"We will continue to get younger rather than older," president and Co-CEO Allan J. Sweet says. "It is our intention to keep our portfolio relatively young." That means targeted dispositions of its higher quality apartment communities, but finding the targets may not be easy.

AMLI has nine properties in this market, five of them at least 10 years old. The oldest, 196-unit AMLI at Poplar Creek in northwest suburban Schaumburg, was built in 1985. Its longest-term holding is 236-unit AMLI and Windbrooke in north suburban Buffalo Grove, built in 1987 and in AMLI's portfolio since 1995. "Chicago is a little unique," Sweet said in a conference call. "Some of those assets are very, very dynamic properties. I don't think it's fair to assume they're all targets."

Sweet indicated an announcement is forthcoming on a transaction in the extremely tight--4.3% vacancy rate overall--Chicago rental market, where AMLI has 3,248 units. However, it has 7,942 units--30% of its total portfolio--in the Dallas/Fort Worth area and 5,285 in the Atlanta area.

Nine Dallas area projects are at least 10 years old, while five developments in Atlanta were built in the 1980s. However, more pressing problems are vacancy rates and expenses.

Robert S. Aisner, executive vice president and president of AMLI Management Co. says rent concessions are being offered in the Plano and North Fort Worth submarkets because of the supply of new units. "I believe at the end of this quarter, we'll see tremendous upward movement in occupancy," Aisner says.

While revenue was below the budget in Dallas, expenses were higher than expected in Atlanta, where the tax assessment on one property saw a substantial increase. Meanwhile, the company plans on opening four projects with 1,132 new units during the next 18 months.

Revenues were 8% over budget in Austin, where the company has 2,797 units in six communities and is building the 430-unit AMLI at Monterey Oaks. The REIT's strategy of going young was in evidence there in the fourth quarter, as the 18-year-old AMLI at the Arboretum and 15-year-old AMLI at Martha's Vineyard were sold in the fourth quarter. "They were good locations, and Austin is a strong market," Sweet says. "We achieved full and fair prices."

Company officials admitted their biggest miss last year was in the Kansas City market, where AMLI has 2,238 units in nine properties, and is building five new properties with 1,404 units. "The job growth has been steady," Aisner says. "The problem in Kansas City was not job growth, but supply has outstripped demand."

AMLI has four properties and 1,173 units in the Houston market, where the average vacancy rate is 10%, and is completing development of the 300-unit AMLI at King's Harbor.

AMLI reported Jan. 30 lower-than-expected funds from operations of $2.75 per share in 2000, up 6.2% from 1999, and fourth-quarter FFO of $0.68, up 1.5%. The company also announced it would buy up to 500,000 of its common shares, or about 3% of shares outstanding.

AMLI's portfolio includes 67 apartment communities containing 26,147 units. Another 2,845 units are under development or in lease-up.