UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~June~~September 30, 2009

[ ] 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 0-14483

Davidson Diversified Real Estate II, L.P.

(Exact name of registrant as specified in its charter)

Delaware	62-1207077
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

55 Beattie Place, P.O. Box 1089

Greenville, South Carolina 29602

(Address of principal executive offices)

(864) 239-1000

(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.

[X] Yes [ ] No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). [ ] Yes [ ] No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer [ ]

Accelerated filer [ ]

Non-accelerated filer [ ]

(Do not check if a smaller reporting company)

Smaller reporting company [X]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). [ ] Yes [X] No

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

DAVIDSON DIVERSIFIED REAL ESTATE II, L.P.

CONSOLIDATED ~~BALANCE~~STATEMENT ~~SHEETS~~OF NET ASSETS IN LIQUIDATION

(Unaudited)

(in thousands)

September 30, 2009

Assets
Cash and cash equivalents	$ 897
Receivables	49
Restricted escrow	613
	1,559
Liabilities
Accounts payable	625
Accrued property taxes	310
Other liabilities	64
Taxes payable (Note D)	400
Estimated costs during the period of liquidation (Note B)	105
	1,504

Net assets in liquidation	$ 55

See Accompanying Notes to Consolidated Financial Statements

Davidson Diversified Real Estate II, L.P.

CONSOLIDATED BALANCE SHEET

(in thousands, except unit data)

	June 30,	December 31,
	2009	2008
	(Unaudited)	(Note)
Assets
Cash and cash equivalents	$ 629	$ 1,980
Receivables and deposits	64	126
Restricted escrow	613	613
Other assets	176	165
Investment property:
Land	586	586
Buildings and related personal property	10,883	10,758
	11,469	11,344
Less accumulated depreciation	(9,248)	(8,960)
	2,221	2,384
	$ 3,703	$ 5,268
Liabilities and Partners' Deficit
Liabilities
Accounts payable	$ 662	$ 764
Tenant security deposit liabilities	40	46
Accrued property taxes	388	592
Other liabilities	117	107
Mortgage note payable	8,382	8,431
	9,589	9,940
Partners' Deficit
General partners	(3)	--
Limited partners (1,224.25 units issued and	(5,883)	(4,672)
outstanding)	(5,886)	(4,672)
	$ 3,703	$ 5,268

December 31, 2008

Note: The consolidated balance sheet at December 31, 2008 has been derived from the audited financial statements at that date but does not include all the information and footnotes required by generally accepted accounting principles for complete financial statements.

Assets held for Sale
Cash and cash equivalents	$ 1,980
Receivables and deposits	126
Restricted escrow	613
Other assets	165
Investment property:
Land	586
Buildings and related personal property	10,758
	11,344
Less accumulated depreciation	(8,960)
	2,384
	$ 5,268

Liabilities and Partners' Deficit
Liabilities related to Assets held for Sale
Accounts payable	$ 764
Tenant security deposit liabilities	46
Accrued property taxes	592
Other liabilities	107
Mortgage note payable	8,431
	9,940

Partners' Deficit
General partners	--
Limited partners (1,224.25 units issued and outstanding)	(4,672)
	(4,672)
	$ 5,268

Note: The consolidated balance sheet has been derived from the audited financial statements at that date but does not include all the information and footnotes required by generally accepted accounting principles for complete financial statements.

See Accompanying Notes to Consolidated Financial Statements

Davidson Diversified Real Estate II, L.P.

CONSOLIDATED STATEMENTS OF DISCONTINUED OPERATIONS

(Unaudited)

(in thousands, except per unit data)

	Three Months Ended		~~Six~~Nine Months Ended
	June 30,		June 30,
	September 30,		September 30,
	2009	2008	2009	2008
Income from continuing
operations	$ --	$ --	$ --	$ --
Loss from discontinued
operations:
Revenues:
Rental income	~~$ 476~~287	~~$ 483~~1,219	~~$ 963~~1,250	~~$ 976~~5,019
Other income	5526	53129	95121	97490
Total revenues	~~531~~313	~~536~~1,348	1,~~058~~371	15,~~073~~509
Expenses:
Operating	~~241~~256	~~237~~778	~~480~~736	~~467~~2,604
General and administrative	3433	6492	94127	~~123~~215
Depreciation	~~145~~97	~~140~~339	~~288~~385	~~278~~1,699
Interest	~~129~~79	~~229~~251	~~258~~337	~~479~~1,099
Property taxes	3914	36115	7946	73904
Total expenses	588	706	1,199	1,420
Loss on early extinguishment
Loss from continuing operations	(57)	(170)	(141)	(347)
of debt (Note E)	95	137	95	137
Income (loss) from discontinued
Total expenses	574	1,712	1,726	6,658
operations (Note A)	47	(355)	47	(438)
Loss from discontinued
Net loss	$ (10)	$ (525)	$ (94)	$ (785)
operations before gain from
Net loss allocated to general
sale	(261)	(364)	(355)	(1,149)
partners (2%)	$ --	$ (11)	$ (2)	$ (16)
Gain from sale of discontinued
Net loss allocated to limited
operations (Note E)	8,729	15,472	8,729	15,472
partners (98%)	(10)	(514)	(92)	(769)
Net income	$ 8,468	$ 15,108	$ 8,374	$ 14,323
	$ (10)	$ (525)	$ (94)	$ (785)
Net income allocated to
general partners	$ 3	$ 342	$ 1	$ 326
Net income allocated to
limited partners	8,465	14,766	8,373	13,997
	$ 8,468	$ 15,108	$ 8,374	$ 14,323
Per limited partnership unit:
Loss from continuing operations	$ (45.74)	$(135.59)	$(112.72)	$(277.72)
Loss from discontinued
Income (loss) from discontinued
operations	$ (209.11)	$ (291.61)	$ (284.25)	$ (919.74)
operations	37.57	(284.26)	37.57	(350.42)
Gain from sale of discontinued
Net loss	$ (8.17)	$ (419.85)	$ (75.15)	$ (628.14)
operations	7,123.54	12,352.87	7,123.54	12,352.87
Distribution per limited partnership
Net income	$ 6,914.43	$12,061.26	$ 6,839.29	$11,433.13
unit	$ --	$ --	$ 914.03	$ --
Distributions per limited
partnership unit	$ 1,977.54	$ 7,464.16	$ 2,891.57	$ 7,464.16

See Accompanying Notes to Consolidated Financial Statements

Davidson Diversified Real Estate II, L.P.

CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' ~~DEFICIT~~CAPITAL/NET ASSETS IN LIQUIDATION

(Unaudited)

(in thousands, except unit data)

	Limited
	Partnership	General	Limited
	Units	Partners	Partners	Total
Original capital contributions	1,224.25	$ 1	$ 24,485	$ 24,486
Original capital
contributions	1,224.25	$ 1	$24,485	$ 24,486
Partners' deficit at
December 31, 2008	1,224.25	$ --	$ (4,672)	$ (4,672)
Distribution to partners	--	(1)	(1,119)	(1,120)
Distributions to partners	--	(2)	(3,540)	(3,542)
Net loss for the six months
Net income for the nine
ended June 30, 2009	--	(2)	(92)	(94)
months ended
Partners' deficit at
September 30, 2009	--	1	8,373	8,374
June 30, 2009	1,224.25	$ (3)	$ (5,883)	$ (5,886)
Partners' capital at
September 30, 2009	1,224.25	$ (1)	$ 161	160
Adjustment to liquidation
basis (Notes A and B)				(105)
Net assets in liquidation
at September 30, 2009				$ 55

See Accompanying Notes to Consolidated Financial Statements

Davidson Diversified Real Estate II, L.P.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(in thousands)

	Six Months Ended
	Nine Months Ended
	June 30,
	September 30,
	2009	2008
Cash flows from operating activities:
Net loss	$ (94)	$ (785)
Net income	$ 8,374	$ 14,323
Adjustments to reconcile net loss to net cash (used in)
Adjustments to reconcile net income to net cash
provided by operating activities:
(used in) provided by operating activities:
Depreciation	~~288~~385	1,~~360~~699
Amortization of loan costs	79	3547
Gain from sale of discontinued operations	(8,729)	(15,472)
Loss on early extinguishment of debt	95	137
Change in accounts:
Receivables and deposits	6277	~~(24)~~143
Other assets	(18)	(28)
Restricted escrow	--	(613)
Accounts payable	(102)	5
Other assets	61	90
Tenant security deposit liabilities	(6)	13
Accounts payable	(139)	(59)
Accrued property taxes	(204)	285
Tenant security deposit liabilities	(46)	(94)
Other liabilities	10	(41)
Accrued property taxes	(282)	448
Due to affiliates	--	(138)
Other liabilities	(60)	(150)
Net cash (used in) provided by operating
Due to affiliate	--	(490)
activities	(57)	682
Net cash (used in) provided by operating activities	(255)	9
Cash flows used in investing activities:
Cash flows from investing activities:
Property improvements and replacements	(~~125~~144)	(~~646~~1,044)
Deposit to restricted escrow	--	(830)
Deferred revenue	--	830
Net proceeds from sale of discontinued operations	2,927	30,782
Net cash provided by investing activities	2,783	29,738
Cash flows from financing activities:
Payments on mortgage notes payable	(4969)	(~~236~~293)
Loan costs paid	--	(3)
Repayment of mortgage note payable	--	(11,981)
Payments on advances from affiliate	--	(172)
Prepayment penalty paid	--	(122)
Distribution to partners	(1,120)	--
Payments on advances from affiliate	--	(6,332)
Net cash used in financing activities	(1,169)	(411)
Distributions to partners	(3,542)	(9,144)
Net decrease in cash and cash equivalents	(1,351)	(375)
Net cash used in financing activities	(3,611)	(27,872)
Net (decrease) increase in cash and cash equivalents	(1,083)	1,875
Cash and cash equivalents at beginning of period	1,980	727
Cash and cash equivalents at end of period	$ ~~629~~897	$ ~~352~~2,602
Supplemental disclosure of cash flow information:
Cash paid for interest	$ ~~254~~371	$ ~~938~~1,573
Supplemental disclosure of non-cash activity:
Supplemental disclosure of non-cash activities:
Property improvements and replacements included in
accounts payable	$ --	$ 27398
Assumption of mortgage note payable by the purchaser	$ 8,362	$ --

At December 31, 2007, approximately $98,000 of property improvements and replacements were included in accounts payable and are included in property improvements and replacements for the ~~six~~nine months ended September ~~June~~ 30, 2008.

See Accompanying Notes to Consolidated Financial Statements

Davidson Diversified Real Estate II, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note A - Basis of Presentation

~~The~~As ~~accompanying~~of ~~unaudited~~September ~~consolidated~~30, ~~financial statements of~~ 2009, Davidson Diversified Real Estate II, L.P. (the "Partnership" or "Registrant") adopted ~~have been prepared in accordance with generally accepted accounting principles for interim financial information and with~~ the ~~instructions~~liquidation tobasis ~~Form 10-Q and Article 8-03~~ of ~~Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted~~ accounting ~~principles~~due ~~for~~to ~~complete financial statements. In~~ the ~~opinion~~sale of ~~Davidson~~its ~~Diversified~~remaining investment ~~Properties,~~property ~~Inc.~~ (~~the~~as ~~"Managing~~discussed General Partner"), all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and six month periods ended June 30, 2009 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2009. For further information, refer to the consolidated financial statements and footnotes thereto included in ~~the~~“Note ~~Partnership's~~E ~~Annual~~– ~~Report~~Disposition ~~on Form 10-K for the fiscal year ended December 31, 2008. The Managing General Partner is a subsidiary~~ of ~~Apartment~~ Investment ~~and Management Company ("AIMCO"~~ Properties”)~~, a publicly traded real estate investment trust~~.

~~The~~As a result of the decision to liquidate the Partnership’s, ~~management~~the ~~evaluated~~Partnership changed its basis of accounting for ~~subsequent~~its ~~events~~consolidated ~~through~~financial statements at September 30, 2009 to the ~~time~~liquidation ~~this~~basis ~~Quarterly~~of ~~Report~~accounting. onConsequently, ~~Form~~assets ~~10-Q~~have ~~was~~been ~~filed~~valued onat estimated ~~August~~net 14realizable value and liabilities are presented at their estimated settlement amounts, ~~2009~~including estimated costs associated with carrying out the liquidation of the Partnership. The valuation of assets and liabilities necessarily requires many estimates and assumptions and there are substantial uncertainties in carrying out the liquidation. The actual realization of assets and settlement of liabilities could be higher or lower than amounts indicated and is based upon the managing general partner’s estimates as of the date of the consolidated financial statements.

InDavidson ~~accordance~~Diversified Properties, ~~with~~Inc.(the ~~Statement~~“Managing ofGeneral ~~Financial Accounting Standards (“SFAS~~Partner”) estimates ~~No.~~that ~~144,~~the ~~“Accounting~~liquidation ~~for~~process ~~the~~will ~~Impairment~~be orcompleted ~~Disposal~~by ofSeptember ~~Long-Lived Assets”~~30, 2010. Because the ~~accompanying~~success ~~consolidated~~in ~~statements~~realization of ~~operations~~assets ~~for the three~~ and ~~six months ended June 30, 2008 reflect~~ the ~~operations~~settlement of liabilities ~~Reflections~~is ~~Apartments~~based ~~and~~on ~~Big~~the ~~Walnut~~Managing ~~Apartments~~General asPartner’s ~~income~~best ~~(loss)~~estimates, ~~from~~the liquidation ~~discontinued~~period ~~operations~~may ~~due~~be toshorter ~~their~~than ~~sales~~projected onor ~~July~~it ~~31,~~may ~~2008~~be ~~and~~extended ~~October~~beyond the ~~22,~~projected ~~2008, respectively~~period.

The ~~following~~accompanying ~~table~~consolidated ~~presents~~statements ~~summarized~~of discontinued ~~results~~operations for the three and nine months ended September 30, 2009 and 2008 reflect the operations of Trails Apartments as loss from discontinued operations ~~related~~and tothe balance sheet as of December 31, 2008 reflects the ~~Partnership~~assets and liabilities as held for sale as a result of the property’s sale to a third party on August 25, 2009 (as discussed in “Note E”). The consolidated statements of discontinued operations for the three and ~~six~~nine months ended ~~June~~September 30, 2008 also ~~(in~~reflect ~~thousands):~~the operations of Reflections Apartments and Big Walnut Apartments as loss from discontinued operations due to their sales on July 31, 2008 and October 22, 2008, respectively.

	Three Months Ended June 30, 2008
	Reflections	Big Walnut
	Apartments	Apartments	Total
Revenues	$ 1,089	$ 462	$ 1,551
Expenses	(1,376)	(530)	(1,906)
Loss from discontinued operations	$ (287)	$ (68)	$ (355)

Certain reclassifications were made to the 2008 balances to conform to the 2009 presentation.

	Six Months Ended June 30, 2008
	Reflections	Big Walnut
	Apartments	Apartments	Total
Revenues	$ 2,170	$ 919	$ 3,089
Expenses	(2,460)	(1,067)	(3,527)
Loss from discontinued operations	$ (290)	$ (148)	$ (438)

The Partnership’s management evaluated subsequent events through the time this Quarterly Report on Form 10-Q was filed.

The income from discontinued operations for the three months ended June 30, 2009 is a result of a reduction of the liability recorded for real estate taxes for prior years at Reflections Apartments. The income from discontinued operations for the six months ended June 30, 2009 is the result of the write off of accruals related to the Big Walnut Apartments Ohio entity tax, which was paid during the second quarter of 2009.

On June 24, 2009, the Partnership entered into a sale contract with a third party relating to the sale of The Trails Apartments. The property is expected to sell during the third quarter of 2009 for an expected sale price of $11,475,000. The Partnership determined that certain criteria of SFAS No. 144 were not met at June 30, 2009 and therefore the Partnership continues to report the assets and liabilities of the investment property as held for investment and its respective operations as continuing operations.

Certain reclassifications have been made to the 2008 balances to conform to the 2009 presentation.

Organization : On May 21, 2008, the Managing General Partner amended the Partnership Agreement to allow for the establishment of different designated series of limited partnership interests that have separate rights with respect to specific Partnership property. As of June 30, 2009, the Managing General Partner has not amended the Partnership Agreement or the Certificate of Limited Partnership establishing designated series interests.

Recent Accounting Pronouncement

In June 2009, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 168, The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles—a replacement of FASB Statement No. 162, or SFAS No. 168, which is effective for financial statements issued for interim and annual periods ending after September 15, 2009. Upon the effective date of SFAS No. 168, the FASB Accounting Standards Codification, or the ~~Codification~~FASB ASC, ~~will~~became ~~become~~ the single source of authoritative GAAP recognized by the FASB to be applied by nongovernmental entities. Rules and interpretive releases of the Securities and Exchange Commission, or SEC, under authority of federal securities laws are also sources of authoritative GAAP for SEC registrants. The ~~Codification~~FASB ~~will~~ASC ~~supersede~~superseded all then-existing non-SEC accounting and reporting standards., ~~All~~and ~~other~~all other non-grandfathered non-SEC accounting literature not included in the ~~Codification~~FASB ~~will~~ASC ~~become~~is now non-authoritative. ~~Following~~Subsequent to the effective date of SFAS No. 168, the FASB will issue Accounting Standards Updates that serve to update the ~~Codification.~~FASB ~~The Partnership does not anticipate that SFAS No~~ASC. ~~168 will have a significant effect on its consolidated financial statements.~~

Note B -– ~~Transactions~~Adjustment ~~with~~to Liquidation ~~Affiliated~~Basis ~~Parties~~of Accounting

At September 30, 2009, in accordance with the liquidation basis of accounting, assets were adjusted to their estimated net realizable value and liabilities were adjusted to their estimated settlement amount. The net adjustment required to convert to the liquidation basis of accounting was a decrease in net assets of approximately $105,000, which is included in the consolidated statement of changes in partners' capital/net assets in liquidation. The net adjustment is summarized as follows:

	Decrease in
	Net Assets
	(in thousands)
Adjustment of other assets and liabilities, net	$(105)

Note C - Transactions with Affiliated Parties

The Partnership has no employees and depends on the Managing General Partner and its affiliates for the management and administration of all Partnership activities. The Partnership Agreement provides for payments to affiliates for services and reimbursement of certain expenses incurred by affiliates on behalf of the Partnership.

Affiliates of the Managing General Partner ~~receive~~received 5% of gross receipts from all of the Partnership's properties as compensation for providing property management services. The Partnership paid to such affiliates approximately $5269,000 and $~~204~~272,000 for the nine ~~six~~ months ended ~~June~~September 30, 2009 and 2008, respectively, which are included in operating expenses ~~and loss from discontinued operations~~.

An affiliate of the Managing General Partner charged the Partnership for reimbursement of accountable administrative expenses amounting to approximately $2034,000 and $~~132~~227,000 for the nine ~~six~~ months ended ~~June~~September 30, 2009 and 2008, respectively, which is included in general and administrative expenses, gain from sale of discontinued operations and investment property. The portion of these reimbursements included in gain from sale of discontinued operations and investment property for the nine ~~six~~ months ended ~~June~~September 30, 2009 and 2008 are construction management services provided by an affiliate of the Managing General Partner of approximately $4,000 and $5489,000, respectively.

In accordance with the Partnership Agreement, AIMCO Properties, L.P., an affiliate of the Managing General Partner, advanced the Partnership various funds in prior years to cover capital expenditures, operating expenses, real estate taxes and funds in connection with the refinancing of the mortgage encumbering Big Walnut Apartments. No such advances were received during the ~~six~~nine months ended September ~~June~~ 30, 2009 or 2008. The Partnership repaid ~~approximately~~in ~~$172,000~~full ofthe ~~principal~~advance balance and ~~approximately $329,000 of~~ accrued interest toof ~~AIMCO~~approximately ~~Properties~~$7,046,000 ~~L.P.~~ during the ~~six~~nine months ended ~~June~~September 30, 2008. with proceeds from the sale of Reflections Apartments. Interest on advances was charged at prime plus 1%. Interest expense was approximately $~~215~~249,000 for the ~~six~~nine months ended ~~June~~September 30, 2008. ~~The Partnership repaid in full the remaining advance balance and accrued interest during the third quarter of 2008 with proceeds from the sale of Reflections Apartments.~~ At September ~~June~~ 30, 2009 and December 31, 2008, there were no advances or associated accrued interest due to AIMCO Properties, L.P. The Partnership may receive additional advances of funds from AIMCO Properties, L.P. although AIMCO Properties, L.P. is not obligated to provide such advances. For more information on AIMCO Properties, L.P., including copies of its audited balance sheet, please see its reports filed with the Securities and Exchange Commission.

The Partnership accrued a real estate commission due to the Managing General Partner of $48,000 upon the sale of Shoppes at River Rock during the year ended December 31, 1999. During 2002, the Partnership paid $30,000 of this amount to an unaffiliated third party as part of a settlement regarding brokerage services. Approximately $18,000 iswas accrued at ~~June 30, 2009 and~~ December 31, 2008 and is included in other liabilities inon the ~~accompanying~~ consolidated balance ~~sheets~~sheet. Payment of this commission is subordinate to the limited partners receiving their original invested capital plus a cumulative non-compounded annual return of 8% on their adjusted invested capital. During the nine months ended September 30, 2009, the Managing General Partner determined that the limited partners would not receive both their original capital contribution and applicable cumulative return. Therefore, the Managing General Partner reversed the real estate commission of approximately $18,000 previously accrued associated with the sale of Shoppes at River Rock, which is included in gain from sale of discontinued operations for the three and nine months ended September 30, 2009.

The Partnership ~~insures~~insured its properties up to certain limits through coverage provided by AIMCO which is generally self-insured for a portion of losses and liabilities related to workers’ compensation, property casualty, general liability and vehicle liability. The Partnership ~~insures~~insured its properties above the AIMCO limits through insurance policies obtained by AIMCO from insurers unaffiliated with the Managing General Partner. During the ~~six~~nine months ended ~~June~~September 30, 2009, the Partnership was charged by AIMCO and its affiliates approximately $28,000 for insurance coverage and fees associated with policy claims administration. ~~Additional charges will be incurred by the Partnership during 2009 as other insurance policies renew later in the year.~~ The Partnership was charged by AIMCO and its affiliates approximately $128,000 for insurance coverage and fees associated with policy claims administration during the year ended December 31, 2008.

Note CD – Partnership Income Taxes

The Partnership is subject to Tennessee income taxes as a result of the Partnership’s former property, The Trails Apartments, being located in the state of Tennessee. The Partnership ~~has~~ recorded a deferred tax liability of approximately $14,000 at ~~both June 30, 2009 and~~ December 31, 2008 as a result of the Tennessee income tax requirements, which is classified in other liabilities. During the nine months ended September 30, 2009, as a result of the sale of The Trails Apartments, the Partnership ~~classifies~~recorded a deferred tax ~~income~~benefit ~~related~~of toapproximately ~~the~~$14,000, ~~Trails~~which ~~Apartments~~is reflected as a reduction of operating expenses. onIn addition, the ~~consolidated~~Partnership ~~statements~~recognized current tax expense of approximately $400,000, as a result of the sale, which is reflected as a reduction of gain from sale of discontinued operations. The corresponding liability is included in taxes payable at September 30, 2009. The Partnership’s deferred tax liability ~~consists~~at December 31, 2008 consisted primarily of temporary differences related to land, buildings and accumulated depreciation.

Note DE – ~~Fair~~Disposition ~~Value~~ of Investment ~~Financial Instruments~~Properties

~~SFAS~~On ~~No.~~August ~~107~~25, ~~"Disclosures about Fair Value of Financial Instruments" requires disclosure of fair value information about financial instruments~~2009, ~~whether~~the Partnership orsold ~~not~~its ~~recognized~~last inremaining ~~the~~investment ~~balance sheet~~property, ~~for~~The ~~which~~Trails ~~it is practicable~~ Apartments, to ~~estimate~~a ~~fair~~third ~~value.~~party ~~Fair~~for ~~value is defined in the SFAS as the amount at which the instruments could be exchanged in~~ a ~~current~~gross ~~transaction~~sale ~~between~~price ~~willing~~of ~~parties~~$11, ~~other than in a forced or liquidation sale~~475,000. The ~~Partnership~~net ~~believes~~proceeds realized ~~that~~by the ~~carrying~~Partnership ~~amount~~were ofapproximately ~~its~~$2,927,000 ~~financial~~after ~~instruments~~payment ~~(except~~of closing ~~for~~costs ~~long~~of ~~term~~approximately ~~debt)~~$186,000 ~~approximates~~and ~~their fair value due to~~ the ~~short-term~~assumption ~~maturity~~ of ~~these~~the ~~instruments.~~mortgage ~~The~~debt encumbering ~~Partnership estimates~~ the ~~fair~~property ~~value~~ of ~~its~~approximately ~~long-term~~$8,362,000 ~~debt~~ by ~~discounting~~the ~~future~~purchaser. ~~cash~~As ~~flows using~~ a result ~~discount~~of ~~rate~~the ~~commensurate~~sale, ~~with~~the ~~that~~Partnership ~~currently~~recorded ~~believed~~a togain beof ~~available~~approximately to$8,711,000 during the ~~Partnership~~three ~~for~~and ~~similar~~nine ~~term,~~months ~~long-term~~ended ~~debt. At~~September ~~June~~ 30, 2009. In addition, the Partnership ~~fair~~recorded ~~value~~a ofloss ~~the~~on ~~Partnership's~~early ~~long-term~~extinguishment of debt atof ~~the~~approximately $95,000 ~~Partnership's~~due ~~incremental~~to ~~borrowing~~the ~~rate~~write ~~approximated~~off ~~its~~of ~~carrying~~unamortized ~~value~~loan costs.

On July 31, 2008, the ~~Note~~Partnership Esold -Reflections ~~Contingencies~~Apartments to a third party for a gross sale price of approximately $31,010,000. The net proceeds received by the Partnership were approximately $30,782,000 after payment of closing costs of approximately $227,000. The Partnership used approximately $11,981,000 to repay the mortgage encumbering the property. As a result of the sale, the Partnership recorded a gain of approximately $15,472,000, which is included in gain from sale of discontinued operations, and a loss on the early extinguishment of debt of approximately $137,000 due to the write off of unamortized loan costs and a prepayment penalty of approximately $122,000.

AsNote ~~previously~~F disclosed, AIMCO Properties, L.P. and NHP Management Company, both affiliates of the Managing General Partner, were defendants in a lawsuit, filed as a collective action in August 2003 in the United States District Court for the District of Columbia, alleging that they willfully violated the Fair Labor Standards Act (“FLSA”) by failing to pay maintenance workers overtime for time worked in excess of 40 hours per week (“overtime claims”). The plaintiffs also contended that AIMCO Properties, L.P. and NHP Management Company failed to compensate maintenance workers for time that they were required to be "on-call" (“on-call claims”). In March 2007, the court in the District of Columbia decertified the collective action. In July 2007, plaintiffs’ counsel filed individual cases in Federal court in 22 jurisdictions. In the second quarter of 2008, AIMCO Properties, L.P. settled the overtime cases involving 652 plaintiffs and established a framework for resolving the 88 remaining “on-call” claims and the attorneys’ fees claimed by plaintiffs’ counsel. As a result, the lawsuits asserted in the 22 Federal courts have been dismissed. During the fourth quarter of 2008, the Partnership paid approximately $3,000 for settlement amounts for alleged unpaid overtime to employees who had worked at the Partnership’s investment properties. At this time, the 88 remaining “on-call” claims and the attorneys’ fees claimed by plaintiffs’ counsel are not resolved. The parties have selected six “on-call” claims that will proceed forward through the arbitration process and have selected arbitrators. The arbitrations have not yet been scheduled. The Managing General Partner is uncertain as to the amount of any additional loss that may be allocable to the Partnership. Therefore, the Partnership cannot estimate whether any additional loss will occur or a potential range of loss. Contingencies

As previously disclosed, AIMCO Properties, L.P. and NHP Management Company, both affiliates of the Managing General Partner, were defendants in a lawsuit, filed as a collective action in August 2003 in the United States District Court for the District of Columbia, alleging that they willfully violated the Fair Labor Standards Act (“FLSA”) by failing to pay maintenance workers overtime for time worked in excess of 40 hours per week (“overtime claims”). The ~~Partnership~~plaintiffs isalso contended ~~unaware~~that AIMCO Properties, L.P. and NHP Management Company failed to compensate maintenance workers for time that they were required to be "on-call" (“on-call claims”). In March 2007, the court in the District of ~~any~~Columbia decertified ~~other~~the ~~pending~~collective oraction. In ~~outstanding~~July ~~litigation~~2007, ~~matters~~plaintiffs’ counsel filed individual cases in Federal court in 22 jurisdictions. In the second quarter of 2008, AIMCO Properties, L.P. settled the overtime cases involving it652 plaintiffs orand ~~its~~established a framework for resolving the 88 remaining “on-call” claims and the attorneys’ fees claimed by plaintiffs’ counsel. As a result, the lawsuits asserted in the 22 Federal courts have been dismissed. During the fourth quarter of 2008, the Partnership paid approximately $3,000 for settlement amounts for alleged unpaid overtime to employees who had worked at the Partnership’s investment ~~property~~properties. At ~~that~~this time, the 88 remaining “on-call” claims and the attorneys’ fees claimed by plaintiffs’ counsel are not ofresolved. aThe ~~routine~~parties ~~nature~~have ~~arising~~selected six “on-call” claims that will proceed forward through the arbitration process and have selected arbitrators. The first two arbitrations will take place in December 2009, and the ~~ordinary~~remaining ~~course~~four arbitrations will take place in March and April 2010. The Managing General Partner is uncertain as to the amount of ~~business~~any additional loss that may be allocable to the Partnership. Therefore, the Partnership cannot estimate whether any additional loss will occur or a potential range of loss.

The Partnership is unaware of any other pending or outstanding litigation matters involving it or its former investment properties that are not of a routine nature arising in the ordinary course of business.

Environmental

Various Federal, state and local laws subject property owners or operators to liability for management, and the costs of removal or remediation, of certain hazardous substances present on a property, including lead-based paint. Such laws often impose liability without regard to whether the owner or operator knew of, or was responsible for, the release or presence of the hazardous substances. The presence of, or the failure to manage or remedy properly, hazardous substances may adversely affect occupancy at affected apartment communities and the ability to sell or finance affected properties. In addition to the costs associated with investigation and remediation actions brought by government agencies, and potential fines, or penalties imposed by such agencies in connection therewith, the presence of hazardous substances on a property could result in claims by private plaintiffs for personal injury, disease, disability or other infirmities. Various laws also impose liability for the cost of removal, remediation or disposal of hazardous substances through a licensed disposal or treatment facility. Anyone who arranges for the disposal or treatment of hazardous substances is potentially liable under such laws. These laws often impose liability whether or not the person arranging for the disposal ever owned or operated the disposal facility. In connection with the ownership, operation and management of its ~~property~~former properties, the Partnership could potentially be liable for environmental liabilities or costs associated with its ~~property~~former properties.

Mold

The Partnership is aware of lawsuits against owners and managers of multifamily properties asserting claims of personal injury and property damage caused by the presence of mold, some of which have resulted in substantial monetary judgments or settlements. The Partnership has only limited insurance coverage for property damage loss claims arising from the presence of mold and for personal injury claims related to mold exposure. Affiliates of the Managing General Partner have implemented policies, procedures, third-party audits and training and the Managing General Partner believes that these measures will prevent or eliminate mold exposure and will minimize the effects that mold may have on residents. To date, the Partnership has not incurred any material costs or liabilities relating to claims of mold exposure or to abate mold conditions. Because the law regarding mold is unsettled and subject to change the Managing General Partner can make no assurance that liabilities resulting from the presence of or exposure to mold will not have a material adverse effect on the Partnership’s consolidated financial condition ~~or results of operations~~.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS ~~OF OPERATIONS~~

~~The~~OF Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for forward-looking statements in certain circumstances. Certain information included in this Quarterly Report contains or may contain information that is forward-looking, including, without limitation, statements regarding the effect of redevelopments, the Partnership’s future financial performance, including the Partnership’s ability to maintain current or meet projected occupancy and rent levels, and the effect of government regulations. Actual results may differ materially from those described in these forward-looking statements and , in addition, will be affected by a variety of risks and factors some of which are beyond the Partnership’s control including, without limitation: financing risks, including the availability and cost of financing and the risk that the Partnership’s cash flows from operations may be insufficient to meet required payments of principal and interest; natural disasters and severe weather such as hurricanes; national and local economic conditions; the general level of interest rates; energy costs; the terms of governmental regulations that affect the Partnership’s property and interpretations of those regulations; the competitive environment in which the Partnership operates; real estate risks, including fluctuations in real estate values and the general economic climate in local markets and competition for tenants in such markets; insurance risk; development risks; litigation, including costs associated with prosecuting or defending claims and any adverse outcomes; and possible environmental liabilities, including costs, fines or penalties that may be incurred due to necessary remediation of contamination of properties presently owned or previously owned by the Partnership. Readers should carefully review the Partnership’s consolidated financial statements and the notes thereto and the other documents the Partnership files from time to time with the Securities and Exchange Commission.OPERATIONS

The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for forward-looking statements in certain circumstances. Certain information included in this Quarterly Report contains or may contain information that is forward-looking, without limitation, statements regarding the Partnership'’s ~~investment~~future ~~property~~financial performance ~~consists~~and ofthe ~~one~~effect ~~apartment~~of ~~complex~~government regulations. ~~The~~Actual ~~following~~results ~~table~~may ~~sets~~differ materially ~~forth~~from those described in these forward-looking statements and, in addition, will be affected by a variety of risks and factors some of which are beyond the ~~average~~Partnership’s ~~occupancy~~control including, without limitation: national and local economic conditions; the general level of interest rates; the ~~property~~terms ~~for~~of governmental regulations that affect the Partnership ~~six~~and ~~months~~interpretations ~~ended~~of ~~June~~those 30regulations; litigation, ~~2009~~including costs associated with prosecuting or defending claims and ~~2008:~~any adverse outcomes; and possible environmental liabilities, including costs, fines or penalties that may be incurred due to necessary remediation of contamination of properties previously owned by the Partnership. Readers should carefully review the Partnership’s consolidated financial statements and the notes thereto and the other documents the Partnership files from time to time with the Securities and Exchange Commission.

	Average Occupancy
	2009	2008
The Trails Apartments
Nashville , Tennessee	96%	97%

Results of Operations

~~The~~As ~~Partnership’s~~of ~~financial~~September ~~results~~30, ~~depend~~2009, the ~~upon~~Partnership aadopted ~~number~~the ofliquidation ~~factors~~basis ~~including~~of ~~the~~accounting ~~ability~~due to ~~attract~~the ~~and~~sale ~~maintain~~of its ~~tenants~~remaining ~~at the~~ investment property, ~~interest~~The ~~rates~~Trails ~~on the mortgage loan~~Apartments, ~~costs~~on ~~incurred~~August ~~to operate the investment property~~25, ~~general economic conditions and weather~~2009. Prior Asto ~~part~~adopting of the ~~ongoing~~liquidation ~~business~~basis ~~plan~~ of ~~the Partnership~~accounting, the ~~Managing~~Partnership’s ~~General~~net income ~~Partner~~was ~~monitors~~approximately ~~the~~$8,468,000 ~~rental~~and ~~market~~$8,374,000 ~~environment~~for ~~of its investment property to assess~~ the ~~feasibility~~three ~~of increasing rents, maintaining or increasing occupancy levels~~ and ~~protecting~~nine ~~the~~months ended ~~Partnership~~September ~~from~~30, ~~increases~~2009, ~~in expenses. As part of this plan~~respectively, ~~the~~compared ~~Managing General Partner attempts~~ to ~~protect~~net ~~the~~income ~~Partnership from the burden~~ of ~~inflation-related~~approximately $15,108,000 ~~increases~~and in$14,323,000 ~~expenses~~for bythe ~~increasing~~three ~~rents~~ and ~~maintaining~~nine amonths ~~high~~ended ~~overall~~September ~~occupancy~~30, 2008, ~~level~~respectively. ~~However,~~The ~~the~~decrease ~~Managing~~in ~~General~~income ~~Partner~~for ~~may~~both ~~use~~the ~~rental~~three ~~concessions~~ and ~~rental~~nine ~~rate~~months ended ~~reductions~~September ~~to offset softening market conditions; accordingly~~30, ~~there~~2009 is nodue ~~guarantee that the Managing General Partner will be able to sustain such~~ a ~~plan.~~decrease ~~Further,~~in again ~~number~~from ofsale ~~factors that are outside the control~~ of ~~the~~discontinued operations, ~~Partnership~~partially ~~such~~offset asby ~~the~~a ~~local~~decrease ~~economic~~in ~~climate~~loss ~~and~~from ~~weather~~discontinued ~~can adversely or positively affect the Partnership’s financial results~~operations.

On August 25, 2009, the ~~Results~~Partnership sold its last remaining investment property, The Trails Apartments, to a third party for a gross sale price of ~~Operations~~$11,475,000. The net proceeds realized by the Partnership were approximately $2,927,000 after payment of closing costs of approximately $186,000 and the assumption of the mortgage debt encumbering the property of approximately $8,362,000 by the purchaser. As a result of the sale, the Partnership recorded a gain of approximately $8,711,000 during the three and nine months ended September 30, 2009. In addition, the Partnership recorded a loss on early extinguishment of debt of approximately $95,000 due to the write off of unamortized loan costs.

The ~~Partnership~~additional ~~recognized~~gain ~~net~~from sale ~~loss~~ of ~~approximately~~discontinued ~~$10,000~~operations ~~and $94,000~~ for the ~~three~~nine ~~and six~~ months ended ~~June~~September 30, 2009, ~~respectively,~~is the ~~compared~~result of the reversal of a sale commission accrued related to ~~net~~the ~~loss~~sale of Shoppes ~~approximately~~at ~~$525,000~~River ~~and~~Rock in a previous year. The Partnership accrued a real estate commission due to the Managing General Partner of $~~785~~48,000 ~~for~~upon the ~~three~~sale ~~and~~of Shoppes ~~six~~at ~~months~~River Rock during the year ended ~~June~~December 3031, ~~2008~~1999. During 2002, ~~respectively.~~the InPartnership ~~accordance~~paid ~~with~~$30,000 ~~Statement~~of this amount to an unaffiliated third party as part of ~~Financial~~a ~~Accounting~~settlement ~~Standards~~regarding ~~("SFAS")~~brokerage Noservices. ~~144~~Approximately $18,000 ~~“Accounting~~was ~~for~~accrued at ~~the~~December ~~Impairment~~31, or2008 ~~Disposal~~and ofis ~~Long-Lived~~included ~~Assets”,~~in other liabilities on the consolidated balance ~~statements~~sheet. Payment of ~~operations~~this ~~for~~commission is subordinate to the ~~three~~limited ~~and~~partners receiving ~~six~~their ~~months~~original invested capital plus a cumulative non-compounded annual return of 8% on their adjusted invested capital. During the nine months ended ~~June~~September 30, ~~2008~~2009, ~~reflect~~the Managing General Partner determined that the limited ~~operations~~partners ofwould ~~Reflections~~not ~~Apartments~~receive both their original capital contribution and applicable ~~Big~~cumulative ~~Walnut~~return. Therefore, ~~Apartments~~the asManaging ~~income~~General ~~(loss)~~Partner reversed ~~from~~the ~~discontinued~~real ~~operations~~estate ~~due~~commission toof ~~their~~approximately ~~sales~~$18,000 onpreviously ~~July~~accrued associated 31with the sale of Shoppes at River Rock, ~~2008~~which is included in gain from sale of discontinued operations for the three and ~~October~~nine months ~~22,~~ended ~~2008~~September 30, ~~respectively~~2009.

On July 31, 2008, the Partnership sold Reflections Apartments to a third party for a gross sale price of approximately $31,010,000. The ~~following~~net ~~table~~proceeds ~~presents~~received ~~summarized~~by ~~results~~the Partnership were approximately $30,782,000 after payment of ~~operations~~closing ~~related~~costs of approximately $227,000. The Partnership used approximately $11,981,000 to repay the mortgage encumbering the property. As a result of the sale, the Partnership’s recorded a gain of approximately $15,472,000, which is included in gain from sale of discontinued operations, ~~for~~and ~~the~~a ~~three~~loss ~~and~~on ~~six~~the ~~months~~early ~~ended~~extinguishment ~~June~~of 30debt of approximately $137,000 ~~2008~~due ~~(in~~to ~~thousands):~~the write off of unamortized loan costs and a prepayment penalty of approximately $122,000.

	Three Months Ended June 30, 2008
	Reflections	Big Walnut
	Apartments	Apartments	Total
Revenues	$ 1,089	$ 462	$ 1,551
Expenses	(1,376)	(530)	(1,906)
Loss from discontinued operations	$ (287)	$ (68)	$ (355)

Excluding the impact of the gains from sale of discontinued operations, the Partnership’s loss from discontinued operations for the three and nine months ended September 30, 2009 was approximately $261,000 and $355,000, respectively, compared to losses of approximately $364,000 and $1,149,000 for the three and nine months ended September 30, 2008, respectively. The decrease in loss from discontinued operations for both the three and nine months ended September 30, 2009 is due to a decrease in total expenses, partially offset by a decrease in total revenues. Total expenses and total revenues decreased for both the three and nine months ended September 30, 2009 as a result of the sale of the Partnership’s remaining investment property on August 25, 2009 (as discussed above) and the sales of Reflections Apartments and Big Walnut Apartments on July 31, 2008 and October 22, 2008, respectively.

	Six Months Ended June 30, 2008 , 2008
	Reflections	Big Walnut
	Apartments	Apartments	Total
Revenues	$ 2,170	$ 919	$ 3,089
Expenses	(2,460)	(1,067)	(3,527)
Loss from discontinued operations	$ (290)	$ (148)	$ (438)

Included in general and administrative expenses for the three and nine months ended September 30, 2009 and 2008 are management reimbursements to the Managing General Partner as allowed under the Partnership Agreement, costs associated with the quarterly and annual communications with investors and regulatory agencies and the annual audit required by the Partnership Agreement.

~~The~~Liquidity ~~income~~and from discontinued operations for the three months ended June 30, 2009 is a result of a reduction of the liability recorded for real estate taxes for prior years at Reflections Apartments. The income from discontinued operations for the six months ended June 30, 2009 is the result of the write off of accruals related to the Big Walnut Apartments Ohio entity tax, which was paid during the second quarter of 2009.Capital Resources

The Partnership’s ~~loss~~expects ~~from continuing operations for the three and six months ended June 30, 2009 was approximately $57,000 and $141,000, respectively, compared~~ to liquidate ~~loss~~during ~~from~~2010 ~~continuing operations of approximately $170,000 and $347,000 for the three and six months ended June 30, 2008, respectively. The decrease in loss from continuing operations for both periods is~~ due to ~~a decrease in total expenses, partially offset by a decrease in total revenues. The decrease in total expenses for~~ the three months ended June 30, 2009 is due to decreases in interest and general and administrative expenses. Operating, depreciation and property tax expenses remained relatively constant for the three months ended June 30, 2009. Total expenses decreased for the six months ended June 30, 2009 due to decreases in interest and general and administrative expenses, partially offset by increases in operating, depreciation and property tax expenses. Interest expense decreased for both periods due to the payoff of advances from an affiliate of the Managing General Partner in the third quarter of 2008 from the proceeds from the sale of ~~Reflections~~its ~~Apartments.~~remaining ~~Operating expenses increased for the six months ended June 30, 2009 primarily due to an increase in utilities at the Partnership’s~~ investment property. ~~Depreciation~~(see “Note ~~expense~~A ~~increased~~– ~~for~~Basis ~~the~~of ~~six~~Presentation” ~~months ended June 30, 2009 due~~ to ~~property improvements and replacements placed into service at~~ the ~~property~~consolidated ~~during~~financial ~~the~~statements included ~~past~~in ~~twelve~~“Item ~~months~~1. ~~The~~Financial ~~increase in property tax expense for the six months ended June 30, 2009 is primarily due to an increase in the assessed value at The Trails Apartments~~Statements”).

~~The~~At ~~decrease~~September in30, ~~general~~2009, ~~and~~the Partnership ~~administrative~~had ~~expenses~~cash ~~for~~and ~~both~~cash ~~the~~equivalents ~~three~~of ~~and~~approximately ~~six~~$897,000, ~~months~~compared ~~ended~~to approximately ~~June~~$1,980,000 30at December 31, ~~2009~~2008. Cash isand ~~primarily~~cash equivalents decreased approximately $1,083,000 due to aapproximately ~~decrease~~$3,611,000 and $255,000 of cash used in ~~reimbursements~~financing toand ~~the~~operating ~~Managing~~activities, ~~General~~respectively, ~~Partner~~partially offset asby ~~allowed~~approximately ~~under~~$2,783,000 ~~the~~of ~~Partnership~~cash ~~Agreement~~provided by investing activities. ~~Also~~ Cash ~~included~~used in ~~general~~financing ~~and~~activities ~~administrative~~consisted ~~expenses~~of ~~for~~distributions ~~the~~to ~~three~~partners and principal ~~six~~payments ~~months~~made ~~ended~~on ~~June~~the ~~30,~~mortgage ~~2009~~encumbering ~~and~~the ~~2008~~Partnership’s ~~are~~investment property. ~~costs~~Cash ~~associated~~provided ~~with~~by ~~the~~investing ~~quarterly~~activities ~~and~~consisted ~~annual~~of ~~communications~~net ~~with~~proceeds received ~~investors~~from ~~and~~the ~~regulatory~~sale ~~agencies~~of ~~and~~The ~~the~~Trails ~~annual~~Apartments, ~~audit~~partially ~~required~~offset by ~~the~~property improvements ~~Partnership~~and ~~Agreement~~replacements.

~~Total~~During ~~revenues decreased for both~~ the ~~three~~nine ~~and six~~ months ended September ~~June~~ 30, 2009, ~~due~~the toPartnership acompleted ~~decrease~~approximately in$144,000 ~~rental~~of ~~income.~~capital improvements ~~Other~~at ~~income~~The ~~remained~~Trails ~~relatively~~Apartments, ~~constant~~consisting ~~for~~primarily ~~both~~of ~~periods~~exterior painting and floor covering replacement. ~~Rental~~ ~~income~~These ~~decreased~~improvements ~~for~~were ~~both~~funded ~~periods~~from ~~primarily~~operating cash ~~due~~flow. toThe ~~decreases~~Partnership insold ~~occupancy~~The ~~and~~Trails ~~the~~Apartments ~~average~~to ~~rental~~a ~~rate~~third atparty ~~The~~on ~~Trails~~August 25, ~~Apartments~~2009.

~~Liquidity~~As a result of the decision to liquidate the Partnership, the Partnership changed its basis of accounting for its consolidated financial statements at September 30, 2009 to the liquidation basis of accounting. Consequently, assets have been valued at estimated net realizable value and ~~Capital~~liabilities ~~Resources~~are presented at their estimated settlement amounts, including estimated costs associated with carrying out the liquidation of the Partnership. The valuation of assets and liabilities necessarily requires many estimates and assumptions and there are substantial uncertainties in carrying out the liquidation. The actual realization of assets and settlement of liabilities could be higher or lower than amounts indicated and is based upon the Managing General Partner’s estimates as of the date of the consolidated financial statements.

AtIn ~~June~~accordance ~~30,~~with ~~2009,~~ the liquidation ~~Partnership~~basis ~~had cash and cash equivalents~~ of ~~approximately $629~~accounting,~~000,~~ ~~compared to approximately $352,000~~ at ~~June~~September 30, ~~2008. Cash~~2009, ~~and~~assets ~~cash~~were ~~equivalents~~adjusted ~~decreased~~to their ~~approximately~~estimated ~~$1,351,000,~~net ~~from~~realizable ~~December~~value ~~31,~~and ~~2008,~~liabilities ~~due~~were adjusted to ~~approximately~~their estimated ~~$1,169,000,~~settlement ~~$125,000~~amount. ~~and~~The ~~$57,000~~net ofadjustment ~~cash~~required ~~used~~to inconvert ~~financing,~~to ~~investing~~the liquidation ~~and~~basis ~~operating~~of ~~activities,~~accounting ~~respectively.~~was ~~Cash~~a ~~used~~decrease in ~~financing~~net ~~activities~~assets ~~consisted~~ of aapproximately $105,000, ~~distribution~~which tois ~~partners~~included ~~and~~in ~~principal payments made on~~ the ~~mortgage~~consolidated ~~encumbering~~statement ~~the~~of ~~Partnership~~changes in partners’s ~~investment~~capital ~~property.~~/ ~~Cash~~net ~~used~~assets in ~~investing activities consisted of property improvements and replacements~~liquidation. The ~~Partnership~~net ~~invests~~adjustment ~~its~~is ~~working~~summarized as ~~capital reserves in interest bearing accounts.~~follows:

In accordance with the Partnership Agreement, AIMCO Properties, L.P., an affiliate of the Managing General Partner, advanced the Partnership various funds in prior years to cover capital expenditures, operating expenses, real estate taxes and funds in connection with the refinancing of the mortgage encumbering Big Walnut Apartments. No such advances were received during the six months ended June 30, 2009 or 2008. The Partnership repaid approximately $172,000 of principal and approximately $329,000 of accrued interest to AIMCO Properties, L.P. during the six months ended June 30, 2008. Interest on advances was charged at prime plus 1%. Interest expense was approximately $215,000 for the six months ended June 30, 2008. The Partnership repaid in full the remaining advance balance and accrued interest during the third quarter of 2008 with proceeds from the sale of Reflections Apartments. At June 30, 2009 and December 31, 2008, there were no advances or associated accrued interest due to AIMCO Properties, L.P. The Partnership may receive additional advances of funds from AIMCO Properties, L.P. although AIMCO Properties, L.P. is not obligated to provide such advances. For more information on AIMCO Properties, L.P., including copies of its audited balance sheet, please see its reports filed with the Securities and Exchange Commission.

	Decrease in
	Net Assets
	(in thousands)

Adjustment of other assets and liabilities, net	$ (105)

The ~~sufficiency of existing liquid assets to meet future liquidity and capital expenditure requirements is directly related to the level of capital expenditures required at the~~ Partnership’s ~~property to adequately maintain~~ distributed the ~~physical~~following ~~assets~~amounts ~~and~~during ~~other operating needs of~~ the ~~Partnership~~nine ~~and~~months toended ~~comply~~September ~~with Federal~~30, ~~state,~~2009 and ~~local legal and regulatory requirements. The Managing General Partner monitors developments~~ 2008 (in ~~the~~thousands, ~~area~~except ofper ~~legal~~unit ~~and regulatory compliance. Capital improvements planned for the Partnership's property are detailed below.~~data):

During the six months ended June 30, 2009, the Partnership completed approximately $125,000 of capital improvements at The Trails Apartments, consisting primarily of exterior painting and floor covering replacement. These improvements were funded from operating cash flow. The Partnership regularly evaluates the capital improvement needs of the property. While the Partnership has no material commitments for property improvements and replacements, certain routine capital expenditures are anticipated during 2009. Such capital expenditures will depend on the physical condition of the property as well as anticipated cash flow generated by the property.


	Nine Months Ended	Per Limited	Nine Months Ended	Per Limited
	September 30,	Partnership	September 30,	Partnership
	2009	Unit	2008	Unit

Sale(1)	$ 3,542	$2,891.57	$ 9,144	$7,464.16

~~The Partnership’s assets are thought to be sufficient for any near term needs~~ (~~exclusive of capital improvements~~1) Proceeds from of the ~~Partnership.~~August ~~The~~2009 ~~mortgage~~sale ~~indebtedness~~of ~~encumbering~~ The Trails Apartments ~~of approximately $8~~,~~382,000~~ ~~matures~~the inJuly ~~June~~2008 ~~2016~~sale ~~at which time a balloon payment~~ of Reflections ~~approximately~~Apartments ~~$7,385,000 is due. The Managing General Partner will attempt to refinance~~ and~~/or~~ ~~sell~~ the ~~property~~October ~~prior~~2008 tosale ~~such~~of ~~maturity~~Big ~~date~~Walnut Apartments. ~~If the property cannot be refinanced or sold for a sufficient amount, the Partnership may risk losing such property through foreclosure.~~

~~During~~The ~~2008, the~~ Partnership ~~Agreement was amended to extend the Partnership’~~'s ~~termination~~cash available ~~date~~for todistribution ~~December~~will ~~31,~~be ~~2017,~~reviewed ~~unless~~on ~~terminated~~a ~~prior~~quarterly ~~to such date~~basis. OnFuture ~~May~~cash distributions ~~21,~~will ~~2008,~~depend ~~the~~on ~~Managing General Partner amended~~ the ~~Partnership~~amount ~~Agreement to allow for the establishment~~ of ~~different~~cash ~~designated~~remaining ~~series~~after offully liquidating ~~limited partnership interests that have separate rights with respect to specific Partnership property. As of June 30, 2009,~~ the ~~Managing General Partner has not amended the~~ Partnership ~~Agreement or the Certificate of Limited Partnership establishing designated series interests~~.

~~The Partnership distributed the following amounts during the six months ended June 30, 2009 and 2008 (in thousands, except per unit data):~~Other

		Per Limited		Per Limited
	Six Months Ended	Partnership	Six Months Ended	Partnership
	June 30, 2009	Unit	June 30, 2008	Unit
Sale (1)	$1,120	$914.03	$ --	$ --

In addition to its indirect ownership of the managing and associate general partner interests in the Partnership, AIMCO and its affiliates owned 706.00 limited partnership units ("Units") in the Partnership representing 57.67% of the outstanding Units at September 30, 2009. A number of these Units were acquired pursuant to tender offers made by AIMCO or its affiliates. Pursuant to the Partnership Agreement, unitholders holding a majority of the Units are entitled to take action with respect to a variety of matters that include, but are not limited to, voting on certain amendments to the Partnership Agreement and voting to remove the Managing General Partner. As a result of its ownership of 57.67% of the outstanding Units, AIMCO is in a position to control all such voting decisions with respect to the Partnership. Although the Managing General Partner owes fiduciary duties to the limited partners of the Partnership, the Managing General Partner also owes fiduciary duties to AIMCO as its sole stockholder. As a result, the duties of the Managing General Partner, as managing general partner, to the Partnership and its limited partners may come into conflict with the duties of the Managing General Partner to AIMCO as its sole stockholder.

~~(1) Proceeds~~Critical ~~from~~Accounting ~~the July 2008 sale of Reflections Apartments~~ Policies and ~~the October 2008 sale of Big Walnut Apartments.~~Estimates

~~Future~~The ~~cash~~consolidated ~~distributions~~financial statements ~~will~~are ~~depend~~prepared onin ~~the~~accordance ~~levels~~with ofaccounting ~~net~~principles ~~cash~~generally accepted ~~generated~~in ~~from~~the ~~operations~~United States, ~~the~~which ~~timing~~require of the ~~debt~~Partnership ~~maturity,~~to ~~property~~make ~~sale~~ estimates and~~/or~~ ~~refinancing~~assumptions. The Partnership's ~~cash~~believes ~~available~~that ~~for~~of ~~distribution~~its issignificant ~~reviewed on a monthly basis. There can be no assurance~~accounting policies, ~~however, that~~ the ~~Partnership~~following ~~will~~may ~~generate~~involve ~~sufficient~~a ~~funds~~higher ~~from~~degree ~~operations,~~of ~~after~~judgment ~~required capital expenditures, to permit additional distributions to its partners during 2009 or subsequent periods~~and complexity.

OnImpairment ~~June 24, 2009, the Partnership entered into a sale contract with a third party relating to the sale~~ of The Trails Apartments. The property is expected to sell during the third quarter of 2009 for an expected sale price of $11,475,000. The Partnership determined that certain criteria of SFAS No. 144 were not met at June 30, 2009 and therefore the Partnership continues to report the assets and liabilities of the investment property as held for investment and its respective operations as continuing operations.Long-Lived Asset

~~Other~~Investment property was recorded at cost, less accumulated depreciation, unless the carrying amount of the asset was not recoverable. If events or circumstances indicated that the carrying amount of the property would not be recoverable, the Partnership made an assessment of its recoverability by comparing the carrying amount to the Partnership’s estimate of the undiscounted future cash flows, excluding interest charges, of the property. If the carrying amount exceeded the aggregate undiscounted future cash flows, the Partnership recognized an impairment loss to the extent the carrying amount exceeded the estimated fair value of the property.

InReal ~~addition~~property toinvestment ~~its~~was subject ~~indirect~~to ~~ownership~~varying degrees of ~~the~~risk. Several ~~managing~~factors ~~and~~may ~~associate~~have ~~general~~adversely affected ~~partner interests in~~ the ~~Partnership,~~economic ~~AIMCO~~performance and ~~its~~value ~~affiliates~~of ~~owned 706.00 limited partnership units ("Units") in~~ the Partnership’s ~~representing 57~~investment property.~~67%~~ These offactors ~~the outstanding Units at June 30~~included, ~~2009. A~~but ~~number of these Units~~ were ~~acquired~~not ~~pursuant~~limited to, ~~tender~~general economic ~~offers~~climate; ~~made~~competition byfrom ~~AIMCO~~other orapartment ~~its~~communities ~~affiliates. It is possible that AIMCO or its affiliates will acquire additional Units in exchange for cash or a combination of cash~~ and ~~units~~other inhousing options; ~~AIMCO~~local ~~Properties~~conditions, ~~L.P.,~~such ~~the~~as ~~operating~~loss ~~partnership~~ of ~~AIMCO,~~jobs ~~either through private purchases~~ or ~~tender~~an ~~offers.~~increase ~~Pursuant~~in to the ~~Partnership~~supply ~~Agreement, unitholders holding a majority~~ of ~~the Units are entitled to take action~~ ~~with~~apartments ~~respect to a variety of matters~~ that ~~include,~~might ~~but~~adversely ~~are~~affect ~~not~~apartment ~~limited~~occupancy ~~to,~~or ~~voting~~rental onrates; changes ~~certain~~in ~~amendments~~governmental toregulations ~~the Partnership Agreement~~ and ~~voting to remove~~ the ~~Managing~~related ~~General~~cost ~~Partner. As a result~~ of ~~its~~compliance; increases ~~ownership of 57.67% of the outstanding Units, AIMCO is~~ in aoperating ~~position~~costs to(including ~~control~~real ~~all~~estate ~~such~~taxes) ~~voting~~due ~~decisions with respect~~ to ~~the~~inflation ~~Partnership.~~and other ~~Although the Managing General Partner owes fiduciary duties to the limited partners of the Partnership~~factors, ~~the~~which ~~Managing~~may ~~General~~not ~~Partner~~be ~~also~~offset ~~owes~~by ~~fiduciary~~increased ~~duties~~rents; toand ~~AIMCO~~changes asin ~~its~~tax laws ~~sole~~and ~~stockholder.~~housing ~~As a result~~laws, including the ~~duties~~enactment of ~~the~~rent ~~Managing~~control ~~General~~laws ~~Partner,~~or asother laws ~~managing~~regulating ~~general~~multi-family ~~partner,~~housing. Any toadverse ~~the~~changes ~~Partnership~~in ~~and~~these ~~its~~factors could ~~limited~~have ~~partners~~caused ~~may~~impairment ~~come into conflict with the duties~~ of the ~~Managing~~Partnership’s ~~General Partner to AIMCO as its sole stockholder~~asset.

~~Critical Accounting Policies and Estimates~~Revenue Recognition

The ~~consolidated~~Partnership ~~financial~~generally leased ~~statements~~apartment ~~are~~units ~~prepared~~for twelve-month terms or less. The Partnership offered rental concessions during particularly slow months or in ~~accordance~~response ~~with~~to heavy ~~accounting~~competition ~~principles~~from ~~generally~~other ~~accepted~~similar complexes in the ~~United~~area. Rental ~~States~~income attributable to leases, ~~which~~net ~~require~~of ~~the~~any ~~Partnership~~concessions, towas ~~make~~recognized ~~estimates~~on ~~and~~a straight-line ~~assumptions.~~basis over the term of the lease. The Partnership ~~believes~~evaluated all ~~that~~accounts ofreceivable ~~its~~from ~~significant~~residents ~~accounting~~and ~~policies~~established an allowance, after the application ~~following~~of ~~may~~security ~~involve~~deposits, afor ~~higher~~accounts ~~degree~~greater ofthan ~~judgment~~30 days past due on current tenants and ~~complexity~~all receivables due from former tenants.

~~Impairment~~ITEM of4T. ~~Long-Lived~~CONTROLS ~~Asset~~AND PROCEDURES

Investment property is recorded at cost, less accumulated depreciation, unless the carrying amount of the asset is not recoverable. If events or circumstances indicate that the carrying amount of the property may not be recoverable, the Partnership will make an assessment of its recoverability by comparing the carrying amount to the Partnership’s estimate of the undiscounted future cash flows, excluding interest charges, of the property.(a) IfDisclosure ~~the~~Controls carrying amount exceeds the aggregate undiscounted future cash flows, the Partnership would recognize an impairment loss to the extent the carrying amount exceeds the estimated fair value of the propertyand Procedures.

~~Real~~The ~~property~~Partnership’s ~~investment~~management, iswith ~~subject~~the participation ~~to varying degrees~~ of ~~risk. Several factors may adversely affect~~ the ~~economic~~principal ~~performance~~executive officer and ~~value~~principal financial officer of the ~~Partnership’s~~Managing ~~investment~~General ~~property. These factors include~~Partner, ~~but~~who are ~~not~~the ~~limited~~equivalent ~~to,~~of ~~general~~the ~~economic~~Partnership’s principal ~~climate;~~executive ~~competition~~officer ~~from other apartment communities~~ and ~~other~~principal ~~housing~~financial ~~options;~~officer, ~~local conditions~~respectively, ~~such~~has evaluated asthe ~~loss~~effectiveness of ~~jobs or an increase in~~ the ~~supply~~Partnership’s ofdisclosure ~~apartments~~controls ~~that~~and procedures ~~might~~(as ~~adversely~~defined ~~affect apartment occupancy or rental rates; changes~~ in ~~governmental~~Rules ~~regulations~~13a-15(e) and 15d-15(e) under the ~~related~~Securities Exchange ~~cost~~Act of ~~compliance;~~1934, ~~increases~~as inamended ~~operating~~(the ~~costs~~“Exchange ~~(including~~Act”)) ~~real~~as ~~estate~~of ~~taxes)~~the ~~due~~end toof ~~inflation~~the period ~~and~~covered ~~other~~by ~~factors,~~this ~~which~~report. ~~may~~Based ~~not~~on besuch ~~offset~~evaluation, bythe ~~increased~~principal ~~rents;~~executive officer and ~~changes~~principal infinancial ~~tax~~officer ~~laws~~of ~~and~~the ~~housing~~Managing General ~~laws~~Partner, ~~including~~who are the ~~enactment~~equivalent of ~~rent~~the ~~control~~Partnership’s ~~laws~~principal orexecutive officer ~~other~~and ~~laws~~principal ~~regulating~~financial ~~multi-family~~officer, ~~housing. Any~~respectively, ~~adverse~~have ~~changes~~concluded inthat, ~~these~~as of ~~factors~~the ~~could~~end ~~cause~~of ~~impairment~~such ofperiod, the Partnership’s ~~asset~~disclosure controls and procedures are effective.

~~Revenue~~(b) Changes ~~Recognition~~in Internal Control Over Financial Reporting.

~~The~~There ~~Partnership~~has ~~generally~~been no ~~leases~~change ~~apartment~~in ~~units~~the ~~for twelve-month terms or less. The~~ Partnership’s ~~will~~internal ~~offer~~control ~~rental~~over ~~concessions~~financial ~~during~~reporting ~~particularly~~(as defined ~~slow months or~~ in ~~response~~Rules to13a-15(f) ~~heavy~~and ~~competition~~15d-15(f) ~~from~~under ~~other~~the ~~similar~~Exchange ~~complexes~~Act) induring the fiscal ~~area. Rental~~quarter ~~income attributable~~ to ~~leases,~~which ~~net~~this ofreport ~~any~~relates ~~concessions,~~that ishas ~~recognized~~materially onaffected, aor ~~straight-line~~is reasonably ~~basis~~likely ~~over~~to ~~the~~materially ~~term~~affect, of the ~~lease. The~~ Partnership’s ~~evaluates~~internal ~~all~~control ~~accounts~~over financial receivable from residents and establishes an allowance, after the application of security deposits, for accounts greater than 30 days past due on current tenants and all receivables due from former tenantsreporting.

ITEMPART 4T. CONTROLSII AND- PROCEDURESOTHER INFORMATION

(a) Disclosure Controls and Procedures.

The Partnership’s management, with the participation of the principal executive officer and principal financial officer of the Managing General Partner, who are the equivalent of the Partnership’s principal executive officer and principal financial officer, respectively, has evaluated the effectiveness of the Partnership’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report. Based on such evaluation, the principal executive officer and principal financial officer of the Managing General Partner, who are the equivalent of the Partnership’s principal executive officer and principal financial officer, respectively, have concluded that, as of the end of such period, the Partnership’s disclosure controls and procedures are effective.

(b) Changes in Internal Control Over Financial Reporting.

There has been no change in the Partnership’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter to which this report relates that has materially affected, or is reasonably likely to materially affect, the Partnership’s internal control over financial reporting.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

As previously disclosed, AIMCO Properties, L.P. and NHP Management Company, both affiliates of the Managing General Partner, were defendants in a lawsuit, filed as a collective action in August 2003 in the United States District Court for the District of Columbia, alleging that they willfully violated the Fair Labor Standards Act (“FLSA”) by failing to pay maintenance workers overtime for time worked in excess of 40 hours per week (“overtime claims”). The plaintiffs also contended that AIMCO Properties, L.P. and NHP Management Company failed to compensate maintenance workers for time that they were required to be "on-call" (“on-call claims”). In March 2007, the court in the District of Columbia decertified the collective action. In July 2007, plaintiffs’ counsel filed individual cases in Federal court in 22 jurisdictions. In the second quarter of 2008, AIMCO Properties, L.P. settled the overtime cases involving 652 plaintiffs and established a framework for resolving the 88 remaining “on-call” claims and the attorneys’ fees claimed by plaintiffs’ counsel. As a result, the lawsuits asserted in the 22 Federal courts have been dismissed. During the fourth quarter of 2008, the Partnership paid approximately $3,000 for settlement amounts for alleged unpaid overtime to employees who had worked at the Partnership’s investment properties. At this time, the 88 remaining “on-call” claims and the attorneys’ fees claimed by plaintiffs’ counsel are not resolved. The parties have selected six “on-call” claims that will proceed forward through the arbitration process and have selected arbitrators. The first two arbitrations ~~have~~will ~~not~~take ~~yet~~place ~~been~~in ~~scheduled~~December 2009, and the remaining four arbitrations will take place in March and April 2010. The Managing General Partner is uncertain as to the amount of any additional loss that may be allocable to the Partnership. Therefore, the Partnership cannot estimate whether any additional loss will occur or a potential range of loss.

ITEM 6. EXHIBITS

See Exhibit Index.

The agreements included as exhibits to this Form 10-Q contain representations and warranties by each of the parties to the applicable agreement. These representations and warranties have been made solely for the benefit of the other parties to the applicable agreement and:

should not in all instances be treated as categorical statements of fact, but rather as a way of allocating the risk to one of the parties if those statements prove to be inaccurate;

have been qualified by disclosures that were made to the other party in connection with the negotiation of the applicable agreement, which disclosures are not necessarily reflected in the agreement;

may apply standards of materiality in a way that is different from what may be viewed as material to an investor; and

were made only as of the date of the applicable agreement or such other date or dates as may be specified in the agreement and are subject to more recent developments.

Accordingly, these representations and warranties may not describe the actual state of affairs as of the date they were made or at any other time. The Partnership acknowledges that, notwithstanding the inclusion of the foregoing cautionary statements, it is responsible for considering whether additional specific disclosures of material information regarding material contractual provisions are required to make the statements in this Form 10-Q not misleading. Additional information about the Partnership may be found elsewhere in this Form 10-Q and the Partnership’s other public filings, which are available without charge through the SEC’s website at http://www.sec.gov.

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.

	DAVIDSON DIVERSIFIED REAL ESTATE II, L.P.
	By: Davidson Diversified Properties, Inc.
	Managing General Partner
Date: August 14, 2009	By: /s/Steven D. Cordes
Date: November 16, 2009	By: /s/Steven D. Cordes
	Steven D. Cordes
	Senior Vice President
Date: August 14, 2009	By: /s/Stephen B. Waters
Date: November 16, 2009	By: /s/Stephen B. Waters
	Stephen B. Waters
	Senior Director

DAVIDSON DIVERSIFIED REAL ESTATE II, LP

EXHIBIT INDEX

Exhibit Number Description of Exhibit

3 Partnership Agreement dated June 11, 1984, as amended is incorporated by reference to Exhibit A to the Prospectus of the Registrant dated October 16, 1984 as filed with the Commission pursuant to Rule 424(b) under the Act.

3B Amendment No. 1 to the Partnership Agreement dated August 1, 1985 is incorporated by reference to Exhibit 3B to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1985.

3C First Amendment to the Partnership Agreement of Registrant, dated May 21, 2008, incorporated by reference to the Registrant's Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2008.

3D Second Amendment to the Partnership Agreement of Registrant, dated December 29, 2008, incorporated by reference to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 2008.

4 Certificate of Limited Partnership dated June 11, 1984 is incorporated by reference to Exhibit 4 to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1987.

4A Certificate of Amendment to Limited Partnership dated July 17, 1984 is incorporated by reference to Exhibit 4A to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1987.

4B Restated Certificate of Limited Partnership dated October 5, 1984 is incorporated by reference to Exhibit 4B to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1987.

10K Contract for Sale of Real Estate for The Trails Apartments dated July 31, 1985 between Trails of Nashville Associates, Ltd., a Tennessee limited partnership by reference to Exhibit 10(b) to the Registrant's Current Report on Form 8-K dated August 30, 1985.

10L Assignment of Contract for Sale of Real Estate dated August 28, 1985 between Tennessee Trust Company, as Trustee and the Registrant, relating to assignment of Contract for Sale of Real Estate for The Trails Apartments is incorporated by reference to Exhibit 10(a) to the Registrant's Current Report on Form 8-K dated August 30, 1985.

10GG Assignment of Limited Partnership Interest of Freeman Equities, Limited, dated December 31, 1991 between Davidson Diversified Properties, Inc. and Insignia Jacques-Miller, L.P. is incorporated by reference to Exhibit 10KKK to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1991.

10HH Assignment of General Partner Interests of Freeman Equities, Limited, dated December 31, 1991 between Davidson Diversified Properties, Inc. and MAE GP Corporation is incorporated by reference to Exhibit 10LLL to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1991.

10II Stock certificate, dated December 31, 1991 showing ownership of 1,000 shares of Davidson Diversified Properties, Inc. by MAE GP Corporation is incorporated by reference to Exhibit 10MMM to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1991.

10.9 Multifamily Note dated May 31, 2006 between The Trails, L.P., a South Carolina limited partnership, and Johnston Capital Group, Inc., a Texas corporation incorporated by reference to the Registrant’s Quarterly Report on Form 10-QSB for the quarterly period ended June 30, 2006.

10.10 Multifamily Deed of Trust, Assignment of Rents and Security Agreement dated May 31, 2006 between The Trails, L.P., a South Carolina limited partnership, and Johnston Capital Group, Inc., a Texas corporation incorporated by reference to the Registrant’s Quarterly Report on Form 10-QSB for the quarterly period ended June 30, 2006.

10.11 Guaranty Agreement dated May 31, 2006 between AIMCO Properties, L.P., a Delaware limited partnership and Johnston Capital Group, Inc., a Texas corporation, The Trails, L.P., a South Carolina limited partnership, and Johnston Capital Group, Inc., a Texas corporation incorporated by reference to the Registrant’s Quarterly Report on Form 10-QSB for the quarterly period ended June 30, 2006.

10.22 Purchase and Sale Contract between The Trails, L.P., a South Carolina limited partnership, and White Eagle Property Group, LLC, a New York limited liability company, dated June 24, 2009. (Incorporated by reference to the Partnership’s Current Report on Form 8-K dated June 24, 2009).

10.23 First Amendment of Purchase and Sale Contract between The Trails, L.P., a South Carolina limited partnership, and White Eagle Property Group, LLC, a New York limited liability company, dated August 7, 2009. (Incorporated by reference to the Registrant’s Current Report on Form 8-K dated August 7, 2009).

31.1 Certification of equivalent of Chief Executive Officer pursuant to Securities Exchange Act Rules 13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2 Certification of equivalent of Chief Financial Officer pursuant to Securities Exchange Act Rules 13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1 Certification of the equivalent of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Filing Compare · DAVIDSON DIVERSIFIED REAL ESTATE II LIMITED PARTNERSHIP