C RE ATING VALUE AIMCO 2007 ANNUAL REPORT Apartment Investment and Management Company Aimco is a real estate investment trust headquartered in Denver, Colorado that owns and operates a geographically diversified portfolio of apartment communities through 19 regional operating centers. Aimco, through its subsidiaries and affi liates, is the largest owner and operator of apartment communities in the United States with 1,169 properties, including 203,040 apartment units, and serves approximately 750,000 residents each year. Aimco’s properties are located in 46 states, the District of Columbia and Puerto Rico. Aimco common shares are traded on the New York Stock Exchange under the ticker symbol AIV and are included in the S&P 500. CREATING VALU E Chairman and CEO Terry Considine, center, and Aimco’s senior leadership team. Creating value – for our shareholders, for our residents, and for our team members – is at the heart of Aimco’s mission. For our shareholders, we strive to att ain this standard by achieving a prudent balance between maximizing strategic, short-term opportunities and charting a course for long-term growth. For our residents, we work each day to deliver operational excellence by providing quality apartment homes managed by a team dedicated to superior service. For our team members, Aimco promotes a collaborative, performance-driven environment, recruiting and retaining men and women whose talents help our company innovate, execute and excel. Building on a solid foundation of progress, Aimco is positioned to create value in the years ahead. To consistently provide quality apartment homes in a respectful environment delivered by a team of people who care — Aimco’s Mission DE A R FEL L OW SHAREHOLDERS, I have looked forward to writing you about our mutual enterprise. I have much good news and a few serious concerns. Th e good news is that the Aimco business is fl ourishing. Th e many metrics on which we rely show increased customer satisfaction. Other measures show the increased engagement and satisfaction of the Aimco team. Our properties are in good shape, in part because during the past year we have invested a total of approximately $550 million in capital to upgrade them. Our balance sheet is in good shape with more than $675 million of ‘dry powder’ in cash and available credit at year end. Th ese improvements translated into improved fi nancial results in 2007 and support the 5% dividend increase implicit in the special dividend paid in January. We begin 2008 with high occupancies and good prospects as tighter home lending standards shift residential demand away from home ownership and towards apartment and other rental housing. My most serious concerns are two: the prospects for the national economy and the disparity between the Aimco share price and the private value of Aimco assets. as well as painful to all Aimco investors including me and my family. Some pundits interpret the volatility and decline in REIT prices as the harbinger of recession. Th eir view reinforces my concerns for the economy. Others foresee a re-pricing of investment real estate as an asset “bubble” defl ates. I agree in part: it’s why Aimco has been a net seller of properties for the past few years. All said, the disparity between today’s share price and today’s Aimco asset values seems too large. For this reason, Aimco has been a steady buyer of its own shares – 15% of its total outstanding stock over the past 24 months. We expect to buy more during 2008 and I, paid entirely in Aimco equity and with a substantial percent of my family wealth invested in Aimco shares, am delighted with the prospect of “eating my own cooking.” I am delighted too by the men and women with whom I work each day. Jeff Adler, our Chief Property Operations Offi cer, has built a systematic and data driven property management system with increasing eff ectiveness and reliability. For the past few years, Jeff and his senior colleagues, Tony D’Alto, Mike Karsner, Jeff Kimes, Peter Kompaniez, Tom Seeger, and Rob Walker have led the Aimco team to sustained out performance of their local markets. “We begin 2008 with high occupancies and good prospects” Economic growth has slowed due to past homebuilding excesses and also due to the credit abuses grouped together as the “sub-prime” problem. If a recession results, apartment demand will be aff ected: during the last recession in 2001-03, apartment incomes declined by 11.5%. We are preparing for such a contingency by emphasizing occupancy levels and cost controls at our properties…and by guarding corporate liquidity. Th e 38% decline in the Aimco share price during 2007 is also worrisome… Th e Palazzo, Los Angeles, CA, one of three communities included in Aimco’s joint venture with JP Morgan. Tom Herzog, our Chief Financial Offi cer, has been a transformational force due to his unrelenting eff orts to improve Aimco effi ciency, especially in the allocation of precious capital. His team, led by Patt i Fielding, Treasurer and head of Capital Markets, Scott Fordham, Chief Accounting Offi cer, and Ernie Freedman, a mid-year recruit to head Financial Planning and Analysis, have provided both abundant fi nancial resources notwithstanding the turbulent fi nancial markets and also a most welcome clarity to Aimco planning and decision making. Jim Purvis, head of Human Resources, has built a team over the past few years that has recruited talent, built a bench for succession at key positions, provided training, and engaged the Aimco team. Th ank you, Jim! During the past few years, David Robertson, with Harry Alcock and Lance Graber as key lieutenants, has led a team of senior leaders in an ongoing review of our investment strategy. Craig Zeutzius has focused on market selection considering local economic, demographic and regulatory factors, as well as market cycles for investment pricing and returns. Based on his work, we have made decisions about where to focus and where to exit investments to enhance portfolio performance. Tom Herzog has focused on improving our understanding of expected risk adjusted returns from our several investment segments: core properties; redevelopment; and tax credit assisted redevelopment. He also has emphasized the importance of correct allocation of our substantial capital spending. Boulder Creek, Boulder, CO Aimco’s 2007 redevelopment production is equivalent to building 16, 300-unit communities Scott sdale Gateway, Tempe, AZ Near year end, Jeff Adler promoted Tony D’Alto to head the tactical execution of property operations so that Jeff could focus more on such strategic matt ers as consumer research, market segmentation and rent premiums. Over the past two and a half years, Tim Beaudin, our Chief Development Offi cer, has recruited a cadre of development talent and built a redevelopment program that is highly accretive and at a scale comparable to the largest multifamily developers in America. Key lieutenants such as John Bezzant, Chris Bishop, Andy Cretal, Gary Holt, Tony Ianuale, Dan Matula, Paul Springthorpe and Betsy Weingarten have brought energy and discipline to the task of renovating annually properties worth more than one billion dollars. Miles Cortez, aft er a brilliant record as General Counsel, has been promoted to Chief Administrative Offi cer where he and I work together to make our enterprise more effi cient and eff ective. It is to Miles’s credit that we were able to fi ll his position from within by promoting Lisa Cohn, a fi rst rate legal talent and possessed of solid judgment and great personal skills. She is management’s face to the Board and will be a good leader of our legal team. 3400 Avenue of the Arts, Costa Mesa, David himself has focused on the relative merits of diff erent funding strategies. For example, he is leading an expansion of our asset management businesses as can be seen in our joint venture with JP Morgan to hold three Los Angeles properties. Of course, there are many other important contributors to Aimco’s success whom I would thank by name if space permitt ed. I am proud to be their teammate. I am grateful too to my colleagues on the Aimco Board of Directors: lead director Lanny Martin, along with Jim Bailey, Dick Ellwood, Tom Keltner, Bob Miller, Dusty Rhodes and Mike Stein. Th ey are men of judgment, personal integrity, and business success. Each is independent of management and each serves on all board committ ees. Th ey know our business well and are paid largely in Aimco equity. Th eir advice, enthusiasm and friendship are much appreciated. Our Annual Meeting will be April 28. I look forward to seeing you there. Sincerely, Terry Considine Chairman/CEO Greenspoint, Phoenix, AZ Royal Crest Estates, Nashua, NH E XCEPTIONAL OPERATIONS AND SERV ICE Th e success of our company lies in the strength of our operations and our ability to meet the needs of our residents. In 2007, Aimco implemented several initiatives to improve operational excellence and enhance customer service. By integrating aff ordable and conventional property operations, Aimco has capitalized on the expertise and experience of both teams and strives to exceed the expectations of our residents. Aimco has expanded its Customer Contact Center to improve responsiveness to potential residents. Whether they’re searching for an apartment at noon or at midnight, our representatives are at-the-ready to help callers fi nd the perfect apartment home, schedule appointments or lease on line. In 2007, the Contact Center team fi elded more than one million leasing inquiries through 850,000 inbound phone calls and more than 163,000 web-based requests. To improve the customer experience, Aimco teamed with the Disney Institute in 2007. Th rough this relationship with Disney, known for its delivery of superb customer experiences, we designed a resident-focused training program known as Moments that Matt er, a moniker that defi nes the importance and eff ect of every customer interaction. Th ese new approaches are emphasized in the Aimco philosophy and culture. One of the best ways to create and maintain a positive experience for residents is through consistent delivery of operational excellence. Offi ce Courtesy Maintenance Courtesy 98% 94% At each community, whether home to business executives, young working professionals or senior citizens, the quality of our day-to-day service is Aimco’s top priority. During 2007, the apartment management industry recognized Aimco’s operational excellence with numerous awards; for example, Aimco was awarded the 2007 Communities of Quality Program Award given by the National Aff ordable Housing Management Association (NAHMA). Th is top national honor was awarded to Aimco in recognition of having the most properties distinguished as a “Community of Quality.” More than 60 Aimco communities were designated a “Community of Quality” based on high marks for exceptional operations and outstanding customer service. Aimco’s Customer Experience Ratings EN HANCING THE VALUE OF OUR PORTFO L IO Aimco Capital President and CEO David Robertson, right, with Executive Vice President Harry Alcock, left , and Executive Vice President Lance Graber, center. Aimco creates value by operating a geographically diversifi ed portfolio, acquiring new properties with high land values and improving our investment properties through operational excellence, new entitlements and redevelopment. We evaluate and select markets based on local economic factors such as job growth, population trends and expected incremental returns on our capital investments. In 2007, Aimco invested $455 million in acquisitions and another $42.8 million in purchases of limited partnership interests. Aimco’s joint venture agreement with JP Morgan for the Palazzo properties in Los Angeles refl ects Aimco’s strategic objectives of att racting investment capital from blue chip partners, and rebalancing geographic allocation of Aimco capital while maintaining operational scale in key target markets. In 2007, Aimco’s asset management and transactions income grew by more than 40 percent Th e Glen at Forestlake, Daytona Beach, FL Conventional Portfolio Gross Asset Value Los Angeles 12.5% Washington Metro 11.1% Other 23.6% Indianapolis 2.5% Norfolk 2.6% Miami 7.0% Boston 5.9% San Diego 3.0% Denver 3.2% Houston 3.3% Phoenix 3.6% Tampa 3.8% Orlando 3.9% New York 4.3% Philadelphia 4.6% Chicago 5.1% Aimco’s 2007 acquisitions included the Adam Clayton Powell property in New York City. $455 million in new acquisitions Hudson Harbour, Poughkeepsie, NY VA L UE - ADDED REDEVELOPMENT 3400 Avenue of the Arts, Costa Mesa, Aimco’s redevelopment team maximizes the potential of older apartment communities in premiere locations. Our business model includes acquiring properties with high land value and redeveloping aging buildings – making them competitive in the market while improving value. In 2007, Aimco invested nearly $319 million in the redevelopment of 64 properties, completing 4,900 units. Aimco’s 2007 redevelopment production is the equivalent of building 16 new 300-unit communities. Forty-eight projects are underway and are achieving expected fi nancial returns through improved rents and resident satisfaction. In addition, Aimco is making investments in energy and water conservation, creating more environmentally friendly and sustainable communities. 2007 projects resulted in a reduction in greenhouse gas emissions of approximately 13,454 metric tons of carbon dioxide equivalent. According to the Environmental Protection Agency’s clean energy calculations, this CO2 reduction is comparable to taking 2,464 passenger vehicles off the road. Aimco also works to redevelop properties in our aff ordable portfolio in partnership with local offi cials, state government agencies and the U.S. Department of Housing and Urban Development. As one of the largest owners of aff ordable housing in the nation, during 2007, Aimco successfully raised $103 million in tax credit equity to fund the renovation of 12 communities. $319 MILLION $180 MILLION $166 MILLION $95 MILLION 2004 2005 2006 2007 Redevelopment Spending Th e $6.5 million renovation of Mesa Royale, in Mesa, AZ, included remodeling of the 4,700 square foot clubhouse, a new outdoor dining area overlooking the golf course, and the addition of a library/lounge area. Aimco received a $10 million tax credit award from the State of California to redevelop Terry Manor and preserve it as senior, aff ordable housing. Leasing apartments at Riverside, Alexandria, VA. “Th ank you for the early wedding present! We are so excited to start our married life together at Country Club West and we are anxiously awaiting our new home! Th e warmth and helpfulness of your leasing offi ce made the choice of our future residence quite simple. We found (and continue to fi nd) the experience to be delightful.” — A Resident of Country Club West, Denver, CO With views of the Potomac River, Riverside, in Alexandria, VA, is undergoing a planned, fi ve-year, $140 million renovation. $549 million investment in community upgrades Th is remodeled kitchen in Th e Latrobe, Washington, D.C., is part of an ongoing, $11.7 million, 18-month redevelopment with expected completion in August 2008. BUI L D ING OUR TEAM Th e success of any organization turns on its people. At Aimco, we realize the value of our nearly 6,000 team members nationwide who work hard each day to fulfi ll our mission. We have built a deep bench of talent, which has enabled us to promote from within our company as opportunities arise. In November 2007, Aimco initiated its Leadership Excellence Program, an intensive, year-long, training program for select team members. Tailored specifi cally for Aimco, the program trains high performing team members to become successful Aimco leaders. Classroom training, online learning and problem-solving activities focus on strategic thinking, interpersonal communications skills, prioritizing projects, negotiating skills, building and managing a team, and making sound business decisions. Our AIMing for the Stars program recognizes and rewards Aimco’s team members who demonstrate outstanding performance in carrying out Aimco’s vision, mission and values. Team members receive designations as superstars in the areas of sales, service, customer focus and leadership. 1,592 internal promotions in 2007 Jeff Adler, Executive Vice President and Chief Property Operations Offi cer, shares plans for 2008 with the Denver team on a quarterly webcast. ADD IN G VAL UE TO COMMUNITIES Th e Aimco Cares philanthropic program continues to grow and provide value to the communities in which we live. During 2007, Aimco team members nationwide volunteered thousands of hours to important causes in partnership with a variety of non-profi t organizations. Our commitment to building communities from the inside out resulted in a variety of volunteer initiatives, including the rebuilding of homes for low-income senior citizens, raising money for childhood cancer programs, fundraising for the homeless, and forming teams to walk, run and bike for charitable causes. Th rough the Aimco Family Foundation, higher education scholarships were awarded to the children of 50 Aimco team members. We also provided emergency assistance funds to team members and their families who experienced diffi cult circumstances from unexpected illness, accidents and natural disasters. Aimco has an ongoing commitment to the men and women serving our country in the military. Aimco provides full pay and benefi ts to team members called to active duty, and provides support to assist veterans and their families. Miles Cortez, Chief Administrative Offi cer, center, presents a check for $172,688 to the Denver Rescue Mission. Th e donation, representing the proceeds from the 2007 Aimco Cares Golf Tournament, supports the Mission’s educational, life skills training and career development programs for individuals overcoming homelessness and addiction. “I would like to thank the Aimco Cares 4U Committ ee for the tremendous support that you have given me. You have lift ed one burden I had, by providing me with great relief through this diffi cult time. It is nice to know that I had someone to count on.” — Aimco Team Member, Michigan co team members in Indianapolis volunteered to remodel a home for income seniors as part of the national Rebuilding Together program. Greenville, SC Aimco team members volunteer their time to rehabilitate a home for a low-income family. Scholarship Recipients “It is very expensive to obtain a higher education. I want to thank Aimco for this generous award. It helps me more than you’ll ever know.” Margaret Chen, left , daughter of Bieying Chen, Accounting, Indianapolis, IN. — Nathan Anderson, son of Ruth Nowak, Resident Service Coordinator, Locust Apartments, Westminster, MD Mike Larsen, son of Torry Larsen, Risk Management, Denver, CO. Jose Gonzalez, son of Jose Gonzalez, Service Technician, Houston, TX. Brandy Sullivan, daughter of Etrulia Tubbs, Accounting Specialist, Greenville, SC. AIMCO CARES Th e Aimco Military Outreach team sent care packages to a reservist unit serving in Baghdad, Iraq. Large boxes arrived on Christmas Eve to help make the holiday brighter. Aimco won the 9News Corporate Challenge in 2007, placing fi rst among Denver area corporations by collecting nearly 11 tons of food for needy families. BOARD OF DIRECTORS Terry Considine Chairman of the Board, Chief Executive Offi cer and President James N. Bailey Director, Chairman of the Nominating and Corporate Governance Committ ee Senior Managing Director, Cambridge Associates, LLC Richard S. Ellwood Director, Private Investor Th omas L. Keltner Director, Executive Vice President and CEO, Americas and Global Brands, Hilton Hotels Corporation J. Landis Martin Lead Independent Director, Chairman of the Compensation and Human Resources Committ ee Founder and Managing Director, Platte River Ventures, LLC Robert A. Miller Director, President, Marriott Leisure Th omas L. Rhodes Director, Chairman and President, National Review Magazine Michael A. Stein Director, Chairman of the Audit Committ ee Private Investor ADVISORY BOARD Roy H. Lambert, Sr. Vero Beach, Florida Richard Morton Miami, Florida Charles R. Considine Emeritus EXECUTIVE OFFICERS Jeff rey W. Adler Executive Vice President, Chief Property Operations Offi cer Harry G. Alcock Executive Vice President Timothy J. Beaudin Executive Vice President and Chief Development Offi cer Lisa R. Cohn Executive Vice President, General Counsel and Secretary Miles Cortez Executive Vice President and Chief Administrative Offi cer Anthony R. D’Alto Executive Vice President, Property Operations Patt i K. Fielding Executive Vice President, Securities and Debt; and Treasurer Scott W. Fordham Senior Vice President and Chief Accounting Offi cer Lance J. Graber Executive Vice President Th omas M. Herzog Executive Vice President and Chief Financial Offi cer James G. Purvis Executive Vice President, Human Resources David Robertson Executive Vice President and Chief Investment Offi cer; President and CEO, Aimco Capital Robert Y. Walker, IV Executive Vice President and Property Operations/Redevelopment Chief Financial Offi cer CORPORA TE OFFICE Stanford Place 3 4582 South Ulster Street Parkway Suite 1100 Denver, CO 80237 Telephone: 303-757-8101 Toll Free: 888-789-8600 www.aimco.com STOCK LISTING New York Stock Exchange Symbols: AIV, AIVPRG, AIVPRT, AIVPRU, AIVPRV, AIVPRY INVESTOR RELATIONS Toll Free: 888-789-8600 Telephone: 303-691-4350 Fax: 303-300-3269 Elizabeth Coalson Vice President, Investor Relations Telephone: 303-691-4327 Fax: 303-713-6902 LIMITED PARTNER INVESTOR RELATIONS P.O. Box 2347, Greenville, SC Telephone: 864-239-1029 Fax: 864-239-5812 E-mail: partners@aimco.com STOCK TRA NSFER AGENT AND REGISTRA R Computershare Trust Company, N.A. P.O. Box 43078 Providence, RI 02940-3078 Telephone: 800-730-6001 www.computershare.com INDEPENDENT AUDITORS Ernst & Young LLP Denver, Colorado Readers should carefully review Aimco’s fi nancial statements and notes thereto, as well as the risk factors described in Aimco’s Annual Report on Form 10-K for the year ended December 31, 2007, and other documents fi led from time to time with the Securities and Exchange Commission. In 2007, our CEO submitt ed his annual unqualifi ed corporate governance listing standards certifi cation to the NYSE. Apartment Investment and Management Company Stanford Place 3 4582 South Ulster Street Parkway, Suite 1100 Denver, Colorado 80237 telephone 303.757.8101 toll free 888.789.8600 www.aimco.com