Construction has begun on the project on Milwaukee Avenue, north of the Hawthorn shopping center and surrounded by the Cuneo Gardens. First occupancy is expected late next summer, with completion scheduled for early in 2005.

AMLI at Museum Gardens is the REIT's only development project this year. Along with the $82.2-million AMLI at Seven Bridges, development activity in the Chicago market surpasses the $114.3-million cost of three projects continuing in Atlanta, Austin and Indianapolis, according to the company's most recent report.

CFO Robert Chapman says returns from the projects under development will likely be one percentage point below expectations, to about 8.5% to 9.5%. The yield on the AMLI at Museum Gardens is likely to be less than 9%, adds AMLI Residential president Allan J. Sweet. However, that is better than what the REIT could achieve on buying multifamily projects, Chapman adds.

AMLI Residential needs to raise $22 million to fund all of its development projects, Chapman says, but expects to do that by tapping its credit line or selling assets. Although multifamily communities in other markets are for sale, none of the AMLI Residential's eight developments are being marketed, according to company officials.

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