MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Total property revenues for the year ended December 31, 2003 increased 1.6% as compared to 2002, but remained  constant at $729 on a per apartment home per month basis. Total property revenues from our same store properties  decreased 1.0%, from $354.2 million for 2002 to $350.6 million for 2003, which represents a decrease of $7 on a per apartment home per month basis. For same store properties, rental rates on a per apartment home per month basis  increased $12 from 2002 to 2003, and vacancy loss decreased $5 per apartment home over the same period. These increases in revenues were offset by increases in concessions granted which increased $27 per apartment home per  month from 2002 to 2003. One of our primary objectives in 2003 was to increase occupancy rates at our same store properties, which began the year at approximately 90.9% occupied and rose to approximately 94.5% occupied at December 31, 2003. Related to this increase, concessions granted during 2003 at our same store properties increased  approximately $15.0 million from 2002. Property revenues from our non-same store, development and lease-up properties increased from $24.7 million for  2002 to $42.5 million for 2003 due to the completion and stabilization of properties in our development pipeline. The  decrease in property revenues from 2002 to 2003 attributable to the disposition of two properties, which we continued  to manage, was $8.2 million. Fee and asset management revenues during the year ended December 31, 2003 increased $1.0 million over 2002. This  increase was due primarily to fees earned on third-party construction and development projects. Other revenues for  the year ended December 31, 2003 decreased $2.5 million from 2002. Other revenues for the year ended December 31,  2002 included $5.3 million of interest income from our third-party development program. This program was completed  in 2002. Other revenues for 2003 included approximately $3.9 million of interest income related to our mezzanine  financing program, which we began in the third quarter of 2002. Interest income from this program totaled $0.4 million  during the year ended December 31, 2002. Total property expenses for the year ended December 31, 2003 increased $12.6 million, or 8.6%, as compared to 2002,  and increased from $3,305 to $3,533 on an annualized per apartment home basis. Total property expenses from our  same store properties increased 5.6%, from $133.9 million for 2002 to $141.3 million for 2003, which represents an  increase of $181 on an annualized per apartment home basis. The increase in same store property expenses per  apartment home was due primarily to increases in property insurance premiums, salary expenses, repair and main- tenance expenses and slight increases in all other expense categories. Property expenses from our non-same store,  development and lease-up properties increased from $9.6 million for 2002 to $17.2 million for 2003. The increase in  operating expenses during 2003 from our non-same store, development and lease-up properties was consistent with  the growth in revenues during the same period. The decrease in property expenses from 2002 to 2003 attributable to  property dispositions was $2.4 million. Property management expense, which represents regional supervision and accounting costs related to property operations, increased from $10.0 million for the year ended December 31, 2002 to $10.2 million for the year ended  December 31, 2003. This increase was due primarily to increases in salary and benefi t expenses. Fee and asset management expense, which represents expenses related to third-party construction projects and property management for third parties, increased from $2.5 million for the year ended December 31, 2002 to $3.9 million for the year ended December 31, 2003. This increase was due primarily to increased costs associated with our third-party construction division, including cost overruns on fixed fee projects that totaled $2.0 million for 2003. See further discussion of our third-party construction in our “Business” section. General and administrative expenses increased $1.8 million from $14.4 million in 2002 to $16.2 million in 2003, and increased as a percent of revenues from 3.6% to 4.0%. The increase was due primarily to increases in salary and benefit expenses, costs associated with pursuing potential transactions that were not consummated and increases in public company related costs. transforming camden 63