NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Real estate to be disposed of is reported at the lower of its carrying amount or its estimated fair value, less its cost to  sell. Depreciation expense is not recorded during the period in which such assets are considered held for sale. The  operating results of discontinued operations related to properties held through our investments in joint ventures that  are subsequently sold will continue to be reported in “Equity in income of joint ventures”. Carrying charges, principally interest and real estate taxes, of land under development and buildings under  construction are capitalized as part of properties under development and buildings and improvements to the extent  that such charges do not cause the carrying value of the asset to exceed its net realizable value. Capitalized interest  was $9.3 million in 2004, $15.1 million in 2003 and $10.9 million in 2002. Capitalized real estate taxes were $2.2  million in 2004, $2.3 million in 2003 and $2.0 million in 2002. All operating expenses associated with completed  apartment homes for properties in the development and leasing phase are expensed. We capitalized $26.3 million and $22.3 million in 2004 and 2003, respectively, of renovation and improvement costs  which we believe extended the economic lives and enhanced the earnings of our multifamily properties. Capital  expenditures are capitalized and depreciated over their useful lives, which range from 3 to 20 years.  All initial buildings and improvements costs are depreciated over their remaining estimated useful lives of 5  to 35 years using the straight-line method. Capital improvements, including carpet, appliances and HVAC unit  replacements, subsequent to initial construction are depreciated over their expected useful lives of 3 to 20 years  using the straight-line method.  During 2004, we reviewed the estimated remaining useful lives of our operating multifamily communities. Based on  this review, adjustments were made to useful lives of six communities to align them with management’s estimates  of their economic useful life. These adjustments were based, in part, on the historical capital improvement and  renovation costs spent at these properties. The effect of the adjustment in the useful lives of the communities was a  reduction in depreciation expense of approximately $0.7 million, or $0.02 per basic and diluted share, as compared to  the amount of depreciation expense that would have been recorded had the adjustment not been made. The reduction  in depreciation expense in 2005 as a result of this change will be approximately $3.0 million, or $0.07 per basic and  diluted share. Property operating and maintenance expenses included repair and maintenance expenses totaling $29.8 million in  2004, $28.4 million in 2003 and $26.0 million in 2002. Costs recorded as repair and maintenance include all costs  which do not alter the primary use, extend the expected useful life or improve the safety or efficiency of the related  asset. Our largest repair and maintenance expenditures related to landscaping, interior painting and floor coverings. If an event or change in circumstance indicates that a potential impairment in the value of a property has occurred,  our policy is to assess any potential impairment by making a comparison of the current and projected cash flows for  such property over its remaining holding period, on an undiscounted basis, to the carrying amount of the property. If  such carrying amounts were in excess of the estimated projected cash flows of the property, we would recognize an  impairment loss equivalent to an amount required to adjust the carrying amount to its estimated fair value, less costs  to sell. During 2004, 2.4 acres of undeveloped land held in Dallas was classified as held for sale, upon the commencement  of a plan to dispose of the asset. In connection with our decision to dispose of the asset, we incurred an impairment  charge of $1.1 million to write-down the carrying value of the land to its fair value, less costs to sell. The net fair value  expected to be received is estimated to be $1.8 million. Other Assets, Net Other assets in our consolidated financial statements include investments under deferred compensation plans,  deferred financing costs, non-real estate leasehold improvements and equipment, prepaid expenses and other  miscellaneous receivables. Investments under deferred compensation plans are held as trading securities and are  adjusted to fair market value at period end. See further discussion of our investments under deferred compensation  plans at Note 10. Deferred financing costs are amortized over the terms of the related debt on the straight-line  transforming camden 75