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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549
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FORM 10-K

/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997

/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM TO

COMMISSION FILE NUMBER 1-13232

APARTMENT INVESTMENT AND MANAGEMENT COMPANY

(Exact name of registrant as specified in its charter)

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

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REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (303) 757-8101

SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:

NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
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Class A Common Stock New York Stock Exchange
Class C Cumulative Preferred Stock New York Stock Exchange
Class D Cumulative Preferred Stock New York Stock Exchange

SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: NONE

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

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

As of March 18, 1998, there were 41,417,376 shares of Class A Common Stock
and 162,500 shares of Class B Common Stock outstanding. The aggregate market
value of the voting and non-voting common stock held by non-affiliates of the
registrant, was approximately $1,377 million as of March 18, 1998.
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DOCUMENTS INCORPORATED BY REFERENCE

Portions of the proxy statement for the registrant's 1998 annual meeting of
stockholders are incorporated by reference into Part III of this Annual Report.

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APARTMENT INVESTMENT AND MANAGEMENT COMPANY
TABLE OF CONTENTS

ANNUAL REPORT ON FORM 10-K
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997

ITEM PAGE
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PART I

1. Business............................................................................................ 1
Recent Developments................................................................................. 2
Financial Information About Industry Segments....................................................... 9
Growth Strategies................................................................................... 9
Operating Strategies................................................................................ 10
Taxation of the Company............................................................................. 11
Competition......................................................................................... 12
Regulation.......................................................................................... 12
Environmental Matters............................................................................... 13
Insurance........................................................................................... 13
Employees........................................................................................... 13

2. Properties.......................................................................................... 13

3. Legal Proceedings................................................................................... 14

4. Submission of Matters to a Vote of Security Holders................................................. 16
PART II

5. Market for the Registrant's Common Equity and Related Stockholder Matters........................... 16

6. Selected Financial Data............................................................................. 18

7. Management's Discussion and Analysis of Financial Condition and Results of Operations............... 19

7a. Quantitative and Qualitative Disclosures About Market Risk.......................................... 31

8. Financial Statements and Supplementary Data......................................................... 31

9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure................ 31
PART III

10. Directors and Executive Officers of the Registrant.................................................. 31

11. Executive Compensation.............................................................................. 36

12. Security Ownership of Certain Beneficial Owners and Management...................................... 37

13. Certain Relationships and Related Transactions...................................................... 37
PART IV

14. Exhibits, Financial Statement Schedules and Reports on Form 8-K..................................... 37

PART I

INTRODUCTION

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

ITEM 1. BUSINESS

Apartment Investment and Management Company, a Maryland corporation formed
on January 10, 1994 ("AIMCO" and, together with its subsidiaries and other
entities in which it owns an equity interest, the "Company"), is a
self-administered and self-managed real estate investment trust (a "REIT")
engaged in the ownership, acquisition, development, expansion and management of
mulit-family apartment properties. On July 24, 1994, AIMCO completed its initial
public offering and engaged in a business combination and consummated a series
of related transactions which enabled it to continue and expand the property
management and related businesses of Property Asset Management, L.L.C., Limited
Liability Company, and its affiliated companies, and PDI Realty Enterprises,
Inc. (collectively, the "AIMCO Predecessors"). Through its controlling interests
in AIMCO Properties, L.P. a Delaware limited partnership (the "AIMCO Operating
Partnership"), other limited partnerships and subsidiary corporations, the
Company owned or controlled 40,039 units in 147 apartment properties (the "Owned
Properties"), held an equity interest in 83,431 units in 515 apartment
properties (the "Equity Properties") and managed 69,587 units in 374 apartment
properties for third party owners and affiliates (the "Managed Properties" and,
together with the Owned Properties and Equity Properties, the "AIMCO
Properties"), bringing the total portfolio to 193,057 units in 1,036 apartment
properties as of December 31, 1997. The AIMCO Properties are located in 42
states, the District of Columbia and Puerto Rico. As of December 31, 1997, AIMCO
held an 88% ownership interest in the AIMCO Operating Partnership. The Company
focuses on "middle market" apartment properties (properties with rents at or
near the averages in their markets).

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

1997 DEVELOPMENTS

NHP ACQUISITION

In a series of transactions in 1997, the Company acquired NHP Incorporated
("NHP"), a nationwide real estate services company engaged in property and asset
management, as well as related services, including equity investments,
purchasing, risk management and home healthcare.

On May 5, 1997, pursuant to a Stock Purchase Agreement dated as of April 16,
1997, AIMCO acquired 2,866,073 shares of common stock ("NHP Common Stock") of
NHP Incorporated ("NHP") from Demeter Holdings ("Demeter"), Capricorn Investors,
L.P. ("Capricorn") and certain of Capricorn's limited partners (collectively,
the "NHP Sellers") in exchange for 2,142,857 shares of AIMCO Class A Common
Stock, par value $0.01 per share ("Class A Common Stock"), with a recorded value
of $57.3 million.

NHP provides a broad array of real estate services nationwide, including
property management and asset management as well as a group of related services,
including equity investments, purchasing, risk management and home health care.

Subsequent to the purchase, AIMCO contributed the NHP Common Stock to the
AIMCO Operating Partnership in exchange for additional Partnership Common Units
("OP Units") of the AIMCO Operating Partnership. The AIMCO Operating Partnership
then contributed the NHP Common Stock to the Company's unconsolidated
subsidiary, AIMCO/NHP Holdings, Inc. ("ANHI") in exchange for all of the shares
of ANHI's non-voting preferred stock, representing a 95% economic interest in
ANHI. Concurrently, ANHI obtained a loan in the amount of $72.6 million (the
"ANHI Credit Facility") and used the proceeds from the loan to purchase an
additional 3,630,000 shares of NHP Common Stock from the NHP Sellers. Upon the
completion of this transaction, ANHI owned 6,496,073 shares of NHP Common Stock,
representing 51.3% of the NHP Common Stock outstanding as of May 31, 1997.

In separate transactions, occurring in August and September 1997, ANHI sold
to AIMCO 5,717,000 shares of NHP Common Stock for an aggregate purchase price of
$114.4 million. ANHI used $74.3 million of the proceeds from the sale to repay
the principal and accrued interest outstanding under the ANHI Credit Facility
and distributed $40.0 million to the AIMCO Operating Partnership and its other
shareholders. In addition, AIMCO acquired an additional 434,049 shares of NHP
Common Stock from the NHP Sellers, bringing the total number of shares of NHP
Common Stock owned by AIMCO and ANHI to 6,930,122.

On December 8, 1997, AIMCO/NHP Acquisition Corp., a wholly-owned subsidiary
of AIMCO merged with and into NHP, with NHP being the surviving corporation and
becoming a wholly owned subsidiary of AIMCO (the "NHP Merger"). As a result of
the NHP Merger, each outstanding share of NHP Common Stock, other than the
shares owned by ANHI, was converted into the right to receive either (i) 0.74766
shares of AIMCO Class A Common Stock or (ii) at the election of the holder,
0.37383 shares of AIMCO Class A Common Stock and $10.00 in cash. The conversion
of the NHP Common Stock resulted in the issuance of an additional 4,554,827
shares of AIMCO Class A Common Stock and cash payments of $0.3 million,
excluding cash paid to ANHI of $7.8 million.

Immediately following the NHP Merger, the Company completed a reorganization
(the "NHP Reorganization") of the assets and operations of NHP. As a result of
the NHP Reorganization, the former operations of NHP are now primarily conducted
through unconsolidated subsidiaries of AIMCO (the "Unconsolidated
Subsidiaries"). The Unconsolidated Subsidiaries have ownership structures
similar in which the Company holds a 95% economic interest through ownership of
shares of non-voting preferred stock, and certain directors and officers of
AIMCO hold a 5% economic interest through direct or indirect ownership of all of
the outstanding shares of common stock.

NHP REAL ESTATE PARTNERSHIPS

In June 1997, the Company purchased from Demeter, Capricorn, Phemus
Corporation, J. Roderick Heller, III and NHP Partners Two LLC, a group of
companies (the "NHP Real Estate Companies") affiliated with NHP that hold
general and limited partnership interests in partnerships (the "NHP
Partnerships") that own 534 conventional and affordable apartment properties
(the "NHP Properties") containing 87,659 units, a captive insurance subsidiary
and certain related assets. "Affordable Units" are units benefitting from some
sort of interest rate or rental subsidy or otherwise subject to governmental
programs aimed at providing low and moderate income housing. The Company paid
aggregate consideration of $54.8 million in cash and warrants to purchase
399,999 shares of Class A Common Stock at an exercise price of $36.00 per share.
As a result of the NHP Reorganization, the Master Property Management Agreement,
pursuant to which NHP managed the NHP Properties, was terminated.

As of December 31, 1997, the Company had made offers to the limited partners
of 25 NHP Partnerships to acquire their limited partnerships interests. The
Company has accepted tenders from certain limited partners, in exchange for
$34.2 million in cash and Partnership Common Units ("OP Units") of the AIMCO
Operating Partnership, valued at $7.3 million. In addition, during September and
October 1997, the Company purchased the existing mortgages on four NHP
Properties for an aggregate of $60.6 million in cash, and land leases for two
NHP Properties for $12.9 million in cash transactions.

INDIVIDUAL PROPERTY ACQUISITIONS

During the year ended December 31, 1997, the Company purchased or acquired
control of 59 properties (including 15 NHP Properties) consisting of 17,191
apartment units and disposed of five properties consisting of 916 apartment
units, as described below. The cash portions of the acquisitions were funded
from proceeds raised through public offerings, private offerings, borrowings
under the Company's revolving credit facility, other short-term and long-term
financings or with working capital. The cash proceeds from the property
dispositions was used to repay outstanding indebtedness or fund working capital
requirements.

FOXCHASE. In December 1997, the Company purchased Foxchase Apartments
("Foxchase"), a 2,113-unit apartment complex built in 1947 and located in
Alexandria, Virginia, for approximately $107.7 million, consisting of
approximately $70 million in assumed mortgage obligations and the remainder in
OP Units. The Company purchased Foxchase from a limited partnership for which
the Company serves as general partner and majority limited partner.

FISHERMAN'S LANDING. In December 1997, the Company acquired Fisherman's
Landing, a 200-unit apartment complex built in 1984 and located in Tampa,
Florida, for approximately $8.5 million, including the assumption of outstanding
indebtedness.

WINDWARD AT THE VILLAGES. In October 1997, the Company purchased Windward
at the Villages Apartments ("Windward"), a 196-unit apartment community built in
1988 and located in West Palm Beach, Florida, for approximately $10.8 million.
Windward is adjacent to the Bear Lakes Country Club and Golf Course in the
Villages of Palm Beach Lakes, a master planned golf course community.

MORTON TOWERS. In September 1997, the Company, through two subsidiary
limited partnerships in which the Company is the sole general partner and has an
aggregate ownership interest of approximately 77%, acquired the Morton Towers
Apartments, a 1,277-unit, twin tower high rise apartment complex built in 1960
and located in Miami Beach, Florida, for $63.0 million, including approximately
1.4 million OP Units valued at $42.0 million. The Company expects to undertake a
major renovation of the complex at an estimated total cost of $35.0 million.

LOS ARBOLES. In September 1997, the Company acquired Los Arboles
Apartments, a 232-unit apartment community built in 1985 and located in
Chandler, Arizona, for approximately $11.3 million. Los

Arboles is adjacent to Vista del Lagos, a 200-unit apartment community in which
the Company has an equity interest.

SAWGRASS. In July 1997, the Company purchased Sawgrass Apartments, a
208-unit apartment community built in 1989 and located in Orlando, Florida, for
approximately $9.6 million. Sawgrass was formerly a Managed Property.

TUSTIN EAST VILLAGE/THE CALIFORNIAN. In June 1997, the Company acquired
Tustin East Village and The Californian, two garden-style apartment communities
consisting of 292 units built in 1970, and Red Hill Plaza, an adjacent shopping
plaza built in 1970 and located in Tustin, California, for $21.4 million,
including approximately 0.5 million OP Units valued at $13.9 million. These
properties are contiguous to Brookside Apartments, another Owned Property,
consisting of 336 units, purchased in April 1996 from the same seller, and are
operated with Brookside as one property.

THE VININGS. In June 1997, the Company acquired The Vinings at the
Waterways, a 180-unit luxury garden-style apartment community built in 1991 and
located in Aventura, Florida, for approximately $16.4 million. The Vinings is
located by a yacht basin and marina directly accessing the Intracoastal Waterway
and is also adjacent to a commercial center. Aventura is a coastal city located
near North Miami Beach.

STONEBROOK. In May 1997, the Company acquired the Stonebrook Apartments, a
244-unit apartment community built in 1991 and located in Orlando, Florida, for
approximately $11.0 million. Stonebrook is less than a mile from the location of
a proposed interchange on a beltway around Orlando and is near a regional
airport being expanded for commercial aviation.

BAY CLUB. In April 1997, the Company acquired The Bay Club at Aventura, a
702-unit luxury high rise apartment complex, consisting of two towers built in
1990, located in Aventura, Florida, for approximately $71.0 million. The
property includes approximately 3.5 acres of land with permits to construct a
third tower, consisting of 225 units.

WINTHROP ACQUISITION

In October 1997, the Company acquired a portfolio of 35 residential
apartment properties (the "Winthrop Portfolio"). The 35 garden-style apartment
communities comprising the Winthrop Portfolio are located in seven states, have
an average age of 17 years and contain a total of 8,175 apartment units. Fifteen
of the apartment communities are located in Arizona, with 2,602 units in Phoenix
and 816 units in Tucson; eleven apartment communities with 2,075 units are
located throughout Texas; two apartment communities with 1,223 units are located
in Florida; two apartment communities with 494 units are located in Michigan;
three apartment communities with 536 units are located in Georgia; one apartment
community with 293 units is located in Illinois; and one apartment community
with 136 units is located in North Carolina.

The aggregate purchase price for the Winthrop Portfolio, including
transactions costs, was approximately $263.5 million. The Company paid aggregate
consideration of $116.1 million in cash to the sellers, assumed $8.3 million in
mortgage indebtedness and incurred $139.1 million of new indebtedness secured by
the properties, to complete the purchase. The Company has also budgeted an
additional $16.0 million in initial capital expenditures related to the Winthrop
Portfolio.

ENGLISH TENDER OFFERS

During 1997, the Company made separate offers (the "English Tender Offers")
to the limited partners of 25 partnerships, acquired in November 1996 (the
"Tender Offer English Partnerships"), to acquire their limited partnerships
interests. Various limited partners accepted tenders representing, in the
aggregate,

approximately 46% of all outstanding limited partnership interests in the Tender
Offer English Partnerships subject to the offers. The Company paid $16.0 million
in cash and issued OP Units valued at $1.7 million, for the interests tendered
in the English Tender Offers. The remaining limited partners have elected to
continue as limited partners in the Tender Offer English Partnerships.

PROPERTY DISPOSITIONS

In October 1997, the Company sold the Meadowbrook, Ashwood, Parkside,
Chimney Ridge and Cobble Creek apartment properties, which consisted of an
aggregate of 916 units located in Texas and Arizona, to an unaffiliated third
party. Cash proceeds from the sale of approximately $22.7 million were used to
repay a portion of the Company's outstanding short-term indebtedness. The
Company recognized a gain of approximately $2.8 million on the disposition of
these five properties.

DEBT ASSUMPTIONS AND FINANCINGS

In order to reduce the impact of changes in interest rates prior to the
refinancing, the Company routinely enters into interest rate lock agreements
that are accounted for as anticipatory hedges.

In April 1997, 23 partnerships controlled by the Company completed a $108.0
million refinancing of secured, short term, floating rate indebtedness with
secured, 20-year, fixed rate, fully amortizing debt. The new debt is secured by
27 apartment properties owned by such partnerships. In connection with this
refinancing, the Company received proceeds of $3.4 million from two interest
rate lock agreements accounted for as hedges. The aggregate gain on the interest
rate lock agreements was deferred and will be amortized over the life of the
debt.

During 1997, the Company assumed $220.4 million of mortgage indebtedness in
connection with purchases of 39 apartment properties. In addition, in connection
with the acquisition of the NHP Real Estate Companies, the Company assumed
fixed-rate mortgage indebtedness totaling $212.3 million, which is secured by 15
properties held by partnerships in which the Company acquired controlling
interests.

In December 1997, the Company refinanced certain mortgage indebtedness
secured by 27 properties, of which five are Owned Properties. The new notes,
which have an aggregate outstanding principal balance of $91.5 million as of
December 31, 1997, have an aggregate weighted average fixed interest rate of
6.71%. The new notes are fully amortizing, require monthly principal and
interest payments and mature in December 2012. In anticipation of the
refinancing, the Company entered into an interest rate lock agreement with an
investment banking company. Upon the settlement of the interest rate lock
agreement, the Company realized a loss of $10.9 million, which will be amortized
over the life of the new debt.

In May 1997, the Company increased its maximum amount available under its
revolving credit facility (the "Credit Facility") with Bank of America National
Trust and Savings Association ("Bank of America") from $50.0 million to $100.0
million. The outstanding balance under the Credit Facility was $33.5 million at
December 31, 1997. As of December 31, 1997 the Company was in compliance with
all debt covenants associated with the Credit Facility.

In January 1998, the Company replaced the Credit Facility with a new
unsecured $50 million revolving credit facility (the "New Credit Facility") with
Bank of America and BankBoston, N.A. The AIMCO Operating Partnership is the
borrower under the New Credit Facility, but all obligations thereunder are
guaranteed by AIMCO and certain of its subsidiaries. The interest rate under the
New Credit Facility is based on either LIBOR or Bank of America's reference
rate, at the election of the Company, plus an applicable margin (the "Margin").
The Margin ranges between 0.6% and 1.0% in the case of LIBOR-based loans and
between 0% and 0.5% in the case of loans based on Bank of America's reference
rate, depending upon the credit rating of the AIMCO Operating Partnership's
senior unsubordinated unsecured long-term indebtedness. The New Credit Facility
expires on January 26, 2000 unless extended for successive one-year periods, at
the discretion of the lenders. The New Credit Facility provides for the

conversion of the revolving facility into a three year term loan. The
availability of funds to the Company under the New Credit Facility is subject to
certain borrowing base restrictions and other customary restrictions, including
compliance with financial and other covenants thereunder.

In February 1998, the AIMCO Operating Partnership, as borrower, and AIMCO
and certain single asset wholly-owned subsidiaries of the Operating Partnership
(the "Owners"), as guarantors, entered into a five year $50 million secured
credit facility agreement (the "WMF Credit Facility") with Washington Mortgage
Financial Group, Ltd. ("Washington Mortgage"), which provides for the conversion
of all or a portion of such revolving credit facility to a base loan facility.
The WMF Credit Facility provides that all the rights of Washington Mortgage are
assigned to the Federal National Mortgage Association ("FNMA"), but FNMA does
not assume Washington Mortgage's obligations under the WMF Credit Facility. At
the AIMCO Operating Partnership's request, the commitment amount may be
increased to an amount not to exceed $250 million, subject to the consent of
Washington Mortgage and FNMA in their sole and absolute discretion. The AIMCO
Operating Partnership and affiliates have pledged their ownership interests in
the Owners as security for its obligations under the WMF Credit Facility. The
guarantees of the Owners are secured by assets of the Owners, including four
apartment properties and two mortgage notes. Advances to the AIMCO Operating
Partnership under the WMF Credit Facility are funded with the proceeds of the
sale to investors of FNMA mortgage-backed securities that are secured by the
advance and an interest in the collateral. The interest rate on each advance is
determined by investor bids for such mortgage-backed securities, plus a margin
presently equal to 0.5%. The maturity date of each advance under the revolving
portion of the WMF Credit Facility is a date between three and nine months from
the closing date of the advance, as selected by the AIMCO Operating Partnership.
Advances under the base facility mature at a date, selected by the AIMCO
Operating Partnership between ten and twenty years from the date of the advance.
Subject to certain conditions, the AIMCO Operating Partnership has the right to
add or substitute collateral. The WMF Credit Facility requires the Company to
maintain a ratio of debt to gross asset value of no more than 0.55 to 1.0, an
interest coverage ratio of at least 2.25 to 1.0, and a debt service coverage
ratio of at least 2.0 to 1.0, imposes minimum net worth requirements and also
provides other financial covenants and interest coverage ratio requirements that
are specifically related to the collateral.

The Company anticipates that it will refinance a portion of its floating
rate indebtedness with fixed rate indebtedness during 1998. In September 1997,
the Company entered into an interest rate lock agreement with a major investment
banking company, having a notional principal amount of $75 million. The interest
rate lock agreement matures on March 19, 1998, and fixes the ten year treasury
rate at 6.211%. Based on the fair value of the interest rate lock at December
31, 1997, the Company has a potential loss of approximately $2.6 million, which
will be amortized over the life of the new debt and included in interest
expense.

EQUITY OFFERINGS

In February 1997, AIMCO completed a public offering of 2,015,000 shares of
Class A Common Stock at a public offering price of $26.75 per share. The net
proceeds of approximately $51.0 million were used to repay a portion of the
Company's indebtedness incurred in connection with 1996 acquisitions.

In May 1997, AIMCO sold 2,300,000 shares of Class A Common Stock at an
average price of $28.00 per share in two public offerings. The net proceeds of
approximately $63.0 million were used to repay outstanding indebtedness under
the Credit Facility and to provide working capital.

In August 1997, AIMCO sold 750,000 shares of newly created Class B
Cumulative Convertible Preferred Stock, par value $.01 per share ("Class B
Preferred Stock") for gross proceeds of $75.0 million in cash to an
institutional investor in a private transaction. The proceeds from the sale of
the Class B Preferred Stock were used to repay borrowings outstanding under the
Credit Facility and to provide working capital.

In October 1997, AIMCO issued 7,000,000 shares of Class A Common Stock. Net
proceeds from the sale of approximately $242.5 million were used to fund certain
property acquisitions, repay outstanding indebtedness under the Credit Facility
and provide working capital.

In December 1997, AIMCO issued 2,400,000 shares of newly created Class C
Cumulative Preferred Stock, par value $.01 per share ("Class C Preferred Stock")
in a public offering. The net proceeds of $58.1 million were used to repay
borrowings outstanding under the Credit Facility and to provide working capital.

Subsequent to December 31, 1997, AIMCO issued 4,200,000 shares of newly
created Class D Cumulative Preferred Stock, par value $0.01 per share (the
"Class D Preferred Stock") in a public offering. The net proceeds of $101.7
million were used to repay indebtedness under the New Credit Facility and to
provide working capital.

MANAGEMENT STOCK ACQUISITION

In July 1997, AIMCO sold 1,100,000 newly issued shares of Class A Common
Stock to certain members of the Company's senior management, at a price of
$30.00 per share, the closing price of the stock on the date of purchase. In
exchange for the shares purchased, such members of senior management executed
notes payable to the Company totaling $33.0 million, of which $15.8 million has
been repaid as of February 28, 1998. The notes bear interest at 7.25% per annum,
payable quarterly, and are due in ten years. The notes are secured by the stock
purchased and are recourse as to 25% of the original amount borrowed.

As of December 31, 1997, members of the Company's management and Board of
Directors own 3,003,056 shares of Class A Common Stock and 905,232 OP Units,
which represents an 8.5% ownership interest in the Company. Based on the closing
price of AIMCO's Class A Common Stock, management's investment in the Company
has increased from $65.1 million as of December 31, 1996 to $143.6 million as of
December 31, 1997.

PENDING ACQUISITIONS

On December 23, 1997, AIMCO and Ambassador Apartments, Inc., a Maryland
corporation that has elected to be taxed as a REIT ("Ambassador"), entered into
an Agreement and Plan of Merger (the "Ambassador Merger Agreement") pursuant to
which Ambassador will be merged with and into AIMCO, with AIMCO being the
surviving corporation (the "Ambassador Merger"). The Ambassador Merger Agreement
also provides that, unless otherwise agreed by the parties, Ambassador
Apartments, L.P., a Delaware limited partnership (the "Ambassador Operating
Partnership"), will be merged with and into the AIMCO Operating Partnership (the
"Ambassador Reorganization") and all outstanding Ambassador Operating
Partnership interests will be converted into AIMCO OP Units based on the
Conversion Ratio, as defined below. In the Ambassador Merger Agreement,
Ambassador's Common Stock, par value $0.01 per share, (the "Ambassador Common
Stock"), is valued at $21 per share. In the Ambassador Merger, holders of
Ambassador Common Stock will receive for each share of Ambassador Common Stock a
number of shares of AIMCO Class A Common Stock equal to the Conversion Ratio.
The "Conversion Ratio" means the quotient determined by dividing $21 by the
"AIMCO Index Price," which is the aggregate of the average of the high and low
sales prices for Class A Common Stock on each of the twenty consecutive New York
Stock Exchange ("NYSE") trading days ending on the fifth NYSE trading day
immediately preceding the closing of the Ambassador Merger, divided by 20. If
the AIMCO Index Price is

less than $36 (i.e. the Conversion Ratio is greater than 0.583), then AIMCO may
elect to fix the Conversion Ratio at 0.583 and pay to each holder of Ambassador
Common Stock cash sufficient to provide $21 in value for each share of
Ambassador Common Stock. Any outstanding options to purchase Ambassador Common
Stock may be converted, at the election of the option holder, into cash or
options to purchase Class A Common Stock at the Conversion Ratio. The Ambassador
Merger Agreement provides that Ambassador's outstanding preferred stock, par
value $0.01 per share (the "Ambassador Preferred Stock"), shall be redeemed,
subject to the right of holders of shares of Ambassador Preferred Stock to
convert such shares into Ambassador Common Stock, immediately prior to the
Ambassador Merger. Assuming a conversion ratio of 0.583, the Company will issue
up to an aggregate of 7,205,739 shares of Class A Common Stock in the Ambassador
Merger, based upon the number of shares of Ambassador Common Stock, options to
purchase Ambassador Common Stock and other securities currently convertible into
shares of Ambassador Common Stock outstanding as of December 31, 1997.

Ambassador is a self-administered and self-managed REIT engaged in the
ownership and management of garden-style apartment properties leased primarily
to middle income tenants. As of December 31, 1997, Ambassador owned 52 apartment
communities with a total of 15,728 units located in Arizona, Colorado, Florida,
Georgia, Illinois, Tennessee and Texas. In addition, Ambassador manages one
property containing 252 units for an unrelated third party. Ambassador conducts
substantially all of its operations through the Ambassador Operating Partnership
and its subsidiaries. As of December 31, 1997, Ambassador held approximately 94%
of the outstanding common units and 100% of the outstanding preferred units of
the Ambassador Operating Partnership.

Consummation of the Ambassador Merger is subject to the affirmative vote of
the holders of at least two-thirds of the outstanding shares of Ambassador
Common Stock, the approval of all appropriate governmental and regulatory
authorities and other customary conditions. The closing of the transaction is
expected to occur during the second quarter of 1998.

On March 17, 1998, AIMCO entered into a definitive merger agreement (the
"Insignia Merger Agreement") to acquire the multi-family apartment management
operations and certain property holdings, of Insignia Financial Group, Inc.
("Insignia"). Insignia is one of the largest managers of multi-family
residential properties in the United States. The acquisition of Insignia will
add approximately 191,000 apartment units to AIMCO's management portfolio,
including approximately 122,000 units in which AIMCO will own an equity interest
and approximately 69,000 units which will be managed for unaffiliated third
parties. Pursuant to the Insignia Merger Agreement, the Company anticipates
issuing approximately $303.0 million in convertible preferred stock to Insignia
shareholders, the payment of a $50 million special dividend to Insignia
shareholders and the assumption of $557.0 million of existing indebtedness. In
addition, the Company will offer to purchase the 25% interest in Insignia
Properties Trust, which is not owned by Insignia, for a price not less than
$13.25 per share of beneficial ownership interest.

The Insignia shareholders will receive shares of AIMCO preferred stock based
on an exchange ratio that fluctuates based on the average high and low sales
price of AIMCO Class A Common Stock for 20 trading days prior to the fifth
trading day preceding the closing of the transaction (the "Index Price"). If the
Index Price is greater than $38.00 per share, then the Index Price will be
$38.00 per share for the exchange ratio. If the Index Price is below $36.50 per
share, then AIMCO may pay a portion of the purchase price in cash to the extent
the Index Price is less than $36.50 per share.

Consummation of the transactions contemplated by the Insignia Merger
Agreement is subject to the affirmative vote of the holders of the outstanding
shares of Insignia, the approval of all appropriate governmental and regulatory
authorities and other customary conditions.

In the ordinary course of business, the Company engages in discussions and
negotiations regarding the acquisition of apartment properties (including
interests in entities that own apartment properties). The Company frequently
enters into contracts and nonbinding letters of intent with respect to the
purchase of properties. These contracts are typically subject to certain
conditions and permit the Company to

terminate the contract in its sole and absolute discretion if it is not
satisfied with the results of its due diligence investigation of the properties.
The Company believes that such contracts essentially result in the creation of
an option on the subject properties and give the Company greater flexibility in
seeking to acquire properties. As of March 18, 1998, the Company had under
contract or letter of intent an aggregate of 21 multi-family apartment
properties with a maximum aggregate purchase price of $223.9 million, including
estimated capital improvements, which, in some cases, may be paid in the form of
assumption of existing debt. All such contracts are subject to termination by
the Company as described above. No assurance can be given that any of these
possible acquisitions will be completed or, if completed, that they will be
accretive on a per share basis.

FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS

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

GROWTH STRATEGIES

The Company's primary objective is to maximize shareholder value by
increasing the amount and predictability of its Funds From Operations ("FFO") on
a per share basis. The Company seeks to achieve this objective primarily by
improving net operating income from its Owned Properties and by acquiring
additional properties at values that are accretive on a per share basis. The
Company's operating and financial strategies include: (i) maintaining a
geographically diversified portfolio of properties; (ii) providing a minimum of
$300 per apartment unit per year for capital replacements to maintain its
properties; (iii) emphasizing long-term, fixed rate, fully amortizing debt; and
(iv) maintaining a dividend payout ratio of less than 80% of FFO. See "Item
7--Management's Discussion and Analysis of Financial Condition and Results of
Operations--Funds From Operations."

ACQUISITIONS

During 1997, the Company directly acquired 44 apartment properties
containing 11,706 units for total consideration of $464.8 million, consisting of
$191.0 million in cash, approximately 1.9 million OP units valued at $53.4
million and the assumption or incurrence of $220.4 million of indebtedness. In
addition, the Company acquired a controlling interest in 15 partnerships which
own 5,285 units located in 15 apartment communities as a result of the
acquisition of the NHP Real Estate Companies, subsequent tender offers made to
investors in certain NHP Partnerships, and the purchase of mortgage debt and
land leases. As a result of these transactions, the Company increased the number
of apartment units it owns or controls to 40,039 units as of December 31, 1997,
a net increase of approximately 68% from the 23,764 units number of units owned
or controlled as of December 31, 1996.

The Company intends to continue to expand its portfolio of Owned Properties
by: (i) acquiring properties in markets familiar to the Company's management;
(ii) developing and expanding its Owned Properties; and (iii) acquiring
controlling interests in companies that own or manage multi-family properties.

MANAGED PROPERTIES

The Company believes its property management operations are integral to its
overall business strategy. The economies of scale realized from managing more
than 193,000 apartment units enable the Company to more efficiently operate its
properties. In addition, the Company believes that managing properties for third
parties improves the performance of its Owned Properties by subjecting property
managers to market-based pricing and service standards. The Company's property
management operations

also support the Company's acquisition activities by enhancing its ability to
identify and evaluate acquisition and development opportunities in its markets.
The Company's local and regional personnel maintain first-hand knowledge of
local market conditions and often obtain early notification of Managed
Properties and other properties that may be offered for sale.

REDEVELOPMENT AND EXPANSION PROPERTIES

The Company has a cautious strategy concerning new development of properties
and intends to develop only in situations in which it believes it has a
significant advantage. The Company believes that redevelopment of selected
properties in superior locations can provide advantages over the development of
new properties because, compared with new development, redevelopment generally
can be accomplished with relatively lower financial risk, in less time and with
reduced delays attributable to governmental approval procedures. The Company
believes that expansion within, or adjacent to, existing properties will provide
growth opportunities at lower risks than are associated with new development,
and may offer certain cost advantages to the extent common area amenities and
on-site management personnel can be utilized.

Recently, the Company acquired and redeveloped Sun Katcher Apartments, a
360-unit apartment property located in Jacksonville, Florida, at a cost of $8.9
million, including $4.9 million in redevelopment costs. The Company also
recently commenced the renovation and upgrading of Bay West Apartments, a
376-unit apartment property located in Tampa, Florida, for a projected cost of
$4.8 million (of which $0.9 million has already been spent), to reposition the
property in the marketplace.

The Company expects to undertake a major renovation of the Morton Towers
Apartments, a 1,277-unit apartment property located in Miami Beach, Florida, at
an estimated cost of $35 million. Pending zoning approval and economic
feasibility studies, the Company intends to construct a third high rise tower on
undeveloped land adjacent to the property, which will add an additional 521
units at an estimated cost of $60.0 million.

The Company believes that expansion within or adjacent to existing AIMCO
Properties also provides growth opportunities at lower risk than new
development. Such expansion can offer cost advantages to the extent common area
amenities and on-site management personnel can service the expanded property.
Recently, the Company constructed 92 additional units at Fairways, an apartment
property located in Phoenix, Arizona, at a cost of $6.5 million. The Company is
planning the construction of 42 additional units at the Township Apartments,
located in Littleton, Colorado, for a projected cost of approximately $3.0
million. In addition, the Company owns or controls 136 acres of vacant land,
adjacent to existing Owned Properties or Equity Properties, which management
believes is suitable for the development of approximately 1,300 apartment units.
The Company generally finances redevelopment and expansion activities initially
with short-term indebtedness, and subsequently arranges permanent financing.

OPERATING STRATEGIES

INTERNAL GROWTH STRATEGY

The Company's strategy for internal growth and to increase cash flow is to
continually: (i) seek higher net rental revenues by enhancing and maintaining
the competitiveness of properties through periodic property upgrades which
typically include cable television, selective refurbishment and the addition of
other amenities; (ii) provide a high level of service to residents; (iii) manage
expenses through a system of detailed management reporting and accountability;
and (iv) provide training programs, orientation workshops and technical courses
for on-site marketing, maintenance and management personnel.

In pursuing its internal growth strategy, the Company's policy is to: (i)
provide on-site management trained to respond promptly to residents' needs; (ii)
conduct annual resident satisfaction surveys;

(iii) respond to maintenance calls within 24 hours; and (iv) maintain the
quality and appearance of its properties with an annual provision of $300 per
apartment unit for capital replacements.

PROPERTY MANAGEMENT

The Company's property management strategy is to achieve improvements in
operating results by combining centralized financial control and uniform
operating procedures with localized property management decision making and
market knowledge. The Company is organized into geographically diversified
Regional Operating Centers ("ROC"). Each ROC is served by local offices of
regional property managers and is supervised by a Regional Vice President.

DIVERSIFIED MARKETS

The Company seeks to operate primarily in markets: (i) where population and
employment growth rates are expected to exceed the national averages; (ii) where
it believes it can become one of the regionally significant owners and managers
of multi-family apartment properties; and (iii) that will enable the Company to
maintain a geographically diversified portfolio or otherwise gain significant
financial benefits. The distribution of the Owned Properties reflects the
Company's focus on growth markets and its belief that geographic diversification
will help to insulate the portfolio from regional and local economic
fluctuations. The Company also seeks to create concentrations of properties
within each of its markets in order to achieve economies of scale in management
and operations. The Company owns or manages apartment units in 18 principal
markets, including in excess of 5,000 apartment units in the Chicago, Dallas,
Houston, Indianapolis, New York, Philadelphia, Phoenix, Tampa and Washington,
D.C. metropolitan areas, and more than 2,000 apartment units in the Albuquerque,
Atlanta, Austin, Baltimore, Ft. Lauderdale, Norfolk, Orlando, San Antonio and
St. Louis metropolitan areas.

TAXATION OF THE COMPANY

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

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

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

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

COMPETITION

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

REGULATION

GENERAL

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

RESTRICTIONS IMPOSED BY LAWS BENEFITING DISABLED PERSONS

Under the Americans with Disabilities Act of 1990 (the "ADA"), all places of
public accommodation are required to meet certain Federal requirements related
to access and use by disabled persons. These requirements became effective in
1992. A number of additional Federal, state and local laws exist which also may
require modifications to the Owned Properties, or restrict certain further
renovations thereof, with respect to access thereto by disabled persons. For
example, the Fair Housing Amendments Act of 1988 (the "FHAA") requires apartment
properties first occupied after March 13, 1990 to be accessible to the
handicapped. Noncompliance with the ADA or the FHAA could result in the
imposition of fines or an award of damages to private litigants and also could
result in an order to correct any non-complying feature, which could result in
substantial capital expenditures. Although management of the Company believes
that the Owned Properties are substantially in compliance with present
requirements, if the Owned Properties are not in compliance, the Company is
likely to incur additional costs to comply with the ADA and the FHAA.

HUD ENFORCEMENT AND LIMITED DENIALS

ENVIRONMENTAL MATTERS

Under Federal, state and local environmental laws and regulations, a current
or previous owner or operator of real property may be required to investigate
and clean up a release of hazardous substances at such property, and may, under
such laws and common law, be held liable for property damage and other costs
incurred by third parties in connection with such releases. The liability under
certain of these laws has been interpreted to be joint and several unless the
harm is divisible and there is a reasonable basis for allocation of
responsibility. The failure to remediate the property properly may also
adversely affect the owner's ability to sell or rent the property or to borrow
using the property as collateral. In connection with its ownership, operation
and management of the AIMCO Properties, the Company could be potentially liable
for environmental liabilities or costs associated with its properties or
properties it may in the future acquire or manage. See "Item 7--Management's
Discussion and Analysis of Financial Condition and Results of
Operations--Environmental."

INSURANCE

Management believes that the Owned Properties are covered by adequate fire,
flood and property insurance provided by reputable companies and with
commercially reasonable deductibles and limits.

EMPLOYEES

The Company has a staff of employees performing various acquisition,
redevelopment and management functions. The Company, through the AIMCO Operating
Partnership and related service company businesses, has approximately 7,000
employees, most of whom are employed at the property level. None of the
employees are represented by a union, and the Company has never experienced a
work stoppage. The Company believes it maintains satisfactory relations with its
employees.

ITEM 2. PROPERTIES

The AIMCO Properties are located in 42 states, Puerto Rico and the District
of Columbia. A significant portion of the AIMCO Properties are concentrated in
or around 9 metropolitan areas in which the Company owns, controls or manages
more than 5,000 units. The following table sets forth certain market information
for the AIMCO Properties as of December 31, 1997:

PERCENTAGE OF TOTAL
UNITS
NUMBER OF NUMBER OF OWNED/CONTROLLED
PROPERTIES UNITS OR MANAGED
----------- ----------- ---------------------

Chicago, IL................................................. 23 5,463 3%
Dallas, TX.................................................. 35 7,518 4%
Houston, TX................................................. 38 8,064 4%
Indianapolis, IN............................................ 22 6,074 3%
New York, NYv 44 6,729 3%
Philadelphia, PA............................................ 30 8,587 4%
Phoenix, AZ................................................. 27 5,958 3%
Tampa/St. Petersburg, FL.................................... 18 6,242 3%
Washington, DC.............................................. 34 9,249 5%
----- ----------- ---
Principal markets total................................... 271 63,884 32%
Other markets............................................... 765 129,173 68%
----- ----------- ---
Total..................................................... 1,036 193,057 100%
----- ----------- ---
----- ----------- ---

The AIMCO Properties average 186 apartment units each, with the largest
property containing 2,113 apartment units.

The Owned Properties are located in 19 states, primarily located in the
Sunbelt regions of the United States. A significant portion of the Owned
Properties are concentrated in or around 12 metropolitan areas in which the
Company owns or controls more than 1,000 units. The following table sets forth
certain market information for Owned Properties as of December 31, 1997:

PERCENTAGE OF TOTAL
NUMBER OF NUMBER OF UNITS
PROPERTIES UNITS OWNED OR CONTROLLED
----------- ----------- ---------------------

Atlanta, GA................................................. 9 2,100 5%
Chicago, IL................................................. 7 1,875 5%
Denver, CO.................................................. 5 1,255 3%
Dallas, TX.................................................. 10 2,525 6%
Houston, TX................................................. 22 5,365 13%
Miami/Ft. Lauderdale, FL.................................... 6 3,737 9%
Orlando, FL................................................. 4 1,072 3%
Phoenix, AZ................................................. 18 4,514 11%
San Antonio, TX............................................. 7 1,414 4%
Tampa/St. Petersburg, FL.................................... 4 1,530 4%
Tuscon, AZ.................................................. 5 1,088 3%
Washington, DC.............................................. 1 2,113 5%
----- ----------- ---
Principal markets total................................... 98 28,588 71%
Other markets............................................... 49 11,451 29%
----- ----------- ---
Total..................................................... 147 40,039 100%
----- ----------- ---
----- ----------- ---

At December 31, 1997, the Company owned or controlled 147 properties
containing 40,039 units. The Owned Properties average 272 apartment units each,
with the largest property containing 2,113 apartment units.

The Owned Properties offer residents a range of amenities. Many of the Owned
Properties include a swimming pool and clubhouse, spas, fitness centers, tennis
courts and saunas. Many of the apartment units offer design and appliance
features such as vaulted ceilings, fireplaces, washer and dryer hook-ups, cable
television, balconies and patios.

Substantially all of the Owned Properties are encumbered by mortgage
indebtedness or serve as collateral for the Company's indebtedness. At December
31, 1997, the Company had aggregate mortgage indebtedness totaling $774.5
million, which was secured by 129 Owned Properties with a combined net book
value of $1,246.3 million, having an aggregate weighted average interest rate of
8.1%. At December 31, 1997, the Company had borrowings of $33.5 million
outstanding under its Credit Facility which were collateralized by seven Owned
Properties with a combined net book value of $82.8 million. See the financial
statements included elsewhere in this Annual Report for additional information
about the Company's indebtedness.

ITEM 3. LEGAL PROCEEDINGS

In November 1996, the Company completed the acquisition (the "English
Acquisition") of certain partnership interests, real estate and related assets
from J.W. English, a Houston, Texas-based real estate syndicator and developer,
and certain affiliated entities (collectively, the "J.W. English Companies"). In
the English Acquisition, the Company purchased all of the general and limited
partnerships interests owned by the J.W. English Companies in 22 limited
partnerships which act as the general partner to 31 limited partnerships (the
"English Partnerships") that own 22 multi-family apartment properties and other
assets and interests related to the J.W. English Companies, and assumed
management of the properties owned by the English Partnerships. The Company made
separate tender offers (the "English Tender Offers") to the limited partners of
25 of the English Partnerships (the "Tender Offer English Partnerships").

In November 1996, purported limited partners of certain of the Tender Offer
English Partnerships filed a class action lawsuit against the Company and J.W.
English in the U.S. District Court for the Northern District of California (the
"Federal Action"), alleging among other things, that the Company conspired with
J.W. English to breach his fiduciary duty to the plaintiffs, and that the
offering materials used by the Company in connection with the English Tender
Offers contained misleading statements or omissions. The Federal Action was
voluntarily dismissed, without prejudice, in favor of another purported class
action filed in May 1997 by limited partners of certain of the Tender Offer
English Partnerships and six additional English Partnerships. Two complaints
were filed in Superior Court of the State of California (the "California
Actions") against the Company and the J.W. English Companies, alleging, among
other things, that the consideration the Company offered in the English Tender
Offers was inadequate and designed to benefit the J.W. English Companies at the
expense of the limited partners, that certain misrepresentations and omissions
were made in connection with the English Tender Offers, that the Company
receives excessive fees in connection with its management of the properties
owned by the English Partnerships, that the Company continues to refuse to
liquidate the English Partnerships and that the English Acquisition violated the
partnership agreements governing the English Partnerships and constituted a
breach of fiduciary duty.

In addition to unspecified compensation and exemplary damages, the original
complaints in the California Actions sought an accounting, a constructive trust
on the assets and monies acquired by the English defendants in connection with
the English Acquisition, a court order removing the Company from management of
the English Partnerships and/or ordering disposition of the properties and
attorneys fees, expert fees and other costs. The Company intends to vigorously
defend itself in connection with these actions. The Company also believes it is
entitled to indemnification from the J.W. English Companies, subject to certain
exceptions. Failure by the Company to prevail in the California Actions or to
receive indemnification could have a material adverse effect on the Company's
financial condition and results of operations.

On August 4, 1997, the Company filed demurrers to both complaints in the
California Actions. At a hearing on the demurrers on January 9, 1998, the court
granted the Company's demurrers to each of the three causes of action against it
in the two complaints, with leave to amend. On February 25, 1998, the plaintiffs
filed a consolidated amended class and derivative complaint for damages (the
"Consolidated Amended Complaint"). The Consolidated Amended Complaint has added
as defendants the general partners of the English Partnerships and dropped
certain defendants, including AIMCO/PAM Properties, L.P. The Consolidated
Amended Complaint seeks compensatory and punitive damages and alleges six causes
of action for breach of fiduciary duty (two separate causes of action), for an
accounting, breach of the implied covenant of good faith and fair dealing, and
for inducing breach of contract. Plaintiffs have also added allegations of
alleged wrongful conduct in connection with the Company's second group of tender
offers commenced in late 1997. The Company will likely file a demurrer. The date
to move, answer or otherwise respond to the Consolidated Amended Complaint with
respect to all of the defendants is March 27, 1998.

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

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

AIMCO held a special meeting of stockholders on December 8, 1997 to consider
the issuance by AIMCO of up to 5,433,695 shares of Class A Common Stock in
connection with the NHP Merger. The matter was approved by the following vote:

VOTES
VOTES FOR AGAINST ABSTENTIONS
- ------------ --------- -----------

19,997,613 163,073 134,247

PART II

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

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

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

1995
March 31, 1995................................................................ $ 181/2 $ 171/8 $ 0.415
June 30, 1995................................................................. 201/4 177/8 0.415
September 30, 1995............................................................ 211/8 191/2 0.415
December 31, 1995............................................................. 20 18 0.425

1996
March 31, 1996................................................................ 211/8 193/8 0.425
June 30, 1996................................................................. 21 183/8 0.425
September 30, 1996............................................................ 22 183/8 0.425
December 31, 1996............................................................. 283/8 211/8 0.425

1997
March 31, 1997................................................................ 301/2 251/2 0.4625
June 30, 1997................................................................. 293/4 26 0.4625
September 30, 1997............................................................ 363/16 281/8 0.4625
December 31, 1997............................................................. 38 32 0.4625

1998
March 31, 1998 (through March 15, 1998)....................................... 0.5625(1)

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

(1) On January 22, 1998, the Company's Board of Directors declared a cash
dividend of $0.5625 per share of Common Stock, paid on February 13, 1998 to
stockholders of record on February 6, 1998.

On March 18, 1998, there were 41,417,376 shares of Class A Common Stock
outstanding, held by 328 stockholders of record.

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

requirements, the annual distribution requirements under the provisions of the
Code applicable to REITs and such other factors as the Board of Directors deems
relevant.

From time to time, AIMCO issues shares of Class A Common Stock in exchange
for OP Units tendered to the AIMCO Operating Partnership for redemption in
accordance with the terms and provisions of the agreement of limited partnership
of the AIMCO Operating Partnership. Such shares are issued based on an exchange
ratio of one share for each OP Unit. The shares are issued in exchange for OP
Units in private transactions exempt from registration under the Securities Act
of 1933, as amended (the "Securities Act"), pursuant to Section 4(2) thereof.
During 1997, a total of 563,426 shares were issued in exchange for OP Units.

On June 3, 1997, AIMCO issued warrants (the "NHP Warrants") exercisable to
purchase an aggregate of 399,999 shares of Class A Common Stock at $36 per share
at any time prior to June 3, 2002. The NHP Warrants were issued as part of the
consideration for the NHP Real Estate Companies in a private transaction exempt
from registration under the Securities Act pursuant to Section 4(2) thereof.

On December 2, 1997, AIMCO issued warrants (the "Oxford Warrants")
exercisable to purchase up to an aggregate of 500,000 shares of Class A Common
Stock at $41 per share. The Oxford Warrants were issued to affiliates of Oxford
Realty Financial Group, Inc., a Maryland corporation ("Oxford"), in connection
with the amendment of certain agreements pursuant to which the Company manages
properties controlled by Oxford or its affiliates. The actual number of shares
of Class A Common Stock for which the Oxford Warrants will be exercisable is
based on certain performance criteria with respect to the Company's management
arrangements with Oxford for each of the five years ending December 31, 2001.
The Oxford Warrants are exercisable for six years after the determination of
such criteria for each of the five years. The Oxford Warrants were issued in a
private transaction exempt from registration under the Securities Act pursuant
to Section 4(2) thereof.

ITEM 6. SELECTED FINANCIAL DATA

The historical selected financial data for AIMCO for the years ended
December 31, 1997, 1996 and 1995 is based on audited financial statements. This
information should be read in conjunction with such financial statements,
including the notes thereto, and "Management's Discussion and Analysis of
Financial Condition and Results of Operations" included herein. The historical
selected financial data for AIMCO for the period from January 10, 1994 (the date
of inception) through December 31, 1994 and for the AIMCO Predecessors for the
period January 1, 1994 through July 28, 1994 and for the year ended December 31,
1993 is based on audited financial statements.

THE COMPANY AIMCO PREDECESSORS
--------------------------------------------------------- ----------------------------
FOR THE FOR THE
PERIOD PERIOD
JANUARY 10, JANUARY 1,
FOR THE YEAR FOR THE YEAR FOR THE YEAR 1994 1994 FOR THE YEAR
ENDED ENDED ENDED THROUGH THROUGH ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, JULY 28, DECEMBER 31,
1997 1996 1995 1994 1994 1993
------------ ------------- ------------- ------------- ------------- -------------

OPERATING DATA:
RENTAL PROPERTY OPERATIONS:
Rental and other income.............. $ 193,006 $ 100,516 $ 74,947 $ 24,894 $ 5,805 $ 8,056
Property operating expenses.......... (76,168) (38,400) (30,150) (10,330) (2,263) (3,200)
Owned property management expenses... (6,620) (2,746) (2,276) (711) -- --
------------ ------------- ------------- ------------- ------------- -------------
110,218 59,370 42,521 13,853 3,542 4,856
Depreciation......................... (37,741) (19,556) (15,038) (4,727) 1,151) (1,702)
------------ ------------- ------------- ------------- ------------- -------------
72,477 39,814 27,483 9,126 2,391 3,154
------------ ------------- ------------- ------------- ------------- -------------
SERVICE COMPANY BUSINESS:
Management fees and other income..... 13,937 8,367 8,132 3,217 6,533 8,069
Management and other expenses........ (9,910) (5,352) (4,953) (2,047) (5,823) (6,414)
Corporate overhead allocation........ (588) (590) (581) -- -- --
Owner and seller bonuses............. -- -- -- -- (204) (468)
Amortization of management company
goodwill........................... (948) (500) (428) -- -- --
Depreciation and amortization........ (453) (218) (168) (150) (146) (204)
------------ ------------- ------------- ------------- ------------- -------------
2,038 1,707 2,002 1,020 360 983
------------ ------------- ------------- ------------- ------------- -------------
Minority interests in service company
business........................... (10) 10 (29) (14) -- --
------------ ------------- ------------- ------------- ------------- -------------
Company's shares of income from
service company business........... 2,028 1,717 1,973 1,006 360 983
------------ ------------- ------------- ------------- ------------- -------------
General and administrative
expenses........................... (5,396) (1,512) (1,804) (977) -- --
Interest income...................... 8,676 523 658 123 -- --
Interest expense..................... (51,385) (24,802) (13,322) (1,576) (4,214) (3,510)
Minority interest in other
partnerships....................... 1,008 (111) -- -- -- --
Equity in losses of unconsolidated
partnerships....................... (1,798) -- -- -- -- --
Equity in earnings of unconsolidated
subsidiaries....................... 4,636 -- -- -- -- --
Income from operations............... 30,246 15,629 14,988 7,702 (1,463) 627
Gain on disposition of properties.... 2,720 44 -- -- -- --
Provision for income taxes........... -- -- -- -- (36) (336)
------------ ------------- ------------- ------------- ------------- -------------
Income (loss) before extraordinary
item and minority interest in
Operating Partnership.............. 32,966 15,673 14,988 7,702 (1,499) 291
Extraordinary item--early
extinguishment of debt............. (269) -- -- -- -- --
------------ ------------- ------------- ------------- ------------- -------------
Income (loss) before minority
interest in Operating
Partnership........................ 32,697 15,673 14,988 7,702 (1,499) 291
Minority interest in Operating
Partnership........................ (4,064) (2,689) (1,613) (559) -- --
------------ ------------- ------------- ------------- ------------- -------------
Net income (loss).................... $ 28,633 $ 12,984 $ 13,375 $ 7,143 $ (1,499) $ 291
------------ ------------- ------------- ------------- ------------- -------------
------------ ------------- ------------- ------------- ------------- -------------

Total owned properties (end of
period)............................ 147 94 56 48 4 4
Total owned apartment units (end of
period)............................ 40,039 23,764 14,453 12,513 1,711 1,711
Units under management (end of
period)............................ 69,587 19,045 19,594 20,758 29,343 28,422
Basic earnings per common share
(1)................................ $ 1.09 $ 1.05 $ 0.86 $ 0.42 N/A N/A
Diluted earnings per common share
(1)................................ $ 1.08 $ 1.04 $ 0.86 $ 0.42 N/A N/A
Dividends paid per common share...... $ 1.85 $ 1.70 $ 1.66 $ 0.29 N/A N/A
BALANCE SHEET INFORMATION:
Real estate, before accumulated
depreciation....................... $1,659,763 $ 865,222 $ 477,162 $ 406,067 $ 47,500 $ 46,819
Total assets......................... 2,103,066 834,813 480,361 416,739 39,042 38,914
Total mortgages and notes payable.... 808,530 522,146 268,692 141,315 40,873 41,893
Mandatorily redeemable 1994
Cumulative Senior Preferred
Stock.............................. -- -- -- 96,600 -- --
Stockholders' equity................. 1,045,301 222,889 169,032 140,319 (9,345) (7,556)

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

(1) Earnings per share figures for all periods prior to 1997 have been restated
to reflect the application of Financial Accounting Standards Board Statement
of Financial Accounting Standards No. 128, Earnings Per Share.

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

OVERVIEW

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

RESULTS OF OPERATIONS

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

NET INCOME

The Company recognized net income of $28.6 million and net income
attributable to common shareholders of $26.3 million for the year ended December
31, 1997 compared to net income and net income attributable to common
shareholders of $13.0 million for the year ended December 31, 1996. Net income
attributable to common shareholders represents net income less a provision for
accrued dividends on the Company's Class B Preferred Stock and Class C Preferred
Stock. The Class B Preferred Stock and Class C Preferred Stock were issued in
August and December 1997, respectively. There was no preferred stock outstanding
during 1996. The increase in net income allocable to common shareholders of
$13.3 million, or 102.3%, was primarily the result of the following:

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

- the acquisition of 11,706 units in 44 apartment communities during 1997
(the "1997 Acquisitions");

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

- the acquisition of NHP in December 1997.

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

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

RENTAL PROPERTY OPERATIONS

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

YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1997 1996
------------ ------------

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

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

Property operating expenses consist of on-site payroll costs, utilities (net
of reimbursements received from tenants), contract services, turnover costs,
repairs and maintenance, advertising and marketing, property taxes and
insurance. Property operating expenses totaled $76.2 million for the year ended
December 31, 1997, compared to $38.4 million for the year ended December 31,
1996, an increase of $37.8 million, or 98.4%. Property operating expenses
consisted of the following (in thousands):

YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1997 1996
------------ ------------

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

Owned Property management expenses, representing the costs of managing the
Company's Owned Properties, totaled $6.6 million for the year ended December 31,
1997, compared to $2.7 million for the

year ended December 31, 1996, an increase of $3.9 million, or 144.4%. The
increase resulted from the acquisition of properties in 1996 and 1997 and the
acquisition of interests in the NHP Partnerships.

SERVICE COMPANY BUSINESS

The Company's share of income from the service company business was $2.0
million for the year ended December 31, 1997, compared to $1.7 million for the
year ended December 31, 1996, an increase of $0.3 million or 17.6%. The increase
is due to the acquisition by the Company of property management businesses in
August and November 1996, the acquisition of partnership interests which provide
for certain partnership and administrative fees, and a captive insurance
subsidiary acquired in connection with the acquisition of the NHP Real Estate
Companies in June 1997, which were offset by the expiration of the Company's
commercial asset management contracts on March 31, 1997. The Company's share of
income from service company businesses consisted of the following (in
thousands):

YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1997 1996
------------ ------------

Properties managed for third parties and affiliates
Management fees and other income............................... $ 9,353 $ 5,679
Management and other expenses.................................. (9,045) (4,405)
------------ ------------
308 1,274
------------ ------------
Commercial asset management
Management and other income.................................... 245 1,026
Management and other expenses.................................. (275) (339)
------------ ------------
(30) 687
------------ ------------
Reinsurance operations
Revenues....................................................... 4,228 1,267
Expenses....................................................... (360) (282)
------------ ------------
3,868 985
------------ ------------
Brokerage and other
Revenues....................................................... 111 395
Expenses....................................................... (230) (326)
------------ ------------
(119) 69
------------ ------------
$ 4,027 $ 3,015
------------ ------------
------------ ------------

Income from the management of properties for third parties and affiliates
was $0.3 million for the year ended December 31, 1997, compared to $1.3 million
for the year ended December 31, 1996, a decrease of $1.0 million, or 76.9%.

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

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

GENERAL AND ADMINISTRATIVE EXPENSES

General and administrative expenses totaled $5.4 million for the year ended
December 31, 1997 compared to $1.5 million for the year ended December 31, 1996,
an increase of $3.9 million, or 260.0%. The increase in general and
administrative expenses is primarily due to the payment of incentive
compensation to members of senior management and other employees.

INTEREST EXPENSE

Interest expense, which includes the amortization of deferred finance costs,
totaled $51.4 million for the year ended December 31, 1997, compared to $24.8
million for the year ended December 31, 1996, an increase of $26.6 million or
107.3%. The increase consists of the following (in thousands):

Interest expense on secured short-term and long-term indebtedness
incurred in connection with the 1996 Acquisitions................ $ 11,054
Interest expense on secured and unsecured short-term and long-term
indebtedness incurred in connection with the 1997 Acquisitions... 7,082
Interest expense on secured and unsecured short-term and long-term
indebtedness incurred in connection with the acquisition of
interests in the NHP Partnerships................................ 6,924
Increase in interest expense on the Credit Facility due to
borrowings used in connection with the refinancing of short-term
indebtedness and the acquisition of the NHP Real Estate Companies
in June 1997, net of decreased interest expense on existing
indebtedness due to principal amortization....................... 1,523
---------
Total increase..................................................... $ 26,583
---------
---------

INTEREST INCOME

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

COMPARISON OF THE YEAR ENDED DECEMBER 31, 1996 TO THE YEAR ENDED DECEMBER 31,
1995

The Company recognized net income of $13.0 million for the year ended
December 31, 1996, all of which was attributable to common shareholders. For the
year ended December 31, 1995, the Company recognized net income of $13.4
million, of which $5.2 million was attributable to the holder of AIMCO's
mandatorily redeemable 1994 Cumulative Convertible Senior Preferred Stock
("Convertible Preferred Stock") and $8.2 million was attributable to common
shareholders. The increase in net income allocable to the common shareholders in
1996 of 58.5% was primarily the result of the 1996 Acquisitions offset by the
1996 Dispositions. The increase in net income is partially offset by increased
interest expense associated with debt which was incurred in June 1995 and
September 1995 upon the redemption of the Convertible Preferred Stock, increased
interest expense attributable to indebtedness assumed or incurred in connection
with the 1996 Acquisitions offset by decreased interest expense after the pay
down of the Credit Facility with proceeds from the 1996 Dispositions. These
factors are discussed in more detail in the following paragraphs.

RENTAL PROPERTY OPERATIONS

Rental and other property revenues from the Company's Owned Properties
totaled $100.5 million for the year ended December 31, 1996, compared to $74.9
million for the year ended December 31, 1995, an

increase of $25.6 million, or 34.2%. Rental and other property revenues
consisted of the following (in thousands):

YEAR ENDED YEAR ENDED
DECEMBER 31, 1996 DECEMBER 31, 1995
----------------- -----------------

"Same store" properties................................ $ 69,268 $ 67,058
1996 Acquisitions...................................... 25,929 517
1996 Dispositions...................................... 3,363 5,272
Properties in lease-up after the completion of an
expansion or renovation.............................. 1,956 2,100
-------- -------
Total.................................................. $ 100,516 $ 74,947
-------- -------
-------- -------

Average monthly rent per occupied unit for these 42 properties at December
31, 1996 and 1995 was $546 and $531, respectively, an increase of 2.8%. Weighted
average physical occupancy for the 42 properties increased from 94.2% at
December 31, 1995 to 94.9% at December 31, 1996, a 0.7% increase.

Property operating expenses totaled $38.4 million for the year ended
December 31, 1996, compared to $30.2 million for the year ended December 31,
1995, an increase of $8.2 million, or 27.2%. Property operating expenses
consisted of the following (in thousands):

YEAR ENDED YEAR ENDED
DECEMBER 31, 1996 DECEMBER 31, 1995
----------------- -----------------

"Same store" properties................................ $ 26,103 $ 25,615
1996 Acquisitions...................................... 9,652 218
1996 Dispositions...................................... 1,793 3,146
Properties in lease-up after the completion of an
expansion or renovation.............................. 852 1,171
-------- -------
Total.................................................. $ 38,400 $ 30,150
-------- -------
-------- -------

Owned property management expenses totaled $2.7 million for the year ended
December 31, 1996, compared to $2.3 million for the year ended December 31,
1995, an increase of $0.4 million or 17.4%. The increase is primarily due to the
acquisition of properties in 1996.

SERVICE COMPANY BUSINESS

The Company's share of income from the service company business was $1.7
million for the year ended December 31, 1996 compared to $2.0 million for the
year ended December 31, 1995. Management fees and other income totaled $8.4
million for the year ended December 31, 1996 compared to $8.1 million for the
year ended December 31, 1995, reflecting an increase of $0.3 million, or 3.7%.
Management and other expenses totaled $5.4 million for the year ended December
31, 1996 compared to $5.0 million for the year ended December 31, 1995,
reflecting an increase of $0.4 million, or 8.0%. Major sources of revenue

and expense before amortization of management company goodwill, corporate
overhead allocations, depreciation and amortization and minority interest are
described below.

YEAR ENDED YEAR ENDED
DECEMBER 31, 1996 DECEMBER 31, 1995
----------------- -----------------
(IN THOUSANDS)

Properties managed for third parties and affiliates
Management fees and other income..................... $ 5,679 $ 4,878
Management and other expenses........................ (4,405) (3,620)
------- -------
1,274 1,258
------- -------
Commercial asset management
Management and other income.......................... 1,026 1,564
Management and other expenses........................ (339) (562)
------- -------
687 1,002
------- -------
Reinsurance operations
Revenues............................................. 1,267 1,193
Expenses............................................. (282) (432)
------- -------
985 761
------- -------
Brokerage and other
Revenues............................................. 395 497
Expenses............................................. (326) (339)
------- -------
69 158
------- -------
$ 3,015 $ 3,179
------- -------
------- -------

Income from the management of properties for third parties and affiliates
was $1.3 million for the years ended December 31, 1996 and 1995. Management fee
revenues increased from $4.9 million for the year ended December 31, 1995 to
$5.7 million for the year ended December 31, 1996, an increase of $0.8 million
or 16.4%, primarily as a result of the acquisition of properties in 1996. A
comparable increase in management expenses was also experienced in 1996.

Income from commercial asset management was $0.7 million for the year ended
December 31, 1996 compared to $1.0 million for the year ended December 31, 1995,
a decrease of $0.3 million or 30.0%. Commercial management revenues declined
from $1.6 million in 1995 to $1.0 million in 1996, primarily due to the
reduction in the number of properties managed. Commercial management expenses
declined from $0.6 million to $0.3 million as a result of fewer managed
properties. The asset management contracts expired on March 31, 1997.

Income from the reinsurance operations for the year ended December 31, 1996
increased by $0.2 million, or 29.4%, from the year ended December 31, 1995, due
to increased premiums collected from a larger work force, improved loss
experience and the closure of claims for less than the amounts previously
reserved.

GENERAL AND ADMINISTRATIVE EXPENSES

General and administrative expenses totaled $1.5 million for the year ended
December 31, 1996 compared to $1.8 million for the year ended December 31, 1995,
a decrease of $0.3 million or 16.7%. The amount presented for 1996 included $1.5
million for payroll, overhead and other costs associated with operating a public
company and $0.6 million for payroll and other costs incurred in the development
of new business offset by a corporate overhead allocation of $0.6 million to the
service company business. The amount presented for 1995 included $1.6 million
for payroll, overhead and other costs associated with

operating a public company, and $0.8 million for payroll and other costs
incurred in the development of new business offset by a corporate overhead
allocation of $0.6 million to the service company business. The net decrease in
general and administrative expenses for the year ended December 31, 1996 is
attributable to fewer personnel and a decrease in state income taxes paid in
1996 as a result of the restructuring in early 1995.

INTEREST EXPENSE

Interest expense totaled $24.8 million for the year ended December 31, 1996
compared to $13.3 million for the year ended December 31, 1995, an increase of
$11.5 million or 86.5%. The increase consists primarily of $5.7 million of
interest expense on secured long-term debt incurred in connection with
refinancings completed in June 1995 and September 1995 to refinance certain
secured notes payable, redeem the Convertible Preferred Stock and repurchase
513,514 unregistered shares of Class A Common Stock, and $5.6 million of
interest expense on long-term and short-term indebtedness incurred or assumed in
connection with the 1996 Acquisitions. Interest expense on secured tax-exempt
bond financing increased by $1.0 million, or 13.5%, due to an increase in
interest rate on the $48.1 million of tax-exempt bonds refinanced in June 1996
and the borrowing of $9.9 million in June 1996 (proceeds of which were used to
pay down the Company's Credit Facility). During the year ended December 31,
1996, the Company capitalized interest of $0.8 million as a result of increased
construction and renovation activities compared to $0.1 million which was
capitalized during the year ended December 31, 1995. Interest expense,
amortization of deferred financing costs and unused commitment fees on the
Credit Facility were $1.6 million for the years ended December 31, 1996 and
1995.

LIQUIDITY AND CAPITAL RESOURCES

At December 31, 1997, the Company had $37.1 million in cash and cash
equivalents and $24.2 million of restricted cash primarily consisting of
reserves and impounds held by lenders for capital expenditures, property taxes
and insurance. The Company's principal demands for liquidity include normal
operating activities, payments of principal and interest on outstanding debt,
capital improvements, acquisitions of or investments in properties, dividends
paid to its stockholders and distributions paid to minority limited partners in
the AIMCO Operating Partnership. The Company considers its cash provided by
operating activities to be adequate to meet short-term liquidity demands.

In May 1997, the Company increased its maximum amount available under the
Credit Facility from $50.0 million to $100.0 million. The outstanding balance
under the Credit facility was $33.5 million at December 31, 1997.

In January 1998, the Company replaced the Credit Facility with a new
unsecured $50 million revolving credit facility with Bank of America and
BankBoston, N.A. The interest rate under the New Credit Facility is based on
LIBOR or Bank of America's reference rate at the election of the Company, plus
an applicable margin, ranging from 0.6% to 1.0% for LIBOR based loans and 0.0%
to 0.5% for loans based on Bank of America's reference rate. The New Credit
Facility expires on January 26, 2000 unless extended for successive one-year
periods at the discretion of the lenders. The Company utilizes the New Credit
Facility for general corporate purposes and to fund investments on an interim
basis. As of March 18, 1998, there were no borrowings outstanding under the New
Credit Facility.

In February 1998, the Company entered into a five year secured credit
facility agreement with Washington Mortgage, which provides for a $50 million
revolving credit facility, a portion or all of which may be converted into a
base loan facility. At the AIMCO Operating Partnership's request, the commitment
amount may be increased to an amount not to exceed $250 million, subject to
consent of Washington Mortgage and FNMA in their sole and absolute discretion.
The AIMCO Operating Partnership and affiliates have pledged their ownership
interests in the Owners as security for their obligations under the WMF Credit
Facility. The guarantees of the Owners are secured by assets of the Owners,
including four

apartment properties and two mortgage notes. The interest rate on each advance
is determined by investor bids for such mortgage backed securities plus a fee
spread presently equal to 0.5%. The maturity date of each advance under the
revolving portion of the WMF Credit Facility is a date between three and nine
months from the closing date of the advance as selected by the AIMCO Operating
Partnership. Advances under the base facility mature at a date, selected by the
AIMCO Operating Partnership between ten and twenty years from the date of the
advance. The outstanding balance under the WMF Credit Faculty was $36.9 million
as of March 18, 1998.

The Company expects to meet its long-term liquidity requirements, such as
refinancing debt and property acquisitions, through long-term borrowings, both
secured and unsecured, the issuance of debt, OP Units or equity securities and
cash generated from operations. In May 1997, the Company filed a shelf
registration statement with the Securities and Exchange Commission with respect
to an aggregate of $1.0 billion of debt and equity securities. As of March 18,
1998, the amount remaining available under the shelf registration was $419.4
million. The Company expects to finance the pending acquisition of Ambassador
and other real estate interests, discussed previously in this report, with the
issuance of equity securities and debt.

As of December 31, 1997, 95% of the Company's Owned Properties and 67% of
its total assets were encumbered by debt, and the Company had total outstanding
indebtedness of $808.5 million, all of which was secured by Owned Properties and
other assets. The Company's indebtedness is comprised of $681.4 million of
secured long-term financing, $53.1 in secured short-term financing and $74.0
million of secured tax-exempt bonds. As of December 31, 1997, approximately 8%
of the Company's indebtedness bears interest at variable rates. General Motors
Acceptance Corporation has made 89 loans (the "GMAC Loans"), with an aggregate
outstanding principal balance of $398.6 million as of December 31, 1997, to
property owning partnerships of the Company, each of which is secured by the
underlying Owned Property of such partnership. Certain GMAC Loans are
cross-collateralized with certain other GMAC Loans. Other than certain GMAC
Loans, none of the Company's debt is subject to cross-collateralization
provisions. The weighted average interest rate on the Company's long-term
secured tax-exempt financing and secured notes payable was 8.1% with a weighted
average maturity of 9.7 years. The weighted average interest rate on the
Company's secured short-term financing was 7.5%.

CAPITAL EXPENDITURES

For the year ended December 31, 1997, the Company spent $7.4 million for
capital replacements (expenditures for routine maintenance of a property), $9.1
million for initial capital expenditures (expenditures at a property that have
been identified, at the time the property is acquired, as expenditures to be
incurred within one year of the acquisition), and $8.5 million for construction
and capital enhancements (amenities that add a material new feature or revenue
source at a property). These expenditures were funded by borrowings under the
Credit Facility, working capital reserves and net cash provided by operating
activities. During 1998, the Company will provide an allowance for capital
replacements of $300 per apartment unit. Initial capital expenditures and
capital enhancements will primarily be funded by cash from operating activities
and borrowings under the New Credit Facility.

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

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

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

FUNDS FROM OPERATIONS

The Company measures its economic profitability based on FFO. The Company's
management believes that FFO provides investors with an understanding of the
Company's ability to incur and service debt and make capital expenditures. The
Board of Governors of the National Association of Real Estate Investment Trusts
("NAREIT") defines FFO as net income (loss), computed in accordance with
generally accepted accounting principles ("GAAP"), excluding gains and losses
from debt restructuring and sales of property, plus real estate related
depreciation and amortization (excluding amortization of financing costs), and
after adjustments for unconsolidated partnerships and joint ventures. The
Company calculates FFO in a manner consistent with the NAREIT definition, which
includes adjustments for minority interest in the AIMCO Operating Partnership,
plus amortization of management company goodwill, the non-cash deferred portion
of the income tax provision for unconsolidated subsidiaries and less the payment
of dividends on preferred stock. FFO should not be considered an alternative to
net income or net cash flows from operating activities, as calculated in
accordance with GAAP, as an indication of the Company's performance or as a
measure of liquidity. FFO is not necessarily indicative of cash available to
fund future cash needs.

For the years ended December 31, 1997, 1996 and 1995, the Company's FFO is
calculated as follows (amounts in thousands):

YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1997 1996 1995
------------ ------------ ------------

Income before minority interest in Operating Partnership.............. $ 32,697 $ 15,673 $ 14,988
Extraordinary item.................................................... 269 -- --
Gain on disposition of properties..................................... (2,720) (44) --
Real estate depreciation, net of minority interests................... 33,751 19,056 15,038
Amortization of management company goodwill........................... 948 500 428
Equity in earnings of other partnerships:
Real estate depreciation............................................ 6,280 -- --
Equity in earnings of unconsolidated subsidiaries:
Real estate depreciation............................................ 3,584 -- --
Deferred taxes...................................................... 4,894 -- --
Amortization of management contracts................................ 1,587 -- --
Preferred Stock dividends............................................. (135) -- (5,169)
------------ ------------ ------------
Funds From Operations (FFO)........................................... $ 81,155 $ 35,185 $ 25,285
------------ ------------ ------------
------------ ------------ ------------
Weighted average number of common shares, common share equivalents and
OP Units outstanding:
Common stock...................................................... 24,055 12,411 9,571
Common stock equivalents.......................................... 381 16 8
Preferred stock convertible into common stock..................... 1,006 -- --
OP Units.......................................................... 3,677 2,567 1,882
------------ ------------ ------------
29,119 14,994 11,461
------------ ------------ ------------
------------ ------------ ------------
CASH FLOW INFORMATION:
Cash flow provided by operating activities............................ $ 73,032 $ 38,806 $ 25,911
Cash flow used in investing activities................................ (717,663) (88,144) (60,821)
Cash flow provided by financing activities............................ 668,549 60,129 30,145

CONTINGENCIES

HUD ENFORCEMENT AND LIMITED DENIALS OF PARTICIPATION

A significant number of affordable units included in the AIMCO Properties
are subject to regulation by HUD. Under its regulations, HUD has the authority
to suspend or deny property owners and managers from participation in HUD
programs with respect to additional assistance within a geographic region
through imposition of an LDP by any HUD office or nationwide for violations of
HUD regulatory requirements. In March 1997, HUD announced its intention to step
up enforcement against property owners and managers who violate their agreements
with HUD, and, in July 1997, HUD announced the creation of a new department-wide
enforcement division. Three HUD field offices have recently issued three LDPs to
NHP as a result of physical inspections and mortgage defaults at four properties
owned by the NHP Real Estate Companies, two of which are managed by the Company.
One LDP was subsequently withdrawn and another was terminated in December 1997
after a reinspection of the property. The one remaining LDP, unless lifted,
suspends the Company's ability to manage or acquire additional HUD-assisted
properties in eastern Missouri until June 24, 1998. The Company has proposed a
settlement agreement with HUD which includes aggregate payments to HUD of
approximately $0.5 million, and is awaiting HUD's response. The Company cannot
determine whether HUD will accept the proposed settlement. Because an LDP is
prospective, existing HUD agreements are not affected, so an LDP is not expected
to result in the loss of management service revenue from or to otherwise affect
properties that

the Company currently manages in the subject regions. If HUD were to disapprove
the Company as property manager for one or more affordable properties, the
Company's ability to obtain property management revenues from new affordable
properties may be impaired.

HUD monitors the performance of properties with HUD-insured mortgage loans.
HUD also monitors compliance with applicable regulations, and takes performance
and compliance into account in approving management of HUD-assisted properties.
In this regard, since July 1988, 29 HUD-assisted properties owned or managed by
the NHP Real Estate Companies or NHP have defaulted on non-recourse HUD-insured
mortgage loans. Eight of these 29 properties are also currently managed by the
Company. An additional six properties owned or managed by the Company have
received unsatisfactory performance ratings. As a result of the defaults and
unsatisfactory ratings, the national HUD office must review any field office
approval of the Company to act as property manager for a HUD-assisted property.
The national HUD office has consistently approved NHP's applications to manage
new properties, and the Company received HUD clearance to acquire NHP and the
NHP Real Estate Companies. The Company believes that it enjoys a good working
relationship with HUD and that the national office will continue to apply the
clearance process to large management portfolios such as the Company's,
including NHP's, with discretion and flexibility. While there can be no
assurance, the Company believes that the unsatisfactory reviews and the mortgage
defaults will not have a material impact on its results of operations or
financial condition.

In October 1997, NHP received a subpoena from the Inspector General of HUD
(the "Inspector General") requesting documents relating to any arrangement
whereby NHP or any of its affiliates provides or has provided compensation to
owners of HUD multi-family projects in exchange for or in connection with
management of a HUD project. The Company believes that other owners and managers
of HUD projects have received similar subpoenas. Documents relating to certain
of the Company's acquisitions of property management rights for HUD projects,
may be responsive to the subpoena. The Company is in the process of complying
with the subpoena and has provided certain documents to the Inspector General,
without conceding that they are responsive to the subpoena. The Company believes
that its operations are in compliance, in all material respects, with all laws,
rules and regulations relating to HUD-assisted or HUD-insured properties.
Although the Inspector General has not initiated any action against the Company
or, to the Company's knowledge, any owner of a HUD property managed by the
Company, if any such action is taken in the future, it could ultimately affect
existing arrangements with respect to HUD projects or otherwise have a material
adverse effect on the results of operations of the Company.

ENVIRONMENTAL

Certain Federal, state and local laws and regulations govern the removal,
encapsulation or disturbance of asbestos-containing materials ("ACMs") when
those materials are in poor condition or in the event of building remodeling,
renovation or demolition, impose certain worker protection and notification
requirements and govern emissions of and exposure to asbestos fibers in the air.
These laws also impose liability for a release of ACMs and may enable third
parties to seek recovery from owners or operators of real properties for
personal injury associated with ACMs. In connection with the ownership,
operation or management of properties, the Company could be potentially liable
for those costs. There are ACMs at certain of the Owned Properties, and there
may be ACMs at certain of the other AIMCO Properties. AIMCO has developed and
implemented operations and maintenance programs, as appropriate, that establish
operating procedures with respect to the ACMs at most of the Owned Properties,
and intends to develop and implement, as appropriate, such programs at AIMCO
Properties that do not have such programs.

will not be released or will not migrate, onto the AIMCO Properties. Such
hazardous substances have been released at certain Owned Properties and, in at
least one case, have migrated from an off-site location onto an Owned Property.
In addition, the Company's Montecito property in Austin, Texas, is located
adjacent to, and may be partially on, land that was used as a landfill. Low
levels of methane and other landfill gas have been detected at Montecito. The
City of Austin (the "City"), the former landfill operator, has assumed
responsibility for conducting all investigation and remedial activities to date
associated with the methane and other landfill gas. The remediation of the
landfill gas is now substantially complete and the Texas Natural Resources
Conservation Commission ("TNRCC") has preliminarily approved the methane gas
remediation efforts. Final approval of the site and the remediation process is
contingent upon the results of continued methane gas monitors to confirm the
effectiveness of the remediation efforts. Should further actionable levels of
methane gas be detected, a proposed contingency plan of passive methane gas
venting may be implemented by the City. The City has also conducted testing at
Montecito to determine whether, and to what extent, groundwater has been
impacted. Based on test reports received to date by the Company, the groundwater
does not appear to be contaminated at actionable levels. The Company has not
incurred, and does not expect to incur, liability for the landfill investigation
and remediation; however, the Company has relocated some of its tenants and has
installed a venting system according to the TNRCC's specifications under the
buildings slabs, in connection with the present raising of four of its buildings
in order to install stabilizing piers thereunder, at a total cost of
approximately $550,000, which is primarily the cost for the restabilization. The
restabilization was substantially completed in January 1998. The City will be
responsible for monitoring the conditions of Montecito.

All of the Owned Properties were subject to Phase I or similar environmental
audits by independent environmental consultants prior to acquisition. The audits
did not reveal, nor is the Company aware of, any environmental liability
relating to such properties that would have a material adverse effect on the
Company's business, assets or results of operations. The Managed Properties may
not have been subject to Phase I or similar environmental audits by independent
environmental consultants. However, the Company is not aware of any
environmental liability that would have a material adverse effect on its
business, financial condition or results of operations relating to the Managed
Properties.

In October 1997, NHP received a letter ("the EPA Letter") from the U.S.
Department of Justice ("DOJ") which stated that the U.S. Environmental
Protection Agency ("EPA") has requested that the DOJ file a lawsuit against NHP
alleging, among other things, that NHP violated the Clean Air Act, the National
Recycling and Emissions Reduction Programs and associated regulations in
connection with the employment of certain unlicensed personnel, maintenance and
disposal of certain refrigerants, and record-keeping practices at two
properties. A settlement in principle between NHP and the EPA has been reached
whereby NHP has agreed to pay a fine of less than $100,000, permit the EPA to
audit the maintenance records and technical staffing at 40 NHP properties and
continue to provide training to all maintenance workers with respect to the
disposal of refrigerants. A formal settlement agreement is expected to be
executed in 1998.

YEAR 2000 COMPLIANCE

The Company's management has determined that it will be necessary to modify
or replace certain accounting and operational software and hardware to enable
its computer systems to operate properly subsequent to December 31, 1999. As a
result, management has appointed a team of internal staff to research and manage
the conversion or replacement of existing systems to comply with year 2000
requirements. The team's activities are designed to ensure that there is no
adverse effect on the Company's core business operations, and that transactions
with tenants, suppliers and financial institutions are fully supported.

The Company utilizes numerous accounting and reporting software packages and
computer hardware to conduct its business, some of which already comply with
year 2000 requirements. Management estimates

that the modification or replacement of non-compliant accounting and reporting
software and hardware will total approximately $0.3 million.

The Company's management also believes that certain of the Owned Properties
possess operational systems (e.g. elevators, fire alarm and extinguishment
systems and security systems) which also must be modified or replaced in order
to function properly after 1999. Management is currently engaged in the
identification of all non-compliant operational systems, and has not yet
determined the estimated cost of replacing or modifying such systems.

INFLATION

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

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not applicable.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

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

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

None.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The information regarding the Company's Directors required by this item is
presented under the caption "Board of Directors and Officers" in AIMCO's proxy
statement for its 1998 annual meeting of stockholders and is incorporated herein
by reference.

The directors and executive officers of the Company as of March 18, 1998
are:

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

Terry Considine 50 Chairman of the Board of Directors and Chief Executive Officer
Peter K. Kompaniez 52 Vice Chairman, President and Director
Joel F. Bonder 49 Executive Vice President, General Counsel and Secretary
Robert Ty Howard 40 Executive Vice President--Ancillary Services
Steven D. Ira 47 Executive Vice President and Co-Founder
Thomas W. Toomey 37 Executive Vice President--Finance and Administration
David L. Williams 52 Executive Vice President--Property Operations
Harry G. Alcock 34 Senior Vice President--Acquisitions
Troy D. Butts 33 Senior Vice President and Chief Financial Officer
Martha Carlin 35 Senior Vice President--Ancillary Services
Joseph DeTuno 52 Senior Vice President--Property Redevelopment
Jack W. Marquardt 41 Senior Vice President--Accounting
Herbert Meistrich 55 Senior Vice President--Asset Management
Leeann Morein 43 Senior Vice President--Investor Services
David O'Leary 43 Senior Vice President--Buyers Access
R. Scott Wesson 34 Senior Vice President and Chief Information Officer
Roberta Ujakovich 45 Senior Vice President--Asset Management
Patricia K. Heath 43 Vice President and Chief Accounting Officer
Richard S. Ellwood 65 Director, Chairman, Audit Committee
J. Landis Martin 51 Director, Chairman, Compensation Committee
Thomas L. Rhodes 58 Director
John D. Smith 69 Director

TERRY CONSIDINE. Mr. Considine has been Chairman of the Board of Directors
and Chief Executive Officer of the Company since July 1994. He is the sole owner
of Considine Investment Co. and prior to July 1994 was owner of approximately
75% of Property Asset Management, L.L.C., Limited Liability Company, a Colorado
limited liability company, and its related entities (collectively, "PAM"), one
of the Company's predecessors. On October 1, 1996, Mr. Considine was appointed
Co-Chairman and director of Asset Investors Corp. and Commercial Asset
Investors, Inc., two other public real estate investment trusts, and appointed
as a director of Financial Assets Management, LLC, a real estate investment
trust manager. Mr. Considine has been and remains involved as a principal in a
variety of real estate activities, including the acquisition, renovation,
development and disposition of properties. Mr. Considine has also controlled
entities engaged in other businesses such as television broadcasting, gasoline
distribution and environmental laboratories. Mr. Considine received a B.A. from
Harvard College, a J.D. from Harvard Law School and is admitted as a member of
the Massachusetts Bar.

Mr. Considine has had substantial multifamily real estate experience. From
1975 through July 1994, partnerships or other entities in which Mr. Considine
had controlling interests invested in approximately 35 multifamily apartment
properties and commercial real estate properties. Six of these real estate
assets (four of which were multifamily apartment properties and two of which
were office properties) did not generate sufficient cash flow to service their
related indebtedness and were foreclosed upon by their lenders, causing pre-tax
losses of approximately $11.9 million to investors and losses of approximately
$2.7 million to Mr. Considine.

PETER K. KOMPANIEZ. Mr. Kompaniez has been Vice Chairman and a director of
AIMCO since July 1994 and was appointed President in July 1997. Mr. Kompaniez
has also served as Chief Operating Officer of NHP and President of NHP Partners
since June 1997. Since September 1993, Mr. Kompaniez has owned 75% of PDI Realty
Enterprises, Inc., a Delaware corporation ("PDI"), one of AIMCO's predecessors,
and serves as its President and Chief Executive Officer. From 1986 to 1993, he
served as

President and Chief Executive Officer of Heron Financial Corporation ("HFC"), a
United States holding company for Heron International, N.V's real estate and
related assets. While at HFC, Mr. Kompaniez administered the acquisition,
development and disposition of approximately 8,150 apartment units (including
6,217 units that have been acquired by AIMCO) and 3.1 million square feet of
commercial real estate. Prior to joining HFC, Mr. Kompaniez was a senior partner
with the law firm of Loeb and Loeb where he had extensive real estate and REIT
experience. Mr. Kompaniez received a B.A. from Yale College and a J.D. from the
University of California (Boalt Hall).

JOEL F. BONDER. Mr. Bonder was appointed Executive Vice President and
General Counsel of AIMCO effective December 1997. Prior to joining AIMCO, Mr.
Bonder served as Senior Vice President and General Counsel of NHP from April
1994 until December 1997. Mr. Bonder served as Vice President and Deputy General
Counsel of NHP from June 1991 to March 1994 and as Associate General Counsel of
NHP from1986 to 1991. From 1983 to 1985, Mr. Bonder was with the Washington,
D.C. law firm of Lane & Edson, PC. From 1979 to 1983, Mr. Bonder practiced with
the Chicago law firm of Ross and Hardies. Mr. Bonder received an A.B. from the
University of Rochester and a J.D. from Washington University School of Law.

ROBERT TY HOWARD. Mr. Howard was appointed Executive Vice
President--Ancillary Services in February 1998. Prior to joining AIMCO, Mr.
Howard served as an officer and director of four affiliated companies, Hecco
Ventures, Craig Corporation, Reading Company and Decurion Corporation. Mr.
Howard was responsible for financing, mergers and acquisitions activities,
investments in commercial real estate, both nationally and internationally,
cinema development and interest rate risk management. From 1983 to 1988, he was
employed by Spieker Properties. Mr. Howard received a B.A. from Amherst College,
a J.D. from Harvard Law School and an M.B.A. from Stanford University Graduate
School of Business.

STEVEN D. IRA. Mr. Ira has served as Executive Vice President and
Co-Founder of AIMCO since July 1994. From 1987 until July 1994, he served as
President of PAM. Prior to merging his firm with PAM in 1987, Mr. Ira acquired
extensive experience in property management. Between 1977 and 1981 he supervised
the property management of over 3,000 apartment and mobile home units in
Colorado, Michigan, Pennsylvania and Florida, and in 1981 he joined with others
to form the property management firm of McDermott, Stein and Ira. Mr. Ira served
for several years on the National Apartment Manager Accreditation Board and is a
former president of both the National Apartment Association and the Colorado
Apartment Association. Mr. Ira is the sixth individual elected to the Hall of
Fame of the National Apartment Association in its 54-year history. He holds a
Certified Apartment Property Supervisor (CAPS) and a Certified Apartment Manager
designation from the National Apartment Association, a Certified Property
Manager (CPM) designation from the National Institute of Real Estate Management
(IREM) and is a member of the Boards of Directors of the National Multi-Housing
Council, the National Apartment Association and the Apartment Association of
Metro Denver. Mr. Ira received a B.S. from Metropolitan State College in 1975.

THOMAS W. TOOMEY. Mr. Toomey has served as Senior Vice President--Finance
and Administration of AIMCO since January 1996 and was promoted to Executive
Vice President--Finance and Administration in March 1997. From 1990 until 1995,
Mr. Toomey served in a similar capacity with Lincoln Property Company ("LPC") as
Vice President/Senior Controller and Director of Administrative Services of
Lincoln Property Services where he was responsible for LPC's computer systems,
accounting, tax, treasury services and benefits administration. From 1984 to
1990, he was an audit manager with Arthur Andersen & Co. where he served real
estate and banking clients. From 1981 to 1983, Mr. Toomey was on the audit staff
of Kenneth Leventhal & Company Mr. Toomey received a B.S. in Business
Administration/Finance from Oregon State University and is a Certified Public
Accountant.

DAVID L. WILLIAMS. Mr. Williams has been Executive Vice
President-Operations of AIMCO since January 1997. Prior to joining AIMCO, Mr.
Williams was Senior Vice President of Operations at Evans

Withycombe Residential, Inc. from January 1996 to January 1997. Previously, he
was Executive Vice President at Equity Residential Properties Trust from October
1989 to December 1995. He has served on National Multi-Housing Council Boards
and NAREIT committees. Mr. Williams also served as Senior Vice President of
Operations and Acquisitions of US Shelter Corporation from 1983 to 1989. Mr.
Williams has been involved in the property management, development and
acquisition of real estate properties since 1973. Mr. Williams received his B.A.
in education and administration from the University of Washington in 1967.

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

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

MARTHA CARLIN. Ms. Carlin has served as Vice President since September 1996
and was promoted to Senior Vice President--Ancillary Services in December 1997.
From December 1995 until September 1996, Ms. Carlin served as Chief Financial
Officer for Wentwood Investment Partners. Ms. Carlin was employed by Arthur
Andersen LLP for six years, with a primary focus in real estate. Ms. Carlin was
also employed by MCI Communications and Lincoln Property Company. Ms. Carlin
received a B.S. from the University of Kentucky and is a Certified Public
Accountant.

JOSEPH DETUNO. Mr. DeTuno has been Senior Vice President--Property
Redevelopment of AIMCO since September 1997. Mr. DeTuno was president and
founder of JD Associates, his own full service real estate consulting, advisory
and project management company which he founded in 1990. JD Associates provided
development management, financial analysis, business plan preparation and
implementation services. Previously, Mr. DeTuno served as President/Partner of
Gulfstream Commercial Properties, President and Co managing Partner of Criswell
Development Company, Vice President of Crow Hotel and Company and Project
Director with Perkins & Will Architects and Planners. Mr. DeTuno received his
B.A. in architecture and is a registered architect in Illinois and Texas.

JACK W. MARQUARDT. Mr. Marquardt has been Senior Vice President--Accounting
of AIMCO since September 1997. Mr. Marquardt brings over 17 years of real estate
accounting experience to AIMCO. From October 1992 through August 1997, Mr.
Marquardt served as Vice President/Corporate Controller and Manager of Data
Processing for Transwestern Property Company, where he was responsible for
corporate accounting, tax, treasury services and computer systems. From August
1986 through September 1992, Mr. Marquardt worked in the real estate accounting
area of Aetna Realty Investors, Inc. serving as Regional Controller from April
1990 through September 1992. Mr. Marquardt received a B.S. in Business
Administration/Finance from Ohio State University.

HERBERT MEISTRICH. Mr. Meistrich has served as a Regional Vice President of
AIMCO since March 1995 and was promoted to Senior Vice President in September
1997, with responsibility for acquisitions and conversions of properties. Mr.
Meistrich has been involved in property management, development and acquisition
of all types of real estate properties since 1972. From 1982 to 1993, Mr.
Meistrich was President of Continental American Capital Corp., an affiliate of
ConAm Properties,

Ltd., and was responsible for acquisition and financing of apartments and
hotels. From 1966 to 1982, Mr. Meistrich practiced law, specializing in real
estate development and management. He was an Adjunct Assistant Professor at NYU
and has taught advanced real estate courses at NYU, as well as at other
professional seminars. He has authored articles in various real estate
publications. Mr. Meistrich received a B.A. from Rutgers University and a J.D.
from Columbia University Law School.

LEEANN MOREIN. Ms. Morein has served as Senior Vice President-- lnvestor
Services of AIMCO since November 1997. Ms. Morein served as Secretary from July
1994 to December 1997. From July 1994 until October 1997, Ms. Morein also served
as Chief Financial Officer. From September 1990 to March 1994, Ms. Morein served
as Chief Financial Officer of the real estate subsidiaries of California Federal
Bank, including the general partner of CF Income Partners, L.P, a publicly
traded master limited partnership. Ms. Morein joined California Federal in
September 1988 as Director of Real Estate Syndications Accounting and became
Vice President-Financial Administration in January 1990. From 1983 to 1988, Ms.
Morein was Controller of Storage Equities, Inc., a real estate investment trust,
and from 1981 to 1983, she was Director of Corporate Accounting for Angeles
Corporation, a real estate syndication firm. Ms. Morein worked on the audit
staff of Price Waterhouse from 1979 to 1981. Ms. Morein received a B.A. from
Pomona College and is a Certified Public Accountant.

DAVID O'LEARY. Mr. O'Leary has been President of Property Services Group,
Inc., an AIMCO subsidiary since December 1997. Property Services Group, Inc.
administers the Buyers Access program. From 1993 until 1997, Mr. O'Leary served
as Regional Vice President and Senior Vice President for Property Services
Group, Inc., with responsibility for program marketing and sales. From 1981 to
1993 Mr. O'Leary served as Vice President and Executive Vice President for
Commonwealth Pacific Inc., a privately held real estate investment and
management firm based in Seattle, Washington. During his tenure with
Commonwealth Pacific, Inc., Mr. O'Leary was responsible for acquisitions,
dispositions, development, and asset management from offices located in Houston
and Dallas, Texas, Atlanta, Georgia and Seattle, Washington. Mr. O'Leary also
served as Vice President for Johnstown American Companies, directing acquisition
activities for the Northeast United States. Mr. O'Leary received his B.A. Degree
from the University of Utah in 1979.

R. SCOTT WESSON. Mr. Wesson has been Senior Vice President-Chief
Information Officer of AIMCO since July 1997. From 1994 until 1997, Mr. Wesson
served as Vice President of Information Services at Lincoln Property Company,
where he was responsible for information systems infrastructure, technology
planning and business process re-engineering. From 1992 to 1994, Mr. Wesson
served in the role of Director of Network Services for Lincoln Property Company,
where he was responsible for the design and deployment of the company's Wide
Area Network and Local Area Networks, comprising over 2,500 workstations in over
40 locations nationwide. From 1988 to 1992, he was a systems consultant with
Automatic Data Processing involved in design, planning and deployment of
financial and human resources systems for several major, multi-national
organizations. From 1984 to 1987, he was a Senior Analyst with Federated
Department Stores, Inc. involved in planning and distribution. Mr. Wesson
received his B.S. from the University of Texas in 1984.

ROBERTA UJAKOVICH. Ms. Ujakovich has served as Senior Vice President since
July, 1997. She is responsible for transactions in the portfolio of over 380
AIMCO and NHP properties. Prior to joining AIMCO, Ms. Ujakovich was Vice
President of NHP serving as the Director of Transactions in NHP's Asset
Management Department. Previously, Ms. Ujakovich worked as a developer for three
successive, affiliated real estate development companies: The Cafritz / Freeman
Group, The Investment Group and Rosenberg, Freeman and Associates. She holds a
B.A. from Allegheny College and a Masters in Public Policy from the John F.
Kennedy School of Government at Harvard University.

PATRICIA K. HEATH. Ms. Heath has served as Vice President and Chief
Accounting Officer of the Company since July 1994. From 1992 to July 1994, Ms.
Heath served as Manager of Accounting, then Chief Financial Officer, of HFC, and
effective September 1993, as Chief Financial Officer of PDI. She had

responsibility for all internal and external financial reporting, cash
management and budgeting for HFC, its subsidiaries, related joint ventures and
partnerships and for PDI. Ms. Heath served as Controller for the real estate
investment, development and syndication firms of Guilford Glazer & Associates
from 1990 to 1992, Ginarra Holdings, Inc. from 1984 to 1990, and Fox & Carskadon
Financial Corporation from 1980 to 1983. Ms. Heath worked from 1978 to 1980 as
an auditor with Deloitte, Haskins and Sells. She received her B.S. in Business
from California State University at Chico and is a Certified Public Accountant.

RICHARD S. ELLWOOD. Mr. Ellwood was appointed a director of AIMCO in July
1994 and is currently Chairman of the Audit Committee. Mr. Ellwood is the
founder and President of R.S. Ellwood & Co., Incorporated, a real estate
investment banking firm. Prior to forming R.S. Ellwood & Co., Incorporated in
1987, Mr. Ellwood had 31 years experience as an investment banker, serving as:
Managing Director and Senior Banker at Merrill Lynch Capital Markets from 1984
to 1987; Managing Director at Warburg Paribas Becker from 1978 to 1984; general
partner and then Senior Vice President and a director at White, Weld & Co. from
1968 to 1978; and in various capacities at J.P Morgan & Co. from 1955 to 1968.
Mr. Ellwood currently serves as a director of Corporate Realty Income Trust and
FelCor Suite Hotels, Inc. He is a registered investment advisor.

J. LANDIS. MARTIN. Mr. Martin was appointed a director of AIMCO in July
1994 and is currently Chairman of the Compensation Committee. Mr. Martin has
served as President, Chief Executive Officer and a director of NL Industries,
Inc., a manufacturer of specialty chemicals, since 1987. Since 1988, he has
served as the President and Chief Executive Officer of Tremont Corporation, an
integrated producer of titanium metals. Mr. Martin has also served as a director
and the Chairman of the Board of Directors of Tremont Corporation since August
1990. From December 1988 until January 1994, he served as Chairman of the Board
of Directors of Baroid Corporation, an oilfield services company. In January
1994, Baroid Corporation became a wholly owned subsidiary of Dresser Industries,
Inc. and Mr. Martin currently serves as a director of Dresser Industries, Inc.
Mr. Martin also serves as Chairman of the Board and Chief Executive Officer of
Titanium Metals Corporation, an integrated producer of titanium.

THOMAS L. RHODES. Mr. Rhodes was appointed a director of AIMCO in July
1994. Mr. Rhodes has served as the President and a director of National Review
since 1992. From 1976 to 1992, he held various positions at Goldman, Sachs & Co.
and was elected a General Partner in 1986. He also served as a director of
Underwriters Reinsurance Company from 1987 to 1993 and was a member of the
Advisory Board of TransTerra Co. during 1993. He currently serves as Co-Chairman
and director of Financial Assets Management, LLC and its subsidiaries, and as a
director of Delphi Financial Group, Inc. and The Lynde and Harry Bradley
Foundation. Mr. Rhodes is Chairman of the Empire Foundation for Policy Research,
a Trustee of The Heritage Foundation, a Trustee of The Manhattan Institute and a
Member of the Council on Foreign Relations.

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

Information required by this item is presented under the caption "Other
Matters--Section 16(a) Compliance" in the Company's proxy statement for its 1998
annual meeting of stockholders and is incorporated herein by reference.

ITEM 11. EXECUTIVE COMPENSATION

The information required by this item is presented under the captions
"Summary Compensation Table", "Option/SAR Grants in Last Fiscal Year" and
"Aggregate Option/SAR Exercises in Last Fiscal Year and Fiscal Year-end
Options/SAR Values" in AIMCO's proxy statement for its 1998 annual meeting of
stockholders and is incorporated herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The information required by this item is presented under the caption
"Security Ownership of Certain Beneficial Owners and Management" in AIMCO's
proxy statement for its 1998 annual meeting of stockholders and is incorporated
herein by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information required by this item is presented under the caption
"Certain Relationships and Transactions" in AIMCO's proxy statement for its 1998
annual meeting of stockholders and is incorporated herein by reference.

PART IV

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

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

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

(a)(3) The Exhibit Index is included on page 39 of this report and
incorporated herein by reference.

(b) Reports on Form 8-K for the quarter ended December 31, 1997:

Current Report on Form 8-K, dated September 19, 1997, relating to the
acquisition by the Company of common stock of NHP Incorporated; the
acquisition by the Company of the Morton Towers apartments and adjacent land
through two subsidiary limited partnerships; the probable acquisition by the
Company of a multi-family residential apartment property for an aggregate
cash purchase price of approximately $260 million; the potential sale by the
Company of its interests in the Hall Properties to affiliated joint venture
partners; and the completion by the Company of the acquisition of the Los
Arboles Apartments located in Chandler, Arizona, including certain pro forma
financial information and the Historical Summary of Gross Income and Direct
Operating Expenses of Morton Towers for the year ended December 31, 1996 and
the six months ended June 30, 1997 (unaudited).

Current Report on Form 8-K, dated October 15, 1997, and Amendment No. 1
thereto, relating to the acquisition by the Company of 35 multi-family
residential properties located in seven states from 27 limited partnerships
affiliated with Winthrop Financial Associates, including certain pro forma
financial information and the Combined Statement of Revenues and Certain
Expenses of the Thirty-five Acquisition Properties for the year ended
December 31, 1996 and the six months ended June 30, 1997 (unaudited).

Current Report on Form 8-K, dated December 1, 1997, relating to the
acquisition by the Company of the Foxchase Apartments from First Alexandria
Associates Limited Partnership, a Virginia Limited partnership ("First
Alexandria"); the acquisition by the Company of approximately 53.95% of the
limited partnership interests in Country Lake Associates Two ("Country
Lakes"); the acquisition by the Company of 61.88% of the limited partnership
interest in Point West Limited

Partnership ("Point West"); the acquisition by AIMCO Properties, L.P. of
approximately 72.05% of the limited partnership interest in the Oak Park
Partnership ("Oak Park"), including the Financial Statement and Independent
Auditors' Report for First Alexandria for the Years Ended December 31, 1996,
1995 and 1994, the Financial Statement and Independent Auditors' Report for
Country Lakes for the years ended December 31, 1996, 1995 and 1994, the
Financial Statement and Independent Auditors' Report for Point West, for the
Years Ended December 31, 1996, 1995 and 1994, the Statements of Revenues and
Certain Expenses for Oak Park for the Years Ended December 31, 1996, 1995
and 1994, and certain pro forma financial information.

Current Report on Form 8-K, dated December 23, 1997 and Amendment No. 1
thereto, relating to the Company's entering into an Agreement and Plan of
Merger with Ambassador Apartments, Inc., a Maryland corporation
("Ambassador"), including Financial Statements, Schedule and Report of
Independent Auditors for Ambassador as of December 31, 1996 and 1995 and for
the Years Ended December 31, 1996, 1995 and 1994, the Financial Statement
for Ambassador as of September 30, 1997 and December 31, 1996 and for the
Three and Nine Months ended September 30, 1997 and 1996 (unaudited), and
certain pro forma financial information.

Amendment No. 2 to Current Report on Form 8-K, dated April 16, 1997
(filed October 6, 1997).

Amendment No. 3 to Current Report on Form 8-K, dated April 16, 1997
(filed October 22, 1997).

Amendment No. 4 to Current Report on Form 8-K, dated June 3, 1997 (filed
October 6, 1997).

Amendment No. 5 to Current Report on Form 8-K, dated June 3, 1997 (filed
October 22, 1997).

EXHIBIT INDEX (1)

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

2.1 Agreement and Plan of Merger, dated as of April 21, 1997, by and among Apartment
Investment and Management Company, AIMCO/NHP Acquisition Corp. and NHP Incorporated (2)
2.2 Agreement of Plan of Merger, dated as of December 23, 1997, by and between Apartment
Investment and Management Company and Ambassador Apartments, Inc. (3)
3.1 Charter
3.2 Bylaws (4)
10.1 Credit Agreement, dated as of May 5, 1997, by and among AIMCO/NHP Holdings, Inc., the
lenders from time to time party thereto, Bank of America National Trust and Savings
Association, as one of the Lenders, Smith Barney Mortgage Capital Group, Inc., as one of
the Lenders and Bank of America National Trust and Savings Association, as Agent (5)
10.2 Promissory Note, dated as of May 5, 1997, by AIMCO/NHP Holdings, Inc. in favor of Smith
Barney Mortgage Capital Group, Inc. (5)
10.3 Promissory Note, dated of May 5, 1997, by AIMCO/NHP Holdings, Inc., in favor of Bank of
America National Trust and Savings Association (5)
10.4 Payment Guaranty, dated as of May 5, 1997, by the Company and AIMCO Properties, L.P., in
favor of Bank of America National Trust and Savings Association, as the agent (5)
10.5 Pledge Agreement, dated as of May 5, 1997, by AIMCO Properties, L.P. and Terry Considine
and Peter K. Kompaniez and the Bank of America National Trust and Savings Association,
as Agent, for Bank of America National Trust and Savings Association and Smith Barney
Mortgage Capital Group, Inc. (5)
10.6 Amended and Restated Credit Agreement (Secured Revolver-to-Term Facility), dated as of May
5, 1997, by and among AIMCO Properties, L.P., the lenders from time to time party
thereto, Bank of America National Trust and Savings Association, as one of the Lenders
and as the Issuing Lender, and Bank of America National Trust and Savings Association,
as Agent (5)
10.7 Promissory Note, dated as of May 5, 1997, by AIMCO Properties, L.P., in favor of Bank of
America National Trust and Savings Association (5)
10.8 Payment Guaranty, dated as of May 5, 1997, by the Company, AIMCO-LP, Inc., AIMCO-GP, Inc.,
AIMCO Holdings QRS, Inc., AIMCO Somerset, Inc. and AIMCO/OTC QRS, Inc. in favor of Bank
of America National Trust and Savings Association, as the agent. (5)
10.9 Amended and Restated Credit Agreement (Bridge Loan Facility), dated as of May 5, 1997, by
and among AIMCO Properties, L.P., the lenders from time to time party thereto, Bank of
America National Trust and Savings Association, as one of the Lenders, and Bank of
America National Trust and Savings Association, as Agent (5)
10.10 Promissory Note, dated as of May 5, 1997, by AIMCO Properties, L.P., in favor of Bank of
America National Trust and Savings Association (5)
10.11 Second Amended and Restated Agreement of Limited Partnership of AIMCO Properties, L.P.,
dated as of July 29, 1994, among AIMCO-GP, Inc., as general partner, AIMCO-LP, Inc., as
special limited partner, and AIMCO-GP, Inc., as attorney-in-fact for the limited
partners (6)

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

10.12 First Amendment to the Second Amended and Restated Agreement of Limited Partnership of
AIMCO Properties, L.P., dated as of July 29, 1997, by AIMCO-GP, Inc. (6)
10.13 Common Stock Purchase Agreement made as of August 26, 1997, by and between Apartment
Investment and Management Company, a Maryland corporation, and ABKB/LaSalle Securities
Limited Partnership, a registered investment advisor (7)
10.14 Purchase and Sale Agreement and Joint Escrow Instructions, made and entered into as of
August 22, 1997, by and between AIMCO Properties, L.P., and each of the parties
identified on Exhibit "A" attached thereto (collectively, the "Winthrop Sellers") (8)
10.15 Letter Agreement, dated October 15, 1997, by and between AIMCO Properties, L.P. and the
Winthrop Sellers (8)
10.16 Restricted Stock Agreement (1997 Stock Award and Incentive Plan), dated as of July 25,
1997, by and between Apartment Investment and Management Company, and R. Scott Wesson
(4) (9)
10.17 Contribution Agreement and Joint Escrow Instructions, dated as of January 1, 1996, by and
between AIMCO Properties, L.P. and Peachtree Park 94, L.P. (10)
10.18 Acquisition Agreement, dated as of April 30, 1996, by and among the Company, AIMCO
Somerset, Inc., AIMCO Properties, L.P., Somerset REIT, Inc., RJ Holdings, Ltd., Somerset
PAM Partnership and RJ Equities, Inc. (11)
10.19 Credit Agreement, dated as of August 12, 1996, by and among AIMCO Properties, L.P., the
banks from time to time party to this Agreement, Bank of America National Trust and
Savings Association, as one of the Banks, and Bank of America National Trust and Savings
Association, as Agent (12)
10.20 Promissory Note, dated as of August 12, 1996, by AIMCO Properties, L.P., in favor of Bank
of America National Trust and Savings Association (12)
10.21 Payment Guaranty, dated as of August 12, 1996, by the Company, AIMCO-GP, Inc., AIMCO-LP,
Inc., AIMCO Holdings, L.P., AIMCO Holdings QRS, Inc., AIMCO Somerset, Inc. and AIMCO/OTC
QRS, Inc. in favor of Bank of America National Trust and Savings Association, as the
agent (12)
10.22 Credit Agreement (Bridge Loan) entered into as of August 12, 1996, among AIMCO Properties,
L.P., the National Trust and Savings Association and Bank of America National Trust and
Savings Association, as Agent (12)
10.23 Promissory Note by AIMCO Properties, L.P. in favor of Bank of America National Trust and
Savings Association (12)
10.24 Payment Guaranty dated as of August 12, 1996, by the Company, AIMCO-GP, Inc., AIMCO-LP,
Inc., AIMCO Holdings, L.P., AIMCO Holdings QRS, Inc., AIMCO Somerset, Inc. and AIMCO/OTC
QRS, Inc., in favor of Bank of America National Trust and Savings Association (12)
10.25 Acquisition Agreement, dated as of July 26, 1995, among the Company, AIMCO Properties,
L.P., AIMCO/PAM Properties, L.P., John W. English, J.W. English Real Estate, Inc., J.W.
English Development Co., J.W. English Investments Co., J.W. English Management Co.,
Easton Falls Partners, Ltd. and English Income Fund I, a Texas Limited Partnership (12)
10.26 Apartment Investment and Management Company Non-Qualified Employee Stock Option Plan,
adopted August 29, 1996 (9) (13)
10.27 Apartment Investment and Management Company 1996 Stock Award and Incentive Plan, adopted
April 25, 1996 (9) (14)
10.28 Summary of Arrangement for Sale of Stock to Executive Officers (9) (14)

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

10.29 Employment Contract executed on July 29, 1994 by and between AIMCO Properties, L.P. and
Peter Kompaniez (9) (15)
10.30 Employment Contract executed on July 29, 1994 by and between AIMCO Properties, L.P. and
Terry Considine (9) (15)
10.31 Employment Contract executed on July 29, 1994 by and between AIMCO Properties, L.P. and
Steven D. Ira (9) (15)
10.32 Stock Purchase Agreement, dated as of April 16, 1997, by and among Apartment Investment
and Management Company, Demeter Holdings Corporation and Capricorn Investors, L.P. (2)
10.33 Real Estate Acquisition Agreement, dated as of May 22, 1997, by and among Apartment
Investment and Management Company, AIMCO Properties, L.P., Demeter Holdings Corporation,
Phemus Corporation, Capricorn Investors, L.P., J. Roderick Heller, III and NHP Partners
LLC (16)
10.34 Contribution Agreement, dated as of January 31, 1998, by and between Apartment Investment
and Management Company and Terry Considine and Peter K. Kompaniez (17)
10.35 Second Amendment to the Second Amended and Restated Agreement of Limited Partnership of
AIMCO Properties, L.P., dated as of December 22, 1997 by AIMCO-GP, Inc.
10.36 Third Amendment to the Second Amended and Restated Agreement of Limited Partnership of
AIMCO Properties, L.P., dated as of February 19, 1998 by AIMCO-GP, Inc.
21.1 List of Subsidiaries
23.1 Consent of Ernst & Young LLP
27.1 Financial Data Schedule
99.1 Agreement re: disclosure of long-term debt instruments.

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

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

(2) Incorporated by reference from the Company's Current Report on Form 8-K,
dated April 16, 1997.

(3) Incorporated by reference from the Company's Current Report on Form 8-K
dated December 23, 1997.

(4) Incorporated by reference from the Company's Quarterly Report on Form 10-Q
for the quarterly period ending September 30, 1997.

(5) Incorporated by reference from the Company's Quarterly Report on Form 10-Q
for the quarterly period ending March 31, 1997.

(6) Incorporated by reference from the Company's Quarterly Report on Form 10-Q
for the quarterly period ending June 30, 1997.

(7) Incorporated by reference from the Company's Current Report on Form 8-K,
dated August 26, 1997.

(8) Incorporated by reference from the Company's Current Report on Form 8-K,
dated October 15, 1997.

(9) Management contract or compensatory plan or arrangement.

(10) Incorporated by reference from the Company's Current Report on Form 8-K,
dated January 1, 1996.

(11) Incorporated by reference from the Company's Quarterly Report on Form 10-Q
for the quarterly period ending June 30, 1996.

(12) Incorporated by reference from the Company's Quarterly Report on Form 10-Q
for the quarterly period ending September 30, 1996.

(13) Incorporated by reference from the Company's Quarterly Report on Form
10-Q/A for the quarterly period ending September 30, 1996.

(14) Incorporated by reference from the Company's Annual Report on Form 10-K
for the fiscal year 1996.

(15) Incorporated by reference from the Company's Annual Report on Form 10-K
for the fiscal year 1994.

(16) Incorporated by reference from the Company's Current Report on Form 8-K
dated June 3, 1997.

(17) Incorporated by reference from the Company's Current Report on Form 8-K,
dated January 31, 1998.

SCHEDULE 1

Documents substantially identical to Exhibit 10.16, except as to the
recipient, the number of shares, the borrower and the note amount, have been
omitted in reliance on Rule 12b-31 under the Securities Exchange Act of 1934.
Set forth below are the material details in which such documents differ from
Exhibit 10.16.

RECIPIENT AND BORROWER NUMBER OF SHARES NOTE AMOUNT
- ----------------------------------------------------------- ----------------- -------------

Terry Considine (Titahothree Limited Partnership RLLLP).... 691,578 $ 20,747,340
Peter Kompaniez............................................ 210,526 6,315,780
Tom Toomey................................................. 52,632 1,578,960
Steven Ira................................................. 52,632 1,578,960
David Williams............................................. 52,632 1,578,960
Troy D. Butts.............................................. 30,435 1,050,000
Harry Alcock............................................... 10,000 300,000
Martha Carlin.............................................. 10,000 300,000
Leeann Morein.............................................. 4,000 120,000
Patricia Heath............................................. 4,000 120,000
Carla Stoner............................................... 3,000 90,000

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, on the 20th day of
March, 1998.

APARTMENT INVESTMENT AND MANAGEMENT COMPANY

/s/ TERRY CONSIDINE
-----------------------------------------
Terry Considine, CHAIRMAN OF THE BOARD
AND CHIEF EXECUTIVE OFFICER

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

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

/s/ TERRY CONSIDINE
- ------------------------------ Chairman of the Board and March 20, 1998
Terry Considine Chief Executive Officer

/s/ PETER K. KOMPANIEZ
- ------------------------------ Vice Chairman, President March 20, 1998
Peter K. Kompaniez and Director

/s/ THOMAS W. TOOMEY Executive Vice President--
- ------------------------------ Finance and March 20, 1998
Thomas W. Toomey Administration

/s/ TROY D. BUTTS
- ------------------------------ Senior Vice President and March 20, 1998
Troy D. Butts Chief Financial Officer

/s/ PATRICIA K. HEATH
- ------------------------------ Vice President and Chief March 20, 1998
Patricia K. Heath Accounting Officer

/s/ RICHARD S. ELLWOOD
- ------------------------------ Director March 20, 1998
Richard S. Ellwood

/s/ J. LANDIS MARTIN
- ------------------------------ Director March 20, 1998
J. Landis Martin

/s/ THOMAS L. RHODES
- ------------------------------ Director March 20, 1998
Thomas L. Rhodes

/s/ JOHN D. SMITH
- ------------------------------ Director March 20, 1998
John D. Smith

INDEX TO FINANCIAL STATEMENTS
APARTMENT INVESTMENT AND MANAGEMENT COMPANY

PAGE
---------

FINANCIAL STATEMENTS:
Report of Independent Auditors........................................................................... F-2
Consolidated Balance Sheets as of December 31, 1997 and 1996............................................. F-3
Consolidated Statements of Income for the Years ended December 31, 1997, 1996 and 1995................... F-4
Consolidated Statements of Stockholders' Equity for the Years ended December 31, 1997, 1996 and 1995..... F-5
Consolidated Statements of Cash Flow for the Years ended December 31, 1997, 1996 and 1995................ F-6
Notes to Consolidated Financial Statements............................................................... F-9
FINANCIAL STATEMENT SCHEDULE:
Schedule III--Real Estate and Accumulated Depreciation................................................... F-39
All other schedules are omitted because they are not applicable or the required information is shown in
the financial statements or notes thereto.

F-1

REPORT OF INDEPENDENT AUDITORS

Stockholders and Board of Directors

Apartment Investment and Management Company

We have audited the accompanying consolidated balance sheets of Apartment
Investment and Management Company as of December 31, 1997 and 1996, and the
related consolidated statements of income, stockholders' equity and cash flows
for each of the three years in the period ended December 31, 1997. Our audits
also included the consolidated financial statement schedule listed in the Index
at Item 14(a)(2). These financial statements and schedule are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these financial statements and schedule based on our audits.

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

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
Apartment Investment and Management Company at December 31, 1997 and 1996, and
the consolidated results of its operations and its cash flows for each of the
three years in the period ended December 31, 1997 in conformity with generally
accepted accounting principles. Also, in our opinion, the related consolidated
financial statement schedule, when considered in relation to the basic financial
statements taken as a whole, presents fairly, in all material respects the
information set forth therein.

ERNST & YOUNG LLP

Dallas, Texas

March 6, 1998,

except for Note 25, as to which
the date is March 17, 1998

F-2

APARTMENT INVESTMENT AND MANAGEMENT COMPANY
CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 1997 AND 1996
(IN THOUSANDS, EXCEPT SHARE DATA)

ASSETS 1997 1996
--------- -----------

Real Estate, net of accumulated depreciation of $153,285, and $120,077 (see
Note 3)...................................................................... $1,503,922 $ 745,145
Property held for sale......................................................... 6,284 6,769
Investments in securities (see Note 4)......................................... 22,144 --
Investments in and notes receivable from unconsolidated subsidiaries (see Note
5)........................................................................... 84,459 --
Investments in and note receivable from unconsolidated real estate partnerships
(see Note 6)................................................................. 212,150 --
Cash and cash equivalents...................................................... 37,088 13,170
Restricted cash................................................................ 24,229 15,831
Accounts receivable............................................................ 28,656 4,344
Deferred financing costs....................................................... 12,793 11,053
Goodwill....................................................................... 125,239 --
Other assets................................................................... 43,546 31,361
--------- -----------
Total assets................................................................... $2,100,510 $ 827,673
--------- -----------
--------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY

Secured notes payable (see Note 7)............................................. $ 681,421 $ 242,110
Secured tax-exempt bond financing (see Note 9)................................. 74,010 75,497
Secured short-term financing (see Note 8)...................................... 53,099 192,039
Unsecured short-term financing (see Note 10)................................... -- 12,500
--------- -----------
Total indebtedness............................................................. 808,530 522,146
--------- -----------
Accounts payable, accrued and other liabilities................................ 88,170 16,299
Resident security deposits and prepaid rents................................... 10,213 4,316
--------- -----------
Total liabilities.............................................................. 906,913 542,761
--------- -----------
Commitments and contingencies (see Note 12) -- --

Minority interest in other partnerships (see Note 13).......................... 36,335 10,386
Minority interest in Operating Partnership (see Note 14)....................... 111,962 58,777

Stockholder's equity (see Note 16)
Class A Common Stock, $.01 par value, 150,000,000 shares authorized,
40,439,218 and 14,980,441 shares issued and outstanding.................... 403 150
Class B Common Stock, $.01 par value, 262,500 and 425,000 shares authorized,
162,500 and 325,000 shares issued and outstanding.......................... 2 3
Non-voting preferred stock, $0.01 par value, 6,490,000 shares authorized,
none issued and outstanding................................................ -- --
Class B Cumulative Convertible Preferred Stock, $.01 par value, 750,000
shares authorized, 750,000 and 0 shares issued and outstanding............. 75,000 --
Class C Cumulative Preferred Stock, $.01 par value, 2,760,000 shares
authorized, 2,400,000 and 0 shares issued and outstanding.................. 60,000 --
Additional paid-in capital................................................... 977,601 236,791
Notes receivable on common stock purchases................................... (35,095) (7,140)
Distributions in excess of earnings.......................................... (30,928) (14,055)
Unrealized loss on investments............................................... (1,683) --
--------- -----------
1,045,300 215,749
--------- -----------
$2,100,510 $ 827,673
--------- -----------
--------- -----------

See accompanying notes to consolidated financial statements.

F-3

APARTMENT INVESTMENT AND MANAGEMENT COMPANY
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
(IN THOUSANDS, EXCEPT PER SHARE DATA)

1997 1996 1995
--------- --------- -----------

RENTAL PROPERTY OPERATIONS
Rental and other property revenues.............................................. $ 193,006 $ 100,516 $ 74,947
Property operating expenses..................................................... (76,168) (38,400) (30,150)
Owned property management expense............................................... (6,620) (2,746) (2,276)
--------- --------- -----------
Income from property operations before depreciation............................. 110,218 59,370 42,521
Depreciation.................................................................... (37,741) (19,556) (15,038)
--------- --------- -----------
Income from property operations................................................. 72,477 39,814 27,483
--------- --------- -----------
SERVICE COMPANY BUSINESS
Management fees and other income................................................ 13,937 8,367 8,132
Management and other expenses................................................... (9,910) (5,352) (4,953)
Corporate overhead allocation................................................... (588) (590) (581)
Amortization of management company goodwill..................................... (948) (500) (428)
Depreciation and amortization................................................... (453) (218) (168)
--------- --------- -----------
Income from service company business............................................ 2,038 1,707 2,002
Minority interests in service company business.................................. (10) 10 (29)
--------- --------- -----------
Company's share of income from service company business......................... 2,028 1,717 1,973
--------- --------- -----------
General and administrative expenses............................................. (5,396) (1,512) (1,804)
Interest expense................................................................ (51,385) (24,802) (13,322)
Interest income................................................................. 8,676 523 658
Minority interest in other partnerships......................................... 1,008 (111) --
Equity in losses of unconsolidated partnerships................................. (1,798) -- --
Equity in earnings of unconsolidated subsidiaries............................... 4,636 -- --
--------- --------- -----------
Income from operations.......................................................... 30,246 15,629 14,988
Gain on disposition of properties............................................... 2,720 44 --
--------- --------- -----------
Income before extraordinary item and minority interest in Operating
Partnership................................................................... 32,966 15,673 14,988
Extraordinary item--early extinguishment of debt................................ (269) -- --
--------- --------- -----------
Income before minority interest in Operating Partnership........................ 32,697 15,673 14,988
Minority interest in Operating Partnership...................................... (4,064) (2,689) (1,613)
--------- --------- -----------
Net income...................................................................... 28,633 12,984 13,375
Net income attributable to preferred shareholders............................... 2,315 -- 5,169
--------- --------- -----------
Net income attributable to common shareholders.................................. $ 26,318 $ 12,984 $ 8,206
--------- --------- -----------
--------- --------- -----------
Basic earnings per common share................................................. $ 1.09 $ 1.05 $ 0.86
--------- --------- -----------
--------- --------- -----------
Diluted earnings per common share............................................... $ 1.08 $ 1.04 $ 0.86
--------- --------- -----------
--------- --------- -----------
Weighted average common shares outstanding...................................... 24,055 12,411 9,571
--------- --------- -----------
--------- --------- -----------
Weighted average common shares and common share equivalents outstanding......... 24,436 12,427 9,579
--------- --------- -----------
--------- --------- -----------
Dividends paid per common share................................................. $ 1.85 $ 1.70 $ 1.66
--------- --------- -----------
--------- --------- -----------

See accompanying notes to consolidated financial statements.

F-4

APARTMENT INVESTMENT AND MANAGEMENT COMPANY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
(IN THOUSANDS, EXCEPT PER SHARE DATA)

CLASS A CLASS B CLASS B
COMMON STOCK COMMON STOCK PREFERRED STOCK
------------------------ ------------------------ ----------------------
SHARES SHARES SHARES
ISSUED AMOUNT ISSUED AMOUNT ISSUED AMOUNT
----------- ----------- ----------- ----------- ----------- ---------

BALANCE DECEMBER 31, 1994............................. 9,589 $ 96 650 $ 7 -- $ --
Net proceeds from issuance of Class A Common Stock in
public offering..................................... 2,706 27
Repurchase of unregistered Class A Common Stock....... (514) (5)
Conversion of Class B Common Stock to Class A Common
Stock............................................... 65 (65) (1)
Conversion of Operating Partnership Units to Class A
Common Stock........................................ 1
Net income............................................
Dividends paid--Convertible Preferred Stock...........
Dividends paid--Class A Common Stock..................
----------- ----- --- ----- --- ---------
BALANCE DECEMBER 31, 1995............................. 11,847 118 585 6 -- --
Net proceeds from issuance of Class A Common Stock.... 1,265 13
Conversion of Class B Common Stock to Class A Common
Stock............................................... 260 3 (260) (3)
Conversion of Operating Partnership Units to Class A
Common Stock........................................ 212 2
Class A Common Stock issued as consideration for real
estate acquired..................................... 704 7
Purchase of stock by officers......................... 895 9
Repurchase of Class A Common Stock.................... (206) (2)
Stock options exercised............................... 3
Net income............................................
Dividends paid--Class A Common Stock..................
----------- ----- --- ----- --- ---------
BALANCE DECEMBER 31, 1996............................. 14,980 150 325 3 -- --
Net proceeds from issuance of Class A Common Stock.... 16,367 164
Net proceeds from issuance of Class B Preferred
Stock............................................... 750 75,000
Net proceeds from issuance of Class C Preferred
Stock...............................................
Repurchase of Class A Common Stock from officer.......
Conversion of Class B Common Stock to Class A Common
Stock............................................... 163 1 (163) (1)
Conversion of Operating Partnership Units to Class A
Common Stock........................................ 562 6
Purchase of stock by officers......................... 1,149 11
Repayment of notes receivable from officers...........
Stock options exercised............................... 442 4
Warrants exercised.................................... 16
Class A Common Stock issued as consideration for NHP
Common Stock........................................ 6,760 67
Net income............................................
Dividends paid--Class A Common Stock..................
Dividends paid--Class B Preferred stock...............
Unrealized loss on investments........................
----------- ----- --- ----- --- ---------
BALANCE DECEMBER 31, 1997............................. 40,439 $ 403 162 $ 2 750 $ 75,000
----------- ----- --- ----- --- ---------
----------- ----- --- ----- --- ---------

CLASS C
PREFERRED STOCK NOTES
---------------------- ADDITIONAL RECEIVABLE
SHARES PAID-IN FROM ACCUMULATED
ISSUED AMOUNT CAPITAL OFFICERS DEFICIT
----------- --------- ----------- ----------- -------------

BALANCE DECEMBER 31, 1994............................. -- $ -- $ 138,968 $ -- $ 1,248
Net proceeds from issuance of Class A Common Stock in
public offering..................................... 46,847
Repurchase of unregistered Class A Common Stock....... (10,623)
Conversion of Class B Common Stock to Class A Common
Stock............................................... 1
Conversion of Operating Partnership Units to Class A
Common Stock........................................ 18
Net income............................................ 13,375
Dividends paid--Convertible Preferred Stock........... (5,169)
Dividends paid--Class A Common Stock.................. (15,757)
----- --------- ----------- ----------- -------------
BALANCE DECEMBER 31, 1995............................. -- -- 175,211 -- (6,303)
Net proceeds from issuance of Class A Common Stock.... 28,123
Conversion of Class B Common Stock to Class A Common
Stock...............................................
Conversion of Operating Partnership Units to Class A
Common Stock........................................ 3,797
Class A Common Stock issued as consideration for real
estate acquired..................................... 15,287
Purchase of stock by officers......................... 18,568 (7,140)
Repurchase of Class A Common Stock.................... (4,253)
Stock options exercised............................... 58
Net income............................................ 12,984
Dividends paid--Class A Common Stock.................. (20,736)
----- --------- ----------- ----------- -------------
BALANCE DECEMBER 31, 1996............................. -- -- 236,791 (7,140) (14,055)
Net proceeds from issuance of Class A Common Stock.... 509,950
Net proceeds from issuance of Class B Preferred
Stock...............................................
Net proceeds from issuance of Class C Preferred
Stock............................................... 2,400 60,000 (1,890)
Repurchase of Class A Common Stock from officer....... (67) 67
Conversion of Class B Common Stock to Class A Common
Stock...............................................
Conversion of Operating Partnership Units to Class A
Common Stock........................................ 8,615
Purchase of stock by officers......................... 34,704 (33,517)
Repayment of notes receivable from officers........... 14,540
Stock options exercised............................... 8,411 (9,045)
Warrants exercised.................................... 303
Class A Common Stock issued as consideration for NHP
Common Stock........................................ 180,784
Net income............................................ 28,633
Dividends paid--Class A Common Stock.................. (44,660)
Dividends paid--Class B Preferred stock............... (846)
Unrealized loss on investments........................
----- --------- ----------- ----------- -------------
BALANCE DECEMBER 31, 1997............................. 2,400 $ 60,000 $ 977,601 $ (35,095) $ (30,928)
----- --------- ----------- ----------- -------------
----- --------- ----------- ----------- -------------

UNREALIZED
GAIN (LOSS)
ON
INVESTMENTS TOTAL
------------- -----------
BALANCE DECEMBER 31, 1994............................. $ -- $ 140,319
Net proceeds from issuance of Class A Common Stock in
public offering..................................... 46,874
Repurchase of unregistered Class A Common Stock....... (10,628)
Conversion of Class B Common Stock to Class A Common
Stock............................................... --
Conversion of Operating Partnership Units to Class A
Common Stock........................................ 18
Net income............................................ 13,375
Dividends paid--Convertible Preferred Stock........... (5,169)
Dividends paid--Class A Common Stock.................. (15,757)
------------- -----------
BALANCE DECEMBER 31, 1995............................. -- 169,032
Net proceeds from issuance of Class A Common Stock.... 28,136
Conversion of Class B Common Stock to Class A Common
Stock............................................... --
Conversion of Operating Partnership Units to Class A
Common Stock........................................ 3,799
Class A Common Stock issued as consideration for real
estate acquired..................................... 15,294
Purchase of stock by officers......................... 11,437
Repurchase of Class A Common Stock.................... (4,255)
Stock options exercised............................... 58
Net income............................................ 12,984
Dividends paid--Class A Common Stock.................. (20,736)
------------- -----------
BALANCE DECEMBER 31, 1996............................. -- 215,749
Net proceeds from issuance of Class A Common Stock.... 510,114
Net proceeds from issuance of Class B Preferred
Stock............................................... 75,000
Net proceeds from issuance of Class C Preferred
Stock............................................... 58,110
Repurchase of Class A Common Stock from officer....... --
Conversion of Class B Common Stock to Class A Common
Stock............................................... --
Conversion of Operating Partnership Units to Class A
Common Stock........................................ 8,621
Purchase of stock by officers......................... 1,198
Repayment of notes receivable from officers........... 14,540
Stock options exercised............................... (630)
Warrants exercised.................................... 303
Class A Common Stock issued as consideration for NHP
Common Stock........................................ 180,851
Net income............................................ 28,633
Dividends paid--Class A Common Stock.................. (44,660)
Dividends paid--Class B Preferred stock............... (846)
Unrealized loss on investments........................ (1,683) (1,683)
------------- -----------
BALANCE DECEMBER 31, 1997............................. $ (1,683) $ 1,045,300
------------- -----------
------------- -----------

See accompanying notes to consolidated financial statements.

F-5

APARTMENT INVESTMENT AND MANAGEMENT COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOW
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
(IN THOUSANDS)

FOR THE YEAR FOR THE YEAR FOR THE YEAR
ENDED ENDED ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1997 1996 1995
------------ ------------- ------------

CASH FLOWS FROM OPERATING ACTIVITIES

Net Income................................................................ $ 28,633 $ 12,984 $ 13,375
------------ ------------- ------------
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization........................................... 43,520 21,209 15,859
Gain on disposition of property......................................... (2,720) (44) --
Minority interest in Operating Partnership.............................. 4,064 2,689 1,613
Minority interests in other partnerships................................ (1,008) 111 --
Equity in losses of unconsolidated partnerships......................... 1,798 -- --
Equity in earnings of unconsolidated subsidiaries....................... (4,636) -- --
Extraordinary loss on early extinguishment of debt...................... 269 -- --
(Increase) decrease in restricted cash.................................. (7,421) 6,678 (6,072)
Increase in other operating assets, net................................. (15,799) (4,785) (1,567)
Increase (decrease) in operating liabilities, net....................... 26,332 (36) 2,703
------------ ------------- ------------
Total adjustments................................................... 44,399 25,822 12,536
------------ ------------- ------------
Net cash provided by operating activities........................... 73,032 38,806 25,911
------------ ------------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of real estate....................................... 21,792 17,147 --
Purchase of real estate................................................. (376,315) (26,032) (52,419)
Purchase of NHP common stock, notes receivable, general and limited
partnership interests and other assets................................ (199,146) (53,878) --
Note receivable and investment in unconsolidated subsidiary............. (59,787) -- --
Advances to unconsolidated partnerships................................. (42,879) -- --
Additions to property held for sale..................................... (247) (5,718) --
Capital replacements.................................................... (7,350) (5,133) (2,865)
Initial capital expenditures............................................ (9,108) (6,194) (4,879)
Construction in progress and capital enhancements....................... (8,477) (7,629) (639)
Proceeds from sale of property held for sale............................ 303 -- --
Purchase of NHP mortgage loans.......................................... (60,575) -- --
Purchase of Ambassador common stock..................................... (19,881) -- --
Dividends received from unconsolidated subsidiary....................... 45,791 -- --
Purchase of office equipment and leasehold improvements................. (1,784) (707) (19)
------------ ------------- ------------
Net cash used in investing activities................................. (717,663) (88,144) (60,821)
------------ ------------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of Class A Common Stock and Class B Common Stock,
net of underwriting and offering costs................................ 510,114 28,136 46,792
Principal payments received on notes due from Officers on Class A Common
Stock purchases....................................................... 25,957 -- --
Proceeds from exercises of employee stock options and warrants.......... 871 -- --
Proceeds from issuance of Class B Preferred Stock....................... 75,000 -- --
Proceeds from issuance of Class C Preferred Stock....................... 58,110 -- --
Proceeds from secured tax-exempt bond financing......................... -- 58,010 --
Proceeds from secured notes payable borrowings.......................... 225,436 -- 155,401
Principal paydowns on secured tax-exempt bond financing................. (1,487) (48,703)
Principal paydowns on secured notes payable............................. (12,512) (28,463) (43,666)
Principal paydowns on unsecured short-term note payable................. (79)
Net borrowings (paydowns) on Credit Facility............................ (162,008) 40,800 (17,600)
Proceeds from secured short-term financing.............................. 19,050 30,119 25,000
Proceeds (payoff) from unsecured short-term financing................... (12,500) 12,500 --
Payment of loan costs, including proceeds and costs from interest rate
hedges................................................................ (6,387) (3,464) (4,703)
Redemption of mandatorily redeemable 1994 Cumulative Convertible Senior
Preferred Stock and repurchase of unregistered Class A Common Stock... -- -- (107,228)
Payment of dividend on mandatorily redeemable 1994 Cumulative
Convertible Senior Preferred Stock.................................... -- -- (5,169)
Repurchase of common stock.............................................. -- (4,255) --
Payment of common stock dividends....................................... (44,660) (20,736) (15,757)
Payment of distributions to minority interest in Operating
Partnership........................................................... (5,510) (3,815) (2,925)
Payment of preferred stock dividends.................................... (846) -- --
------------ ------------- ------------
Net cash provided by financing activities............................. 668,549 60,129 30,145
------------ ------------- ------------
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS........................ 23,918 10,791 (4,765)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR.............................. 13,170 2,379 7,144
------------ ------------- ------------
CASH AND CASH EQUIVALENTS AT END OF YEAR.................................... $ 37,088 $ 13,170 $ 2,379
------------ ------------- ------------
------------ ------------- ------------

See accompanying notes to consolidated financial statements.

F-6

APARTMENT INVESTMENT AND MANAGEMENT COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOW

(IN THOUSANDS EXCEPT SHARE AND OPERATING PARTNERSHIP UNIT DATA)

1997 1996 1995
--------- --------- ---------

SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid....................................................................... $ 51,076 $ 22,869 $ 12,170

NON CASH INVESTING AND FINANCING ACTIVITIES

PURCHASE OF REAL ESTATE, CASH COLLATERAL AND PROPERTY MANAGEMENT BUSINESSES

1997 1996 1995
---------- --------- ---------

Secured notes payable assumed in connection with purchase of real estate............. $ 140,451 $ 31,796 $ 8,242
Secured short-term financing assumed in connection with purchase of real estate...... 9,600 5,072 --
Real estate, restricted cash, cash collateral and property management businesses
contributed in exchange for Partnership Common Units ("OP Units") of AIMCO
Properties, L.P. (the "AIMCO Operating Partnership")............................... 55,906 15,279 2,626
Common Stock issued in consideration for purchase of real estate..................... -- 15,294 --
---------- --------- ---------
$ 205,957 $ 67,441 $ 10,868
---------- --------- ---------
---------- --------- ---------

PURCHASE OF NHP AND REAL ESTATE COMPANIES

In 1997, the Company acquired NHP Partners, Inc., NHP Partners Two Limited
Partners and their subsidiaries (collectively, the "NHP Real Estate Companies")
and all of the common stock of NHP Incorporated ("NHP") in exchange for
6,759,148 shares of AIMCO Class A Common Stock with a recorded value of $180.9
million, $141.3 million in cash and warrants to purchase 399,999 shares of Class
A Common Stock in a series of related transactions (see Notes 5 and 6).

The aggregate purchase price consisted of the following:

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

PURCHASE OF ENGLISH PORTFOLIO

In 1996, the Company issued 789,039 OP Units with a recorded value of
$16,877 and assumed $1,051 in secured short-term financing in connection with
the purchase of certain partnership interests, real estate and related assets
(the "English Portfolio") owned by J.W. English and certain affiliated entities.

The aggregate purchase price consisted of the following:

Assets purchased................................................... $ 218,268
Liabilities assumed................................................ 172,154
Cash paid.......................................................... 29,237
OP Units issued.................................................... 16,877

REPAYMENT OF SECURED NOTE PAYABLE

In 1996, 63,152 OP Units with a recorded value of $1,168 were issued in
connection with the repayment of the second deed of trust on a property
purchased in 1996.

F-7

APARTMENT INVESTMENT AND MANAGEMENT COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOW (CONTINUED)

(IN THOUSANDS EXCEPT SHARE AND OPERATING PARTNERSHIP UNIT DATA)

NON CASH INVESTING AND FINANCING ACTIVITIES (CONTINUED)
RECEIPT OF NOTES RECEIVABLE DUE FROM OFFICERS

In 1997, the Company received promissory notes from officers for a total of
$42.6 million in connection with the sale of 1,462,735 shares of Class A Common
Stock (of which $14,664 was repaid in 1997 and an additional $5.7 million was
repaid in February and March 1998).

In 1996, the Company received promissory notes due from officers for a total
of $18,557 in connection with the sale of 895,250 shares of Class A Common Stock
(of which $11,440 was repaid in March 1997).

REDEMPTION OF OP UNITS

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

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

In 1995, 1,145 OP Units with a recorded value of $18 were redeemed in
exchange for an equal number of shares of Class A Common Stock.

CONVERSION OF CLASS B COMMON STOCK

In 1997, 162,500 shares of Class B Common Stock were converted to Class A
Common Stock upon achievement of the 1995 and 1996 target results for a total
recorded value of $2.

In 1996, 260,000 shares of Class B Common Stock were converted to Class A
Common Stock upon achievement of the 1995 and 1996 target results (130,000
shares respectively for each year) for a total recorded value of $3 (See Note
16).

In 1995, 65,000 shares of Class B Common Stock with a recorded value of $1
were converted to Class A Common Stock upon achievement of the 1994 target
results.

OTHER

In 1997, the AIMCO Operating Partnership issued an additional 216,564 OP
Units with a recorded value of $7,469 in connection with the purchase of certain
partnership interests.

F-8

APARTMENT INVESTMENT AND MANAGEMENT COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 1997, 1996, AND 1995

NOTE 1--ORGANIZATION

Apartment Investment and Management Company, a Maryland corporation
incorporated on January 10, 1994 ("AIMCO" and together with its subsidiaries and
other controlled entities, the "Company") acts as sole general partner of AIMCO
Properties, L.P. (the "AIMCO Operating Partnership") through its wholly owned
subsidiary, AIMCO-GP, Inc. The Company held an 88% interest in the AIMCO
Operating Partnership as of December 31, 1997.

Prior to February 1996, four of the Company's executive officers
collectively held a 5% beneficial interest in each of four regional business
trusts (the "Service Trusts"). The Service Trusts owned four corresponding
regional limited liability companies (the "Service LLCs") through which the
Company's third party property and asset management business was then
principally conducted. In February 1996, the AIMCO Operating Partnership and the
four executive officers contributed their respective interests in the Service
Trusts to Property Asset Management Services, Inc. ("PAMS, Inc."), a newly
formed non-controlled subsidiary of the AIMCO Operating Partnership. In April
1996, the Service Trusts were dissolved and their interests in the Service LLCs
were distributed to PAMS, Inc. In May 1996, the four Service LLCs were merged
into Property Asset Management Services, L.P. ("PAMS, LP") with PAMS, LP as the
surviving entity.

In December 1997, AIMCO acquired all of the outstanding stock of NHP in a
purchase transaction. NHP provides a broad array of real estate services
nationwide, including property management and asset management. As of December
31, 1997, substantially all of the Company's property and asset management
business is conducted through PAMS, Inc., PAMS, LP and unconsolidated
subsidiaries of AIMCO.

At December 31, 1997, AIMCO had 40,439,218 shares of Class A Common Stock
outstanding and the AIMCO Operating Partnership had 5,362,879 Partnership Common
Units ("OP Units") outstanding, for a combined total of 45,802,097 shares and OP
Units.

At December 31, 1997, the Company owned or controlled 40,039 units in 147
apartment properties (the "Owned Properties"), held an equity interest in 83,431
units in 515 apartment properties (the "Equity Properties") and managed 69,587
units in 374 apartment properties for third party owners and affiliates (the
"Managed Properties" and, together with the Owned Properties and Equity
Properties, the "AIMCO Properties"), bringing the total managed portfolio to
193,057 units in 1,036 apartment properties. The AIMCO Properties are located in
42 states, the District of Columbia and Puerto Rico.

NOTE 2--BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES

PRINCIPLES OF CONSOLIDATION

The accompanying consolidated financial statements include the accounts of
AIMCO, the AIMCO Operating Partnership, majority owned subsidiaries and
controlled real estate limited partnerships. Interests held by limited partners
in real estate partnerships controlled by the Company are reflected as Minority
Interests in Other Partnerships.

All significant intercompany balances and transactions have been eliminated
in consolidation.

F-9

APARTMENT INVESTMENT AND MANAGEMENT COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1997, 1996, AND 1995

NOTE 2--BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)
INVESTMENTS IN UNCONSOLIDATED SUBSIDIARIES

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

INVESTMENTS IN AND NOTES RECEIVABLE FROM REAL ESTATE PARTNERSHIPS

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

REAL ESTATE AND DEPRECIATION

Real estate is recorded at cost, less accumulated depreciation, unless
considered impaired. If events or circumstances indicate that the carrying
amount of a property may be impaired, the Company will make an assessment of its
recoverability by estimating the future undiscounted cash flows, excluding
interest charges, of the property. If the carrying amount exceeds the aggregate
future cash flows, the Company would recognize an impairment loss to the extent
the carrying amount exceeds the fair value of the property. As of December 31,
1997, management believes that no impairments exist based on periodic reviews.
No impairment losses were recognized for the years ended December 31, 1997, 1996
and 1995.

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

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

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

The Company capitalizes direct and indirect costs (including interest, taxes
and other costs) in connection with the development or redevelopment of its
Owned Properties and land under development. Direct costs associated with the
acquisition of Owned Properties are capitalized as a cost of the assets
acquired, and are depreciated over the estimated useful lives of the related
assets.

Expenditures for ordinary repairs, maintenance and apartment turnover costs
are expensed as incurred.

F-10

APARTMENT INVESTMENT AND MANAGEMENT COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1997, 1996, AND 1995

NOTE 2--BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)
PROPERTY HELD FOR SALE

Property held for sale is recorded at the lower of cost, less accumulated
depreciation, or estimated sales proceeds less selling costs. Upon management's
determination that a property is to be sold, the Company ceases deprecation of
the property's assets.

CASH EQUIVALENTS

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

RESTRICTED CASH

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

GOODWILL

The Company records goodwill in connection with purchase business
combinations where the aggregate purchase price exceeds the fair value of the
assets acquired. Goodwill is amortized on a straight-line basis over a period of
20 years, which represents its useful life.

DEFERRED FINANCING COSTS

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

OTHER ASSETS

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

COMPENSATED ABSENCES

The Company's employees earn vacation time ratably throughout the calendar
year. The rate at which vacation time is earned is based primarily on an
employee's length of service. An employee may accrue up to the maximum number of
hours for which he/she is eligible to take in any one calendar year. The
Company's policy is to compensate employees for all vacation time earned, but
not taken, upon the employee's termination. As of December 31, 1997, the Company
has not accrued vacation pay earned, but not yet taken by its employees.
Management does not believe that the accrual of earned vacation compensation
would have a material effect on the consolidated financial statements.

F-11

APARTMENT INVESTMENT AND MANAGEMENT COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1997, 1996, AND 1995

NOTE 2--BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)
REVENUE RECOGNITION

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

INTEREST RATE LOCK AGREEMENTS

Interest rate lock agreements related to planned refinancings of identified
variable rate indebtedness are accounted for as anticipatory hedges. Upon the
refinancing of such indebtedness, any gain or loss associated with the
termination of the interest rate lock agreement is deferred and recognized over
the life of the refinanced indebtedness (see Note 11).

INCOME TAXES

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

As a REIT, AIMCO generally will not be subject to U.S. federal income taxes
at the corporate level if it distributes at least 95% of its REIT taxable income
to its shareholders. REITs are also subject to a number of other organizational
and operational requirements. If AIMCO fails to qualify as a REIT in any taxable
year, its taxable income will be subject to U.S. federal income tax at regular
corporate rates (including any applicable alternative minimum tax). Even if
AIMCO qualifies as a REIT, it may be subject to certain state and local income
taxes and to U.S. federal income and excise taxes on its undistributed income.

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

For the years ended December 31, 1997, 1996 and 1995, distributions paid per
share were taxable as follows:

1997 % 1996 % 1995 %
--------- ----------- --------- ----------- --------- -----------

Ordinary income.................................... $ 1.74 94% $ 1.45 85% $ 1.48 89%
Return of capital.................................. -- -- 0.25 15% 0.18 11%
Capital Gains...................................... 0.04 2% -- -- -- --
Depreciation Recapture............................. 0.07 4% -- -- -- --
--------- --- --------- --- --------- ---
$ 1.85 100% $ 1.70 100% $ 1.66 100%
--------- --- --------- --- --------- ---
--------- --- --------- --- --------- ---

F-12

APARTMENT INVESTMENT AND MANAGEMENT COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1997, 1996, AND 1995

NOTE 2--BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)
EARNINGS PER SHARE

Earnings per share is calculated based on the weighted average number of
shares of common stock, common stock equivalents and dilutive convertible
securities outstanding during the period (see Note 19).

FAIR VALUE OF FINANCIAL INSTRUMENTS

The estimated aggregate fair value of the Company's cash and cash
equivalents, receivables, payables and short-term secured and unsecured
financing as of December 31, 1997 is assumed to approximate their carrying value
due to their relatively short terms. Management further believes that, after
consideration of interest rate agreements, the fair market value of the
Company's secured tax-exempt bond financing and secured long-term financing
approximates their carrying value, based on market comparisons to similar types
of debt instruments having similar maturities.

In valuing its investments in securities at their quoted market price, the
Company has recognized unrealized losses on investments of $1.7 million as of
December 31, 1997, which are included as a component of stockholders' equity.

INSURANCE SUBSIDIARY

Reinsurance premiums written are earned on a monthly pro rata basis over the
terms of the policies. A reserve for outstanding losses and loss-related
expenses of $14.8 million has been provided at December 31, 1997. The reserve
includes estimates for insurance losses incurred but not reported, as well as
losses pending settlement. Reserves are based on Management's estimates and are
believed to be adequate.

RECLASSIFICATIONS

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

USE OF ESTIMATES

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

F-13

APARTMENT INVESTMENT AND MANAGEMENT COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1997, 1996, AND 1995

NOTE 3--REAL ESTATE

Real estate at December 31 is as follows (in thousands):

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

Land............................................................... $ 265,570 $ 118,031
Buildings and improvements......................................... 1,391,637 747,191
------------ -----------
1,657,207 865,222
Accumulated depreciation........................................... (153,285) (120,077)
------------ -----------
$ 1,503,922 $ 745,145
------------ -----------
------------ -----------

During the years ended December 31, 1997 and 1996, the Company purchased or
acquired control of 59 properties (17,191 units) and 42 properties (10,484
units), respectively, and disposed of five properties (916 units) and four
properties (1,265 units), respectively, as described below.

The Company directly acquired nine apartment communities in unrelated
transactions during 1997 (the "1997 Acquisitions"). The aggregate consideration
paid by the Company of $204.3 million consisted of $75.4 million in cash, 1.9
million OP Units with a total recorded value of $55.9 million and the assumption
of $73.0 million of secured long-term indebtedness.

As a result of acquisition of the NHP Real Estate Companies (see Note 6) and
related tender offers to limited partners, the Company acquired a controlling
interest in 15 partnerships (the "Controlled NHP Partnerships"), which own 5,285
units located in 15 apartment communities. The portion of the aggregate purchase
price for the NHP Real Estate Companies allocated to the Controlled NHP
Partnerships was approximately $269.3 million, including the assumption of
approximately $212.3 million of mortgage indebtedness.

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

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

The Company acquired 100% ownership in seven apartment properties in
unrelated transactions in 1996 (the "1996 Acquisitions"). The aggregate
consideration paid by the Company of $93.1 million consisted of $26.0 million in
cash, 704,220 shares of Class A Common Stock with a total recorded value of
$15.3 million, 745,183 in OP Units with a total recorded value of $15.0 million
and the assumption of $31.7 million of secured long-term indebtedness and $5.1
million of secured short-term indebtedness. Each transaction, with the exception
of Peachtree Park and Somerset Village (see Note 21), was with an unaffiliated
third party.

F-14

APARTMENT INVESTMENT AND MANAGEMENT COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1997, 1996, AND 1995

NOTE 3--REAL ESTATE (CONTINUED)
In November 1996, the Company completed the acquisition (the "English
Portfolio Acquisition") of certain partnership interests, real estate and
related assets owned by J.W. English, a Houston, Texas-based real estate
syndicator and developer, and certain affiliated entities (collectively, the
"J.W. English Companies"). The English Portfolio Acquisition included the
purchase of all of the general and some of the limited partnership interests in
22 limited partnerships which act as the general partner to 31 limited
partnerships (the "English Partnerships") that own 22 multi-family apartment
properties, aggregating 5,230 apartment units, and four commercial properties,
primarily in Houston, Texas; title to a 104-unit apartment property in Houston,
Texas; certain assets of J. W. English Management Company which provided
management services to the apartment properties; and other real estate interests
related to the J.W. English Companies' operations. The aggregate purchase price
of the English Portfolio Acquisition was $23.1 million, consisting of $15.2
million in OP Units and $7.9 million in cash. The English Partnerships are
subject to approximately $95.4 million of mortgage debt.

The Company also made separate offers (the "English Tender Offers") to the
limited partners of 25 of the English Partnerships (the "Tender Offer English
Partnerships") to acquire their limited partnerships interests. The various
limited partners accepted tenders representing, in the aggregate, approximately
46% of all outstanding limited partnership interests in the Tender Offer English
Partnerships. The Company paid $16.0 million in cash and $1.7 million in OP
Units for the interests tendered in the English Tender Offers. The remaining
limited partners elected to continue as limited partners in the Tender Offer
English Partnerships.

In a series of related transactions completed in November and December 1996,
the Company acquired general partnership interests in 21 limited partnerships
which own twelve multi-family apartment properties (collectively, the "Dallas
Acquisition Properties") aggregating 2,839 apartment units, primarily in the
Dallas, Texas metropolitan area, and loans made by the general partners and
their affiliates to such partnerships, for an aggregate price of $26.7 million
in cash (collectively, the "Dallas Portfolio Acquisition"). The Dallas
Acquisition Properties are subject to approximately $60.7 million of mortgage
debt. The existing limited partners retained their interest in such limited
partnerships.

During 1996, the Company disposed of four properties (the "1996
Dispositions"). The properties were sold to one unaffiliated third party. The
cash proceeds from the disposition of approximately $17.1 million were used to
pay down $9.2 million of the Company's outstanding indebtedness and to provide
funds available for future investment purposes. The Company recognized a total
gain of approximately $44,000 on the disposition of these four properties.

In the fourth quarter of 1996, the Company completed construction of a 92
apartment unit expansion within the Fairways Apartments in Phoenix, Arizona for
a cost of approximately $6.0 million.

In 1996, the Company acquired Sun Katcher Apartments, a 360-unit apartment
property located in Jacksonville, Florida, at a cost of $4.0 million. In 1997,
the redevelopment of Sun Katcher was completed at a cost of $4.9 million. The
Company also recently commenced the renovation and upgrading of Bay West
Apartments, a 376-unit apartment property located in Tampa, Florida, for a
projected cost of $4.8 million (of which $0.9 million has already been spent),
to reposition the property in the marketplace. In addition, the Company expects
to undertake a major renovation of the Morton Towers Apartments, a 1,277-unit
apartment property located in Miami Beach, Florida, at an estimated cost of
$35.0 million. Approximately $0.4 million has been spent on the Morton Towers
redevelopment as of December 31, 1997.

F-15

APARTMENT INVESTMENT AND MANAGEMENT COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1997, 1996, AND 1995

NOTE 3--REAL ESTATE (CONTINUED)
Interest of $1.3 million, $0.8 million and $0.1 million was capitalized for
the years ended December 31, 1997, 1996 and 1995, respectively.

NOTE 4--INVESTMENT IN AMBASSADOR APARTMENTS, INC.

In September 1997, the Company acquired 886,600 shares of common stock
("Ambassador Common Stock") of Ambassador Apartments, Inc. ("Ambassador"), a
publicly traded REIT, for $19.9 million in cash. The shares acquired represented
8.4% of the shares of Ambassador Common Stock outstanding as of the date of the
purchase. As of December 31, 1997, the fair market value of the Ambassador stock
is $18.2 million. Accordingly, the Company has recognized an unrealized loss on
the Ambassador investment of $1.7 million, which is included as a component of
stockholders' equity.

On December 23, 1997, AIMCO and Ambassador entered into an Agreement and
Plan of Merger (the "Ambassador Merger Agreement") pursuant to which Ambassador
will be merged with and into AIMCO, with AIMCO being the surviving corporation
(the "Ambassador Merger"). The Ambassador Merger Agreement also provides that,
unless otherwise agreed by the parties, Ambassador Apartments, L.P., a Delaware
limited partnership (the "Ambassador Operating Partnership"), will be merged
with and into the AIMCO Operating Partnership (the "Ambassador Reorganization")
and all outstanding Ambassador Operating Partnership interests will be converted
into AIMCO OP Units at the Conversion Ratio, as defined below. In the Ambassador
Merger Agreement, the Ambassador Common Stock is valued at $21 per share.
Holders of Ambassador Common Stock will receive for each share an amount of
Class A Common Stock equal to the Conversion Ratio. The "Conversion Ratio" means
the quotient determined by dividing $21 by the "AIMCO Index Price," which is the
aggregate of the average of the high and low sales prices for Class A Common
Stock on each of the twenty consecutive NYSE trading days ending on the fifth
NYSE trading day immediately preceding the closing of the Ambassador Merger,
divided by 20. If the AIMCO Index Price is less than $36 (i.e. the Conversion
Ratio is greater than 0.583), then the AIMCO may elect to fix the Conversion
Ratio at 0.583 and pay to each holder of Ambassador Common Stock cash sufficient
to provide $21 in value for each share of Ambassador Common Stock.

The Ambassador Merger Agreement provides that any outstanding options to
purchase Ambassador Common Stock may be converted, at the election of the option
holder, into cash or options to purchase Class A Common Stock at the Conversion
Ratio. The Ambassador Merger Agreement further states that Ambassador's
outstanding preferred stock, par value $0.01 per share (the "Ambassador
Preferred Stock"), shall be redeemed, subject to the right of holders of shares
of Ambassador Preferred Stock to convert such shares into Ambassador Common
Stock, immediately prior to the Ambassador Merger. Assuming a conversion ratio
of 0.583, the Company will issue up to an aggregate of 7,205,739 shares of Class
A Common Stock in the Ambassador Merger, based upon the number of shares of
Ambassador Common Stock, options to purchase Ambassador Common Stock and other
securities currently convertible into shares of Ambassador Common Stock
outstanding as of December 31, 1997.

The Ambassador Merger Agreement contains certain penalties to be incurred by
either AIMCO or Ambassador should the agreement be terminated by either party.
The maximum penalty to be paid by either AIMCO or Ambassador in the event that
the Ambassador Merger Agreement is terminated is approximately $9.4 million.

F-16

APARTMENT INVESTMENT AND MANAGEMENT COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1997, 1996, AND 1995

NOTE 4--INVESTMENT IN AMBASSADOR APARTMENTS, INC. (CONTINUED)
Ambassador is a self-administered and self-managed REIT engaged in the
ownership and management of garden-style apartment properties leased primarily
to middle income tenants. As of December 31, 1997, Ambassador owned 52 apartment
communities with a total of 15,728 units located in Arizona, Colorado, Florida,
Georgia, Illinois, Tennessee and Texas. In addition, Ambassador manages one
property containing 252 units for an unrelated third party. Ambassador conducts
substantially all of its operations through the Ambassador Operating Partnership
and its subsidiaries. As of December 31, 1997, Ambassador held approximately 94%
of the outstanding common units and 100% of the outstanding preferred units of
the Ambassador Operating Partnership.

NOTE 5--INVESTMENTS IN AND NOTES RECEIVABLE FROM UNCONSOLIDATED SUBSIDIARIES

In order to satisfy certain requirements of the Code applicable to AIMCO's
status as a REIT, certain assets of the Company are held through corporations
(the "Unconsolidated Subsidiaries") in which the AIMCO Operating Partnership
holds non-voting preferred stock that represents a 95% economic interest, and
certain officers and/or directors of AIMCO hold, directly or indirectly, all of
the voting common stock, representing a 5% economic interest. As a result of the
controlling ownership interest in the Unconsolidated Subsidiariers held by
others, AIMCO accounts for its interest in the Unconsolidated Subsidiaries on
the equity method. As of December 31, 1997, the Unconsolidated Subsidiaries
included PAMS, Inc., AIMCO/NHP Holdings, Inc. ("ANHI"), AIMCO/NHP Properties,
Inc. ("ANPI"), NHP Property Management Company ("NHPMC"), and NHP A&R Services,
Inc. ("NHPA&R").

In May and September of 1997, the Company acquired an aggregate of 6,930,122
shares of common stock ("NHP Common Stock") of NHP. On December 8, 1997, the
Company acquired the remaining shares of NHP Common Stock in a merger
transaction accounted for as a purchase (the "NHP Merger"). Pursuant to the NHP
Merger, each outstanding share of NHP Common Stock was converted into either (i)
0.74766 shares of Class A Common Stock or (ii) at the shareholder's option,
0.37383 shares of Class A Common Stock and $10.00 in cash. As a result of the
NHP Merger, AIMCO issued 6,759,148 shares of Class A Common Stock, valued at
$180.8 million, and paid $86.5 million in cash. The total cost of the purchase
was $349.5 million.

In connection with NHP the merger, AIMCO recorded approximately $125 million
in goodwill, which is being amortized using the straight line method over a
period of 20 years.

In addition, in connection with the NHP Merger, the Company executed a plan
to close NHP's headquarters in Vienna, Virginia. Concurrent with this plan,
certain employees of NHP were either terminated or relocated to the
Indianapolis, Indiana office. The Company incurred $2.7 million in severance and
relocation costs, which were capitalized as a cost of the acquisition.

In connection with the purchase of NHP, the Company acquired NHP's property
management business, as well as several other businesses, including a membership
purchasing organization, home health

F-17

APARTMENT INVESTMENT AND MANAGEMENT COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1997, 1996, AND 1995

NOTE 5--INVESTMENTS IN AND NOTES RECEIVABLE FROM UNCONSOLIDATED SUBSIDIARIES
(CONTINUED)
care services, and insurance services. Immediately following the purchase, AIMCO
completed a reorganization which resulted in those businesses being conducted by
ANHI, ANPI, NHPMC and NHPA&R.

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

See selected combined financial information for the Company's unconsolidated
subsidiaries and unconsolidated partnerships at Note 6.

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

In connection with the purchase of the NHP Real Estate Companies, the
Company acquired general and limited partnership interests in partnerships that
own 82,374 conventional and affordable apartment units in 519 apartment
properties. The Company's ownership interests in these partnerships ranges from
1% to 100%, and the provisions of the partnership agreements give the Company
varying degrees of control.

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

At December 31, 1997, AIMCO's investment in unconsolidated partnerships
totaled $212.1 million.

F-18

APARTMENT INVESTMENT AND MANAGEMENT COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1997, 1996, AND 1995

NOTE 6-- INVESTMENT IN AND NOTES RECEIVABLE FROM UNCONSOLIDATED REAL ESTATE
PARTNERSHIPS (CONTINUED)
The following table provides selected combined financial information for
both the Company's unconsolidated subsidiaries and unconsolidated partnerships
as of and for the year ended December 31, 1997 (in thousands):

Real estate, net of accumulated depreciation............................ $2,252,702
Management contracts.................................................... 51,441
Goodwill................................................................ 45,494
Total assets............................................................ 2,827,264
Secured notes payable................................................... 2,951,989
Stockholders' equity.................................................... (767,201)
Total liabilities and stockholders' equity.............................. 2,827,264

Rental and other property revenues...................................... 501,384
Property operating expenses............................................. (303,547)
Depreciation expense.................................................... (63,384)
Service company revenues................................................ 23,776
Service company expenses................................................ (11,733)
Interest expense........................................................ 156,929
Net loss before gain on disposition of properties and discontinued
operations............................................................. (7,589)
Net income.............................................................. 11,536

NOTE 7--SECURED NOTES PAYABLE

In April 1997, 23 partnerships controlled by the Company completed a $108.0
million refinancing of secured, short term, floating rate indebtedness with
secured, 20-year, fixed rate, fully amortizing debt. The new notes are secured
by 27 apartment properties owned by such partnerships. In connection with this
refinancing, the Company received proceeds of $3.4 million from two interest
rate lock agreements accounted for as hedges. The gain on the interest rate lock
agreements was deferred and will be amortized over the life of the debt.

During 1997, the Company assumed $220.4 million in mortgage indebtedness in
connection with the purchase of 39 apartment properties. In addition, in
connection with the acquisition of the NHP Real Estate Companies (see Note 6),
the Company assumed fixed-rate indebtedness totaling approximately $209.8
million, which is secured by 15 properties held by NHP Partnerships in which the
Company acquired controlling interests.

In December 1997, the Company refinanced certain notes payable secured by 27
properties, of which, five are Owned Properties and are consolidated. The new
notes have an aggregate outstanding principal balance of $91.5 million as of
December 31, 1997 and carry fixed interest rates ranging from 6.6% to 6.8%. The
new notes are fully amortizing, requiring monthly principal and interest
payments, and mature in December 2012. In anticipation of the refinancing, the
Company entered into an interest rate lock agreement with an investment banking
company ("the March Hedge"). The March Hedge had a notional value of $100.0
million and fixed the interest rate of the anticipated refinancing at 7.053%.
The March Hedge was settled in connection with the refinancing, at which time
the Company realized a loss on the

F-19

APARTMENT INVESTMENT AND MANAGEMENT COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1997, 1996, AND 1995

NOTE 7--SECURED NOTES PAYABLE (CONTINUED)
hedge of approximately $10.9 million. The loss on the hedge will be amortized
over the life of the refinanced debt (see Note 11).

The following table summarizes the Company's long-term secured notes payable
at December 31, 1997 and 1996, all of which are non-recourse to the Company (in
thousands):

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

Fixed rate, ranging from 5.0% to 10.1%, or a weighted average all-in
rate of 8.10%, fully-amortizing notes maturing at various dates
through 2029........................................................ $ 561,056 $ 165,762
Fixed rate, ranging from 7.25% to 9.5%, or a weighted average all-in
rate of 8.73%, non-amortizing notes maturing at various dates
through 2001........................................................ 106,424 57,198
Floating rate, ranging from 6.7% to 7.4% at December 31, 1997, or a
weighted average all-in rate of 7.7%, non-amortizing notes maturing
at various dates through 2005....................................... 13,941 19,150
---------- ----------
$ 681,421 $ 242,110
---------- ----------
---------- ----------

Real estate assets which secure the first trust deeds for these secured
notes payable had a net book value of $1,117.6 million at December 31, 1997.

As of December 31, 1997, the scheduled principal payments for the Company's
secured notes payable are as follows (in thousands):

1998.............................................. $ 125,879
1999.............................................. 34,285
2000.............................................. 20,178
2001.............................................. 75,967
2002.............................................. 14,750
Thereafter........................................ 410,362
---------
$ 681,421
---------
---------

NOTE 8--SECURED SHORT-TERM FINANCING

The Company utilizes a variety of secured short-term financing instruments
to manage its working capital needs and to fund real estate investments. In
1994, the Company obtained a variable rate revolving credit facility (the
"Credit Facility") with Bank of America National Trust and Savings Association
("Bank of America"). In August 1996, the Credit Facility was extended through
August 1998, the interest rate was reduced from LIBOR plus 1.75% to LIBOR plus
1.625% and the commitment was increased from $40.0 million to $50.0 million. In
May 1997, the Company increased its maximum amount available under the Credit
Facility from $50.0 million to $100.0 million. Interest on the Credit Facility
was payable monthly at the variable interest rate of LIBOR plus 1.45% unless
borrowings exceed 60% of the aggregate collateral value, in which case, the
interest rate was LIBOR plus 1.70%. Commitment fees of 0.125% per

F-20

APARTMENT INVESTMENT AND MANAGEMENT COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1997, 1996, AND 1995

NOTE 8--SECURED SHORT-TERM FINANCING (CONTINUED)
annum on the remaining availability were payable quarterly. The outstanding
balance under the Credit facility was $33.5 million at December 31, 1997.

The following table summarizes the Company's secured short-term financing at
December 31, 1997 and 1996 (in thousands):

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

Floating rate interest only note, having a stated interest rate of
7.67% at December 31, 1997............................................ $ 19,050 $ 115,499
Floating rate interest only notes...................................... -- 25,615
Floating rate interest only notes secured by property held for sale.... -- 1,051
9.25% fixed rate, non-amortizing note.................................. 549 5,074
Floating rate Credit Facility, interest at 7.33% at December 31, 1997,
expiring August 1998.................................................. 33,500 44,800
--------- ----------
$ 53,099 $ 192,039
--------- ----------
--------- ----------

Real estate assets, which secure the Company's short-term financing, had a
net book value of $104.0 million at December 31, 1997.

Secured short-term indebtedness totaling $33.5 million is guaranteed by the
Company and certain of its affiliates and secured by an assignment of the
Company's general partnership interests in 12 of the English Partnerships.

The Company replaced the Credit Facility with a new $50 million unsecured
revolving credit facility in January 1998, and a new $50 million secured
revolving credit facility in February 1998 (see Note 25).

NOTE 9--SECURED TAX-EXEMPT BOND FINANCING

The following table summarizes the Company's secured tax-exempt bond
financing at December 31, 1997 and 1996, which is non-recourse to the Company
(in thousands):

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

7.0% fully-amortizing bonds, effective rate of 7.3%, due July 2016................ $ 46,498 $ 47,674
6.9% fully-amortizing bonds due, effective rate of 7.3% July 2016................. 9,529 9,773
4.2% interest only bonds, effective rate of 6.7%, due July 2016................... 5,958 6,000
6.0% interest only bonds, effective rate of 6.7%, secured by a letter of credit in
the amount of $5,350, due September 1998......................................... 5,325 5,350
5.4% interest only bonds due December 2002........................................ 6,700 6,700
--------- ---------
Total............................................................................. $ 74,010 $ 75,497
--------- ---------
--------- ---------

Real estate assets securing the tax-exempt bond financing had a net book
value of $107.5 million at December 31, 1997.

F-21

APARTMENT INVESTMENT AND MANAGEMENT COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1997, 1996, AND 1995

NOTE 9--SECURED TAX-EXEMPT BOND FINANCING (CONTINUED)

As of December 31, 1997, the scheduled principal payments for the Company's
secured tax-exempt bonds are as follows (in thousands):

1998............................................... $ 7,031
1999............................................... 1,827
2000............................................... 1,956
2001............................................... 2,096
2002............................................... 2,244
Thereafter......................................... 58,856
---------
$ 74,010
---------
---------

NOTE 10--UNSECURED SHORT-TERM FINANCING

In November 1996, the Company borrowed $12.5 million in conjunction with the
purchase of limited partnership interests in the English Partnerships. The loan
was repaid in February 1997 with proceeds from a public offering of shares of
Class A Common Stock (see Note 16).

NOTE 11--INTEREST RATE LOCK AGREEMENTS

In 1996, in anticipation of refinancing certain indebtedness, the Company
entered into two interest rate lock agreements with a major New York investment
banking company (the "1996 Hedges"). The 1996 Hedges had an aggregate notional
value of $100.0 million and fixed the interest rate of the anticipated
refinancings at 6.2% and 6.3%. The 1996 Hedges were settled in April 1997 in
connection with the refinancing, at which time the Company realized aggregate
gains of approximately $3.4 million (see Note 7).

In March 1997, the Company entered into an interest rate lock agreement with
an investment banking company (the "March Hedge"). The March Hedge had a
notional value of $100.0 million and fixed the interest rate of the anticipated
refinancing at 7.053%. The March Hedge was settled December 1997, in connection
with the refinancing, at which time the Company realized a loss on the hedge of
approximately $10.9 million (see Note 7).

In September 1997, the Company entered into an interest rate lock agreement
(the "September Hedge") in anticipation of refinancing certain other long-term
indebtedness. The September Hedge has a notional principal amount of $75.0
million, matures on March 19, 1998, and fixes the ten year treasury rate at
6.211%. Based on the fair value of the interest rate lock agreement at December
31, 1997, the Company has a potential loss on the September Hedge of
approximately $2.6 million. Management anticipates that the debt will be
refinanced during the first quarter of 1998.

In October 1997, the Company entered into an interest rate lock agreement
(the "October Hedge") in anticipation of incurring indebtedness in connection
with the acquisition of the Foxchase Apartments. The October Hedge had a
notional value of $70.0 million and fixed the interest rate of the anticipated
indebtedness at 6.13%. The October Hedge was settled in December 1997 when the
Foxchase acquisition was completed, at which time the Company realized a loss of
$1.4 million.

F-22

APARTMENT INVESTMENT AND MANAGEMENT COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1997, 1996, AND 1995

NOTE 11--INTEREST RATE LOCK AGREEMENTS (CONTINUED)
The Company is exposed to credit risk in the event of nonperformance by the
other parties to the interest rate lock agreements. However, the Company does
not anticipate nonperformance by the counterparties. In addition, since the
variable rate in the interest rate lock agreements is not on the same basis as
the variable rate indebtedness, the Company is exposed to losses to the extent
that the LIBOR rate and the Treasury rate change independently of each other.
The Company does not anticipate that inconsistent changes in the LIBOR rate and
the Treasury rate will have a material effect.

NOTE 12--COMMITMENTS AND CONTINGENCIES

LEGAL

In addition to unspecified compensation and exemplary damages, the original
complaints in the California Actions sought an accounting, a constructive trust
on the assets and monies acquired by the English defendants in connection with
the English Acquisition, a court order removing the Company from management of
the English Partnerships and/or ordering disposition of the properties and
attorneys fees, expert fees and other costs. The Company intends to vigorously
defend itself in connection with these actions. The Company believes it is
entitled to indemnity from the J.W. English Companies, subject to certain
exceptions. Failure by the Company to prevail in the California Actions or to
receive indemnification could have a material adverse effect on the Company's
financial condition and results of operations.

F-23

APARTMENT INVESTMENT AND MANAGEMENT COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1997, 1996, AND 1995

NOTE 12--COMMITMENTS AND CONTINGENCIES (CONTINUED)
which are covered by liability insurance, and none of which are expected to have
a material adverse effect on the consolidated financial condition or results of
operations of the Company.

HUD ENFORCEMENT AND LIMITED DENIALS

A significant number of the affordable units included in the AIMCO
Properties are subject to regulation by the U.S. Department of Housing and Urban
Development ("HUD"). HUD has the authority to suspend or deny property owners
and managers from participation in HUD programs with respect to additional
assistance within a geographic region through imposition of a limited denial of
participation ("LDP") by any HUD office or nationwide for violations of HUD
regulatory requirements. In March 1997, HUD announced its intention to step up
enforcement against property owners and managers who violate their agreements
with HUD, and in July 1997, HUD announced the creation of a new department-wide
enforcement division. Three HUD field offices have recently issued LDPs to NHP
as a result of physical inspections and mortgage defaults at four NHP
Properties, two of which are managed by the Company. One LDP was subsequently
withdrawn and another was terminated in December 1997 after a reinspection of
the property. The one remaining LDP, unless lifted, suspends the Company's
ability to manage or acquire additional HUD-assisted properties in eastern
Missouri until June 24, 1998. The Company has requested that HUD terminate the
one remaining LDP, but HUD has so far refused to do so, and the Company cannot
determine whether HUD will reverse that decision with respect to the affected
region. Because an LDP is prospective, existing HUD agreements are not affected,
so an LDP is not expected to result in the loss of management service revenue
from or otherwise to affect properties that the Company currently manages in the
subject regions. If HUD were to disapprove the Company as property manager for
one or more affordable properties, the Company's ability to obtain property
management revenues from new affordable properties may be impaired.

HUD monitors the performance of properties with HUD-insured mortgage loans.
HUD also monitors compliance with applicable regulations, and takes performance
and compliance into account in approving management of HUD-assisted properties.
In this regard, since July 1988, 29 HUD-assisted properties owned or managed by
the NHP Real Estate Companies or NHP have defaulted on non-recourse HUD-insured
mortgage loans. Eight of these 29 properties are also currently managed by the
Company. An additional six properties owned or managed by the Company have
received unsatisfactory performance ratings. As a result of the defaults and
unsatisfactory ratings, a national HUD office must review any field office
approval of the Company to act as property manager for a HUD-assisted property.
The national HUD office has consistently approved NHP's applications to manage
new properties, and the Company received HUD clearance to acquire NHP and the
NHP Real Estate Companies. The Company believes that it enjoys a good working
relationship with HUD and that the national office will continue to apply the
clearance process to large management portfolios such as the Company's,
including the NHP Properties, with discretion and flexibility. While there can
be no assurance, the Company believes that the unsatisfactory reviews and the
mortgage defaults will not have a material impact on its results of operations
or financial condition.

F-24

APARTMENT INVESTMENT AND MANAGEMENT COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1997, 1996, AND 1995

NOTE 12--COMMITMENTS AND CONTINGENCIES (CONTINUED)
projects have received similar subpoenas. Documents relating to certain of the
Company's acquisitions of property management rights for HUD projects may be
responsive to the subpoena. The Company is in the process of complying with the
subpoena and has provided certain documents to the Inspector General, without
conceding that they are responsive to the subpoena. The Company believes that
its operations are in compliance, in all material respects, with all laws, rules
and regulations relating to HUD-assisted or HUD-insured properties. Although the
Inspector General has not initiated any action against the Company or, to the
Company's knowledge, any owner of a HUD property managed by the Company, if any
such action is taken in the future, it could ultimately affect existing
arrangements with respect to HUD projects or otherwise have a material adverse
effect on the results of operations of the Company.

ENVIRONMENTAL

Certain of the Company's Owned Properties, and some of the other AIMCO
Properties, are located on or near properties that contain or have contained
underground storage tanks or on which activities have occurred which could have
released hazardous substances into the soil or groundwater. There can be no
assurance that such hazardous substances have not been released or have not
migrated, or in the future will not be released or will not migrate, onto the
AIMCO Properties. Such hazardous substances have been released at certain Owned
Properties and, in at least one case, have migrated from an off-site location
onto an Owned Property. In addition, the Company's Montecito property in Austin,
Texas, is located adjacent to, and may be partially on, land that was used as a
landfill. Low levels of methane and other landfill gas have been detected at
Montecito. The City of Austin (the "City"), the former landfill operator, has
assumed responsibility for conducting all investigation and remedial activities
to date associated with the methane and other landfill gas. The remediation of
the landfill gas is now substantially complete and the Texas Natural Resources
Conservation Commission ("TNRCC") has preliminarily approved the methane gas
remediation efforts. Final approval of the site and the remediation process is
contingent upon the results of continued methane gas monitors to confirm the
effectiveness of the remediation efforts. Should further actionable levels of
methane gas be detected, a proposed contingency plan of passive methane gas
venting may be implemented by the City. The City has also conducted testing at
Montecito to determine whether, and to what extent, groundwater has been
impacted. Based on test reports received to date by the Company, the groundwater
does not appear to be contaminated at actionable levels. The Company has not
incurred, and does not expect to incur, liability for the landfill investigation
and remediation; however, the Company has relocated some of its tenants and has
installed a venting system according to the TNRCC's specifications under the
buildings slabs, in connection with the present raising of four of its buildings
in order to install stabilizing piers thereunder, at a total cost of
approximately $550,000, which is primarily the cost for the restabilization. The
restabilization was substantially completed in January 1998. The City will be
responsible for monitoring the conditions of Montecito.

F-25

APARTMENT INVESTMENT AND MANAGEMENT COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1997, 1996, AND 1995

NOTE 12--COMMITMENTS AND CONTINGENCIES (CONTINUED)
In October 1997, NHP received a letter ("the EPA Letter") from the U.S.
Department of Justice ("DOJ") which stated that the U.S. Environmental
Protection Agency ("EPA") has requested that the DOJ file a lawsuit against NHP
alleging, among other things, that NHP violated the Clean Air Act, the National
Recycling and Emissions Reduction Programs and associated regulations in
connection with the employment of certain unlicensed personnel, maintenance and
disposal of certain refrigerants, and record-keeping practices at two
properties. An agreement in principle between the Company and the EPA has been
reached, whereby the Company has agreed to pay a fine of approximately $0.1
million, permit the EPA to audit the maintenance records and technical staffing
at 40 NHP Properties and continue to provide training to all maintenance workers
with respect to the disposal of refrigerants. A formal settlement agreement is
expected to be executed in 1998.

LEASE COMMITMENTS

Minimum payments under the terms of all noncancellable operating leases in
which the Company is the lessee, principally for office space, at December 31,
1997 are as follows (in thousands):

1998..................................................... $ 541
1999..................................................... 376
2000..................................................... 211
2001..................................................... 170
2002..................................................... 127
---------
$ 1,425
---------
---------

Total rent expense for the years ended December 31, 1997, 1996 and 1995 was
$0.7 million, $0.6 million and $0.6 million, respectively.

NOTE 13--MINORITY INTERESTS IN OTHER PARTNERSHIPS

Interests held by limited partners (other than the Company) in real estate
partnerships controlled by the Company are reflected as Minority Interests in
Other Partnerships. Net income is allocated based on the percentage interest
owned by these limited partners in each respective real estate partnership.

NOTE 14--MINORITY INTEREST IN OPERATING PARTNERSHIP

Interests in the AIMCO Operating Partnership held by limited partners are
represented by OP Units. The AIMCO Operating Partnership's income is allocated
to holders of OP Units based on the weighted average number of OP Units
outstanding during the period. The AIMCO Operating Partnership records the
issuance of OP Units and the assets acquired in purchase transactions based on
the market price of the Company's Class A Common Stock at the date of execution
of the purchase contract. The holders of the OP Units receive distributions,
prorated from the date of admittance, in an amount equivalent to the dividends
paid to holders of Class A Common Stock. During 1997, 1996 and 1995, the
weighted average ownership interest in the AIMCO Operating Partnership held by
the OP Unit holders (other than the Company) was 13.2%, 17.1% and 16.4%,
respectively. At December 31, 1997, the ownership interest of the OP Unit
holders (other than the Company) was 11.7%.

F-26

APARTMENT INVESTMENT AND MANAGEMENT COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1997, 1996, AND 1995

NOTE 14--MINORITY INTEREST IN OPERATING PARTNERSHIP (CONTINUED)
After holding the OP Units for one year, the limited partners generally have
the right to redeem their OP Units for cash. Notwithstanding that right, AIMCO
may elect to acquire some or all of the OP Units tendered for redemption in
exchange for shares of Class A Common Stock in lieu of cash.

NOTE 15--REGISTRATION STATEMENTS

In April 1997, the Company filed a shelf registration statement with the
Securities and Exchange Commission which provides for the offering of, on a
delayed or continuous basis, debt securities, Class A Common Stock, preferred
stock and warrants with an aggregate value of up to $1.0 billion. The shelf
registration statement was declared effective in May 1997. As of December 31,
1997, the Company has issued 12,052,418 shares of Class A Common Stock and
3,150,000 shares of preferred stock under the shelf registration, the aggregate
gross proceeds of which was $475.6 million. As of December 31, 1997, up to
$524.4 million of additional securities may be sold under the shelf
registration.

In February 1998, AIMCO issued 4,200,000 shares of newly created AIMCO Class
D Cumulative Preferred Stock ("Class D Preferred Stock") for gross proceeds of
$105.0 million (see Note 25). After giving effect to the sale of the Class D
Preferred Stock, up to $419.4 million of additional securities may be sold under
the shelf registration.

NOTE 16--STOCKHOLDERS' EQUITY

During 1996, AIMCO issued 895,250 shares of Class A Common Stock to certain
executive officers (or entities controlled by them) at $20.75 per share,
pursuant to the exercise of stock options issued under the Apartment Investment
and Management Company 1996 Stock Award and Incentive Plan. In exchange for the
shares purchased, the executive officers (or entities controlled by them)
executed notes payable totaling $18.6 million to the Company, of which $11.9
million was repaid during 1997.

In September 1996, the Company's Board of Directors authorized the
repurchase of up to 500,000 shares of Class A Common Stock in open market and
privately negotiated purchase transactions. The stock may be purchased from time
to time as market conditions warrant.

In May 1997, AIMCO sold 2,300,000 shares of Class A Common Stock at an
average price of $28 per share in two public offerings. The net proceeds of
approximately $63.0 million were used to repay $56.0 million of outstanding
indebtedness under the Credit Facility and to provide working capital of $7.0
million. In addition, the Company issued 2,142,857 shares of Class A Common
Stock in connection with the acquisition of 2,866,073 shares of NHP Common Stock
(see Note 5).

In July 1997, AIMCO sold 1,100,000 shares of Class A Common Stock to certain
members of the Company's senior management at a price of $30 per share, the
closing price of the stock on the date of purchase. In exchange for the shares
purchased, such members of senior management executed notes payable to the
Company totaling $33.0 million, of which $15.8 million has been repaid as of
February 28, 1998. The notes bear interest at 7.25% per annum, payable
quarterly, and mature in 2007. The notes are secured by the stock purchased and
are recourse as to 25% of the original amount borrowed.

F-27

APARTMENT INVESTMENT AND MANAGEMENT COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1997, 1996, AND 1995

NOTE 16--STOCKHOLDERS' EQUITY (CONTINUED)
In August 1997, AIMCO sold 750,000 shares of newly created Class B
Cumulative Convertible Preferred Stock ("Class B Preferred Stock") for gross
proceeds of $75.0 million in cash to an institutional investor in a private
transaction. Holders of the Class B Preferred Stock are entitled to receive,
when, as and if declared by the Board of Directors, quarterly cash dividends per
share equal to the greater of $1.78125 or the cash dividends declared on the
number of shares of Class A Common Stock into which one share of Class B
Preferred Stock is convertible. Each share of Class B Preferred Stock is
convertible at the option of the holder, beginning in August 1998, into 3.28407
shares of Class A Common Stock, subject to certain anti-dilution adjustments.
The agreement pursuant to which AIMCO issued the Class B Preferred Stock
provides that the holders of such stock may require AIMCO to repurchase the
Class B Preferred Stock at a price of $105 per share, plus accrued and unpaid
dividends, if (i) at any time AIMCO fails to qualify as a REIT; or (ii) upon the
occurrence of a change of control of AIMCO, as defined by the aforementioned
agreement. The Class B Preferred Stock is senior to the Class A Common Stock as
to dividends and liquidation, and is non-voting. The proceeds from the sale of
the Class B Preferred Stock were used to repay outstanding indebtedness under
the Credit Facility and to provide working capital.

In August and September 1997, AIMCO issued an aggregate of 5,052,418 shares
of Class A Common Stock to institutional investors for aggregate net proceeds of
$156.9 million. The Company used $114.4 million of such proceeds to purchase
5,717,000 shares of NHP Common Stock from ANHI, used $7.0 million to purchase
351,974 additional shares of NHP Common Stock from a third party pursuant to a
stock purchase agreement, and contributed the remaining $35.5 million to the
AIMCO Operating Partnership (see Note 5). An additional 61,364 shares of Class A
Common Stock were subsequently issued in exchange for 82,074 shares of NHP
Common Stock.

In December 1997, AIMCO issued 4,554,873 shares of Class A Common Stock in
connection with the NHP Merger (see Note 5).

In December 1997, AIMCO issued 2,400,000 shares of newly created Class C
Cumulative Preferred Stock ("Class C Preferred Stock") for net proceeds of $58.1
million. Holders of the Class C Preferred Stock are entitled to receive, when,
as and if declared by the Board of Directors, annual cash dividends equal to
$2.25 per share. The Class C Preferred Stock is senior to the Class A Common
Stock as to dividends and liquidation, and is non-voting. Upon any liquidation,
dissolution or winding up of AIMCO, before payment or distributions by AIMCO
shall be made to any holders of Class A Common Stock, the holders of the Class C
Preferred Stock shall be entitled to receive a liquidation preference of $25 per
share, plus accrued and unpaid dividends. The proceeds from the sale of the
Class C Preferred Stock were used to repay indebtedness outstanding under the
Credit Facility and to provide working capital.

In February 1998, AIMCO issued 4,200,000 shares of Class D Cumulative
Preferred Stock in a public offering (see Note 25).

Concurrent with the IPO in July 1994, 650,000 shares of AIMCO common stock
held by four of the Company's executive officers were reclassified as AIMCO
Class B Common Stock ("Class B Common Stock"). The Class B Common Stock is
convertible into Class A Common Stock, subject to certain conditions. In 1997,
1996 and 1995, respectively, 162,500, 260,000 and 65,000 shares of Class B
Common

F-28

APARTMENT INVESTMENT AND MANAGEMENT COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1997, 1996, AND 1995

NOTE 16--STOCKHOLDERS' EQUITY (CONTINUED)
Stock were converted into Class A Common Stock upon the satisfaction of the
requisite financial conditions for 1994 through 1997.

NOTE 17--STOCK OPTION PLANS AND STOCK WARRANTS

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

The Company has adopted the 1994 Stock Option Plan of Apartment Investment
and Management Company (the "1994 Plan"), the Apartment Investment and
Management Company 1996 Stock Award and Incentive Plan (the "1996 Plan"), the
Apartment Investment and Management Company 1997 Stock Award and Incentive Plan
(the "1997 Plan") and the Apartment Investment and Management Company
Non-Qualified Employee Stock Option Plan (the "Non-Qualified Plan") to attract
and retain officers, key employees and independent directors. The 1994 Plan
provides for the granting of a maximum of 150,000 options to purchase common
shares. The 1996 Plan provides for the granting of a maximum of 500,000 options
to purchase common shares. The 1997 Plan provides for the granting of a maximum
of 20,000,000 options to purchase common shares. The Non-Qualified Plan provides
for the granting of a maximum of 500,000 options to purchase common shares. The
1994 Plan, the 1996 Plan, the 1997 Plan and the Non-Qualified Plan allow for the
grant of incentive and non-qualified stock options, and are administered by the
Compensation Committee of the Board of Directors. The 1994 Plan also provides
for a formula grant of the non-qualified stock options to the independent
directors to be administered by the Board of Directors to the extent necessary.
The exercise price of the options granted may not be less than the fair market
value of the common stock at the date of grant. The term of the incentive and
non-qualified options is ten years from the date of grant. The non-qualified
options vest 20% per year over a five-year period with initial vesting one year
from the date of grant. Terms may be modified at the discretion of the
Compensation Committee of the Board of Directors.

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

1997 1996 1995
--------------- --------------- ---------------

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

F-29

APARTMENT INVESTMENT AND MANAGEMENT COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1997, 1996, AND 1995

NOTE 17--STOCK OPTION PLANS AND STOCK WARRANTS (CONTINUED)
The Black-Scholes option valuation model was developed for use in estimating
fair value of traded options which have no vesting restrictions and are fully
transferable. In addition, option valuation models require the input of highly
subjective assumptions including the expected stock price volatility. Because
the Company's stock options have characteristics significantly different from
those of traded options, and because changes in the subjective input assumptions
can materially affect the fair value estimate, in management's opinion, the
existing models do not necessarily provide a reliable single measure of the fair
value of its employee stock options.

For purposes of pro forma disclosures, the estimated fair value of the
options is amortized over the options' vesting period. The Company's pro forma
information for the options is as follows (in thousands except per share
information):

1997 1996 1995
--------- --------- ---------

Pro forma income attributable to common shareholders.......... $ 26,096 $ 12,201 $ 8,191
Pro forma basic earnings per common share..................... $ 1.00 $ 0.98 $ 0.86

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

The following table summarizes the option activity for the years ended
December 31, 1997, 1996 and 1995:

1997 1996 1995
---------- ---------- ----------

Outstanding at beginning of year.................... 505,000 108,000 86,000
AIMCO options granted............................... 127,000 803,000 27,000
AIMCO options exercised............................. (342,000) (383,000) --
AIMCO options forfeited............................. (6,000) (23,000) (5,000)
NHP options assumed................................. 595,000 -- --
NHP options exercised............................... (95,000) -- --
---------- ---------- ----------
Outstanding at end of year.......................... 784,000 505,000 108,000
---------- ---------- ----------
---------- ---------- ----------
Stock options exercisable at the end of year........ 690,000 425,000 26,000
---------- ---------- ----------
---------- ---------- ----------

Weighted average fair value of options
granted during the year................. $ 3.24 $ 1.01 $ 1.75
Weighted average exercise price........... $ 30.01 $ 20.74 $ 17.69
Exercise prices........................... $12.36-$35.00 $20.25-$20.75 $17.12-$18.37
Weighted average remaining contractual
life.................................... 8.12 years 9.57 years 9.21 years

At December 31, 1997, the outstanding options consisted of: (i) 500,000 NHP
options assumed, with exercise prices ranging from $12.36 to $22.74 and a
weighted average exercise price of $17.79, all immediately exercisable; (ii)
234,000 AIMCO options (190,000 exercisable) with exercise prices ranging from
$17.125 to $27.75, a weighted average exercise price of $22.13 and a weighted
average life of 8.0

F-30

APARTMENT INVESTMENT AND MANAGEMENT COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1997, 1996, AND 1995

NOTE 17--STOCK OPTION PLANS AND STOCK WARRANTS (CONTINUED)
years; and (iii) 50,000 AIMCO options (none exercisable) with an exercise price
of $35.00 and remaining life of 9.7 years.

NOTE 18--DIVIDEND REINVESTMENT PLAN

Effective August 21, 1995, AIMCO implemented a dividend reinvestment plan to
permit stockholders to reinvest dividends and make voluntary cash investments to
purchase additional shares of Class A Common Stock. In May 1996, the Company
filed a registration statement relating to 1,000,000 shares of Class A Common
Stock to be made available for issuance under the dividend reinvestment plan. On
February 19, 1998, the Company terminated its dividend reinvestment plan
effective March 19, 1998 (see Note 25).

NOTE 19--EARNINGS PER SHARE

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

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

F-31

APARTMENT INVESTMENT AND MANAGEMENT COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1997, 1996, AND 1995

NOTE 19--EARNINGS PER SHARE (CONTINUED)
The following table illustrates the calculation of basic and diluted
earnings per share for the years ended December 31, 1997, 1996 and 1995 (in
thousands, except per share data):

FOR THE YEAR FOR THE YEAR FOR THE YEAR
ENDED ENDED ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1997 1996 1995
------------ ------------ ------------

Numerator:
Net income.................................................. $ 28,633 $ 12,984 $ 13,375
Preferred stock dividends................................... (2,315) -- (5,169)
------------ ------------ ------------
Numerator for basic and diluted earnings per share-- income
attributable to common shareholders....................... $ 26,318 $ 12,984 $ 8,206
------------ ------------ ------------
------------ ------------ ------------
Denominator:
Denominator for basic earnings per share--weighted average
number of shares of common stock outstanding.............. 24,055 12,411 9,571
Effect of dilutive securities:
Employee stock options...................................... 381 14 6
Warrants.................................................... -- 2 2
------------ ------------ ------------
Dilutive potential common shares............................ 381 16 8
------------ ------------ ------------
Denominator for diluted earnings per share.................. 24,436 12,427 9,579
------------ ------------ ------------
------------ ------------ ------------
Basic earnings per common share:
Operations................................................ $ 0.99 $ 1.05 $ 0.86
Gain on disposition of properties......................... 0.11 -- --
Extraordinary item........................................ (0.01) -- --
------------ ------------ ------------
Total..................................................... $ 1.09 $ 1.05 $ 0.86
------------ ------------ ------------
------------ ------------ ------------
Diluted earnings per common share:
Operations................................................ $ 0.98 $ 1.04 $ 0.86
Gain on dispositions of properties........................ 0.11 -- --
Extraordinary item........................................ (0.01) -- --
------------ ------------ ------------
Total..................................................... $ 1.08 $ 1.04 $ 0.86
------------ ------------ ------------
------------ ------------ ------------

NOTE 20--RECENT ACCOUNTING DEVELOPMENTS

In June, 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 130, REPORTING COMPREHENSIVE INCOME ("SFAS
130") which provides guidance with respect to the calculation and presentation
of comprehensive income. Comprehensive income includes all transactions
affecting stockholders' equity, including the traditional measure of net income,
and excluding contributions from and distributions to stockholders. Under SFAS
130, companies will be required to present comprehensive income and its
components on the face of the income statement or in a separate financial
statement that is displayed with the same prominence. The Company has elected
not to adopt the provisions of SFAS 130 as of December 31, 1997.

F-32

APARTMENT INVESTMENT AND MANAGEMENT COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1997, 1996, AND 1995

NOTE 20--RECENT ACCOUNTING DEVELOPMENTS (CONTINUED)
In June, 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 131, DISCLOSURES ABOUT SEGMENTS OF AN
ENTERPRISE AND RELATED INFORMATION ("SFAS 131") which redefines how business
segments are identified and stipulates the content and nature of segment
information to be presented in the financial statements. The Company has elected
not to adopt the provisions of SFAS 131 as of December 31, 1997.

NOTE 21--TRANSACTIONS WITH AFFILIATES

The Company serves as property manager for certain apartment properties
owned by entities in which certain officers of the Company have an ownership
interest. Compensation for these services is 3% to 6% of gross receipts from the
properties and were $5.4 million, $0.6 million and $1.3 million for the years
ending December 31, 1997, 1996 and 1995, respectively. In addition, the Company
received consulting fees from affiliates of $0.1 million for the year ended
December 31, 1995. No consulting fees from affiliates were received for 1997 or
1996.

In 1996, the Company acquired the Peachtree Park Apartments in Atlanta,
Georgia and the Somerset Village Apartments in Salt Lake City, Utah from
entities controlled by officers of the Company. The aggregate consideration paid
of $39.6 million consisted of $3.8 million in cash, 372,678 shares of Class A
Common Stock, 121,447 OP Units with a total recorded value of $9.9 million, and
the assumption of $25.9 million of secured short-term indebtedness. In addition,
the Company acquired the cable equipment at the Peachtree Park Apartments from
an entity controlled by an officer of the Company in exchange for 8,243 shares
of Class A Common Stock with a recorded value $0.2 million.

On December 1, 1997, the Company purchased the Foxchase Apartments for
approximately $107.7 million from First Alexandria Associates, Limited
Partnership. The purchase price consisted of approximately $70.0 million in
assumed mortgage obligations and the remainder in OP Units. The Company serves
as the general partner and a limited partner in First Alexandria Associates,
Limited Partnership and has a 54% interest in the partnership.

During 1997, in order to preserve the Company's REIT status, the Company
transferred the following assets to certain unconsolidated subsidiaries of
AIMCO: (i) partnerships interests with an estimated value of approximately $0.4
million; (ii) partnership interests, a $50.0 million promissory note and certain
management agreements with an aggregate estimated value of approximately $53.7
million; and (iii) the stock of certain corporations with an estimated value of
$25.0 million.

During July 1997, the Company sold 1,100,000 shares of Class A Common Stock
to certain members of the Company's senior management at a price of $30.00 per
share, the closing price of the stock on the date of the purchase. In exchange
for the shares purchased, such members of senior management executed notes
payable to the Company totaling $33.0 million, of which approximately $10.1
million has been repaid as of December 31, 1997 (see Note 16).

On August 15, 1997, the AIMCO Operating Partnership contributed stock of a
captive insurance subsidiary to PAMS Inc. Certain members of the Company's
senior management are shareholders in PAMS Inc. In order to maintain their
aggregate 5% ownership interest in PAMS Inc., these individuals contributed an
aggregate of $0.2 million to PAMS Inc.

F-33

APARTMENT INVESTMENT AND MANAGEMENT COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1997, 1996 AND 1995

NOTE 21--TRANSACTIONS WITH AFFILIATES (CONTINUED)

On January 21, 1998, the AIMCO Operating Partnerships sold an aggregate of
15,000 High Performance Units to a limited liability company formed by certain
members of the Company's senior management and to AIMCO's non-employee
directors, for $2.1 million in cash (see Note 25).

On January 31, 1998, the Company entered into a Contribution Agreement with
CK Services, Inc. ("CK") and the stockholders of CK to cause certain assets to
be transferred to CK and to distribute all outstanding stock of CK to the
stockholders of AIMCO. CK is a corporation wholly-owned by Terry Considine,
AIMCO's Chairman and Chief Executive Officer, and by Peter Kompaniez, AIMCO's
President and Vice Chairman (see Note 25).

NOTE 22--EMPLOYEE BENEFIT PLANS

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

NOTE 23--UNAUDITED SUMMARIZED CONSOLIDATED QUARTERLY INFORMATION

Summarized unaudited consolidated quarterly information for 1997 and 1996 is
provided below (amounts in thousands except per share amounts).

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

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

F-34

APARTMENT INVESTMENT AND MANAGEMENT COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1997, 1996 AND 1995

NOTE 23--UNAUDITED SUMMARIZED CONSOLIDATED QUARTERLY INFORMATION (CONTINUED)

QUARTER
------------------------------------------
YEAR ENDED DECEMBER 31, 1996 FIRST SECOND THIRD FOURTH
- ---------------------------------------------------------------------- --------- --------- --------- ---------

Revenue from property operations...................................... $ 22,451 $ 23,801 $ 24,140 $ 30,124
Income from property operations....................................... 8,617 9,083 9,866 12,248
Revenue from service company business................................. 1,848 1,877 1,717 2,925
Company's share of income from service company business............... 291 350 401 675
Income before minority interest in Operating Partnership.............. 3,304 3,774 4,118 4,477
Net income............................................................ 2,810 3,145 3,396 3,633
Basic earnings per share.............................................. $ 0.24 $ 0.26 $ 0.27 $ 0.27
Diluted earnings per share............................................ $ 0.24 $ 0.26 $ 0.27 $ 0.27
Weighted average common shares outstanding............................ 11,848 12,210 12,391 13,280
Weighted average common shares and common share equivalents
outstanding......................................................... 11,860 12,217 12,398 13,309

NOTE 24--PRO FORMA FINANCIAL STATEMENTS (UNAUDITED)

The unaudited pro forma condensed consolidated statements of operation for
the years ended December 31, 1997 and 1996 have been prepared as if each of the
following transactions had occurred on January 1, 1996: (i) the 1996
Acquisitions; (ii) the English Portfolio Acquisition; (iii) the Dallas Portfolio
Acquisition; (iv) the 1996 Dispositions; (v) the NHP stock purchases and the NHP
Merger (see Note 5); (vi) the acquisition of the NHP Real Estate Companies (see
Note 6); (vii) a reorganization of the interests held by the NHP Real Estate
Companies (see Note 5); (viii) the (a) 1997 Acquisitions, (b) the acquisition of
the Controlled NHP Partnerships, (c) the acquisition of the Winthrop Portfolio,
the related issuance of Class A Common Stock and OP Units, the incurrence of
indebtedness to finance such acquisitions, and the refinancing of such
indebtedness; (ix) the 1997 Dispositions; (x) the sale of (a) 2,015,000 shares
of Class A Common Stock in February 1997, (b) 2,300,000 shares of Class A Common
Stock in May 1997, (c) 5,052,418 shares in August and September 1997, and (d)
7,000,000 shares of Class A Common Stock in October 1997, and the application of
the aggregate net proceeds thereof to repay indebtedness and fund the purchase
of additional shares of NHP Common Stock; (xi) the sale of 750,000 shares of
Class B Preferred Stock in August 1997, and the application of the net proceeds
thereof to repay indebtedness; (xii) the sale of 2,400,000 shares of Class C
Preferred Stock in December 1997, and the application of the net proceeds
thereof to repay indebtedness, (xiii) the Company's receipt of a dividend from
ANHI from proceeds ANHI received from ANHI stock transfers; (xiv) the purchase
of 886,600 shares of Ambassador Common Stock in September 1997; (xv) the
purchase of third-party notes payable secured by four properties in which the
NHP Real Estate Companies own an interest, and the conversion of such notes
payable into loans from the general partner; and (xvi) the purchase of land
leased by two partnerships in which the NHP Real Estate Companies own an
interest.

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

F-35

APARTMENT INVESTMENT AND MANAGEMENT COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1997, 1996 AND 1995

NOTE 24--PRO FORMA FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(IN THOUSANDS EXCEPT PER SHARE DATA)
(UNAUDITED)

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

RENTAL PROPERTY OPERATIONS
Rental and other property revenues...................................................... $ 284,174 $ 272,871
Property operating expenses............................................................. (121,274) (126,748)
Owned property management expenses...................................................... (10,002) (9,652)
----------- -----------
Income from property operations before depreciation..................................... 152,898 136,471
Depreciation............................................................................ (55,542) (52,874)
----------- -----------
Income from property operations......................................................... 97,356 83,597
----------- -----------
SERVICE COMPANY BUSINESS
Company's share of income from Service Company Business................................. (1,353) (2,902)
General and administrative expenses..................................................... (5,396) (1,512)
Interest expense........................................................................ (64,361) (57,710)
Interest income......................................................................... 10,576 2,773
Minority interest in other partnerships................................................. 1,803 4,703
Equity in losses of unconsolidated partnerships......................................... (9,703) (11,123)
Equity in earnings of unconsolidated subsidiaries....................................... 4,938 13,421
----------- -----------
Income before minority interest in Operating Partnership................................ 33,860 31,247
Minority interest in Operating Partnership.............................................. (3,578) (4,461)
----------- -----------
Net income.............................................................................. $ 30,282 $ 26,786
----------- -----------
----------- -----------
Net income attributable to preferred shareholders....................................... $ 10,744 $ 10,744
----------- -----------
----------- -----------
Net income attributable to common shareholders.......................................... $ 19,538 $ 16,042
----------- -----------
----------- -----------
Basic earnings per share................................................................ $ 0.49 $ 0.42
Diluted earnings per share.............................................................. $ 0.49 $ 0.41
Weighted average number of common shares outstanding--basic............................. 40,106 38,398
Weighted average number of common shares and common share equivalents
outstanding--diluted.................................................................. 40,257 38,686

NOTE 25--SUBSEQUENT EVENTS

DIVIDEND DECLARED

On January 22, 1998, the Board of Directors declared a cash dividend of
$0.5625 per share (equivalent to $2.25 on an annualized basis, an increase of
21.6% per share from the 1997 annualized dividend rate) of Class A Common Stock
for the quarter ended December 31, 1997, payable on February 13, 1998 to
stockholders of record on February 6, 1998.

F-36

APARTMENT INVESTMENT AND MANAGEMENT COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1997, 1996 AND 1995

NOTE 25--SUBSEQUENT EVENTS (CONTINUED)
CREATION OF NEW CREDIT FACILITY

In January 1998, the Company replaced the existing Credit Facility with a
new $50 million unsecured revolving credit facility (the "New Credit Facility")
with Bank of America and BankBoston, N.A. The AIMCO Operating Partnership is the
borrower under the New Credit Facility, but all obligations thereunder are
guaranteed by AIMCO and certain of its subsidiaries. The interest rate under the
New Credit Facility is based on either LIBOR or Bank of America's reference
rate, at the election of the Company, plus an applicable margin (the "Margin").
The Margin ranges between 0.6% and 1.0% in the case of LIBOR based loans and
between 0% and 0.5% in the case of loans based on Bank of America's reference
rate, depending upon the credit rating of the AIMCO Operating Partnership's
senior unsubordinated unsecured long-term indebtedness. The New Credit Facility
expires on January 26, 2000 unless extended for successive one-year periods at
the discretion of the lenders. The New Credit Facility provides for the
conversion of the revolving facility into a three-year term loan. The financial
covenants contained in the New Credit Facility require the Company to maintain a
ratio of debt to gross asset value of no more than 0.55 to 1.0, an interest
coverage ratio of 2.25 to 1.0 and a debt service coverage ratio of at least 2.0
to 1.0. In addition, the New Credit Facility limits the Company from
distributing more than 80% of its Funds From Operations (as defined) to
stockholders, imposes minimum net worth requirements and provides other
financial covenants related to certain unencumbered assets.

In February 1998, the AIMCO Operating Partnership, as borrower, and AIMCO
and certain single asset wholly-owned subsidiaries of the Operating Partnership
(the "Owners"), as guarantors, entered into a five year secured credit facility
agreement (the "WMF Credit Facility") with Washington Mortgage Financial Group,
Ltd. ("Washington Mortgage"), which provides for a $50 million revolving credit
facility and conversion of all or a portion of such revolving credit facility to
a base loan facility. The WMF Credit Facility provides that all the rights of
Washington Mortgage are assigned to the Federal National Mortgage Association
("FNMA"), but FNMA does not assume Washington Mortgage's obligations under the
WMF Credit Facility. At the AIMCO Operating Partnership's request, the
commitment amount may be increased to an amount not to exceed $250 million,
subject to consent of Washington Mortgage and FNMA in their sole and absolute
discretion. The AIMCO Operating Partnership and affiliates have pledged their
ownership interests in the Owners as security for its obligations under the WMF
Credit Facility. The guarantees of the Owners are secured by assets of the
Owners, including four apartment properties and two mortgage notes. Advances to
the AIMCO Operating Partnership under the WMF Credit Facility are funded with
the proceeds of the sale to investors of FNMA mortgage backed securities that
are secured by the advance and an interest in the collateral. The interest rate
on each advance is determined by investor bids for such mortgage backed
securities plus a fee spread presently equal to 0.5%. The maturity date of each
advance under the revolving portion of the WMF Credit Facility is a date between
three and nine months from the closing date of the advance as selected by the
AIMCO Operating Partnership. Advances under the base facility mature at a date,
selected by the AIMCO Operating Partnership, between ten and twenty years from
the date of the advance. Subject to certain conditions, the AIMCO Operating
Partnership has the right to add or substitute collateral. The WMF Credit
Facility requires the Company to maintain a ratio of debt to gross asset value
of no more than 0.55 to 1.0, an interest coverage ratio of at least 2.25 to 1.0,
and a debt service coverage ratio of at least 2.0 to 1.0, imposes minimum net
worth requirements and also provides other financial covenants and interest
coverage ratios that are specifically related to the collateral.

F-37

APARTMENT INVESTMENT AND MANAGEMENT COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1997, 1996 AND 1995

NOTE 25--SUBSEQUENT EVENTS (CONTINUED)
CONTRIBUTION AGREEMENT

CK was created as a vehicle for holding property and performing services
that the Company is limited or prohibited from holding or providing due to its
election to be taxed as a REIT. The Company is finalizing which assets will be
contributed to CK. Any transfer of assets or services to CK will be at market
rates and approved by the independent members of the Company's Board of
Directors, and if market rates are difficult to ascertain, the pricing will
favor AIMCO.

Pursuant to the Contribution Agreement, AIMCO will contribute certain assets
to CK and, in return, the stock of CK will be contributed to the Company or one
of its subsidiaries. Following the contribution of CK stock, the Company will
agree to contribute additional assets to CK with the intent of creating a stand-
alone entity meeting the requirements for listing on the NYSE or NASDAQ National
Market, and if the Company is successful in doing so, the stock of CK will be
distributed to the stockholders of AIMCO. If the Company is unable to list the
CK stock on the NYSE or NASDAQ National Market, CK will remain a direct or
indirect subsidiary of AIMCO and the Company will pay to the former stockholders
of CK an amount necessary to compensate the former CK stockholders for the value
of such stock on January 31, 1998. Consummation of the transaction is subject to
the approval of the independent members of the Company's board of directors.

STOCK OFFERING

On February 19, 1998, the Company issued 4,200,000 shares of Class D
Preferred Stock in a public offering. Holders of the Class D Preferred Stock are
entitled to receive, when, as and if declared by the Board of Directors, annual
cash dividends equal to $2.1875 per share. The Class D Preferred Stock is senior
to the Class A Common Stock as to dividends and liquidation. Upon any
liquidation, dissolution or winding up of AIMCO, before payment or distributions
by AIMCO shall be made to any holders of Class A Common Stock, the holders of
the Class D Preferred Stock shall be entitled to receive a liquidation
preference of $25 per share, plus accrued and unpaid dividends. The net proceeds
of $101.7 million were used to repay indebtedness under the New Credit Facility
and to fund working capital requirements.

PROPERTY ACQUISITION

On February 4, 1998, the Company purchased Steeplechase Apartments, an
apartment community containing 484 units, located in Tyler, Texas, for $9.8
million plus closing costs. The acquisition was funded with short-term
borrowings under the New Credit Facility.

TERMINATION OF DIVIDEND REINVESTMENT PLAN

On February 19, 1998, the Company terminated its dividend reinvestment plan,
effective March 19, 1998 (the "Effective Date"). Under the terms of the
termination, voluntary cash investments received by

F-38

APARTMENT INVESTMENT AND MANAGEMENT COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1997, 1996 AND 1995

NOTE 25--SUBSEQUENT EVENTS (CONTINUED)
the plan administrator on or after February 6, 1998 will be returned to the
participants. Subsequent to the Effective Date, each participant will receive
(i) a stock certificate representing the whole number of shares credited to
their account as of the Effective Date, and (ii) a cash payment equal to the
value of any remaining fractional shares credited to their account, based upon
the sale price received by the plan administrator on the open market.

On March 17, 1998, AIMCO entered into a definitive merger agreement to
acquire the multi-family apartment management operations, and certain property
holdings, of Insignia Financial Group, Inc. ("Insignia") for approximately $910
million, including the assumption of debt. Insignia is one of the largest
managers of multi-family residential properties in the United States, having a
management portfolio consisting of approximately 191,000 units as of December
31, 1997.

F-39

SCHEDULE III

APARTMENT INVESTMENT AND MANAGEMENT COMPANY
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1997

(IN THOUSANDS EXCEPT UNIT DATA)

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

100 Forest Place 10/97 Oak Park, IL 1986 234 $ 3,463 $ 19,624
40th North 07/94 Phoenix, AZ 1970 556 2,546 14,437
Anchorage 11/96 League City, TX 1985 264 523 9,097
Arbor Crossing 05/97 Atlanta, GA 1988 240 1,879 10,647
Arbors 10/97 Tempe, AZ 1971 200 1,092 6,189
Ashford Plantation 12/95 Atlanta, GA 1975 211 2,770 9,956
Bay Club 04/97 Aventura, FL 1990 702 10,530 60,830
Bay West 12/96 Tampa, FL 1975 376 1,500 7,085
Beacon Hill 10/97 Chamblee, GA 1978 120 928 5,261
Blossomtree 10/97 Scottsdale, AZ 1970 125 535 3,029
Bluffs 09/83 Boulder, CO 1971 232 696 7,779
Boardwalk 12/95 Tamarac, FL 1986 291 3,350 8,196
Brandywine 04/83 St. Petersburg, FL 1971 477 1,423 11,336
Brant Rock 10/97 Houston, TX 1984 84 337 1,908
Brentwood 11/96 Lake Jackson, TX 1980 104 200 3,092
Bridgewater 11/96 Tomball, TX 1978 206 333 4,033
Brookside Village 4/96 Tustin, CA 1970 336 2,498 14,180
Cambridge Heights 05/97 Natchez, MS 1979 94 249 1,413
Chesapeake 12/96 Houston, TX 1983 320 775 7,317
Colonnade Gardens 10/97 Phoenix, AZ 1973 196 765 4,337
Copperfield 11/96 Houston, TX 1983 196 702 7,003
Copper Chase 12/96 Katy, TX 1982 316 1,484 11,530
Coral Gardens 04/93 Las Vegas, NV 1983 670 3,190 12,745
Country Club 07/94 Amarillo, TX 1984 282 1,049 5,951
Coventry Square 11/96 Houston, TX 1983 270 975 6,355
Crows Nest 11/96 League City, TX 1984 176 795 5,400
Cypress Landing 12/96 Savannah, GA 1984 200 386 7,911
Dolphin's Landing 12/96 Corpus Cristi, TX 1980 218 1,740 5,589
Dunwoody 07/94 Atlanta, GA 1980 318 1,838 10,538
Easton Village 11/96 Houston, TX 1983 146 440 6,584
Eden Crossing 11/94 Pensacola, FL 1985 200 1,111 6,332
Elm Creek 05/97 Chicago, IL 1986 372 5,339 30,253
Fairways 07/94 Phoenix, AZ 1986 260 1,830 10,403
Fairways II 09/96 Phoenix, AZ 1996 92 -- --
Fisherman's Landing 12/97 Bradenton, FL 1984 200 1,275 7,225
Fishermans Wharf 11/96 Clute, TX 1981 360 830 9,969
Fondren Court 11/96 Houston, TX 1979 429 1,349 9,355
Foothills 10/97 Tuscon, AZ 1982 270 1,203 6,817
Foxbay 10/97 Tuscon, AZ 1983 232 700 3,966
Foxchase 05/97 Alexandria, VA 1947 2,113 39,390 68,354
Foxtree 10/97 Tempe, AZ 1976 487 2,505 14,194
Frankford Place 07/94 Dallas, TX 1982 274 1,125 6,382
Freedom Place Club 10/97 Jacksonville, FL 1988 352 2,289 12,970
Garden Terrace 07/94 Bowie, TX 1978 20 49 280
Greens of Naperville 05/97 Naperville, IL 1986 400 3,756 21,284

DECEMBER 31, 1997

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

COST TOTAL COST TOTAL COST
CAPITALIZED ------------------------------------- NET OF
SUBSEQUENT TO BUILDINGS AND ACCUMULATED ACCUMULATED
PROPERTY NAME ACQUISITION LAND IMPROVEMENTS TOTAL DEPRECIATION DEPRECIATION ENCUMBRANCES

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

100 Forest Place 35 $ 3,463 $ 19,659 $ 23,122 $ 232 $ 22,890 $ 15,600

40th North 1,198 2,546 15,635 18,181 2,250 15,931 10,818

Anchorage 123 523 9,220 9,743 2,951 6,792 4,923

Arbor Crossing 36 1,879 10,683 12,562 287 12,275 5,410

Arbors 23 1,092 6,212 7,304 40 7,264 3,909

Ashford Plantation 464 2,770 10,420 13,190 865 12,325 7,463

Bay Club 1,060 10,530 61,890 72,420 1,493 70,927 49,000

Bay West 1,063 1,500 8,148 9,648 241 9,407 (A)

Beacon Hill 20 928 5,281 6,209 34 6,175 3,678

Blossomtree 16 535 3,045 3,580 19 3,561 2,143

Bluffs 364 696 8,143 8,839 4,919 3,920 6,192

Boardwalk 886 3,350 9,082 12,432 779 11,653 9,529

Brandywine 1,436 1,423 12,772 14,195 4,547 9,648 6,584

Brant Rock 11 337 1,919 2,256 12 2,244 1,239

Brentwood 210 200 3,302 3,502 87 3,415 1,827

Bridgewater 155 333 4,188 4,521 1,112 3,409 --

Brookside Village 1,051 2,498 15,231 17,729 250 17,479 --

Cambridge Heights 14 249 1,427 1,676 35 1,641 1,589

Chesapeake 668 775 7,985 8,760 285 8,475 (A)

Colonnade Gardens 16 765 4,353 5,118 28 5,090 2,893

Copperfield 275 702 7,278 7,980 1,090 6,890 3,533

Copper Chase 514 1,484 12,044 13,528 6,124 7,404 5,666

Coral Gardens 1,594 3,190 14,339 17,529 3,092 14,437 11,306

Country Club 535 1,049 6,486 7,535 883 6,652 4,064

Coventry Square 127 975 6,482 7,457 2,466 4,991 3,077

Crows Nest 22 795 5,422 6,217 1,527 4,690 2,922

Cypress Landing 880 386 8,791 9,177 2,472 6,705 4,377

Dolphin's Landing 2,943 1,740 8,532 10,272 255 10,017 (A)

Dunwoody 678 1,838 11,216 13,054 1,545 11,509 7,545

Easton Village 377 690 6,711 7,401 1,266 6,135 2,931

Eden Crossing 400 1,111 6,732 7,843 858 6,985 5,959

Elm Creek 56 5,339 30,309 35,648 836 34,812 (C)

Fairways 6,592 1,830 16,995 18,825 1,565 17,260 6,405

Fairways II 5,952 -- 5,952 5,952 -- 5,952 --

Fisherman's Landing -- 1,275 7,225 8,500 -- 8,500 --

Fishermans Wharf 131 830 10,100 10,930 3,482 7,448 3,575

Fondren Court 423 1,349 9,778 11,127 5,044 6,083 5,528

Foothills 19 1,203 6,836 8,039 44 7,995 3,929

Foxbay 22 700 3,988 4,688 25 4,663 3,254

Foxchase 890 39,390 69,244 108,634 1,169 107,465 68,796

Foxtree 30 2,505 14,224 16,729 91 16,638 9,062

Frankford Place 673 1,125 7,055 8,180 967 7,213 4,003

Freedom Place Club 24 2,289 12,994 15,283 83 15,200 7,104

Garden Terrace 23 49 303 352 41 311 --

Greens of Naperville 60 3,756 21,344 25,100 249 24,851 16,182

F-40

SCHEDULE III

APARTMENT INVESTMENT AND MANAGEMENT COMPANY
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1997

(IN THOUSANDS EXCEPT UNIT DATA)

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

Green Tree 12/96 Carrollton, TX 1983 365 1,909 14,842
Hampton Hill 11/96 Houston, TX 1984 332 1,574 8,408
Hastings Place 11/96 Houston, TX 1984 176 734 3,382
Hazeltree 10/97 Phoenix, AZ 1970 310 997 5,650
Heather Ridge 12/96 Arlington, TX 1983 180 655 5,455
Hiddentree 10/97 East Lansing, MI 1966 261 1,470 8,330
Highland Park 12/96 Ft. Worth, TX 1985 500 3,234 19,536
Hillmeade 11/94 Nashville, TN 1985 288 2,872 16,066
Hills 10/97 Austin, TX 1983 329 1,367 7,747
Islandtree 10/97 Whitemarsh Island, GA 1985 216 1,267 7,181
Jefferson Place 11/94 Baton Rouge, LA 1985 234 2,696 15,115
Lake Crossing 05/97 Atlanta, GA 1988 300 2,046 11,596
Lakehaven I 05/97 Carol Stream, IL 1984 144 1,071 6,069
Lakehaven II 05/97 Carol Stream, IL 1985 348 2,680 15,189
Las Brisas 07/94 Casa Grande, AZ 1985 132 573 3,260
Las Brisas 12/95 San Antonio, TX 1983 176 1,100 5,454
Lexington 07/94 San Antonio, TX 1981 72 311 1,764
Los Arboles 09/97 Chandler, AZ 1985 432 1,662 9,418
Meadowcreek 04/85 Boulder, CO 1972 332 1,387 10,027
Meadows 12/96 Austin, TX 1983 100 417 4,563
Montecito 07/94 Austin, TX 1985 268 1,268 7,194
Morton Towers 09/97 Miami Beach, FL 1960 1,277 8,736 49,774
Newberry Park 05/97 Chicago, IL 1985 84 181 1,027
Newport 07/94 Phoenix, AZ 1986 204 800 4,554
Oak Falls 11/96 Spring, TX 1983 144 514 3,585
Olmos Club 10/97 San Antonio, TX 1983 134 322 1,825
Olympiad 11/94 Montgomery, AL 1986 176 1,046 5,958
Orchidtree 10/97 Scottsdale, AZ 1971 278 2,314 13,112
Paradise Palms 07/94 Phoenix, AZ 1970 130 647 3,684
Park at Cedar Lawn 11/96 Galveston, TX 1985 192 769 5,073
Parliament Bend 07/94 San Antonio, TX 1980 232 765 4,342
Peachtree Park 1/96 Atlanta, GA 1962/1995 295 4,681 12,957
Penn Square 12/94 Albuquerque, NM 1982 210 1,128 6,478
Peppermill Place 11/96 Houston, TX 1983 224 406 3,957
Pine Creek 10/97 Clio, MI 1978 233 852 4,830
Pleasant Ridge 11/94 Little Rock, AR 1982 200 1,660 9,464
Pleasant Valley 11/94 Little Rock, AR 1985 112 907 5,069
Point West 05/97 Lenexa, KS 1985 172 979 5,548
Polo Park 10/97 Midland, TX 1983 184 800 4,532
Prairie Hills 07/94 Albuquerque, NM 1985 260 1,680 9,633
Pride Gardens 05/97 Jackson, MS 1975 76 265 1,502
Quailtree 10/97 Phoenix, AZ 1978 184 659 3,735
Randol Crossing 12/96 Ft. Worth, TX 1984 160 782 5,742
Ridge Crest 12/96 Denton, TX 1983 152 612 5,642
Rillito Village 07/94 Tuscon, AZ 1985 272 1,220 6,947

DECEMBER 31, 1997
-----------------------------------------------------------------------------------

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

Green Tree 398 1,909 15,240 17,149 4,524 12,625 7,534

Hampton Hill 773 2,130 8,625 10,755 3,840 6,915 4,188

Hastings Place 312 734 3,694 4,428 1,068 3,360 2,689

Hazeltree 18 997 5,668 6,665 36 6,629 4,133

Heather Ridge (4) 655 5,451 6,106 1,994 4,112 2,630

Hiddentree 16 1,470 8,346 9,816 53 9,763 4,497

Highland Park 261 3,234 19,797 23,031 8,089 14,942 9,492

Hillmeade 1,214 2,872 17,280 20,152 2,151 18,001 11,091

Hills 22 1,367 7,769 9,136 50 9,086 8,247

Islandtree 18 1,267 7,199 8,466 46 8,420 4,293

Jefferson Place 1,215 2,696 16,330 19,026 2,023 17,003 9,543

Lake Crossing 45 2,046 11,641 13,687 312 13,375 11,628

Lakehaven I 21 1,071 6,090 7,161 69 7,092 (C)

Lakehaven II 53 2,680 15,242 17,922 172 17,750 (C)

Las Brisas 131 573 3,391 3,964 468 3,496 (B)

Las Brisas 311 1,100 5,765 6,865 480 6,385 3,382

Lexington 75 311 1,839 2,150 260 1,890 1,067

Los Arboles 67 1,662 9,485 11,147 95 11,052 --

Meadowcreek 692 1,387 10,719 12,106 3,458 8,648 7,928

Meadows 151 417 4,714 5,131 1,273 3,858 2,111

Montecito 1,180 1,268 8,374 9,642 1,064 8,578 5,030

Morton Towers 285 8,736 50,059 58,795 670 58,125 --

Newberry Park 13 181 1,040 1,221 26 1,195 8,621

Newport 394 800 4,948 5,748 680 5,068 2,601

Oak Falls 201 514 3,786 4,300 1,097 3,203 2,767

Olmos Club 13 322 1,838 2,160 12 2,148 1,272

Olympiad 415 1,046 6,373 7,419 802 6,617 5,325

Orchidtree 20 2,314 13,132 15,446 84 15,362 7,404

Paradise Palms 300 647 3,984 4,631 550 4,081 2,335

Park at Cedar Lawn (15) 769 5,058 5,827 1,227 4,600 2,781

Parliament Bend 405 765 4,747 5,512 655 4,857 (B)

Peachtree Park 1,355 4,684 14,309 18,993 1,065 17,928 (A)

Penn Square 488 1,128 6,966 8,094 854 7,240 4,224

Peppermill Place 208 406 4,165 4,571 1,063 3,508 3,615

Pine Creek 14 852 4,844 5,696 31 5,665 2,438

Pleasant Ridge 580 1,660 10,044 11,704 1,265 10,439 6,700

Pleasant Valley 708 907 5,777 6,684 709 5,975 3,465

Point West 26 979 5,574 6,553 64 6,489 5,650

Polo Park 17 800 4,549 5,349 29 5,320 2,324

Prairie Hills 391 1,680 10,024 11,704 1,379 10,325 7,333

Pride Gardens 12 265 1,514 1,779 38 1,741 912

Quailtree 17 659 3,752 4,411 24 4,387 2,252

Randol Crossing 18 782 5,760 6,542 1,878 4,664 2,485

Ridge Crest 159 612 5,801 6,413 1,906 4,507 2,507

Rillito Village 225 1,220 7,172 8,392 995 7,397 4,062

F-41

SCHEDULE III

APARTMENT INVESTMENT AND MANAGEMENT COMPANY
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1997

(IN THOUSANDS EXCEPT UNIT DATA)

Rivercrest 10/97 Tuscon, AZ 1984 210 751 4,253
Riverside 07/94 Denver, CO 1987 248 1,553 8,828
Riverwalk 12/95 Little Rock, AR 1988 262 1,075 9,295
Royal Palms 07/94 Phoenix, AZ 1985 152 832 4,730
Sand Castles 10/97 League City, TX 1987 138 978 5,541
Sand Pebble 10/97 El Paso, TX 1983 208 861 4,879
Sandpiper Cove 05/97 West Palm Beach, FL 1987 416 4,006 22,701
Sawgrass 07/97 Orlando, FL 1986 208 1,443 8,157
Seaside Point 11/96 Galveston, TX 1985 102 295 2,994
Seasons 10/95 San Antonio, TX 1976 280 974 5,749
Shadetree 10/97 Tempe, AZ 1965 123 591 3,349
Shadow Lake 10/97 Greensboro, NC 1988 136 1,054 5,972
Signature Point 11/96 League City, TX 1994 304 2,160 13,627
Silktree 10/97 Phoenix, AZ 1979 86 421 2,383
Snug Harbor 12/95 Las Vegas, NV 1990 64 750 2,966
Somerset Village 5/96 Salt Lake City, UT 1985 486 4,375 17,600
South Willow 07/94 Salt Lake City, UT 1987 440 2,218 12,612
Southridge 12/96 Greenville, TX 1984 160 565 5,787
Spectrum Pointe 07/94 Atlanta, GA 1984 196 1,029 5,903
Stirling Court 11/96 Houston, TX 1984 228 946 5,958
Stonebrook 06/97 Orlando, FL 1991 244 1,583 9,046
Stonehaven 11/96 Houston, TX 1972 337 1,197 11,236
Stoney Brook 11/96 Houston, TX 1972 113 579 3,871
Summer Chase 05/97 Fort Smith, AR 1974 72 170 962
Sun Grove 07/94 Phoenix, AZ 1986 86 659 3,749
Sun Katcher 12/95 Jacksonville, FL 1972 360 578 3,440
Sun Valley 07/94 Salt Lake City, UT 1985 430 1,306 7,434
Sunbury Downs 11/96 Houston, TX 1982 240 565 4,380
Sunchase-Clearwater 11/94 Clearwater, FL 1985 461 2,177 19,641
Sunchase-East 11/94 Orlando, FL 1985 296 927 8,361
Sunchase-North 11/94 Orlando, FL 1985 324 1,013 9,142
Sunchase-Tampa 11/94 Tampa, FL 1985 216 757 6,831
Surry Oaks 10/97 Bedford, TX 1983 152 628 3,560
Swiss Village 11/96 Houston, TX 1972 360 1,011 11,310
Tall Timbers 10/97 Houston, TX 1982 256 1,238 7,016
Tara Bridge 05/97 Atlanta, GA 1988 220 1,610 9,124
Timbermill 10/95 San Antonio, TX 1982 296 778 4,674
Timbertree 10/97 Phoenix, AZ 1980 387 2,334 13,229
Township at Highlands 11/96 Denver, CO 1986 119 1,058 11,166
Tustin Woods 06/97 Tustin, CA 1971 292 6,279 15,373
Twinbridge 10/97 Tuscon, AZ 1982 104 310 1,757
Villa Ladera 1/96 Albuquerque, NM 1985 280 1,765 10,013
Village Creek 07/94 Denver, CO 1987 324 2,446 13,901
Village Park Towers 10/97 North Miami, FL 1979 871 3,173 17,978
Vinings 06/97 Aventura, FL 1991 180 4,504 11,702

DECEMBER 31, 1997

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

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

Rivercrest 10 751 4,263 5,014 27 4,987 2,869

Riverside 752 1,553 9,580 11,133 1,308 9,825 6,046

Riverwalk 333 1,075 9,628 10,703 841 9,862 5,688

Royal Palms 165 832 4,895 5,727 687 5,040 3,561

Sand Castles 16 978 5,557 6,535 36 6,499 3,156

Sand Pebble 25 861 4,904 5,765 31 5,734 2,756

Sandpiper Cove 63 4,006 22,764 26,770 627 26,143 16,068

Sawgrass 73 1,443 8,230 9,673 160 9,513 4,980

Seaside Point 188 295 3,182 3,477 793 2,684 --

Seasons 453 982 6,194 7,176 512 6,664 4,534

Shadetree 18 591 3,367 3,958 21 3,937 2,098

Shadow Lake 19 1,054 5,991 7,045 38 7,007 3,295

Signature Point 53 2,160 13,680 15,840 1,671 14,169 7,472

Silktree 16 421 2,399 2,820 15 2,805 1,585

Snug Harbor 253 750 3,219 3,969 268 3,701 2,076

Somerset Village 526 4,375 18,126 22,501 1,104 21,397 8,537

South Willow 783 2,218 13,395 15,613 1,827 13,786 8,379

Southridge 70 565 5,857 6,422 2,212 4,210 2,132

Spectrum Pointe 356 1,029 6,259 7,288 816 6,472 4,357

Stirling Court 283 946 6,241 7,187 2,709 4,478 3,598

Stonebrook 147 1,583 9,193 10,776 225 10,551 6,374

Stonehaven (2,550) 1,197 8,686 9,883 675 9,208 4,160

Stoney Brook 279 579 4,150 4,729 953 3,776 741

Summer Chase 11 170 973 1,143 23 1,120 694

Sun Grove 132 659 3,881 4,540 546 3,994 (B)

Sun Katcher 5,620 578 9,060 9,638 142 9,496 (A)

Sun Valley 328 1,306 7,762 9,068 939 8,129 5,600

Sunbury Downs 183 565 4,563 5,128 1,001 4,127 2,491

Sunchase-Clearwater 845 2,177 20,486 22,663 1,377 21,286 17,550

Sunchase-East 679 927 9,040 9,967 1,126 8,841 9,210

Sunchase-North 610 1,013 9,752 10,765 1,218 9,547 12,354

Sunchase-Tampa 523 757 7,354 8,111 945 7,166 7,384

Surry Oaks 18 628 3,578 4,206 23 4,183 2,346

Swiss Village (941) 1,011 10,369 11,380 3,655 7,725 4,596

Tall Timbers 17 1,238 7,033 8,271 45 8,226 4,180

Tara Bridge 33 1,610 9,157 10,767 246 10,521 7,694

Timbermill 501 778 5,175 5,953 431 5,522 (A)

Timbertree 25 2,334 13,254 15,588 85 15,503 8,035

Township at Highlands 418 1,058 11,584 12,642 2,187 10,455 9,019

Tustin Woods 1,614 6,279 16,987 23,266 1,251 22,015 (A)

Twinbridge 11 310 1,768 2,078 11 2,067 1,159

Villa Ladera 738 1,765 10,751 12,516 855 11,661 5,646

Village Creek 843 2,446 14,744 17,190 2,014 15,176 (B)

Village Park Towers 38 3,173 18,016 21,189 -- 21,189 (A)

Vinings 97 4,504 11,799 16,303 275 16,028 7,956

F-42

SCHEDULE III

APARTMENT INVESTMENT AND MANAGEMENT COMPANY
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1997

(IN THOUSANDS EXCEPT UNIT DATA)

Walnut Springs 12/96 San Antonio, TX 1983 224 851 8,076
Waterford 11/96 Houston, TX 1984 312 533 5,692
Wickertree 10/97 Phoenix, AZ 1983 226 1,225 6,944
Wildflower 10/97 Midland, TX 1982 264 705 3,996
Williams Cove 07/94 Dallas, TX 1984 260 1,227 6,972
Windsor Landing 10/97 Morrow, GA 1991 200 1,641 9,298
Windward at the Villages 10/97 West Palm Beach, FL 1988 196 1,595 9,037
Woodhill 12/96 Denton, TX 1985 352 1,578 13,199
Woodhollow 10/97 Austin, TX 1974 108 658 3,728
Woodland Ridge 12/96 Irving, TX 1984 130 1,021 4,507
Woodlands-Odessa 07/94 Odessa, TX 1982 232 676 3,835
Woodlands-Tyler 07/94 Tyler, TX 1984 256 1,029 5,845
Wydewood 10/97 Midland, TX 1982 218 519 2,943
Yorktree 10/97 Carol Stream, IL 1972 293 1,968 11,151
1,029
----------- --------- --------------
Sub-total 40,039 257,534 1,329,755
----------- --------- --------------
Properties under development
or held for development:
Fairways III land 07/94 2,303 --
Morton Towers land 9/97 4,446 --
Villa Ladera land 03/96 470 9
----------- --------- --------------
Total 40,039 $ 264,753 $ 1,329,764
----------- --------- --------------
----------- --------- --------------

DECEMBER 31, 1997

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

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

Walnut Springs 176 851 8,252 9,103 2,329 6,774 4,859

Waterford 127 533 5,819 6,352 1,582 4,770 4,068

Wickertree 25 1,225 6,969 8,194 45 8,149 4,224

Wildflower 25 705 4,021 4,726 26 4,700 2,116

Williams Cove 409 1,227 7,381 8,608 1,052 7,556 3,928

Windsor Landing 20 1,641 9,318 10,959 60 10,899 5,554

Windward at the Villages 15 1,595 9,052 10,647 91 10,556 4,810

Woodhill 408 1,578 13,607 15,185 4,782 10,403 5,903

Woodhollow 12 658 3,740 4,398 24 4,374 2,133

Woodland Ridge 78 1,021 4,585 5,606 1,542 4,064 2,109

Woodlands-Odessa 532 676 4,367 5,043 574 4,469 (B)

Woodlands-Tyler 405 1,029 6,250 7,279 868 6,411 4,255

Wydewood 15 519 2,958 3,477 19 3,458 1,671

Yorktree 23 1,968 11,174 13,142 72 13,070 6,766

1,029 1,029 1,029 88

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

Sub-total 62,251 258,351 1,391,189 1,649,540 153,285 1,496,255 755,431

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

Properties under development
or held for development:
Fairways III land -- 2,303 2,303 2,303
Morton Towers land 401 4,446 401 4,847 4,847
Villa Ladera land 38 470 47 517 517
--------------- --------- -------------- ---------- ------------- ------------- --------------

Total $ 62,690 $ 265,570 $ 1,391,637 $1,657,207 $ 153,285 $ 1,503,922 $ 755,431

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

- ----------------------------------------
(A) Pledged as security for the Credit Facility.

(B) Pledged as additional colleratal for secured tax-exempt financing.

F-43

APARTMENT INVESTMENT AND MANAGEMENT COMPANY
REAL ESTATE AND ACCUMULATED DEPRECIATION
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
(IN THOUSANDS)

1997 1996 1995
------------ ---------- ----------

REAL ESTATE
Balance at beginning of year............................................. $ 865,222 $ 477,162 $ 406,067
Additions during the year:
Real estate acquisitions............................................... 786,571 388,574 63,351
Additions.............................................................. 26,808 17,993 7,744
Dispositions........................................................... (21,394) (18,507) --
------------ ---------- ----------
Balance at end of year................................................... $ 1,657,207 $ 865,222 $ 477,162
------------ ---------- ----------
------------ ---------- ----------
ACCUMULATED DEPRECIATION
Balance at beginning of year............................................. $ 120,077 $ 28,737 $ 13,699
Additions during the year:
Depreciation........................................................... 37,741 19,556 15,038
Additions.............................................................. -- 73,189 --
Dispositions........................................................... (4,533) (1,405) --
------------ ---------- ----------
Balance at end of year................................................... $ 153,285 $ 120,077 $ 28,737
------------ ---------- ----------
------------ ---------- ----------

See Report of Independent Auditors and accompanying notes to consolidated
financial statements.

F-44