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2005 Annual Report AIMING HIGHER COVER: TABLE OF CONTENTS 100 Forest Place, Oak Park, IL. The Arbors of Battle Creek, Battle Creek, MI, top. AIMING HIGHER . .1 Flamingo South Beach, Miami, FL, right. The Knolls, Colorado Springs, CO, below. MAKING PROGRESS . .2 Freedom Place Club, Letter to Shareholders Jacksonville, FL, opposite bottom. ENHANCING OPERATIONS . .6 MAXIMIZING EFFICIENCY . .9 IMPROVING QUALITY . .10 INCREASING VALUE . .12 BUILDING COMMITMENT . .14 DIRECTORS & SENIOR OFFICERS . .16 Gross Real Estate Assets In 2005, America’s largest owner, operator and 12000 manager of apartment communities aimed higher 10000 and achieved results. At year’s end, Aimco’s 1,370 communities had higher occupancy, higher rents and 8000 higher customer satisfaction than at any time since 2000. Driven by a renewed vision to “consistently 6000 provide quality apartment homes in a respectful Dollars (000s) environment delivered by a team of people who 4000 care,” 6,400 Aimco team members delivered results—for Aimco’s residents, its shareholders 2000 and for the team. 0 Founded in 1994 by a group headed by Terry 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Considine, Aimco is a real estate investment trust (REIT) with headquarters in Denver, Colorado. Since its initial public offering (IPO) in 1994, Aimco’s Aimco’s goal is to provide superior customer service gross real estate assets have grown from $315 million and satisfaction—at every price point, at every to $11 billion today. Aimco’s common stock is property, in every market in which it operates. The included in the S&P 500 index. During 2005, Aimco goal of each Aimco team member is to serve the was again ranked as one of the most admired real company’s diverse customers and meet their unique estate companies in Fortune Magazine’s annual housing and lifestyle needs. From elegant urban and poll. An investment in Aimco has provided coastal high rises to middle-market suburban garden shareholders with a 14.3% compounded annual and affordable communities, the Aimco team is return since its IPO. focused on making life better for each and every one of its valued residents. In 2005, the Aimco team Aimco serves nearly one million residents annually aimed for higher results and achieved them. As a 1 in 240,000 apartments in 47 states, the District of result the company is well positioned for continued Columbia and Puerto Rico. Nineteen regional success in the years ahead. operating centers provide local management and service to our valued customers. Dedicated redevelopment and construction services teams maintain and upgrade Aimco communities. The entire Aimco team strives to become the most profitable and respected owner and operator of multi-family communities. 1 MAKING PROGRESS in an important business, providing homes for Dear Fellow Shareholder: hundreds of thousands of American families. Our customers will require our services for a long time to Each year, I look forward to writing this letter. It is come. We serve them by providing rental housing my opportunity to communicate directly with you in properties whose useful life is multi-generational. and to provide context to the details and numbers We serve them with teammates who have joined of the year gone by. Aimco for their careers. Our success will be measured over a longer period than the past year, My interests are aligned with yours. My family’s or even the past recession. Aimco stake is our largest investment. We are keenly interested in its financial results. 2005 was a good year—a very good year—because the Aimco team made significant progress on all of In writing, I seek to tell you what I would like to the issues important to long-term success in the learn if our roles were reversed, that is, if you apartment business. thought about Aimco each day and if I were an outsider with an important investment in Aimco. During the year, our operations got better. Jeff Adler, Mike Karsner and their team led this effort. We 2005 was a very good year for Aimco. Yes, I know improved our service to customers: our new contact that FFO declined and that the dividend exceeded center improved responsiveness, was available 24/7 our AFFO. Those results were painful…believe me, and answered more than 1.5 million calls. Three- I know…but they are better understood as quarters of resident service requests were completed investments in longer-term financial strength within 24 hours. We also had more customers: new and profitability. inquiries in 2005 were 40% more than in the This brings to the surface an important fact: my prior year. investment horizon is long-term. Aimco is engaged Conventional Rental Rate Same Store Sales (month end) 760.0 $229 million in redevelopments and capital improvements for our conventional properties while Aimco Capital raised more than $65 million in tax 742.0 credit equity to fund redevelopment at 13 affordable communities. In the fourth quarter, we welcomed Tim Beaudin as Chief Development Officer. 725.0 During the year, we increased the value of our Dollars properties: for example, by seeking new entitlements to increase the permitted density or 707.0 uses at a number of properties. One important example was Springhill Lake, in Greenbelt, Maryland, where Patti Shwayder and her team 690.0 were successful in doubling the permitted density. Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2001 2002 2003 2004 2005 Under the leadership of David Robertson, Brian Shuman and Lance Graber, Aimco Capital During the year, we improved the neighbors with delivered strong results in 2005, with improved whom our customers live: for example, by raising affordable property operations and increased asset our financial stability standards, we added better management and transaction revenue. Randy Fein’s qualified residents…and reduced accounts receivable success in managing our university communities’ and bad debt substantially while increasing rental joint venture added further to our growing asset rates by 3.5% versus a year ago. management business. During the year, we improved the physical condition During the year, Jim Purvis and his team made of our properties: for example, we completed a Aimco a better place to work: we improved the major redevelopment at Belmont Place and invested training available to all team members, offering heavily in property upgrades, completing interior more than 100 new courses designed to hone 3 improvements or new construction on more than specific skills and develop leadership qualities. 2,000 conventional units. We invested more than We continued our performance and results-based Reflections, West Palm Beach, FL, opposite top. Leasing Consultant Felicia Goode in the Customer Contact Center in Denver, CO, near right. Service Manager Rob Sanders of Bayhead Village, Indianapolis, IN, middle right. Villas at Park La Brea, Los Angeles, CA, far right. Aimco Cares car wash, Tampa, FL, below left. Fox Crest, Waukegan, IL, below right. Conventional Occupancy compensation programs and implemented a new Same Store Sales (month end) 97 performance planning and tracking system so that each team member is more in charge of his own work and managing her own performance. 94 During the year, we contributed to the larger world in which we do business: when we upgrade our properties, the neighborhoods and towns where they 91 are located also benefit. We preserved 130 affordable Percent communities by extending the time during which they are committed to low-income housing. We 88 supported Aimco team members and their families by providing full pay and benefits for those teammates called to active duty in the military. 85 We completed our first full year of Aimco Cares, Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec supporting more than a thousand team members in 2001 2002 2003 2004 2005 philanthropic activities of their choosing, often in partnership with local non-profit organizations. targeted investments in redevelopment. Harry In all these activities, we strive to uphold the Alcock and his team focused our efforts and capital highest ethical standards while seeking to be an on our core portfolio, concentrating where we can exemplary corporate citizen. We are fortunate to achieve the greatest returns and long-term growth. have Miles Cortez, Aimco General Counsel, and Tom Herzog, Rob Walker and their teams have made an impressive legal team to oversee compliance our management systems better and have sharpened with the multitude of laws and regulations our focus on continuous improvement. Thanks to inherent in our business. Patti Fielding and her team, we enjoy an excellent relationship with our bank lenders—and also our 4 During the year, in sum, we improved the founda- property lenders who, supporting our efforts, made tion for Aimco’s long-term financial results: our new loans of almost $1 billion, long-term and customer base is better with higher occupancy at without recourse, at interest rates averaging higher rents. Our properties are improving with about 5%. This positions us well for 2006 and the future. We have an excellent portfolio well positioned to benefit from a rising market. We have a conven- tional redevelopment pipeline of 21 active projects…with 50 more under evaluation. We have 27 active entitlement projects…with 25 more in initial phases of review. Aimco Capital has 14 properties under redevelopment…and a strong pipeline of further opportunities. We made these advances working as a team. The The Ashford, Atlanta, GA, right. senior corporate officers are listed on page 16. They Calhoun Beach are leaders and my partners. I thank them. The Club, Minneapolis, MN, below. entire team, of course, is larger and includes more than 6,400 team members who are passionate about customer service, doing the right thing, and building a better Aimco.

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