America First Apartment Investors, Inc. and America First Real Estate Investment Partners, L.P. Announce Approval of Plans to Merge.

Business Editors

OMAHA, Neb.--(BUSINESS WIRE)--May 26, 2004

America First Apartment Investors, Inc. (Nasdaq:APRO) and America First Real Estate Investment Partners, L.P. (Nasdaq:AFREZ) announced today that the Merger Agreement under which AFREZ will merge with and into APRO has been approved by the holders of (i) a majority of the issued and outstanding shares of APRO's common stock and (ii) a majority of the issued and outstanding Beneficial Unit Certificates (BUCs) of AFREZ. The merger will be effective June 3, 2004, with the last trading day for AFREZ BUCs being June 2, 2004.

The Merger Agreement provides that the limited partners of AFREZ will receive 0.7910 shares of APRO common stock for each BUC they hold on the effective date of the merger and a one-time cash distribution of $0.39 per BUC. Based on the closing sale price of APRO common stock of $10.35 on May 25, 2004, the dollar value of the aggregate merger consideration will be approximately $58.3 million or $8.58 per BUC.

As a result of the merger, APRO will own and operate 29 multifamily apartment complexes comprising approximately 6,100 rental units. After the merger, APRO intends to continue to pursue its business plan of acquiring additional multifamily apartment properties and other residential real estate investments. The board of directors of APRO expects to continue to pay dividends quarterly at the annual rate of $1.00 per share after the merger and has approved the payment of the second quarter dividend of $0.25 per share on July 30, 2004, for shareholders of record on June 30, 2004.

The terms of the Merger Agreement were negotiated on behalf each company by special committees consisting solely of independent directors of APRO and independent managers of the general partner of AFREZ. The special committee representing APRO was advised by Friedman, Billings, Ramsey & Co., Inc. The special committee representing AFREZ was advised by Houlihan Lokey Howard & Zukin. Friedman, Billings, Ramsey & Co., Inc. has rendered an opinion to the effect that the transaction is fair, from a financial point of view, to APRO and its stockholders. Houlihan Lokey Howard & Zukin has rendered an opinion to the effect that the transaction is fair, from a financial point of view, to AFREZ and its BUC holders.

Information contained in this Press Release contains "forward-looking statements" relating to, without limitation, future performance, plans and objectives of management for future operations and projections of revenue and other financial items, which can be identified by the use of forward-looking terminology such as "may," "will," "should," "expect," "anticipate," "estimate" or "continue" or the negative thereof or other variations thereon or comparable terminology. Several factors with respect to such forward-looking statements, including certain risks and uncertainties, could cause actual results to differ materially from those in such forward-looking statements.