UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

FORM 10-Q

For the quarterly period ended March 31, 2005

or

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)

     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 þ     NO o

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

YES þ     NO o

     As of April 30, 2005, there were 10,510,558 outstanding shares of the registrant’s common stock.

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AMERICA FIRST APARTMENT INVESTORS, INC.

TABLE OF CONTENTS

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PART I — FINANCIAL INFORMATION

Item 1. Financial Statements.

AMERICA FIRST APARTMENT INVESTORS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(in thousands, except shares and per share amounts)

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AMERICA FIRST APARTMENT INVESTORS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(in thousands, except per share amounts)

2

AMERICA FIRST APARTMENT INVESTORS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(in thousands)

The accompanying notes are an integral part of the consolidated financial statements.

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AMERICA FIRST APARTMENT INVESTORS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2005
(UNAUDITED)

1. Organization and Basis of Presentation

America First Apartment Investors, Inc. (the “Company”) is a Maryland corporation which owns and operates 29 multifamily apartment projects and an office warehouse facility. The Company also invests in agency securities and other real estate assets.

The Company is treated as a Real Estate Investment Trust (“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.

The accompanying interim unaudited consolidated financial statements have been prepared according to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted according to such rules and regulations, although management believes that the disclosures are adequate to make the information presented not misleading. The consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2004. Certain amounts from prior periods have been reclassified to conform to the current period presentation. In the opinion of management, all normal and recurring adjustments necessary to present fairly the financial position as of March 31, 2005, and the results of operations for all periods presented have been made. The results of operations for the interim periods are not necessarily indicative of the results to be expected for the full year.

The consolidated financial statements include the accounts of the Company and its subsidiaries. All significant intercompany transactions and accounts have been eliminated in consolidation. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

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AMERICA FIRST APARTMENT INVESTORS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2005
(UNAUDITED)

2. Investments in Real Estate

As of March 31, 2005 and December 31, 2004, the Company’s investments in real estate consisted of the following (in thousands):

⁽¹⁾ This is an office/warehouse facility. The figure represents square feet available for lease to tenants.

3. Notes Payable

Notes payable of the Company consist of Variable Rate Junior Notes assumed in the merger with America First Real Estate Investment Partners, L.P. (“AFREZ”) in June 2004. These unsecured notes bear interest at the rate equal to 120% of the annual applicable federal rate for debt instruments with a term of not over three years as determined by the Internal Revenue Code and applicable regulations thereunder. As of March 31, 2005, such rate was 3.65%. The notes provide for annual installments of accrued interest payable on the 15^th of each January. The unpaid principal balance and accrued but unpaid interest is due January 15, 2008.

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AMERICA FIRST APARTMENT INVESTORS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2005
(UNAUDITED)

4. Bonds and Mortgage Notes Payable

The Company has financed its multifamily apartment properties and its commercial property with long-term mortgage debt consisting of thirteen tax-exempt bond financings and seven taxable mortgage notes. Each debt obligation is secured by a first mortgage or deed of trust on the property. Bonds and mortgage notes payable as of March 31, 2005 and December 31, 2004 consisted of the following (in thousands):

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AMERICA FIRST APARTMENT INVESTORS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2005
(UNAUDITED)

Bonds Payable:

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AMERICA FIRST APARTMENT INVESTORS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2005
(UNAUDITED)

Mortgage Notes Payable:

⁽¹⁾ In January 2005, the Company entered into an interest rate swap transaction which fixed the rate on the bond to 3.44% through January 2012. The swap is accounted for as a qualifying cash flow hedge and therefore any changes in the fair value of the swap are reflected in other comprehensive income (loss) until earnings are affected by the hedged item.

⁽²⁾ The bond payable bears interest at a highly rated bond composite variable rate that is reset weekly and capped at 7.30%. The rate averaged 2.20% for the quarter and was 2.22% as of March 31, 2005.

⁽³⁾ In June 2004, the Company entered into an interest rate swap transaction with a third party under which the interest rates on these bonds are now fixed at 3.30% through June 2009.

⁽⁴⁾ The interest rate on these bonds are variable based upon the BMA average plus 0.65%.

⁽⁵⁾ The Company has an interest rate swap agreement with a third party under which the interest rate on the bond is fixed at 2.82% through February 2009.

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AMERICA FIRST APARTMENT INVESTORS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2005
(UNAUDITED)

⁽⁶⁾ The Company assumed this fixed rate debt as part of the merger with AFREZ and the carrying amounts reflect the effect of determining the fair value of the debt on the merger date. Principal amounts for the debt as of March 31, 2005 are as follows: Waterman’s Crossing — $11,219; Huntsview Apartments — $6,911; Highland Park Apartments — $6,841; and Fox Hollow Apartments — $5,972.

⁽⁷⁾ This mortgage note payable matures in less than one year. At the current time, the Company will either refinance or pay this debt in full upon its maturity.

⁽⁸⁾ Bond payable bears interest at a highly rated bond composite variable rate that is reset weekly and capped at 12%, the rate at March 31, 2005 was 2.02% and the average for the quarter was 2.14%.

5. Borrowings under Repurchase Agreements

Borrowings under repurchase agreements as of March 31, 2005 and December 31, 2004 consisted of the following (in thousands):