MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Total property revenues for the year ended December 31, 2004 increased $16.5 million over 2003, and increased from  $729 to $748 on a per apartment home per month basis. Total property revenues from our same store properties  increased 0.9%, from $376.0 million for 2003 to $379.4 million for 2004, which represents an increase 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 $20 from 2003 to 2004, and vacancy loss decreased $9 per apartment home over the same period. These  increases in revenues were partially offset by increases in concessions granted of $23 per apartment home per month  from 2003 to 2004. Property revenues from our non-same store, development and lease-up properties increased from $17.0 million for  2003 to $30.1 million for 2004 due to the completion and lease-up of properties in our development pipeline.  Fee and asset management revenues during the year ended December 31, 2004 increased $1.9 million over 2003. This  increase was primarily due to construction and development fees earned on third-party projects and fees earned on  our mezzanine fi nancing program. Other revenues for the year ended December 31, 2004 increased $6.3 million from 2003. Other revenues for the year  ended December 31, 2004 included interest income of $9.3 million from our mezzanine financing program, $1.7 million  related to an insurance settlement for lost rents related to a fire at one of our communities in 2000, and $0.9 million associated with the sale of an e-commerce investment that had previously been written off. Other revenues for 2003 included interest income of $3.9 million from our mezzanine financing program and $1.2 million in revenues from townhome sales. Total property expenses for the year ended December 31, 2004 increased $9.8 million, or 6.2%, as compared to 2003,  and increased from $3,533 to $3,695 on an annualized per apartment home basis. Total property expenses from our  same store properties increased 3.2%, from $151.4 million for 2003 to $156.3 million for 2004, which represents an  increase of $112 on an annualized per apartment home basis. The increase in same store property expenses per  apartment home is primarily due to a 15.4% increase in property insurance expense and a 5.2% increase in salary and  benefit costs, combined with slight increases in all other expense categories. Property expenses from our non-same  store, development and lease-up properties increased from $7.0 million for 2003 to $12.0 million for 2004, which is  consistent with the growth in revenues during the same period.  Property management expense, which represents regional supervision and accounting costs related to property operations, increased from $10.2 million for the year ended December 31, 2003 to $11.9 million for the year ended  December 31, 2004. This increase was primarily due to increases in salary and benefit expenses related to the addition  of regional supervision personnel, and increases in incentive compensation expense. Fee and asset management expense, which represents expenses related to third-party construction projects and property management for third parties, remained constant at $3.9 million for the years ended December 31, 2003 and  2004. See further discussion of our third-party construction in our “Business” section. General and administrative expenses increased $2.3 million from $16.2 million in 2003 to $18.5 million in 2004, and increased as a percent of revenues from 4.0% to 4.3%. The increase in expense was primarily due to increases in salary and benefit expenses including expenses associated with share-based compensation, and costs associated with Sarbanes-Oxley compliance. Gross interest cost before interest capitalized to development properties decreased $1.9 million, or 2.1%, from $90.5 million for the year ended December 31, 2003 to $88.5 million for the year ended December 31, 2004. The overall  decrease in interest expense was due to declines in the average interest rate on our outstanding debt, due to declines  in variable interest rates and savings from the refinancing of maturing debt at lower rates. This decrease was partially  offset by higher average debt balances that were incurred to fund our increase in real estate assets. Interest capitalized  decreased from $15.1 million to $9.3 million for the years ended December 31, 2003 and 2004, respectively, due to  lower average balances in our development pipeline. transforming camden 61