-day
operations of the community held by the  venture; (iv) in the case of a  venture
with  a property under  development, oversees construction  and development; and
(v)  recommends  the  sale  or  refinancing  of  the  property.  All  of  AMLI's
co-investments  are made on  a pari passu basis  with its co-investment partners
and any  disputes over  sale  or refinancing  decisions are  generally  resolved
through  the exercise  of a  buy-sell provision. As  of September  30, 1996, the
Company had  established  co-investment relationships  with  Allstate  Insurance
Company, Erie Insurance Group, The New York Common Retirement Fund, Northwestern
Mutual Life Insurance Company and The Rockefeller Foundation.
 
    Since  the Initial Offering,  the Company has  entered into 13 co-investment
relationships for  the  acquisition  or  development  of  multifamily  apartment
communities.  The  table below  summarizes the  co-investment activities  of the
Company since the Initial Offering:
 
                         AMLI CO-INVESTMENT ACTIVITIES


                                    NO. OF               NO. OF               NO. OF               NO. OF
                                  COMMUNITIES        APARTMENT HOMES        COMMUNITIES        APARTMENT HOMES
YEAR                               ACQUIRED             ACQUIRED           DEVELOPED(1)         DEVELOPED(2)
- ----------------------------  -------------------  -------------------  -------------------  -------------------
                                                                                 
1994........................               3                1,026                    1                  502
1995........................               3                  794                    1                  446
1996........................               2                1,080                    3                  878
                                           -                                         -
                                                            -----                                     -----
    Total...................               8                2,900                    5                1,826
                                           -                                         -
                                           -                                         -
                                                            -----                                     -----
                                                            -----                                     -----
 

                                     TOTAL
                                    NO. OF
YEAR                            APARTMENT HOMES
- ----------------------------  -------------------
                           
1994........................           1,528
1995........................           1,240
1996........................           1,958
 
                                       -----
    Total...................           4,726
 
                                       -----
                                       -----

 
- ---------
(1) Represents the  number of  Communities for which  development was  commenced
    during the applicable year.
 
                                      S-10

(2) Represents the number of apartment homes planned for the Community for which
    development was commenced in the applicable year.
 
    The  table below sets forth the total expected capital outlays for all 13 of
these development and acquisition ventures, the Company's expected share of such
capital requirements and the one-time and  recurring annual fee income that  the
Company  and the  Service Companies  have received  from these  13 joint venture
relationships through September 30, 1996:
 
              CO-INVESTMENT ACTIVITIES SINCE THE INITIAL OFFERING
 


                                                             1994           1995            1996         TOTAL (4)
                                                         -------------  -------------  --------------  --------------
                                                                                           
Total Expected Project Cost(1).........................  $  71,191,204  $  79,681,765  $  147,818,975  $  298,691,944
AMLI Expected Equity Investment........................  $   7,640,881  $   7,548,315  $   25,415,391  $   40,604,587
Actual Fee Income to AMLI and the Service Companies
  Initial or One-Time Fees(2)..........................  $     286,654  $     607,211  $    1,139,587  $    2,033,452
  Annual Fee Income(3).................................  $     221,250  $     769,204  $      989,203  $    1,979,657

 
- ---------
(1) Includes  $157.9 million  which has  been or  will be  debt financed.  Total
    expected  costs  are included  in the  year in  which a  development project
    begins or an acquisition closes.
 
(2) The one-time  fee income is  shown net of  intercompany eliminations to  the
    extent  of  the Company's  percentage  interest in  its  co-investment joint
    ventures. One time  fees include  general contractor  fees, development  and
    redevelopment   fees  and  property  acquisition  fees.  The  amounts  shown
    represent the portion of the fees earned in the applicable year. The initial
    and one-time fee income  for 1996 represents amounts  earned by the  Company
    for  the period from January 1,  1996 through September 30, 1996. Subsequent
    to September 30, 1996, additional one time fees of approximately  $2,774,543
    are  anticipated to be  earned by the  Company and the  Service Companies in
    connection with  the completion  of four  Communities under  development  on
    behalf of existing co-investment joint ventures.
 
(3)  Annual fee income includes property  management fees, asset management fees
    and partnership administration fees. The amounts shown represent the portion
    of the fees earned in  the applicable year. The  annual fee income for  1996
    represents amounts earned by the Company for the period from January 1, 1996
    through  September 30, 1996.  Annual fee income  will increase as additional
    co-investment communities under development are completed.
 
    The Company  has received  indications  of interest  and is  pursuing  other
commitments  for  the  acquisition or  development  of  additional co-investment
communities. In addition, the Company is continually working to expand the  base
of its institutional joint venture partners.
 
                              RECENT DEVELOPMENTS
 
    Since  the  Initial  Offering, the  Company  has expanded  its  portfolio of
Communities through the acquisition, development and selective expansion of  its
apartment communities.
 
DEVELOPMENT
 
    At  the time of the  Initial Offering, the Company  and its predecessors had
not begun the development of a  new multifamily community for five years.  Since
that time, the development pipeline has grown extensively. Approximately, 50% of
the  3,686 apartment  homes developed or  under development by  the Company have
been built with a co-investment partner and the other 50% have been developed or
are under development solely for the Company.
 
    The tables set forth  below summarize the  following information related  to
the   Company   Development  Communities   and  the   Co-Investment  Development
Communities: (i) the  name and  location of the  community; (ii)  the number  of
apartment  homes  to  be  constructed at  each  community;  (iii)  the projected
completion date of each community and the percentage completion of the community
as of September 30, 1996;
 
                                      S-11

(iv) the anticipated development cost of  each community and the amount  thereof
expended  as of September 30,  1996; and (v) with  respect to each Co-Investment
Community, the Company's percentage ownership  interest therein and the name  of
the  joint  venture  partner  with  respect  to  each  Co-Investment Development
Community. The  Company  Development  Communities exclude  AMLI  at  Sope  Creek
Crossing Phase IV, a 232 apartment home community, which is now completed.
 
                        COMPANY DEVELOPMENT COMMUNITIES
 


                                                                                                                  AMOUNT
COMPANY                                                                             PROJECTED   ANTICIPATED      EXPENDED
DEVELOPMENT                                             NO. OF       COMPLETION    COMPLETION   DEVELOPMENT      THROUGH
COMMUNITY                             LOCATION           UNITS       PERCENTAGE       DATE          COST         9/30/96
- ------------------------------  --------------------  -----------  --------------  -----------  ------------  --------------
                                                                                            
AMLI at Gleneagles
  Phase II....................  Dallas, Texas                264           86%      Dec. 1996    $13,800,000   $ 11,932,000
AMLI at Regents Center          Overland Park,
  Phase III...................  Kansas                       124           70%      Dec. 1996     7,700,000       5,419,000
AMLI at Crown Colony
  Phase II....................  Topeka, Kansas                64           30%      Feb. 1997     3,600,000       1,094,000
AMLI at Autumn Chase
  Phase III...................  Carrollton, Texas            240           13%      Nov. 1997    14,100,000       1,787,000
AMLI at Northwinds
  Phase I.....................  Atlanta, Georgia             400           17%      Feb. 1998    26,800,000       4,423,000
AMLI at Peachtree City........  Atlanta, Georgia             312           20%      Nov. 1997    21,900,000       4,379,000
AMLI at Autumn Chase                                                               Completed;
  Phase II....................  Carrollton, Texas            224          100%     In Lease-up   11,200,000      11,200,000
                                                           -----                                ------------  --------------
 
    TOTAL.....................                             1,628                                 $99,100,000   $ 40,234,000
                                                           -----                                ------------  --------------
                                                           -----                                ------------  --------------

 
                     CO-INVESTMENT DEVELOPMENT COMMUNITIES


                                                                                                                       AMOUNT
CO-INVESTMENT             COMPANY                            NO.                         PROJECTED   ANTICIPATED      EXPENDED
DEVELOPMENT             PERCENTAGE                           OF          COMPLETION     COMPLETION   DEVELOPMENT      THROUGH
COMMUNITY                OWNERSHIP         LOCATION         UNITS        PERCENTAGE        DATE          COST         9/30/96
- --------------------  ---------------  ----------------     -----     ----------------  -----------  ------------  --------------
                                                                                              
AMLI at Pleasant                                                                        Completed;
  Hill..............           40%     Atlanta, Georgia         502             97%     In Lease-up  $26,600,000    $ 25,676,000
AMLI at Barrett
  Lakes.............           35%     Atlanta, Georgia         446             39%      Nov. 1997    27,800,000      10,848,000
AMLI at River Park..           40%     Atlanta, Georgia         222             49%      June 1997    15,400,000       7,497,000
AMLI at Aurora
  Crossing..........           25%     Aurora, Illinois         272             32%      July 1997    24,500,000       7,885,000
AMLI at Fossil
  Creek.............           25%     Ft. Worth, Texas         384             11%      Feb. 1998    23,700,000       2,654,000
                                                              -----                                  ------------  --------------
 
    TOTAL...........                                          1,826                                  1$18,000,000   $ 54,560,000
                                                              -----                                  ------------  --------------
                                                              -----                                  ------------  --------------
 

CO-INVESTMENT
DEVELOPMENT           CO-INVESTMENT
COMMUNITY                PARTNER
- --------------------  -------------
                   
AMLI at Pleasant
  Hill..............       NML
AMLI at Barrett
  Lakes.............       NML
AMLI at River Park..      Erie
AMLI at Aurora
  Crossing..........      NYCRF
AMLI at Fossil
  Creek.............      NYCRF
    TOTAL...........

 
    The  Company believes that the operating prospects for the Communities under
development remain  favorable based  on current  economic and  other  conditions
existing in the areas in which the Company's development activities are focused.
As  with any development  project, there are  uncertainties and risks associated
with development. While  the Company  has prepared development  budgets and  has
estimated  completion and stabilization target dates for each of the Development
Communities based on what it believes  are reasonable assumptions, there can  be
no  assurance that  actual costs  will not  exceed current  budgets or  that the
Company will not  experience construction  delays due to  the unavailability  of
building  materials,  weather conditions  or other  events beyond  the Company's
control. Similarly, adverse market conditions  at the time that the  Development
Communities become available for leasing could affect the
 
                                      S-12

rental   rates  that  may  be  charged  and  the  period  necessary  to  achieve
stabilization at  the  Development  Communities, which  could  have  a  material
adverse   effect  on  the  financial   condition  of  the  affected  Development
Communities.
 
CO-INVESTMENT VENTURES
 
    In September 1996, AMLI closed on  two separate joint ventures with The  New
York  Common Retirement Fund  ("NYCRF") for the  development of two multi-family
residential communities. Through these ventures, the Company will develop a  272
apartment  home community in metropolitan Chicago,  Illinois and a 384 apartment
home community in Ft.  Worth, Texas. Construction of  each of these  Development
Communities had been commenced earlier in the year by AMLI. Construction of AMLI
at  Aurora Crossing, the Development  Community located in metropolitan Chicago,
is projected to be completed in July of 1997, with stabilization expected in the
fourth quarter of 1997. The development budget for this Development Community is
approximately  $24.5  million.  Construction  of  AMLI  at  Fossil  Creek,   the
Development  Community located in Ft. Worth,  is expected to be completed during
the first  quarter of  1998,  with stabilization  expected  in early  1999.  The
development  budget  for  this  Development  Community  is  approximately  $23.7
million. The Company owns a  25% interest in the  joint ventures that own  these
Development  Communities  and The  New York  Common Retirement  Fund owns  a 75%
interest.
 
ACQUISITIONS
 
    In March 1996, the Company, through a co-investment joint venture with  Erie
Insurance  Group, acquired  AMLI at Chevy  Chase (formerly known  as The Lincoln
Club Apartments),  a 592  unit  luxury apartment  community located  in  Buffalo
Grove,   Illinois,  for   a  purchase   price  of   approximately  $45  million.
Approximately $30 million of the purchase  price was financed through 6.67%  per
annum,  seven  year  mortgage  debt.  The  AMLI  at  Chevy  Chase  Community was
constructed in 1988  and contains  480,688 square feet  in 19  two-story and  17
three-story  buildings. This Community  is set on  43.2 acres of  land and has a
clubhouse, two heated swimming pools, four tennis courts and a  state-of-the-art
fitness  center. The Company owns a 33% interest and Erie Insurance Group owns a
67% interest in the joint venture that owns this Community.
 
    In April 1996, AMLI  further expanded its  presence in metropolitan  Chicago
through  the  acquisition  of  AMLI  at  Willowbrook  (formerly  Stewart's  Glen
Apartments)  through  a  joint  venture  with  Allstate  Insurance  Company  for
approximately $36 million. Approximately $24.5 million of the purchase price was
financed  through 7.79% per annum, seven year mortgage debt. AMLI at Willowbrook
is a  488  unit  luxury  garden  apartment  community  located  in  Willowbrook,
Illinois.  This Community was  constructed in three phases,  with Phase I having
been completed  in 1985  and Phases  II and  III in  1987. AMLI  at  Willowbrook
contains 418,384 square feet in 59 two-story buildings. This Community is set on
36.5 acres of land and has two clubhouses, two state-of-the-art fitness centers,
an  aerobics room, two  swimming pools, a  tennis court, a  volleyball court and
laundry facilities in  each building.  The Company owns  a 40%  interest in  the
joint  venture which owns  this Community and Allstate  Insurance Company owns a
60% interest.
 
FINANCING ACTIVITIES
 
    During 1996, the  Company continued  to improve its  balance sheet,  capital
structure  and  financing  flexibility.  Beginning in  the  first  quarter, AMLI
directly issued  to four  institutions  and ARC  1,200,000 Series  A  Cumulative
Convertible  Preferred Shares  of Beneficial Interest  for $20 per  share or $24
million. The proceeds of the offering,  less $82,500 of transaction costs,  were
used  to reduce the Company's  debt and to fund  development and working capital
requirements. The preferred shares are entitled to a preference upon liquidation
of the Company and cumulative quarterly dividends equal to the greater of  $0.43
per share or the current quarterly per share dividend on Common Shares. In March
of  1996, ARC converted the  100,000 preferred shares acquired  by it for Common
Shares.
 
    During the second quarter three  long-term fixed-rate loans were closed  and
two  medium-term loans were simultaneously repaid.  The Company closed two seven
year fixed rate loans with Connecticut General Life Insurance Company  ("CIGNA")
in  the aggregate principal amount of $42 million that carry an average interest
rate of  7.31% per  annum. In  April, AMLI  obtained a  ten year  loan with  the
Federal  National Mortgage Association ("Fannie  Mae") in an aggregate principal
amount of approximately $44 million. This
 
                                      S-13

loan carries a  fixed-rate of interest  of 7.79% per  annum. In connection  with
these fixed rate financings, two medium term loans with an aggregate outstanding
balance  of  approximately  $65  million  were prepaid.  As  a  result  of these
transactions,  the  weighted  average  maturity  of  the  Company's  outstanding
indebtedness  was  increased to  approximately 5.3  years, the  weighted average
interest rate was reduced  to 6.93% and  four previously mortgaged  wholly-owned
Communities became unencumbered.
 
    During  June 1996, AMLI renegotiated one of its primary lines of credit with
Wachovia Bank  (the "Wachovia  Line").  The line  is  used for  general  working
capital  needs and to fund construction  of development properties. The line was
increased in size from $50 million to  $60 million and the interest rate on  the
facility  was reduced to LIBOR plus  1.65% for borrowings secured by communities
under development and to LIBOR plus  1.35% for borrowings secured by  stabilized
communities.  As of September 30, 1996, a total of $32.5 million was outstanding
under this facility.
 
UICI INVESTMENT
 
   
    On November 6, 1996, UICI, a  NASDAQ National Market traded holding  company
with  interests in insurance, financial services and technology and total assets
of approximately $1.2 billion, acquired, through a stock for stock exchange, all
of the outstanding capital stock  of ARC, a predecessor  of the Company and  the
Company's  largest shareholder. Separately,  on November 4,  1996, UICI, through
one  of  its  affiliates,  acquired  500,000  Common  Shares  from  an  existing
shareholder  of  the Company.  As a  result of  these transactions,  UICI, after
completion of the  Offering, will  beneficially own approximately  14.3% of  the
Company. The Chairman of UICI and its largest shareholder, Ronald L. Jensen, has
had  an association with members of AMLI's  senior management for over 20 years,
was one of ARC's original  founders, and served on  its Board of Directors  from
1980 through 1982.
    
 
    ARC has informed the Company that it agreed to effect the exchange with UICI
in  order to provide  liquidity to its shareholders,  approximately 60% of which
are not  Trustees, officers  or employees  of  the Company,  and to  once  again
involve Mr. Jensen in the ownership and strategic direction of ARC.
 
    At  a meeting of  the Board of Trustees  of the Company  held on October 28,
1996,  the  Company  exempted  UICI  and  its  affiliates  from  the   ownership
limitations  in the Company's Declaration of Trust.  As a result of this action,
UICI and Gregory T. Mutz, the Chairman  of the Company's Board of Trustees,  may
collectively own up to 34.9% of the outstanding shares of beneficial interest of
the  Company  and  UICI and  Mr.  Mutz  may individually  own  29.9%  and 24.9%,
respectively, of the outstanding shares  of beneficial interest of the  Company,
subject  to the group restrictions. Further, UICI,  as an affiliate of ARC, will
be exempt  from  the "business  combinations"  and "control  share  acquisition"
restrictions  of the Maryland General Corporation Law. See "Shares of Beneficial
Interest and Shareholder Liability" in the accompanying Prospectus.
 
                                USE OF PROCEEDS
 
   
    The net  proceeds to  the Company  from the  sale of  Common Shares  in  the
Offering,  after paying  underwriting discounts and  transactional expenses, are
expected to be approximately $56.4 million (approximately, $64.9 million if  the
Underwriters'  over-allotment option is exercised  in full). The Company expects
to use the  net proceeds of  the Offering to  repay approximately $41.1  million
outstanding  under  its primary  lines of  credit with  Wachovia Bank  and First
Chicago (the "First Chicago Line"). The Wachovia Line and the First Chicago Line
had outstanding  balances  of approximately  $32.5  million and  $14.0  million,
respectively,  as of October 31, 1996 and  carried interest at floating rates of
LIBOR plus  1.35%  and LIBOR  plus  1.65%, respectively.  Borrowings  under  the
Wachovia  Line mature in May, 1998, and  borrowings under the First Chicago Line
mature in February, 1998. An additional $4.7 million of the net proceeds will be
used to prepay  the 9.38%  fixed rate  first mortgage  loan secured  by AMLI  at
Alvamar  which matures  on March  1, 1997.  The balance  of the  net proceeds of
approximately $10.6 million  will be  used to  fund the  future acquisition  and
development activity of the Company.
    
 
    Pending  application  of  the net  proceeds  as  set forth  above,  such net
proceeds  will  be  invested   in  interest-bearing  accounts  and   short-term,
interest-bearing  securities, which are consistent  with the Company's intention
to qualify for taxation  as a REIT. Such  investments may include, for  example,
obligations of the
 
                                      S-14

Government  National  Mortgage  Association,  government  and  government agency
securities, certificates of deposit, commercial  paper, money market funds  that
invest in government securities and interest-bearing bank deposits.
 
             PRICE RANGE OF COMMON SHARES AND DISTRIBUTION HISTORY
 
    The  Common Shares have been traded on the NYSE under the symbol "AML" since
the Initial Offering. The following table sets forth the quarterly high and  low
sales prices per Common Share reported on the NYSE.
 
   


                                                                                                      DISTRIBUTIONS
                                                                                 HIGH        LOW       DECLARED(2)
                                                                               ---------  ---------  ---------------
                                                                                            
1995
  First Quarter..............................................................  $   19.75  $   17.00     $     .43
  Second Quarter.............................................................  $   20.50  $   17.63     $     .43
  Third Quarter..............................................................  $   20.13  $   18.25     $     .43
  Fourth Quarter.............................................................  $   20.38  $   18.38     $     .43
1996
  First Quarter..............................................................  $   21.25  $   19.63     $     .43
  Second Quarter.............................................................  $   20.88  $   18.88     $     .43
  Third Quarter..............................................................  $   20.88  $   19.88     $     .43
  Fourth Quarter(1)..........................................................  $   23.00  $   20.25

    
 
- ---------
   
(1) October 1, 1996 through November 20, 1996.
    
 
(2) Distributions are declared and paid in the quarter immediately following the
    quarter for which they are paid.
 
   
    On  November 20, 1996, the last reported  sale price of the Common Shares on
the NYSE  was $22.00  per  share. On  November 20,  1996,  the Company  had  190
shareholders of record.
    
 
    The  Company intends to  continue to pay  regular quarterly distributions to
holders  of  Common  Shares.  The  quarterly  distribution  rate  of  $.43,   if
annualized,  would equal an annual distribution  rate of $1.72 per Common Share.
The  distribution  for  the  quarter   ended  September  30,  1996   represented
approximately  83% of the Company's funds  from operations for that quarter. See
Selected Financial  Information for  a discussion  of the  Company's funds  from
operations.  On October  28, 1996,  the Board  of Trustees  declared its regular
quarterly distribution  of $.43  per  Common Share  payable to  shareholders  of
record  as of November  8, 1996. Although  the Company intends  to maintain this
current distribution rate, future  distributions by the Company  will be at  the
discretion  of the Board  of Trustees and  will depend on  the actual Funds from
Operations of the  Company, its financial  condition, capital requirements,  the
annual  distribution requirements under the REIT provisions of the Code and such
other factors as the Board of Trustees deems relevant.
 
    The Company has  implemented a  dividend reinvestment  program (the  "DRIP")
under  which the  holders of Common  Shares may elect  automatically to reinvest
their dividends  in  additional Common  Shares  (and/or to  make  optional  cash
purchases  of Common Shares  free of brokerage  commissions and charges). Shares
purchased directly from the  Company with reinvested  dividends pursuant to  the
DRIP will be purchased at fair market value.
 
                                      S-15

                                 CAPITALIZATION
 
    The  following  table sets  forth the  capitalization of  the Company  as of
September 30, 1996, and of the Company on a pro forma basis assuming, as of such
date, the completion of the Offering and the application of the net proceeds  as
described  under the caption "Use of Proceeds." The information set forth in the
following table should be read in conjunction with the financial statements  and
notes  thereto  incorporated  herein  and  in  the  accompanying  Prospectus  by
reference and  the discussion  under "Management's  Discussion and  Analysis  of
Financial Condition and Results of Operations--Liquidity and Capital Resources."
 
   


                                                                                              SEPTEMBER 30, 1996
                                                                                            -----------------------
                                                                                                          COMPANY
                                                                                             COMPANY     PRO FORMA
                                                                                            ----------  -----------
                                                                                                (IN THOUSANDS)
                                                                                                  
Debt(1)...................................................................................  $  233,567   $ 201,766
Minority Interest.........................................................................      41,409      44,115
Shareholders' Equity:
  Common Shares of Beneficial Interest, $0.01 par value per share, 148,500,000 authorized,
    11,797,738 Common Shares issued and outstanding (14,547,738 Common Shares pro
    forma)(2)(3)..........................................................................         118         145
  Series A Cumulative Convertible Preferred Shares of Beneficial Interest, $0.01 par value
    per share, 1,500,000 authorized, 1,100,000 Preferred Shares issued and outstanding
    (1,100,000 Preferred Shares pro forma)(2).............................................          11          11
  Additional paid-in capital..............................................................     242,487     296,113
  Distributions in excess of net income...................................................     (58,328)    (58,328)
                                                                                            ----------  -----------
      Total capitalization................................................................  $  459,264   $ 483,822
                                                                                            ----------  -----------
                                                                                            ----------  -----------

    
 
- ---------
(1)  The Company Pro Forma debt is shown  net of the portion of the net proceeds
    of the Offering used to pay down the specific debt existing as of  September
    30,  1996. Additional indebtedness incurred after September 30, 1996 to fund
    the Company's development activity is anticipated to be repaid following the
    closing of the Offering from the net proceeds of the Offering.
 
(2) Does not include 2,901,154 Common Shares reserved for issuance upon exchange
    of issued OP  Units or 159,190  Common Shares reserved  for issuance on  the
    exercise  of Options which have been granted by the Company, 15,190 of which
    are currently  exercisable  and  144,000  of  which  become  exercisable  in
    February,  1996. Any number of authorized  and unissued Common Shares may be
    classified by  the  Trustees  as preferred  shares  with  such  preferences,
    conversions  or other rights as the Trustees may decide. Under the Company's
    Declaration of Trust, 150,000,000 Common Shares are authorized, and pursuant
    to Articles  Supplementary filed  January 30,  1996, 1,500,000  such  Common
    Shares  were designated as Series  A Cumulative Convertible Preferred Shares
    of Beneficial Interest.  In March 1996,  100,000 of the  1,200,000 Series  A
    Cumulative Convertible Preferred Shares of Beneficial Interest issued by the
    Company were converted into Common Shares.
 
   
(3)  Assumes the Underwriters'  over-allotment option to  purchase up to 412,500
    Common Shares is not exercised. See "Underwriting."
    
 
                                      S-16

                         SELECTED FINANCIAL INFORMATION
 
    The following table sets forth selected financial information on a pro forma
basis for  the  Company and  on  a historical  basis  for the  Company  and  its
predecessor,  Amli Residential Properties Group  ("ARPG"). For periods after the
closing of the Initial Offering on February 15, 1994, the accompanying  selected
financial data is presented on a consolidated basis and includes the accounts of
the  Company and the Operating Partnership. For the periods prior to the Initial
Offering,  the  accompanying  selected  financial  data  reflects  the  combined
accounts of ARPG.
 
    ARPG  consisted  of  various  limited partnerships  sponsored  by  ARC which
previously owned 20 residential properties,  general partner interests in  three
additional   limited  partnerships  sponsored  by   ARC,  and  certain  property
management, landscaping, investment advisory  and asset management  subsidiaries
and  divisions of ARC  which were contributed  to the Company.  The accounts are
presented on  a combined  basis because  of the  common ownership  interest  and
management. The historical operating data for AMLI, for the years ended December
31,  1995 and 1994 and for ARPG, for the years ended December 31, 1993, 1992 and
1991 have been derived from the historical financial statements audited by  KPMG
Peat  Marwick LLP, independent auditors. The  operating data for the nine months
ended September 30, 1996 and 1995  has been derived from the unaudited  combined
financial statements of the Company. In the opinion of management, the operating
data  for  the  nine  months  ended September  30,  1996  and  1995  include all
adjustments (consisting  solely of  normal recurring  adjustments) necessary  to
present  fairly the information set forth therein. The results of the operations
for the nine months ended September  30, 1996 are not necessarily indicative  of
the Company's future results of operations for the full year ending December 31,
1996.
 
   
    The  pro forma operating data is presented as if: (i) the Common Shares were
sold in the Offering at the offering price of $21.75 per share; and (ii) the net
proceeds of the Offering were  applied as described in  "Use of Proceeds" as  of
the  beginning  of  the periods  presented  for  the operating  data  and  as of
September 30, 1996 for the balance sheet data.
    
 
    The following selected financial information  should be read in  conjunction
with  the  discussion  set forth  in  "Management's Discussion  and  Analysis of
Financial Condition  and  Results  of  Operations"  and  all  of  the  financial
statements  incorporated by  reference in  the accompanying  Prospectus. The pro
forma financial information  is not  necessarily indicative of  what the  actual
financial  position and results of operations of  the Company would have been as
of and for the periods  indicated, nor does it  purport to represent the  future
financial position and results of operations for future periods.
 
                                      S-17

                         SELECTED FINANCIAL INFORMATION
                     AMLI RESIDENTIAL PROPERTIES TRUST AND
                       AMLI RESIDENTIAL PROPERTIES GROUP
 
            (IN THOUSANDS EXCEPT PER SHARE AND PROPERTY INFORMATION)
 
   


                                                 NINE MONTHS ENDED
                                                    SEPTEMBER 30                            YEAR ENDED DECEMBER 31
                                         ----------------------------------  -----------------------------------------------------
                                                         1996       1995       1995       1994       1993       1992       1991
                                             1996      ---------  ---------  ---------  ---------  ---------  ---------  ---------
                                         ------------
                                          PRO FORMA
                                                                                                 
OPERATING DATA:
REVENUES:
  Property:
    Rental.............................   $   53,420   $  53,420  $  52,057  $  69,341  $  61,123  $  45,438  $  36,489  $  32,744
    Other..............................        2,427       2,427      2,094      2,797      2,338      1,709      1,317      1,063
  Income from Service Companies(1).....         (160)       (160)        40          3        100        884      1,068        782
  Interest from Service Companies......          342         342        342        455        398
  Other interest.......................        1,314         392        308        407        491        313        260        325
  Other................................        1,596       1,596        572        874        765        190        146        400
                                         ------------  ---------  ---------  ---------  ---------  ---------  ---------  ---------
    Total revenues.....................       58,939      58,017     55,413     73,877     65,215     48,534     39,280     35,314
                                         ------------  ---------  ---------  ---------  ---------  ---------  ---------  ---------
EXPENSES:
  Property operating and maintenance
    expenses...........................       22,729      22,729     21,265     28,451     24,834     19,908     15,688     15,080
  Property management fees.............        1,396       1,396      1,353      1,803      1,411
  Landscape services...................                                                        11        107        194        129
  Interest.............................        7,184       8,981      9,844     12,926     11,557     15,842     15,181     15,312
  Amortization of deferred expenses....        1,095       1,104      1,342      1,792      2,659        729        531        543
  Depreciation and amortization........        8,354       8,354      8,218     10,785     10,627      9,687      7,852      7,477
  General and administrative...........        1,703       1,703      1,446      1,932      1,616      3,257      2,631      2,797
  Expenses associated with the AMLI
    brand name.........................                                 680        680
  Writedown of vacant land.............                                                                              67        600
                                         ------------  ---------  ---------  ---------  ---------  ---------  ---------  ---------
      Total expenses...................       42,461      44,267     44,148     58,369     52,715     49,530     42,144     41,938
                                         ------------  ---------  ---------  ---------  ---------  ---------  ---------  ---------
  Income (loss) before income taxes
    minority interest and non-recurring
    gains..............................       16,478      13,750     11,265     15,508     12,500       (996)    (2,864)    (6,624)
  Gain on sale of residential
   property............................                               1,514      1,498
  Gain resulting from interest cap
   contracts...........................          584         584                              960
  Provision for income taxes...........                                                       (62)      (699)      (440)      (217)
                                         ------------  ---------  ---------  ---------  ---------  ---------  ---------  ---------
  Income (loss) before extraordinary
   items...............................       17,062      14,334     12,779     17,006     13,398     (1,695)    (3,304)    (6,841)
  Minority interest....................        2,636       2,605      2,481      3,287      2,681
                                         ------------  ---------  ---------  ---------  ---------  ---------  ---------  ---------
  Income (loss) before extraordinary
    items(2)...........................   $   14,426   $  11,729  $  10,298  $  13,719  $  10,717  $  (1,695) $  (3,304) $  (6,841)
                                         ------------  ---------  ---------  ---------  ---------  ---------  ---------  ---------
                                         ------------  ---------  ---------  ---------  ---------  ---------  ---------  ---------
  Net income (loss) per common share
    before extraordinary items(3)......   $     0.91   $    0.88  $    0.88  $    1.18  $    0.92
                                         ------------  ---------  ---------  ---------  ---------
                                         ------------  ---------  ---------  ---------  ---------

    
 
                                      S-18

 
   


                                                 NINE MONTHS ENDED
                                                    SEPTEMBER 30                            YEAR ENDED DECEMBER 31
                                         ----------------------------------  -----------------------------------------------------
                                                         1996       1995       1995       1994       1993       1992       1991
                                             1996      ---------  ---------  ---------  ---------  ---------  ---------  ---------
                                         ------------
                                          PRO FORMA
                                                                                                 
OTHER DATA:
  Funds from operations(4).............   $   25,783   $  23,055  $  20,439  $  27,404  $  25,002  $   8,021  $   4,744  $   1,453
  EBITDA(5)............................   $   34,062   $  33,140  $  31,625  $  42,122  $  37,670  $  25,262  $  20,700  $  16,708
  Net cash from (for) operating
   activities..........................                $  23,599  $  21,880  $  29,152  $  27,510  $  10,594  $   5,195  $   2,507
  Net cash from (for) investing
   activities..........................                $ (42,197) $   2,867  $  (3,369) $(143,999) $ (71,796) $ (29,838) $ (22,048)
  Net cash from (for) financing
   activities..........................                $  19,962  $ (25,867) $ (26,964) $ 110,326  $  64,951  $  26,902  $  18,530
  Wholly-Owned Communities (at end of
   period).............................           24          24         24         24         25         19         17         14
  Apartment homes--Wholly-Owned
   Communities (at end of period)......        9,600       9,600      9,368      9,600      9,789      8,207      6,793      5,673
  Physical occupancy--Wholly-Owned
   Communities (weighted average)......        93.4%       93.4%      96.7%      96.0%      94.9%      94.2%      95.6%      94.3%
  Co-Investment Communities (at end of
   period).............................           10          10          8          9          6
  Apartment homes--Co-Investment
   Communities (at end of period)......        3,175       3,175      2,003      2,245      1,451
  Physical Occupancy--Co-Investment
   Communities (weighted average)......        94.5%       94.5%      94.1%      90.9%      90.7%
                                         ------------  ---------  ---------  ---------  ---------  ---------  ---------  ---------
                                         ------------  ---------  ---------  ---------  ---------  ---------  ---------  ---------

    
 
   


                                                           SEPTEMBER 30                           DECEMBER 31
                                                       --------------------  -----------------------------------------------------
                                                         1996       1995       1995       1994       1993       1992       1991
                                                       ---------  ---------  ---------  ---------  ---------  ---------  ---------
                                         SEPTEMBER 30
                                             1996
                                         ------------
                                         (PRO FORMA)                                 (IN THOUSANDS)
                                                                                                 
BALANCE SHEET DATA:
  Residential real estate, before
    accumulated depreciation...........   $  475,515   $ 475,515  $ 439,031  $ 442,865  $ 451,762  $ 338,895  $ 263,877  $ 227,372
  Total assets.........................      498,706     474,148    430,712    433,227    442,619    311,236    242,680    211,444
  Total debt (6).......................      201,766     233,567    210,040    215,255    217,687    263,021    202,360    180,673
  Minority interest....................       44,115      41,409     39,522     39,077     42,743
  Stockholders' equity.................      237,941     184,288    167,696    166,163    170,161     39,157     33,340     24,566
                                         ------------  ---------  ---------  ---------  ---------  ---------  ---------  ---------
                                         ------------  ---------  ---------  ---------  ---------  ---------  ---------  ---------

    
 
- ------------
(1) Amounts from 1991 through 1993 include revenues from property management and
    landscape  services provided  by the  Management Company.  Since the Initial
    Offering, the amounts reflect the  Company's proportionate share of the  net
    income  of the  Management Company,  AIA and  Amrescon after  elimination of
    intercompany profit on construction activities.
 
(2) Represents the  Company's  income  (loss) after  minority  interest  of  the
    holders of OP Units.
 
   
(3) Assumes  average  Common  Shares  outstanding  of  14,530,934  (pro  forma),
    11,780,934, 11,620,375, 11,634,776, 11,488,651, respectively. 1996  earnings
    per  share is exclusive of $1,273,000 dividends paid to holders of preferred
    shares. 1994 earnings per share is for the period from February 15, 1994  to
    December 31, 1994.
    
 
(4) Industry  analysts  generally  consider  funds  from  operations  to  be  an
    appropriate measure  of  the  performance  of an  equity  REIT.  Funds  from
    operations  is  defined as  income (loss)  before  minority interest  of the
    holders of OP  Units and  extraordinary items (computed  in accordance  with
    generally  accepted  accounting  principles)  plus  certain  non-cash items,
    primarily  depreciation.  Adjustments  for  all  periods  consist  only   of
    depreciation and certain non-recurring gains and losses, including a gain on
    sale of residential property in 1995, gains resulting from interest rate cap
    contracts  in 1994  and 1996,  expenses associated  with the AMLI-Registered
    Trademark-brand name in  1995, and  write down  of vacant  land and  imputed
    interest  on debt  in 1991  and 1992. The  Company believes  that funds from
    operations is helpful  to investors as  a measure of  the performance of  an
    equity  REIT  because,  along  with cash  flows  from  operating activities,
    financing activities  and investing  activities,  it provides  investors  an
    understanding of the ability of the Company to incur and service debt and to
    make capital expenditures. Funds from operations should not be considered as
    an  alternative to net income or any other GAAP measurement as an indication
    of the Company's performance or to cash flow as a measure of liquidity.
 
(5) EBITDA means operating  income before  mortgage and  other interest,  income
    taxes,  depreciation  and  amortization.  EBITDA  does  not  represent  cash
    generated from operating activities  in accordance with GAAP,  is not to  be
    considered  as an alternative to net income or any other GAAP measurement as
    a measure of operating performance and is not necessarily indicative of cash
    available to fund  all cash needs.  The Company has  included EBITDA  herein
    because  the  Company  believes  that  it is  one  measure  used  by certain
    investors to determine operating cash flow.
 
(6) The Company pro  forma total debt  is shown net  of the portion  of the  net
    proceeds  of the  Offering used  to pay  down specific  debt existing  as of
    September 30,  1996. Additional  indebtedness incurred  after September  30,
    1996  to fund the Company's development activity is anticipated to be repaid
    following the closing of the Offering from the net proceeds of the Offering.
 
                                      S-19

                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 
    The following discussions should be read in conjunction with the information
under  "Selected Financial Information"  and the financial  statements and notes
thereto incorporated by reference in the accompanying Prospectus.
 
    As of September  30, 1996, the  Company owned an  81.6% general  partnership
interest  in the Operating Partnership, which  holds the operating assets of the
Company. The limited partners hold OP Units that are convertible into shares  of
the  Company on a one-for-one basis, subject to certain limitations. The Company
has qualified, and  anticipates continuing  to qualify,  as a  REIT for  Federal
income tax purposes.
 
RESULTS OF OPERATIONS
 
    During the period from January 1, 1995 through September 30, 1996, growth in
property  revenues and  property operating  expenses resulted  from increases at
Communities  owned  as  of  January  1,  1995  and  from  the  newly-constructed
Communities.
 
    During  the  same period,  the Company  has  invested in  five co-investment
partnerships, which  own  the 236-unit  AMLI  at Windbrooke  in  Buffalo  Grove,
Illinois,  the 242-unit AMLI  at Willeo Creek in  Roswell, Georgia, the 316-unit
AMLI at Greenwood Forest in Houston, Texas, the 592-unit AMLI at Chevy Chase  in
Buffalo  Grove, Illinois, and  the 488-unit AMLI  at Willowbrook in Willowbrook,
Illinois.
 
    For the nine  months ended September  30, 1996, net  income attributable  to
Common  Shares  was  $9,338,000,  or  $.79  per  share,  on  total  revenues  of
$58,017,000. For  the nine  months  ended September  30,  1995, net  income  was
$10,298,000, or $.88 per share, on total revenues of $55,413,000.
 
    On  a "same community"  basis, weighted average  occupancy of the stabilized
Communities decreased slightly to 94.2% for the nine months ended September  30,
1996 from 96.0% for the same period in the prior year. For the nine months ended
September  30, 1996, weighted average collected  rents increased by 4.8% to $648
from $618 per unit per month for the nine months ended September 30, 1995.
 
COMPARISON OF NINE MONTHS ENDED SEPTEMBER 30, 1996 TO NINE MONTHS ENDED
SEPTEMBER 30, 1995
 
    Income before  non-recurring items,  minority interests,  and  extraordinary
items increased to $13,750,000 for the nine months ended September 30, 1996 from
$11,265,000  for the nine months ended September  30, 1995. This increase in net
income was primarily attributable  to an $863,000  decrease in interest  expense
and a $2,604,000 increase in total revenues, reduced by a $1,507,000 increase in
property  operating expenses. For  the nine months ended  September 30, 1996 and
1995, net income was $10,611,000 and $10,298,000, respectively.
 
    Total property  revenues  increased  by  $1,696,000,  or  3.1%.  On  a  same
community basis, total property revenues increased by $2,087,000, or 4.0%.
 
    The  $1,024,000 increase  in other revenue  includes a  $390,000 increase in
share of income from co-investment ventures, a $358,000 increase in  development
fees,  a $196,000 increase in  asset management fees, and  a $96,000 increase in
acquisition fees.
 
    Property operating  expenses increased  by $1,507,000,  or 6.7%.  On a  same
community basis, property operating expenses increased by $1,358,000, or 6.2%.
 
    Interest  expense, net of the amounts capitalized, decreased from $9,844,000
to $8,981,000, or 8.8%.
 
    General and administrative expenses increased  from $1,446,000 for the  nine
months  ended  September  30,  1995  to $1,703,000  for  the  nine  months ended
September  30,  1996.  The  increase  is  primarily  attributable  to  increased
compensation and compensation-related costs.
 
                                      S-20

LIQUIDITY AND CAPITAL RESOURCES
 
    At  September  30,  1996,  the  Company  had  $3,643,000  in  cash  and cash
equivalents and $52,965,000 in availability under its two primary bank lines  of
credit,  the Wachovia Line, a $60,000,000 line  of credit, and the First Chicago
Line, a $29,500,000 line of credit  which the Company anticipates will  increase
by $11,747,000 to $41,247,000 during November 1996.
 
    At   September  30,  1996,   the  Company  had   outstanding  borrowings  of
approximately $32,535,000 on the Wachovia Line which is secured by mortgages  on
two  Wholly-Owned Communities in Georgia. Of  the total outstanding, the rate on
$12,400,000 has been fixed at  6.47% per annum until  February 15, 1997 and  the
rate  on $14,000,000 has been fixed at 6.65% per annum through February 24, 1997
through use of  interest rate  swap contracts.  In addition,  $5,845,000 has  an
interest  rate cap  contract in place  as protection against  increases in LIBOR
above 3.875% through February 15, 1998.  The Wachovia Line bears interest at  an
annual  rate of  LIBOR plus  1.65% for  borrowings secured  by communities under
development  and  LIBOR  plus  1.35%   for  borrowings  secured  by   stabilized
communities.  The remaining credit availability of $27,465,000 is anticipated to
be used to  fund future working  capital needs and  acquisition and  development
activities.
 
    At   September  30,  1996,   the  Company  had   outstanding  borrowings  of
approximately $4,000,000 on the  First Chicago Line which  bears interest at  an
annual rate of LIBOR plus 1.65%. This facility was used to fund a portion of the
construction  of  the  second  phases  of  AMLI  at  Autumn  Chase  and  AMLI at
Gleneagles. The remaining  credit availability of  $25,500,000 and the  expected
increased  availability of $11,747,000 on the  First Chicago Line is expected to
be used by the Company to fund  construction of AMLI at Autumn Chase Phase  III,
future working capital needs and acquisition and development activities.
 
    On  April 29, 1996, the Company closed  on a $43,907,000 10-year, 7.79% loan
provided by Fannie Mae. This loan is secured by mortgages on three properties in
Dallas, Texas. The loan proceeds,  net of a .75%  financing fee and an  original
issue  discount of  $673,000, were  used to  retire the  Company's then existing
balance on its  line of credit  with Lehman Brothers  Holdings, Inc.  ("Lehman")
which,  beginning in August, 1997, would carry interest at a fixed rate of 8.35%
and to reduce the balance on the First Chicago Line.
 
    On June 11,  1996, the  Company closed with  CIGNA on  two seven-year  loans
aggregating  $42,000,000  with  an average  interest  rate of  7.31%  per annum.
Concurrently, the  Company repaid  the then  existing balance  on the  Company's
$54,835,000 whole loan with Lehman. As a result of the refinancings completed by
the  Company in  April and  June as  described above,  the Company  improved its
balance sheet, financing structure and capability as follows:
 
    - the Company increased the weighted average annual interest rate by 0.4% to
      6.9% through  August 1,  1997 and  decreased the  weighted average  annual
      interest rate by 0.2% during the four years thereafter;
 
    - the  Company increased  the weighted  average maturity  of its outstanding
      indebtedness to 5.3 years;
 
    - the Company increased the  percentage of debt that  is fixed-rate debt  to
      66% from 54%;
 
    - the Company wrote off expenses previously deferred in conjunction with the
      repaid  loans thereby  decreasing its deferred  expenses and amortization,
      particularly for the period through August 1, 1997;
 
    - the Company increased the number of unencumbered Wholly-Owned  Communities
      from one to five;
 
    - the  Company incurred net extraordinary or otherwise non-recurring charges
      of $781,000, which is primarily attributable to the non-cash write-off  of
      deferred expenses relating to the Lehman loans.
 
    At  September 30, 1996, the Company had a $13,701,000 outstanding balance on
its $20,100,000 loan  provided by  Teachers Insurance  and Annuity  Association.
This  loan is secured  by AMLI at  Regents Center in  Overland Park, Kansas. The
remaining commitment is anticipated to  fund in November, 1996 upon  substantial
completion  of  the additional  124-unit Phase  III  under construction  at this
Community.
 
                                      S-21

    At September 30, 1996, the  $6,230,000 construction loan provided by  Harris
Trust  and  Savings  Bank  for  Phase  III of  AMLI  at  Regents  Center  had an
outstanding balance of $3,509,000. This loan  was repaid in full by the  Company
in October, 1996.
 
    For the nine months ended September 30, 1996, net cash provided by operating
activities  was $23,599,000. For the nine  months ended September 30, 1995, cash
provided by operating  activities was  $21,880,000. The  increase was  primarily
attributable  to  the $2,604,000  increase in  total  revenues and  the $863,000
decrease in interest expense, net of $1,507,000 increase in operating  expenses.
During  the second and third  quarters of 1996, a total  of $274,000 of cash was
used in operating activities  for start-up losses from  the initial lease-up  of
the  second phases of AMLI  at Autumn Chase and  AMLI at Gleneagles. No start-up
losses were incurred during 1995.
 
    Cash flows  used for  investing  activities were  $42,197,000 for  the  nine
months  ended  September 30,  1996,  and net  cash  flows provided  by investing
activities were $2,867,000 for the nine months ended September 30, 1995.
 
    Net cash flows  provided by  financing activities were  $19,962,000 for  the
nine  months ended  September 30,  1996, and  net cash  flows used  in financing
activities were $25,867,000 for the nine  months ended September 30, 1995.  Such
cash  flows for the nine months ended  September 30, 1996 reflected the issuance
of preferred shares of beneficial interest resulting in the net cash proceeds of
$23,917,500.
 
    The Company  expects to  pay  quarterly dividends  from cash  available  for
distribution.  Until  distributed,  funds  available  for  distribution  will be
invested in short-term investment-grade securities or used to temporarily reduce
outstanding balances on the Company's revolving lines of credit.
 
    The Company expects to meet  its short-term liquidity requirements by  using
its  working  capital and  any  portion of  net  cash flow  from  operations not
distributed currently. The Company  is of the opinion  that its future net  cash
flows  will be adequate to meet operating requirements in both the short and the
long term and provide for payment of dividends by the Company in accordance with
REIT requirements. In order  to qualify as  a REIT, the  Company is required  to
distribute  dividends  to its  shareholders  equal to  95%  of its  REIT taxable
income. The Company's  1996 estimated  dividend payment level  equals an  annual
rate  of $1.72 per  share. The Company  estimates that approximately  35% of the
total dividends to be paid in 1996 will be treated as a return of capital.
 
    The Company expects to meet  certain long-term liquidity requirements,  such
as  scheduled debt maturities, repayment of loans for construction, development,
and acquisition  activities  through  the  issuance  of  long-term  secured  and
unsecured debt and additional equity securities of the Company (or OP Units). On
July   20,  1995,  the  Company's   shelf  registration  became  effective.  The
registration provided  for  up to  an  aggregate of  $200,000,000  of  preferred
shares, common shares and security warrants that the Company may issue from time
to time.
 
    On  January  30,  1996, the  Company  issued 1,200,000  Series  A Cumulative
Convertible Preferred  Shares  of Beneficial  Interest  for $20  per  share,  or
$24,000,000  in the aggregate, directly to  four institutional investors and ARC
in a registered offering, without the  use of a placement agent or  underwriter.
The  proceeds of the offering,  less $82,500 of transaction  costs, were used to
reduce the Company's  debt, to fund  development costs and  for working  capital
requirements.  ARC  converted its  100,000  preferred shares  to  100,000 Common
Shares on March 6, 1996.
 
                                      S-22

COMPANY INDEBTEDNESS
 
    The Company's debt as of September  30, 1996, substantially all of which  is
secured  by first mortgages on 19 of the wholly-owned Communities, is summarized
as follows:
 
                               SUMMARY DEBT TABLE
 


                                                                                                           PERCENT OF
TYPE OF INDEBTEDNESS                                     WEIGHTED AVERAGE INTEREST RATE      BALANCE         TOTAL
- -------------------------------------------------------  -------------------------------  --------------  ------------
                                                                                                 
Fixed Rate Mortgages(1)................................               7.76%               $  152,023,000          65%
Tax-Exempt Bonds(2)....................................      Tax Exempt Rate + 1.23%          40,750,000          17%
Lines of Credit(3).....................................         LIBOR + 1.35% to              36,535,000          16%
                                                                  LIBOR + 1.65%
Other(4)...............................................              Various                   4,259,000           2%
                                                                                          --------------         ---
  TOTAL................................................                                   $  233,567,000         100%
                                                                                          --------------         ---
                                                                                          --------------         ---

 
- ---------
(1) Approximately $24,104,000 of the Company's fixed rate indebtedness is due in
    1997, $11,264,000 is  due in 1998,  and $116,655,000 is  due after June  30,
    2003.
 
(2)  The tax exempt bonds bear interest at a variable tax exempt rate, which for
    the week beginning October 22, 1996 was 3.60% making the Company's effective
    rate 4.83%, and mature  on October 1, 2024.  The related credit  enhancement
    expires in 1999.
 
(3) Amounts borrowed under lines of credit are due in 1998.
 
(4) All but $750,000 of the Company's "Other" debt was repaid in October, 1996.
 
FUNDS FROM OPERATIONS
 
    Funds  from operations for the nine months ended September 30, 1996 and 1995
are summarized as follows:
 


                                                                                                 SEPTEMBER 30,
                                                                                              --------------------
                                                                                                1996       1995
                                                                                              ---------  ---------
                                                                                                 (IN THOUSANDS)
                                                                                                   
Net income before minority interest and extraordinary item..................................  $  14,334  $  12,779
Depreciation................................................................................      8,354      8,218
Other, net(1)...............................................................................        367       (558)
                                                                                              ---------  ---------
Funds from operations.......................................................................  $  23,055  $  20,439
                                                                                              ---------  ---------
                                                                                              ---------  ---------
Total shares--weighted average, including shares issued upon conversion of preferred shares
  and units.................................................................................     15,600     14,427
                                                                                              ---------  ---------
                                                                                              ---------  ---------

 
- ---------
(1) Includes share  of co-investment  partnerships' depreciation  and, in  1996,
    non-recurring  gain relating  to the sale  of an interest  rate cap contract
    and, in 1995, non-recurring  gain from the sale  of an apartment  community,
    net of non-recurring expenses associated with the AMLI-Registered Trademark-
    brand name.
 
    Funds  from operations is defined as  income (loss) before minority interest
of the holders of OP Units and extraordinary items (computed in accordance  with
generally   accepted  accounting  principles),   plus  certain  non-cash  items,
primarily depreciation. Adjustments  for unconsolidated  partnerships and  joint
ventures  are calculated  to reflect  funds from  operations on  the same basis.
Funds from operations is widely accepted in measuring the performance of  equity
REITs.  An understanding of the Company's funds from operations will enhance the
reader's comprehension of the Company's results of operations and cash flows  as
presented  in the financial statements and data included elsewhere herein. Funds
from operations should  not be considered  an alternative to  net income or  any
other  GAAP measurement as a measure of the results of the Company's operations,
the Company's cash flows or liquidity.
 
                                      S-23

DEVELOPMENT ACTIVITIES AND OTHER CAPITAL EXPENDITURES
 
    AMLI at  Autumn  Chase  Phase  II,  a  224  apartment  home  development  in
Carrollton,  Texas, is substantially complete and currently in lease-up. AMLI at
Gleneagles Phase II, a 264 apartment home development located in Dallas,  Texas,
is  expected to be completed in December 1996. The approximate development costs
of the two Communities  (including land cost) are  $25,000,000. The Company  has
also  commenced development activities on  additional sites in Atlanta, Chicago,
Dallas, Topeka and Overland Park,  Kansas. Furthermore, the Company has  started
planning  and pre-development  activities on  four additional  sites in Atlanta,
Austin, Chicago  and  Dallas. The  costs  of these  development  activities  are
expected  to be funded  from existing credit  availability and/or in partnership
with institutional investors.
 
    In February 1996, the Company acquired two land parcels in Atlanta,  Georgia
and  Aurora, Illinois for a  total price of $11,023,000.  The Atlanta parcel was
acquired for cash and a  note that was paid off  in May 1996. The  consideration
for  the Aurora land parcel  was satisfied in part by  the issuance of 26,182 OP
Units, with the  remaining purchase  price paid in  cash. A  272 apartment  home
community is under development on the Aurora site in a co-investment partnership
with  an  institutional investor.  The Company  has begun  development of  a 400
apartment home community on the Atlanta site and expects to commence development
of a second 400  apartment home community  on adjacent land  either for its  own
account or in partnership with an institutional investor.
 
    At September 30, 1996, AMLI at Pleasant Hill, a 502 apartment home community
developed  through a co-investment partnership, is substantially complete. Total
development costs  of  approximately  $26,600,000 were  funded  first  from  the
venturers'  capital  contributions  and  thereafter are  being  funded  from the
$15,500,000  fixed-rate  construction  and   permanent  loan  provided  by   the
co-venturer.
 
    In  November 1995, the Company, through a co-investment joint venture, began
construction of the  446-unit AMLI at  Barrett Lakes apartment  community on  54
acres  of land located  in Atlanta, Georgia. Of  the total estimated development
costs of $27,800,000, the co-venturer  has provided $16,680,000 of  construction
and  permanent financing for this development, and the remaining costs are being
funded from the Company's and the co-investor's equity contributions.
 
    In December 1995, the  Company began construction of  AMLI at River Park,  a
222  apartment home community in Atlanta,  Georgia. In June 1996, this Community
was contributed to a co-investment  joint venture. Of the $15,400,000  estimated
development costs, the co-venturer provided $9,100,000 in the form of a loan and
the  remaining costs are being funded from equity contributions from the Company
and its co-investment partner.
 
    On  February  27,  1996,  the  Company  committed  to  make  a   $12,955,000
construction  loan to a third  party to fund the  development of a 156 apartment
home community in Overland  Park, Kansas. This  community was approximately  40%
complete  at September 30, 1996 and is anticipated to be completed in May, 1997.
The construction  and development  of  this community  is  accounted for  as  an
acquisition, construction and development loan.
 
    At September 30, 1996, the Company entered into a joint venture with a large
public  pension fund and formed  Acquiport/Aurora Crossing, L.P. Concurrent with
the formation  of the  partnership,  AMLI contributed  the 18-acre  Aurora  land
parcel  and all the improvements in place  for a 272 apartment home development.
The total development cost of approximately $24,500,000 will be funded by equity
contributions, of which $7,400,000 was funded on September 30, 1996. The Company
owns a  25% general  partnership interest  in this  joint venture  and  received
$5,545,000 as reimbursement of costs.
 
    On  September  30, 1996,  the Company,  as  general partner,  and for  a 25%
partnership interest,  entered into  a co-investment  partnership with  a  large
public  pension plan and  formed Acquiport/Fossil Creek,  L.P. Upon formation of
the partnership, the Company contributed its 19-acre land parcel in Forth Worth,
Texas. The  development  of a  384  apartment home  community  on this  site  is
currently  in progress. The total development costs of approximately $23,700,000
will be funded from  capital contributions from the  partners. At September  30,
1996,  total  costs incurred  of $2,670,000  were  funded. The  Company received
$1,998,000 as reimbursement of costs.
 
                                      S-24

    On October 9, 1996, the Company acquired a 28.6 acre parcel of land  located
in  Aurora,  Illinois. The  $5,014,000 purchase  price of  this parcel  was paid
partially in cash ($3,429,000 of which has been paid by the Company and $485,000
of which is payable when construction is completed) and through the issuance  of
53,140  OP Units. The Company intends to  develop a 464 unit apartment community
on this site in  partnership with an  institutional investor. Total  development
costs  are  projected  to  be  approximately  $45,000,000  and  construction  is
contemplated to commence in the Spring of 1997.
 
    Capital expenditures  are those  made for  assets having  a useful  life  in
excess of one year and include replacements (including carpeting and appliances)
and  betterments, such as unit upgrades, enclosed parking facilities and similar
items.
 
    In conjunction with acquisitions of existing properties, it is the Company's
policy to provide  in its  acquisition budgets  adequate funds  to complete  any
deferred  maintenance  items  and  to  otherwise  make  the  properties acquired
competitive with  comparable newly-constructed  properties. In  some cases,  the
Company  will provide in  its acquisition budget additional  funds to upgrade or
otherwise improve new acquisitions.
 
INFLATION
 
    Virtually  all  apartment  leases  at  the  Communities  and   Co-Investment
Communities  are for six or twelve months' duration. This enables the Company to
pass along inflationary increases in its  operating expenses on a timely  basis.
Because the Company's property operating expenses (exclusive of depreciation and
amortization)  are approximately  43.0% of  rental and  other revenue, increased
inflation typically results  in comparable increases  in income before  interest
and  general and  administrative expenses, so  long as  rental market conditions
allow increases in rental rates while maintaining stable occupancy.
 
    An increase in general price  levels may immediately precede, or  accompany,
an  increase in interest rates. The  Company's exposure to rising interest rates
is mitigated by the  existing debt level of  approximately 41% of the  Company's
current   total  market  capitalization   and  the  high   percentage  (65%)  of
intermediate term fixed  rate debt.  As a  result, for  the foreseeable  future,
increases   in  interest   expense  resulting  from   increasing  inflation  are
anticipated to  be less  than future  increases in  income before  interest  and
general and administrative expenses.
 
                                THE COMMUNITIES
 
THE STABILIZED COMMUNITIES
 
    At  September  30,  1996,  the  Wholly-Owned  Communities  consisted  of  24
stabilized multifamily residential communities containing an aggregate of  9,600
apartment  homes.  The  Co-Investment  Communities  consisted  of  10 stabilized
multifamily residential communities containing  an aggregate of 3,175  apartment
homes.  At September 30,  1996, the average age  of the Wholly-Owned Communities
was 8.5 years,  and the  average age of  the Co-Investment  Communities was  6.2
years.  The  Wholly-Owned  Communities  and  the  Co-Investment  Communities are
primarily oriented to residents  demanding high levels  of services and  contain
numerous  tenant  amenities, such  as  fitness centers,  swimming  pools, tennis
courts, basketball and  volleyball courts,  miles of jogging  trials and  nature
walks.  Most of  the apartment units  have a  patio, porch or  sunroom, and many
offer one  or more  additional  features, such  as vaulted  ceilings,  microwave
ovens,  Palladian windows,  fireplaces, and  washers and  dryers or washer/dryer
connections.  The  Communities  that  were  developed  by  the  Company  or  its
predecessor have won numerous awards for design, landscaping and architecture.
 
    The  table set forth  below summarizes the  following information related to
the stabilized Communities: (i) the name and location of the community; (ii) the
year each community  was completed; (iii)  the number of  units at, and  average
unit  size of, each community; (iv) the  average rent per unit; (v) the weighted
average physical  occupancy  of each  community  from January  1,  1996  through
September  30, 1996; and (vi) with respect to the Co-Investment Communities, the
Company's percentage ownership thereof.
 
                                      S-25

                             STABILIZED COMMUNITIES
 


                                                                                                                  WEIGHTED
                                                                                     AVERAGE        AVERAGE       AVERAGE
                                                                     NUMBER OF      UNIT SIZE      RENT PER       PHYSICAL
WHOLLY-OWNED COMMUNITY                 LOCATION     YEAR COMPLETED     UNITS      (SQUARE FEET)      UNIT        OCCUPANCY
- -----------------------------------  -------------  --------------  -----------  ---------------  -----------  --------------
                                                                                             
DALLAS/FT. WORTH, TX
AMLI at Autumn Chase...............  Carrollton          1987              226            800      $     636          93.7%
AMLI at Bear Creek.................  Euless              1986              350            786            563          93.9%
AMLI at Chase Oaks.................  Plano               1986              250            775            656          95.6%
AMLI at Gleneagles.................  Dallas              1987              326            841            613          96.4%
AMLI on the Green..................  Ft. Worth        1990/1993            424            846            672          95.4%
AMLI at Nantucket..................  Dallas              1986              312            712            519          95.8%
AMLI of North Dallas...............  Dallas           1985/1986          1,032            878            619          95.7%
AMLI at Reflections................  Irving              1986              212            822            645          92.5%
AMLI on Rosemeade..................  Dallas              1987              236            870            632          96.0%
AMLI on Timberglen.................  Dallas              1985              260            774            563          95.1%
AMLI at Valley Ranch...............  Irving              1985              460            848            649          93.6%
                                                                    -----------         -----            ---           ---
                                                                         4,088            827            617          95.0%
                                                                    -----------         -----            ---           ---
AUSTIN, TX
AMLI at the Arboretum..............  Austin              1983              231            771            684          94.3%
AMLI in Great Hills................  Austin              1985              344            747            663          94.2%
AMLI at Martha's Vineyard..........  Austin              1986              360            704            624          91.9%
                                                                    -----------         -----            ---           ---
                                                                           935            736            653          93.3%
                                                                    -----------         -----            ---           ---
ATLANTA, GA
AMLI at Sope Creek.................  Marietta       1982/1983/1995         695            911            677          93.6%
AMLI at Spring Creek...............  Dunwoody         1985-1989          1,180            916            694          94.9%
AMLI at Vinings....................  Atlanta             1985              208          1,104            776          95.9%
AMLI at West Paces.................  Atlanta             1992              337            933            850          94.5%
                                                                    -----------         -----            ---           ---
                                                                         2,420            933            718          94.4%
                                                                    -----------         -----            ---           ---
EASTERN KANSAS
AMLI at Alvamar....................  Lawrence            1989              152            828            640          93.5%
AMLI at Crown Colony...............  Topeka              1986              156            776            553          89.3%
AMLI at Regents Center.............  Overland Park    1991-1995            300            914            731          93.4%
AMLI at Sherwood...................  Topeka              1993              300            868            603          90.2%
                                                                    -----------         -----            ---           ---
                                                                           908            860            643          91.6%
                                                                    -----------         -----            ---           ---
INDIANAPOLIS, IN
AMLI at Riverbend..................  Indianapolis     1983/1985            996            824            565          93.7%
                                                                    -----------         -----            ---           ---
CHICAGO, IL
AMLI at Park Sheridan..............  Chicago             1986              253            855            881          94.3%
                                                                    -----------         -----            ---           ---
    TOTAL WHOLLY-OWNED                                                   9,600            848      $     650          94.2%
     COMMUNITIES...................
                                                                    -----------         -----            ---           ---

 


                                                                                                                     WEIGHTED
                               COMPANY                                                  AVERAGE        AVERAGE       AVERAGE
                             PERCENTAGE                      YEAR        NUMBER        UNIT SIZE        RENT         PHYSICAL
CO-INVESTMENT COMMUNITY       OWNERSHIP      LOCATION      COMPLETED    OF UNITS     (SQUARE FEET)    PER UNIT      OCCUPANCY
- --------------------------  -------------  -------------  -----------  -----------  ---------------  -----------  --------------
                                                                                             
 
ATLANTA, GA
AMLI at Towne Creek.......           1%    Gainesville       1989             150            811           $620          95.6%
AMLI at Willeo Creek......          30%    Roswell           1989             242          1,229            764          94.4%
                                                                       -----------         -----     -----------          ---
                                                                              392          1,069            709          94.9%
                                                                       -----------         -----     -----------          ---
CHICAGO, IL
AMLI at Prairie Court.....           1%    Oak Park          1987             125            845          1,036          94.8%
AMLI at Windbrooke........          15%    Buffalo Grove     1987             236            903            899          95.9%
AMLI at Chevy Chase.......          33%    Buffalo Grove     1988             592            812            862          93.6%
AMLI at Willowbrook.......          40%    Willowbrook       1987             488            857            857          93.8%
                                                                       -----------         -----     -----------          ---
                                                                            1,441            845            881          94.1%
                                                                       -----------         -----     -----------          ---
AUSTIN, TX
AMLI at Park Place........          25%    Austin            1985             588            677            598          96.7%
                                                                       -----------         -----     -----------          ---

 
                                      S-26



                                                                                                                     WEIGHTED
                               COMPANY                                                  AVERAGE        AVERAGE       AVERAGE
                             PERCENTAGE                      YEAR        NUMBER        UNIT SIZE        RENT         PHYSICAL
CO-INVESTMENT COMMUNITY       OWNERSHIP      LOCATION      COMPLETED    OF UNITS     (SQUARE FEET)    PER UNIT      OCCUPANCY
- --------------------------  -------------  -------------  -----------  -----------  ---------------  -----------  --------------
                                                                                             
HOUSTON, TX
AMLI at Champions Centre..          15%    Houston           1994             192            857            718          93.8%
AMLI at Champions Park....          15%    Houston           1991             246            901            681          90.1%
AMLI at Greenwood Forest..          15%    Houston           1995             316            984            733          87.6%
                                                                       -----------         -----     -----------          ---
                                                                              754            924            712          90.0%
                                                                       -----------         -----     -----------          ---
    TOTAL CO-INVESTMENT                                                     3,175            860           $767          93.8%
     COMMUNITIES..........
                                                                       -----------         -----     -----------          ---
TOTAL.....................                                                 12,775            851           $679          94.1   %
                                                                       -----------         -----     -----------          ---
                                                                       -----------         -----     -----------          ---

 
DEVELOPMENT COMMUNITIES
 
    At  September  30,  1996,  the  Development  Communities  consisted  of   12
multifamily  residential communities under construction  or in various stages of
lease-up. When completed, the Development Communities will total 3,454 apartment
homes. The anticipated development costs for the Company Development communities
and the  Co-Investment Development  Communities were  $99.1 million  and  $118.0
million, respectively.
 
    The  tables set forth below summarizes  the following information related to
the  Company   Development  Communities   and  the   Co-Investment   Development
Communities:  (i) the  name and  location of the  community; (ii)  the number of
apartment homes  to  be  constructed  at each  community;  (iii)  the  projected
completion date of each community and the percentage completion of the community
as  of  September  30,  1996;  (iv) the  anticipated  development  cost  of each
community and the amount thereof expended as of September 30, 1996; and (v) with
respect to  each Co-Investment  Community,  the Company's  percentage  ownership
interest  therein and the name of the joint venture partner with respect to each
Co-Investment Development Community. The Company Development Communities exclude
AMLI at Sope  Creek Crossing IV,  a 232  apartment home community  which is  now
complete.
 
                        COMPANY DEVELOPMENT COMMUNITIES
 
   


                                                                                                                    AMOUNT
                                                                                      PROJECTED   ANTICIPATED      EXPENDED
COMPANY DEVELOPMENT                                      NO. OF       COMPLETION     COMPLETION   DEVELOPMENT      THROUGH
COMMUNITY                              LOCATION           UNITS       PERCENTAGE        DATE          COST         9/30/96
- -------------------------------  --------------------  -----------  ---------------  -----------  ------------  --------------
                                                                                              
AMLI at Gleneagles
  Phase II.....................  Dallas, Texas                264            86%      Dec. 1996    $13,800,000   $ 11,932,000
AMLI at Regents Center           Overland Park,
  Phase III....................  Kansas                       124            70%      Dec. 1996     7,700,000       5,419,000
AMLI at Crown Colony
  Phase II.....................  Topeka, Kansas                64            30%      Feb. 1997     3,600,000       1,094,000
AMLI at Autumn Chase
  Phase III....................  Carrollton, Texas            240            13%      Nov. 1997    14,100,000       1,787,000
AMLI at North Winds
  Phase I......................  Atlanta, Georgia             400            17%      Feb. 1998    26,800,000       4,423,000
AMLI at Peachtree City.........  Atlanta, Georgia             312            20%      Nov. 1997    21,900,000       4,379,000
AMLI at Autumn Chase                                                                 Completed;
  Phase II.....................  Carrollton, Texas            224           100%     In Lease-up   11,200,000      11,200,000
                                                            -----                                 ------------  --------------
 
TOTAL..........................                             1,628                                  $99,100,000   $ 40,234,000
                                                            -----                                 ------------  --------------
                                                            -----                                 ------------  --------------

    
 
                                      S-27

                     CO-INVESTMENT DEVELOPMENT COMMUNITIES


                                                                                                                      AMOUNT
CO-INVESTMENT            COMPANY                                                        PROJECTED   ANTICIPATED      EXPENDED
DEVELOPMENT            PERCENTAGE                         NO. OF        COMPLETION     COMPLETION   DEVELOPMENT      THROUGH
COMMUNITY               OWNERSHIP         LOCATION         UNITS        PERCENTAGE        DATE          COST         9/30/96
- -------------------  ---------------  ----------------     -----     ----------------  -----------  ------------  --------------
                                                                                             
AMLI at Pleasant                                                                       Completed;
 Hill..............           40%     Atlanta, Georgia         502             97%     In Lease-up   $26,600,000   $ 25,676,000
AMLI at Barrett
 Lakes.............           35%     Atlanta, Georgia         446             39%      Nov. 1997    27,800,000      10,848,000
AMLI at River
 Park..............           40%     Atlanta, Georgia         222             49%      June 1997    15,400,000       7,497,000
AMLI at Aurora
 Crossing..........           25%     Aurora, Illinois         272             32%      July 1997    24,500,000       7,885,000
AMLI at Fossil
 Creek.............           25%     Ft. Worth, Texas         384             11%      Feb. 1998    23,700,000       2,654,000
                                                             -----                                  ------------  --------------
TOTAL..............                                          1,826                                  1$18,000,000   $ 54,560,000
                                                             -----                                  ------------  --------------
                                                             -----                                  ------------  --------------
 

CO-INVESTMENT
DEVELOPMENT          CO-INVESTMENT
COMMUNITY               PARTNER
- -------------------  -------------
                  
AMLI at Pleasant
 Hill..............       NML
AMLI at Barrett
 Lakes.............       NML
AMLI at River
 Park..............      Erie
AMLI at Aurora
 Crossing..........      NYCRF
AMLI at Fossil
 Creek.............      NYCRF
TOTAL..............

 
                                      S-28

                                   MANAGEMENT
 
TRUSTEES, EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES
 
    The  Trustees, executive officers and certain other significant employees of
the Company and its affiliates and their positions and offices are set forth  in
the following table.
 


            NAME                        POSITIONS AND OFFICES HELD AMLI & AFFILIATES
- ----------------------------  ----------------------------------------------------------------
                           
Gregory T. Mutz               Chairman of the Board of Trustees (term will expire in 1999)
John E. Allen                 Vice-Chairman of the Board of Trustees (term will expire in
                               1998)
Allan J. Sweet                President and Trustee (term will expire 1997)
Philip N. Tague               Executive Vice President and Trustee (term will expire 1998)
Laura D. Gates*               Trustee (term will expire in 1999)
Marc S. Heilweil*             Trustee (term will expire in 1999)
Stephen G. McConahey*         Trustee (term will expire in 1997)
Quintin E. Primo III*         Trustee (term will expire in 1998)
John G. Schreiber*            Trustee (term will expire in 1997)
Stephen C. Ross               Executive Vice President
Charles C. Kraft              Treasurer
Peggy Butterworth             Executive Vice President--Amli Management Company
Robert Aisner                 Senior Vice President--Development
Mark Evans                    Senior Vice President--Amli Residential Construction, Inc.
Melissa Lavender              Senior Vice President--Amli Institutional Advisors, Inc.
Rosita A. Lina                Vice President and Controller
Charlotte A. Sparrow          Vice President and Secretary
Fred N. Shapiro               Vice President--Acquisitions
Curtis Walker                 Vice President--Acquisitions
Jennifer Wilson               Vice President--Development
Greg O'Berry                  Vice President--Asset Management
Cindy Gurniewicz              Vice President--Development
Robert C. Malpasuto           Vice President--Management Information Systems
M. Watson Brown               Vice President--Amli Residential Contruction, Inc.
David R. Wade                 Vice President--Amli Residential Contruction, Inc.
Terry L. Turk                 Regional Vice President--Amli Management Company

 
- ---------
*  Each  of these individuals  is a Disinterested Trustee  within the meaning of
   the Company's Declaration of  Trust. The Company has  a nine-member Board  of
   Trustees,  which includes, as required by the Company's Declaration of Trust,
   a majority of Trustees (presently five Trustees) who are not affiliated  with
   ARC and its affiliates and successors (each a "Disinterested Trustee").
 
                                      S-29

                                  UNDERWRITING
 
    Subject  to the terms and conditions contained in the underwriting agreement
among the underwriters  named below  (the "Underwriters") and  the Company  (the
"Underwriting  Agreement"), the  Underwriters have severally  agreed to purchase
from the Company, and the  Company has agreed to  sell to the Underwriters,  the
following respective number of Common Shares:
 
   


UNDERWRITER                                                                  NUMBER OF SHARES
- ---------------------------------------------------------------------------  -----------------
                                                                          
Lehman Brothers Inc........................................................         687,500
Dean Witter Reynolds Inc...................................................         687,500
Merrill Lynch, Pierce, Fenner & Smith Incorporated.........................         687,500
EVEREN Securities, Inc.....................................................         687,500
                                                                             -----------------
    Total..................................................................       2,750,000
                                                                             -----------------
                                                                             -----------------

    
 
    The  Underwriting Agreement  provides that the  Underwriters' obligations to
purchase  the  Common  Shares  are  subject  to  the  satisfaction  of   certain
conditions,  including the receipt of certain  legal opinions. The nature of the
Underwriters' obligations is such that they are committed to purchase all of the
Common Shares if any are purchased.
 
    The Underwriters have  advised the Company  that they propose  to offer  the
Common Shares offered hereby for sale, from time to time, to purchasers directly
or  through agents, or through brokers in brokerage transactions on the NYSE, or
to underwriters or  dealers in negotiated  transactions or in  a combination  of
such  methods of sale,  at fixed prices  which may be  changed, at market prices
prevailing at the  time of  sale, at prices  related to  such prevailing  market
prices or at negotiated prices.
 
    Brokers,   dealers,  agents   and  underwriters  that   participate  in  the
distribution  of  the  Common  Shares  offered  hereby  may  be  deemed  to   be
underwriters  under the  Securities Act of  1933. Those who  act as underwriter,
broker, dealer or agent in connection with the sale of the Common Shares offered
hereby will  be  selected  by  the Underwriters  and  may  have  other  business
relationships with the Company or affiliates in the ordinary course of business.
 
   
    The  Company has granted to the Underwriters  an option to purchase up to an
additional 412,500 Common Shares at a purchase price of $20.61 per share, solely
to cover over-allotments, if any. Such option may be exercised at any time until
30 days after the date of this Prospectus Supplement.
    
 
    The Company  has  agreed,  subject  to  certain  exceptions  (including  the
issuance  of Common Shares  pursuant to the  Company's employee benefits plans),
not to offer, sell, enter into any agreement to sell or otherwise dispose of any
Common Shares  for  a period  of  90 days  after  the date  of  this  Prospectus
Supplement.
 
    The  Company  has  agreed  to  indemnify  the  Underwriters  against certain
liabilities, including under the Securities Act of 1933.
 
   
    In August  1994, Lehman  Brothers  Holdings, Inc.,  an affiliate  of  Lehman
Brothers  Inc.,  provided  to  the  Company  a  $54,835,000  whole  loan  and  a
$56,347,500 line of credit, each of which was secured by liens on certain of the
Communities. The Company repaid in  full such loan and  line of credit in  June,
1996.  Additionally, from  time to  time from  August, 1994  through June, 1996,
Lehman provided financial advisory services and financial derivative products to
the Company. Lehman  received customary compensation  for providing such  loans,
financial advisory services and financial derivative products.
    
 
    Since October 1, 1996, an affiliate of Merrill Lynch, Pierce, Fenner & Smith
Incorporated  has acted as trustee and administrator of the Company's Retirement
Savings Plan and Trust, for which it has received customary compensation.
 
    Stephen G. McConahey, a Trustee of  the Company, is the President and  Chief
Operating Officer of EVEREN Securities, Inc.
 
                                      S-30

                        SAFE HARBOR STATEMENT UNDER THE
                PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
 
    Certain statements set forth herein or incorporated by reference herein from
the Company's filings under the Securities Exchange Act of 1934, as amended (see
"Incorporation   by   Reference"  in   the  accompanying   Prospectus),  contain
forward-looking statements, including,  without limitation, statements  relating
to  the timing and anticipated capital expenditures of the Company's development
programs. Although the Company believes that the expectations reflected in  such
forward-looking  statements  are  based on  reasonable  assumptions,  the actual
results may  differ  materially  from  that set  forth  in  the  forward-looking
statements.  Certain factors  that might  cause such  difference include general
economic conditions, local  real estate conditions,  construction delays due  to
the unavailability of construction materials, weather conditions or other delays
beyond the control of the Company. Consequently, such forward-looking statements
should  be regarded solely as reflections of the Company's current operating and
development plans  and  estimates. These  plans  and estimates  are  subject  to
revision  from time  to time  as additional  information becomes  available, and
actual results may differ from those indicated in the referenced statements.
 
   
                           INCORPORATION BY REFERENCE
    
 
   
    The Company's Quarterly  Report on Form  10-Q for the  fiscal quarter  ended
September  30, 1996, filed November 6, 1996  with the Commission pursuant to the
Exchange Act,  is  incorporated  by reference  herein.  (See  "Incorporation  By
Reference"  in the accompanying  Prospectus for other  documents incorporated by
reference herein.)
    
 
                                    EXPERTS
 
   
    The consolidated  financial  statements  and schedule  of  Amli  Residential
Properties  Trust as of December 31, 1995 and  1994 and for each of the years in
the three-year  period  ended  December  31,  1995  have  been  incorporated  by
reference  in the accompanying Prospectus and  in the Registration Statement, of
which the accompanying Prospectus is a part, in reliance upon the report of KPMG
Peat Marwick  LLP, independent  certified public  accountants, which  report  is
incorporated  by  reference therein,  and  upon the  authority  of said  firm as
experts in accounting and auditing.
    
 
                                 LEGAL MATTERS
 
    Mayer, Brown & Platt, Chicago, Illinois, has passed upon the validity of the
issuance of the Common Shares offered pursuant to this Prospectus Supplement and
the accompanying  Prospectus  and on  certain  tax matters  as  described  under
"Federal Income Tax Considerations" in the accompanying Prospectus. Mayer, Brown
&  Platt has in the  past represented and is  currently representing the Company
and certain of its affiliates. Mayer, Brown & Platt has in the past  represented
and  is presently representing Lehman Brothers in certain other matters. Certain
legal matters relating to the Offering will be passed upon for the  Underwriters
by Skadden, Arps, Slate, Meagher & Flom (Illinois).
 
                                      S-31

PROSPECTUS
 
                       AMLI RESIDENTIAL PROPERTIES TRUST
 
                                  $200,000,000
 
            PREFERRED SHARES, COMMON SHARES AND SECURITIES WARRANTS
 
                             ---------------------
 
    Amli  Residential Properties  Trust (the  "Company") may  from time  to time
offer and  sell  in  one or  more  series  (i) Preferred  Shares  of  Beneficial
Interest,  par value $.01 per share (the "Preferred Shares"); (ii) Common Shares
of Beneficial Interest par value $.01 per share (the "Common Shares"); or  (iii)
warrants  to  purchase Preferred  Shares (the  "Preferred Shares  Warrants") and
warrants to  purchase Common  Shares  (the "Common  Shares Warrants"),  with  an
aggregate public offering price of up to $200,000,000, on terms to be determined
by  market conditions at the time of offering. The Preferred Shares Warrants and
the Common  Shares Warrants  shall be  referred to  herein collectively  as  the
"Securities  Warrants."  The  Preferred Shares,  Common  Shares,  and Securities
Warrants (collectively, the "Offered Securities")  may be offered separately  or
together, in separate series, in amounts and at prices and terms to be set forth
in   an  accompanying  supplement  to   this  Prospectus  (each,  a  "Prospectus
Supplement").
 
    The specific  terms of  the  Offered Securities  in  respect of  which  this
Prospectus  is being  delivered will be  set forth in  the applicable Prospectus
Supplement and will  include, where  applicable: (i)  in the  case of  Preferred
Shares,  the  specific  title  and  stated  value,  any  dividend,  liquidation,
redemption, conversion, voting and other rights, and any initial public offering
price, along with any other relevant specific terms; (ii) in the case of  Common
Shares,  any initial public offering price; and  (iii) in the case of Securities
Warrants, the duration,  offering price,  exercise price  and detachability,  if
applicable,  along with  any other  relevant specific  terms. In  addition, such
specific  terms  may  include  limitations  on  direct  or  indirect  beneficial
ownership  and restrictions on transfer of  the Offered Securities, in each case
as may be appropriate  to preserve the  status of the Company  as a real  estate
investment trust ("REIT") for federal income tax purposes.
 
    The  applicable Prospectus  Supplement will also  contain information, where
applicable, about  certain  United  States  federal  income  tax  considerations
relating to, and any listing on a securities exchange of, the Offered Securities
covered by such Prospectus Supplement.
 
    The  Offered Securities may  be offered directly by  the Company, or through
agents  designated  from  time  to  time  by  the  Company,  or  to  or  through
underwriters  or dealers. If any agents or underwriters are involved in the sale
of any  of the  Offered Securities,  their names,  and any  applicable  purchase
price,  fee, commission or  discount arrangement between or  among them, will be
set forth,  or  will  be calculable  from  the  information set  forth,  in  the
applicable  Prospectus  Supplement.  See  "Plan  of  Distribution."  No  Offered
Securities may be sold without delivery of the applicable Prospectus  Supplement
describing  the  method and  terms of  the  offering of  such series  of Offered
Securities.
 
                            ------------------------
THESE SECURITIES  HAVE  NOT  BEEN  APPROVED OR  DISAPPROVED  BY  THE  SECURITIES
   AND    EXCHANGE   COMMISSION   OR    ANY   STATE   SECURITIES   COMMISSION
     NOR  HAS  THE  SECURITIES  AND   EXCHANGE  COMMISSION  OR  ANY   STATE
        SECURITIES  COMMISSION PASSED UPON  THE ACCURACY OR ADEQUACY
            OF  THIS  PROSPECTUS.  ANY  REPRESENTATION  TO   THE
                        CONTRARY IS A CRIMINAL OFFENSE.
 
                            ------------------------
       THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS NOT PASSED ON OR
            ENDORSED THE MERITS OF THIS OFFERING. ANY REPRESENTATION
                          TO THE CONTRARY IS UNLAWFUL.
 
                            ------------------------
 
                THE DATE OF THIS PROSPECTUS IS OCTOBER 15, 1996

                             AVAILABLE INFORMATION
 
    The  Company is subject to the  informational requirements of the Securities
Exchange Act  of  1934, as  amended  (the  "Exchange Act"),  and  in  accordance
therewith  files reports and other information  with the Securities and Exchange
Commission (the  "Commission"). Reports,  proxy material  and other  information
concerning  the  Company can  be  inspected and  copied  at the  offices  of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 or at its  regional
offices,  Citicorp Center, 500 West Madison  Street, Chicago, Illinois 60661 and
Seven World Trade Center, New York, New York 10048. Copies of such material  can
be  obtained from the  Public Reference Section  of the Commission  at 450 Fifth
Street, N.W.,  Washington,  D.C.  20549  at  prescribed  rates.  The  Commission
maintains   a  web  site  (http://www.SEC.gov)   that  contains  reports,  proxy
statements and other information regarding registrants that file  electronically
with  the Commission. The Company's outstanding  Common Shares are listed on the
New York  Stock Exchange  (the "NYSE")  under  the symbol  "AML", and  all  such
reports, proxy material and other information filed by the Company with the NYSE
may  be inspected at the offices  of the NYSE at 20  Broad Street, New York, New
York 10005.
 
    The Company has filed with the  Commission a registration statement on  Form
S-3  (together with all  amendments and exhibits,  the "Registration Statement")
under the  Securities Act  of  1933, as  amended  (the "Securities  Act"),  with
respect  to the securities offered hereby. This prospectus ("Prospectus"), which
constitutes a  part of  the Registration  Statement, does  not contain  all  the
information  set forth in the Registration Statement, certain items of which are
contained in exhibits to  the Registration Statement as  permitted by the  rules
and  regulations of the Commission. Statements made in this Prospectus as to the
content of  any  contract, agreement  or  other  document referred  to  are  not
necessarily  complete. With  respect to each  such contract,  agreement or other
document filed or incorporated  by reference as an  exhibit to the  Registration
Statement,  reference is made to the exhibit  for a more complete description of
the matter involved, and  each such statement shall  be deemed qualified in  its
entirety by such reference.
 
                           INCORPORATION BY REFERENCE
 
    The  following documents filed by the  Company with the Commission (File No.
1-12784) pursuant to  the Exchange  Act are  incorporated by  reference in  this
Prospectus:
 
    (1)  The Company's  Annual Report  on Form 10-K,  as amended  on Form 10-K/A
       (filed May 16, 1996), for the fiscal year ended December 31, 1995;
 
    (2) The Company's  Quarterly Reports on  Form 10-Q for  the fiscal  quarters
       ended March 31, 1996 and June 30, 1996.
 
    (3)  The Company's Current Reports on Form 8-K dated January 18, 1996 (filed
       January 19, 1996);  January 30, 1996  (two Reports dated  this date,  one
       filed  January 31, 1996 and one filed  February 14, 1996) and October 15,
       1996;
 
    (4) The Company's  Proxy Statement  for the annual  meeting of  shareholders
       held on April 29, 1996;
 
    (5)  Description of the Common Shares included in the Registration Statement
       on Form 8-A dated February 1, 1994 (filed February 1, 1994).
 
    All documents filed by the Company  pursuant to Section 13(a), 13(c), 14  or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the  termination of the offering made hereby  shall be deemed to be incorporated
by reference in this Prospectus and to be a part hereof from the date of  filing
of  such documents. Any statement contained in a document incorporated or deemed
to be  incorporated  by reference  herein  shall be  deemed  to be  modified  or
superseded  for  purposes of  this  Prospectus to  the  extent that  a statement
contained herein, or  in any other  subsequently filed document  which is or  is
deemed  to be incorporated by reference  herein, modifies or supersedes any such
statement. Any such  statement so  modified or  superseded will  not be  deemed,
except as so modified or superseded, to constitute a part of this Prospectus.
 
    The  Company  will  provide without  charge  to each  person,  including any
beneficial owner, to whom this Prospectus  is delivered, on the request of  such
person,  a  copy  of  any  of the  foregoing  documents  incorporated  herein by
reference (other than the  exhibits to such documents  unless such exhibits  are
specifically  incorporated by reference into such documents). Requests should be
directed to Amli Residential Properties Trust, 125 South Wacker Drive,  Chicago,
Illinois 60606, Attention: Secretary, telephone (312) 984-5037.
 
                                       2

                                  THE COMPANY
 
    The   Company  and   its  affiliates  constitute   a  self-administered  and
self-managed real  estate investment  trust (a  "REIT") which  was organized  in
February,  1994  to  continue  and  expand  the  multifamily  property  business
conducted by Amli Realty Co. and its affiliates ("Amli") since 1980. The Company
and its affiliates own, manage, lease, acquire and develop institutional quality
apartment communities. The Company's communities (the "Communities") are located
in specific markets in the Southwest, Southeast and Midwest areas of the  United
States.  The Company  also holds  interests in  co-investment ventures involving
residential   apartment   communities    (the   "Co-investment    Communities").
Additionally,  the  Company engages  in development  activities  on its  own and
through co-investment joint ventures.
 
    The business of the Company  is operated through the Operating  Partnership,
Amli Management Company (the "Management Company"), Amli Institutional Advisors,
Inc.  ("AIA") and Amli  Residential Construction, Inc.  ("Amrescon" and together
with the Management Company  and AIA, the "Service  Companies"). The Company  is
the  sole  general  partner of  the  Operating Partnership,  a  Delaware limited
partnership, through which  it owns  the Communities  and its  interests in  the
Co-Investment  Communities. As of September 30, 1996, the Company owned 81.6% of
the partnership interests ("Units") in the Operating Partnership. The Management
Company provides management and leasing services to each of the Communities, the
Co-Investment Communities and several additional properties in which the Company
has no interest. AIA, a  "QPAM" (qualified professional asset manager),  renders
real  estate  investment  advice  to  institutional  capital  sources, primarily
pension plans,  endowments, foundations  and  insurance companies.  The  Company
actively  pursues co-investments  through relationships administered  by AIA, in
this way seeking to diversify the  sources of its equity capital for  investment
in  apartment communities.  Amrescon provides  general contracting, construction
management and landscaping services to the Company and its managed ventures.
 
    The Company  was  formed as  a  Maryland  real estate  investment  trust  on
December  16, 1993.  The Company's  executive offices  are located  at 125 South
Wacker Drive, Suite 3100,  Chicago, Illinois 60606 and  its telephone number  is
(312)  984-5037. The  Company's principal  office is  in Chicago,  Illinois with
regional offices in Dallas, Texas and Atlanta, Georgia.
 
                                USE OF PROCEEDS
 
    Unless otherwise described  in the Prospectus  Supplement which  accompanies
this  Prospectus, the Company intends  to use the net  proceeds from the sale of
the Offered  Securities  for  general  corporate  purposes,  which  may  include
acquisition  and  development of  apartment  communities, investment  in further
co-investment ventures, improvement of the Communities and repayment of  certain
then-outstanding secured or unsecured indebtedness.
 
            SHARES OF BENEFICIAL INTEREST AND SHAREHOLDER LIABILITY
 
    The  Declaration of Trust of the Company provides that the Company may issue
up to 150,000,000 shares  of beneficial interest, $.01  par value per share.  No
holder  of any class of  shares of beneficial interest  of the Company will have
any preemptive right to  subscribe for any securities  of the Company except  as
may  be granted by the Board of Trustees  in authorizing the issuance of a class
of preferred shares of beneficial  interest. The Company's Declaration of  Trust
authorizes  the Trustees to classify or reclassify any unissued Common Shares or
Preferred Shares by  setting or  changing the preferences,  conversion or  other
rights, voting powers, restrictions, limitations as to dividends, qualifications
or terms or conditions of redemption.
 
    Both   Maryland  statutory  law  governing  real  estate  investment  trusts
organized under the laws  of that state and  the Company's Declaration of  Trust
provide  that no shareholder  of the Company  will be personally  liable for any
obligations of the Company. The Company's Declaration of Trust further provides,
with  certain  limited  exceptions,  that  the  Company  shall  indemnify   each
shareholder  against claims or  liabilities to which  the shareholder may become
subject by reason of his being or having been a shareholder and that the Company
shall reimburse each  shareholder for  all legal and  other expenses  reasonably
incurred  by him in connection with any such claim or liability. In addition, it
is the Company's policy to include a clause in its
 
                                       3

contracts, including  the Partnership  Agreement of  the Operating  Partnership,
which  provides that shareholders  assume no personal  liability for obligations
entered into on  behalf of the  Company. However, with  respect to tort  claims,
contractual  claims where  shareholder liability is  not so  negated, claims for
taxes and certain statutory liability, a shareholder may, in some jurisdictions,
be personally liable to  the extent that  such claims are  not satisfied by  the
Company.  Inasmuch as the Company will carry public liability insurance which it
considers adequate, any risk of personal liability to shareholders is limited to
situations in which the  Company's assets plus its  insurance coverage would  be
insufficient to satisfy the claims against the Company and its shareholders.
 
BUSINESS COMBINATIONS
 
    Under  the Maryland  General Corporation Law,  as amended from  time to time
(the "MGCL"), as applicable to  Maryland real estate investment trusts,  certain
"business  combinations" (including a merger, consolidation, share exchange, or,
in certain circumstances, an asset  transfer or issuance or reclassification  of
equity  securities)  between a  Maryland real  estate  investment trust  and any
person who beneficially owns 10%  or more of the voting  power of the shares  of
the  trust or  an affiliate of  the trust who,  at any time  within the two-year
period prior to the date in question, was the beneficial owner of 10% or more of
the voting power of the then-outstanding voting shares of beneficial interest of
the trust (an "Interested Shareholder")  or an affiliate thereof are  prohibited
for  five years after the  most recent date on  which the Interested Shareholder
became an Interested Shareholder. Thereafter, any such business combination must
be (a) recommended by the  Board of Trustees of such  trust and (b) approved  by
the  affirmative vote of  at least (i) 80%  of the votes entitled  to be cast by
holders of outstanding  voting shares of  the trust and  (ii) two-thirds of  the
votes  entitled to be cast  by holders of outstanding  voting shares (other than
voting shares  held  by  the  Interested  Shareholder  with  whom  the  business
combination  is to be effected or by  an affiliate or associate thereof), voting
together as a  single group, unless,  among other things,  the company's  common
shareholders  receive  a minimum  price (as  defined in  the statute)  for their
shares and  the  consideration is  received  in cash  or  in the  same  form  as
previously  paid by the Interested Shareholder  for his shares. These provisions
of Maryland  law  do  not  apply,  however,  to  business  combinations  with  a
particular  Interested Shareholder or its existing or future affiliates that are
approved or exempted by  the board of  trustees of the trust  prior to the  time
that  the Interested  Shareholder becomes  an Interested  Shareholder or  if the
original declaration of trust includes a provision electing not to be  governed,
in  whole or  in part,  as to  business combinations  generally, specifically or
generally by  types,  as  to  identified  or  unidentified  existing  or  future
Interested Shareholders or their affiliates. The Company's Declaration of Trust,
in  accordance with  Maryland law,  exempts Mr. Mutz,  Baldwin &  Lyons, Inc., a
publicly traded casualty  insurance company  based in  Indianapolis ("Baldwin  &
Lyons")  and  Amli  and  their respective  affiliates  and  successors  from the
foregoing restrictions. As a  result, such persons and  entities may be able  to
enter  into business combinations with the Company, which may not be in the best
interests of  the  shareholders, without  compliance  by the  Company  with  the
super-majority voting requirements and the other provisions of the statute.
 
CONTROL SHARE ACQUISITIONS
 
    The  MGCL, as applicable to Maryland  real estate investment trusts, imposes
limitations on  the  voting  rights  of shares  acquired  in  a  "control  share
acquisition"  relating  to a  Maryland real  estate  investment trust.  The MGCL
defines a "control share  acquisition" as the  acquisition of "control  shares,"
which  is defined as voting  shares that would entitle  the acquiror to exercise
voting power in electing  trustees in excess of  the following levels of  voting
power:  20%, 33 1/3%, and  50%. The MGCL requires  a two-thirds shareholder vote
(excluding  shares  owned  by  the  acquiring  person  and  certain  members  of
management)  to  accord voting  rights  to shares  acquired  in a  control share
acquisition. The MGCL also requires a  Maryland real estate investment trust  to
hold  a special meeting  at the request  of an actual  or proposed control share
acquiror generally within 50 days after a request is made with the submission of
an "acquiring person statement," but only if the acquiring person (a) delivers a
written undertaking to pay the expenses of such special meeting or, if  required
by  the Board  of Trustees, posts  a bond  for the cost  of the  meeting and (b)
submits a definitive  financing agreement to  the extent that  financing is  not
provided  by the  acquiring person.  In addition,  unless the  charter or bylaws
provide otherwise,  the MGCL  gives  a Maryland  real estate  investment  trust,
within  certain  time  limitations,  various redemption  rights  if  there  is a
shareholder vote on the issue and the grant of
 
                                       4

voting rights is  not approved,  or if an  "acquiring person  statement" is  not
delivered  to  the  target company  within  10  days following  a  control share
acquisition. Moreover, unless the charter or bylaws provide otherwise, the  MGCL
provides  that if, before a control  share acquisition occurs, voting rights are
accorded to the control  shares which results in  the acquiring person having  a
majority  of voting power, then minority  shareholders are entitled to appraisal
rights. The  fair  value  of the  shares  as  determined for  purposes  of  such
appraisal  rights may not be  less than the highest price  per share paid by the
acquiror in the control share acquisition. The control share acquisition statute
does not  apply (a)  to shares  acquired  in a  merger, consolidation  or  share
exchange  if the  trust is  a party  to the  transaction or  (b) to acquisitions
approved or exempted by  the declaration of  trust or bylaws  of the trust.  The
Company's  Declaration of  Trust, in  accordance with  Maryland law,  contains a
provision exempting acquisitions of shares by Mr. Mutz, Baldwin & Lyons and Amli
and their respective affiliates and successors from the foregoing provisions.
 
                          DESCRIPTION OF COMMON SHARES
 
GENERAL
 
    The following description sets forth certain general terms and provisions of
the Common Shares  to which any  Prospectus Supplement may  relate, including  a
Prospectus  Supplement  which provides  for Common  Shares issuable  pursuant to
subscription offerings  or  rights offerings  or  upon conversion  of  Preferred
Shares.  The statements below  describing the Common Shares  are in all respects
subject to  and qualified  in  their entirety  by  reference to  the  applicable
provisions of the Company's Declaration of Trust and Bylaws.
 
    All  Common Shares issued will be duly authorized, fully paid and, except as
described under  "Shares  of  Beneficial Interest  and  Shareholder  Liability,"
non-assessable.  Subject to the provisions of the Company's Declaration of Trust
regarding Excess  Shares (as  defined therein),  each outstanding  Common  Share
entitles the holder thereof to one vote on all matters voted on by shareholders,
including  the election of  Trustees. Holders of  Common Shares do  not have the
right to cumulate their votes in the election of Trustees, which means that  the
holders  of a  majority of the  outstanding Common  Shares can elect  all of the
Trustees then standing for election. Distributions may be paid to the holders of
Common Shares if and when declared by  the Board of Trustees of the Company  out
of  funds legally available therefor, subject to the provisions of the Company's
Declaration of Trust regarding Excess Shares. The Company currently pays regular
quarterly dividends. Holders  of Common Shares  have no conversion,  redemption,
preemptive  or exchange rights to subscribe to any securities of the Company. If
the Company is  liquidated, each outstanding  Common Share will  be entitled  to
participate  pro  rata in  the assets  remaining after  payment of,  or adequate
provision for, all known debts and liabilities of the Company and the rights  of
holders  of  any preferred  shares of  beneficial interest  of the  Company. The
rights of holders  of Common Shares  are subject to  the rights and  preferences
established  by  the  Board  of  Trustees for  any  Preferred  Shares  which may
subsequently be issued by the Company. See "Description of Preferred Shares."
 
RESTRICTIONS ON TRANSFER
 
    The Company's  Declaration of  Trust contains  certain restrictions  on  the
number  of Common Shares  and Preferred Shares  that individual shareholders may
own. For the Company to qualify  as a REIT under the  Code, no more than 50%  in
value of its shares of beneficial interest (after taking into account options to
acquire  shares of beneficial interest) may be owned, directly or indirectly, by
five or fewer individuals  (as defined in the  Code to include certain  entities
and  constructive ownership among specified family members) during the last half
of a taxable year (other than the first taxable year) or during a  proportionate
part  of a shorter taxable year. The  shares of beneficial interest must also be
beneficially owned (other  than during the  first taxable year)  by 100 or  more
persons  during at least  335 days of  a taxable year  or during a proportionate
part of a  shorter taxable year.  Because the  Company expects to  qualify as  a
REIT,  the  Declaration of  Trust of  the Company  contains restrictions  on the
acquisition of Common Shares and Preferred Shares intended to ensure  compliance
with these requirements.
 
    Subject  to  certain exceptions  specified in  the Company's  Declaration of
Trust, no holder  may own,  or be  deemed to own  by virtue  of the  attribution
provisions    of   the   Code,   more    than   5%   (the   "Ownership   Limit")
 
                                       5

of the  number or  value of  the  issued and  outstanding shares  of  beneficial
interest  of the  Company. The  Company's Board of  Trustees, upon  receipt of a
ruling from the Internal Revenue Service (the "Service"), an opinion of  counsel
or  other evidence satisfactory  to the Board  of Trustees, and  upon such other
conditions as  the Board  of Trustees  may direct,  may also  exempt a  proposed
transferee  from  the Ownership  Limit. As  a condition  of such  exemption, the
intended transferee must  give written  notice to  the Company  of the  proposed
transfer  no  later than  the  fifteenth day  prior  to any  transfer  which, if
consummated, would result in the intended transferee owning shares in excess  of
the  Ownership Limit.  The Board  of Trustees  of the  Company may  require such
opinions of  counsel, affidavits,  undertakings  or agreements  as it  may  deem
necessary or advisable in order to determine or ensure the Company's status as a
REIT.  Any transfer of Common Shares or Preferred Shares that would (i) create a
direct or indirect ownership  of shares in excess  of the Ownership Limit,  (ii)
result  in the  shares being  beneficially owned  by fewer  than 100  persons as
provided in Section 856(a)  of the Code,  or (iii) result  in the Company  being
"closely  held" within the meaning of Section  856(h) of the Code, shall be null
and void, and the intended transferee will acquire no rights to the shares.  The
foregoing  restrictions on transferability  and ownership will  not apply if the
Board of  Trustees  determines, which  determination  must be  approved  by  the
shareholders,  that it  is no  longer in  the best  interests of  the Company to
attempt to qualify, or to continue to qualify, as a REIT.
 
    The Company's  Board  of  Trustees  by  resolution  has  excluded  from  the
foregoing  ownership restriction Amli, Gregory T.  Mutz and Baldwin & Lyons, who
collectively may  own  up to  34.9%  of  the outstanding  shares  of  beneficial
interest  of  the  Company  as  a group,  or,  subject  to  certain limitations,
individually (subject to the group restrictions) up to 29.9% of the  outstanding
shares of beneficial interest of the Company. The Company's Declaration of Trust
excludes   certain  investors  (and  their   transferees)  from  whom  apartment
communities were obtained in exchange for  Units or Common Shares in  connection
with  the formation of the Company and who would exceed the Ownership Limit as a
result of the ownership of such Common Shares or the exchange of such Units  for
Common  Shares. In no event will such  persons be entitled to acquire additional
shares of  beneficial  interest  of  the Company  such  that  the  five  largest
beneficial owners of shares of beneficial interest of the Company hold more than
50% of the total outstanding shares.
 
    Any purported transfer of shares that would result in a person owning shares
in  excess of the Ownership Limit or  cause the Company to become "closely held"
under Section 856(h)  of the Code  that is not  otherwise permitted as  provided
above will constitute excess shares ("Excess Shares"), which will be transferred
pursuant to the Declaration of Trust to the Company as trustee for the exclusive
benefit  of  the person  or persons  to  whom the  Excess Shares  are ultimately
transferred, until such time as the purported transferee retransfers the  Excess
Shares.  While these Excess Shares are held  in trust, they will not be entitled
to vote or  to share in  any dividends  or other distributions.  Subject to  the
Ownership  Limit,  the  Excess  Shares  may  be  transferred  by  the  purported
transferee to any person (if the Excess Shares would not be Excess Shares in the
hands of such person) at a price not  to exceed the price paid by the  purported
transferee (or, if no consideration was paid, fair market value), at which point
the  Excess Shares will automatically  be exchanged for the  shares to which the
Excess Shares are attributable.  In addition, such Excess  Shares held in  trust
are  subject to purchase by the Company at  a purchase price equal to the lesser
of the  price  paid for  the  shares by  the  purported transferee  (or,  if  no
consideration  was paid,  fair market  value) and the  fair market  value of the
shares of beneficial  interest (as reflected  in the last  reported sales  price
reported on the NYSE on the trading day immediately preceding the relevant date,
or  if not then traded on the NYSE, the last reported sales price of such shares
on the trading day  immediately preceding the relevant  date as reported on  any
exchange  or quotation system  over which such  shares may be  traded, or if not
then traded over any exchange or quotation system, then the market price of such
shares on the relevant date as determined in good faith by the Board of Trustees
of the Company) on the date the Company elects to purchase.
 
    All certificates  representing shares  of beneficial  interest will  bear  a
legend referring to the restrictions described above.
 
TRANSFER AGENT AND REGISTRAR
 
    Harris  Trust  and Savings  Bank has  been appointed  as transfer  agent and
registrar for the Common Shares.
 
                                       6

                        DESCRIPTION OF PREFERRED SHARES
 
GENERAL
 
    Subject  to  limitations  prescribed  by  Maryland  law  and  the  Company's
Declaration  of Trust, the Board of Trustees is authorized to issue, without the
approval of the shareholders, Preferred Shares, from the authorized but unissued
shares of beneficial interest  of the Company, in  series and to establish  from
time to time the number of Preferred Shares to be included in such series and to
fix  the designation  and any preferences,  conversion and  other rights, voting
powers, restrictions, limitations as to dividends, qualifications and terms  and
conditions  of redemption  of the  shares of  each series.  All Preferred Shares
issued will  be duly  authorized,  fully paid  and,  except as  described  under
"Shares of Beneficial Interest and Shareholder Liability," non-assessable.
 
    Reference  is made  to the Prospectus  Supplement relating  to the Preferred
Shares offered  thereby  for  the  specific  terms  of  such  Preferred  Shares,
including:
 
        (1) The title and stated value of such Preferred Shares;
 
        (2)  The  number  of  shares  of  such  Preferred  Shares  offered,  the
    liquidation preference per share  and the offering  price of such  Preferred
    Shares;
 
        (3)  The dividend rate(s), period(s) and/or payment date(s) or method(s)
    of calculation thereof applicable to such Preferred Shares;
 
        (4) The  date  from  which  dividends on  such  Preferred  Shares  shall
    cumulate, if applicable;
 
        (5)  The procedures  for any auction  and remarketing, if  any, for such
    Preferred Shares;
 
        (6) The provision for a sinking fund, if any, for such Preferred Shares;
 
        (7) The  provision  for redemption,  if  applicable, of  such  Preferred
    Shares;
 
        (8) Any listing of such Preferred Shares on any securities exchange;
 
        (9)  The terms and conditions, if  applicable, upon which such Preferred
    Shares will be convertible into Common Shares of the Company, including  the
    conversion price (or manner of calculation thereof);
 
       (10)  Whether interests in  such Preferred Shares  will be represented by
    Global Securities;
 
       (11) Any  other  specific  terms,  preferences,  rights,  limitations  or
    restrictions of such Preferred Shares;
 
       (12) A discussion of federal income tax considerations applicable to such
    Preferred Shares;
 
       (13)  The relative ranking and preferences of such Preferred Shares as to
    dividend rights and rights  upon liquidation, dissolution  or winding up  of
    the affairs of the Company;
 
       (14)  Any  limitations  on issuance  of  any series  of  Preferred Shares
    ranking senior to or on a parity with such series of Preferred Shares as  to
    dividend  rights and rights  upon liquidation, dissolution  or winding up of
    the affairs of the Company; and
 
       (15) Any limitations on direct  or beneficial ownership and  restrictions
    on  transfer of  Preferred Shares,  in each  case as  may be  appropriate to
    preserve the status of the Company as a REIT.
 
RANK
 
    Unless otherwise  specified  in  the Prospectus  Supplement,  the  Preferred
Shares  will,  with  respect to  dividend  rights and  rights  upon liquidation,
dissolution or winding  up of the  Company, rank  (i) senior to  all classes  or
series  of Common  Shares and  to all equity  securities ranking  junior to such
Preferred Shares; (ii)  on a  parity with all  equity securities  issued by  the
Company the terms of which specifically provide that such equity securities rank
on a parity with the Preferred Shares; and (iii) junior to all equity securities
issued
 
                                       7

by  the  Company  the  terms  of which  specifically  provide  that  such equity
securities rank senior  to the Preferred  Shares. The rights  of the holders  of
each  series  of  the Preferred  Shares  will  be subordinate  to  those  of the
Company's general creditors.
 
DIVIDENDS
 
    Holders of each  series of Preferred  Shares shall be  entitled to  receive,
when,  as and if declared by the Board of Trustees of the Company, out of assets
of the Company legally available for  payment, cash dividends at such rates  and
on such dates as will be set forth in the applicable Prospectus Supplement. Such
rate  may be fixed or  variable or both. Each such  dividend shall be payable to
holders of record as they appear on  the share transfer books of the Company  on
such record dates as shall be fixed by the Board of Trustees of the Company.
 
    Dividends  on  any  series of  the  Preferred  Shares may  be  cumulative or
non-cumulative, as provided in the applicable Prospectus Supplement.  Dividends,
if  cumulative, will  be cumulative  from and  after the  date set  forth in the
applicable Prospectus Supplement. If the Board of Trustees of the Company  fails
to  declare a dividend payable  on a dividend payment date  on any series of the
Preferred Shares for which dividends are noncumulative, then the holders of such
series of the  Preferred Shares  will have  no right  to receive  a dividend  in
respect  of the dividend  period ending on  such dividend payment  date, and the
Company will have  no obligation to  pay the dividend  accrued for such  period,
whether  or not  dividends on  such series  are declared  payable on  any future
dividend payment date.
 
    If Preferred Shares of any series  are outstanding, no full dividends  shall
be  declared or  paid or set  apart for payment  on the Preferred  Shares of the
Company of any other series ranking, as to dividends, on a parity with or junior
to the Preferred Shares of such series for any period unless (i) if such  series
of  Preferred Shares has  a cumulative dividend,  full cumulative dividends have
been or contemporaneously are declared and paid or declared and a sum sufficient
for the payment thereof set  apart for such payment  on the Preferred Shares  of
such  series for all past dividend periods  and the then current dividend period
or (ii) if such series of Preferred Shares does not have a cumulative  dividend,
full   dividends   for  the   then  current   dividend   period  have   been  or
contemporaneously are declared and paid or declared and a sum sufficient for the
payment thereof  set apart  for such  payment on  the Preferred  Shares of  such
series.  When dividends are not paid in full  (or a sum sufficient for such full
payment is not so  set apart) upon  the Preferred Shares of  any series and  the
shares  of  any other  series  of Preferred  Shares ranking  on  a parity  as to
dividends with the Preferred Shares of such series, all dividends declared  upon
Preferred Shares of such series and any other series of Preferred Shares ranking
on  a parity as  to dividends with  such Preferred Shares  shall be declared pro
rata so that the amount of dividends declared per share on the Preferred  Shares
of such series and such other series of Preferred Shares shall in all cases bear
to  each other the same ratio that  accrued dividends per share on the Preferred
Shares of such  series (which  shall not include  any cumulation  in respect  of
unpaid  dividends for prior dividend periods  if such series of Preferred Shares
does not have a cumulative dividend)  and such other series of Preferred  Shares
bear  to each other. No interest, or sum  of money in lieu of interest, shall be
payable in respect of  any dividend payment or  payments on Preferred Shares  of
such series which may be in arrears.
 
    Except  as provided  in the immediately  preceding paragraph,  unless (i) if
such series  of Preferred  Shares  has a  cumulative dividend,  full  cumulative
dividends  on the Preferred Shares of such series have been or contemporaneously
are declared and paid or declared and  a sum sufficient for the payment  thereof
set  apart  for payment  for  all past  dividend  periods and  the  then current
dividend period and  (ii) if such  series of  Preferred Shares does  not have  a
cumulative  dividend, full dividends on the Preferred Shares of such series have
been or contemporaneously are declared and paid or declared and a sum sufficient
for the payment  thereof set  apart for payment  for the  then current  dividend
period,  no dividends (other than in Common Shares or other shares of beneficial
interest ranking junior to the Preferred  Shares of such series as to  dividends
and  upon liquidation)  shall be declared  or paid  or set aside  for payment or
other distribution shall be declared or made upon the Common Shares or any other
shares of beneficial interest of  the Company ranking junior  to or on a  parity
with  the Preferred Shares of  such series as to  dividends or upon liquidation,
nor shall any Common Shares  or any other shares  of beneficial interest of  the
Company  ranking junior  to or  on a  parity with  the Preferred  Shares of such
series as to dividends or upon liquidation be redeemed,
 
                                       8

purchased or otherwise acquired for any consideration (or any moneys be paid  to
or  made available for a sinking fund for  the redemption of any such shares) by
the Company  (except  by  conversion  into  or  exchange  for  other  shares  of
beneficial  interest of  the Company ranking  junior to the  Preferred Shares of
such series as to dividends and upon liquidation).
 
    Any dividend payment  made on a  series of Preferred  Shares shall first  be
credited  against the earliest  accrued but unpaid dividend  due with respect to
shares of such series which remains payable.
 
REDEMPTION
 
    If so provided in the applicable Prospectus Supplement, the Preferred Shares
will be  subject to  mandatory redemption  or redemption  at the  option of  the
Company, as a whole or in part, in each case upon the terms, at the times and at
the redemption prices set forth in such Prospectus Supplement.
 
    The  Prospectus Supplement relating to a  series of Preferred Shares that is
subject to mandatory redemption will specify the number of such Preferred Shares
that shall be redeemed by the Company in each year commencing after a date to be
specified, at a  redemption price per  share to be  specified, together with  an
amount  equal to all accrued  and unpaid dividends thereon  (which shall not, if
such Preferred Shares do not have a cumulative dividend, include any  cumulation
in  respect  of unpaid  dividends for  prior  dividend periods)  to the  date of
redemption. The redemption price  may be payable in  cash or other property,  as
specified  in the applicable Prospectus Supplement.  If the redemption price for
Preferred Shares of  any series is  payable only  from the net  proceeds of  the
issuance  of shares  of beneficial  interest of the  Company, the  terms of such
Preferred Shares may  provide that,  if no  such shares  of beneficial  interest
shall  have been issued or to the extent  the net proceeds from any issuance are
insufficient to  pay in  full  the aggregate  redemption  price then  due,  such
Preferred Shares shall automatically and mandatorily be converted into shares of
the  applicable  shares  of  beneficial  interest  of  the  Company  pursuant to
conversion provisions specified in the applicable Prospectus Supplement.
 
    Notwithstanding the foregoing, unless (i) if such series of Preferred Shares
has a cumulative dividend, full cumulative dividends on all Preferred Shares  of
any  series have been or contemporaneously are declared and paid or declared and
a sum sufficient  for the payment  thereof set  apart for payment  for all  past
dividend periods and the then current dividend period and (ii) if such series of
Preferred  Shares does  not have  a cumulative  dividend, full  dividends on all
Preferred Shares of any series have  been or contemporaneously are declared  and
paid  or declared  and a sum  sufficient for  the payment thereof  set apart for
payment for the then current dividend period, no Preferred Shares of any  series
shall  be redeemed  unless all outstanding  Preferred Shares of  such series are
simultaneously redeemed; PROVIDED, HOWEVER, that the foregoing shall not prevent
the purchase or  acquisition of Preferred  Shares of such  series pursuant to  a
purchase  or exchange offer made on the same terms to holders of all outstanding
Preferred Shares of  such series, and,  unless (i) if  such series of  Preferred
Shares  has a  cumulative dividend, full  cumulative dividends  on all Preferred
Shares of any  series have been  or contemporaneously are  declared and paid  or
declared  and a sum sufficient for the payment thereof set apart for payment for
all past dividend periods and the then current dividend period and (ii) if  such
series  of Preferred Shares does not  have a cumulative dividend, full dividends
on all  Preferred  Shares of  any  series  have been  or  contemporaneously  are
declared  and paid or declared and a  sum sufficient for the payment thereof set
apart for payment for  the then current dividend  period, the Company shall  not
purchase  or otherwise  acquire directly or  indirectly any  shares of Preferred
Shares of  such series  (except by  conversion into  or exchange  for shares  of
beneficial  interest of  the Company ranking  junior to the  Preferred Shares of
such series as to dividends and upon liquidation).
 
    If fewer than all of the outstanding  Preferred Shares of any series are  to
be  redeemed, the  number of  shares to  be redeemed  will be  determined by the
Company and such shares may be redeemed  pro rata from the holders of record  of
Preferred  Shares of such series in proportion to the number of Preferred Shares
of such series  held by such  holders (with adjustments  to avoid redemption  of
fractional shares), by lot in a manner determined by the Company or by any other
method  as  may  be determined  by  the Company  in  its sole  discretion  to be
equitable.
 
    Notice of redemption will be  mailed at least 30 days  but not more than  60
days  before the redemption date to each holder of record of Preferred Shares of
any   series    to    be   redeemed    at    the   address    shown    on    the
 
                                       9

share transfer books of the Company. Each notice shall state: (i) the redemption
date;  (ii)  the number  of  shares and  series of  the  Preferred Shares  to be
redeemed;  (iii)  the  redemption  price;   (iv)  the  place  or  places   where
certificates  for such Preferred Shares are to be surrendered for payment of the
redemption price; (v) that dividends on the Preferred Shares to be redeemed will
cease to  accrue on  such redemption  date; and  (vi) the  date upon  which  the
holder's conversion rights, if any, as to such Preferred Shares shall terminate.
If  fewer than all  the Preferred Shares of  any series are  to be redeemed, the
notice mailed  to each  such holder  thereof shall  also specify  the number  of
Preferred  Shares to be redeemed from each  such holder. If notice of redemption
of any Preferred  Shares has  been given  and if  the funds  necessary for  such
redemption  have been set aside  by the Company in trust  for the benefit of the
holders of any Preferred  Shares so called for  redemption, then from and  after
the redemption date dividends will cease to accrue on such Preferred Shares, and
all  rights of the  holders of such  shares will terminate,  except the right to
receive the redemption price.
 
LIQUIDATION PREFERENCE
 
    Upon any voluntary or involuntary liquidation, dissolution or winding up  of
the  affairs of the Company,  then, before any distribution  or payment shall be
made to the holders of any Common Shares or any other class or series of  shares
of  beneficial interest of the Company ranking junior to the Preferred Shares in
the distribution of assets  upon any liquidation, dissolution  or winding up  of
the Company, the holders of each series of Preferred Shares shall be entitled to
receive  out  of assets  of the  Company legally  available for  distribution to
shareholders,  liquidating  distributions  in  the  amount  of  the  liquidation
preference  per share (set forth in  the applicable Prospectus Supplement), plus
an amount equal  to all dividends  accrued and unpaid  thereon (which shall  not
include any cumulation in respect of unpaid dividends for prior dividend periods
if  such Preferred Shares do  not have a cumulative  dividend). After payment of
the full amount of the liquidating distributions to which they are entitled, the
holders of Preferred Shares will have no right or claim to any of the  remaining
assets of the Company. In the event that, upon any such voluntary or involuntary
liquidation,  dissolution or winding up, the available assets of the Company are
insufficient  to  pay  the  amount  of  the  liquidating  distributions  on  all
outstanding Preferred Shares and the corresponding amounts payable on all shares
of  other classes  or series  of shares  of beneficial  interest of  the Company
ranking on a  parity with the  Preferred Shares in  the distribution of  assets,
then the holders of the Preferred Shares and all other such classes or series of
shares  of beneficial interest  shall share ratably in  any such distribution of
assets in proportion to the full  liquidating distributions to which they  would
otherwise be respectively entitled.
 
    If  liquidating distributions shall have been made in full to all holders of
the Preferred Shares, the remaining assets  of the Company shall be  distributed
among  the  holders of  any  other classes  or  series of  shares  of beneficial
interest ranking junior to the Preferred Shares upon liquidation, dissolution or
winding up of the Company, according to their respective rights and  preferences
and  in  each case  according to  their  respective number  of shares.  For such
purposes, the consolidation  or merger  of the Company  with or  into any  other
entity,  or the  sale, lease or  conveyance of  all or substantially  all of the
property or  business  of the  Company,  shall not  be  deemed to  constitute  a
liquidation, dissolution or winding up of the Company.
 
VOTING RIGHTS
 
    Holders  of the Preferred  Shares of a  particular series will  not have any
voting rights,  except  as set  forth  below  or in  the  applicable  Prospectus
Supplement  or  as otherwise  required  by applicable  law.  The following  is a
summary of the voting rights that,  unless provided otherwise in the  applicable
Prospectus Supplement, will apply to each series of Preferred Shares.
 
    If  six  quarterly dividends  (whether or  not  consecutive) payable  on the
Preferred Shares of such series, or any other series of Preferred Shares ranking
on a parity with such  series of Preferred Shares with  respect in each case  to
the  payment of dividends, amounts upon  liquidation, dissolution and winding up
("Parity Shares"), are in arrears, whether or not earned or declared, the number
of Trustees then constituting  the Board of Trustees  will be increased by  two,
and  the holders of Preferred Shares of  such series, voting together as a class
with the holders of Parity  Shares of any other  series (any such other  series,
the  "Voting Preferred  Shares"), will  have the  right to  elect two additional
Trustees to serve on the Board of Trustees at any annual meeting of shareholders
or a  properly called  special meeting  of the  holders of  Preferred Shares  of
 
                                       10

such  series  and such  Voting Preferred  Shares and  at each  subsequent annual
meeting of shareholders until all such  dividends and dividends for the  current
quarterly  period on the Preferred  Shares of such series  and such other Voting
Preferred Shares have  been paid  or declared and  set aside  for payment.  Such
voting  rights will  terminate when all  such accrued and  unpaid dividends have
been declared and  paid or  set aside  for payment. The  term of  office of  all
Trustees so elected will terminate with the termination of such voting rights.
 
    The  approval  of two-thirds  of the  outstanding  Preferred Shares  of such
series and  all other  series  of Voting  Preferred Shares  similarly  affected,
voting  as  a single  class, is  required in  order to  (i) amend  the Company's
Declaration of Trust to affect materially and adversely the rights,  preferences
or  voting power of  the holders of the  Preferred Shares of  such series or the
Voting Preferred  Shares, (ii)  enter into  a share  exchange that  affects  the
Preferred  Shares of such series, consolidate with or merge into another entity,
or permit another entity to consolidate  with or merge into the Company,  unless
in  each  such case  each  Preferred Share  of  such series  remains outstanding
without a material and adverse  change to its terms  and rights or is  converted
into  or  exchanged for  convertible preferred  shares  of the  surviving entity
having preferences,  conversion or  other rights,  voting powers,  restrictions,
limitations   as  to  dividends,  qualifications  and  terms  or  conditions  of
redemption thereof identical to that of a Preferred Share of such series (except
for changes  that do  not materially  and adversely  affect the  holders of  the
Preferred  Shares of  such series)  or (iii)  authorize, reclassify,  create, or
increase the authorized amount  of any class of  shares having rights senior  to
the  Preferred Shares of such series with respect to the payment of dividends or
amounts upon liquidation, dissolution  or winding up.  However, the Company  may
create  additional classes  of Parity Shares  and Preferred Shares  of any other
series ranking junior to  such series of Preferred  Shares with respect in  each
case  to the  payment of  dividends, amounts  upon liquidation,  dissolution and
winding up ("Junior Shares"),  increase the authorized  number of Parity  Shares
and Junior Shares and issue additional series of Parity Shares and Junior Shares
without the consent of any holder of Preferred Shares of such series.
 
    Except  as provided above and  as required by law,  the holders of Preferred
Shares  of  each  series  will  not  be  entitled  to  vote  on  any  merger  or
consolidation involving the Company or a sale of all or substantially all of the
assets of the Company.
 
    With respect to any matter as to which the Preferred Shares of any series is
entitled  to vote, holders of the Preferred Shares of such series and any Voting
Preferred Shares will be entitled to cast  the number of votes set forth in  the
respective Prospectus Supplement with respect to that series of Preferred Shares
and Voting Preferred Shares. As a result of the provisions requiring the holders
of  shares of a series of the Preferred  Shares to vote together as a class with
the holders of shares  of one or  more series of Parity  Shares, it is  possible
that the holders of such Parity Shares could approve action that would adversely
affect  such series of  Preferred Shares, including  the creation of  a class of
shares of beneficial interest ranking prior  to such series of Preferred  Shares
as to dividends, voting or distributions of assets.
 
CONVERSION RIGHTS
 
    The  terms and conditions, if any, upon which Preferred Shares of any series
are convertible  into  Common  Shares  will  be  set  forth  in  the  applicable
Prospectus  Supplement relating thereto.  Such terms will  include the number of
shares of Common  Shares into which  the Preferred Shares  are convertible,  the
conversion  price  (or manner  of calculation  thereof), the  conversion period,
provisions as to whether conversion will be at the option of the holders of  the
Preferred  Shares  or the  Company, the  events requiring  an adjustment  of the
conversion price  and  provisions  affecting  conversion in  the  event  of  the
redemption of such Preferred Shares.
 
RESTRICTIONS ON TRANSFER
 
    See   "Description  of  Common  Shares--Restrictions   on  Transfer"  for  a
discussion of the restrictions on the transfer of shares of beneficial interest.
 
TRANSFER AGENT AND REGISTRAR
 
    The name and address of the transfer  agent and registrar for any series  of
Preferred Shares will be set forth in the applicable Prospectus Supplement.
 
                                       11

                       DESCRIPTION OF SECURITIES WARRANTS
 
    The  Company may  issue Securities  Warrants for  the purchase  of Preferred
Shares or  Common Shares.  Securities Warrants  may be  issued independently  or
together  with any other Offered Securities offered by any Prospectus Supplement
and may be attached to or separate from such Offered Securities. Each series  of
Securities  Warrants will be issued under  a separate warrant agreement (each, a
"Warrant Agreement") to be entered into between the Company and a warrant  agent
specified  in the  applicable Prospectus  Supplement (the  "Warrant Agent"). The
Warrant Agent will act solely as an agent of the Company in connection with  the
Securities  Warrants  of  such series  and  will  not assume  any  obligation or
relationship of agency or trust for or with any holders or beneficial owners  of
Securities  Warrants.  The  following  summaries of  certain  provisions  of the
Securities Warrant Agreement and  the Securities Warrants do  not purport to  be
complete  and are subject to,  and are qualified in  their entirety by reference
to, all the provisions  of the Securities Warrant  Agreement and the  Securities
Warrant  certificates relating to each series  of Securities Warrants which will
be filed with the Commission and incorporated by reference as an exhibit to  the
Registration  Statement of which  this Prospectus is  a part at  or prior to the
time of the issuance of such series of Securities Warrants.
 
    If Securities  Warrants are  offered, the  applicable Prospectus  Supplement
will  describe the  terms of such  Securities Warrants,  including the following
where applicable: (i) the  offering price; (ii) the  aggregate number of  shares
purchasable  upon exercise of such Securities  Warrants, the exercise price, and
in the  case  of Securities  Warrants  for Preferred  Shares,  the  designation,
aggregate  number and terms  of the series of  Preferred Shares purchasable upon
exercise of such  Securities Warrants; (iii)  the designation and  terms of  any
series of Preferred Shares with which such Securities Warrants are being offered
and  the number  of such Securities  Warrants being offered  with such Preferred
Shares; (iv) the date, if any, on  and after which such Securities Warrants  and
the  related series  of Preferred Shares  or Common Shares  will be transferable
separately; (v) the date on which the right to exercise such Securities Warrants
shall commence and the  date on which such  right shall expire (the  "Expiration
Date");  (vi) any  special United  States federal  income tax  consequences; and
(vii) any other material terms of such Securities Warrants.
 
    Securities Warrant certificates may be exchanged for new Securities  Warrant
certificates  of  different  denominations,  may  (if  in  registered  form)  be
presented for registration of  transfer, and may be  exercised at the  corporate
trust  office of the Securities  Warrant Agent or any  other office indicated in
the applicable Prospectus Supplement.  Prior to the  exercise of any  Securities
Warrants  to  purchase  Preferred  Shares  or  Common  Shares,  holders  of such
Securities Warrants will not have any rights of holders of such Preferred Shares
or Common Shares, including the right to receive payments of dividends, if  any,
on  such Preferred Shares or Common Shares,  or to exercise any applicable right
to vote.
 
    To protect the  Company's status  as a  REIT, restrictions  on ownership  of
Securities  Warrants similar to  the restrictions on  ownership of Common Shares
and Preferred Shares will  be imposed and enforced.  See "Description of  Common
Shares--Restrictions    on    Transfer"    and    "Description    of   Preferred
Shares--Restrictions on Transfer."
 
EXERCISE OF SECURITIES WARRANTS
 
    Each Securities Warrant  will entitle  the holder thereof  to purchase  such
number  of  Preferred Shares  or  Common Shares,  as the  case  may be,  at such
exercise price as shall in  each case be set forth  in, or calculable from,  the
Prospectus  Supplement relating  to the  offered Securities  Warrants. After the
close of business  on the  Expiration Date  (or such  later date  to which  such
Expiration Date may be extended by the Company), unexercised Securities Warrants
will become void.
 
    Securities Warrants may be exercised by delivering to the Securities Warrant
Agent  payment as provided in the applicable Prospectus Supplement of the amount
required to purchase the Preferred Shares or Common Shares, as the case may  be,
purchasable  upon such exercise  together with certain  information set forth on
the reverse side of the Securities Warrant certificate. Securities Warrants will
be deemed to have been exercised upon receipt of payment of the exercise  price,
subject  to the receipt within five (5) business days, of the Securities Warrant
certificate evidencing such  Securities Warrants. Upon  receipt of such  payment
and  the Securities Warrant certificate properly  completed and duly executed at
the corporate trust office of the  Securities Warrant Agent or any other  office
indicated in the applicable Prospectus Supplement,
 
                                       12

the Company will, as soon as practicable, issue and deliver the Preferred Shares
or  Common Shares, as the case may  be, purchasable upon such exercise. If fewer
than all  of the  Securities  Warrants represented  by such  Securities  Warrant
certificate  are exercised, a new Securities  Warrant certificate will be issued
for the remaining amount of Securities Warrants.
 
AMENDMENTS AND SUPPLEMENTS TO WARRANT AGREEMENT
 
    The Warrant Agreements may be amended or supplemented without the consent of
the holders of the Securities Warrants issued thereunder to effect changes  that
are  not inconsistent with the provisions of the Securities Warrants and that do
not adversely affect the interests of the holders of the Securities Warrants.
 
ADJUSTMENTS
 
    Unless otherwise  indicated in  the  applicable Prospectus  Supplement,  the
exercise  price of,  and the  number of  shares of  Common Shares  covered by, a
Common Shares Warrant are subject to adjustment in certain events, including (i)
payment of  a dividend  on the  Common Shares  payable in  shares of  beneficial
interest  and  share  splits,  combinations or  reclassification  of  the Common
Shares; (ii) issuance to all holders of  Common Shares of rights or warrants  to
subscribe  for or purchase  shares of Common  Shares at less  than their current
market price (as  defined in  the Warrant Agreement  for such  series of  Common
Shares  Warrants); and (iii) certain  distributions of evidences of indebtedness
or assets (including  securities but excluding  cash dividends or  distributions
paid  out of consolidated earnings or  retained earnings or dividends payable in
Common Shares) or of subscription rights and warrants (excluding those  referred
to above).
 
    No  adjustment in  the exercise  price of, and  the number  of Common Shares
covered by, a Common Shares Warrant will be made for regular quarterly or  other
periodic  or recurring cash dividends or  distributions or for cash dividends or
distributions  to  the  extent  paid  from  consolidated  earnings  or  retained
earnings.  No adjustment will be required unless such adjustment would require a
change of at least  1% in the  exercise price then in  effect. Except as  stated
above,  the exercise  price of, and  the number  of Common Shares  covered by, a
Common Shares Warrant will not be adjusted for the issuance of Common Shares  or
any  securities convertible into or exchangeable  for Common Shares, or carrying
the right or option to purchase or otherwise acquire the foregoing, in  exchange
for cash, other property or services.
 
    In  the event of any (i) consolidation or merger of the Company with or into
any entity (other than a consolidation or  a merger that does not result in  any
reclassification,  conversion, exchange or cancellation of outstanding shares of
Common Shares); (ii) sale, transfer, lease or conveyance of all or substantially
all  of  the  assets  of   the  Company;  or  (iii)  reclassification,   capital
reorganization or change of the Common Shares (other than solely a change in par
value  or from par  value to no par  value), then any holder  of a Common Shares
Warrant will be  entitled, on  or after  the occurrence  of any  such event,  to
receive  on exercise of such Common Shares Warrant the kind and amount of shares
of beneficial  interest or  other securities,  cash or  other property  (or  any
combination  thereof)  that  the  holder would  have  received  had  such holder
exercised  such  holder's  Common  Shares  Warrant  immediately  prior  to   the
occurrence  of such event. If the consideration  to be received upon exercise of
the Common Shares Warrant following any such event consists of common shares  of
the  surviving entity,  then from  and after the  occurrence of  such event, the
exercise price  of  such Common  Shares  Warrant will  be  subject to  the  same
anti-dilution and other adjustments described in the second preceding paragraph,
applied as if such common shares were Common Shares.
 
                       FEDERAL INCOME TAX CONSIDERATIONS
 
    The   following  is  a  description  of  the  material  Federal  income  tax
consequences to the Company and its shareholders of the treatment of the Company
as a  REIT. The  discussion  is general  in nature  and  not exhaustive  of  all
possible tax considerations, nor does the discussion give a detailed description
of  any state,  local, or  foreign tax  considerations. The  discussion does not
discuss all  aspects  of Federal  income  tax law  that  may be  relevant  to  a
prospective  shareholder in light of his  particular circumstances or to certain
types of shareholders (including insurance companies, financial institutions  or
broker-dealers,  tax exempt organizations, foreign  corporations and persons who
are not citizens or residents of the United States) subject to special treatment
under the  federal income  tax  laws nor  does  the discussion  address  special
considerations,  if any, which may relate to the purchase of Preferred Shares or
Securities Warrants.
 
                                       13

    THIS DISCUSSION IS NOT  INTENDED AS A SUBSTITUTE  FOR CAREFUL TAX  PLANNING,
AND  EACH  PROSPECTIVE  INVESTOR IS  ADVISED  TO  CONSULT WITH  ITS  TAX ADVISOR
REGARDING THE SPECIFIC  TAX CONSEQUENCES TO  IT OF THE  PURCHASE, OWNERSHIP  AND
SALE OF THE OFFERED SECURITIES, INCLUDING THE FEDERAL, STATE, LOCAL, FOREIGN AND
OTHER  TAX CONSEQUENCES OF  SUCH PURCHASE, OWNERSHIP AND  SALE, AND OF POTENTIAL
CHANGES IN APPLICABLE TAX LAWS.
 
    If certain detailed conditions  imposed by the REIT  provisions of the  Code
are met, entities, such as the Company, that invest primarily in real estate and
that otherwise would be treated for Federal income tax purposes as corporations,
are  generally not taxed at  the corporate level on  their "REIT taxable income"
that is  currently distributed  to  shareholders. This  treatment  substantially
eliminates  the "double taxation"  (I.E., at both  the corporate and shareholder
levels) that generally results from the use of corporations.
 
    If the Company fails to qualify as a  REIT in any year, however, it will  be
subject to Federal income taxation as if it were a domestic corporation, and its
shareholders  will  be taxed  in  the same  manner  as shareholders  of ordinary
corporations. In  this  event,  the  Company could  be  subject  to  potentially
significant  tax liabilities,  and therefore  the amount  of cash  available for
distribution to its shareholders would be reduced or eliminated.
 
    The Company has  elected REIT status  effective for the  taxable year  ended
December  31, 1994, and the  Board of Trustees of  the Company believes that the
Company has operated and expects that the Company will continue to operate in  a
manner  that will permit the  Company to elect REIT  status in each taxable year
thereafter. There can be no assurance, however, that this belief or  expectation
will  be  fulfilled,  since  qualification  as a  REIT  depends  on  the Company
continuing to satisfy  numerous asset, income  and distribution tests  described
below,  which  in turn  will be  dependent  in part  on the  Company's operating
results.
 
TAXATION OF THE COMPANY
 
    GENERAL.  In any year in which the Company qualifies as a REIT it will  not,
in general, be subject to Federal income tax on that portion of its REIT taxable
income  or capital gain  which is distributed to  shareholders. The Company may,
however, be subject to tax at normal corporate rates upon any taxable income  or
capital gain not distributed.
 
    Notwithstanding its qualification as a REIT, the Company may also be subject
to  taxation  in certain  other  circumstances. If  the  Company should  fail to
satisfy either the 75% or  the 95% gross income  test (as discussed below),  and
nonetheless  maintains  its  qualification  as  a  REIT  because  certain  other
requirements are met, it  will be subject to  a 100% tax on  the greater of  the
amount  by which the Company fails either the 75% or the 95% test, multiplied by
a fraction intended  to reflect  the Company's profitability.  The Company  will
also be subject to a tax of 100% on net income from any "prohibited transaction"
as described below, and if the Company has (i) net income from the sale or other
disposition  of  "foreclosure  property" which  is  held primarily  for  sale to
customers in the ordinary course of business or (ii) other non-qualifying income
from foreclosure  property,  it will  be  subject to  tax  on such  income  from
foreclosure  property at the highest corporate rate. In addition, if the Company
should fail to distribute during each calendar year at least the sum of (i)  85%
of its REIT ordinary income for such year, (ii) 95% of its REIT capital gain net
income  for such  year, and  (iii) any  undistributed taxable  income from prior
years, the Company would  be subject to a  4% excise tax on  the excess of  such
required  distribution over  the amounts  actually distributed.  The Company may
also be subject  to the corporate  alternative minimum  tax, as well  as tax  in
certain  situations not presently contemplated.  Each of the Management Company,
Amrescon and AIA will  be taxed on  its income at  regular corporate rates.  The
Company  will use the calendar year both for Federal income tax purposes and for
financial reporting purposes.
 
    In order to  qualify as a  REIT, the  Company must meet,  among others,  the
following requirements:
 
    SHARE  OWNERSHIP TESTS.  The Company's shares of beneficial interest must be
held by a minimum of 100 persons for at least 335 days in each taxable year  (or
a  proportional number of days  in any short taxable  year). In addition, at all
times during the second half of each taxable year, no more than 50% in value  of
the
 
                                       14

outstanding  shares of beneficial interest of the Company may be owned, directly
or indirectly and by applying certain  constructive ownership rules, by five  or
fewer  individuals, which for this purpose includes certain tax-exempt entities.
However, for purposes of this test, any shares of beneficial interest held by  a
qualified  domestic pension  or other retirement  trust will be  treated as held
directly by its beneficiaries in proportion to their actuarial interest in  such
trust rather than by such trust.
 
    In  order to attempt to ensure compliance with the foregoing share ownership
tests, the Company has placed certain restrictions on the transfer of its shares
of beneficial interest to prevent  additional concentration of share  ownership.
Moreover,  to  evidence  compliance  with  these  requirements,  under  Treasury
regulations  the  Company  must  maintain  records  which  disclose  the  actual
ownership  of its outstanding  shares of beneficial  interest. In fulfilling its
obligations to  maintain  records, the  Company  must and  will  demand  written
statements  each year from  the record holders of  designated percentages of its
shares of beneficial  interest disclosing the  actual owners of  such shares  of
beneficial  interest (as  prescribed by Treasury  regulations). A  list of those
persons failing or refusing to comply with  such demand must be maintained as  a
part  of the Company's records. A shareholder failing or refusing to comply with
the Company's written demand must submit with his tax return a similar statement
disclosing the actual  ownership of  Company shares of  beneficial interest  and
certain  other  information. In  addition,  the Company's  Declaration  of Trust
provides restrictions  regarding  the  transfer  of  its  shares  of  beneficial
interest  that are intended to  assist the Company in  continuing to satisfy the
share ownership requirements. See  "Description of Common Shares--  Restrictions
on Transfer" and "Description of Preferred Shares--Restrictions on Transfer."
 
    ASSET  TESTS.  At the  close of each quarter  of the Company's taxable year,
the Company must satisfy two  tests relating to the  nature of its assets  (with
"assets"  being  determined  in accordance  with  generally  accepted accounting
principles). First, at least 75% of the value of the Company's total assets must
be represented by  interests in real  property, interests in  mortgages on  real
property,  shares in  other REITs, cash,  cash items,  government securities and
qualified temporary  investments.  Second, although  the  remaining 25%  of  the
Company's  assets generally may  be invested without  restriction, securities in
this  class  may  not  exceed  (i)  in  the  case  of  securities  of  any   one
non-government issuer, 5% of the value of the Company's total assets or (ii) 10%
of  the outstanding voting securities of any  one such issuer. Where the Company
invests in a partnership (such as the Operating Partnership), it will be  deemed
to  own a proportionate share of the partnership's assets. See "--Tax Aspects of
the Company's Investments in Partnerships--General." Accordingly, the  Company's
investment  in  the Communities  and the  Co-Investment Communities  through its
interest in the Operating Partnership is intended to constitute an investment in
qualified assets for purposes of the 75% asset test.
 
    The Operating Partnership  owns 100%  of the non-voting  preferred stock  of
each  of the Management  Company, Amrescon and  AIA and 5%  of the voting common
stock of each of the Management Company, Amrescon and AIA. See "The Company." By
virtue of its partnership interest in the Operating Partnership, the Company  is
deemed  to own its  pro rata share  of the assets  of the Operating Partnership,
including the  securities  of  the  Management Company,  Amrescon  and  AIA,  as
described  above. Because the  Operating Partnership owns only  5% of the voting
securities of each of the Management Company, Amrescon and AIA and the preferred
stock's approval right in the case  of each of the Management Company,  Amrescon
and AIA is limited to certain fundamental corporate actions that could adversely
affect  the preferred stock as a class, the 10% limitation on holdings of voting
securities of any one issuer should not be exceeded.
 
    Based upon  its analysis  of the  total estimated  value of  the  Management
Company  stock,  Amrescon  stock  and  AIA  stock  and  the  Subordinated Notes,
respectively, owned by the Operating Partnership relative to the estimated value
of the total assets owned by the  Operating Partnership and the other assets  of
the  Company, the  Company believes  that the  Company's pro  rata share  of the
non-voting preferred stock,  voting common  stock and Subordinated  Note of  the
Management  Company owned by  the Operating Partnership does  not exceed, on the
date of this Prospectus, 5% of the value of the Company's total assets, that the
Company's pro rata  share of the  non-voting preferred stock  and voting  common
stock  of Amrescon owned  by the Operating  Partnership does not  exceed, on the
date of this Prospectus, 5% of the value of the Company's total assets, and that
the Company's pro rata  share of the non-voting  preferred stock, voting  common
stock  and Subordinated Note of AIA owned  by the Operating Partnership does not
exceed, on the
 
                                       15

date of this Prospectus, 5%  of the value of the  Company's total assets. As  to
the securities of any Services Company, this 5% limitation must be satisfied not
only  as  of  the date  that  the  Company (directly  or  through  the Operating
Partnership) acquired securities of the Management Company, Amrescon or AIA, but
also at the end of  any quarter in which the  Company increases its interest  in
the  Management Company, Amrescon or AIA or  so acquires other property. In this
respect, if the holder of a right to exchange Units for Common Shares  exercises
such  rights,  the Company  will thereby  increase its  proportionate (indirect)
ownership interest in the Management  Company, Amrescon and AIA, thus  requiring
the  Company to meet the 5% test in  any quarter in which such conversion option
is exercised.  Although  the Company  plans  to take  steps  to ensure  that  it
satisfies  the 5% value test for any  quarter with respect to which retesting is
to occur, there can be no assurance that such steps will always be successful or
will not require a reduction in the Operating Partnership's overall interest  in
the Management Company, Amrescon or AIA.
 
    GROSS  INCOME TESTS.  There are  three separate percentage tests relating to
the sources  of the  Company's gross  income which  must be  satisfied for  each
taxable  year.  For purposes  of these  tests,  where the  Company invests  in a
partnership, the Company will  be treated as receiving  its share of the  income
and loss of the partnership, and the gross income of the partnership will retain
the  same character in the  hands of the Company  as it has in  the hands of the
partnership.   See   "--Tax   Aspects   of   the   Company's   Investments    in
Partnerships--General" below. The three tests are as follows:
 
    THE  75% TEST.  At  least 75% of the Company's  gross income for the taxable
year must be "qualifying income." Qualifying income generally includes (i) rents
from real  property (except  as modified  below); (ii)  interest on  obligations
secured  by mortgages on, or  interests in, real property;  (iii) gains from the
sale or  other  disposition  of  interests in  real  property  and  real  estate
mortgages, other than gain from property held primarily for sale to customers in
the ordinary course of the Company's trade or business ("dealer property"); (iv)
dividends  or other distributions on shares in other REITs, as well as gain from
the sale of such shares; (v) abatements and refunds of real property taxes; (vi)
income from the operation, and gain from the sale, of property acquired at or in
lieu of a  foreclosure of the  mortgage secured by  such property  ("foreclosure
property"); (vii) commitment fees received for agreeing to make loans secured by
mortgages  on real property  or to purchase  or lease real  property; and (viii)
certain qualified temporary investment income attributable to the investment  of
new  capital  received by  the Company  in  exchange for  its shares  during the
one-year period following the receipt of such capital.
 
    Rents received from a tenant will  not, however, qualify as rents from  real
property  in satisfying  the 75%  test (or the  95% gross  income test described
below) if the Company, or  an owner of 10% or  more of the Company, directly  or
constructively   owns  10%  or  more  of  such  tenant.  In  addition,  if  rent
attributable to personal  property leased  in connection  with a  lease of  real
property  is greater than 15%  of the total rent  received under the lease, then
the portion of rent attributable to  such personal property will not qualify  as
rents  from  real property.  Moreover, an  amount received  or accrued  will not
qualify as rents from real property (or as interest income) for purposes of  the
75%  and 95% gross income tests if it is based in whole or in part on the income
or profits of any person, although an amount received or accrued generally  will
not  be excluded from "rents from real property" solely by reason of being based
on a fixed percentage  or percentages of receipts  or sales. Finally, for  rents
received  to qualify as rents from real property for purposes of the 75% and 95%
gross income  tests,  the Company  generally  must  not operate  or  manage  the
property  or  furnish  or render  services  to  tenants, other  than  through an
"independent contractor" from whom  the Company derives  no income, except  that
the  "independent contractor" requirement does not  apply to the extent that the
services provided  by  the Company  are  "usually or  customarily  rendered"  in
connection  with the rental  of space for  occupancy only, or  are not otherwise
considered "rendered to the occupant for his convenience."
 
    The Management Company  (which does not  satisfy the independent  contractor
standard)  provides management and  leasing services to  each of the Communities
and each of the  Co-Investment Communities and may  provide certain services  on
any newly acquired properties of the Operating Partnership. The Company believes
for  purposes of the 75% and 95%  gross income tests, that the services provided
by the  Management Company  on the  Operating Partnership's  properties and  any
other services and amenities provided by the Operating Partnership or its agents
with    respect    to   such    properties    are   and    will    continue   to
 
                                       16

be of the type usually or customarily rendered in connection with the rental  of
space  for  occupancy only.  The  Company intends  to  monitor the  services and
amenities provided by the Management Company  as management agent as well as  by
others,  if any,  on the  properties of  the Operating  Partnership. The Company
intends that  services  that  cannot  be  provided  directly  by  the  Operating
Partnership,  the  Management  Company  or other  agents  will  be  performed by
independent contractors.
 
    THE 95% TEST.   In addition  to deriving 75%  of its gross  income from  the
sources listed above, at least 95% of the Company's gross income for the taxable
year  must  be  derived  from the  above-described  qualifying  income,  or from
dividends, interest, or  gains from the  sale or other  disposition of stock  or
other  securities that  are not dealer  property. Dividends and  interest on any
obligations not collateralized by an interest in real property are included  for
purposes of the 95% test, but not for purposes of the 75% test.
 
    For  purposes of determining  whether the Company complies  with the 75% and
the 95% gross income tests, gross income does not include income from prohibited
transactions. A "prohibited transaction" is a sale of dealer property (excluding
foreclosure property); however, it does not  include a sale of property if  such
property  is  held by  the Company  for at  least four  years and  certain other
requirements (relating to  the number of  properties sold in  a year, their  tax
bases, and the cost of improvements made thereto) are satisfied. See "--Taxation
of  the Company--General"  and "--Tax  Aspects of  the Company's  Investments in
Partnerships--Sale of the Communities and Co-Investment Communities."
 
    The Company believes that, for  purposes of both the  75% and the 95%  gross
income   tests,  its  investment  in   the  Communities  and  the  Co-Investment
Communities through the Operating  Partnership will in major  part give rise  to
qualifying  income  in  the  form of  rents,  and  that gains  on  sales  of the
Communities and the Co-Investment Communities,  or of the Company's interest  in
the Operating Partnership, generally will also constitute qualifying income.
 
    The  Management Company receives  and anticipates continuing  to receive fee
income in  consideration of  the performance  of property  management and  other
services  with respect to properties  not owned by the  Company or the Operating
Partnership, Amrescon receives and anticipates continuing to receive fee  income
in  consideration  of the  performance of  general contracting  and construction
management services, and AIA receives and anticipates continuing to receive  fee
income  for providing  investment advisory services;  however, substantially all
income derived by the Company from the Management Company, Amrescon and AIA will
be in the form of dividends on the  preferred stock and common stock of each  of
the  Service Companies  owned by the  Operating Partnership and  interest on the
Subordinated Notes. Such dividends and interest income will satisfy the 95%, but
not the 75%, gross income test (as discussed above). In addition, the  Company's
share  of any income realized on interest rate swap or cap agreements, including
income received at the time of  entering into such agreements, will satisfy  the
95%,  but not the 75%, gross income test. The Company intends to closely monitor
its non-qualifying  income and  anticipates that  non-qualifying income  on  its
other  investments  and  activities, including  such  dividend  income, interest
income and interest rate  swap or cap  income (if any), will  not result in  the
Company failing either the 75% or 95% gross income test.
 
    Even  if the Company  fails to satisfy one  or both of the  75% or 95% gross
income tests for any taxable year, it may still qualify as a REIT for such  year
if  it is entitled to relief under  certain provisions of the Code. These relief
provisions will generally be available if:  (i) the Company's failure to  comply
was due to reasonable cause and not to willful neglect; (ii) the Company reports
the  nature and amount  of each item  of its income  included in the  tests on a
schedule attached to its tax return; and (iii) any incorrect information on this
schedule is  not  due  to fraud  with  intent  to evade  tax.  If  these  relief
provisions apply, however, the Company will nonetheless be subject to a 100% tax
on  the greater  of the amount  by which  it fails either  the 75%  or 95% gross
income test,  multiplied  by  a  fraction  intended  to  reflect  the  Company's
profitability.
 
    THE 30% TEST.  The Company must derive less than 30% of its gross income for
each  taxable year from the sale or  other disposition of (i) real property held
for less  than  four years  (other  than foreclosure  property  and  involuntary
conversions);  (ii) stock or securities (including  an interest rate swap or cap
agreement) held  for less  than one  year; and  (iii) property  in a  prohibited
transaction. The Company does not anticipate that it
 
                                       17

will  have difficulty  in complying  with this  test. However,  if extraordinary
circumstances were to  occur that give  rise to dispositions  of Communities  or
Co-Investment Communities held for less than four years (for example, on account
of the inability to obtain refinancing), the 30% test could become an issue.
 
    ANNUAL  DISTRIBUTION  REQUIREMENTS.   In  order to  qualify  as a  REIT, the
Company is required to distribute dividends (other than capital gain  dividends)
to  its shareholders each year in an amount at least equal to (A) the sum of (i)
95% of  the  Company's REIT  taxable  income  (computed without  regard  to  the
dividends paid deduction and the Company's net capital gain) and (ii) 95% of the
net  income (after tax), if any, from foreclosure property, minus (B) the sum of
certain items of non-cash income. Such distributions must be paid in the taxable
year to which they relate, or in  the following taxable year if declared  before
the  Company timely files its tax return for  such year and if paid on or before
the first regular dividend  payment after such declaration.  To the extent  that
the  Company does not distribute  all of its net  capital gain or distributes at
least 95%, but less than 100%, of its REIT taxable income, as adjusted, it  will
be  subject  to tax  on the  undistributed  amount at  regular capital  gains or
ordinary corporate tax rates, as the case may be.
 
    The Company intends to make  timely distributions sufficient to satisfy  the
annual  distribution  requirements  described  in  the  first  sentence  of  the
preceding paragraph. In  this regard, the  Partnership Agreement authorizes  the
Company, as general partner, to take such steps as may be necessary to cause the
Operating  Partnership to  distribute to  its partners  an amount  sufficient to
permit the Company to meet these distribution requirements. It is possible  that
the  Company may not have sufficient cash or other liquid assets to meet the 95%
distribution requirement, due to timing  differences between the actual  receipt
of  income and actual payment of expenses on  the one hand, and the inclusion of
such income  and deduction  of such  expenses in  computing the  Company's  REIT
taxable  income on the other hand;  due to the Operating Partnership's inability
to control cash distributions with respect to any properties as to which it does
not have decision making control; or for other reasons. To avoid a problem  with
the   95%  distribution  requirement,  the  Company  will  closely  monitor  the
relationship between its REIT  taxable income and cash  flow and, if  necessary,
intends  to borrow funds (or cause the Operating Partnership or other affiliates
to borrow  funds) in  order to  satisfy the  distribution requirement.  However,
there can be no assurance that such borrowing would be available at such time.
 
    If the Company fails to meet the 95% distribution requirement as a result of
an  adjustment  to the  Company's tax  return  by the  Service, the  Company may
retroactively  cure  the  failure  by  paying  a  "deficiency  dividend"   (plus
applicable penalties and interest) within a specified period.
 
    FAILURE  TO QUALIFY.  If the Company fails to qualify for taxation as a REIT
in any taxable year and the relief provisions do not apply, the Company will  be
subject to tax (including any applicable alternative minimum tax) on its taxable
income  at regular corporate rates. Distributions to shareholders in any year in
which the Company  fails to  qualify as  a REIT will  not be  deductible by  the
Company,  nor generally will they be required to be made under the Code. In such
event, to  the extent  of  current and  accumulated  earnings and  profits,  all
distributions  to shareholders will be taxable  as ordinary income, and, subject
to certain limitations in the Code,  corporate distributees may be eligible  for
the  dividends  received deduction.  Unless  entitled to  relief  under specific
statutory provisions, the  Company also  will be  disqualified from  re-electing
taxation  as a REIT for  the four taxable years  following the year during which
qualification was lost.
 
TAX ASPECTS OF THE COMPANY'S INVESTMENTS IN PARTNERSHIPS
 
    GENERAL.   The  Company  holds  a  partnership  interest  in  the  Operating
Partnership.  See "The Company."  In general, a  partnership is a "pass-through"
entity which  is  not  subject  to Federal  income  tax.  Rather,  partners  are
allocated  their  proportionate  shares  of the  items  of  income,  gain, loss,
deduction and  credit of  a  partnership, and  are  potentially subject  to  tax
thereon,  without regard to whether the partners receive a distribution from the
partnership. The Company will include  its proportionate share of the  foregoing
partnership items for purposes of the various REIT gross income tests and in the
computation of its REIT taxable income. See "--Taxation of the Company--General"
and "--Gross Income Tests."
 
    Accordingly,  any resultant  increase in  the Company's  REIT taxable income
from its interest in the Operating  Partnership (whether or not a  corresponding
cash distribution is also received from the Operating
 
                                       18

Partnership) will increase its distribution requirements (see "--Taxation of the
Company--Annual  Distribution Requirements"), but will not be subject to Federal
income tax in the  hands of the  Company provided that an  amount equal to  such
income is distributed by the Company to its shareholders. Moreover, for purposes
of  the REIT  asset tests  (see "--Taxation  of the  Company--Asset Tests"), the
Company will include  its proportionate share  of assets held  by the  Operating
Partnership.
 
    ENTITY  CLASSIFICATION.  The Company's interest in the Operating Partnership
involves special tax considerations, including the possibility of a challenge by
the Service of  the status  of the Operating  Partnership as  a partnership  (as
opposed  to  an association  taxable  as a  corporation  for Federal  income tax
purposes). If the Operating Partnership were to be treated as an association, it
would be taxable as a corporation  and therefore subject to an entity-level  tax
on  its income. In such  a situation, the character  of the Company's assets and
items of  gross income  would  change, which  would  preclude the  Company  from
satisfying the REIT asset tests and the REIT gross income tests (see "--Taxation
of  the Company--Asset Tests"  and "--Gross Income Tests"),  which in turn would
prevent the  Company  from  qualifying  as  a  REIT.  (See  "--Taxation  of  the
Company--Failure  to  Qualify" above,  for  a discussion  of  the effect  of the
Company's failure to meet such tests.)
 
    TAX ALLOCATIONS WITH RESPECT TO THE COMMUNITIES.  Pursuant to Section 704(c)
of the Code,  income, gain, loss  and deduction attributable  to appreciated  or
depreciated  property that  is contributed to  a partnership in  exchange for an
interest in  the partnership  (such  as certain  of  the Communities),  must  be
allocated  in a manner  such that the  contributing partner is  charged with, or
benefits from, respectively, the unrealized  gain or unrealized loss  associated
with the property at the time of the contribution. The amount of such unrealized
gain  or unrealized loss is  generally equal to the  difference between the fair
market value of the  contributed property at the  time of contribution, and  the
adjusted  tax basis of  such property at  the time of  contribution (a "Book-Tax
Difference"). Such allocations are solely for Federal income tax purposes and do
not affect the book  capital accounts or other  economic arrangements among  the
partners.  The formation of the  Operating Partnership included contributions of
appreciated property  (including  certain  Communities  or  interests  therein).
Consequently,  the Partnership Agreement requires certain allocations to be made
in a manner consistent with Section 704(c) of the Code.
 
    In general, certain contributors of certain of the Communities or  interests
therein  will  be allocated  lower amounts  of  depreciation deductions  for tax
purposes and  increased  taxable  income  and gain  on  sale  by  the  Operating
Partnership  on the contributed  assets (including certain  of the Communities).
This will  tend  to eliminate  the  Book-Tax Difference  over  the life  of  the
Operating  Partnership. However, the special  allocation rules of Section 704(c)
do not always  entirely rectify the  Book-Tax Difference on  an annual basis  or
with  respect to a specific taxable transaction such as a sale or a deemed sale,
and accordingly  variations from  normal Section  704(c) principles  may  arise,
which could result in the allocation of additional taxable income to the Company
in excess of corresponding cash proceeds in certain circumstances.
 
    Treasury  regulations  issued  under  Section  704(c)  of  the  Code provide
partnerships with  a  choice  of  several methods  of  accounting  for  Book-Tax
Differences,  including retention of the method under current law. The Operating
Partnership and the Company will use the remedial method for making  allocations
under Section 704(c) with respect to the existing Communities.
 
    With  respect  to  any  property  purchased  by  the  Operating  Partnership
subsequent to the  admission of  the Company  to the  Operating Partnership,  in
general,  such property will initially have a tax basis equal to its fair market
value and Section 704(c) of the Code will not apply.
 
    SALE OF THE COMMUNITIES AND CO-INVESTMENT COMMUNITIES.  The Company's  share
of  any gain  realized by the  Operating Partnership  on the sale  of any dealer
property generally will be treated as income from a prohibited transaction  that
is  subject to a  100% penalty tax.  See "Taxation of  the Company--General" and
"Gross Income  Tests--The 95%  Test." Under  existing law,  whether property  is
dealer  property  is  a question  of  fact that  depends  on all  the  facts and
circumstances  with  respect  to  the  particular  transaction.  The   Operating
Partnership  intends to hold  the Communities and  Co-Investment Communities for
investment with a view to long-term  appreciation, to engage in the business  of
acquiring,  owning,  operating  and  developing  the  Communities, Co-Investment
Communities and other multifamily residential properties, and
 
                                       19

to make such occasional sales of the Communities, Co-Investment Communities  and
other  properties acquired subsequent to the  date hereof as are consistent with
the  Company's  investment  objectives.  Based  upon  the  Company's  investment
objectives,  the Company believes that overall the Communities and Co-Investment
Communities should not  be considered  dealer property  and that  the amount  of
income from prohibited transactions, if any, will not be material.
 
TAXATION OF SHAREHOLDERS
 
    TAXATION OF TAXABLE DOMESTIC SHAREHOLDERS.  As long as the Company qualifies
as a REIT, distributions made to the Company's taxable domestic shareholders out
of  current or accumulated  earnings and profits (and  not designated as capital
gain dividends) will be taken into account  by them as ordinary income and  will
not   be  eligible  for  the  dividends  received  deduction  for  corporations.
Distributions that are  designated as capital  gain dividends will  be taxed  as
long-term  capital gains (to the extent they  do not exceed the Company's actual
net capital gain for the  taxable year) without regard  to the period for  which
the  shareholder  has held  its shares  of beneficial  interest of  the Company.
However, corporate shareholders may  be required to treat  up to 20% of  certain
capital  gain dividends as ordinary income. To the extent that the Company makes
distributions in excess of current  and accumulated earnings and profits,  these
distributions  are  treated  first  as  a  tax-free  return  of  capital  to the
shareholder, reducing  the tax  basis of  a shareholder's  shares of  beneficial
interest  by the amount of  such excess distribution (but  not below zero), with
distributions in excess of  the shareholder's tax basis  being taxed as  capital
gains  (if the shares  of beneficial interest  are held as  a capital asset). In
addition, any dividend declared by the Company in October, November or  December
of  any year and  payable to a shareholder  of record on a  specific date in any
such month shall  be treated as  both paid by  the Company and  received by  the
shareholder  on December 31 of such year, provided that the dividend is actually
paid by the Company during January of the following calendar year.  Shareholders
may  not include in their individual income tax returns any net operating losses
or capital losses of the Company. Federal income tax rules may also require that
certain minimum  tax  adjustments  and preferences  be  apportioned  to  Company
shareholders.
 
    In  general,  any loss  upon  a sale  or  exchange of  shares  of beneficial
interest by a shareholder  who has held such  shares of beneficial interest  for
six months or less (after applying certain holding period rules) will be treated
as  a long-term capital  loss, to the  extent of distributions  from the Company
required to be treated by such shareholder as long-term capital gains.
 
    BACKUP WITHHOLDING.  The  Company will report  to its domestic  shareholders
and  to the Service the amount of dividends paid for each calendar year, and the
amount of  tax  withheld,  if  any,  with  respect  thereto.  Under  the  backup
withholding  rules, a  shareholder may be  subject to backup  withholding at the
rate of 31%  with respect to  dividends paid  unless such shareholder  (i) is  a
corporation  or comes within certain other exempt categories and, when required,
demonstrates this  fact  or  (ii) provides  a  taxpayer  identification  number,
certifies  as to  no loss  of exemption  from backup  withholding, and otherwise
complies with  applicable  requirements  of  the  backup  withholding  rules.  A
shareholder  that  does  not  provide  the  Company  with  its  correct taxpayer
identification number may also be subject  to penalties imposed by the  Service.
Any  amount paid  as backup  withholding is  available as  a credit  against the
shareholder's income tax liability. In addition, the Company may be required  to
withhold  a portion of  capital gain distributions made  to any shareholders who
fail to certify  their non-foreign status  to the Company.  See "Certain  United
States  Tax  Considerations  for Non-U.S.  Shareholders--Distributions  from the
Company--Capital Gain Dividends" below.
 
    TAXATION OF  TAX-EXEMPT SHAREHOLDERS.    The Service  has issued  a  revenue
ruling  in which  it held  that amounts  distributed by  a REIT  to a tax-exempt
employees' pension trust  do not  constitute unrelated  business taxable  income
("UBTI"). Subject to the discussion below regarding a "pension-held REIT," based
upon  such ruling and the statutory framework  of the Code, distributions by the
Company to a shareholder that is a tax-exempt entity should not constitute UBTI,
provided that the  tax-exempt entity  has not  financed the  acquisition of  its
shares  with "acquisition indebtedness" within the meaning of the Code, that the
shares are  not  otherwise  used  in  an unrelated  trade  or  business  of  the
tax-exempt  entity, and  that the Company,  consistent with  its present intent,
does not hold a residual interest in a real estate mortgage investment conduit.
 
                                       20

    However, if  any pension  or  other retirement  trust that  qualifies  under
Section  401(a) of the Code  ("qualified pension trust") holds  more than 10% by
value of the interests  in a "pension-held  REIT" at any  time during a  taxable
year,  a portion of  the dividends paid  to the qualified  pension trust by such
REIT may constitute UBTI. For these  purposes, a "pension-held REIT" is  defined
as  a REIT  if (i)  such REIT  would not have  qualified as  a REIT  but for the
provisions of the  Code which  look through such  a qualified  pension trust  in
determining  ownership of  shares of  the REIT and  (ii) at  least one qualified
pension trust holds more than 25% by value of the interests of such REIT or  one
or  more qualified pension trusts (each owning more than a 10% interest by value
in the REIT) hold in  the aggregate more than 50%  by value of the interests  in
such REIT.
 
    DIVIDEND  REINVESTMENT  PLAN.   Shareholders  participating in  the dividend
reinvestment and share purchase  plan adopted by the  Company will be deemed  to
have  received the gross amount of any  cash distributions which would have been
paid by the Company  to such shareholders had  they not elected to  participate.
These  deemed distributions  will be  treated as  actual distributions  from the
Company to the participating shareholders and will retain the character and  tax
effects  applicable to distributions from the Company generally. See "--Taxation
of Shareholders--Taxation of Taxable Domestic Shareholders." Participants in the
dividend reinvestment and share purchase plan are subject to Federal income  tax
on  the amount of the deemed distributions to the extent that such distributions
represent dividends or  gains, even though  they receive no  cash. In  addition,
participants in the dividend reinvestment and share purchase plan are subject to
Federal  income tax on payment by the  Company of brokerage commissions and bank
fees on their behalf. Common Shares received under the plan will have a  holding
period  beginning with the  day after purchase,  and a tax  basis equal to their
cost (which is the gross  amount of the deemed  distribution plus the amount  of
any brokerage commissions and bank fees paid on the holder's behalf).
 
OTHER TAX CONSIDERATIONS
 
    THE  MANAGEMENT COMPANY, AMRESCON AND AIA;  OTHER CONSIDERATIONS.  A portion
of the cash to  be used by  the Operating Partnership  to fund distributions  to
partners,  including  the  Company,  is expected  to  come  from  the Management
Company, Amrescon and AIA through dividends on the common and preferred stock of
the Management Company, Amrescon and AIA  held by the Operating Partnership  and
from  interest on the  Subordinated Notes. In  addition, the Management Company,
Amrescon and  AIA will  each  receive income  from  the Company,  the  Operating
Partnership  and  unrelated third  parties. Because  the Company,  the Operating
Partnership, the Management Company, Amrescon and AIA are related through  stock
or partnership ownership, income of the Management Company, Amrescon or AIA from
services  performed for the Company and the Operating Partnership may be subject
to certain  rules  under  which  additional  income  may  be  allocated  to  the
Management Company, Amrescon or AIA. On account of such ownership relationships,
the allocation of certain expenses and reimbursements thereof among the Company,
the  Management Company,  the Operating Partnership,  Amrescon and  AIA could be
subject to additional scrutiny by the Service.
 
    Each of the Management Company, Amrescon and AIA will pay Federal and  state
income  taxes at  the full  applicable corporate  rates on  its income  prior to
payment of any dividends. Each of the Management Company, Amrescon and AIA  will
attempt  to minimize  the amount of  such taxes,  but there can  be no assurance
whether or  the  extent  to which  measures  taken  to minimize  taxes  will  be
successful.  To the  extent that  the Management  Company, Amrescon  and AIA are
required to  pay  Federal,  state,  or  local  taxes,  the  cash  available  for
distribution by the Company to shareholders will be reduced accordingly.
 
    In addition, to the extent that tax exempt entities and foreign persons hold
shares of beneficial interest of the Company, the interest expense deductions of
the Management Company and AIA on the Subordinated Notes could be reduced.
 
    POSSIBLE LEGISLATIVE OR OTHER ACTIONS AFFECTING TAX
CONSEQUENCES.    Prospective  shareholders  should  recognize  that  the present
Federal income tax  treatment of investment  in the Company  may be modified  by
legislative,  judicial or  administrative action at  any time and  that any such
action may affect investments and commitments previously made. The rules dealing
with Federal income taxation are constantly under review by persons involved  in
the  legislative  process  and  by  the  Service  and  the  Treasury Department,
resulting in
 
                                       21

revisions of regulations and revised interpretations of established concepts  as
well  as statutory changes. No assurance can be  given as to the form or content
(including with respect to effective dates) of any tax legislation which may  be
enacted.  Revisions  in  Federal  tax  laws  and  interpretations  thereof could
adversely affect the tax consequences of investment in the Company.
 
    STATE AND LOCAL TAXES.  The Company  and its shareholders may be subject  to
state  or local taxation, and  the Company and the  Operating Partnership may be
subject  to   state  or   local  tax   withholding  requirements,   in   various
jurisdictions,  including those in which it or they transact business or reside.
The state and local tax  treatment of the Company  and its shareholders may  not
conform  to the Federal  income tax consequences  discussed above. Consequently,
prospective shareholders should  consult their  own tax  advisors regarding  the
effect  of state  and local tax  laws on  an investment in  shares of beneficial
interest of the Company.
 
                    CERTAIN UNITED STATES TAX CONSIDERATIONS
                           FOR NON-U.S. SHAREHOLDERS
 
    The following is a discussion of certain anticipated U.S. Federal income and
U.S. Federal estate tax consequences of the ownership and disposition of  shares
of  beneficial interest  applicable to Non-U.S.  Shareholders of  such shares. A
"Non-U.S. Shareholder"  is (i)  any  individual who  is  neither a  citizen  nor
resident  of the United States, (ii) any corporation or partnership other than a
corporation or partnership created  or organized in the  United States or  under
the  laws of the  United States or  any state thereof  or under the  laws of the
District of Columbia or (iii) any estate or trust that is not "resident" in  the
United  States.  The discussion  is  based on  current  law and  is  for general
information only. The discussion does not address other aspects of U.S.  Federal
taxation  other than income and  estate taxation or all  aspects of U.S. Federal
income and estate taxation. The discussion does not consider any specific  facts
or circumstances that may apply to a particular Non-U.S. Shareholder.
 
    PROSPECTIVE  INVESTORS ARE URGED TO CONSULT THEIR TAX ADVISORS REGARDING THE
U.S.  FEDERAL,  STATE,  LOCAL  AND   NON-U.S.  INCOME,  ESTATE  AND  OTHER   TAX
CONSEQUENCES OF HOLDING AND DISPOSING OF SHARES OF BENEFICIAL INTEREST.
 
DISTRIBUTIONS FROM THE COMPANY
 
    ORDINARY   DIVIDENDS.    The  portion  of  dividends  received  by  Non-U.S.
Shareholders payable out  of the  Company's earnings  and profits  that are  not
attributable  to  capital gains  of  the Company  and  that are  not effectively
connected with a  U.S. trade  or business of  the Non-U.S.  Shareholder will  be
subject  to U.S. withholding tax at the rate of 30% (unless reduced by treaty or
the Non-U.S. Shareholder files  an Internal Revenue Service  Form 4224 with  the
Company  certifying that  the investment  to which  the distribution  relates is
effectively connected to  a United  States trade  or business  of such  Non-U.S.
Shareholder).  Under certain limited  circumstances, the amount  of tax withheld
may be refundable, in  whole or in  part, because of the  tax status of  certain
partners  or  beneficiaries of  Non-U.S.  Shareholders that  are  either foreign
partnerships or foreign  estates or  trusts. In  general, Non-U.S.  Shareholders
will not be considered engaged in a U.S. trade or business solely as a result of
their  ownership of shares  of beneficial interest. In  cases where the dividend
income from a Non-U.S. Shareholder's investment in shares of beneficial interest
is (or  is treated  as) effectively  connected with  the Non-U.S.  Shareholder's
conduct  of a U.S. trade or business, the Non-U.S. Shareholder generally will be
subject to U.S. tax at graduated rates, in the same manner as U.S.  shareholders
are  taxed with respect  to such dividends (and  may also be  subject to the 30%
branch profits  tax  (unless  reduced by  treaty)  in  the case  of  a  Non-U.S.
Shareholder that is a foreign corporation).
 
    Under  currently  applicable  Treasury regulations,  withholding  agents are
required  to  determine  the  applicable   withholding  rate  pursuant  to   the
appropriate  tax treaty, and withhold the  appropriate amount. Under the current
regulations, dividends paid to an address  in a foreign country are presumed  to
be  paid to a  resident of that country  (unless the payer  has knowledge to the
contrary) for purposes of the withholding discussed above and, under the current
interpretation of  the Treasury  regulations, for  purposes of  determining  the
applicability of a tax treaty rate. Treasury regulations proposed in 1996, which
have  not been adopted,  and are, therefore, not  currently effective, would, if
and when they become effective, require Non-U.S. Shareholders to file a form W-8
to obtain the benefit of any applicable tax treaty providing for a lower rate of
 
                                       22

withholding tax  on dividends  paid after  December 31,  1997. Such  form  would
require  a representation by the holder as  to foreign status, the holder's name
and permanent residence address, the basis for a reduced withholding rate (e.g.,
the relevant tax  treaty) and other  pertinent information, to  be certified  by
such  holder under  penalties of perjury.  Such information is  subject to being
reported to the Internal Revenue Service. A permanent residence address for this
purpose generally is the address in the country where the person claims to be  a
resident  for the purpose of the country's  income tax. If the beneficial holder
is a  corporation, then  the  address is  where  the corporation  maintains  its
principal office in its country of incorporation.
 
    CAPITAL  GAIN DIVIDENDS.  Under the  Foreign Investment in Real Property Tax
Act of  1980 ("FIRPTA"),  any distribution  made by  the Company  to a  Non-U.S.
Shareholder,  to the  extent attributable to  gains from  dispositions of United
States Real  Property  Interests  ("USRPIs")  by  the  Company  ("USRPI  Capital
Gains"),  will be considered effectively connected with a U.S. trade or business
of the  Non-U.S.  Shareholder  and subject  to  U.S.  income tax  at  the  rates
applicable  to U.S. individuals or corporations,  without regard to whether such
distribution is designated as a capital gain dividend. In addition, the  Company
will be required to withhold tax equal to 35% of the amount of such distribution
to  the extent it constitutes USRPI Capital Gains. Such distribution may also be
subject to the 30% branch profits tax (unless reduced by treaty) in the case  of
a Non-U.S. Shareholder that is a foreign corporation.
 
    NON-DIVIDEND  DISTRIBUTIONS.  Any  distributions by the  Company that exceed
both current and  accumulated earnings and  profits of the  Company will not  be
taxed  as  either ordinary  dividends or  capital  gain dividends.  See "Federal
Income  Tax  Considerations--Taxation   of  Shareholders--Taxation  of   Taxable
Domestic  Shareholders."  However, if  it  cannot be  determined  at the  time a
distribution is  made whether  or not  such distribution  will be  in excess  of
current  and accumulated earnings and profits,  the distribution will be subject
to withholding. Should this occur, the Non-U.S. Shareholder may seek a refund of
over withholding from the Service once  it is subsequently determined that  such
distribution  was, in  fact, in excess  of current and  accumulated earnings and
profits of the Company.
 
DISPOSITIONS OF SHARES OF BENEFICIAL INTEREST
 
    Unless the  shares  of beneficial  interest  constitute USRPIs,  a  sale  or
exchange  of shares of  beneficial interest by  a Non-U.S. Shareholder generally
will not be  subject to  U.S. taxation under  FIRPTA. The  shares of  beneficial
interest will not constitute USRPIs if the Company is a "domestically controlled
REIT."  A domestically controlled REIT is a REIT in which, at all times during a
specified testing period, less than 50% in value of its shares is held  directly
or  indirectly by  Non-U.S. Shareholders. It  is currently  anticipated that the
Company will be a domestically controlled REIT and, therefore, that the sale  of
shares  of beneficial interest will not be  subject to taxation under FIRPTA. No
assurance can  be given  that the  Company will  continue to  be a  domestically
controlled REIT.
 
    If  the  Company  does  not constitute  a  domestically  controlled  REIT, a
Non-U.S. Shareholder's  sale  or  exchange  of  shares  of  beneficial  interest
generally  will still  not be subject  to tax under  FIRPTA as a  sale of USRPIs
provided that (i)  the Company's  shares of beneficial  interest are  "regularly
traded"  (as  defined  by  applicable Treasury  regulations)  on  an established
securities market (e.g., the  NYSE, on which the  Common Shares are listed)  and
(ii)  the  selling  Non-U.S.  Shareholder  held  5%  or  less  of  the Company's
outstanding shares  of  beneficial interest  at  all times  during  a  specified
testing period.
 
    If  gain  on the  sale or  exchange  of shares  of beneficial  interest were
subject to taxation under FIRPTA, the  Non-U.S. Shareholder would be subject  to
U.S. income tax at the rates applicable to U.S. individuals or corporations, and
the purchaser of shares of beneficial interest could be required to withhold 10%
of  the purchase price and remit such  amount to the Service. The branch profits
tax would not apply to such sales or exchanges.
 
    Capital gains  not subject  to FIRPTA  will nonetheless  be taxable  in  the
United  States to  a Non-U.S.  Shareholder in three  cases: (i)  if the Non-U.S.
Shareholder's  investment  in  shares  of  beneficial  interest  is  effectively
connected  with a U.S. trade or business conducted by such Non-U.S. Shareholder,
the Non-U.S.  Shareholder  will  be  subject  to  the  same  treatment  as  U.S.
shareholders  with respect to such  gain, (ii) if the  Non-U.S. Shareholder is a
nonresident alien individual who was present  in the United States for 183  days
or  more during the taxable year and has  a "tax home" in the United States, the
nonresident alien individual will
 
                                       23

be subject  to 30%  tax on  the  individual's capital  gain (unless  reduced  or
eliminated  by treaty), or (iii)  if the Non-U.S. Shareholder  is subject to tax
pursuant to the Code provisions applicable to certain U.S. expatriates.
 
FEDERAL ESTATE TAX
 
    Shares of beneficial interest owned or treated as owned by an individual who
is not a citizen or "resident" (as specifically defined for U.S. Federal  estate
tax  purposes) of the United  States at the time of  death will be includable in
the individual's gross estate  for U.S. Federal estate  tax purposes, unless  an
applicable estate tax treaty provides otherwise. Such individual's estate may be
subject  to U.S. Federal estate tax on the property includable in the estate for
U.S. Federal estate tax purposes.
 
INFORMATION REPORTING AND BACKUP WITHHOLDING
 
    The Company  must  report annually  to  the  Service and  to  each  Non-U.S.
Shareholder  the amount of dividends (including any capital gain dividends) paid
to, and  the tax  withheld with  respect to,  each Non-U.S.  Shareholder.  These
reporting  requirements apply regardless  of whether withholding  was reduced or
eliminated by an applicable tax treaty. Copies of these returns may also be made
available under the provisions  of a specific treaty  or agreement with the  tax
authorities in the country in which the Non-U.S. Shareholder resides.
 
    U.S.  backup withholding (which generally  is imposed at the  rate of 31% on
certain payments to persons that fail to furnish the information required  under
the  U.S.  information reporting  requirements)  and information  reporting will
generally not apply to dividends (including any capital gain dividends) paid  on
shares  of beneficial interest  to a Non-U.S. Shareholder  at an address outside
the  United  States.  The  proposed  Treasury  regulations  referred  to   under
"Distributions   from  the  Company--Ordinary   Dividends,"  in  general,  would
similarly require a Non-U.S. Shareholder to  provide the form W-8 for  dividends
paid  after  December  31,  1997  to  be  exempt  from  backup  withholding  and
information reporting.
 
    The payment of  the proceeds from  the disposition of  shares of  beneficial
interest  to or through a U.S. office of a broker will be subject to information
reporting and backup withholding unless  the owner, under penalties of  perjury,
certifies,  among  other  things,  its  status  as  a  Non-U.S.  Shareholder, or
otherwise establishes  an  exemption.  The  payment of  the  proceeds  from  the
disposition  of shares of beneficial interest to or through a non-U.S. office of
a non-U.S.  broker generally  will  not be  subject  to backup  withholding  and
information  reporting,  except as  noted below.  In  the case  of a  payment of
proceeds from the disposition of shares  of beneficial interest to or through  a
non-U.S.  office of  a broker  which is  (i) a  U.S. person,  (ii) a "controlled
foreign corporation" for  U.S. Federal income  tax purposes or  (iii) a  foreign
person  50% or more of whose gross income  for certain periods is derived from a
U.S.  trade  or  business  (a  "Foreign  U.S.  Connected  Broker"),  information
reporting  (but  not  backup  withholding)  will  apply  unless  the  broker has
documentary evidence in its files that the holder is a Non-U.S. Shareholder (and
the broker has no actual knowledge to the contrary) and certain other conditions
are met, or  the holder  otherwise establishes  an exemption.  In addition,  the
Treasury  Department has indicated that it  is studying the possible application
of backup withholding in the  case of such foreign  offices of U.S. and  Foreign
U.S.  Connected Brokers. Under  proposed Treasury regulations,  a payment of the
proceeds from the  disposition of shares  of beneficial interest  to or  through
such  broker will  be subject  to backup withholding  if such  broker has actual
knowledge that the holder is a U.S. person.
 
    Backup withholding is not an additional tax. Any amounts withheld under  the
backup  withholding  rules will  be refunded  or  credited against  the Non-U.S.
Shareholder's  U.S.  Federal  income  tax  liability,  provided  that   required
information is furnished to the Service.
 
    These backup withholding and information reporting rules are currently under
review by the Treasury Department, and their application to shares of beneficial
interest is subject to change.
 
                              PLAN OF DISTRIBUTION
 
    The  Company may sell the Offered Securities to one or more underwriters for
public offering and sale by them or may sell the Offered Securities to investors
directly or through agents. Direct sales to investors
 
                                       24

may be  accomplished  through  subscription offerings  or  through  subscription
rights   distributed  to   the  Company's   shareholders.  In   connection  with
subscription  offerings   or  the   distribution  of   subscription  rights   to
shareholders,  if all  of the underlying  Offered Securities  are not subscribed
for, the Company may sell such unsubscribed Offered Securities to third  parties
directly  or through underwriters or agents and, in addition, whether or not all
of the  underlying  Offered  Securities  are subscribed  for,  the  Company  may
concurrently  offer additional Offered  Securities to third  parties directly or
through underwriters or agents.  Any such underwriter or  agent involved in  the
offer  and  sale of  the  Offered Securities  will  be named  in  the applicable
Prospectus Supplement.
 
    The distribution of the Offered Securities may be effected from time to time
in one or more transactions at a fixed price or prices, which may be changed, or
at prices related  to the prevailing  market prices at  the time of  sale or  at
negotiated  prices (any  of which may  represent a discount  from the prevailing
market prices). The Company also may, from time to time, authorize  underwriters
acting as the Company's agents to offer and sell the Offered Securities upon the
terms  and conditions as are set  forth in the applicable Prospectus Supplement.
In connection with the sale of Offered Securities, underwriters may be deemed to
have received  compensation  from  the  Company  in  the  form  of  underwriting
discounts  or commissions  and may also  receive commissions  from purchasers of
Offered Securities for whom they may act as agent. Underwriters may sell Offered
Securities to or through dealers, and  such dealers may receive compensation  in
the  form of discounts, concessions or  commissions from the underwriters and/or
commissions from the purchasers for whom they may act as agent.
 
    Any underwriting compensation paid by the Company to underwriters or  agents
in  connection  with  the offering  of  Offered Securities,  and  any discounts,
concessions or  commissions allowed  by underwriters  to participating  dealers,
will be set forth in the applicable Prospectus Supplement. Underwriters, dealers
and  agents participating in  the distribution of the  Offered Securities may be
deemed to be underwriters,  and any discounts and  commissions received by  them
and  any profit  realized by  them on  resale of  the Offered  Securities may be
deemed to be underwriting discounts  and commissions, under the Securities  Act.
Underwriters,  dealers and agents may be entitled, under agreements entered into
with the Company,  to indemnification  against and  contribution toward  certain
civil liabilities, including liabilities under the Securities Act.
 
    If  so indicated in  the applicable Prospectus  Supplement, the Company will
authorize dealers acting as  the Company's agents to  solicit offers by  certain
institutions  to  purchase Offered  Securities from  the  Company at  the public
offering price  set forth  in  such Prospectus  Supplement pursuant  to  Delayed
Delivery  Contracts ("Contracts") providing for payment and delivery on the date
or dates stated  in such  Prospectus Supplement. Each  Contract will  be for  an
amount  not less than, and the  aggregate principal amount of Offered Securities
sold pursuant  to Contracts  shall be  not less  nor more  than, the  respective
amounts  stated in the applicable  Prospectus Supplement. Institutions with whom
Contracts, when authorized, may  be made include  commercial and savings  banks,
insurance  companies,  pension  funds,  investment  companies,  educational  and
charitable institutions, and other institutions but will in all cases be subject
to the approval of the Company. Contracts will not be subject to any  conditions
except  (i) the purchase by an institution  of the Offered Securities covered by
its Contracts shall not at the time of delivery be prohibited under the laws  of
any  jurisdiction in the United States to which such institution is subject; and
(ii) if the Offered Securities are being sold to underwriters, the Company shall
have sold  to  such underwriters  the  total  principal amount  of  the  Offered
Securities less the principal amount thereof covered by the Contracts.
 
    Certain of the underwriters and their affiliates may be customers of, engage
in  transactions with and perform services  for the Company and its subsidiaries
in the ordinary course of business.
 
                                    EXPERTS
 
    The consolidated  financial  statements  and schedule  of  Amli  Residential
Properties  Trust as of December 31, 1995 and 1994, and for each of the years in
the three-year  period  ended  December  31, 1995,  have  been  incorporated  by
reference  herein and in the Registration  Statement in reliance upon the report
of KPMG Peat Marwick LLP, independent certified public accountants, which report
is incorporated by  reference herein,  and upon the  authority of  said firm  as
experts in accounting and auditing. To the extent that
 
                                       25

KPMG  Peat  Marwick  LLP audits  and  reports  on financial  statements  of Amli
Residential Properties Trust issued at future dates, and consents to the use  of
their  report thereon,  such financial statements  also will  be incorporated by
reference in the Registration Statement in  reliance upon their report and  said
authority.
 
                                 LEGAL MATTERS
 
    Certain  legal matters  relating to the  validity of  the Offered Securities
offered pursuant  to this  Prospectus will  be passed  upon for  the Company  by
Mayer,  Brown & Platt. Mayer,  Brown & Platt has in  the past represented and is
currently representing the Company and certain of its affiliates.
 
                                       26




[The inside back cover shows pictures of the following AMLI communities:

     AMLI at Gleneagles II in Dallas
     AMLI at Martha's Vineyard in Austin
     AMLI at Regents Center in Overland Park
     AMLI at Sope Creek IV in Atlanta
     AMLI at Aurora Crossing in Chicago
     AMLI at North Dallas in Dallas]



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    NO  DEALER, SALESMAN  OR OTHER  INDIVIDUAL HAS  BEEN AUTHORIZED  TO GIVE ANY
INFORMATION OR  TO  MAKE  ANY  REPRESENTATIONS OTHER  THAN  THOSE  CONTAINED  OR
INCORPORATED  BY REFERENCE  IN THIS PROSPECTUS  SUPPLEMENT OR  THE PROSPECTUS IN
CONNECTION WITH  THE  OFFERING  MADE  BY  THIS  PROSPECTUS  SUPPLEMENT  AND  THE
PROSPECTUS,  AND IF GIVEN OR MADE,  SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON  AS HAVING BEEN  AUTHORIZED BY THE  COMPANY OR THE  UNDERWRITERS.
NEITHER  THE DELIVERY OF  THIS PROSPECTUS SUPPLEMENT AND  THE PROSPECTUS NOR ANY
SALE MADE  HEREUNDER AND  THEREUNDER SHALL,  UNDER ANY  CIRCUMSTANCE, CREATE  AN
IMPLICATION  THAT  THERE HAS  BEEN  NO CHANGE  IN THE  FACTS  SET FORTH  IN THIS
PROSPECTUS SUPPLEMENT OR  IN THE  PROSPECTUS OR IN  THE AFFAIRS  OF THE  COMPANY
SINCE  THE DATE  HEREOF. THIS  PROSPECTUS SUPPLEMENT  AND THE  PROSPECTUS DO NOT
CONSTITUTE AN OFFER OR SOLICITATION BY ANYONE  IN ANY STATE IN WHICH SUCH  OFFER
OR  SOLICITATION IS NOT AUTHORIZED  OR IN WHICH THE  PERSON MAKING SUCH OFFER OR
SOLICITATION IS NOT QUALIFIED TO  DO SO OR TO ANYONE  TO WHOM IT IS UNLAWFUL  TO
MAKE SUCH OFFER OR SOLICITATION.
    
                            ------------------------
 
                               TABLE OF CONTENTS
                             Prospectus Supplement
 
   


                                                     Page
                                                   ---------
                                                
Prospectus Supplement Summary....................        S-3
The Company......................................        S-7
Growth Strategies................................        S-7
Recent Developments..............................       S-11
Use of Proceeds..................................       S-14
Price Range of Common Shares and Distribution
  History........................................       S-15
Capitalization...................................       S-16
Selected Financial Information...................       S-17
Management's Discussion and Analysis of Financial
  Condition and Results of Operations............       S-20
The Communities..................................       S-25
Management.......................................       S-29
Underwriting.....................................       S-30
Safe Harbor Statement Under the Private
  Securities Litigation Reform Act of 1995.......       S-31
Incorporation by Reference.......................       S-31
Experts..........................................       S-31
Legal Matters....................................       S-31

    
 
                                   Prospectus
 

                                             
Available Information.........................          2
Incorporation by Reference....................          2
The Company...................................          3
Use of Proceeds...............................          3
Shares of Beneficial Interest and Shareholder
  Liability...................................          3
Description of Common Shares..................          5
Description of Preferred Shares...............          7
Description of Securities Warrants............         12
Federal Income Tax Considerations.............         13
Certain United States Tax Considerations for
  Non-U.S. Shareholders.......................         22
Plan of Distribution..........................         24
Experts.......................................         25
Legal Matters.................................         26

 
   
                                2,750,000 SHARES
    
 
                                     [LOGO]
 
                                AMLI RESIDENTIAL
                                PROPERTIES TRUST
 
                                 COMMON SHARES
 
   
                                 --------------
                             PROSPECTUS SUPPLEMENT
                               NOVEMBER 21, 1996
                             ---------------------
    
 
                                LEHMAN BROTHERS
                           DEAN WITTER REYNOLDS INC.
                              MERRILL LYNCH & CO.
                            EVEREN SECURITIES, INC.
 
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