UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

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

For the fiscal year ended December 31, 2004

or

o     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: 000-49986

AMERICA FIRST APARTMENT INVESTORS, INC.

(402) 444-1630
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

None

Securities registered pursuant to Section 12(g) of the Act:

Common Stock, $.01 par Value

     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.

     Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of the chapter) is not contained herein, and will not be contained, to the best of the 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 10-K. o

     Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act).

     The aggregate market value of the registrant’s common stock held by non-affiliates based on the final sales price of the shares on the last business day of the registrant’s most recently completed second fiscal quarter was $110,677,286.

     As of March 10, 2005, there were 10,510,558 outstanding shares of the registrant’s common stock.

DOCUMENTS INCORPORATED BY REFERENCE

     Portions of the Company’s Proxy Statement pertaining to its 2005 Annual Shareholders Meeting are incorporated herein by reference into Part III.

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PART I

Item 1. Business.

America First Apartment Investors, Inc. (the “Company”) was formed on March 29, 2002 under the Maryland General Corporation Law and is taxed as a real estate investment trust (“REIT”) for Federal income tax purposes. The Company is the successor to America First Apartment Investors, L.P. (the “Partnership”) which merged with the Company as of January 1, 2003. As a result of this merger, the Company assumed the assets, liabilities and business operations of the Partnership. The Company had no material assets or operations prior to its merger with the Partnership. Accordingly, any operations or financial results of the Company described herein for periods prior to January 1, 2003 are those of the Partnership.

On June 3, 2004, the Company merged with America First Real Estate Investment Partners, L.P. (“AFREZ”). As a result of the merger, AFREZ was merged with and into the Company. The Company was the surviving entity and assumed all of the assets, liabilities and business operations of AFREZ, including 14 multifamily apartment properties containing 2,783 rental units located in Arizona, Florida, Illinois, Michigan, North Carolina, Ohio, Tennessee and Virginia.

Operating and Investment Strategy

The Company’s operating and investment strategy primarily focuses on multifamily apartment properties as long-term investments. The Company’s operating goal is to generate increasing amounts of net rental income from these properties that will allow it to increase dividends paid on its common stock. In order to achieve this goal, management of these multifamily apartment properties is focused on: (i) maintaining high economic occupancy and increasing rental rates through effective leasing, reduced turnover rates and providing quality maintenance and services to maximize resident satisfaction; (ii) managing operating expenses and achieving cost reductions through operating efficiencies and economies of scale generally inherent in the management of a portfolio of multiple properties ; (iii) emphasizing regular programs of repairs, maintenance and property improvements to enhance the competitive advantage and value of its properties in their respective market areas; and (iv) continuing its program of selective property acquisitions and dispositions to increase the value and cash flow potential of its portfolio. As of December 31, 2004, the Company owned 29 multifamily apartment properties containing a total of 6,307 rental units and a 72,002 square foot office/warehouse facility. The Company’s multifamily apartment properties are located in the states of Florida, Tennessee, Georgia, Oklahoma, Arizona, California, Michigan, North Carolina, Ohio, Virginia and Illinois. The Company focuses its acquisition efforts on established multifamily apartment properties located throughout the United States. In particular, the Company seeks out properties that it believes have the potential for increased revenues through more effective management. In connection with each potential property acquisition, the Company reviews many factors, including the following: (i) the location of the property; (ii) the construction quality, condition and design of the property; (iii) the current and projected cash flow generated by the property and the potential to increase cash flow through more effective management; (iv) the potential for capital appreciation of the property; (v) the potential for rental rate increases; (vi) the economic situation in the community in which the property is located and the potential changes thereto; (vii) the occupancy and rental rates at competing properties; and (viii) the potential for liquidity through financing or refinancing of the property or the ultimate sale of the property. The Company does not have any limitations on the percentage of its assets which may be invested in any one property or on the number of properties that it may own in any particular geographic market.

The Company may also invest in other types of real estate assets including:

     (i) Agency Securities issued or guaranteed as to the payment of principal or interest by an agency of the U.S. government or a federally-chartered corporation such as the Federal National Mortgage

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Association (“FNMA”), Government National Mortgage Association (“GNMA”) or the Federal Home Loan Mortgage Corporation (“FHLMC”) (“Agency Securities”). Agency Securities acquired by the Company are secured by pools of first mortgage loans on single-family residences. Agency Securities held by the Company bear interest at an adjustable interest rate or at a fixed rate for an initial period of time (typically one to three years) and then convert to a one-year adjustable rate for the remaining loan term. As of December 31, 2004, the Company had Agency Securities with a fair market value of approximately $26.2 million.

     (ii) Mezzanine-level financing provided to developers of residential real estate which can take a variety of forms including subordinated mortgage loans and preferred equity investments. These mezzanine level investments will generally be structured to provide the Company with a minimum return by way of a fixed base rate of interest or preferred dividend as well as the opportunity to participate in the excess cash flow and sales proceeds of the underlying apartment property through the payment of participating interest and additional dividends. As of December 31, 2004, the Company did not have any investments of this type.

     (iii) Equity investments in other REITs and similar real estate companies, which can include publicly-traded common and preferred stocks. The Company may also acquire controlling and non-controlling interests in other real estate businesses such as property management companies. As of December 31, 2004, the Company had investments of this type with a fair market value of approximately $4.3 million.

By including investments in Agency Securities, mezzanine-level financing of residential real estate, and investments in other real estate companies, the Company seeks to supplement and stabilize its cash flow by investing in assets that are less affected by the variables that affect the cash flow generated by investments in apartments. In addition, investments in Agency Securities allow the Company to quickly invest the proceeds from the sale of additional stock or from the sale of any of its real property investments at potentially higher returns than traditional money market investments. The overall mix of these various types of investments will vary from time to time as the Company seeks to take advantage of opportunities in the real estate industry. In general, however, it is anticipated that at least 80% of the Company’s equity capital will be invested in multifamily apartment properties. As of December 31, 2004, approximately 81% of the Company’s equity capital was invested in multifamily apartment properties.

All investments made by the Company must be made in compliance with applicable requirements for maintaining its status as a REIT for Federal income tax purposes. As a REIT, the Company is generally not subject to Federal income taxes on distributed income. To maintain qualification as a REIT, the Company must meet a number of organizational and operational requirements, including a requirement to distribute at least 90% of the REIT’s ordinary taxable income to shareholders. It is the Company’s current intention to adhere to these requirements and maintain its REIT status.

Financing Strategies

The Company has the authority to finance the acquisition of additional real estate in a variety of manners, including borrowings in the form of taxable or tax-exempt mortgage loans secured by the acquired properties and borrowing against existing unencumbered assets, including the use of repurchase agreements collateralized by its Agency Securities. In addition, the Company may sell existing properties and reinvest the net proceeds from a sale in additional properties.

As of December 31, 2004, the Company had net debt obligations under twenty financing arrangements with an aggregate principal balance of approximately $167.2 million, all of which is secured by mortgages on its properties. In addition, the Company has approximately $20.9 million of borrowings under repurchase agreements which are collateralized by Agency Securities secured by first mortgages on multifamily properties

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and single family properties. Approximately $7.0 million of borrowings under repurchase agreements are secured by the underlying property value of The Ponds at Georgetown. The Company does not have any limitations on the number or amount of mortgages which may be placed on any one property.

In addition, the Company has the authority to raise additional equity capital through the issuance of additional shares. If the Company decides to sell shares, it may do so in a number of different manners, including a rights offering directly to existing shareholders, an underwritten public offering or in a private placement negotiated with a small number of investors. The Company may also issue shares to the owners of multifamily apartment properties that it acquires as full or partial payment for those properties. In June 2004, the Company filed a Form S-3 registration statement for $200 million of any combination of common stock and preferred stock in one or more offerings which may be sold from time to time in order to raise additional equity capital in order to support the Company’s business strategy. To date, no securities have been sold under this registration statement.

AFREZ Merger

On May 26, 2004, the shareholders of the Company approved a merger with AFREZ, pursuant to the Agreement and Plan of Merger entered into by the Company and AFREZ on November 25, 2003 (the “Merger Agreement”). The merger became effective on June 3, 2004.

The Company issued shares of its common stock and paid cash to the holders of the limited partner and general partner interests in AFREZ upon consummation of the merger. Each Unit representing an assigned limited partnership interest in AFREZ as of the date of the merger was converted into the right to receive 0.7910 shares of the common stock of the Company and a cash payment of $0.39 per Unit. Fractional shares were rounded up or down to the nearest whole number. A total of 5,376,353 shares of the common stock of the Company were issued to Unit holders in connection with the merger plus a cash payment of $2.7 million. The general partner’s 1% interest in AFREZ was converted into 54,308 shares of the common stock of the Company plus a cash payment of approximately $27,000. The general partner was an affiliate of the Company’s Advisor.

Both the general partner of AFREZ and the Board of Directors of the Company determined that the merger would provide investors in both AFREZ and the Company with a number of benefits, including:

	•	a greater ability to acquire additional apartment complexes, Agency Securities and other residential real estate resulting in enhanced access to capital;
	•	a reduction in investment risks due to a larger and more diversified portfolio of investment assets;
	•	a more stable and liquid market for the Company’s shares;
	•	lower overall operating costs due to elimination of duplicative expense and other economies of scale;
	•	simplified income tax reporting for investors in AFREZ.

In addition, special committees made up of the independent directors of the general partner of AFREZ and of the independent directors of the Company negotiated the terms of the merger and concluded that the terms were fair to the limited partners of AFREZ and the shareholders of the Company. Each of the special committees was advised by their own independent investment banking firm regarding the fairness of the terms of the merger.

Acquisition of certain property management assets

On November 8, 2004, America First PM Group, Inc., (“PM Group”) a wholly-owned subsidiary of the Company, acquired certain property management assets, rights to use certain proprietary systems, certain

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property management agreements, certain employment agreements and other intangible assets from America First Properties Management Companies, L.L.C. (“America First Properties”) and its parent, America First Companies, L.L.C. (“America First Companies”) (“the Property Management acquisition”). Prior to this transaction, America First Properties managed each of the multi-family apartment complexes owned by the Company. As a result of this transaction, the management of all of the Company’s properties and certain other properties owned by unaffiliated parties was internalized, allowing the Company to cease paying third-party property management fees. The internalization of the property management function is expected to be accretive to earnings beginning in 2005.

The purchase price for the acquired assets was $6.8 million, plus estimated transaction costs of approximately $172,000. A Special Committee of the Board of Directors of the Company (“Special Committee”), comprised solely of independent directors of the Company, negotiated the terms and conditions of the transaction on behalf of the Company. The Special Committee retained an independent investment banking firm to render an opinion to the Company as to the fairness to the Company of the consideration paid for the acquired assets.

Executive and Administrative Advisory Services

The Company has an Advisory Agreement (the “Agreement”) with America First Apartment Advisory Corporation (the “Advisor”) in which the Advisor provides external executive and administrative services under the supervision of the Company’s Board of Directors. The Advisor also acts as a consultant with respect to investment and policy decisions.

The Company pays an administrative fee equal to 0.55% per annum of the sum of: (i) the original principal amount of the bonds originally issued to the predecessor to the Partnership; (ii) the purchase price paid by the Company for new assets that are then held by the Company; (iii) the outstanding principal of mezzanine financing provided by the Company to unaffiliated developers of residential real estate, plus (iv) the fair value of the AFREZ properties on the date of the merger to the Advisor for the services it provides under the Agreement. The Advisor may also receive a separate fee in connection with the identification, evaluation and acquisition of real estate assets that the Company acquires. The acquisition fee is equal to 1.25% of the gross purchase price paid for such real estate assets. The Advisor also earns an administrative fee of 0.25% per annum of the outstanding principal balance of all Agency Securities held by the Company with an incentive equal to 20% of the amount by which the total net interest income realized by the Company from its portfolio of Agency Securities during each calendar month exceeds the average dollar amount of stockholders’ equity invested in Agency Securities during the month times the composite dividend yield reported by the National Association of Real Estate Investment Trusts (“NAREIT”) for equity REITs which invest in residential apartment properties. The Advisor has retained an unaffiliated sub-advisor to advise it with respect to the Company’s investments in Agency Securities. All fees paid to this sub-advisor are paid by the Advisor and none are paid by the Company. The Company will also reimburse the Advisor and its affiliates for certain out-of-pocket expenses that it incurs in connection with the carrying out of the Company’s business activities.

Competition

In each city where the Company’s properties are located, the properties compete with a substantial number of other multifamily properties. Multifamily properties also compete with single-family housing that is either owned or leased by potential tenants. To compete effectively, the Company must offer quality apartments at competitive rental rates. In order to maintain occupancy rates and attract quality tenants, the Company may also offer rental concessions, such as free rent to new tenants for a stated period. The Company also competes by offering quality apartments in attractive locations and providing tenants with amenities such as recreational facilities, garages and pleasant landscaping. The Company also emphasizes maintenance and property physical condition.

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Environmental Matters

The Company believes that each of its properties is in compliance, in all material respects, with federal, state and local regulations regarding hazardous waste and other environmental matters and is not aware of any environmental contamination at any of its properties that would require any material capital expenditure by the Company for the remediation thereof.

Risk Factors

The financial condition and results of operations of the Company and its ability to pay dividends are affected by various factors, many of which are beyond the Company’s control. These include the following:

The Company’s financial results are substantially dependent upon the performance of its multifamily housing.

     The performance of the Company’s multifamily housing is affected by a number of factors including:

	•	general and local economic conditions
	•	the relative supply of apartments and other homes in the market area
	•	interest rates on single family mortgages and the effect on the affordability of home buying. If interest rates on single-family mortgages maintain current levels or decline further, it could further increase home buying and continue to reduce the number of quality tenants available.
	•	the need for and costs of repairs and maintenance of the properties
	•	government regulations and the cost of complying with them
	•	property tax rates imposed by local taxing authorities
	•	utility rates and property insurance rates.

As a result of any or all of the above factors, the Company’s financial results, the amount of cash available for distribution to the Company’s shareholders and the market price of the Company’s common stock could decline.

The Company is not completely insured against damages from hurricanes and other major storms.

The Company currently owns several apartment complexes and other properties that are in areas that are prone to damage from hurricanes and other major storms, including seven apartment complexes and one commercial property located in Florida. Due to the significant losses incurred by insurance companies on policies written on properties in Florida damaged by hurricanes, property and casualty insurers in Florida have modified their approach to underwriting policies. As a result, the Company now assumes the risk of first loss on a larger percentage of the value of its Florida real estate. If any of these properties were damaged in a hurricane or other major storm, the losses incurred by the Company could be significant. The Company’s current policies carry a 3% deductible on the insurable value of the properties. The current insurable value of the Florida properties is approximately $51.3 million.

     The Company is subject to the risk normally associated with debt financing.

The Company finances its real estate investments with mortgage debt, subjecting the Company to the risk that cash flow may not be sufficient to meet required payments of principal and interest on its debt. In addition, the existing terms of certain of the Company’s bonds and mortgages payable require that only a small portion of the principal of its debt will be repaid prior to maturity. Therefore, the Company is likely to need to refinance at least a portion of the outstanding debt as it matures if it intends to continue owning the property. There is a risk that the terms of the refinancing will not be as favorable as the existing debt. The

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Company’s ability to pay dividends to its shareholders is subordinated to the payment of debt service on its debt and other borrowings.

Real estate financed with tax-exempt debt is subject to certain restrictions.

The Company has and may in the future use tax-exempt financing to finance the acquisition of multifamily properties. While this type of financing generally offers lower interest rates than conventional financing, it subjects the financed property to certain restrictive covenants, including a requirement that a percentage of the apartment units in each property be occupied by residents whose income does not exceed a percentage of the median income for the area in which the property is located. It is possible that such covenants may cause the rents charged by these properties to be lowered, or rent increases foregone, in order to attract enough residents meeting the income requirements. In the event the Company does not comply with these restrictions, the interest on the bonds could become subject to Federal and state income tax, which would result in either an increase in the interest rate on the bonds or an early redemption of these bonds that would force the Company to obtain alternative financing or sell the property financed by the bond.

Fluctuating interest rates may affect the Company’s earnings.

The Company’s variable rate bonds payable bear interest at short-term variable rates. The short-term rate on the variable rate bonds payable is an index rate which is reset weekly. Increases in the short-term interest rates would increase interest expense on such borrowings.

The Company’s borrowings under repurchase agreements all bear interest at short-term fixed rates. An increase in market interest rates would cause the interest rates of the obligations to increase when and if they are renewed upon maturity.

If interest rates increase, the Company will have to pay more interest on this debt, but would not necessarily be able to increase rental income from its multifamily apartment properties. Therefore, an increase in interest rates may reduce the Company’s earnings and this may reduce the amount of funds available for distribution to the Company’s shareholders and the market price of its common stock.

The Company’s multifamily apartment properties may be illiquid and their value may decrease.

The Company’s investments in multifamily apartment properties are relatively illiquid. The ability to sell these assets, and the price received upon sale are affected by a number of factors including the number of potential and interested buyers, the number of competing properties on the market in the area and a number of other market conditions. As a result, the Company may not be able to recover its original purchase price upon sale.

The Company is subject to risks associated with its investments in Agency Securities that differ from those involved with owning multifamily apartment properties.

Prepayments are the primary feature of Agency Securities that distinguishes them from other types of fixed income investments and can occur when a homeowner sells or refinances his home. Prepayments usually can be expected to increase when mortgage interest rates decrease significantly and decrease when mortgage interest rates increase, although such effects are not entirely predictable. While a certain percentage of the pool of mortgage loans underlying Agency Securities are expected to prepay during a given period of time, the prepayment rate can, and often does, vary significantly from the anticipated rate of prepayment. Prepayments generally have a negative impact on the Company’s financial results, the effects of which depends on, among other things, the amount of unamortized premium on the securities, the reinvestment lag and the reinvestment opportunities.

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The Company’s financing strategy for its portfolio of Agency Securities uses a leverage rate of approximately eight times equity capital and by borrowing against a substantial portion of the market value of its Agency Securities in the form of repurchase agreements. If interest income on the Agency Securities purchased with borrowed funds fails to cover the cost of the borrowings, the Company will experience net interest losses and may experience net losses from operations. The return earned by the Company on its Agency Securities may be reduced if the interest rates on the underlying mortgage loans do not adjust as quickly or as much as necessary in order to match interest rate increases that may occur on the borrowings used by the Company to finance Agency Securities. In addition, fluctuations in the market value of the Agency Securities may result from changing interest rates. Accordingly, investments made by the Company in Agency Securities may result in lower earnings per share or losses and, as a result, could reduce the amount of cash available for distribution to stockholders.

There are risks associated with making mezzanine investments that differ from those involved with owning multifamily apartment properties.

In general, mezzanine level financing provided by the Company will be subordinate to senior lenders on the financed properties. Accordingly, in the event of a default on investments of this type, senior lenders will have a first right to the proceeds from the sale of the property securing their loan and this may result in the Company receiving less than all principal and interest it is owned on its mezzanine level financing. Also, since mezzanine level financings are expected to participate in the cash flow or sale proceeds from a financed property, they may carry a base interest rate different than a non-participating financing.

The issuance of additional shares of stock by the Company could cause the price of its stock to decline.

The Company has the authority to issue additional equity. These may be shares of common stock or shares of one or more classes of preferred stock. Shares of preferred stock, if any, would have rights and privileges different from the Company’s common stock, which may include preferential rights to receive dividends. The issuance of additional common stock or other forms of equity could cause dilution of the existing shares of common stock and a decrease in the market price of the common stock.

There are a number of risks associated with being taxed as a REIT.

In order to maintain its status as a REIT, the Company must comply with a number of requirements. Furthermore, Congress and the IRS could make changes to the tax laws and regulations and the courts might issue new rulings that would make it impossible or difficult for the Company to remain qualified as a REIT. If the Company fails to qualify as a REIT, its net income would be subject to Federal income tax at regular corporate rates.

Information Available on Website

The Company’s annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and press releases are available free of charge at www.apro-reit.com as soon as reasonably practical after they are filed with the Securities and Exchange Commission (“SEC”).

Item 2. Properties.

Properties owned by the Company as of December 31, 2004 are described in the following table:

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In the opinion of the Company’s management, each of the properties is adequately covered by insurance. For additional information concerning the properties, see Note 6 to the Company’s consolidated financial statements. A discussion of general competitive conditions to which these properties are subject is included in Item 1 of this report.

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On December 22, 2004, the Company acquired all of the outstanding membership interests in a newly formed Tennessee limited liability company, Arbor Knoll-Crest, LLC from Gables Realty Limited Partnership, a Delaware limited partnership and Gables GP, Inc., a Texas corporation. The sole asset of Arbor Knoll-Crest, LLC is a 548-unit apartment complex in Antioch, Tennessee, which was renamed Arbor Hills.

The purchase price for the membership interests in Arbor Knoll-Crest, LLC was approximately $29.7 million, $26.2 million of which was paid through the assumption of existing tax-exempt mortgage debt on the Property, approximately $3.0 million of which was paid in cash, and approximately $550,000 of which was paid through various expense prorations.

On December 15, 2004, the Company sold the property commonly referred to as “The Glades Apartments.” The total sales price of $20.0 million consisted of cash and debt assumed by the buyer. The net cash proceeds to the Company were $11.1 million, net of closing costs of approximately $149,000. The total debt assumed by the buyer was approximately $8.8 million. A gain of approximately $6.0 million was realized upon the closing of the transaction.

Item 3. Legal Proceedings.

On December 3, 2003, a purported class action lawsuit was filed in the Delaware Court of Chancery against AFREZ, along with its general partner and America First Companies L.L.C. (“America First”), by Harvey Matcovsky and Gloria Rein, in their capacities as holders of assigned limited partner interests (“Units”) of AFREZ. The plaintiffs seek to have the lawsuit certified as a class action on behalf of all Units holders. The lawsuit alleges, among other things, that the defendants acted in violation of their fiduciary duties to the Unit holders in connection with the merger of AFREZ with and into the Company. The plaintiffs were seeking to enjoin the proposed merger and also seek unspecified damages and costs. On February 5, 2004, the defendants filed an Answer denying all material allegations and asserting several affirmative defenses. The merger of AFREZ with and into the Company was completed on June 3, 2004 and, as a result, the Company assumed all liabilities of AFREZ, including any liability that may be imposed as a result of this lawsuit. To date, the plaintiffs have not amended their complaint to formally name the Company as a defendant or to modify the relief they are seeking. The Company intends to defend this lawsuit vigorously, but is unable to predict the outcome of this litigation. There are no other material pending legal proceedings to which the Company is a party or to which any of its properties is subject

Item 4. Submission of Matters to a Vote of Security Holders.

No matter was submitted during the fourth quarter of the fiscal year ended December 31, 2004 to a vote of the Company’s security holders.

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PART II

     Item 5. Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

     (a) Market Information. Shares of the Company trade on the NASDAQ National Market System under the trading symbol “APRO”. The following table sets forth the high and low sale prices for the shares for each quarterly period in 2004 and 2003.

	(b)	Shareholders. The approximate number of shareholders on March 4, 2005 was 9,890.
	(c)	Dividends. Dividends to shareholders were made on a quarterly basis during 2004 and 2003. Total dividends declared to shareholders during the fiscal years ended December 31, 2004 and 2003 equaled $9,149,143 and $5,074,649, respectively. The dividends accrued per share during the fiscal years ended December 31, 2004 and 2003 were as follows:

See Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” for information regarding the sources of funds that will be used for cash dividends and for a discussion of factors which may affect the Company’s ability to pay cash dividends at the same levels in 2005 and thereafter.

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Item 6. Selected Financial Data.

Set forth below is selected financial data for the Company for the five years ended December 31, 2004. Information for periods prior to January 1, 2003 represents the financial data of the Partnership. Information for the periods beginning June 3, 2004 include the financial information of AFREZ which merged with the Company as of that date. The information should be read in conjunction with the Company’s consolidated financial statements and Notes thereto filed in response to Item 8 of this report.

(1) FFO is calculated in accordance wit