UNITEDTable STATESof Contents

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended ~~June 30~~March 31, ~~2005~~2007

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

For the transition period ~~fromto~~from to .

Commission File Number 1-16755

ARCHSTONE-SMITH TRUST

(Exact name of registrant as specified in its charter)

Maryland			84-1592064
(State or other jurisdiction of incorporation or organization)			(I.R.S. employer identification no.)


Maryland (State or other jurisdiction of incorporation or organization)		84-1592064 (I.R.S. employer identification no.)

9200 E. Panorama Circle, Suite 400 Englewood, Colorado 80112 (Address of principal executive offices and zip code)

~~Englewood~~(303) 708-5959 (Registrant’s telephone number, ~~Colorado~~including ~~80112~~area code)

(~~Address~~Former ofname, ~~principal~~former ~~executive~~address ~~offices~~ and ~~zip~~former ~~code~~fiscal year, if changed since last report)

Indicate by check mark whether the registrant (~~303~~1) has ~~708-5959~~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 for the past 90 days.

~~(Registrant's~~Yes ~~telephone~~þ No ~~number, including area code)~~ o

~~(Former~~ Indicate ~~name~~by check mark whether the registrant is a large accelerated filer, ~~former~~an ~~address~~accelerated filer or a non-accelerated filer. See definition of “accelerated filer and ~~former~~large ~~fiscal~~accelerated filer” ~~year,~~in Rule 12b-2 of the Exchange Act. (Check one):

ifLarge ~~changed~~accelerated ~~since~~filer ~~last~~þ Accelerated ~~report)~~filer o Non-accelerated filer o

Indicate by check mark whether the registrant ~~(1)~~is ~~has~~a ~~filed~~shell ~~all~~company ~~reports~~(as ~~required~~defined toin beRule 12b-2 ~~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 for the past 90 days~~.

Yes X o No þ

~~Indicate~~At byMay 1, ~~check~~2007, ~~mark~~there ~~whether~~were ~~the~~approximately ~~registrant~~222,916,489 isof anthe ~~accelerated~~Registrant’s ~~filer~~Common ~~(as~~Shares ~~defined~~outstanding, excluding indilutive ~~Rule~~Common ~~12b-2~~Share ~~of the Act)~~equivalents.

~~Yes~~Table Xof NoContents

At August 1, 2005 there were approximately 199,700,000 of the Registrant's Common Shares outstanding.


		Page
Item	Description	Number
	PART I – Financial Information

1.	Financial Statements
	Condensed Consolidated Balance Sheets – March 31, 2007 (Unaudited) and December 31, 2006		3
	Condensed Consolidated Statements of Earnings – Three Months Ended March 31, 2007 and 2006 (Unaudited)		4
	Condensed Consolidated Statement of Shareholders’ Equity and Comprehensive Income – Three Months Ended March 31, 2007 (Unaudited)		5
	Condensed Consolidated Statements of Cash Flows – Three Months Ended March 31, 2007 and 2006 (Unaudited)		6
	Notes to Condensed Consolidated Financial Statements (Unaudited)		7
	Independent Registered Public Accounting Firm Review Report		23
2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		24
3.	Quantitative and Qualitative Disclosures about Market Risk		33
4.	Controls and Procedures		33

	PART II – Other Information

1.	Legal Proceedings		34
1A.	Risk Factors		34
2.	Unregistered Sales of Equity Securities and Use of Proceeds		34
3.	Defaults Upon Senior Securities		34
4.	Submission of Matters to a Vote of Security Holders		34
5.	Other Information		34
6.	Exhibits		34
Form of Performance Unit Agreement
Computation of Ratio of Earnings to Fixed Charges
Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Share Dividends
Independent Registered Public Accounting Firm Awareness Letter
Certification of CEO Pursuant to Section 302
Certification of CFO Pursuant to Section 302
Certification of CEO Pursuant to Section 906
Certification of CFO Pursuant to Section 906

~~Table of Contents~~2

Item	Description	Page Number
	PART 1
1.	Financial Statements
	Condensed Consolidated Balance Sheets – June 30, 2005 (unaudited) and December 31, 2004	3
	Condensed Consolidated Statements of Earnings – Three and Six months ended June 30, 2005 and 2004 (unaudited)	4
	Condensed Consolidated Statement of Shareholders’ Equity and Comprehensive Income/(Loss) – Six months ended June 30, 2005 (unaudited)	5
	Condensed Consolidated Statements of Cash Flows – Six months ended June 30, 2005 and 2004 (unaudited)	6
	Notes to Condensed Consolidated Financial Statements (unaudited)	7
	Independent Registered Public Accounting Firm Review Report	21
2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
3.	Quantitative and Qualitative Disclosures About Market Risk	34
4.	Controls and Procedures	34
	PART II
1.	Legal Proceedings	35
2.	Changes in Securities, Use of Proceeds and Issuer Purchases of Equity	35
4.	Submission of Matters to a Vote of Security Holders	35
6.	Exhibits	37

2PART I – FINANCIAL INFORMATION

~~PART~~Item 1. IFinancial ~~– FINANCIAL INFORMATION~~Statements

~~Item~~Archstone-Smith ~~1. Financial Statements~~Trust

~~Archstone-Smith~~Condensed ~~Trust~~Consolidated Balance Sheets

~~Condensed~~(In ~~Consolidated~~thousands, ~~Balance~~except ~~Sheets~~share data)

(In thousands, except share data)


	March 31,			December 31,
	2007			2006
	(Unaudited)
ASSETS
Real estate	$	12,101,054		$	12,214,034
Real estate – held-for-sale		975,821			973,606
Accumulated depreciation		(975,517	)		(957,146	)

		12,101,358			12,230,494
Investments in and advances to unconsolidated entities		252,014			235,323

Net investments		12,353,372			12,465,817
Cash and cash equivalents		49,270			48,655
Restricted cash in tax-deferred exchange and bond escrow		669,395			319,312
Other assets		389,464			425,343

Total assets	$	13,461,501		$	13,259,127


LIABILITIES AND SHAREHOLDERS’ EQUITY

Liabilities:
Unsecured credit facilities	$	275,900		$	84,723
Unsecured loans – International		171,730			235,771
Long-Term Unsecured Debt		3,321,702			3,355,699
Mortgages payable		2,557,553			2,639,280
Mortgages payable – held-for-sale		136,738			136,954
Accounts payable		77,603			71,967
Accrued interest		47,446			67,135
Accrued expenses and other liabilities		342,403			365,260

Total liabilities		6,931,075			6,956,789


Minority interest		711,486			739,149


Shareholders’ equity:
Perpetual Preferred Shares		50,000			50,000
Common Shares (222,754,422 shares at March 31, 2007 and 220,147,167 shares at December 31, 2006)		2,228			2,201
Additional paid-in capital		4,951,830			4,883,164
Accumulated other comprehensive income		4,292			3,520
Retained Earnings		810,590			624,304

Total shareholders’ equity		5,818,940			5,563,189

Total liabilities and shareholders’ equity	$	13,461,501		$	13,259,127

ASSETS	June 30, 2005	December 31, 2004
	(Unaudited)
Real estate	$ 8,872,304	$ 8,842,611
Real estate – held for sale	400,766	378,427
Less accumulated depreciation	841,539	763,542
	8,431,531	8,457,496
Investments in and advances to unconsolidated entities	124,598	111,481
Net investments	8,556,129	8,568,977
Cash and cash equivalents	12,765	203,255
Restricted cash in tax-deferred exchange escrow	124,041	120,095
Other assets	254,391	173,717
Total assets	$ 8,947,326	$ 9,066,044
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities:
Unsecured credit facilities	$ –	$ 19,000
Long-Term Unsecured Debt	2,379,209	2,099,132
Mortgages payable	1,742,872	2,013,730
Mortgages payable – held for sale	17,649	17,775
Accounts payable	56,513	52,052
Accrued expenses and other liabilities	226,990	273,079
Total liabilities	4,423,233	4,474,768
Minority interest	488,349	498,098
Shareholders’ equity:
Perpetual Preferred Shares	50,000	50,000
Common Shares (199,304,169 shares in 2005 and 199,577,459 shares in 2004)	1,993	1,996
Additional paid-in capital	4,023,930	4,026,113
Accumulated other comprehensive loss	(5,403)	(4,425)
Retained (loss)/earnings	(34,776)	19,494
Total shareholders’ equity	4,035,744	4,093,178
Total liabilities and shareholders’ equity	$ 8,947,326	$ 9,066,044

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

~~The accompanying notes are an integral part of these condensed consolidated financial statements.~~3

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Archstone-Smith Trust

Condensed Consolidated Statements of Earnings

(In thousands, except per share amounts) (Unaudited)

(Unaudited)


	Three Months Ended
	March 31,
	2007			2006
Revenues:
Rental revenues	$	268,132		$	207,734
Other income		15,754			16,216

		283,886			223,950

Expenses:
Rental expenses		63,430			45,330
Real estate taxes		26,240			18,897
Depreciation on real estate investments		67,492			53,359
Interest expense		67,293			45,527
General and administrative expenses		18,998			15,385
Other expenses		955			10,354

		244,408			188,852

Earnings from operations		39,478			35,098
Minority interest		(5,808	)		(7,234	)
Income from unconsolidated entities		695			18,878
Other non-operating income		2,026			176

Earnings before discontinued operations		36,391			46,918
Earnings from discontinued operations		251,308			77,537

Net earnings		287,699			124,455
Preferred Share dividends		(958	)		(958	)

Net earnings attributable to Common Shares – Basic		286,741			123,497
Interest on Convertible Debt		7,295			—
Minority interest		611			69

Net earnings attributable to Common Shares – Diluted	$	294,647		$	123,566

Weighted average Common Shares outstanding:
Basic		221,256			213,379

Diluted		231,149			214,253


Earnings per Common Share – Basic:
Earnings before discontinued operations	$	0.16		$	0.22
Discontinued operations, net		1.14			0.36

Net earnings	$	1.30		$	0.58


Earnings per Common Share – Diluted:
Earnings before discontinued operations	$	0.15		$	0.22
Discontinued operations, net		1.12			0.36

Net earnings	$	1.27		$	0.58


Dividends paid per Common Share	$	0.4525		$	0.4350

	Three Months Ended June 30,		Six Months Ended June 30,
	2005	2004	2005	2004
Revenues:
Rental revenues	$ 226,375	$ 198,911	$ 446,291	$ 389,526
Other income	6,848	5,209	11,975	8,906
	233,223	204,120	458,266	398,432
Expenses:
Rental expenses	56,700	49,454	115,261	97,480
Real estate taxes	22,644	19,328	45,280	38,031
Depreciation on real estate investments	54,832	47,419	108,609	91,979
Interest expense	46,330	37,724	93,826	74,265
General and administrative expenses	13,755	12,092	28,044	24,525
Other expenses	7,390	900	28,472	2,124
	201,651	166,917	419,492	328,404
Earnings from operations	31,572	37,203	38,774	70,028
Minority interest	(4,451)	(6,917)	(9,550)	(12,947)
Equity in Earnings/(loss) from unconsolidated entities	5,794	7,354	16,911	12,630
Other non-operating income	4,778	9,951	28,783	20,461
Earnings before discontinued operations	37,693	47,591	74,918	90,172
Earnings from discontinued apartment communities	18,009	32,471	46,140	90,062
Net earnings	55,702	80,062	121,058	180,234
Preferred Share dividends	(958)	(3,143)	(1,915)	(6,274)
Net earnings attributable to Common Shares – Basic	$ 54,744	$ 76,919	$ 119,143	$ 173,960
Weighted average Common Shares outstanding – Basic	198,987	195,241	199,630	195,055
Weighted average Common Shares outstanding – Diluted	200,093	196,187	200,668	198,574
Earnings per Common Share – Basic:
Earnings before discontinued operations	$ 0.19	$ 0.23	$ 0.37	$ 0.43
Discontinued operations, net	0.09	0.16	0.23	0.46
Net earnings	$ 0.28	$ 0.39	$ 0.60	$ 0.89
Earnings per Common Share – Diluted:
Earnings before discontinued operations	$ 0.18	$ 0.23	$ 0.36	$ 0.43
Discontinued operations, net	0.09	0.16	0.23	0.46
Net earnings	$ 0.27	$ 0.39	$ 0.59	$ 0.89
Dividends paid per Common Share	$ 0.4325	$ 0.43	$ 0.8650	$ 0.86

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

~~The accompanying notes are an integral part of these condensed consolidated financial statements.~~4

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Archstone-Smith Trust

Condensed Consolidated Statement of Shareholders’ Equity and Comprehensive Income

~~Equity~~Three ~~and~~Months ~~Comprehensive~~Ended ~~Income/(Loss)~~March 31, 2007

~~Six~~(In ~~Months Ended June 30, 2005~~thousands) (Unaudited)

(In thousands)


	Perpetual
	Preferred
	Sharesat							Accumulated
	Aggregate		Common		Additional			Other
	Liquidation		Shares at		Paid-in			Comprehensive			Retained
	Preference		Par Value		Capital			Income			Earnings			Total
Balances at December 31, 2006	$	50,000	$	2,201	$	4,883,164		$	3,520		$	624,304		$	5,563,189
Comprehensive income:
Net earnings		—		—		—			—			287,699			287,699
Change in fair value of hedges		—		—		—			845			—			845
Reclassification adjustment for realized net gains on marketable securities		—		—		—			(1,794	)		—			(1,794	)
Foreign currency exchange translation		—		—		—			1,721			—			1,721

Comprehensive income attributable to Common Shares															288,471

Preferred Share dividends		—		—		—			—			(958	)		(958	)
Common Share dividends		—		—		—			—			(100,455	)		(100,455	)
A-1 Common Units converted into Common Shares		—		21		49,330			—			—			49,351
Issuance of Common Shares under Dividend Reinvestment Plan		—		2		10,166			—			—			10,168
Exercise of options		—		4		5,887			—			—			5,891
Equity-classified awards under Compensation Plans		—		—		(1,382	)		—			—			(1,382	)
Other, net (Including Minority Interest Revaluation of $3,021)		—		—		4,665			—			—			4,665

Balances at March 31, 2007	$	50,000	$	2,228	$	4,951,830		$	4,292		$	810,590		$	5,818,940

~~(Unaudited)~~The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

	Perpetual Preferred Shares at Aggregate Liquidation Preference	Common Shares at Par Value	Additional Paid-in Capital	Accumulated Other Comprehensive Income/(Loss)	Retained Earnings	Total
Balances at December 31, 2004	$ 50,000	$ 1,996	$ 4,026,113	$ (4,425)	$ 19,494	$ 4,093,178
Comprehensive income:
Net earnings	-	-	-	-	121,058	121,058
Change in fair value of cash flow hedges	-	-	-	411	-	411
Change in fair value of marketable securities	-	-	-	(1,389)	-	(1,389)
Comprehensive income attributable to Common Shares						120,080
Preferred Share dividends	-	-	-	-	(1,915)	(1,915)
Common Share dividends	-	-	-	-	(173,413)	(173,413)
A-1 Common Units converted into Common Shares	-	1	3,128	-	-	3,129
Common Share repurchases	-	(16)	(56,479)	-	-	(56,495)
Issuance of Common Shares under Compensation Plans	-	12	31,843	-	-	31,855
Other, net (includes Minority Interest Revaluation)	-	-	19,325	-	-	19,325
Balances at June 30, 2005	$ 50,000	$ 1,993	$ 4,023,930	$ (5,403)	$ (34,776)	$ 4,035,744

TheTable accompanying notes are an integral part of these condensed consolidated financial statements.Contents

5Archstone-Smith Trust

~~Archstone-Smith~~Condensed ~~Trust~~Consolidated Statements of Cash Flows

~~Condensed~~(In ~~Consolidated Statements of Cash Flows~~thousands) (Unaudited)

(In thousands)


	Three Months Ended
	March 31,
	2007			2006
Operating activities:
Net earnings	$	287,699		$	124,455
Adjustments to reconcile net earnings to net cash flow provided by operating activities:
Depreciation and amortization		78,871			72,762
Gains on dispositions of depreciated real estate		(278,722	)		(82,191	)
Gains on sale of marketable equity securities		(1,867	)		—
Change in swap value – DeWAG derivatives		(258	)		—
Provision for possible loss on investments		—			2,200
Minority interest		37,228			19,437
Equity in earnings from unconsolidated entities		2,050			917
Interest accrued on Mezzanine loans		(1,336	)		(2,086	)
Change in other assets		(18,630	)		1,092
Change in accounts payable, accrued expenses and other liabilities		(32,755	)		(16,966	)
Other, net		4,741			6,556

Net cash flow provided by operating activities		77,021			126,176


Investing activities:
Real estate investments		(365,264	)		(435,550	)
Change in investments in unconsolidated entities, net		(18,736	)		(15,491	)
Proceeds from dispositions		689,405			280,133
Change in restricted cash		(350,083	)		315,532
Change in notes receivable, net		44,102			(54,105	)
Other, net		6,710			(34,933	)

Net cash flow provided by investing activities		6,134			55,586


Financing activities:
Proceeds from Long-Term Unsecured Debt, net		—			296,946
Payments on Long-Term Unsecured Debt		(34,750	)		(18,750	)
Proceeds from (payments on) unsecured credit facilities, net		191,177			(309,869	)
Principal repayment of mortgages payable, including prepayment penalties		(71,373	)		(49,923	)
Regularly scheduled principal payments on mortgages payable		(2,047	)		(4,406	)
Proceeds from Unsecured loans – International		88,627			—
Principal repayments on Unsecured loans – International		(152,668	)		—
Proceeds from Common Shares issued under DRIP and employee stock options		16,059			22,630
Cash dividends paid on Common Shares		(100,455	)		(93,284	)
Cash dividends paid on Preferred Shares		(958	)		(958	)
Cash distributions paid to minority interests		(13,087	)		(14,668	)
Other, net		(3,065	)		629

Net cash flow used by financing activities		(82,540	)		(171,653	)

Net change in cash and cash equivalents		615			10,109
Cash and cash equivalents at beginning of period		48,655			13,638

Cash and cash equivalents at end of period	$	49,270		$	23,747


Significant non-cash investing and financing activities:
Common Units issued in exchange for real estate	$	1,024		$	25,191
Common Units converted to Common Shares		49,351			23,552
Assumption of mortgages payable upon purchase of apartment communities		—			197,449

~~(Unaudited)~~These Condensed Consolidated Statements of Cash Flows combine cash flows from discontinued operations with cash flows from continuing operations.

	Six Months Ended June 30,
	2005	2004
Operating activities:
Net earnings	$ 121,058	$ 180,234
Adjustments to reconcile net earnings to net cash flow provided by operating activities:
Depreciation and amortization	114,390	111,640
Gains on dispositions of depreciated real estate, net	(60,262)	(93,482)
Gains on sale of marketable equity securities and property management business	(27,948)	(20,461)
Minority interest	15,118	24,447
Equity in earnings from unconsolidated entities	(16,911)	(12,630)
Change in other assets	1,288	(8,682)
Change in accounts payable, accrued expenses and other liabilities	(8,231)	(16,488)
Other, net	(4,399)	(4,826)
Net cash flow provided by operating activities	134,103	159,752
Investing activities:
Real estate investments, net	(457,763)	(581,739)
Change in investments in unconsolidated entities, net	8,312	26,958
Proceeds from dispositions, net of closing costs	465,099	272,339
Change in restricted cash	(3,946)	163,368
Change in notes receivable, net	(73,408)	123
Other, net	14,844	83,436
Net cash flow used in investing activities	(46,862)	(35,515)
Financing activities:
Payments on Long-Term Unsecured Debt	(18,750)	(40,450)
Proceeds from Long-Term Unsecured Debt	296,034	-
Proceeds/Repayments from unsecured credit facilities, net	(19,000)	206,843
Principal prepayment of mortgages payable, including prepayment penalties	(263,456)	(56,468)
Regularly scheduled principal payments on mortgages payable	(5,321)	(6,396)
Proceeds from mortgage notes payable	655	32,003
Proceeds from Common Shares issued under employee stock options	20,556	29,129
Repurchase of Common Shares	(56,495)	(85,441)
Repurchase of Series E and G Perpetual Preferred Units	(19,522)	-
Cash dividends paid on Common Shares	(173,413)	(169,544)
Cash dividends paid on Preferred Shares	(1,915)	(6,274)
Cash distributions paid to minority interests	(42,263)	(24,248)
Other, net	5,159	(682)
Net cash flow used in financing activities	(277,731)	(121,528)
Net change in cash and cash equivalents	(190,490)	2,709
Cash and cash equivalents at beginning of period	203,255	5,230
Cash and cash equivalents at end of period	$ 12,765	$ 7,939
Significant non-cash investing and financing activities:
A-1 Common Units issued in exchange for real estate	$ 41,660	$ 10,788
Common Shares issued in exchange for real estate	-	4,502
A-1 Common Units converted to Common Shares	3,129	34,064
Assumption of mortgages payable upon purchase of apartment communities	-	74,900

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

~~The accompanying notes are an integral part of these condensed consolidated financial statements.~~6

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Archstone-Smith Trust

Notes to Condensed Consolidated Financial Statements

~~June 30~~March 31, ~~2005~~2007 and ~~2004~~2006 (Unaudited)

(~~Unaudited~~1) Description of the Business and Summary of Significant Accounting Policies

~~(1) Description of the~~ Business ~~and Summary of Significant Accounting Policies~~

~~Business~~ Our business is conducted primarily through Archstone-Smith Operating Trust, our majority owned subsidiary, which we refer to herein as the “Operating Trust.” We are structured as an UPREIT under which all property ownership and business operations are conducted through the Operating Trust. We are the sole trustee and own approximately 89.0% of the Operating Trust’s outstanding Common Units; the remaining 11.0% of the Common Units are owned by minority interest holders. As used herein, “we,” “our” and the “company” refers to the Operating Trust and Archstone-Smith, collectively, except where the context otherwise requires. Archstone-Smith is an equity REIT organized under the laws of the State of Maryland. We focus on creating value for our shareholders by acquiring, developing, redeveloping and operating apartments in markets characterized by protected locations with limited land for new housing construction, expensive single-family home prices, and a strong, diversified economic base with significant employment growth potential.

~~Our~~ Interim ~~business~~Financial is conducted primarily through our majority owned subsidiary, the Operating Trust. We are structured as an UPREIT under which all property ownership and business operations are conducted through the Operating Trust. We are the sole trustee and own approximately 89.2% the Operating Trust’s outstanding common units; the remaining 10.8% owned by minority interest holders. As used herein, “we”, “our” and the “company” refers to the Operating Trust and Archstone-Smith, collectively, except where the context otherwise requires. Archstone-Smith is an equity REIT organized under the laws of the State of Maryland. We focus on creating value for our shareholders by acquiring, developing and operating apartments in markets characterized by very expensive single-family home prices, limited land on which to build new housing and a strong, diversifiedReporting ~~economic base with employment growth potential.~~

~~Interim~~ The accompanying Condensed Consolidated Financial ~~Reporting~~Statements of Archstone-Smith are unaudited and certain information and footnote disclosures normally included in financial statements have been omitted. While management believes that the disclosures presented are adequate for interim reporting, these interim financial statements should be read in conjunction with the financial statements and notes included in Archstone-Smith’s Annual Report on Form 10-K, for the year ended December 31, 2006 (“2006 Form 10-K”). See the glossary in our 2006 Form 10-K for definitions of all initially-capitalized terms not defined herein.

~~The~~ In ~~accompanying~~the ~~condensed~~opinion ~~consolidated financial statements~~ of ~~Archstone-Smith~~management, ~~are~~the accompanying unaudited ~~and certain information and footnote disclosures normally included in~~ financial statements ~~have~~contain ~~been~~all adjustments ~~omitted. While~~necessary ~~management~~for ~~believes~~a ~~that~~fair ~~the~~presentation ~~disclosures~~of ~~presented~~Archstone-Smith’s ~~are~~financial ~~adequate~~statements for the interim ~~reporting,~~periods ~~these~~presented. ~~interim~~The ~~financial~~results ~~statements~~of ~~should~~operations befor ~~read in conjunction with~~ the ~~financial~~three ~~statements~~months ~~and~~ended ~~notes~~March 31, ~~included~~2007 inare not ~~Archstone-Smith’s~~necessarily ~~2004~~indicative ~~Form~~of ~~10-K. See~~ the ~~glossary~~results into ~~our~~be ~~2004~~expected ~~Form 10-K~~ for ~~all~~the ~~defined~~entire ~~terms not defined herein~~year.

In Use ~~the opinion~~ of management, the accompanying unaudited financial statements contain all adjustments necessary for a fair presentation of Archstone-Smith’s financial statements for the interim periods presented. The results of operations for the three and six months ended June 30, 2005 are not necessarily indicative of the results to be expected for the entire year.Estimates

~~Use~~ The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect amounts reported in the financial statements and the related notes. Actual results could differ from management’s estimates. Estimates and assumptions are reviewed periodically and the effects of revisions are reflected in the period they are determined to be necessary.

~~The~~ Real ~~preparation~~Estate ~~of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates~~ and assumptions that affect amounts reported in the financial statements and the related notes. Actual results could differ from management’s estimates. Estimates and assumptions are reviewed periodically and the effects of revisions are reflected in the period they are determined to be necessary. Depreciation

~~Loss~~ We ~~Contingencies~~allocate the cost of newly acquired properties between net tangible and identifiable intangible assets. When allocating cost to an acquired property, we first allocate costs to the estimated intangible value of the existing lease agreements and then to the estimated value of the land, building and fixtures assuming the property is vacant. We estimate the intangible value of the lease agreements by determining the lost revenue associated with a hypothetical lease-up. We depreciate the building and fixtures based on the expected useful life of the asset and amortize the intangible value of the lease agreements over the average remaining life of the existing leases. This amortization expense is included in depreciation on real estate investments in our Condensed Consolidated Statements of Earnings.

We accrue for loss contingencies when it is probable that a loss will be incurred and that loss can be reasonably estimated consistent with the criteria established in SFAS No. 5 “Accounting for Contingencies.” We also record insurance recoveries up to the amount of the actual loss contingency when the insurance recovery is both probable and can be reasonably estimated. 7

LegalTable Feesof Contents

WeArchstone-Smith generally recognize legal expenses as incurred; however, if such fees are related to the accrual for an estimated legal settlement, we accrue for the related incurred and anticipated legal fees at the same time we accrue the cost of settlement.Trust

7Notes to Condensed Consolidated Financial Statements (Continued)

~~Archstone-Smith Trust~~ Intangibles

~~Notes~~ Intangible assets consist of lease-related intangibles and certain intangibles associated with the DeWAG acquisition. The market value of above and below market leases are based on our estimate of current market rents as compared to ~~Condensed~~the ~~Consolidated~~rent ~~Financial~~that ~~Statements~~we ~~(Continued)~~are receiving and is recorded in either other assets or other liabilities. These assets are charged and liabilities are credited to rental income over the estimated term of the lease. We also recognize the value of our in-place lease agreements and amortize these assets into depreciation on real estate investments over the estimated term of the lease.

~~Marketable~~ We ~~Securities~~will ~~and~~perform ~~Other~~an ~~Investments~~impairment test annually, or more frequently, if events or changes in circumstances indicate impairment of our intangible assets, which are included in other assets.

~~All~~ Revenue ~~publicly traded equity securities are classified as “available for sale”~~ and ~~carried~~Gain at fair value, with unrealized gains and losses reported as a separate component of shareholders’ equity. Private investments, for which we do not have the ability to exercise significant influence, are accounted for at cost. Declines in the value of public and private investments that management determines are other than temporary are recorded as a provision for loss on investments. Recognition

~~Real~~ We ~~Estate~~generally ~~Depreciation~~lease our apartment units under operating leases with terms of one year or less. Communities subject to the Oakwood Master Leases entered into in 2005 have a seven-year term. Rental income related to leases is recognized in the period earned over the lease term in accordance with Statement of Financial Accounting Standards SFAS No. 13, “Accounting for Leases.” Rent concessions are recognized as an offset to revenues collected over the term of the underlying lease. We use the full accrual method of profit recognition in accordance with SFAS No. 66 to record gains on sales of real estate. Accordingly, we evaluate the related GAAP requirements in determining the profit to be recognized at the date of each sale transaction (i.e., the profit is determinable and the earnings process is complete). We recognize deferred gains when a property is sold to a third party.

We Rental allocate the cost of newly acquired properties between net tangible and identifiable intangible assets. The primary intangible asset associated with an apartment community acquisition is the value of the existing lease agreements. When allocating cost to an acquired property, we first allocate costs to the estimated intangible value of the existing lease agreements and then to the estimated value of the land, building and fixtures assuming the property is vacant. We estimate the intangible value of the lease agreements by determining the lost revenue associated with a hypothetical lease-up. We depreciate the building and fixtures based on the expected useful life of the asset and amortize the intangible value of the lease agreements over the average remaining life of the existing leases.Expenses

~~Income~~ Rental ~~Taxes~~expenses shown on the accompanying Condensed Consolidated Statements of Earnings include costs associated with on-site and property management personnel, utilities, repairs and maintenance, property insurance, marketing, landscaping and other on-site and related administrative costs. Utility reimbursements from residents, which are recorded as offsets to utility expenses, aggregated $6.8 million and $5.8 million including amounts reclassified to discontinued operations for the three months ended March 31, 2007 and 2006, respectively.

~~Archstone-Smith~~ Insurance made an election to be taxed as a REIT under the Internal Revenue Code of 1986, as amended, and we believe we qualify as a REIT and have made all required distributions of our taxable income. Accordingly, no provision has been made for federal income taxes at the trust level. Recoveries

We ~~primarily~~recognize ~~incur~~insurance recovery proceeds as other income ~~taxes~~if ~~through~~the ~~our~~recovery ~~consolidated~~is ~~taxable~~related ~~REIT~~to ~~subsidiary~~items that ~~called~~were ~~Ameriton. Income~~originally ~~taxes~~expensed, ~~are~~such ~~accounted~~as ~~for~~legal ~~under~~settlements, ~~the~~legal ~~asset~~expenses and ~~liability~~repairs ~~method. Deferred~~that ~~tax~~did ~~assets~~not meet ~~and~~capitalization ~~liabilities~~guidelines. ~~are~~For ~~recognized~~recoveries ~~for~~of ~~the~~property ~~future~~damages ~~tax~~that ~~consequences~~were ~~attributable~~eligible tofor capitalization, ~~differences~~we ~~between~~reduce the ~~financial~~basis ~~statement~~of ~~carrying~~the ~~amounts~~property ofor ~~existing~~if ~~assets~~the ~~and~~property ~~liabilities~~has ~~and~~subsequently ~~their~~been ~~respective~~sold, we ~~tax~~recognize ~~basis,~~the ~~operating~~proceeds ~~loss~~as ~~and~~an ~~tax~~additional ~~credit~~gain ~~carry~~on ~~forwards~~sale. ~~Deferred~~ ~~tax~~We ~~assets~~recognize ~~and~~insurance ~~liabilities~~recoveries ~~are~~at ~~measured~~such time ~~using~~that ~~enacted~~we ~~tax~~believe ~~rates~~the ~~expected~~recovery tois ~~apply~~probable toand ~~taxable~~we ~~income~~have insufficient ~~the~~information ~~years~~to inmake ~~which~~a reasonable ~~those~~estimate ~~temporary~~of ~~differences~~proceeds, ~~are~~except ~~expected~~in tocases bewhere ~~recovered~~we orhave ~~settled. The~~to ~~effect~~pursue onrecovery ~~deferred~~via ~~tax~~litigation. In ~~assets~~this ~~and~~circumstance, ~~liabilities~~we ofrecognize athe ~~change~~recovery inwhen ~~tax~~we ~~rates~~have isa ~~recognized~~signed, inlegally ~~earnings~~binding inagreement with the ~~period~~insurance ~~that includes the enactment date~~carrier.

~~Preferred~~ Legal ~~Share Redemptions~~Fees

~~When~~ We ~~redeeming~~generally ~~Preferred Shares, we~~ recognize ~~share~~legal ~~issuance~~expenses ~~costs~~ as aincurred; ~~charge~~however, toif ~~earnings~~such infees ~~accordance~~are ~~with~~related ~~Financial~~to ~~Accounting~~the accrual ~~Standards~~for ~~Board~~an ~~(“FASB”) —~~estimated ~~Emerging~~legal ~~Issues Task Force (“EITF”) Topic D-42~~settlement, ~~“The~~we ~~Effect~~accrue ~~on the Calculation of Earnings per Share~~ for the ~~Redemption~~related orincurred ~~Induced Conversion of Preferred Stock.” In July 2003, the Securities~~ and ~~Exchange~~anticipated ~~Commission~~legal fees ~~(“SEC”)~~at ~~staff issued a clarification of~~ the ~~SEC’s~~same ~~position~~time onwe ~~the~~accrue ~~application of FASB-EITF Topic D-42. The SEC staff’s position, as clarified, is that in applying Topic D-42,~~ the ~~carrying~~estimated ~~value~~cost of ~~preferred shares that are redeemed should be reduced by the amount of original issuance costs, regardless of where in shareholders’ equity those costs are reflected~~settlement.

Archstone-SmithTable Trustof Contents

~~Notes~~Archstone-Smith ~~to Condensed Consolidated Financial Statements (Continued)~~Trust

~~Stock-Based~~Notes ~~Compensation~~to Condensed Consolidated Financial Statements (Continued)

As Foreign ofCurrency June 30, 2005, the company has one stock-based employee compensation plan. Effective January 1, 2003, the company adopted the fair value recognition provision of SFAS No. 123, “Accounting for Stock-Based Compensation,” prospectively to all employee awards granted, modified or settled after January 1, 2003, which results in expensing of options. During 2005, we granted approximately 325,000 Restricted Share Units and 513,000 stock options. During 2004, we granted approximately 300,000 Restricted Share Units and 648,000 stock options. For employee awards granted prior to January 1, 2003, the company accounted for this plan under the recognition and measurement provisions of APB Opinion No. 25, “Accounting for Stock Issued to Employees,” and related Interpretations. WithTranslation respect to options granted under the plan prior to January 1, 2003, no stock-based employee compensation expense is reflected in the accompanying condensed consolidated statements of earnings, as all options granted under those plans had an exercise price equal to the market value of the underlying common stock on the date of grant. The following table illustrates the effect on net earnings and earnings per share if the fair value based method had been applied to all outstanding and unvested awards in each period (dollar amounts in thousands, except per share amounts):

	Three Months Ended June 30,		Six Months Ended June 30,
	2005	2004	2005	2004
Net earnings attributable to Common Shares – Basic	$ 54,744	$ 76,919	$ 119,143	$ 173,960
Add: Stock-based employee compensation expense included in reported net earnings	195	63	400	129
Deduct: Total stock-based employee compensation expense determined under fair value based method for all awards	(321)	(448)	(705)	(884)
Pro forma net earnings attributable to Common Shares – Basic	$ 54,618	$ 76,534	$ 118,838	$ 173,205
Net earnings per Common Share:
Basic – as reported	$ 0.28	$ 0.39	$ 0.60	$ 0.89
Basic – pro forma	$ 0.28	$ 0.39	$ 0.60	$ 0.89
Diluted – as reported	$ 0.27	$ 0.39	$ 0.59	$ 0.89
Diluted – pro forma	$ 0.27	$ 0.39	$ 0.59	$ 0.88
Weighted average risk-free interest rate	3.77%	3.48%	3.77%	3.48%
Weighted average dividend yield	5.63%	6.92%	5.63%	6.92%
Weighted average volatility	21.97%	15.33%	21.97%	15.33%
Weighted average expected option life	5.0 years	5.0 years	5.0 years	5.0 years

Assets and liabilities of the company’s foreign operations are translated into U.S. dollars at the exchange rate in effect at the balance sheet date. Revenue and expenses are translated at average rates in effect during the period. The resulting translation adjustment is reflected as accumulated other comprehensive income, a separate component of shareholders’ equity on the Condensed Consolidated Balance Sheets. The functional currency utilized for these subsidiaries is the local foreign currency.

~~Comprehensive~~ Derivative ~~Income~~Financial Instruments

~~Comprehensive~~ We ~~income,~~utilize ~~which~~derivative isfinancial ~~defined~~instruments asto ~~net~~manage ~~earnings~~our ~~and~~interest ~~all~~rate ~~other~~risk, ~~non-owner~~foreign currency exchange risk, exposure to changes in ~~equity,~~the isfair ~~displayed~~value of certain investments in ~~the~~equity ~~accompanying~~securities and ~~Condensed~~exposure ~~Consolidated~~to ~~Statements~~volatile ofenergy ~~Shareholders’~~prices. ~~Equity~~The resulting assets and ~~Comprehensive~~liabilities ~~Income/(Loss)~~associated with derivative financial instruments are carried on our financial statements at estimated fair value at the end of each reporting period. ~~Other~~The ~~comprehensive~~changes ~~income/(loss)~~in ~~reflects~~fair ~~unrealized~~value ~~holding~~of ~~gains~~a fair value hedge and ~~losses~~the onfair value of the ~~available-~~items hedged are generally recorded in earnings for~~-sale~~ ~~investments~~each ~~and~~reporting ~~changes~~period. The change in the fair value of effective cash flow hedges and foreign currency hedges are carried on our financial statements as a component of accumulated other comprehensive income. If effective, our hedges have little or no impact on our current earnings.

9 Income Taxes

~~Archstone-Smith~~ We ~~Trust~~have made an election to be taxed as a REIT under the Internal Revenue Code of 1986, as amended, and we believe we qualify as a REIT and have made all required distributions of our taxable income.

~~Notes~~ Income taxes for our taxable REIT subsidiaries are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to ~~Condensed~~differences ~~Consolidated~~between ~~Financial~~the ~~Statements~~financial ~~(Continued)~~statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in earnings in the period that includes the enactment date.

~~Our~~ Comprehensive ~~accumulated other comprehensive income/(loss) for the six months ended June 30, 2005 was as follows (in thousands):~~Income

	Net Unrealized Gains on Marketable Securities	Cash Flow Hedges	Accumulated Other Comprehensive Income/(Loss)
Balance at December 31, 2004	$ 1,398	$ (5,823)	$ (4,425)
Change in fair value of cash flow hedges	–	2,270	2,270
Fair value of long-term debt hedge	–	(1,859)	(1,859)
Mark to market for marketable equity securities	690	–	690
Reclassification adjustments for realized net gains	(2,079)	–	(2,079)
Balance at June 30, 2005	$ 9	$ (5,412)	$ (5,403)

Comprehensive income, which is defined as net earnings and all other non-owner changes in equity, is displayed in the accompanying Condensed Consolidated Statement of Shareholders’ Equity and Comprehensive Income. Other comprehensive income reflects unrealized holding gains and losses on the available-for-sale investments, changes in the fair value of effective cash flow hedges and gains and losses on long-term foreign currency transactions.

~~Per~~ Our ~~Share~~accumulated ~~Data~~other comprehensive income for the three months ended March 31, 2007 was as follows (in thousands):

Following is a reconciliation of basic EPS to diluted EPS for the periods indicated (in thousands):


	Net Unrealized								Accumulated
	Gains on						Foreign		Other
	Marketable			Cash Flow			Currency		Comprehensive
	Securities			Hedges			Translation		Income
Balance at December 31, 2006	$	1,822		$	(554	)	$	2,252	$	3,520
Change in fair value of hedges		—			789			—		789
Change in fair value of long-term debt hedges		—			56					56
Reclassification adjustment for realized net gains		(1,794	)		—			—		(1,794	)
Foreign currency exchange translation		—			—			1,721		1,721

Balance at March 31, 2007	$	28		$	291		$	3,973	$	4,292

		Three Months Ended June 30,		Six Months Ended June 30,
		2005	2004	2005	2004
	Reconciliation of numerator between basic and diluted net earnings per Common Share (1):
Net earnings attributable to Common Shares – Basic		$ 54,744	$ 76,919	$ 119,143	$ 173,960
Dividends on Convertible Preferred Shares		–	–	–	2,208
Minority interest – convertible operating partnership units		33	42	66	103
Net earnings attributable to Common Shares – Diluted		$ 54,777	$ 76,961	$ 119,209	$ 176,271
	Reconciliation of denominator between basic and diluted net earnings per Common Share (1):
Weighted average number of Common Shares outstanding – Basic		198,987	195,241	199,630	195,055
Assumed conversion of Convertible Preferred Shares into Common Shares		–	–	–	2,583
Assumed exercise of options		1,106	946	1,038	936
Weighted average number of Common Shares outstanding – Diluted		200,093	196,187	200,668	198,574

(1)Table Excludes the impact of potentially dilutive equity securities during periods in which they are anti-dilutive.Contents

~~New~~Archstone-Smith ~~Accounting Pronouncements~~Trust

InNotes December 2004, the FASB issued SFAS No. 123R, “Share-Based Payment”. This Statement is a revision of SFAS No. 123, “Accounting for Stock-Based Compensation”, and supercedes APB No. 25, “Accounting for Stock Issued to ~~Employees”. The~~Condensed ~~Statement~~Consolidated ~~requires~~Financial ~~companies~~Statements to recognize, in the income statement, the grant-date fair value of stock options and other equity based compensation issued to employees. This Statement is effective as of the beginning of the first interim or annual period that commences after January 1, 2006. We do not believe that the adoption of SFAS No. 123R will have a material impact on our financial position, net earnings or cash flows. (Continued)

10 Per Share Data

~~Archstone-Smith~~ Following ~~Trust~~is a reconciliation of basic EPS to diluted EPS for the periods indicated (in thousands):

Notes to Condensed Consolidated Financial Statements (Continued)


	Three Months Ended
	March 31,
	2007		2006
Reconciliation of numerator between basic and diluted net earnings per Common Share⁽¹⁾:

Net earnings attributable to Common Shares – Basic	$	286,741	$	123,497
Interest on Convertible Debt		7,295		—
Minority interest		611		69

Net earnings attributable to Common Shares – Diluted	$	294,647	$	123,566

Reconciliation of denominator between basic and diluted net earnings per Common Share⁽¹⁾:
Weighted average number of Common Shares outstanding – Basic		221,256		213,379
Assumed conversion of Convertible Debt into Common Shares		9,039		—
Incremental options		854		874

Weighted average number of Common Shares outstanding – Diluted		231,149		214,253

In June 2005, the Emerging Issues Task Force issued EITF No. 04-5, "Determining Whether a General Partner, or the General Partners as a Group, Controls a Limited Partnership or Similar Entity When the Limited Partners Have Certain Rights." (~~EITF No. 04-5~~1) ~~This~~ ~~Issue~~Excludes provides a framework for evaluating whether a general partner or group of general partners or managing members controls a limited partnership or limited liability company and therefore should consolidate the ~~entity. EITF~~impact ~~No. 04-5 is effective for general partners or managing members~~ of ~~all~~potentially ~~new~~dilutive ~~limited~~equity ~~partnerships~~securities ~~formed~~during ~~and~~periods ~~for~~in ~~existing limited partnerships for~~ which ~~the~~they ~~partnership agreements~~ are modified, the guidance in this Issue is effective after June 29, 2005. For general partners or managing members in all other limited partnerships, the guidance in this Issue is effective no later than the beginning of the first reporting period in fiscal years beginning after December 15, 2005. Although we have yet to complete our analysis, we do not believe that the adoption of EITF No. 04anti-~~5 will have a material impact on our financial position, net earnings or cash flows~~dilutive.

~~(2)~~ To ~~Real~~calculate ~~Estate~~earnings per share, we allocate the interest on the Convertible Debt on a pro-rata basis between continuing and discontinued operations.

~~Investments in Real Estate~~ Reclassifications

~~Investments~~ Certain inprior ~~real~~year ~~estate,~~amounts athave ~~cost,~~been ~~were~~reclassified asto ~~follows~~conform ~~(dollar~~to ~~amounts~~the incurrent ~~thousands):~~presentation.

	June 30, 2005		December 31, 2004
	Investment	Units (1)	Investment	Units (1)
REIT Apartment Communities:
Operating communities	$ 8,097,273	57,730	$ 8,018,658	58,486
Communities under construction	537,345	3,282	499,239	3,237
Development communities In Planning	22,360	585	51,822	1,251
Total REIT apartment communities	8,656,978	61,597	8,569,719	62,974
Ameriton apartment communities (2)	533,189	7,200	581,910	6,791
Other real estate assets(3)	82,903	-	69,409	-
Total real estate	$ 9,273,070	68,797	$ 9,221,038	69,765

New Accounting Pronouncements

In July 2006, the FASB issued Interpretation No. 48 (1FIN 48), ~~Unit~~“Accounting ~~information~~for isUncertainty ~~based~~in Income Taxes – An Interpretation of FASB Statement No. 109.” FIN 48 defines a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FIN 48 also provides guidance on ~~management’s~~derecognition, classification, ~~estimates~~interest and ~~has~~penalties, accounting in interim periods, disclosure and transition. The provisions of FIN 48 are effective for fiscal years beginning after December 15, 2006. The adoption of FIN 48 as of January 1, 2007 did not ~~been~~have ~~reviewed~~a bymaterial effect on our ~~independent~~financial ~~registered~~position, net ~~Public~~earnings ~~Accounting~~or ~~Firm~~cash flows.

~~(2)~~ We ~~Ameriton’s~~recognize ~~investment~~these astax ofpositions ~~June~~and 30evaluate them using a two-step process. First, ~~2005~~we determine ~~and~~whether ~~December~~a 31tax position is more likely than not (greater than 50 percent probability) to be sustained upon examination, ~~2004~~including ~~for~~resolution ~~development~~of ~~communities~~any ~~Under~~related ~~Control~~appeals ~~was~~or ~~$0.8~~litigation ~~million~~processes, based ~~253~~on ~~units~~the ~~and~~technical $1merits of the position.5 ~~million~~Then, ~~593~~we ~~units,~~measure ~~respectively,~~to determine the amount of benefit to recognize and ~~are~~record ~~reflected~~the inamount of the ~~“Other~~benefit ~~assets”~~that ~~caption~~is ofmore ~~our~~likely ~~Condensed~~than ~~Consolidated~~not ~~Balance~~to ~~Sheets~~be realized upon ultimate settlement.

~~(3)~~ We ~~Includes~~or ~~land~~one ~~that~~of isour subsidiaries files income tax returns in the U.S. federal jurisdiction, and various states and foreign jurisdictions. With few exceptions, we are not Insubject ~~Planning~~to U.S. federal, state and ~~other~~local, ~~real~~or ~~estate~~non-U.S. ~~assets~~income tax examinations by tax authorities for years before 2001. As of March 31, 2007, no taxing authority has proposed any significant adjustments to our tax positions. We have no significant current tax examinations in process.

~~The change in investments in real estate, at cost, consisted of the following (in thousands):~~10

Balance at December 31, 2004		$ 9,221,038
Acquisition-related expenditures		286,311
Redevelopment expenditures		23,465
Recurring capital expenditures		16,676
Development expenditures, excluding land acquisitions		152,895
Dispositions		(435,284)
Net apartment community activity		44,063
Change in other real estate assets		7,969
Balance at June 30, 2005		$ 9,273,070

AtArchstone-Smith June 30, 2005 we had unfunded contractual commitments related to real estate investment activities aggregating approximately $563.0 million, of which $540.9 million related to communities under construction.Trust

11Notes to Condensed Consolidated Financial Statements (Continued)

~~Archstone-Smith~~ A ~~Trust~~reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):

Notes to Condensed Consolidated Financial Statements (Continued)


Unrecognized Tax Benefits:
Balance at January 1, 2007	$	2,021
Current Period Interest		69

Balance at March 31, 2007	$	2,090

~~(3)~~ We ~~Discontinued~~are ~~Operations~~required to recognize interest and penalties accrued related to unrecognized tax benefits in tax expense. As of the date of adoption, the Company has accrued interest of approximately $228,000 and we have not recorded any penalties.

The results of operations for properties sold during the period or designated as held-for-sale at the end of the period are required to be classified as discontinued operations. The property-specific components of net earnings that are classified as discontinued operations include rental revenues, rental expenses, real estate taxes, depreciation expense, minority interest, estimated income taxes (~~for Ameriton properties~~2), Real debt extinguishment expense and interest expense (actual interest expense for encumbered properties and a pro-rata allocation of interest expense for any unencumbered property up to our weighted average leverage ratio), as well as the net gain or loss on the disposition of properties. Estate

~~Consistent~~ Investments with our capital recycling program, we have ten operating apartment communities, representing 3,868 units (unaudited), classified as held for sale under the provisions of SFAS No. 144, at June 30, 2005. Accordingly, we have classified the operating earnings from these ten properties within discontinued operations for the three and six months ended June 30, 2005 and 2004. During the six months ended June 30, 2005, we sold nine Archstone-Smith and Ameriton operating communities. The operating results of these nine communities and the related gain/loss on sale are also included in ~~discontinued~~Real operations for 2005 and 2004. During the twelve months ended December 31, 2004, we sold 30 Archstone-Smith and Ameriton operating communities. The operating results of these 30 communities and the related gain/loss on the sale are also included in discontinued operations for the threeEstate ~~and six months ended June 30, 2004.~~

~~The~~ Investments ~~following~~in isreal aestate, ~~summary~~at ofcost, ~~net~~were ~~earnings~~as ~~from~~follows ~~discontinued~~(dollar ~~operations~~amounts (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
		March 31,		December 31,
	2005		2004	2005		2004
		2007		2006
Rental revenues	$ 12,322		$ 47,506	$ 27,261		$ 95,786
		Investment		Investment
Rental expenses	(4,046)		(15,454)	(9,351)		(31,256)
REIT Apartment Communities:
Real estate taxes	(1,264)		(5,921)	(2,523)		(12,034)
Operating communities		$	10,899,899	$	11,208,052
Depreciation on real estate investments	(1,699)		(7,119)	(4,896)		(16,330)
Communities under construction			466,532		406,881
Interest expense (1)	(3,681)		(13,057)	(7,536)		(26,688)
Development communities In Planning(1)			94,970		75,538
Estimated income taxes (Ameriton properties)	(1,453)		(166)	(6,120)		(278)
Total REIT apartment communities			11,461,401		11,690,471
Debt extinguishment costs related to dispositions	(331)		(212)	(5,389)		(1,120)
Ameriton(1)			626,191		585,524
Allocation of minority interest	(2,181)		(4,092)	(5,568)		(11,500)
International			929,037		851,593
Gains on disposition of taxable REIT subsidiary real estate investments, net	6,937		1,817	20,703		14,513
Other real estate assets(2)			60,246		60,052
Gains on dispositions of REIT real estate investments, net	13,405		29,169	39,559		78,969
Total real estate		$	13,076,875	$	13,187,640
Earnings from discontinued apartment communities	$ 18,009		$ 32,471	$ 46,140		$ 90,062

(1) The portion of interest expense included in discontinued operations that is allocated to properties based on the company’s leverage ratio was $3.3 million and $9.5 million for the three months ended June 30, 2005 and 2004, and $6.0 million and $19.4 million for the six months ended June 30, 2005 and 2004, respectively.


(1)		Includes development communities In Planning – Owned but excludes In Planning – Under Control. Our investment as of March 31, 2007 and December 31, 2006 for development communities In Planning – Under Control was $10.9 million and $7.6 million, respectively, and is reflected in the “Other assets” caption of our Condensed Consolidated Balance Sheets.

(2)		Includes land that is not In Planning and other non-multifamily real estate assets.

~~Assets~~ The ~~held~~change ~~for~~in ~~sale~~investments asin ~~of June 30, 2005 and December 31, 2004, represented gross~~ real estate ~~of $400.8 million and $378.4 million with $17.6 million and $17.8 million related mortgages payable at June 30~~, ~~2005 and December 31, 2004, respectively. Additionally, of our investment in real estate~~ at ~~December 31~~cost, ~~2004,~~consisted ~~we disposed~~ of ~~$435.3 million of real estate and paid off related mortgages of $85.5 million during~~ the ~~six~~following ~~months~~(in ~~ended June 30, 2005.~~thousands):


Balance at December 31, 2006	$	13,187,640
Acquisition-related expenditures		165,125
Redevelopment expenditures		8,873
Recurring capital expenditures		7,731
Development expenditures, including initial acquisition costs		130,665
Acquisition of land for development		41,283
Dispositions		(466,379	)
Other		500

Net apartment community activity		(112,202	)
Change in other real estate assets		1,437

Balance at March 31, 2007	$	13,076,875

~~Archstone-Smith Trust~~11

NotesTable toof Condensed Consolidated Financial Statements (Continued)Contents

~~(4)~~Archstone-Smith ~~Investments in and Advances to Unconsolidated Entities~~Trust

~~Real~~Notes ~~Estate~~to ~~Joint~~Condensed ~~Ventures~~Consolidated Financial Statements (Continued)

We At ~~have~~March 31, ~~investments~~2007, inwe ~~entities~~had ~~that~~unfunded wecontractual ~~account~~commitments ~~for~~of ~~using~~$507.6 million ~~the~~related ~~equity~~to communities ~~method. At~~under ~~June~~construction ~~30,~~and ~~2005,~~under ~~the~~redevelopment. ~~investment~~The ~~balance~~purchase ~~consisted~~prices of ~~$92.5~~certain ~~million~~recent acquisitions in ~~Archstone-Smith~~New ~~joint~~York ~~ventures~~ and ~~$32.1~~Germany ~~million~~were inallocated ~~Ameriton~~to ~~joint~~land, ~~ventures. At~~buildings ~~December~~and ~~31,~~other ~~2004,~~assets ~~the~~based ~~investment~~on preliminary ~~balance~~estimates ~~consisted~~and ofis ~~$74.1~~subject ~~million~~to inchange ~~Archstone-Smith~~as ~~joint~~we ~~ventures~~obtain ~~and~~more ~~$37.4~~complete ~~million~~information inregarding land, ~~Ameriton~~building ~~joint~~and ~~ventures~~lease intangibles values.

~~Combined summary balance sheet data for our investments in unconsolidated entities presented on a stand-alone basis follows~~ (~~in thousands~~3): DeWAG Acquisition

	June 30, 2005	December 31, 2004
Assets:
Real estate	$ 1,118,018	$ 1,115,563
Other assets	189,962	52,394
Total assets	$ 1,307,980	$ 1,167,957
Liabilities and owners’ equity:
Inter-company debt payable to Archstone-Smith	$ 3,125	$ 4,124
Mortgages payable (1)	903,774	777,924
Other liabilities	30,971	24,254
Total liabilities	937,870	806,302
Owners’ equity	370,110	361,655
Total liabilities and owners’ equity	$ 1,307,980	$ 1,167,957

On July 27, 2006, we acquired 94% of the shares and 94% of an outstanding shareholder loan of DeWAG Deutsche WohnAnlage GmbH (“DeWAG”) for approximately $271 million, based on the exchange rate on the transaction date. We have the option to acquire the remaining 6%, owned by the Managing Directors of DeWAG, under certain circumstances. The results of DeWAG’s operations have been included in the Condensed Consolidated Financial Statements since July 1, 2006. The purchase was funded by an international term loan, which is expected to be repaid or refinanced during the second quarter of 2007. In addition, we assumed approximately $509 million in DeWAG liabilities. DeWAG specializes in the acquisition, ownership, operation and re-sale of quality residential properties in the major metropolitan areas of Southern and Western Germany, as well as West Berlin. As of July 1, 2006, the portfolio consisted of approximately 6,400 residential units. We acquired DeWAG because we are interested in expanding our operations into German markets which we believe have attractive fundamentals for apartment operations.

~~(1) Archstone-Smith~~ The ~~guarantees~~following ~~$190.5~~table ~~million~~summarizes the estimated fair value of the ~~outstanding~~assets ~~debt~~acquired ~~balance~~and asthe liabilities assumed at the date of ~~June~~the ~~30,~~acquisition. ~~2005~~We recognized goodwill in connection with the DeWAG acquisition. Goodwill represents the excess of the purchase price and related costs over the value assigned to the net tangible and identifiable intangible assets. The goodwill associated with the transaction is ~~committed~~primarily attributable to ~~guarantee~~the ~~another~~people ~~$93~~and processes which comprise the investing and the operating platform.5 ~~million~~We ~~upon~~will ~~funding~~perform an impairment test annually, or more frequently if events or changes in circumstances indicate impairment of ~~additional~~our ~~debt~~goodwill. Due to the recent closing of the transaction, we are still in the process of seeking information to finalize the valuations for our real estate, intangible assets, and certain liabilities. Therefore, the purchase price allocation is subject to change (dollar amounts in thousands).

Selected combined summary results of operations for our unconsolidated investees presented on a stand-alone basis follows (in thousands):


Real estate	$	646,285
Other assets		67,722
Intangible assets		30,958
Goodwill		34,490

Total assets	$	779,455


Mortgages payable	$	407,933
Other liabilities		10,759
Deferred tax liability		69,327
Intangible liabilities		20,514

Total liabilities		508,533

Net assets acquired	$	270,922

	Three Months Ended June 30,		Six Months Ended June 30,
	2005	2004	2005	2004
Archstone-Smith Joint Ventures
Revenues	$ 32,863	$ 35,424	$ 66,152	$ 70,836
Net Earnings (1)	11,244	916	26,732	10,098
Ameriton Joint Ventures
Revenues	$ 1,174	$ 1,697	$ 2,263	$ 3,320
Net Earnings (2)	4,816	7,417	11,934	7,160
Total
Revenues	$ 34,037	$ 37,121	$ 68,415	$ 74,156
Net Earnings	$ 16,060	$ 8,333	$ 38,666	$ 17,258

Following are preliminary values as of March 31, 2007 related to the intangible assets and liabilities we identified in connection with the DeWAG transaction and the corresponding amortization we expect to record (dollar amounts in thousands).

(1) Includes gains associated with the disposition of Archstone-Smith Joint Ventures of $4.6 million during the three months ended June 30, 2005, none for the same period ended 2004, and $22.0 million and $8.0 million for the six months ended June 30, 2005 and 2004 respectively.


						Weighted
						Average
	Gross					Useful
	Carrying		Accumulated			Life (in
	Amount		Amortization			years)

Non-compete agreements	$	19,869	$	(3,725	)		4
In-place leases		12,893		(2,417	)		4

Total intangible assets	$	32,762	$	(6,142	)

Below-market leases	$	21,711	$	(4,071	)		4

Total intangible liabilities	$	21,711	$	(4,071	)

(2) Includes Ameriton’s share of pre-tax gains associated with the disposition of real estate joint ventures. These gains aggregated $5.0 million and $3.8 million during the three months ended June 30, 2005 and 2004, and $12~~.9 million and $7.0 million for the six months ended June 30, 2005 and 2004, respectively.~~

13Table of Contents

Archstone-Smith Trust

Notes to Condensed Consolidated Financial Statements (Continued)

(5) Mezzanine Notes Receivable


Estimated net amortization for the year ended
2007	$	2,763
2008	$	2,763
2009	$	2,763
2010	$	1,382

~~During~~ The ~~the~~changes six months ended June 30, 2005, we entered into six mezzanine note agreements as a lender to third parties to fund certain real estate projects. As of June 30, 2005 and December 31, 2004, we had a total of $60.9 million and $8.7 million in ~~mezzanine notes receivable, respectively and a commitment to fund an additional $23.8 million under existing agreements. Our rights to~~ the ~~underlying~~carrying ~~collateral~~amount ~~in the event~~ of ~~default~~goodwill are ~~subordinate~~as to the primary mortgage lender. During the six months ended June 30, 2005, we recognized a total of $2.6 million in interest income associated with mezzanine notes receivable. There was no comparable interest income for the same period in 2004.follows:

(6) Borrowings


Balance December 31, 2006	$	35,450
Purchase accounting adjustment		(481	)
Change in foreign currency translation		355

Balance March 31, 2007	$	35,324

~~Unsecured~~(4) Discontinued ~~Credit Facilities~~Operations

The ~~following~~results ~~table~~of ~~summarizes~~operations ~~our~~for ~~revolving~~properties ~~credit~~sold ~~facility~~during ~~borrowings~~the ~~under~~period ~~our~~or ~~line~~designated as held-for-sale at the end of ~~credit~~the ~~(in~~period ~~thousands~~are required to be classified as discontinued operations. The property specific components of net earnings that are classified as discontinued operations include rental revenues, ~~except~~rental ~~for~~expenses, ~~percentages):~~real estate taxes, depreciation expense, minority interest, income taxes, a pro-rata allocation of interest expense and the net gain or loss on the disposition of properties.

	As of and for the Six Months Ended June 30, 2005	As of and for the Year Ended December 31, 2004
Total unsecured revolving credit facility	$ 600,000	$ 600,000
Borrowings outstanding at end of period	–	19,000
Outstanding letters of credit under this facility	5,329	13,983
Weighted average daily borrowings	63,486	81,317
Maximum borrowings outstanding during the period	141,000	375,000
Weighted average daily nominal interest rate	3.06%	1.58%
Weighted average daily effective interest rate	3.14%	2.62%

Consistent with our capital recycling program, we had 16 operating apartment communities, representing 6,724 units (unaudited), classified as held-for-sale under the provisions of SFAS No. 144, at March 31, 2007. Accordingly, we have reclassified the operating earnings from these properties to discontinued operations for the three months ended March 31, 2007 and 2006. During the three months ended March 31, 2007, we sold 11 Archstone-Smith and one Ameriton operating community. The operating results of these communities and the related gain on sale are also included in discontinued operations for 2007 and 2006.

We The ~~also~~following ~~have~~is a ~~short-term~~summary ~~unsecured borrowing agreement with JPMorgan Chase Bank, which provides for maximum borrowings~~ of ~~$100~~net ~~million.~~earnings ~~The borrowings under the agreement bear interest at an overnight rate agreed to at the time of borrowing and ranged~~ from ~~2.75%~~discontinued tooperations ~~3.60%~~(in ~~during 2005. There were no borrowings outstanding under the agreement at June 30, 2005 and December 31, 2004.~~thousands):

Long-Term Unsecured Debt


	Three Months Ended
	March 31,
	2007			2006
Rental revenues	$	31,254		$	77,504
Rental expenses		(7,997	)		(22,014	)
Real estate taxes		(3,616	)		(10,260	)
Depreciation on real estate investments		(6,654	)		(16,215	)
Interest expense⁽¹⁾		(7,027	)		(16,224	)
Income taxes from taxable REIT subsidiaries		(358	)		(422	)
Provision for possible loss on real estate investment		—			(2,200	)
Debt extinguishment costs related to dispositions		(746	)		(863	)
Allocation of minority interest		(31,420	)		(12,203	)
Gains from the disposition of REIT real estate investments, net		275,197			67,467
Internal disposition costs – REIT transactions⁽²⁾		(709	)		(649	)
Gains from the disposition of taxable REIT subsidiary real estate investments, net		3,525			14,724
Internal disposition costs – taxable REIT subsidiary transactions⁽²⁾		(141	)		(1,108	)

Earnings from discontinued apartment communities	$	251,308		$	77,537

A(1) ~~summary~~Interest ofexpense ~~our~~included ~~Long-Term~~in ~~Unsecured~~discontinued ~~Debt~~operations ~~outstanding~~is atallocated ~~June~~to ~~30,~~properties ~~2005~~based on each asset’s cost in relation to the company’s leverage ratio and ~~December~~the ~~31,~~average ~~2004~~effective ~~follows~~interest ~~(dollar~~rate ~~amounts~~for ineach ~~thousands):~~respective period.

Type of Debt	Coupon Rate(1)	Effective Interest Rate(2)	Balance at June 30, 2005	Balance at December 31, 2004	Average Remaining Life (Years)
Long-term unsecured senior notes	6.08%	6.25%	$ 2,300,707	$ 2,019,607	5.5
Unsecured tax-exempt bonds	2.88%	3.14%	78,502	79,525	18.1
Total/average	5.97%	6.15%	$ 2,379,209	$ 2,099,132	5.9

(1)Table Representsof a fixed rate for the long-term unsecured notes and a variable rate for the unsecured tax-exempt bonds.Contents

~~(2)~~Archstone-Smith ~~Includes the effect of fair value hedges, loan cost amortization and other ongoing fees and expenses, where applicable.~~Trust

14Notes to Condensed Consolidated Financial Statements (Continued)

~~Archstone-Smith~~(2) ~~Trust~~Represents the direct and incremental compensation and related costs associated with the employees dedicated to our significant disposition activity.

~~Notes~~ The toreal estate and mortgage payable balances associated with operating communities classified as held-for-sale are reflected as “Real estate – held-for-sale” and “Mortgages payable – held-for-sale” in the accompanying Condensed Consolidated ~~Financial~~Balance ~~Statements (Continued)~~Sheets.

~~During~~ The ~~May~~disposition ~~2005,~~proceeds associated with the ~~Operating~~sales ~~Trust~~of ~~issued~~individual ~~$300~~rental ~~million~~units by our foreign subsidiaries are included in ~~long-term~~continuing ~~unsecured~~operations ~~ten-year~~as ~~senior~~such ~~notes~~sales ~~with~~do anot ~~coupon~~meet ~~rate~~the ofrequirements ~~5.25%~~under SFAS ~~and~~144, an“Accounting ~~effective~~for ~~interest~~the ~~rate~~Impairment or Disposal of ~~5.4%~~Long-Lived ~~from~~Assets,” ~~its~~to ~~shelf~~be ~~registration~~reflected ~~statement~~as discontinued operations.

~~Mortgages~~(5) Investments ~~payable~~in and Advances to Unconsolidated Entities

~~Our~~ Real ~~mortgages~~Estate ~~payable~~Joint generally feature either monthly interest and principal payments or monthly interest-only payments with balloon payments due at maturity. A summary of mortgages payable follows (dollar amounts in thousands):Ventures

	Outstanding Balance at (1)
	June 30, 2005	December 31, 2004	Effective Interest Rate (2)
Secured floating rate debt:
Tax-exempt debt	$ 495,381	$ 508,923	2.7%
Construction loans	–	40,868	N/A
Conventional mortgages	21,705	21,705	3.5%
Total Floating	517,086	571,496	2.7%
Secured fixed rate debt:
Conventional mortgages	1,223,510	1,439,558	6.3%
Other secured debt	19,925	20,451	5.0%
Total Fixed	1,243,435	1,460,009	6.3%
Total debt outstanding at end of period	$ 1,760,521	$ 2,031,505	5.2%

We have investments in entities that we account for using the equity method. At March 31, 2007, the investment balance consisted of $210.7 million in thirteen Archstone-Smith joint ventures and $41.3 million in five Ameriton joint ventures. At December 31, 2006, the investment balance consisted of $199.7 million in 13 Archstone-Smith joint ventures and $35.6 million in five Ameriton joint ventures. Archstone-Smith and Ameriton’s combined weighted average percentage of ownership in joint ventures based on total assets at March 31, 2007 was 37.4%.

~~(1)~~ Combined ~~Includes~~summary ~~the~~balance ~~unamortized~~sheet ~~fair~~data ~~market~~for ~~value~~our ~~adjustment~~investments ~~recorded~~ in ~~connection~~unconsolidated ~~with~~entities ~~the~~presented on ~~Smith~~a ~~Merger~~stand-alone ofbasis ~~$41.1~~follows ~~million~~(in ~~and $48.4 million at June 30, 2005 and December 31, 2004, respectively. This amount is being amortized into interest expense over the life of the underlying debt.~~thousands):

(2) Includes the effect of fair value hedges, credit enhancement fees, the amortization of fair market value purchase adjustment, and other related costs, where applicable.


	March 31,		December 31,
	2007		2006
Assets:
Real estate	$	1,589,914	$	1,530,659
Other assets		165,946		213,569

Total assets	$	1,755,860	$	1,744,228

Liabilities and owners’ equity:
Inter-company debt payable to Archstone-Smith	$	512	$	1,519
Mortgages payable⁽¹⁾		1,080,560		1,063,451
Other liabilities		65,932		126,048

Total liabilities		1,147,004		1,191,018

Owners’ equity		608,856		553,210

Total liabilities and owners’ equity	$	1,755,860	$	1,744,228

~~The~~(1) ~~change~~Archstone-Smith inguarantees ~~mortgages~~$288.8 ~~payable~~million ~~during~~of the ~~six~~outstanding ~~months~~debt ~~ended~~balance ~~June~~as 30of March 31, ~~2005~~2007 ~~consisted~~and ofis ~~the~~committed ~~following~~to ~~(in~~guarantee ~~thousands):~~another $43.1 million upon funding of additional debt.

Balance at December 31, 2004		$ 2,031,505
Regularly scheduled principal amortization		(5,321)
Prepayments, final maturities and other (1)		(266,318)
Proceeds from mortgage notes payable		655
Balance at June 30, 2005		$ 1,760,521

Selected combined summary results of operations for our unconsolidated investees presented on a stand-alone basis follows (in thousands):

(1) We incurred $23.2 million of debt extinguishment costs in connection with these mortgage prepayments.


	Three Months Ended
	March 31,
	2007			2006
Archstone-Smith Joint Ventures
Revenues	$	37,483		$	31,008
Net Earnings⁽¹⁾		(2,589	)		2,179
Ameriton Joint Ventures
Revenues	$	128		$	141
Net Earnings⁽²⁾		3,850			18,362
Total
Revenues	$	37,611		$	31,149

Net Earnings	$	1,261		$	20,541

1514

Archstone-SmithTable Trustof Contents

~~Notes~~Archstone-Smith ~~to Condensed Consolidated Financial Statements (Continued)~~Trust

~~Other~~Notes to Condensed Consolidated Financial Statements (Continued)

~~The~~(1) ~~book~~There ~~value~~were ofno ~~total~~gains ~~assets~~associated ~~pledged~~with as collateral for mortgage loans and other obligations at June 30, 2005 and December 31, 2004 is $3.4 billion and $3.8 billion, respectively. Our debt instruments generally contain covenants common to the ~~type~~disposition of ~~facility~~REIT orJoint ~~borrowing,~~Venture ~~including~~assets ~~financial~~for ~~covenants establishing minimum debt service coverage ratios and maximum leverage ratios. We were in compliance with all financial covenants pertaining to our debt instruments during~~ the three ~~and six~~ months ended ~~June~~March 3031, ~~2005~~2007 and 2006.

~~The~~(2) ~~total~~Includes ~~interest~~Ameriton’s ~~paid~~share onof ~~all~~pre-tax ~~outstanding~~gains ~~debt~~associated ~~was~~with ~~$35.5 million and $40.5 million for three months ended June 30, 2005 and 2004, respectively and $120.1 million and $114.3 million for~~ the ~~six~~disposition ~~months ended June 30, 2005 and 2004, respectively. We capitalize interest incurred during the construction period as part~~ of ~~the~~real ~~cost~~estate ofjoint ~~apartment~~venture ~~communities under development~~assets. ~~Interest~~ ~~capitalized~~The ~~was~~gains ~~$9.3~~for ~~million and $5.4 million during~~ the three months ended ~~June~~March 3031, ~~2005~~2007 and ~~2004,~~2006 ~~respectively~~were ~~and~~ $173.59 million and $1119.36 million ~~during the six months ended June 30~~, ~~2005 and 2004,~~ respectively.

(76) ~~Minority~~ Mortgage ~~Interest~~and Other Notes Receivable

~~Minority~~ The ~~interest~~change ~~consisted~~in ofmortgage ~~A-1~~and ~~Common~~other ~~Units~~notes atreceivable, ~~June~~which 30are included in other assets, ~~2005. The~~during the ~~changes~~three inmonths ~~minority~~ended ~~interest~~March 31, ~~were~~2007 asconsisted ~~follows~~of the following (in thousands):

Balance at December 31, 2004	$ 498,098
Balance at December 31, 2006		$	123,261
A-1 Common Unit conversions	(3,129)
Funding of additional notes			464
Unitholders’ share of net earnings	15,118
Accrued interest			1,336
Common Units issued for real estate	41,660
Prepayments			(44,560	)
Minority interest distributions	(20,359)
Balance at March 31, 2007		$	80,501
Series E & G Redemptions (1)	(19,522)
Other (includes A-1 revaluation)	(23,517)
Balance at June 30, 2005	$ 488,349

~~(1) 200,000~~ We ~~Series~~have Ea ~~Preferred~~commitment ~~Units~~to ~~were~~fund ~~redeemed~~an additional $20.9 million under existing agreements. Our rights to the underlying collateral on these notes in ~~February~~the ~~2005~~event of default are generally subordinate to the primary mortgage lender. We evaluate the collectibility of our mezzanine and other ~~600~~notes receivable on a quarterly basis. We recognized interest income associated with notes receivable of $2.7 million and $3.6 million for the three months ended March 31,~~000~~ ~~Series~~2007 Gand ~~Preferred~~2006, respectively. ~~Units~~The ~~were~~weighted ~~redeemed~~average incontracted interest rate on these notes as of March 31, ~~2005~~2007 was approximately 11.9%.

~~Operating Trust Units~~(7) Borrowings

We Unsecured ~~owned~~Credit 89.2% and 89.1% of the Operating Trust’s outstanding Common Units at June 30, 2005 and December 31, 2004, respectively. During the six months ended June 30, 2005, approximately 153,000 A-1 Common Units were converted into Common Shares. Facilities

~~(8) Distributions~~ Our $600 million unsecured credit facility, which is led by JPMorgan Chase Bank, N.A., bears interest at the greater of the prime rate or the federal funds rate plus 0.50% or, at our option, LIBOR plus 0.40%. The spread over LIBOR can vary from LIBOR plus 0.325% to ~~Shareholders~~LIBOR plus 1.00%, based upon the rating of our long-term unsecured senior notes. The facility contains an accordion feature that allows us to increase the size of the commitment to $1.0 billion at any time during the life of the facility, subject to lenders providing additional commitments, and enables us to borrow up to $150 million in foreign currencies. The credit facility is scheduled to mature in June 2010, but may be extended for one year at our option.

The following table summarizes ~~the~~our ~~quarterly~~revolving ~~cash~~credit ~~dividends~~facility ~~paid~~borrowings ~~per~~under ~~share~~our online ~~Common~~of credit ~~and~~(in ~~Preferred Shares during the three months ended March 31 and June 30~~thousands, ~~2005~~except ~~and the annualized dividend we expect to pay~~ for ~~2005~~percentages):

	Quarterly Cash Dividend Per Share		Annualized Cash Dividend Per Share
	March 31, 2007			December 31, 2006
Common Shares	$ 0.4325		$ 1.73
Total unsecured revolving credit facility	$	600,000		$	600,000
Series I Perpetual Preferred Shares (1)	1,915		7,660
Borrowings outstanding at end of period		228,552			80,000
Outstanding letters of credit under this facility		9,211			14,880
Weighted average daily borrowings		160,160			100,474
Maximum borrowings outstanding during the period		242,417			360,000
Weighted average daily nominal interest rate		5.4	%		5.0	%
Weighted average daily effective interest rate		5.6	%		6.3	%

~~(1) Series I Preferred Shares have a par value of $100,000 per share.~~15

16Table of Contents

Archstone-Smith Trust

Notes to Condensed Consolidated Financial Statements (Continued)

~~(9) Segment~~ We ~~Data~~also have a short-term unsecured borrowing agreement with JPMorgan Chase Bank, N.A., which provides for maximum borrowings of $100 million. The borrowings under the agreement bear interest at an overnight rate agreed to at the time of borrowing and ranged from 5.6% to 5.8% during 2007. There were $47.3 million of borrowings outstanding under the agreement at March 31, 2007, and $4.7 million of borrowings outstanding at December 31, 2006.

We Unsecured ~~have~~Loans ~~determined~~– that each of our garden communities and each of our high-rise properties have similar economic characteristics and also meet the other GAAP criteria, which permit the garden communities and high-rise properties to be aggregated into two reportable segments. Additionally, we have defined the activity from Ameriton as an individual operating segment as its primary focus is the opportunistic acquisition, development and eventual disposition of real estate with a short-term investment horizon. NOI is defined as rental revenues less rental expenses and real estate taxes. We rely on NOI for purposes of making decisions about resource allocations and assessing segment performance. We also believe NOI is a valuable means of comparing year-to-year property performance.International

~~Following~~ We ~~are~~entered ~~reconciliations,~~into ~~which~~a ~~exclude~~$272.8 million ~~the~~short-term ~~amounts~~loan ~~classified~~agreement aswith ~~discontinued~~LaSalle ~~operations,~~Bank National Association to fund the acquisition of ~~each~~DeWAG. ~~reportable~~We ~~segment’s~~also ~~(i)~~entered ~~revenues~~into toa ~~consolidated~~separate ~~revenues;~~$129.6 million short-term ~~(ii)~~revolving ~~NOI~~loan agreement with LaSalle Bank National Association to ~~consolidated~~fund ~~earnings~~acquisitions ~~from~~by DeWAG. ~~operations;~~The ~~and~~borrowings ~~(iii)~~under ~~assets~~these toloans ~~consolidated~~bear ~~assets~~interest at EURIBOR plus 0.40%. The effective interest rate at March 31, ~~for~~2007 was 4.3%. The unpaid balance on our Unsecured loans – International at March 31, 2007 was $171.7 million. We expect the ~~periods~~balances ~~indicated~~of ~~(in~~these ~~thousands):~~loans to be paid off or refinanced during the second quarter of 2007.

	Three Months Ended June 30,		Six Months Ended June 30,
	2005	2004	2005	2004
Reportable apartment communities segment revenues:
Same-Store:
Garden communities	$ 115,394	$ 112,118	$ 227,969	$ 222,330
High-rise properties	76,711	74,577	144,673	140,275
Non Same-Store:
Garden communities	17,008	6,233	32,532	11,040
High-rise properties	10,236	1,380	28,069	8,463
Ameriton (1)	6,169	3,735	11,622	5,882
Other non-reportable operating segment revenues	857	868	1,426	1,536
Total segment and consolidated rental revenues	$ 226,375	$ 198,911	$ 446,291	$ 389,526

Long-Term Unsecured Debt

	Three Months Ended June 30,		Six Months Ended June 30,
	2005	2004	2005	2004
Reportable apartment communities segment NOI:
Same-Store:
Garden communities	$ 76,828	$ 74,868	$ 150,534	$ 147,699
High-rise properties	49,319	48,434	90,477	90,336
Non Same-Store:
Garden communities	11,126	3,429	20,776	6,402
High-rise properties	5,813	813	17,072	5,531
Ameriton (1)	3,161	1,787	5,648	2,727
Other non-reportable operating segment NOI	784	798	1,243	1,320
Total segment NOI	147,031	130,129	285,750	254,015
Reconciling items:
Other income	6,848	5,209	11,975	8,906
Depreciation on real estate investments	(54,832)	(47,419)	(108,609)	(91,979)
Interest expense	(46,330)	(37,724)	(93,826)	(74,265)
General and administrative expenses	(13,755)	(12,092)	(28,044)	(24,525)
Other expenses	(7,390)	(900)	(28,472)	(2,124)
Consolidated earnings from operations	$ 31,572	$ 37,203	$ 38,774	$ 70,028

A summary of our Long-Term Unsecured Debt outstanding at March 31, 2007 and December 31, 2006 follows (dollar amounts in thousands):


				Effective							Average
	Coupon			Interest			Balance at		Balance at		Remaining
Type of Debt	Rate⁽¹⁾			Rate^{(1) (2)}			March 31, 2007		December 31, 2006		Life (Years)
Long-term unsecured senior notes		5.4	%		5.6	%	$	3,261,759	$	3,279,404		5.3
Unsecured tax-exempt bonds		4.0	%		4.3	%		59,943		76,295		14.8

Total/Weighted average		5.4	%		5.5	%	$	3,321,702	$	3,355,699		5.3

Archstone-Smith Trust


(1)		Represents a fixed rate for the long-term unsecured notes and a variable rate for the unsecured tax-exempt bonds.

(2)		Includes the effect of fair value hedges, loan cost amortization and other ongoing fees and expenses, where applicable.

~~Notes~~ Mortgages ~~to Condensed Consolidated Financial Statements (Continued)~~Payable

~~(1)~~ Our ~~While~~mortgages ~~rental~~payable ~~revenue~~generally ~~and~~feature ~~NOI~~either ~~are~~monthly ~~the~~interest primary measures we use to evaluate the performance of our assets, management also utilizes gains from the disposition of real estate when evaluating the performance of Ameriton as its primary focus is the opportunistic acquisition, development and ~~eventual~~principal ~~disposition~~payments ofor monthly ~~real~~interest-only ~~estate~~payments with aballoon ~~short~~payments ~~term~~due ~~investment~~at ~~horizon~~maturity. ~~During~~Early ~~the~~repayment ~~six months ended June 30, 2005 and 2004, pre-tax gains from the disposition~~ of ~~Ameriton~~mortgages is ~~real~~generally ~~estate~~subject were $20.7 million and $5.4 million, respectively. Additionally, Ameriton had gains of $12.9 million and $7.0 million during the six months ended June 30, 2005 and 2004, respectively from the sale of unconsolidated joint venture assets. These gains are classified within income from unconsolidated entities. Ameriton assets are excluded from our Same-Store population as they are acquired or developed to ~~achieve~~prepayment ~~short-term opportunistic gains, and therefore, the average holding period is typically much shorter than the holding period of assets operated by the REIT~~penalties.

	June 30, 2005	December 31, 2004
Reportable operating communities segment assets:
Same-Store:
Garden communities	$ 3,123,171	$ 3,186,395
High-rise properties	2,516,184	2,534,774
Non Same-Store:
Garden communities	1,150,619	1,053,259
High-rise properties	833,547	869,379
Ameriton	403,038	483,712
Other non-reportable operating segment assets	76,268	69,942
Total segment assets	8,102,827	8,197,461
Real estate held for sale, net	328,704	260,035
Total segment assets	8,431,531	8,457,496
Reconciling items:
Investment in and advances to unconsolidated entities	124,598	111,481
Cash and cash equivalents	12,765	203,255
Restricted cash in tax-deferred exchange escrow	124,041	120,095
Other assets	254,391	173,717
Consolidated total assets	$ 8,947,326	$ 9,066,044

A summary of mortgages payable follows (dollar amounts in thousands):

Total capital expenditures for garden communities included in continuing operations were $15.9 million and $12.4 million for the six months ended June 30, 2005 and 2004, respectively. Total capital expenditures for high-rise properties included in continuing operations were $24.3 million and $12.0 million for the six months ended June 30, 2005 and 2004, respectively. Total capital expenditures for Ameriton properties included in continuing operations were $0.5 million and $1.0 million for the six months ended June 30, 2005 and 2004, respectively.


	Outstanding Balance at⁽¹⁾				Effective Interest
	March 31, 2007		December 31, 2006		Rate⁽²⁾
Secured floating rate debt:
Tax-exempt debt	$	866,720	$	935,536		5.1	%
Conventional mortgages		157,377		167,020		4.7	%


Total Floating		1,024,097		1,102,556		5.0	%
Secured fixed rate debt:
Tax-exempt debt		3,085		3,086		6.4	%
Conventional mortgages		1,648,448		1,651,650		5.8	%
Other secured debt		18,661		18,942		4.6	%

Total Fixed		1,670,194		1,673,678		5.8	%

Total mortgages payable	$	2,694,291	$	2,776,234		5.5	%

~~(10) Litigation and Contingencies~~16

DuringTable 2004, we incurred estimated losses associated with multiple hurricanes in Florida. As a result of this damage, we recorded a loss contingency for both wholly owned and unconsolidated apartment communities. During the first quarter of 2005, we increased the reserve for our unconsolidated apartment communities by $0.7 million. Based on currently available information from our insurance adjustors during the second quarter of 2005, we accrued an estimated insurance recovery of $2.5 million, $1.3 million of which related to our unconsolidated apartment communities.Contents

18Archstone-Smith Trust

Notes ~~Archstone-Smith~~to ~~Trust~~Condensed Consolidated Financial Statements (Continued)

~~Notes~~(1) Includes the unamortized fair market value adjustment associated with assumption of fixed rate mortgages in connection with real estate acquisitions. The unamortized balance aggregated $40.8 million and $43.9 million at March 31, 2007 and December 31, 2006 respectively, and is being amortized as a credit to ~~Condensed~~interest ~~Consolidated~~expense ~~Financial~~over ~~Statements~~the ~~(Continued)~~life of the underlying debt.

~~During~~(2) ~~the~~Includes ~~second quarter of 2005, we entered into a full and final settlement in~~ the ~~United~~effect ~~States District Court for the District~~ of ~~Maryland~~fair ~~with~~value three national disability organizations and agreed to make capital improvements in a number of our communities in order to make them fully compliant with the Fair Housing Act (FHA) and Americans with Disabilities Act (ADA). The litigationhedges, ~~settled~~credit byenhancement ~~this agreement~~fees, ~~alleged~~the ~~lack~~amortization of ~~full~~fair ~~compliance~~market ~~with~~value ~~certain~~purchase ~~design~~adjustment, and ~~construction~~other ~~requirements~~related ~~under the two federal statutes at 71 of the company's communities. As part of the settlement~~costs, ~~the~~where ~~three disability organizations all recognized that Archstone-Smith had no intention to build any of its communities in a manner inconsistent with the FHA or ADA~~applicable.

The ~~amount~~change ~~of the capital expenditures required to remediate the communities named~~ in ~~the~~mortgages ~~settlement~~payable isduring ~~not quantifiable at~~ the ~~present time. These expenditures will generally be capitalized as they are incurred. The settlement agreement approved by the court allows us to remediate the designated communities over the next~~ three years, and also provides that we are not restricted from selling any of our communities during the remediation period. We agreed to pay damages totaling $1.4 million, which include legal fees and costs incurred by the plaintiffs. In addition to the settlement, we incurred $1.0 million for legal and consulting fees during the first six months ofended ~~2005 related to this lawsuit and have accrued an estimate of $1.6 million for legal~~March 31, ~~consulting~~2007 ~~and~~consisted ~~other expenses, most~~ of ~~which are expected to be incurred during~~ the following ~~remainder~~(in ~~of 2005.~~ thousands):

We are a party to various other claims and routine litigation arising in the ordinary course of business. We do not believe that the results of any such claims or litigation, individually or in the aggregate, will have a material adverse effect on our business, financial position or results of operations.


Balance at December 31, 2006	$	2,776,234
Regularly scheduled principal amortization		(2,047	)
Prepayments, final maturities and other		(79,896	)

Balance at March 31, 2007	$	2,694,291

~~(11) Derivatives and Hedging Activities~~ Other

We The ~~are~~book ~~exposed~~value ~~to the impact~~ of ~~interest~~total ~~rate~~assets ~~changes~~pledged ~~and~~as ~~will~~collateral ~~occasionally~~for ~~utilize~~mortgage ~~interest~~loans ~~rate swaps~~ and ~~interest~~other ~~rate~~obligations at ~~caps~~March 31, as2007 ~~hedges~~and ~~with~~December 31, ~~the~~2006 ~~objective~~was ~~of lowering our overall borrowing costs~~$5.6 billion. ~~These~~Our ~~derivatives~~debt ~~are~~instruments ~~designated~~generally ascontain covenants ~~either~~common ~~cash~~to ~~flow~~the ortype ~~fair~~of ~~value~~facility ~~hedges. We do not use these derivatives for trading~~ or ~~other speculative purposes. Further~~borrowing, asincluding ~~a matter of policy, we only enter into contracts with major~~ financial ~~institutions~~covenants ~~based~~establishing minimum ~~upon~~debt ~~their~~service ~~credit~~coverage ~~ratings~~ratios and ~~other~~maximum ~~factors~~leverage ratios. ~~When~~ ~~viewed~~We were in ~~conjunction~~compliance with ~~the~~all financial ~~underlying~~covenants ~~and~~pertaining ~~offsetting~~to ~~exposure~~our ~~that~~debt ~~the~~instruments ~~derivatives~~at ~~are designed to hedge~~March 31, ~~we have not, nor do we expect to sustain a material loss from the use of these hedging instruments~~2007.

We The ~~formally~~total ~~assess,~~interest ~~both~~paid ~~at inception of the hedge and~~ on anall ~~ongoing~~outstanding ~~basis,~~debt ~~whether~~was ~~each~~$106.4 million ~~derivative~~and is$82.0 million ~~highly~~for ~~effective~~the three inmonths ~~offsetting~~ended ~~changes~~March 31, in2007 ~~fair~~and ~~values or cash flows of the hedged item~~2006. We ~~measure~~capitalize ~~hedge~~interest ~~effectiveness~~incurred byduring ~~comparing~~ the ~~changes~~construction period inas ~~the~~part ~~fair value or cash flows~~ of the ~~derivative~~cost ~~instrument with the changes in the fair value or cash flows~~ of ~~the~~apartment ~~hedged~~communities ~~item~~under development. We ~~assess~~Capitalized ~~effectiveness of purchased~~ interest ~~rate~~was $12.9 million ~~caps~~and ~~based~~$12.8 million onfor ~~overall changes in~~ the ~~fair~~three ~~value~~months ofended ~~the~~March 31, ~~caps. If~~2007 aand ~~derivative ceases to be a highly effective hedge~~2006, ~~we discontinue hedge accounting prospectively~~respectively.

To(8) Minority determine the fair values of derivative and other financial instruments, we use a variety of methods and assumptions that are based on market value conditions and risks existing at each balance sheet date. These methods and assumptions include standard market conventions and techniques such as discounted cash flow analysis, option pricing models, replacement cost and termination cost. All methods of assessing fair value result in a general approximation of value, and therefore, are not necessarily indicative of the actual amounts that we could realize upon disposition.Interest

~~During~~ Minority ~~June 2005, we entered into two forward-starting swap transactions to mitigate the risk of changes in the~~ interest~~-related~~ ~~cash~~consisted ~~outflows on a forecasted issuance~~ of ~~long-term~~Common ~~unsecured~~Units ~~debt. At~~at ~~inception~~March 31, ~~these swap transactions had an aggregate notional amount of $143~~2007.0 ~~million and a fair value of zero.~~ The ~~long-term~~changes ~~unsecured debt these swap transactions related to was issued~~ in ~~July~~minority interest ~~2005~~were ~~(see~~as ~~Note~~follows ~~12). At the time of the debt issuance, the fair value of the cash flow hedge was a benefit of approximately $587,000. The benefit associated with these cash flow hedges will be included~~ (in ~~comprehensive income and amortized over the term of the underlying debt as a reduction to interest expense.~~thousands):


Balance at December 31, 2006	$	739,149
Common Unit conversions		(49,351	)
Common Unit redemptions		(456	)
Unitholders’ share of net earnings		37,228
Common Units issued for real estate		1,024
Common Unitholders’ distributions		(13,087	)
Revaluation and other		(3,021	)

Balance at March 31, 2007	$	711,486

~~Archstone-Smith~~ Common ~~Trust~~Units

~~Notes~~ We toowned ~~Condensed~~89.0% ~~Consolidated~~and ~~Financial~~88.2% ~~Statements~~of ~~(Continued)~~the Operating Trust’s outstanding Common Units at March 31, 2007 and December 31, 2006, respectively. During the three months ended March 31, 2007, 2,052,018 Common Units were converted into Common Shares.

During the six months ended June 30, 2005 and 2004 we recorded an increase/(decrease) to interest expense of $(36,000) and $72,000, respectively, for hedge ineffectiveness caused by a difference between the interest rate index on a portion of our outstanding variable rate debt and the underlying index of the associated interest rate swap. We pursue hedging strategies that we expect will result in the lowest overall borrowing costs under the accounting standards.17

(12)Table Subsequentof EventsContents

~~During July, 2005, the Operating Trust issued $200 million in long~~Archstone-~~term~~Smith unsecured ten-year senior notes with a coupon rate of 5.25% and an effective interest rate of 5.26% from its shelf registration statement. The notes were issued under a re-opening of the long-term unsecured ten-year senior notes issued in May 2005.Trust

~~During~~Notes ~~July~~to ~~2005,~~Condensed ~~the~~Consolidated ~~Operating~~Financial ~~Trust~~Statements ~~redeemed $200 million of long-term unsecured ten-year senior notes with a coupon rate of 8.2% and an effective interest rate of 8.4%.~~(Continued)

On July 29, 2005, we closed the first round of apartment community acquisitions from various partnerships of Oakwood Worldwide, comprising 25 communities, 8,228 units, and a total expected investment of $1.1 billion. We funded this initial tranche of the acquisition with a combination of operating partnership units, assumed mortgage debt and cash. Operating partnership units represented $319 million, or 8.(9) Dividends million units, of the total. In addition, we assumed $372 million of mortgage debt, which has an all-in rate of approximately 5.1%. The cash component of the transaction was $438 million, with $195 million used to pay off of existing Oakwood mortgage debt. In total, we expect to acquire 36 communities from Oakwood; with the remaining communities, representing 4,548 units and a total expected investment of $412.0 million, anticipated to close later this year or during 2006.Shareholders

20 The following table summarizes the quarterly cash dividends paid per share on Common Shares, A-1 Common Units and Preferred Shares during the three months ended March 31, 2007 and the annualized dividend we expect to pay for 2007:

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


	Quarterly		Annualized
	Cash Dividend		Cash Dividend
	Per Share		Per Share
Common Shares and A-1 Common Units	$	0.4525	$	1.81
Series I Perpetual Preferred Shares⁽¹⁾		1,915		7,660

~~The~~(1) ~~Board~~Series ofI ~~Trustees~~Preferred ~~and~~Shares ~~Shareholders~~have a par value of $100,000 per share.

~~Archstone-Smith~~(10) Benefit ~~Trust:~~Plans and Implementation of SFAS 123R

We Our ~~have~~long-term ~~reviewed~~incentive ~~the~~plan ~~accompanying~~was ~~condensed~~approved ~~consolidated~~in ~~balance~~1997 ~~sheet~~and ofwas ~~Archstone-~~modified in connection with the Smith ~~Trust~~Merger. ~~and~~There ~~subsidiaries~~have asbeen ofsix ~~June~~types ~~30,~~of ~~2005,~~awards ~~and~~under the ~~related~~plan: ~~condensed~~(i) options ~~consolidated~~with ~~statements~~a ofDEU ~~earnings~~feature (only ~~for~~awarded ~~the~~prior ~~three~~to ~~and~~2000); ~~six-month~~(ii) options ~~periods~~without ~~ended~~the ~~June~~DEU ~~30,~~feature ~~2005~~(generally ~~and~~awarded ~~2004,~~after ~~the~~1999); (iii) RSU ~~condensed~~awards ~~consolidated~~with ~~statement~~a ofDEU ~~shareholders’~~feature ~~equity~~(awarded ~~and~~prior ~~comprehensive~~to ~~income/~~2006); (~~loss~~iv) RSU ~~for~~awards ~~the~~with ~~six-month~~a ~~period~~cash ~~ended~~dividend payment ~~June~~feature ~~30,~~(awarded after 2005); ~~and~~(v) employee ~~the~~share ~~condensed~~purchase ~~consolidated~~program ~~statements~~with ofmatching ~~cash~~options without ~~flows~~the ~~for~~DEU ~~the~~feature, ~~six-month~~granted ~~periods~~only ~~ended~~in ~~June~~1997 ~~30,~~and ~~2005~~1998; and ~~2004.~~(vi) performance ~~These~~units, ~~condensed~~which ~~consolidated~~are convertible ~~financial~~into ~~statements~~Common ~~are~~Shares ~~the~~upon ~~responsibility~~vesting, ofissued ~~Archstone~~to certain named executives under a Special Long-~~Smith~~Term ~~Trust’s~~Incentive ~~management~~Program.

We No ~~conducted~~more ~~our~~than ~~reviews~~20.0 million inshare ~~accordance~~or ~~with~~option ~~standards~~awards ofin the ~~Public~~aggregate ~~Company~~may ~~Accounting~~be ~~Oversight~~granted ~~Board~~under ~~(United~~the plan, ~~States).~~and Ano ~~review~~individual ofmay ~~interim~~be ~~financial~~awarded ~~information~~more ~~consists~~than ~~principally~~1.0 million ofshare ~~applying~~or ~~analytical~~option ~~procedures~~awards ~~and~~in ~~making~~any ~~inquiries~~one-year period. As of ~~persons~~March 31, ~~responsible~~2007, ~~for~~Archstone-Smith ~~financial~~had ~~and~~approximately ~~accounting matters~~9.7 million Itshares isavailable ~~substantially~~for future ~~less~~issuance. inNon-qualified ~~scope~~options ~~than~~constitute an ~~audit~~important ~~conducted~~component ~~in accordance with the standards~~ of ~~the~~compensation ~~Public~~for officers ~~Company~~below ~~Accounting Oversight Board (United States),~~ the ~~objective~~level of ~~which~~senior isvice ~~the~~president ~~expression~~and offor anselected ~~opinion regarding the financial statements taken as a whole~~employees. ~~Accordingly, we do not express such an opinion.~~

~~Based~~ A onsummary ~~our reviews, we are not aware~~ of ~~any~~share ~~material~~option ~~modifications~~activity ~~that~~for ~~should be made to~~ the ~~condensed~~options ~~consolidated~~and ~~financial~~RSUs ~~statements~~is ~~referred~~presented ~~to above for them to be in conformity with U.S. generally accepted accounting principles.~~ below:

We have previously audited, in accordance with standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet of Archstone-Smith Trust as of December 31, 2004, and the related consolidated statements of earnings, shareholders’ equity and comprehensive income/(loss), and cash flows for the year then ended (not presented herein); and in our report dated February 28, 2005, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of December 31, 2004 is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.


	Option Awards					RSU Awards
				Weighted					Weighted
				Average					Average
	Options			Exercise Price		Units			Grant Price

Balance, December 31, 2006		1,831,355		$	30.14		946,615		$	31.82
Granted		388,017		$	58.62		175,176		$	58.62
Exercised/Settled		(165,369	)	$	33.70		(99,532	)	$	28.86
Forfeited		(22,306	)	$	42.63		0		$	0
Expired		0		$	0		0		$	0
Balance, March 31, 2007		2,031,697		$	35.16		1,022,259		$	36.72

~~/s/~~ Certain ~~KPMG~~of ~~LLP~~the options and RSUs, included in the table above, have a DEU feature. The aggregate number of vested DEUs outstanding as of March 31, 2007 was approximately 267,000. During the three months ended March 31, 2007, we recorded $97,000 as a charge to operating expense related to unvested DEUs and $415,000 of Common Share dividends related to vested DEUs.

~~Denver, Colorado~~ Options

~~August~~ During the three months ended March 31, 2007 and 2006, the share options granted to associates had a calculated fair value of $8.44 and $5.52 per option, ~~2005~~respectively. The historical exercise patterns of the associate groups receiving option awards are similar, and therefore we used only one set of assumptions in calculating fair value for each period. For the three months ended March 31, 2007, the calculated fair value was determined using

2118

ItemTable 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsContents

~~The following information should be read in conjunction with~~ Archstone-Smith’s ~~2004 Form 10-K as well as the financial statements and notes included in Item 1 of this report.~~Trust

~~Forward-Looking~~Notes to Condensed Consolidated Financial Statements (Continued)

~~Certain~~the ~~statements in this Form 10~~Black-QScholes-Merton ~~that~~valuation ~~are~~model, ~~not~~using ~~historical~~a ~~facts~~weighted ~~are~~average ~~“forward~~risk-~~looking~~free ~~statements”~~rate asinterest rate ~~that~~of ~~term~~4.44%, isa ~~defined~~weighted ~~under~~average ~~the~~dividend ~~Private~~yield ~~Securities Litigation Reform Act~~ of ~~1995~~3. ~~These~~39%, ~~forward-looking~~a ~~statements~~volatility ~~are~~factor ~~based~~of on18.62% ~~our current expectations, beliefs, assumptions, estimates~~ and ~~projections~~a weighted ~~about~~average ~~the~~expected ~~industry~~life ~~and~~of ~~markets~~four ~~in which we operate~~years. ~~Words~~ ~~such~~For asthe ~~“expects,”~~three ~~“anticipates,”~~months ~~“intends,”~~ended ~~“plans~~March 31,” ~~“believes~~2006,” ~~“seeks,”~~the calculated ~~“estimates”~~fair ~~and~~value ~~variations~~was ofdetermined ~~such~~using ~~words~~the ~~and~~Black-Scholes-Merton ~~similar~~valuation ~~expressions~~model, ~~are~~using ~~intended~~a weighted toaverage ~~identify~~risk-free ~~such~~interest ~~forward-looking~~rate ~~statements~~of 4. ~~Information~~66%, ~~concerning~~a ~~expected~~weighted ~~investment~~average ~~balances,~~dividend ~~expected~~yield ~~funding~~of ~~sources~~4.57%, ~~planned~~a volatility ~~investments,~~factor ~~forecasted~~of ~~dates~~18.30% and ~~revenue~~a ~~and~~weighted ~~expense~~average ~~growth~~expected ~~assumptions~~life ~~are examples~~ of ~~forward-looking~~four ~~statements~~years. ~~These~~ ~~statements~~The ~~are~~options ~~not~~vest over ~~guarantees~~a ofthree-year ~~future performance~~period and ~~involve~~have ~~certain~~a ~~risks,~~contractual ~~uncertainties~~term ~~and~~of ~~assumptions,~~10 years. ~~which~~We ~~are~~used ~~difficult~~an toestimated ~~predict~~forfeiture rate ~~and many~~ of ~~which~~10% ~~are~~in ~~beyond~~recording ~~our~~option ~~control. Therefore,~~compensation ~~actual~~expense ~~outcomes~~for ~~and~~the ~~results~~three ~~may~~months ~~differ~~ended ~~materially~~March 31, ~~from what is expressed~~2007, based ~~forecasted~~primarily oron ~~implied~~historical ~~in such forward-looking statements~~experience. We ~~undertake~~The nounamortized ~~obligation~~compensation tocost ~~update~~is ~~publicly~~$2.2 million, ~~any~~which includes ~~forward-looking~~all ~~statements,~~options ~~whether~~previously asgranted abut ~~result~~not ofyet ~~new~~vested. ~~information,~~This ~~future~~amount ~~events~~will orbe ~~otherwise,~~recorded ~~except~~ as compensation ~~required~~cost byratably ~~applicable~~through ~~law~~December 31, 2009.

~~Our~~ The ~~operating~~total ~~results~~intrinsic ~~depend~~value ~~primarily~~of onthe ~~income~~share ~~from~~options ~~apartment~~exercised ~~communities,~~during ~~which~~the isthree-month ~~substantially~~periods ~~influenced~~ended March 31, by2007 ~~supply~~ and ~~demand~~2006 ~~for~~were ~~apartment~~$4.5 million ~~units~~and $21.9 million, ~~operating~~respectively. ~~expense~~The ~~levels,~~intrinsic ~~property~~value ~~level~~is defined ~~operations~~as ~~and~~the difference between the ~~pace~~realized ~~and~~fair ~~price~~value of the share or the quoted fair value at the ~~which~~end weof ~~can~~the ~~develop~~period, ~~acquire~~less orthe ~~dispose~~exercise price of ~~apartment~~the ~~communities~~option. ~~Capital~~ ~~and~~We ~~credit~~have ~~market~~1.2 million ~~conditions~~fully vested options outstanding at March 31, ~~which~~2007 ~~affect~~with ~~our~~a ~~cost~~weighted average exercise price of ~~capital,~~$25.64. ~~also~~The weighted-average ~~influence~~contractual ~~operating~~life ~~results~~of the fully vested options is 6. ~~See~~75 years, ~~Archstone-Smith’s~~and ~~2004~~they ~~Form~~have ~~10-K~~an intrinsic ~~“Item~~value 1of $35.7 million. ~~Business”~~In ~~for~~addition, we have 627,342 options outstanding that we expect to vest with a ~~more~~weighted ~~complete~~average ~~discussion~~exercise price of ~~risk~~$51.15. ~~factors~~The ~~that~~weighted-average ~~could~~contractual ~~impact~~life ~~our~~of the ~~future~~unvested ~~financial~~options ~~performance~~is 9.5 years, and they have an intrinsic value of $2.0 million.

~~The~~ Restricted ~~Company~~Share Units

~~Archstone-Smith~~ Also isduring athe ~~public~~three ~~equity~~months ~~REIT~~ended ~~that~~March 31, is2007 ~~engaged~~and ~~primarily in the operation~~2006, ~~development,~~we ~~redevelopment,~~issued ~~acquisition,~~RSUs ~~management~~to senior officers and ~~long-term~~trustees ~~ownership~~ of ~~apartment~~the ~~communities~~company ~~throughout~~with ~~the~~an ~~United~~average ~~States. The~~grant ~~company~~date isfair ~~structured~~value asof an$58.62 ~~UPREIT~~and $45.58, respectively ~~with~~per ~~all~~share. ~~property~~The ~~ownership~~units ~~and~~vest ~~business~~over ~~operations~~a ~~conducted~~three-year ~~through~~period and the ~~Operating~~related ~~Trust~~unamortized compensation ~~and~~cost ~~its~~is ~~subsidiaries~~$17.5 million, ~~and~~which ~~affiliates. We~~includes ~~are~~all ~~the~~units ~~sole~~previously ~~trustee~~granted ~~and~~but ~~own~~not 89yet vested.2% This ofamount ~~the~~will ~~Operating~~be ~~Trust’s~~recorded ~~common~~as ~~units~~compensation ascost ofratably ~~June~~through 30December 31, ~~2005~~2009.

~~Results~~ We have 595,732 fully vested RSUs outstanding at March 31, 2007 with a weighted average grant date fair value of ~~Operations~~$36.72. The weighted-average contractual life for the fully vested shares is 6.74 years and the intrinsic value is $32.3 million. In addition, we have 426,527 RSUs outstanding that we expect to vest with a weighted average grant date fair value of $48.68. The weighted-average contractual life for the unvested shares is 9.1 years and the intrinsic value is $23.1 million. The total intrinsic value of the RSUs settled during the three-month periods ended March 31, 2007 and 2006 were $6.1 million and $4.3 million, respectively.

~~Executive~~ Special ~~Summary~~Long-Term Incentive Program

We Effective ~~produced~~January 1, ~~diluted~~2006, ~~net~~a ~~earnings~~special ~~per~~long-term ~~share~~incentive program related to the achievement of total ~~$0.27~~shareholder return performance targets was established for ~~the~~certain ~~quarter~~of ~~ending~~our ~~June~~executive 30officers. We would issue approximately 300,000 ~~2005~~performance units if all performance targets are ultimately met as of December 31, ~~compared~~2008. ~~with~~The calculated grant date fair value of approximately $04.398 million ~~per~~is being ~~share~~charged ~~for~~to compensation expense ratably over the ~~same~~three-year ~~period~~term inof ~~2004~~the plan. ~~Our~~ ~~earnings~~The ~~this~~calculated fair ~~quarter~~value ~~were~~was ~~lower~~determined ~~than~~by ~~one~~an ~~year~~independent ~~ago~~third ~~principally~~party ~~due~~using toa ~~lower~~Monte ~~profits~~Carlo ~~from~~simulation ~~the~~approach which ~~sale~~yielded an estimated payout percentage of ~~assets~~41%. The related unamortized compensation cost at March 31, 2007 is $2.8 million.

Most markets continue to improve, with year over year Same-Store revenue growth accelerating in each of the last five quarters. Our Same-Store revenues increased 2.9% in the second quarter of 2005. The New York City metropolitan area, Southeast Florida, Southern California and the Washington, D.C. metropolitan area produced second quarter same-store revenue growth of 6.9%, 4.5%, 3.0% and 2.9%, respectively. Additionally, our Same-Store net operating income (rental revenues less rental expenses and real estate taxes) was up 2.2% in the second quarter. Summary

~~Year-to-date~~ The ~~through~~compensation ~~July~~cost ~~26,~~associated ~~2005,~~with ~~Archstone-Smith~~all ~~has~~awards ~~acquired~~for ~~$250~~the ~~million~~three inmonths ~~apartment~~ended ~~communities~~March 31, ~~including~~2007 ~~Archstone~~was approximately ~~Fox Plaza~~$3.0 million, aof ~~444-unit~~which ~~high-rise~~approximately ~~in downtown San Francisco~~$2. In1 million ~~addition,~~was wecharged ~~began~~to ~~our~~operating ~~first development in Manhattan~~expenses, and aapproximately ~~joint~~$.9 million ~~venture:~~related ~~The~~to ~~Mosaic,~~dedicated ainvestment ~~627-unit~~personnel ~~community~~and inwas ~~the~~capitalized ~~very~~with respect ~~desirable~~to ~~Clinton~~development ~~neighborhood. As~~and ofother ~~July~~qualifying ~~26,~~investment ~~2005,~~activities. weThe ~~have~~compensation ~~5,393~~cost associated ~~units,~~with ~~representing~~all aawards ~~total~~for ~~expected~~the ~~investment~~three ofmonths ~~$1.6~~ended ~~billion~~March 31, ~~under~~2006 ~~construction,~~was ~~including~~approximately ~~Ameriton and joint ventures~~$3.0 million, inof ~~markets~~which ~~that~~approximately ~~include~~$2.3 million ~~midtown~~was ~~Manhattan,~~charged ~~downtown~~to ~~Boston,~~operating ~~downtown Washington~~expenses, ~~D.C.~~ and ~~coastal Southern California~~approximately $0. As7 million ofrelated ~~July~~to ~~26,~~dedicated ~~2005,~~investment ~~our~~personnel ~~current~~and ~~pipeline~~was ~~totals~~capitalized ~~$2.5~~with ~~billion,~~respect ~~including~~to development ~~Ameriton~~ and ~~joint~~other ~~venture~~qualifying ~~communities~~investment ~~under construction and in planning~~activities.

Earlier this year, we announced that we would acquire a $1.6 billion portfolio of apartment communities from various partnerships of Oakwood Worldwide. We closed on 25 communities in the portfolio, representing a total expected investment of $1.1 billion, on July 29, 2005, with the remaining communities expected to close later this year 19

22Table of Contents

or in 2006. This acquisition is consistent with our objective to improve the quality of our portfolio with every investment we make. We funded this initial tranche of the acquisition with a combination of operating partnership units, assumed mortgage debt and cash. Operating partnership units represented $319 million, or 8.9 million units, of the total. In addition, we assumed $372 million of mortgage debt, which has an allArchstone-inSmith ~~rate of approximately 5.1%. The cash component of the transaction was $438 million, with $195 million used to pay off of existing Oakwood mortgage debt.~~Trust

WeNotes ~~completed a $300 million unsecured debt offering in May, which was recently re-opened during July and increased by $200 million~~ to aCondensed ~~total~~Consolidated ofFinancial ~~$500~~Statements ~~million. The notes mature in May 2015, and have an all-in cost of approximately 5.3%. Proceeds from the offerings provide a portion of the financial capacity to close the Oakwood acquisition.~~ (Continued)

~~Our second quarter 2005 results include the following items:~~ (i11) Segment operating community sales gains from Ameriton, the company’s wholly owned subsidiary, which contributed $7.7 million, or $0.034 per share, to second quarter EPS; (ii) a positive adjustment of $2.4 million, or $0.011 per share, to the gain from the sale of our interest in Rent.com to eBay, which closed in February 2005; (iii) a $1.8 million realized gain, or $0.008 per share, from the sale of previously acquired stock in another real estate company; and (iv) accrued insurance recoveries of $2.5 million, or $0.011 per share, associated with hurricane damage in 2004. In addition, we incurred total expenses of $4.5 million, or $0.020 per share, related to the settlement of the Fair Housing Act (FHA) and American with Disabilities Act (ADA) lawsuit and other litigation costs. We believe that a substantial portion of theseData ~~costs will be recovered from our insurance carriers, although the amount is not quantifiable at this time. Per share amounts do not include the impact of minority interest.~~

We ~~will~~have ~~pay~~determined athat ~~dividend~~our ofgarden ~~$0.4325~~communities ~~per~~and ~~common~~our ~~share~~High-Rise ~~payable~~properties onhave ~~August~~similar economic 31characteristics and meet the other GAAP criteria, ~~2005~~which permit the garden communities and High-Rise properties to ~~shareholders~~be ofaggregated ~~record~~into astwo ofreportable ~~August~~segments. 17Additionally, ~~2005.~~we Onhave defined the activity from Ameriton as an ~~annualized~~individual ~~basis~~operating segment as its primary focus is the opportunistic acquisition, ~~this~~development ~~represents~~and aeventual ~~dividend~~disposition of $1real estate with a short-term investment horizon.73 ~~per~~NOI ~~common~~is ~~share~~defined as rental revenues less rental expenses and real estate taxes. We rely on NOI for purposes of making decisions about resource allocations and assessing segment performance. We also believe NOI is a valuable means of comparing year-to-year operating performance.

In Following ~~conjunction~~are ~~with our capital recycling strategy~~reconciliations, ~~rental~~which ~~revenues~~exclude ~~and rental expenses, including real estate taxes, will fluctuate based upon~~ the ~~timing~~amounts ~~and~~classified ~~volume~~as ~~of dispositions~~discontinued operations, ~~acquisitions and development lease-ups. Accordingly, our results are not only driven by the performance~~ of ~~our~~each ~~operating~~reportable ~~portfolio,~~segment’s ~~but~~(i) revenues ~~also~~to byconsolidated ~~gains/losses~~revenues; ~~from~~(ii) NOI ~~the~~to consolidated ~~disposition~~earnings ~~of real estate, the corresponding loss of ongoing income~~ from ~~assets~~operations; ~~sold,~~ and ~~increased~~(iii) assets ~~income generated from acquisitions and new developments. These factors all contribute~~ to ~~the~~consolidated ~~overall~~assets, ~~financial~~for ~~performance of~~ the ~~company.~~periods indicated (in thousands):

Quarter-to-Date Earnings Analysis


	Three Months Ended
	March 31,
	2007		2006
Reportable apartment communities segment revenues:
Same-Store:
Garden communities	$	116,538	$	108,760
High-Rise properties		84,436		79,598
Non Same-Store and other:
Garden communities		15,110		2,812
High-Rise communities		29,257		11,368
Ameriton communities⁽¹⁾		2,193		430
International and other non-reportable operating segment revenues		20,598		4,766

Total segment and consolidated rental revenues	$	268,132	$	207,734

Basic net earnings attributable to Common Shares decreased $22.2 million, or 28.8%, for the three months ended June 30, 2005 as compared to the same period in 2004. This decrease is primarily attributable to:


	Three Months Ended
	March 31
	2007			2006
Reportable apartment communities segment NOI:
Same-Store:
Garden communities	$	82,350		$	76,656
High-Rise communities		58,155			55,089
Non Same-Store and other:
Garden communities		7,672			1,399
High-Rise communities		17,929			6,931
Ameriton communities⁽¹⁾		1,114			(2	)
International and other non-reportable operating segment		11,242			3,434

Total segment NOI	$	178,462		$	143,507

Reconciling items:
Other income		15,754			16,216
Depreciation on real estate investments		(67,492	)		(53,359	)
Interest expense		(67,293	)		(45,527	)
General and administrative expenses		(18,998	)		(15,385	)
Other expenses		(955	)		(10,354	)

Consolidated earnings from operations	$	39,478		$	35,098

•(1) AWhile ~~$10.7~~rental ~~million~~revenue ~~decrease~~and inNOI ~~gains~~are ~~from~~ the ~~sale~~primary ofmeasures ~~operating~~we ~~communities,~~use ~~which~~to ~~includes~~evaluate ~~gains from~~ the ~~sale~~performance of our assets, bymanagement ~~Ameriton~~also ~~for~~utilizes ~~the~~gains ~~three~~from ~~months~~the ~~ended~~disposition ~~June~~of ~~30,~~real ~~2005~~estate aswhen ~~compared~~evaluating to the ~~same~~performance ~~period~~of inAmeriton ~~2004;~~as •its Aprimary ~~$4.5~~focus ~~million~~is ~~charge related to~~ the ~~settlement~~opportunistic ofacquisition, ~~the~~development ~~Fair~~and ~~Housing~~eventual ~~Act~~disposition ~~(FHA)~~of ~~and~~real ~~American~~estate with ~~Disabilities~~a ~~Act~~short ~~(ADA)~~term ~~lawsuit~~investment ~~and other litigation costs; • A $3~~horizon.3 ~~million~~Pre-tax ~~gain~~net gains from the disposition of ~~our~~Ameriton ~~property~~operating ~~management~~communities ~~business~~were ~~during the three months ended June 30, 2004; • The recognition of~~ $73.4 million ~~related to the sale of Consolidated Engineering Services (“CES”), including contingent proceeds associated with the expiration of certain indemnifications~~ and ~~collection~~$13.6 ~~and~~million ~~recognition~~for of the ~~settlement of an ongoing CES lawsuit during the~~ three months ended ~~June~~March 3031, ~~2004;~~2007

~~• A $2.3 million decrease in gains related to the sale of marketable equity securities; and,~~20

•Table The loss of rental revenues and a corresponding decrease in operating expenses due to $435.3 million and $1.5 billion in total REIT and Ameriton dispositions in the first six months of 2005 and the twelve months ended December 31, 2004, respectively.Contents

~~These~~Archstone-Smith ~~decreases were partially offset by:~~Trust

•Notes ~~The accrual of $2.5 million for anticipated insurance recoveries during the three months ended June 30, 2005 related~~ to ~~2004~~Condensed ~~hurricane~~Consolidated ~~damage~~Financial inStatements ~~South Florida;~~(Continued)

•and A2006, $1respectively.7 ~~million~~These ~~gain~~gains onare classified within discontinued operations. Additionally, Ameriton had gains from the sale of unconsolidated joint venture assets that are classified within income from unconsolidated entities and gains from land ~~for~~sales ~~the~~that ~~three~~are classified ~~months~~within ~~ended~~other ~~June~~income. 30Ameriton assets are excluded from our Same-Store population as they are acquired or developed to achieve short-term opportunistic gains, ~~2005;~~and therefore, the average holding period is typically much shorter than the holding period of assets operated by the REIT.


	March 31,		December 31,
	2007		2006
Reportable operating communities segment assets, net:
Same-Store:
Garden communities	$	3,598,470	$	3,610,111
High-Rise properties		3,055,678		3,070,712
Non Same-Store:
Garden communities		1,330,053		1,527,922
High-Rise properties		1,692,038		1,699,610
Ameriton		446,426		412,030
FHA/ADA settlement accrual		22,701		29,185
International		915,661		843,003
Other non-reportable operating segment assets		154,709		153,567

Total segment assets		11,215,736		11,346,140
Real estate held-for-sale, net		885,622		884,354

Total segment assets		12,101,358		12,230,494

Reconciling items:
Investment in and advances to unconsolidated entities		252,014		235,323
Cash and cash equivalents		49,270		48,655
Restricted cash in tax-deferred exchange escrow		669,395		319,312
Other assets		389,464		425,343

Consolidated total assets	$	13,461,501	$	13,259,127

• Total ~~Increased~~capital ~~revenues~~expenditures ~~partially~~for ~~offset~~garden bycommunities aincluded ~~corresponding increase~~ in ~~operating~~continuing ~~expenses~~operations ~~associated~~were ~~with~~ $~~286~~12.3 4 million and $17.13 million ~~billion~~for inthe ~~REIT~~three months ended March 31, 2007 and ~~Ameriton~~2006, ~~operating~~respectively. ~~asset~~Total capital ~~acquisitions~~expenditures for High-Rise properties included in ~~the~~continuing ~~first~~operations ~~six~~were $7.0 million and $10.2 million for the three months ofended ~~2005~~March 31, 2007 and 2006, respectively. Total capital expenditures for Ameriton properties included in continuing operations were $0.5 million and $0.7 million for the ~~twelve~~three months ended ~~December~~ March 31, ~~2004~~2007 and 2006, respectively;.

•	Increased income from the continued lease-up of new development projects;
•	A 2.2% increase in Same-Store NOI during the second quarter of 2005 as compared to 2004; and,

(12) Litigation and Contingencies

• During Athe ~~$2.2~~second ~~million~~quarter ~~reduction~~of 2005, we entered into a full and final settlement in ~~Preferred~~the ~~Share~~United States ~~dividends~~District ~~due~~Court tofor the ~~redemption~~District of ~~Series~~Maryland Dwith ~~Preferred~~three ~~Shares~~national indisability ~~August~~organizations ~~2004,~~and agreed ~~the~~to ~~conversion~~make ofcapital ~~Series~~improvements Kin ~~Preferred~~a ~~Shares~~number of our communities in ~~September~~order ~~2004~~to ~~and~~make them fully compliant with the ~~early~~FHA ~~conversion~~and ofADA. ~~Series~~The Llitigation, ~~Preferred~~settled ~~Shares~~by inthis ~~December~~agreement, ~~2004.~~alleged ~~These~~lack ~~conversions~~of full compliance with certain design and construction requirements under the ~~redemption~~two ~~also~~federal ~~eliminated~~statutes at 71 of the ~~impact~~company’s wholly-owned and joint venture communities, of which we still own or have an interest in 42. As part of the ~~related~~settlement, ~~Preferred~~the ~~Share~~three ~~dividends~~disability onorganizations ~~our~~all ~~fixed~~recognized ~~charge~~that Archstone-Smith ~~coverage~~had ~~ratio~~no intention to build any of its communities in a manner inconsistent with the FHA or ADA.

~~Year-~~ The amount of the capital expenditures required to~~-Date~~ ~~Earnings~~remediate ~~Analysis~~the communities named in the settlement was estimated at $47.2 million and was accrued as an addition to real estate during the fourth quarter of 2005. The settlement agreement approved by the court allows us to remediate each of the designated communities over a three year period, and also provides that we are not restricted from selling any of our communities during the remediation period. We agreed to pay damages totaling $1.4 million, which included legal fees and costs incurred by the plaintiffs. We had $22.7 million of the original accrual remaining on March 31, 2007.

Basic net earnings attributable to Common Shares decreased $54.8 million, or 31.5%, for the six months ended June 30, 2005 as compared to the same period in 2004. This decrease is primarily attributable to:21

•Table A $33.2 million decrease in gains from the sale of operating communities, which includes gains from the sale of assets by Ameriton for the six months ended June 30, 2005 as compared to the same period in 2004; • A $23.2 million expense for early extinguishment of debt related to the payoff of $221.9 million of mortgages during the six months ended June 30, 2005, $5.4 million of which related to asset dispositions. The elimination of these mortgages will reduce future interest expense; • A $6.5 million charge related to the settlement of the Fair Housing Act (FHA) and American with Disabilities Act (ADA) lawsuit and other litigation costs; • A $3.3 million gain from the disposition of our property management business during the six months ended June 30, 2004; • The recognition of $8.0 million related to the sale of Consolidated Engineering Services (“CES”) including contingent proceeds associated with the expiration of certain indemnifications and collection and recognition of the settlement of an ongoing CES lawsuit during the six months ended June 30, 2004; and, • The loss of rental revenues and a corresponding decrease in rental expenses due to $435.3 million and $1.5 billion in total REIT and Ameriton dispositions in the first six months of 2005 and the twelve months ended December 31, 2004, respectively.Contents

~~These~~Archstone-Smith ~~decreases were partially offset by:~~Trust

•Notes ~~The accrual of $2.5 million for anticipated insurance recoveries during the six months ended June 30, 2005 related~~ to ~~2004~~Condensed ~~hurricane~~Consolidated ~~damage~~Financial inStatements ~~South Florida;~~(Continued)

• We Aare $3subject to various claims filed in 2002 and 2003 in connection with moisture infiltration and resulting mold issues at certain high-rise properties we once owned in Southeast Florida.1 ~~million~~These ~~gain~~claims ongenerally allege that water infiltration and resulting mold contamination resulted in the ~~sale~~claimants having personal injuries and/or property damage. Although certain of these ~~land~~claims ~~for~~continue to be in various stages of litigation, with respect to the ~~six~~majority ~~months~~of ~~ended~~these claims, ~~June~~we 30have either settled the claims and/or we have been dismissed from the lawsuits that had been filed. With respect to the lawsuits that have not been resolved, ~~2005;~~we continue to defend these claims in the normal course of litigation.

• We ~~Increased~~are ~~revenues~~a ~~partially~~party ~~offset~~to byvarious aother ~~corresponding~~claims ~~increase~~and inroutine ~~operating~~litigation ~~expenses~~arising ~~associated~~in ~~with~~the ~~$286~~ordinary course of business.3 ~~million~~We ~~and~~do ~~$1.1~~not ~~billion~~believe inthat ~~REIT~~the ~~and~~results ~~Ameriton~~of ~~operating~~any ~~asset~~such ~~acquisitions~~claims or litigation, individually or in the ~~first~~aggregate, ~~six~~will ~~months~~have ofa ~~2005~~material ~~and~~adverse ~~the~~effect ~~twelve~~on ~~months~~our ~~ended~~business, ~~December~~financial ~~31,~~position ~~2004,~~or results ~~respectively;~~of operations.

~~• Increased income from the continued lease-up of new development projects;~~22

•Table A 1.2% increase in Same-Store NOI during the six months ended June 30, 2005 as compared to 2004; • A $4.3 million increase in income from unconsolidated entities due to higher gains on the disposition of joint venture properties during the six months ended June 30, 2005 compared to the same period in 2004; • A $25.9 million gain on the sale of our Rent.com investment to eBay and $2.1 million gains on the sale of marketable equity securities during the six months ended June 30, 2005, compared to a $17.0 million gain on the sale of marketable equity securities during the same period in 2004; and, • A $4.4 million reduction in Preferred Share dividends due to the redemption of Series D Preferred Shares in August 2004, the conversion of Series K Preferred Shares in September 2004 and the early conversion of Series L Preferred Shares in December 2004. These conversions and the redemption also eliminated the impact of the related Preferred Share dividends on our fixed charge coverage ratio.Contents

~~Apartment~~REPORT ~~Community~~OF ~~Operations~~INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

24The Board of Trustees and Shareholders Archstone-Smith Trust:

We ~~utilize~~have ~~NOI~~reviewed as the ~~primary~~accompanying ~~measure~~condensed toconsolidated ~~evaluate~~balance ~~the~~sheet ~~performance~~ of ~~our~~Archstone-Smith Trust ~~operating~~and ~~communities. NOI~~subsidiaries ~~is defined~~ as ~~rental~~of ~~revenues~~March 31, ~~less~~2007, ~~rental~~and ~~expenses~~the ~~and~~related ~~real~~condensed ~~estate~~consolidated ~~taxes~~statements of earnings for ~~each~~the ofthree ~~our~~months ~~operating~~ended ~~properties. We~~March 31, ~~rely~~2007 onand ~~NOI~~2006, ~~for~~the ~~purposes~~condensed consolidated statement of ~~making~~shareholders’ ~~decisions~~equity ~~about~~and ~~resource~~comprehensive ~~allocations~~income ~~and~~for ~~assessing~~the ~~segment~~three ~~performance. We~~months ~~also~~ended ~~believe~~March 31, ~~NOI~~2007, isand athe condensed ~~valuable~~consolidated ~~means~~statements of ~~comparing~~cash ~~period-to-period~~flows ~~property~~for ~~performance. The~~the ~~following~~three ismonths aended ~~reconciliation~~March 31, of2007 ~~NOI~~and to2006. These ~~earnings~~condensed ~~from~~consolidated ~~operations~~financial ~~(in~~statements ~~thousands):~~are the responsibility of Archstone-Smith Trust’s management.

	Three months ended June 30,		Six months ended June 30,
	2005	2004	2005	2004
Net operating income	$ 147,031	$ 130,129	$ 285,750	$ 254,015
Other income	6,848	5,209	11,975	8,906
Depreciation of real estate investments	(54,832)	(47,419)	(108,609)	(91,979)
Interest expense	(46,330)	(37,724)	(93,826)	(74,265)
General and administrative expenses	(13,755)	(12,092)	(28,044)	(24,525)
Other expense	(7,390)	(900)	(28,472)	(2,124)
Earnings from operations	$ 31,572	$ 37,203	$ 38,774	$ 70,028

We conducted our reviews in accordance with standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the Public Company Accounting Oversight Board (United States), the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

At Based ~~June~~on ~~30,~~our ~~2005~~reviews, ~~investments~~we inare ~~operating~~not ~~apartment~~aware ~~communities~~of ~~comprised~~any ~~over~~material ~~99%~~modifications ofthat ~~our~~should ~~total~~be ~~real~~made ~~estate~~to the ~~portfolio,~~Condensed ~~based~~Consolidated onFinancial ~~NOI.~~Statements ~~The~~referred ~~following~~to ~~table~~above ~~summarizes~~for ~~the~~them ~~performance~~to ofbe ~~our~~in ~~operating~~conformity ~~portfolio~~with U.S. ~~(in~~generally ~~thousands,~~accepted ~~except~~accounting ~~for percentages):~~principles.

	Three months ended June 30,			Six months ended June 30,
	2005	2004	Variance	2005	2004	Variance
Rental revenues:
Garden communities	$ 132,402	$ 118,351	$ 14,051	$ 260,501	$ 233,370	$ 27,131
High-rise properties	86,947	75,957	10,990	172,742	148,738	24,004
Ameriton	6,169	3,735	2,434	11,622	5,882	5,740
Non-multifamily	857	868	(11)	1,426	1,536	(110)
Total revenues	226,375	198,911	27,464	446,291	389,526	56,765
Operating expenses (rental expenses and real estate taxes):
Garden communities	44,448	40,054	(4,394)	89,191	79,269	(9,922)
High-rise properties	31,815	26,710	(5,105)	65,193	52,871	(12,322)
Ameriton	3,008	1,948	(1,060)	5,974	3,155	(2,819)
Non-multifamily	73	70	(3)	183	216	33
Total operating expenses	79,344	68,782	(10,562)	160,541	135,511	(25,030)
Net operating income:
Garden communities	87,954	78,297	9,657	171,310	154,101	17,209
High-rise properties	55,132	49,247	5,885	107,549	95,867	11,682
Ameriton	3,161	1,787	1,374	5,648	2,727	2,921
Non-multifamily	784	798	(14)	1,243	1,320	(77)
Total net operating income	147,031	130,129	16,902	285,750	254,015	31,735
NOI classified as discontinued operations	7,012	26,131	(19,119)	15,387	52,496	(37,109)
NOI including discontinued operations	$ 154,043	$ 156,260	$ (2,217)	$ 301,137	$ 306,511	$ (5,374)
Margin (NOI/rental revenues):
Garden communities	66.4%	66.2%	0.2%	65.8%	66.0%	(0.2%)
High-rise properties	63.4%	64.8%	(1.4%)	62.3%	64.5%	(2.2%)
Average occupancy during period (1):
Garden communities	95.4%	94.8%	0.6%	94.8%	95.1%	(0.3%)
High-rise properties	94.5%	95.1%	(0.6%)	94.4%	95.1%	(0.7%)

We have previously audited, in accordance with standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet of Archstone-Smith Trust as of December 31, 2006, and the related consolidated statements of earnings, shareholders’ equity and comprehensive income (loss), and cash flows for the year then ended (not presented herein); and in our report dated March 1, 2007, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of December 31, 2006 is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

25/s/ KPMG LLP

~~(1)~~Denver, ~~Does~~Colorado May 9, ~~not include occupancy at Ameriton properties.~~2007

~~The following table reflects revenue, expense and NOI growth/(decline) for Same-Store communities that were fully operating during each respective comparison period:~~23

	Same-Store Revenue Growth/(Decline)	Same-Store Expense Growth/(Decline)	Same-Store NOI Growth/(Decline)
Q2 2005 vs. Q2 2004
Garden	2.9%	3.7%	2.5%
High-Rise	2.8%	4.8%	1.7%
Total	2.9%	4.2%	2.2%
YTD 2005 vs. YTD 2004
Garden	2.6%	3.9%	1.9%
High-Rise	3.1%	8.4%	0.1%
Total	2.8%	5.7%	1.2%

~~Quarter-to-date~~Item 2. ~~NOI~~Management’s Discussion and Analysis of Financial Condition and Results of Operations

~~NOI,~~ The ~~excluding~~following ~~discontinued~~information ~~operations,~~should ~~increased~~be byread ~~$16.9~~in ~~million,~~conjunction orwith ~~13.0%,~~Archstone-Smith’s ~~during~~2006 ~~the~~Form 10-K as ~~three~~well ~~months ended June 30, 2005~~ as ~~compared to~~ the ~~same~~financial ~~period~~statements inand ~~2004. Of~~notes ~~this~~included ~~increase,~~in ~~$9.7 million was produced by our garden communities, $5.9 million by our high-rise communities and $~~Item 1.4 ~~million~~of bythis ~~Ameriton~~report.

The $9.7 million increase in garden NOI during the second quarter of 2005 as compared to 2004 was primarily attributable to the acquisition of seven garden communities subsequent to April 1, 2004 for a total of $508.2 million and the ongoing lease Forward-upLooking and stabilization of development communities, which significantly increased both rental revenues and rental expenses. Additionally, Same-Store revenue growth increased by 2.9% compared to the prior year primarily due to increased rental rates and higher occupancy. This increase was partially offset by a 3.7% increase in Same-Store operating expenses primarily due to higher personnel costs and higher costs resulting from the rollout of new technologies. These cost increases were partially offset by lower insurance costs.Statements

~~The~~ Certain ~~$5.9~~statements ~~million~~in ~~increase~~this inForm ~~high~~10-~~rise~~Q ~~NOI~~that ~~during~~are ~~the~~not ~~second~~historical ~~quarter~~facts ofare ~~2005~~“forward-looking statements” ~~compared~~as tothat ~~2004~~term ~~was~~is ~~primarily~~defined ~~attributable~~under to the ~~acquisition~~Private Securities Litigation Reform Act of ~~one~~1995. These ~~high~~forward-~~rise~~looking ~~property~~statements inare ~~the~~based ~~New~~on ~~York~~our ~~area~~current expectations, beliefs, assumptions, estimates and ~~one~~projections inabout the ~~Washington~~industry Dand markets in which we operate.C. ~~metropolitan~~Words ~~market~~such ~~subsequent~~as “expects,” to“anticipates,” ~~April~~“intends,” 1“plans,” ~~2004~~“believes,” ~~for~~“seeks,” a“estimates” ~~total~~and variations of such ~~$183.5~~words ~~million~~and similar expressions are intended to identify such forward-looking statements. ~~Additionally~~ Information concerning expected investment balances, ~~Same-Store~~expected ~~revenues~~funding ~~increased~~sources, byplanned 2investments, forecasted dates and revenue and expense growth assumptions are examples of forward-looking statements.8% ~~compared~~These tostatements ~~prior~~are ~~year~~not ~~primarily~~guarantees ~~due~~of tofuture ~~increased~~performance ~~rental~~and ~~rates~~involve certain risks, uncertainties and assumptions, which ~~were~~are ~~partially~~difficult ~~offset~~to bypredict aand ~~slight~~many ~~decrease~~of inwhich ~~occupancy~~are beyond our control. ~~This~~ ~~increase~~Therefore, ~~was~~actual ~~partially~~outcomes ~~offset~~and byresults amay ~~4.8%~~differ ~~increase~~materially from what is expressed, forecasted or implied in ~~Same~~such forward-~~Store~~looking ~~operating~~statements. ~~expenses~~We ~~primarily~~undertake ~~attributable~~no obligation to ~~higher~~update publicly ~~personnel~~any ~~costs~~forward-looking statements, ~~higher~~whether ~~costs~~as ~~resulting~~a ~~from~~result ~~the rollout~~ of new ~~technologies~~information, ~~and~~future ~~property~~events ~~tax~~or otherwise, ~~reassessments~~except inas ~~Chicago~~required ~~and~~by ~~Washington,~~applicable Dlaw.C.

~~The~~ Our ~~$1.4~~operating ~~million~~results ~~increase~~depend inprimarily ~~Ameriton~~on ~~NOI~~income ~~during~~from ~~the~~apartment ~~second~~communities, ~~quarter~~which ofis substantially ~~2005~~influenced asby ~~compared~~supply toand ~~2004~~demand ~~was~~for ~~primarily~~apartment ~~attributable~~units, tooperating expense levels, property level operations and the ~~acquisition~~pace ofand ~~two~~price ~~operating~~at which we can develop, acquire or dispose of apartment communities. ~~subsequent~~Capital toand ~~April~~credit 1market conditions, ~~2004~~which ~~and~~affect ~~the~~our ~~ongoing~~cost ~~lease~~of capital, also influence operating results. See Archstone-upSmith’s ~~and~~2006 ~~stabilization~~Form 10-K, “Item 1. Business,” for a more complete discussion of ~~Ameriton~~risk ~~developments~~factors that could impact our future financial performance.

~~NOI~~ The for our entire portfolio, including properties classified within discontinued operations, decreased by $2.2 million, or 1.4%, for the three months ended June 30, 2005 as compared to the same period in 2004. This net decrease in NOI was attributable to the loss of $19.1 million in NOI from the disposition of $435.3 million and $1.5 billion in operating assets, including Ameriton, for the six months ended June 30, 2005 and the twelve months ended December 31 2004, respectively. This decrease was partially offset by an increase in NOI of $0.2 million from communities classified as held for sale as of June 30, 2005 and increased NOI from our Same-Store communities as well as incremental NOI from the acquisitions and lease-ups, as described previously.Company

~~Year~~ Archstone-toSmith is engaged primarily in the acquisition, development, redevelopment, operation and long-~~date~~term ~~NOI~~ownership ~~Analysis~~ of apartment communities in the United States. We have elected REIT status and are structured as an UPREIT, with all property ownership and business operations conducted through the Operating Trust. We are the sole trustee and owned 89.0% of the Operating Trust at March 31, 2007. Archstone-Smith Common Shares trade on the New York Stock Exchange (NYSE: ASN).

~~NOI,~~ Results ~~excluding~~of discontinued operations, increased by $31.7 million, or 12.5%, during the six months ended June 30, 2005 as compared to the same period in 2004. Of this increase, $17.2 million was produced by our garden communities, $11.7 million by our high-rise communities and $2.9 million by Ameriton. Operations

26Executive Summary

The ~~$17.2~~major ~~million~~factors ~~increase~~that ininfluenced ~~garden~~our ~~NOI~~operating ~~during~~results for the ~~six~~quarter ~~months~~ ended ~~June 30~~March 31, ~~2005~~ 2007 as compared to ~~2004 was primarily attributable to garden acquisitions, including those described in~~ the quarter~~-to-date~~ ~~NOI~~ended ~~analysis above~~March 31, ~~and~~2006 lease-ups and an increase in Same-Store sales revenue of 2.6% resulting primarily from higher rental rates. This increase was partially offset by a 3.9% increase in Same-Store expense growth, which was driven by increased personnel costs, higher costs resulting from the roll-out of new technologies and increased utilities associated with the severe winter in the Northeast. These increases were ~~partially~~as ~~offset by lower insurance costs.~~follows:

~~The~~• ~~$11.7~~NOI ~~million~~increased due primarily to an increase of 6.8% in ~~high~~NOI for our Same-~~rise~~Store ~~NOI~~communities ~~during~~as ~~the~~well ~~second~~as ~~quarter~~the ofDeWAG ~~2005~~transaction. ~~compared~~• toOther ~~2004~~income was ~~primarily~~lower ~~attributable~~due primarily to ~~acquisitions,~~lower ~~including~~insurance ~~those~~recoveries ~~described~~offset by an increase in ~~the~~interest ~~quarter-~~income resulting from higher restricted cash balances attributable to~~-date~~ ~~NOI~~our ~~analysis~~1031 ~~above,~~exchange disposition transactions. • Higher depreciation and aninterest expense was due to the increase in ~~Same-Store~~the ~~sales~~size ~~revenue~~ of ~~3.1%~~the ~~resulting~~real ~~primarily~~estate ~~from~~portfolio ~~higher~~and ~~rental~~the ~~rates. This~~related ~~increase~~financing ~~was~~activities, ~~partially~~respectively. ~~offset~~Rising byinterest anrates ~~8.4%~~also influenced the increase in ~~Same-Store~~interest ~~operating~~expense. • General and administrative expenses ~~primarily~~increased ~~attributable~~principally toas ~~higher~~a ~~personnel~~result ~~costs,~~of ~~higher~~our ~~costs~~international ~~resulting~~expansion. ~~from~~• ~~the~~Other ~~roll-out~~expenses ofwere ~~new~~lower ~~technologies,~~in ~~property~~2007 due principally to $8.4 million of Ameriton income tax ~~reassessments~~expense recorded in ~~Chicago~~2006 ~~and~~related ~~Washington,~~primarily Dto disposition gains.~~C.,~~ ~~increased~~• ~~utilities~~Earnings ~~associated~~from ~~with~~unconsolidated ~~the~~entities ~~severe~~was ~~winter~~higher in ~~the~~2006 ~~Northeast~~primarily ~~and~~due to higher gains on the ~~benefit~~sale of aAmeriton ~~$1.0~~joint ~~million~~venture ~~ground~~assets. ~~lease~~• ~~accrual~~The ~~true-up~~increase in ~~the~~gains ~~first~~on ~~quarter~~disposition of ~~2004~~real estate was driven principally by significantly higher volume of REIT dispositions in 2007.

The $2.9 million increase in Ameriton NOI for the six months ended June 30, 2005 as compared to 2004 was primarily attributable to acquisitions, including those described in the quarter-to-date NOI analysis above, and the ongoing lease-up and stabilization of Ameriton developments. 24

NOITable for our entire portfolio, including properties classified within discontinued operations, decreased by $5.4 million, or 1.8%, for the six months ended June 30, 2005 as compared to the same period in 2004. This net decrease in NOI was attributable to the loss of $37.8 million NOI from the disposition of $435.3 million and $1.5 billion in operating assets, including Ameriton, for the six months ended June 30, 2005 and the twelve months ended December 31 2004, respectively; partially offset by an increase in NOI of $0.7 million from the communities classified as held for sale as of June 30, 2005 and increased NOI from our Same-Store communities as well as incremental NOI from the acquisitions and lease-ups as described previously.Contents

~~Other~~Reconciliation ~~Income~~of Quantitative Summary to Condensed Consolidated Statements of Earnings

~~Other~~ The ~~income~~following ~~increased~~schedules ~~$1.6~~are ~~million,~~provided orto ~~31.5%,~~reconcile ~~and~~our ~~$3.1~~Condensed ~~million,~~Consolidated orStatements ~~34.5%~~of Earnings ~~for the three and six months ended June 30, 2005, respectively, as compared~~ to the ~~same~~information ~~periods~~presented in ~~2004. The increase is due to $1.7 million and $3.1 million of pre-tax gains from~~ the ~~sale~~“Quantitative ofSummary” ~~land~~provided ~~during the three and six months ended June 30, 2005, respectively, with no comparable gains during the same periods~~ in ~~2004, an increase of $2.7 million and $4.0 million in interest income on notes receivable and cash balances during~~ the ~~three~~next ~~and~~section (dollar ~~six~~amounts ~~months ended June 30, 2005, respectively, and the accrual of $1.2 million of anticipated insurance recoveries related to 2004 Florida hurricanes~~ in ~~the second quarter of 2005~~thousands).

These increases were offset by the benefit of $4.2 million and $4.7 million related to the sale of CES in the three and six months ended June 30, 2004, respectively and a $1.3 million insurance recovery related to a moisture infiltration claim during the first quarter of 2004.


	Three Months Ended March 31, 2007						Three Months Ended March 31, 2006
	Continuing		Discontinued				Continuing		Discontinued
	Operations		Operations		Total		Operations		Operations		Total
Rental revenue	$	268,132	$	31,254	$	299,386	$	207,734	$	77,504	$	285,238
Other income		15,754		—		15,754		16,216		—		16,216
Property operating expenses (rental expenses and real estate taxes)		89,670		11,613		101,283		64,227		32,274		96,501
Depreciation on real estate investments		67,492		6,654		74,146		53,359		16,215		69,574
Interest expense		67,293		7,027		74,320		45,527		16,224		61,751
General and administrative expenses		18,998		—		18,998		15,385		—		15,385
Other expense		955		1,104		2,059		10,354		3,485		13,839
Minority interest		5,808		31,420		37,228		7,234		12,203		19,437
Income from unconsolidated entities		695		—		695		18,878		—		18,878
Other non-operating income		2,026		—		2,026		176		—		176
Gains, net of disposition costs		—		277,872		277,872		—		80,434		80,434


Net earnings	$	36,391	$	251,308	$	287,699	$	46,918	$	77,537	$	124,455

~~Depreciation~~Quantitative ~~Expense~~Summary

~~Depreciation~~ This ~~expense~~summary ~~increased~~is ~~$7.4~~provided ~~million,~~for orreference ~~15.6%,~~purposes and ~~$16.6~~is ~~million,~~intended orto ~~18.1%~~support ~~for~~and be read in conjunction with the ~~three~~narrative ~~and~~discussion ~~six~~of ~~months~~our ~~ended~~results ~~June~~of ~~30,~~operations. ~~2005,~~This ~~respectively~~quantitative summary includes all operating activities, including those classified as ~~compared~~discontinued operations for GAAP reporting purposes. This information is presented to ~~the~~correspond ~~same~~with ~~periods~~the manner in ~~2004~~which we analyze the business. ~~This~~ ~~increase~~We isgenerally ~~primarily~~reinvest ~~due~~disposition toproceeds ~~community~~into ~~acquisitions~~new operating communities and ~~newly~~developments ~~completed~~and ~~developments~~therefore believe it is most useful to analyze continuing and discontinued operations on a ~~higher~~combined ~~average~~basis. ~~balance~~The impact of ~~short-lived~~communities ~~capital~~classified ~~items~~as “discontinued operations” for GAAP reporting purposes is discussed separately in a later section under the caption “Discontinued Operations Analysis” (dollar amounts in thousands).

Including depreciation expense on properties classified within discontinued operations, depreciation expense increased $2.0 million, or 3.7% and $5.2 million, or 4.8% for the three and six months ended June 30, 2005, respectively as compared to the same periods in 2004. These increases are principally attributable to the reasons described above partially offset by decreases associated with communities sold or classified as held for sale. Depreciation is suspended when an asset is classified as held for sale.


	Three Months Ended March 31,
					Increase/
	2007		2006		(Decrease)
Rental revenues:
Same-Store⁽¹⁾	$	226,827	$	213,201	$	13,626
Non Same-Store and other		48,581		59,559		(10,978	)
Ameriton		3,380		7,712		(4,332	)
Non-multifamily		1,608		3,002		(1,394	)
International		18,990		1,764		17,226

Total rental revenues		299,386		285,238		14,148


Property operating expenses (rental expenses and real estate taxes):
Same-Store⁽¹⁾		68,922		65,392		3,530
Non Same-Store and other		21,378		25,851		(4,473	)
Ameriton		1,628		3,927		(2,299	)

2725

InterestTable Expenseof Contents

Interest expense increased $8.6 million, or 22.8%, and $19.6 million, or 26.3%, for the three and six months ended June 30, 2005 as compared to the same periods in 2004. This increase is primarily due to a greater number of operating assets classified within discontinued operations during 2004, resulting in a $9.4 million and $19.2 million higher interest allocated to discontinued operations for the three and six months ended June 30, 2004 as compared to the same periods in 2005.


	Three Months Ended March 31,
							Increase/
	2007			2006			(Decrease)
Non-multifamily		216			541			(325	)
International		9,139			790			8,349

Total property operating expenses		101,283			96,501			4,782

Net operating income (rental revenues less property operating expenses)		198,103			188,737			9,366
Margin (NOI/rental revenues):		66.2	%		66.2	%		0.0	%
Average occupancy during period:⁽²⁾		93.2	%		95.2	%		(2.0	%)

Other income		15,754			16,216			(462	)
Depreciation of real estate investments		74,146			69,574			4,572
Interest expense		87,207			74,522			12,685
Capitalized interest		12,887			12,771			116

Net interest expense		74,320			61,751			12,569
General and administrative expenses		18,998			15,385			3,613
Other expense		2,059			13,839			(11,780	)

Earnings from continuing and discontinued operations		44,334			44,404			(70	)


Minority interest		(37,228	)		(19,437	)		17,791
Equity in earnings from unconsolidated entities		695			18,878			(18,183	)
Other non-operating income		2,026			176			1,850

Gains on disposition of real estate investments, net of disposition costs
Taxable subsidiaries		3,384			13,616			(10,232	)
REIT		274,488			66,818			207,670


Net earnings		287,699			124,455			163,244

Including interest expense on properties classified within discontinued operations, there was no significant difference in interest expense for the three and six months ended June 30, 2005 as compared to the same periods in 2004. Notable differences in contributions to interest expense were additional interest on long-term debt issuances of $300 million in August of 2004 and May of 2005; offset by lower average line of credit and mortgage balances and increased capitalized interest due to more units under construction during 2005.


(1)		Reflects revenues and operating expenses for Same-Store communities that were owned on March 31, 2007 and fully operating during both of the comparison periods.

(2)		Does not include occupancy associated with properties owned by Ameriton, located in Germany or operated under the Oakwood Master Leases.

~~General~~Property-level ~~and~~operating ~~Administrative~~results ~~Expenses~~

~~The~~ We ~~$1.7~~utilize ~~million,~~NOI oras ~~13.8%,~~the ~~and~~primary ~~$3.5~~measure ~~million,~~to orevaluate ~~14.3%~~our ~~increase~~operating inperformance ~~general~~ and ~~administrative~~for ~~expenses~~purposes of ~~for~~making ~~the~~decisions ~~three~~about resource allocations and ~~six~~assessing ~~months~~segment ~~ended~~performance. ~~June~~We ~~30,~~also ~~2005~~believe NOI asis ~~compared~~a valuable means of comparing period-to-period operating performance. In analyzing the performance ~~same~~of ~~period~~our inoperating ~~2004~~portfolio, iswe ~~primarily~~evaluate ~~due~~Same-Store tocommunities ~~higher~~separately ~~employee~~from ~~related~~Non Same-Store ~~expenses~~communities and other properties.

~~Other~~Same-Store ~~Expenses~~Analysis

The ~~$6.5~~following ~~million~~table ~~increase~~reflects inrevenue, ~~other~~ expense ~~for~~and ~~the~~NOI ~~three~~growth ~~months~~for ~~ended~~Same-Store ~~June~~communities ~~30,~~that were ~~2005~~owned ason ~~compared~~March 31, to2007 ~~the~~and ~~same~~fully ~~period~~operating induring ~~2004~~each ~~is primarily due to a $4.5 million charge related to the settlement~~ of the ~~Fair~~respective ~~Housing~~comparison ~~Act (FHA) and American with Disabilities Act (ADA) lawsuit and other litigation costs~~periods.

~~The $~~26.3 million increase in other expense for the six months ended June 30, 2005 as compared to the same period in 2004 is primarily due to a $17.9 million expense for early extinguishment of debt related to the payoff of $136.5 million of mortgages on currently owned properties during the first six months of 2005. Additionally, we incurred $6.5 million related to the settlement of the Fair Housing Act (FHA) and American with Disabilities Act (ADA) lawsuit and other litigation costs.

IncomeTable fromof Unconsolidated EntitiesContents

Income from unconsolidated entities decreased $1.6 million, or 21.2%, for the three months ended June 30, 2005 as compared to the same period in 2004, primarily due to the recognition of $3.2 million of contingent proceeds from the expiration of certain indemnifications related to the sale of Consolidated Engineering Services (“CES”) during the three months ended June 30, 2004, partially offset by the recognition of $1.3 million of insurance recoveries in the three months ended June 30, 2005 related to Florida hurricane losses sustained in 2004.


	Same-Store			Same-Store
	Revenue			Expense			Same-Store
	Growth			Growth			NOI Growth
	Q1 2007 vs.			Q1 2007 vs.			Q1 2007 vs.
	Q1 2006			Q1 2006			Q1 2006
Garden		6.6	%		4.7	%		7.4	%
High-Rise		6.1	%		6.5	%		5.9	%

Average		6.4	%		5.4	%		6.8	%

~~Income~~ Same-store ~~from~~revenues ~~unconsolidated~~were ~~entities~~up ~~increased $4~~6.34% ~~million~~for the quarter ended March 31, or2007 33as compared to the same period in 2006 due primarily to an increase in average rental revenue per unit which was partially offset by a decrease in occupancy in Washington, D.9C. and New York. Same-store expenses were up 5.4%, for the ~~six~~quarter ~~months~~ ended ~~June 30~~March 31, ~~2005~~2007 as compared to the same period in ~~2004~~2006, primarily due to ~~increased~~higher ~~gains~~real ~~from~~estate ~~the~~taxes ~~sale~~and ofpersonnel ~~joint~~costs. ~~venture~~These ~~operating~~changes ~~communities,~~in ~~offset~~revenues and expenses resulted in an increase in same-store NOI of 6.8% driven principally by ~~the~~strong ~~factors~~growth ~~described~~in ~~above~~Seattle, Southern ~~for~~California, the ~~three~~New ~~months~~York ~~ended~~metropolitan ~~June~~area 30and the San Francisco Bay Area, ~~2005~~which represent 57% of the company’s portfolio.

~~Other~~ Non Same-~~Operating~~Store ~~Income~~and Other Analysis

~~Other~~ The ~~non-operating income decreased by~~ $56.2 5 million ~~for~~decrease ~~the~~in ~~three~~NOI ~~months ended June 30, 2005 as compared to the same period~~ in ~~2004 primarily due to $4.6 million lower gains recognized on~~ the ~~sale~~Non ofSame-Store ~~marketable~~portfolio ~~equity securities~~ for the ~~three~~quarter ~~months~~ ended ~~June 30~~March 31, ~~2005~~2007 as compared to the same period in ~~2004~~2006 ~~and~~is primarily attributable to a $323.3 8 million decrease ~~gain~~related onto ~~the~~community ~~sale of our property management business during the second quarter of 2004~~dispositions, ~~partially~~ offset by ~~the~~an ~~recognition of~~ $211.4 9 million ~~additional~~increase ~~gains~~related ~~from~~to acquisitions ~~the~~and ~~sale~~a of$4.5 million ~~our~~increase ~~Rent.com~~related ~~investment~~to ~~during~~recently ~~the~~stabilized ~~second~~development ~~quarter~~communities ofand communities ~~2005~~in lease-up.

Other non-operating income increased by $8.3 million for the six months ended June 30, 2005 as compared to the same period in 2004 primarily due to a $25.9 million gain from the sale of our Rent.com investment to eBay in 2005, partially offset by a $14.9 million higher gains on the sale of marketable equity securities and the recognition of a $3.3 million gain on the sale of our property management business in 2004. Ameriton

28 The decrease in NOI from Ameriton apartment communities for the three months ended March 31, 2007 as compared to the comparable period in the prior year is primarily attributable to dispositions.

~~Preferred Share Dividends~~ International

~~Preferred~~ The ~~Share~~increase ~~distributions~~in ~~decreased~~NOI byof $28.2 9 million ~~and $4.4 million~~ for the ~~three~~quarter ~~and six months~~ ended ~~June 30~~March 31, ~~2005,~~2007 ~~respectively~~ as compared to the same ~~periods~~period in ~~2004. This~~the ~~decrease~~prior ~~was~~year is primarily ~~due~~attributable to the ~~redemption~~DeWAG ofacquisition ~~our~~that ~~Series~~occurred Din July 2006. ~~Preferred~~As ~~Shares~~of inMarch 31, ~~August 2004~~2007, the ~~conversion~~overall ofInternational ~~Series~~portfolio Kconsisted ~~Preferred Shares into Common Shares in September 2004 and the early conversion~~ of ~~Series~~approximately 9,100 Lresidential ~~Preferred Shares into Common Shares in December 2004~~units. ~~The decrease in Preferred Share distributions due to conversions is offset by an increase in Common Share dividends.~~

~~Discontinued~~Other ~~Operations~~ Income

~~The~~ Other ~~results~~income ofwas ~~operations~~lower for ~~properties sold during~~ the ~~period~~quarter orended ~~designated~~March 31, 2007 as ~~held-for-sale~~compared atto the ~~end~~same ~~of the~~ period ~~are~~in 2006 ~~required~~due primarily to bea ~~classified as discontinued operations~~$5. ~~The~~0 million ~~property-specific~~reduction ~~components~~in ofinsurance ~~net~~recoveries ~~earnings~~offset ~~that~~by ~~are~~higher ~~classified as discontinued operations include rental revenues, rental expenses, real estate taxes, depreciation expense, minority~~ interest~~, estimated~~ income ~~taxes~~earned ~~(for~~on ~~Ameriton~~higher ~~properties),~~cash ~~debt~~balances ~~extinguishment~~that ~~expense~~resulted ~~and~~primarily ~~interest~~from ~~expense (actual interest expense for encumbered properties and a pro-rata allocation of interest expense for any unencumbered property up to~~ our ~~weighted~~1031 ~~average~~exchange ~~leverage ratio), as well as the net gain or loss on the~~ disposition ~~of properties~~ transactions.

~~Consistent~~Depreciation with our capital recycling program, we have ten operating apartment communities, representing 3,868 units (unaudited), classified as held for sale under the provisions of SFAS No. 144, at June 30, 2005. Accordingly, we have classified the operating earnings from these ten properties within discontinued operations for the three and six months ended June 30, 2005 and 2004. During the six months ended June 30, 2005, we sold nine Archstone-Smith and Ameriton operating communities. The operating results of these nine communities and the related gain/loss on sale are also included in discontinued operations for 2005 and 2004. During the twelve months ended December 31, 2004, we sold 30 Archstone-Smith and Ameriton operating communities. The operating results of these 30 communities and the related gain/loss on the sale are also included in discontinued operations for the threeExpense ~~and six months ended June 30, 2004.~~

The ~~following~~depreciation increase for the three months ended March 31, 2007 is aprimarily ~~summary~~related to the increase in the size of ~~net~~the ~~earnings~~real ~~from~~estate ~~discontinued~~portfolio ~~operations~~as ~~(in~~compared ~~thousands):~~to March 31, 2006.

	Three Months Ended June 30,			Six Months Ended June 30,
	2005	2004	2005		2004
Rental revenues	$ 12,322	$ 47,506	$ 27,261		$ 95,786
Rental expenses	(4,046)	(15,454)	(9,351)		(31,256)
Real estate taxes	(1,264)	(5,921)	(2,523)		(12,034)
Depreciation on real estate investments	(1,699)	(7,119)	(4,896)		(16,330)
Interest expense (1)	(3,681)	(13,057)	(7,536)		(26,688)
Estimated income taxes (Ameriton properties)	(1,453)	(166)	(6,120)		(278)
Debt extinguishment costs related to dispositions	(331)	(212)	(5,389)		(1,120)
Allocation of minority interest	(2,181)	(4,092)	(5,568)		(11,500)
Gains on disposition of taxable REIT subsidiary real estate investments, net	6,937	1,817	20,703		14,513
Gains on dispositions of REIT real estate investments, net	13,405	29,169	39,559		78,969
Earnings from discontinued apartment communities	$ 18,009	$ 32,471	$ 46,140		$ 90,062

Interest Expense

~~(1)~~ The ~~portion~~increase ofin gross interest expense ~~included~~during ~~in discontinued operations that is allocated to properties based on~~ the ~~company’s leverage ratio was $3.3 million and $9.5 million for the~~ three months ended ~~June 30~~March 31, ~~2005~~2007 ~~and~~is ~~2004,~~due ~~and~~to higher ~~$6.0~~average ~~million~~debt ~~and~~levels ~~$19.4~~associated ~~million~~with ~~for~~ the ~~six~~increased ~~months~~size ~~ended~~of ~~June~~the ~~30,~~real ~~2005~~estate ~~and~~portfolio ~~2004~~as compared to March 31, ~~respectively~~2006.

Assets held for sale as of June 30, 2005 and December 31, 2004, represented gross real estate of $400.8 million and $378.4 million with $17.6 million and $17.8 million related mortgages payable at June 30, 2005 and December 31, 2004, respectively. Additionally, of our investment in real estate at December 31, 2004, we disposed of $435.3 million of real estate and paid off related mortgages of $85.5 million during the six months ended June 30, 2005.27

29Table of Contents

~~Liquidity~~General and ~~Capital~~Administrative ~~Resources~~Expenses

We General ~~are committed to maintaining a strong balance sheet~~ and ~~preserving~~administrative ~~our~~expenses ~~financial~~were ~~flexibility,~~higher ~~which~~for ~~we believe enhances our ability to capitalize on attractive investment opportunities as they become available. As a result of~~ the ~~significant~~quarter ~~cash~~ended ~~flow generated by our operations~~March 31, ~~current~~2007 ~~cash~~due primarily ~~positions, the available capacity under our unsecured credit facilities, the ability~~ to ~~produce~~higher ~~cash~~personnel-related ~~gains~~costs ~~from~~associated ~~the~~with ~~disposition of real estate and ready access to the capital markets by issuing securities under~~ our ~~existing~~recent ~~shelf~~international ~~registrations, we believe our liquidity and financial condition are sufficient to meet all of our reasonably anticipated cash flow needs during 2005~~expansion.

~~Operating~~Other ~~Activities~~Expense

~~Net~~ Other ~~cash~~expense ~~flow provided by operating activities decreased $25.6 million, or 16.1%,~~ for the ~~six~~quarter ~~months~~ ended ~~June 30~~March 31, ~~2005~~2007 ~~as compared to the same period in 2004. This decrease~~ was ~~primarily~~lower due principally to ~~a decrease in net operating income associated with~~ $~~435~~8.3 4 million of ~~and~~income ~~$1.5~~tax ~~billion~~expense inrelated ~~dispositions~~primarily into ~~the~~prior ~~six~~year ~~months~~disposition ~~ended~~gains ~~June 30, 2005~~ and ~~the~~a ~~twelve months ended December 31, 2004, respectively~~$2. ~~See~~2 million impairment ~~Results~~charge ofrelated ~~Operations~~to ~~for~~an aasset ~~more~~that ~~complete~~we ~~discussion~~sold ofin ~~the factors impacting our operating performance~~2006.

~~Investing~~Minority ~~and Financing Activities~~Interest

~~Net~~ Minority ~~cash~~interest ~~flows~~was ~~from~~higher ~~investing activities decreased by $11.3 million, or 31.9%,~~ for the ~~six~~quarter ~~months~~ ended ~~June 30~~March 31, ~~2005~~2007 as ~~compared~~a toresult ~~the same period in 2004, primarily due to $134.5 million more invested in acquisitions and developments, lower proceeds from the sale~~ of ~~marketable~~higher ~~equity~~gains on ~~securities~~disposition ~~during the first six months~~ of ~~2005~~real ~~as compared to 2004~~estate, ~~the~~which ~~use~~were of $26.9 million of restricted funds for construction, and the use of $50.6 million to fund mezzanine and other loans extended to third parties during the first six months of 2005. The decreases are partially offset by ~~$244.5~~changes ~~million more cash received from disposition activity~~ in the ~~first~~relative ~~six~~number ~~months~~ of ~~2005~~Common ~~as compared~~ Units to the ~~same~~aggregate ~~period~~number inof ~~2004. The~~Common ~~disposition,~~Shares ~~acquisition~~ and ~~development~~Common ~~amounts~~Units, ~~above~~which ~~exclude~~averaged ~~transactions~~11.5% ~~funded~~for by2007 ~~tax-deferred~~and ~~exchange~~13.6% for ~~proceeds~~2006.

~~Net~~Equity ~~cash flows from financing activities decreased by $156.2 million, or 128.5%, for the six months ended June 30, 2005 as compared to the same period~~ in ~~2004,~~Earnings due to $207.0 million used to repay mortgage debt and $225.8 million used to pay down the line of credit during the six months ended June 30, 2005 compared to the same period in 2004. Additionally, $19.5 million was used during 2005 to repurchase Series E and G perpetual preferred units and we had $31.3 million fewer proceeds from ~~new~~Unconsolidated mortgages during 2005 as compared to 2004. These decreases were partially offset by the net proceeds from $300 million of long-term debt issued in May of 2005 and $28.9 million less used to repurchase common shares and preferred shares and units and $21.7 million less in long-term unsecured debt payments during the first six months of 2005 as compared to 2004.Entities

~~Significant~~ Earnings ~~non-cash~~from ~~investing~~unconsolidated ~~and~~entities ~~financing~~were ~~activities~~lower ~~for~~in ~~the~~2007 ~~six~~primarily ~~months~~due ~~ended~~to ~~June~~lower ~~30,~~gains ~~2005~~on ~~and~~the sale ~~2004~~of ~~consisted~~Ameriton ofjoint ~~the~~venture ~~following:~~assets.

•Other ~~Issued $41.7 and $10.8 million of A~~Non-1Operating Common Units as partial consideration for acquired properties during the six months ended June 30, 2005 and 2004, respectively; • Issued $4.5 million of Common Shares as partial consideration for real estate during the first quarter of 2004; • Redeemed $3.1 million and $34.1 million A-1 Common Units for Common Shares during the six months ended June 30, 2005 and 2004, respectively; and,Income

• Non-operating ~~Assumed~~income ~~mortgage~~was ~~debt~~higher offor ~~$74.9~~the ~~million~~quarter ~~during~~ended ~~the~~March 31, ~~first~~2007 ~~quarter~~due to higher gains on the sale of ~~2004~~marketable securities.

~~Scheduled~~Gains ~~Debt~~on ~~Maturities~~Real ~~and~~Estate ~~Interest Payment Requirements~~Dispositions

We See ~~have~~“Discontinued ~~structured~~Operations ~~the~~Analysis” ~~repayments~~below offor ~~our~~discussion long-term debt to create a relatively level principal maturity schedule and to avoid significant repayment obligations in any year which would impact our financial flexibility. We have $242.4 million in scheduled maturities during 2005, and $284.7 million and $540.4 million of ~~long-term debt maturing during 2006 and 2007, respectively~~gains.

At August 1, 2005, we had $242.4 million of liquidity, including cash, restricted cash in tax-deferred escrows and capacity on our unsecured credit facilities. Our unsecured credit facilities, Long-Term Unsecured Debt and mortgages payable had effective average interest rates of 3.14%, 6.15% and 5.25%, respectively, during the six months ended June 30, 2005. These rates give effect to the impact of interest rate swaps and caps, as applicable.28

WeTable wereof in compliance with all financial covenants pertaining to our debt instruments during the period ended June 30, 2005.Contents

30Discontinued Operations Analysis

~~Shareholder~~ Included ~~Dividend~~in ~~Requirements~~the overall results discussed above are the following amounts associated with properties which have been sold or were classified as held-for-sale as of March 31, 2007 (dollars in thousands).

Based on anticipated distribution levels for 2005 and the number of shares and units outstanding as of June 30, 2005, we anticipate that we will pay distributions and dividends of $390.5 million in the aggregate during the year ended December 31, 2005, which includes $0.3 million of distributions for the Series E Preferred Units and Series G Preferred Units that were redeemed during the first quarter of 2005. This amount represents distributions and dividends on our Common shares, all preferred shares and all minority interests, including Class A-1 and B Common Units.


	Three Months Ended
	March 31,
	2007			2006
Rental revenues	$	31,254		$	77,504
Rental expenses		(7,997	)		(22,014	)
Real estate taxes		(3,616	)		(10,260	)
Depreciation on real estate investments		(6,654	)		(16,215	)
Interest expense⁽¹⁾		(7,027	)		(16,224	)
Income taxes from taxable REIT subsidiaries		(358	)		(422	)
Provision for possible loss on real estate investment					(2,200	)
Debt extinguishment costs related to dispositions		(746	)		(863	)
Allocation of minority interest		(31,420	)		(12,203	)
Gains on disposition of real estate investments, net of disposition costs:
Taxable subsidiaries		3,384			13,616
REIT		274,488			66,818

Total discontinued operations	$	251,308		$	77,537


Number of communities sold during the period		12			7
Number of sold communities included in discontinued operations NOI		12			56
Number of communities classified as held-for-sale and included in discontinued operations NOI as of March 31, 2007		16			15

~~Planned~~(1) ~~Investments~~Interest expense included in discontinued operations is allocated to properties based on each asset’s cost in relation to the company’s leverage ratio and the average effective interest rate for each respective period.

~~Following~~ As is a ~~summary~~result of ~~planned~~the ~~investments~~execution asof our strategy of ~~June~~managing 30our invested capital through the selective sale of apartment communities and redeploying the proceeds to fund investments with higher anticipated growth prospects, ~~2005~~we had significant disposition activity in both 2007 and 2006. The resulting gains, net of disposition costs, including ~~amounts~~those ~~for~~from Ameriton, ~~(dollar~~were ~~amounts~~the inbiggest drivers ~~thousands)~~of overall earnings from discontinued operations. ~~The~~NOI ~~amounts~~related ~~labeled~~to ~~“Discretionary”~~communities ~~represent~~sold ~~future~~or classified ~~investments~~as ~~that~~held-for-sale wewas ~~plan~~higher in 2006 as compared to ~~make~~2007 due primarily to the longer holding period for communities we have sold. Direct operating expenses, ~~although~~depreciation ~~there~~and isallocated interest ~~not~~expense aare ~~contractual~~generally ~~commitment~~proportional to dothe sonet operating income of communities included in discontinued operations for each period. The ~~amounts~~number ~~labeled~~of ~~“Committed”~~REIT ~~represent~~dispositions in 2007 and the ~~approximate~~relative size ~~amount~~of ~~that~~the wecorresponding ~~are~~gain ~~contractually~~was ~~committed~~significantly tohigher ~~fund~~in ~~for~~2007. ~~communities~~The ~~under~~portion ~~construction~~of earnings from discontinued operations allocated to minority interest in ~~accordance~~2007 ~~with~~was ~~construction~~higher ~~contracts~~than ~~with~~2006 ~~general~~due ~~contractors~~primarily to higher gains.

		Planned Investments
	Units	Discretionary	Committed
Communities under redevelopment	634	$ 3,851	$ 22,128
Communities under construction	4,651	-	540,877
Communities In Planning and owned	3,646	548,159	-
Communities In Planning and Under Control	253	25,027	-
Community acquisitions under contract	874	327,100	-
Total	10,058	$ 904,137	$ 563,005

Liquidity and Capital Resources

In We ~~addition~~are committed to ~~the~~maintaining ~~planned~~a ~~investments~~strong ~~noted~~balance ~~above~~sheet and preserving our financial flexibility, which we ~~expect~~believe enhances our ability to ~~make~~capitalize ~~additional~~on ~~investments~~attractive ~~relating~~investment opportunities toas ~~planned~~they ~~expenditures~~become onavailable. ~~recently~~As ~~acquired~~a ~~communities~~result asof ~~well~~the assignificant ~~recurring~~cash ~~expenditures~~flow generated by our operations, current cash positions, the available capacity under our unsecured credit facilities, gains from the disposition of real estate and our demonstrated ability to ~~improve~~access the capital markets, we believe our liquidity and ~~maintain~~financial condition are sufficient to meet all of our reasonably ~~established~~anticipated ~~operating~~cash ~~communities~~flow needs during the next 12 months. Please refer to the Condensed Consolidated Statements of Cash Flows for detailed information of our sources and uses of cash for the periods ending March 31, 2007 and 2006.

We Scheduled ~~anticipate~~Debt ~~completion~~Maturities ~~of most of the communities that are currently under construction~~ and ~~the~~Interest ~~planned~~Payment operating community improvements by the end of 2007. No assurances can be given that communities we do not currently own will be acquired or that planned developments will actually occur. In addition, actual costs incurred could be greater or less than our current estimates.Requirements

On We ~~July~~have ~~29,~~structured ~~2005,~~our welong-term ~~closed~~debt ~~the~~maturities ~~first~~in ~~round~~a ofmanner ~~apartment~~designed ~~community~~to ~~acquisitions~~avoid ~~from~~unmanageable repayment ~~various~~obligations ~~partnerships~~in ofany ~~Oakwood Worldwide~~year, ~~comprising~~which 25would ~~communities,~~negatively ~~8,228~~impact ~~units,~~our ~~and~~financial ~~a total expected investment of $1~~flexibility.1 ~~billion. We~~As ~~funded this initial tranche~~ of ~~the acquisition with a combination of operating partnership units~~ March 31, ~~assumed mortgage debt and cash. Operating partnership units represented $319 million~~2007, ~~or 8.9 million units, of the total. In addition,~~ we ~~assumed~~had ~~$372~~scheduled ~~million~~long-term ~~of mortgage~~ debt, ~~which~~maturities ~~has an all-in rate~~ of ~~approximately 5.1%. The cash component of the transaction was~~ $~~438~~ 479.6 million, ~~with~~ $~~195~~ 544.6 million ~~used to pay off of existing Oakwood mortgage debt. In total, we expect to acquire 36 communities from Oakwood; with the remaining communities, representing 4,548 units~~ and ~~a total expected investment of~~ $~~412~~477.0 4 million, ~~anticipated~~during to2007, ~~close~~2008 ~~later this year or during 2006.~~and

~~Funding Sources~~29

WeTable anticipateof that net cash flow from operating activities and gains on dispositions during 2005 will be sufficient to fund anticipated distribution requirements and debt principal amortization payments. To fund planned investment activities, we had $178.9 million in available capacity on our unsecured credit facilities and $63.5 million in cash in tax-deferred exchange escrow at August 1, 2005. Contents

~~In April 2005~~2009, ~~the~~respectively ~~Operating~~and ~~Trust filed a shelf registration statement on Form S-3 to register an additional~~ $~~300~~ 171.7 million ~~(for a total of $1 billion)~~ in ~~unsecured~~International ~~debt~~loans ~~securities. This~~that ~~registration~~we ~~statement~~expect was declared effective in May 2005; subsequently, $300 million of long-term debt was issued during May of 2005 and $200 million of long-term debt was issued during July of 2005. In April 2005, Archstone-Smith filed a registration statement on Form S-3 registering 1,120,806 Common Shares to be ~~issued~~paid ~~upon~~off ~~redemption~~or refinanced ofduring ~~certain A-1 Common Units. This registration statement was declared effective in May 2005. Collectively, Archstone-Smith and~~ the ~~Operating~~second ~~Trust~~quarter ~~have~~of $12007.~~0 billion available in shelf registration debt and equity securities.~~

31 On May 1, 2007, we had $484.9 million borrowed on our unsecured credit facilities, $19.3 million outstanding under letters of credit and available borrowing capacity on our unsecured credit facilities of $195.8 million.

~~Other~~ Our ~~Contingencies~~unsecured credit facilities, long-term unsecured debt, mortgages payable and ~~Hedging~~international loan ~~Activities~~had effective weighted average interest rates of 5.6%, 5.5%, 5.5% and 4.3%, respectively, as of March 31, 2007. All of these rates give effect to debt issuance costs, fair value hedges, the amortization of fair market value purchase adjustments and other fees and expenses, as applicable.

~~During~~ Our ~~2004,~~debt weinstruments ~~incurred~~generally ~~losses~~contain ~~associated~~covenants ~~with~~common ~~multiple~~to ~~hurricanes~~the intype ~~Florida. As a result~~ of ~~this~~facility ~~damage,~~or ~~in 2004~~borrowing, including wefinancial ~~recorded~~covenants ~~estimated~~establishing ~~losses~~minimum ofdebt ~~$4.8~~service ~~million~~coverage ~~for~~ratios ~~both wholly owned~~ and ~~our~~maximum leverage ~~share~~ratios. ofWe ~~unconsolidated~~were ~~apartment~~in ~~communities. During~~compliance ~~the~~with ~~first~~all ~~quarter~~financial ofcovenants ~~2005,~~pertaining weto ~~increased~~ our ~~share~~debt instruments as of ~~the~~and ~~reserve~~ for ~~our unconsolidated apartment communities by $0.7 million. Based on currently available information from our insurance adjustors during~~ the ~~second~~period ~~quarter~~ended ~~of 2005~~March 31, ~~we accrued an estimated insurance recovery of $2~~2007.~~5 million, $1.3 million of which related to our share of unconsolidated apartment communities.~~

~~During~~ Shareholder ~~the~~Dividend second quarter of 2005, we entered into a full and final settlement of litigation with three national disability organizations and agreed to make capital improvements in a number of our communities in order to make them fully compliant with the Fair Housing Act (FHA) and Americans with Disabilities Act (ADA). The litigation, settled by this agreement, alleged lack of full compliance with certain design and construction requirements under the two federal statutes at 71 of the company's communities. As part of the settlement, the three disability organizations all recognized that Archstone-Smith had no intention to build any of its communities in a manner inconsistent with the FHA or ADA. We agreed to pay damages totaling $1.4 million, which include legal fees and costs incurred by the plaintiffs. In addition to the settlement, we incurred $1.0 million for legal andRequirements consulting fees during the first six months of 2005 related to this lawsuit and have accrued an estimate of $1.6 million for legal, consulting and other expenses, most of which are expected to be incurred during the remainder of 2005.

~~The~~ Based ~~amount~~on ofanticipated ~~the~~distribution ~~capital~~levels ~~expenditures~~for ~~required~~2007 toand ~~remediate~~ the ~~communities~~number ~~named~~of inCommon ~~the~~Shares ~~settlement~~and isCommon Units ~~not~~outstanding ~~quantifiable~~as atof ~~the~~March 31, ~~present~~2007, ~~time.~~we ~~These~~anticipate ~~expenditures~~that we will ~~generally~~pay bedistributions ~~capitalized~~and asdividends of ~~they are incurred~~$456.7 million ~~The~~in ~~settlement agreement approved by~~ the ~~court~~aggregate ~~allows~~during ~~us to remediate~~ the ~~designated~~year ~~communities~~ending ~~over~~December 31, ~~the~~2007. ~~next~~This ~~three~~amount represents ~~years,~~distributions and ~~also~~dividends ~~provides~~on ~~that~~our weCommon ~~are~~Shares, ~~not~~all ~~restricted~~preferred ~~from~~shares ~~selling~~and ~~any~~all ofminority interests, ~~our~~including ~~communities~~Class A-1 ~~during~~and ~~the~~B ~~remediation~~Common ~~period~~Units.

We Planned are a party to various other claims and routine litigation arising in the ordinary course of business. We do not believe that the results of any such claims or litigation, individually or in the aggregate, will have a material adverse effect on our business, financial position or results of operations.Investments

~~Critical~~ Following ~~Accounting~~is ~~Policies~~a summary of planned investments as of March 31, 2007, including Ameriton, but excluding joint ventures. The amounts labeled “Discretionary” represent future investments that we plan to make, although there is not a contractual commitment to do so. The amounts labeled “Committed” represent the approximate amount that we are contractually committed to fund for communities under construction in accordance with construction contracts with general contractors.

We define critical accounting policies as those accounting policies that require our management to exercise their most difficult, subjective and complex judgments. Our management has discussed the development and selection of all of these critical accounting policies with our audit committee, and the audit committee has reviewed the disclosure relating to these policies. Our critical accounting policies relate principally to the following key areas:


	Planned Investments
	(in thousands)
	Discretionary		Committed
Communities under redevelopment	$	603	$	3,597
Communities under construction		—		503,969
Communities In Planning and owned		1,376,067		—
Communities In Planning and Under Control		660,418		—
Community acquisitions under contract		309,000		—
FHA/ADA settlement capital accrual		—		22,701

Total	$	2,346,088	$	530,267

~~Internal~~ In ~~Cost~~addition ~~Capitalization~~to the planned investments noted above, we expect to make additional investments relating to planned expenditures on recently acquired communities as well as recurring expenditures to improve and maintain our established operating communities.

We ~~have~~anticipate ancompletion ~~investment~~of ~~organization~~most ~~that is responsible for development and redevelopment~~ of ~~apartment~~the communities. ~~Consistent~~that ~~with GAAP, all direct and certain indirect costs, including interest and real estate taxes, incurred during development and redevelopment activities~~ are ~~capitalized.~~currently ~~Interest~~under isconstruction ~~capitalized on real estate assets that require a period of time to get them ready for their intended use. The amount of interest capitalized is based upon~~ and the ~~average~~planned ~~amount~~operating ofcommunity ~~accumulated~~improvements ~~development~~by ~~expenditures during~~ the ~~reporting~~end ~~period. Included in capitalized costs are management’s estimates~~ of ~~the direct and incremental personnel costs and indirect project costs associated with our development and redevelopment activities~~2010. ~~Indirect~~No ~~project~~assurances ~~costs~~can ~~consist~~be ~~primarily~~given ofthat communities ~~personnel~~we ~~costs~~do ~~associated~~not ~~with~~currently ~~construction~~own ~~administration~~will ~~and~~be ~~development~~acquired ~~accounting,~~or ~~legal fees, and various office costs~~ that ~~clearly~~planned ~~relate~~developments towill ~~projects under development~~actually occur. ~~Because~~In ~~the~~addition, ~~estimation~~actual ~~of capitalizable internal~~ costs ~~requires~~incurred ~~management’s~~could ~~judgment,~~be wegreater ~~believe~~or ~~internal~~less ~~cost~~than ~~capitalization~~our iscurrent ~~a “critical accounting estimate~~estimates.”

~~Valuation~~ Funding ~~of Real Estate~~Sources

~~Long-lived~~ We ~~assets~~anticipate tofinancing beour ~~held~~planned ~~and~~investment ~~used are carried at cost~~ and ~~evaluated~~operating ~~for~~needs ~~impairment~~primarily ~~when~~with ~~events~~cash orflow from ~~changes~~operating inactivities, ~~circumstances~~disposition ~~indicate~~proceeds, ~~such~~existing ancash ~~evaluation~~balances, isborrowings ~~warranted.~~under Weour unsecured ~~also~~credit ~~evaluate~~facilities ~~assets~~and ~~for~~proceeds ~~potential~~from ~~impairment~~long-term ~~when~~financing. weWe ~~deem~~have ~~them~~filed registration statements to befacilitate ~~held~~issuance ~~for sale. Valuation~~ of ~~real~~debt ~~estate~~and isequity ~~considered~~securities aon ~~“critical~~an ~~accounting~~as-needed ~~estimate”~~basis ~~because~~subject ~~the~~to our ~~evaluation~~ability ofto ~~impairment~~effect ~~and~~offerings ~~the~~on ~~determination~~satisfactory ofterms ~~fair~~based ~~values~~on ~~involve~~prevailing aconditions. ~~number~~At ofMay 1, 2007, ~~management~~we ~~assumptions~~had ~~relating~~$195.8 million toin ~~future~~available ~~economic~~capacity ~~events~~on ~~that~~our ~~could~~unsecured ~~materially~~credit ~~affect~~facilities. ~~the~~In addition, ~~determination~~we ofexpect the ~~ultimate~~proceeds ~~value,~~from ~~and~~REIT ~~therefore,~~dispositions ~~the~~to ~~carrying~~approximate ~~amounts of~~ our ~~real~~investment ~~estate.~~in new

3230

WhenTable determining if there is an indication of impairment, we estimate the asset’s NOI over the anticipated holding period on an undiscounted cash flow basis and compare this amount to its carrying value. Estimating the expected NOI and holding period requires significant management judgment. If it is determined that there is an indication of impairment for assets to be held and used, or if an asset is deemed to be held for sale, we then determine the asset’s fair value.Contents

~~The~~REIT ~~apartment~~operating ~~industry uses capitalization rates as the primary measure of fair value. Specifically, annual NOI for a~~ community isacquisitions divided by an estimated capitalization rate to determine the fair value of the community. Determining the appropriate capitalization rate requires significant judgment and is typically based on many factors including the prevailing rate for the market or submarket. Further, capitalization rates can fluctuate up or down due to a variety of factors in ~~the overall economy or within local markets~~2007. IfWe ~~the~~therefore ~~actual~~do ~~capitalization~~not ~~rate~~believe ~~for~~that adiscontinued operations ~~community~~will ~~is significantly different from our estimated rate, the impairment evaluation for an individual asset could be materially affected. Historically we~~ have ~~had~~a ~~limited~~significant ~~and~~adverse ~~infrequent~~impact ~~impairment~~on ~~charges, and the majority of~~ our ~~apartment~~liquidity ~~community sales have produced gains. We evaluate a real estate asset for potential impairment when events or changes~~ in ~~circumstances~~the ~~indicate~~foreseeable ~~that its carrying amount may not be recoverable~~future.

~~Capital~~ Litigation ~~Expenditures~~ and ~~Depreciable Lives~~Contingencies

We During ~~incur~~the ~~costs~~second ~~relating~~quarter toof ~~redevelopment initiatives~~2005, ~~revenue~~we ~~enhancing~~entered ~~and~~into ~~expense~~a ~~reducing~~full ~~capital~~and ~~expenditures,~~final ~~and~~settlement ~~recurring~~in ~~capital~~the ~~expenditures~~United States ~~that~~District ~~are~~Court ~~capitalized~~for asthe ~~part~~District of ~~our~~Maryland ~~real~~with ~~estate.~~three ~~These~~national ~~amounts~~disability ~~are~~organizations ~~capitalized~~ and agreed ~~depreciated~~to ~~over~~make ~~estimated~~capital ~~useful~~improvements ~~lives~~in ~~determined~~a bynumber ~~management.~~of Weour ~~allocate~~communities ~~the~~in ~~cost~~order ofto ~~newly~~make ~~acquired~~them ~~properties~~fully compliant ~~between~~with ~~net~~the ~~tangible~~FHA and ~~identifiable intangible assets~~ADA. The ~~primary~~litigation, ~~intangible~~settled ~~asset~~by ~~associated~~this ~~with~~agreement, analleged ~~apartment~~lack ~~community acquisition is the value~~ of ~~the~~full compliance ~~existing~~with ~~lease~~certain ~~agreements.~~design ~~When~~and ~~allocating~~construction ~~cost~~requirements tounder ~~an acquired property, we first allocate costs to~~ the ~~estimated~~two ~~intangible~~federal ~~value~~statutes at 71 of the ~~existing~~company’s ~~lease~~wholly-owned ~~agreements~~ and ~~then~~joint toventure ~~the~~communities, ~~estimated value~~ of ~~the~~which ~~land,~~we ~~building~~still ~~and~~own ~~fixtures~~or ~~assuming~~have ~~the~~an interest ~~property~~in ~~is vacant~~42. WeAs ~~estimate~~part ~~the intangible value~~ of the ~~lease~~settlement, ~~agreements by determining~~ the ~~lost~~three ~~revenue~~disability ~~associated~~organizations ~~with~~all arecognized ~~hypothetical lease-up.~~that WeArchstone-Smith ~~depreciate~~had ~~the~~no ~~building~~intention ~~and~~to ~~fixtures~~build ~~based~~any ~~on the expected useful life~~ of ~~the~~its ~~asset~~communities ~~and~~in ~~amortize~~a ~~the~~manner ~~intangible~~inconsistent ~~value~~with of the FHA ~~lease~~or ~~agreements over the average remaining life of the existing leases~~ADA.

~~Determining~~ The ~~whether~~amount of the capital expenditures ~~meet~~required to remediate the ~~criteria~~communities ~~for~~named ~~capitalization,~~in the settlement ~~assignment~~was ofestimated ~~depreciable~~at ~~lives~~$47.2 million and ~~determining~~was accrued as an addition to real estate during the fourth ~~appropriate~~quarter ~~amounts~~of 2005. The settlement agreement approved by the court allows us to ~~allocate~~remediate ~~between~~each of ~~tangible~~the designated communities over a three year period, and ~~intangible~~also ~~assets~~provides ~~for~~that ~~property~~we ~~acquisitions~~are ~~requires~~not restricted from selling any of our ~~management~~communities during the remediation period. We agreed to ~~exercise~~pay damages ~~significant~~totaling ~~judgment~~$1.4 million, which included legal fees and iscosts ~~therefore~~incurred ~~considered~~by athe ~~“significant~~plaintiffs. ~~accounting~~We had ~~estimate~~$22.”7 million of the original accrual remaining on March 31, 2007.

~~Pursuit~~ We ~~Costs~~are subject to various claims filed in 2002 and 2003 in connection with moisture infiltration and resulting mold issues at certain high-rise properties we once owned in Southeast Florida. These claims generally allege that water infiltration and resulting mold contamination resulted in the claimants having personal injuries and/or property damage. Although certain of these claims continue to be in various stages of litigation, with respect to the majority of these claims, we have either settled the claims and/or we have been dismissed from the lawsuits that had been filed. With respect to the lawsuits that have not been resolved, we continue to defend these claims in the normal course of litigation.

We ~~incur costs relating to the potential acquisition of real estate which we refer to as pursuit costs. To the extent that these costs~~ are ~~identifiable with~~ a ~~specific~~party property and would be capitalized if the property were already acquired, the costs are accumulated by project and capitalized in the Other Asset section of the balance sheet. If these conditions are not met, the costs are expensed as incurred. Capitalized costs include but are not limited to ~~earnest~~various ~~money,~~other ~~option~~claims ~~fees, environmental reports, traffic reports, surveys, photos, blueprints, direct~~ and ~~incremental~~routine ~~personnel~~litigation ~~costs~~arising ~~and legal costs. Upon acquisition, the costs are included~~ in the ~~basis~~ordinary course of ~~the acquired property~~business. ~~When~~We itdo ~~becomes~~not ~~probable~~believe that ~~a prospective acquisition will not be acquired,~~ the ~~accumulated~~results ~~costs for the property are charged to other expense on the statement~~ of ~~earnings~~any ~~in the period~~ such ~~a determination~~claims isor ~~made.~~litigation, ~~Because~~individually ofor in the ~~inherent~~aggregate, ~~judgment~~will ~~involved~~have ~~in evaluating whether~~ a ~~prospective~~material ~~property~~adverse ~~will~~effect ~~ultimately~~on beour ~~acquired~~business, wefinancial ~~believe~~position ~~capitalizable~~or results ~~pursuit~~of ~~costs are a “critical accounting estimate~~operations.”

~~Off~~ Critical ~~Balance~~Accounting ~~Sheet Arrangements~~Policies

~~Our~~ We ~~real~~define ~~estate~~critical ~~investments~~accounting inpolicies ~~entities~~as ~~that~~those doaccounting ~~not~~policies ~~qualify~~that asrequire aour management ~~variable~~to ~~interest~~exercise ~~entity~~their ~~and~~most ~~are~~difficult, ~~not~~subjective ~~controlled~~and ~~through~~complex ~~majority~~judgments. ~~economic~~Our ~~interest~~management ~~are~~has discussed ~~not~~the ~~consolidated~~development and ~~are~~selection ~~reported~~of asall ~~investments~~of inthese ~~unconsolidated~~critical ~~entities.~~accounting ~~Our~~policies ~~investments~~with inour audit committee, and ~~advances~~the toaudit ~~unconsolidated~~committee ~~entities~~has atreviewed ~~June~~the ~~30,~~disclosure ~~2005,~~relating ~~aggregated~~to ~~$124.6~~these ~~million~~policies. Our critical accounting policies relate principally to the following key areas:

33Internal Cost Capitalization

~~Contractual~~ We ~~Commitments~~have an investment organization that is responsible for development and redevelopment of apartment communities. Consistent with GAAP, all direct and certain indirect costs, including interest and real estate taxes, incurred during development and redevelopment activities are capitalized. Interest is capitalized on real estate assets that require a period of time to get them ready for their intended use. The amount of interest capitalized is based upon the average amount of accumulated development expenditures during the reporting period. Included in capitalized costs are management’s estimates of the direct and incremental personnel costs and indirect project costs associated with our development and redevelopment activities. Indirect project costs consist primarily of personnel costs associated with construction administration and development accounting, legal fees, and various office costs that clearly relate to projects under development. Because the estimation of capitalizable internal costs requires management’s judgment, we believe internal cost capitalization is a “critical accounting estimate.”

~~The~~ If ~~following~~future isaccounting arules ~~summary~~limit ofour ~~significant~~ability ~~changes~~to incapitalize ~~contractual~~internal ~~commitments~~costs ~~for~~or ~~the~~if ~~six~~our development ~~months~~activity ~~ended~~decreased ~~June~~significantly 30without a proportionate decrease in internal costs, there ~~2005:~~could be an increase in our operating expenses.

• We issued $300 million and $200 million in long-term unsecured ten-year senior notes with a coupon rate of 5.25% and an effective interest rate of 5.4% and 5.26% from its shelf registration statement during May and July of 2005, respectively.31

•Table We redeemed $200 million of long-term unsecured ten-year senior notes with a coupon rate of 8.2% and an effective interest rate of 8.4% during July of 2005.Contents

•Valuation ~~We guaranteed $175.0 million~~ of ~~the~~Real ~~outstanding mortgage debt during July, 2005 and are committed to guarantee another $93.5 million upon funding of additional debt in connection with one of our unconsolidated joint ventures.~~Estate

• Long-lived ~~During~~assets ~~the~~to ~~second~~be ~~quarter~~held ofand ~~2005,~~used weare ~~entered~~carried ~~into~~at acost ~~full~~ and ~~final~~evaluated ~~settlement~~for impairment when events or changes in ~~the~~circumstances ~~United~~indicate ~~States~~such ~~District~~an ~~Court~~evaluation is warranted. We also evaluate assets for ~~the~~potential ~~District~~impairment when we deem them to be held-for-sale. Valuation of ~~Maryland~~real ~~with~~estate ~~three~~is considered ~~national~~a ~~disability~~“critical ~~organizations~~accounting ~~and~~estimate” ~~agreed~~because tothe ~~make~~evaluation ~~capital~~of ~~improvements~~impairment inand the determination of fair values involve a number of ~~our~~management ~~communities~~assumptions inrelating ~~order~~ to ~~make~~future ~~them~~economic events ~~fully~~that ~~compliant~~could ~~with~~materially affect the ~~Fair~~determination ~~Housing~~of ~~Act~~the ~~(FHA)~~ultimate value, and ~~Americans~~therefore, ~~with~~the carrying ~~Disabilities~~amounts ~~Act~~of ~~(ADA)~~our real estate. ~~The~~Furthermore, ~~amount~~decisions ofregarding ~~the~~when ~~capital~~a ~~expenditures~~property ~~required~~should tobe classified ~~remediate~~as ~~the~~held-for-sale ~~communities~~under ~~named~~SFAS inNo. 144, ~~the~~“Accounting ~~settlement~~for isImpairment ~~not~~or ~~quantifiable~~Disposal atof Long-Lived ~~the~~Assets,” ~~present~~requires ~~time~~significant management judgment. ~~These~~There ~~expenditures~~are ~~will~~many ~~generally~~phases beto ~~capitalized~~the disposition asprocess ~~they~~ranging ~~are~~from ~~incurred.~~the ~~The~~initial ~~settlement~~market ~~agreement~~research ~~approved~~to bybeing ~~the~~under ~~court~~contract ~~allows~~with non-refundable usearnest money to ~~remediate~~closing. ~~the~~Deciding ~~designated~~when ~~communities~~management ~~over~~is ~~the~~committed ~~next~~to ~~three~~selling ~~years~~an asset is therefore highly subjective.

• When ~~Please~~determining ~~reference~~if ~~Planned~~there ~~Investments~~is an indication of impairment for aassets ~~summary~~intended to be held and used, we estimate the asset’s NOI over the anticipated holding period on an undiscounted cash flow basis and compare this amount to its carrying value. Estimating the expected NOI and holding period requires significant management judgment. If it is determined that there is an indication of impairment ~~amounts~~for ~~committed~~assets to be held and used, or if an asset is deemed to be held-for-sale, ~~investing~~we ~~activities~~then determine the fair value of the asset.

~~Item~~ The 3apartment industry uses capitalization rates as the primary measure of fair value. Specifically, ~~Quantitative~~annual NOI for a community is divided by an estimated capitalization rate to determine the fair value of the community. Determining the appropriate capitalization rate requires significant judgment and ~~Qualitative~~is ~~Disclosures~~typically ~~About~~based ~~Market~~on ~~Risk~~many factors including the prevailing rate for the market or submarket, as well as the quality and location of the properties. Further, capitalization rates can fluctuate up or down due to a variety of factors in the overall economy or within local markets. If the actual capitalization rate for a community is significantly different from our estimated rate, the impairment evaluation for an individual asset could be materially affected.

~~Our~~Capital ~~capital~~Expenditures ~~structure includes the use of both fixed~~ and ~~floating~~Depreciable rate debt and we are exposed to the impact of changes in interest rates. We also use interest rate swap and interest rate cap derivative financial instruments in order to modify interest rate characteristics of our debt in an effort to minimize our overall borrowing costs. We do not utilize these derivative financial instruments for speculative purposes. To assist us in evaluating our interest rate risk and counter-party credit risk, we use the services of third party consultants. Lives

As We aincur ~~result~~costs ofrelating ~~our~~to ~~balance~~redevelopment ~~sheet~~initiatives, ~~management~~revenue ~~philosophy~~enhancing and expense reducing capital expenditures, weand ~~have~~recurring ~~managed~~capital expenditures that are capitalized as part of our ~~debt~~real estate. ~~maturities~~These toamounts ~~create~~are acapitalized ~~relatively~~and ~~level~~depreciated ~~principal~~over ~~maturity~~estimated ~~schedule,~~useful ~~without~~lives ~~significant~~determined ~~repayment~~by management. ~~obligations~~We inallocate ~~any~~the ~~year~~cost of newly acquired properties between net tangible and identifiable intangible assets. If ~~current~~The ~~market~~primary ~~conditions~~intangible doasset ~~not~~associated ~~permit~~with usan toapartment ~~replace~~community ~~maturing~~acquisition is ~~debt~~the atvalue ~~comparable~~of ~~interest~~the ~~rates~~existing lease agreements. When allocating cost to an acquired property, we first ~~are~~allocate ~~not~~costs ~~exposed~~ to ~~significant~~the ~~portfolio~~estimated ~~level~~intangible ~~interest~~value ~~rate~~of ~~volatility~~the ~~due~~existing tolease agreements and then to the ~~management~~estimated value of ~~our~~the ~~maturity~~land, ~~schedules~~building and fixtures assuming the property is vacant. ~~There~~ ~~have~~We ~~been~~estimate the nointangible ~~material~~value ~~changes~~of tothe ~~our~~lease ~~market~~agreements ~~risk~~by ~~profile~~determining ~~since~~the ~~December~~lost ~~31,~~revenue ~~2004~~associated with a hypothetical lease-up. ~~See~~ ~~Item~~We 7adepreciate inthe ~~our~~building ~~2004~~and ~~Form~~fixtures ~~10-K~~based ~~for~~on ~~detailed~~the ~~information~~expected ~~about~~useful life of the ~~qualitative~~asset and ~~quantitative~~amortize ~~disclosures~~the ~~about~~intangible ~~our~~value ~~market~~of ~~risk.~~the lease agreements over the average remaining life of the existing leases.

~~Item~~ Determining 4.whether ~~Controls~~expenditures meet the criteria for capitalization, the assignment of depreciable lives and ~~Procedures~~determining the appropriate amounts to allocate between tangible and intangible assets for property acquisitions requires our management to exercise significant judgment and is therefore considered a “critical accounting estimate.”

AnPursuit evaluation was carried out under the supervision and with the participation of management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our internal control over financial reporting (as defined in Rule 13a-14(c) under the Securities Exchange Act of 1934). Based on their evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our internal control over financial reporting were, to the best of their knowledge, effective as of June 30, 2005, to ensure that information required to be disclosed in reports that are filed or submitted under the Securities Exchange Act are recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms. Subsequent to June 30, 2005, there were no significant changes in the Trust’s internal controls overCosts ~~financial reporting or in other factors that could significantly affect these controls, including any corrective actions with regard to significant deficiencies and material weaknesses.~~

34 We incur costs relating to the potential acquisition of existing operating communities or land for development of new operating communities, which we refer to as pursuit costs. To the extent that these costs are identifiable with a specific property and would be capitalized if the property were already acquired, the costs are accumulated by project and capitalized in the Other Asset section of the balance sheet. If these conditions are not met, the costs are expensed as incurred. Capitalized costs include but are not limited to earnest money, option fees, environmental reports, traffic reports, surveys, photos, blueprints, direct and incremental personnel costs and legal costs. Upon acquisition, the costs are included in the basis of the acquired property. When it becomes probable that a prospective acquisition will not be acquired, the accumulated costs for the property are charged to other expense on the statement of earnings in the period such a determination is made.

~~PART~~ Because IIof –the ~~OTHER~~inherent ~~INFORMATION~~judgment involved in evaluating whether a prospective property will ultimately be acquired, we believe capitalizable pursuit costs are a “critical accounting estimate.”

~~Item 1. Legal Proceedings~~32

EqualTable Rights Center, et al. v. Archstone-Smith Trust, et al., was settled on June 8, 2005. We entered into a full and final settlement in the United States District Court for the District of Maryland with three national disability organizations and agreed to make capital improvements in a number of our communities in order to make them fully compliant with the Fair Housing Act (FHA) and Americans with Disabilities Act (ADA). The litigation, settled by this agreement, alleged lack of full compliance with certain design and construction requirements under the two federal statutes at 71 of the company's communities. As part of the settlement, the three disability organizations all recognized that Archstone-Smith had no intention to build any of its communities in a manner inconsistent with the FHA or ADA.Contents

~~The~~Consolidation ~~amount of the capital expenditures required to remediate the communities named in the settlement is not quantifiable at the present time~~vs. ~~These~~Equity ~~expenditures~~Method will generally be capitalized as they are incurred. The settlement agreement approved by the court allows us to remediate the designated communities over the next three years, and also provides that we are not restricted from selling any of ~~our~~Accounting communities during the remediation period. We agreed to pay damages totaling $1.4 million, which include legal fees and costs incurred by the plaintiffs. In addition to the settlement, we incurred $1.0 million for legal and consulting fees during the first six months of 2005 related to this lawsuit and have accrued an estimate of $1.6 million for legal, consulting and other expenses that are expected to be incurred during the remainder of 2005Ventures

We From time to time, we make co-investments in real estate ventures with third parties and are required ~~party~~to determine whether to ~~various~~consolidate ~~other~~or ~~claims~~use ~~and~~the ~~routine~~equity ~~litigation~~method ~~arising~~of inaccounting for the venture. ~~ordinary~~FASB ~~course~~Interpretation No. 46R, “Consolidation of ~~business~~Variable Interest Entities” (as revised) and Emerging Issues Task Force issued EITF No. 04-5, We“Determining doWhether ~~not~~a ~~believe~~General ~~that~~Partner, or the General ~~results~~Partners ofas ~~any~~a ~~such~~Group, ~~claims~~Controls ~~and~~a ~~litigation,~~Limited ~~individually~~Partnership or inSimilar Entity When the ~~aggregate~~Limited Partners Have Certain Rights,” ~~will~~are ~~have~~the atwo ~~material~~primary ~~adverse~~sources ~~effect~~of onaccounting ~~our~~guidance ~~business~~in this area. Appropriate application of these relatively complex rules requires substantial management judgment, which ~~financial~~we ~~position~~believe, ormakes ~~results~~the choice of ~~operations~~the appropriate accounting method for these ventures a “critical accounting estimate.”

~~Item~~ Off 2.Balance ~~Changes~~Sheet ~~in Securities, Use of Proceeds and Issuer Purchases of Equity Securities~~Arrangements

~~The~~ Our ~~following~~real ~~table~~estate ~~summarizes~~investments ~~repurchases~~in ofentities ~~our~~that ~~Common~~do ~~Shares~~not ~~during~~qualify as variable interest entities, variable interest entities where we are not the ~~three~~primary ~~months~~beneficiary ~~ended~~and ~~June~~entities 30we do not control through majority economic interest are not consolidated and are reported as investments in unconsolidated entities. Our investments in and advances to unconsolidated entities at March 31, 2007 ~~2005~~aggregated ~~(amounts~~$252.0 million. Please refer to Note 5, Investments in ~~thousands):~~and Advances to Unconsolidated Entities for additional information.

Period	Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plan	Maximum Approximate Dollar Value That May Yet Be Purchased Under the Plan
4/1/05 – 4/30/05	437	$ 34.40	(2)	437	$ 132,137	(1)
5/1/05 – 5/31/05	-	-		-	132,137
6/1/05 – 6/30/05	-	-		-	132,137
Total	437			437

Contractual Commitments

~~(1) On~~ Please ~~April~~refer ~~22,~~to ~~2004,~~“Scheduled ~~the~~Debt ~~Board~~Maturities ~~increased~~and ~~the~~Interest ~~total~~Payment ~~authorized~~Requirements” and “Planned Investments” above for ~~share~~further ~~repurchases~~discussion toof ~~$255~~significant ~~million.~~contractual commitments.

~~(2)~~Item 3. ~~Represents~~Quantitative aand ~~per~~Qualitative ~~share~~Disclosures ~~price~~about ofMarket ~~$34.36, plus commissions.~~Risk

~~The~~ There ~~10b5-1~~has ~~plan,~~been ~~pursuant~~no tomaterial ~~which~~change wein ~~were~~the ~~repurchasing~~qualitative or quantitative disclosures regarding our market ~~common~~risk. ~~shares~~For indetailed information about the qualitative and quantitative disclosures of our market risk, ~~was~~see ~~terminated~~Item 7A onin ~~April~~our ~~29,~~2006 ~~2005~~Form 10-K.

Item 4. ~~Submission~~Controls ofand ~~Matters to a Vote of Security Holders~~Procedures

~~None~~Disclosure Controls and Procedures

35 An evaluation was carried out under the supervision and with the participation of management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934). Based on their evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective, to the best of their knowledge, as of March 31, 2007.

~~SIGNATURES~~Changes in Internal Controls over Financial Reporting

~~Pursuant~~ There tohas ~~the~~been ~~requirements~~no ofchange ~~the~~to ~~Securities~~our ~~Exchange~~internal ~~Act~~control ofover ~~1934,~~financial reporting during the ~~registrant~~quarter ended ~~has~~March 31, ~~duly~~2007 ~~caused~~that ~~this~~has ~~report~~materially toaffected beor ~~signed~~is onreasonably ~~its~~likely ~~behalf~~to bymaterially ~~the~~affect ~~undersigned~~our internal ~~thereunto~~control ~~duly~~over ~~authorized~~financial reporting.

~~ARCHSTONE-SMITH TRUST~~33

BY: /s/Table R.of SCOT SELLERSContents

R.PART ~~Scot~~II ~~Sellers~~– OTHER INFORMATION

~~Chairman~~Item 1. ~~and~~Legal Proceedings

~~Chief~~ We ~~Executive~~are ~~Officer~~party to various claims and routine litigation arising in the ordinary course of business. We do not believe that the results of any such claims and litigation, individually or in the aggregate, will have a material adverse effect on our business, financial position or results of operations. See Note 12 to the financial statements included in this report.

~~BY: /s/ CHARLES E~~Item 1A. ~~MUELLER,~~Risk ~~JR.~~Factors

~~Charles~~ See E.the ~~Mueller~~factors discussed in Part 1, Jr“Item 1A. Risk Factors” in our 2006 Form 10-K.

~~Chief~~Item 2. ~~Financial~~Unregistered ~~Officer~~Sales of Equity Securities and Use of Proceeds

There were no repurchases of our Common Shares during the three months ended March 31, 2007. The maximum approximate dollar value that may yet be purchased pursuant to authorization of the Board of Trustees is $132.1 million. During the three months ended March 31, 2007, we issued a total of 2,052,018 Common Shares upon the redemption of 2,052,018 Class A-1 Common Units of the Operating Trust. Certain of the Common Shares were issued in reliance upon the exemption provided by Section 4(~~Principal~~2) ~~Financial~~of ~~Officer~~the Securities Act of 1933. Each ASOT Class A-1 Common Unit of the Operating Trust may be redeemed at the option of the unitholder. We have the option of delivering cash (equal to the value of a Common Share) or one Common Share for each Class A-1 Common Unit redeemed.

~~BY: /s/~~Item 3. ~~MARK~~Defaults A.Upon ~~SCHUMACHER~~Senior Securities

~~Mark A~~ None. ~~Schumacher~~

~~Senior~~Item 4. ~~Vice-President~~Submission ~~and~~of ~~Chief~~Matters ~~Accounting~~to ~~Officer~~a Vote of Security Holders

~~(Principal Accounting Officer)~~ None.

~~Date: August~~ Item 5,. ~~2005~~Other Information

36 No other information is required to be disclosed for the period ended March 31, 2007 that has not been disclosed in a report on Form 8-K. There has been no change to the procedures by which security holders may recommend nominees to our Board of Trustees.

Item 6. Exhibits

~~(a)~~ See Exhibits:.

~~12.1 Computation of Ratio of Earnings to Fixed Charges~~34

12.2Table Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Share DividendsContents

~~15.1 Independent Registered Public Accounting Firm Awareness Letter~~SIGNATURES

~~31.1~~ Pursuant ~~Certification~~to the requirements of ~~Chief~~the ~~Executive~~Securities ~~Officer~~Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

31ARCHSTONE-SMITH TRUST BY: /s/ R.2 ~~Certification~~SCOT ofSELLERS R. Scot Sellers Chairman and Chief Executive Officer BY: /s/ CHARLES E. MUELLER, JR. Charles E. Mueller, Jr. Chief Financial Officer (Principal Financial Officer) BY: /s/ MARK A. SCHUMACHER Mark A. Schumacher Senior Vice President and Chief Accounting Officer (Principal Accounting Officer)

~~32.1~~Date: ~~Certification~~May 9, ~~of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002~~2007

~~32.2 Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002~~35

37Table of Contents

~~EXHIBIT 12~~Item 6.1 Exhibits

ARCHSTONE-SMITH TRUST


3.1		Amended and Restated Declaration of Trust of Archstone-Smith Trust (incorporated by reference to Exhibit 3.1 to Archstone-Smith Trust’s Current Report of Form 8-K filed with the SEC on June 2, 2006)

3.3		Restated Bylaws of Archstone-Smith Trust (incorporated by reference to Exhibit 3.2 to the Archstone-Smith Trust’s Current Report on Form 8-K filed with the SEC on June 2, 2006)

10.1		Amended and Restated Declaration of Trust of Archstone-Smith Operating Trust (incorporated by reference to Exhibit 4.1 to the Archstone-Smith Trust’s Current Report on Form 8-K filed with the SEC on June 2, 2006)

10.2		Bylaws of Archstone-Smith Operating Trust (incorporated by reference to Exhibit 4.2 to the Archstone-Smith Trust’s Current Report on Form 8-K filed with the SEC on June 2, 2006)

10.3		Form of Performance Unit Agreement to be used in connection with the Special Long Term Incentive Program

12.1		Computation of Ratio of Earnings to Fixed Charges

12.2		Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Share Dividends

15.1		Independent Registered Public Accounting Firm Awareness Letter

31.1		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1		Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2		Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

~~COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES~~36

(Dollar amounts in thousands)

(Unaudited)

	Six Months Ended June 30,		Twelve Months Ended December 31,
	2005 (1)	2004 (1)	2004 (1)	2003 (1)	2002 (1)	2001 (1)	2000 (1)
Earnings from operations	$ 38,774	$ 70,028	$ 122,577	$ 122,050	$ 126,934	$ 105,659	$ 118,075
Add:
Interest expense	93,826	74,265	160,244	137,449	138,993	71,950	92,353
Earnings as adjusted	$ 132,600	$ 144,293	$ 282,821	$ 259,499	$ 265,927	$ 177,609	$ 210,428
Fixed charges:
Interest expense	$ 93,826	$ 74,265	$ 160,244	$ 137,449	$ 138,993	$ 71,950	$ 92,353
Capitalized interest	17,482	11,347	23,572	26,854	32,377	29,186	37,079
Total fixed charges	$ 111,308	$ 85,612	$ 183,816	$ 164,303	$ 171,370	$ 101,136	$ 129,432
Ratio of earnings to fixed charges	1.2	1.7	1.5	1.6	1.6	1.8	1.6

(1) Net earnings from discontinued operations have been reclassified for all periods presented.

EXHIBIT 12.2

ARCHSTONE-SMITH TRUST

COMPUTATION OF RATIO OF EARNINGS TO COMBINED FIXED CHARGES

AND PREFERRED SHARE DIVIDENDS

(Dollar amounts in thousands)

(Unaudited)

	Six Months Ended June 30,		Twelve Months Ended December 31,
	2005 (1)	2004 (1)	2004 (1)	2003 (1)	2002 (1)	2001 (1)	2000 (1)
Earnings from operations	$ 38,774	$ 70,028	$ 122,577	$ 122,050	$ 126,934	$ 105,659	$ 118,075
Add:
Interest expense	93,826	74,265	160,244	137,449	138,993	71,950	92,353
Earnings as adjusted	$ 132,600	$ 144,293	$ 282,821	$ 259,499	$ 265,927	$ 177,609	$ 210,428
Combined fixed charges and Preferred Share dividends:
Interest expense	$ 93,826	$ 74,265	$ 160,244	$ 137,449	$ 138,993	$ 71,950	$ 92,353
Capitalized interest	17,482	11,347	23,572	26,854	32,377	29,186	37,079
Total fixed charges	111,308	85,612	183,816	164,303	171,370	101,136	129,432
Preferred Share dividends	1,915	6,274	10,892	20,997	32,185	25,877	25,340
Combined fixed charges and Preferred Share dividends	$ 113,223	$ 91,886	$ 194,708	$ 185,300	$ 203,555	$ 127,013	$ 154,772
Ratio of earnings to combined fixed charges and Preferred Share dividends	1.2	1.6	1.5	1.4	1.3	1.4	1.4

(1) Net earnings from discontinued operations have been reclassified for all periods presented.

EXHIBIT 15.1

The Board of Trustees

Archstone-Smith Trust:

Re: Registration Statements Nos. 333-114358 (Form S-3), 333-114632 (Form S-3), 333-114770 (Form S-3), 333-72550 (Form S-8), 333-72506 (Form S-8), 333-60817-99 (Form S-8), 333-60815-99 (Form S-8), 333-31033-99 (Form S-8), 333-31031-99 (Form S-8), 333-43723-99 (Form S-8), 333-89160 (Form S-3), and 333-124162 (Form S-3).

With respect to the subject registration statements, we acknowledge our awareness of the use therein of our report dated August 5, 2005, related to our review of interim financial information.

Pursuant to Rule 436 under the Securities Act of 1933 (the Act), such report is not considered a part of a registration statement prepared or certified by an accountant, or a report prepared or certified by an accountant within the meaning of Sections 7 and 11 of the Act.

/s/ KPMG LLP

Denver, Colorado

August 5, 2005

EXHIBIT 31.1

CERTIFICATIONS

I, R. Scot Sellers, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Archstone-Smith Trust (the “registrant”).

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of trustees (or persons performing the equivalent function);

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial data; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

BY: /s/ R. SCOT SELLERS

R. Scot Sellers

Chairman and

Chief Executive Officer

Date: August 5, 2005

EXHIBIT 31.2

CERTIFICATIONS

I, Charles E. Mueller, Jr., certify that:

1. I have reviewed this quarterly report on Form 10-Q of Archstone-Smith Trust (the “registrant”).

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

BY: /s/ CHARLES E. MUELLER, JR.

Charles E. Mueller, Jr.

Chief Financial Officer

(Principal Financial Officer)

Date: August 5, 2005

EXHIBIT 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

The undersigned, being the Chief Executive Officer of Archstone-Smith Trust, a Maryland real estate investment trust (the “Issuer”), hereby certifies that the Quarterly Report on Form 10-Q (the “Periodic Report”) of the Issuer for the quarter ended June 30, 2005 which accompanies this certification, fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 (15 U.S.C. §78m(a)) and that the information contained in the Periodic Report fairly presents, in all material respects, the financial condition and results of operations of the Issuer.

Date: August 5, 2005

/s/ R. SCOT SELLERS

R. Scot Sellers, Chairman and Chief Executive Officer

EXHIBIT 32.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

The undersigned, being the Chief Financial Officer of Archstone-Smith Trust, a Maryland real estate investment trust (the “Issuer”), hereby certifies, that the Quarterly Report on Form 10-Q (the “Periodic Report”) of the Issuer for the quarter ended June 30, 2005 which accompanies this certification, fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 (15 U.S.C. §78m(a)) and that the information contained in the Periodic Report fairly presents, in all material respects, the financial condition and results of operations of the Issuer.

Date: August 5, 2005

/s/ CHARLES E. MUELLER, JR.

Charles E. Mueller, Jr., Chief Financial Officer

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