8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of report (Date of earliest event reported):
May 4, 2011

Steadfast Income REIT, Inc.

(Exact Name of Registrant as Specified in Charter)

Maryland
(State or Other Jurisdiction
of Incorporation) 333-160748
(Commission File Number) 27-0351641
(IRS Employer
Identification No.)

18100 Von Karman Avenue, Suite 500
Irvine, California 92612

(Address of Principal Executive Offices, including Zip Code)

Registrant’s telephone number, including area code: (949) 852-0700

Not applicable

(Former Name or Former Address, if Changed Since Last Report)

     Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2.):

o     Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o     Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o     Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o     Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

TABLE OF CONTENTS

	Item 1.01 Entry into a Material Definitive Agreement.
	Item 2.01 Completion of Acquisition or Disposition of Assets.
	Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet                 Arrangement of a Registrant.
	Item 7.01 Regulation FD Disclosure.
	Item 9.01 Financial Statements and Exhibits.
SIGNATURES
EXHIBIT INDEX
EX-10.1
EX-10.2
EX-10.3
EX-10.4
EX-10.5
EX-10.6
EX-10.7
EX-99.1

Item 1.01 Entry into a Material Definitive Agreement.

Property Acquisition

     The information set forth under Items 2.01 and 2.03 of this Current Report on Form 8-K is hereby incorporated by reference into this Item 1.01.

Item 2.01 Completion of Acquisition or Disposition of Assets.

Property Acquisition

     On May 5, 2011 (the “Closing Date”), Steadfast Income REIT, Inc. (the “Company”) acquired a fee simple interest in a 130-unit multifamily residential property located at 2405 Arbor Pointe Drive in Louisville, Kentucky commonly known as the Arbor Pointe Apartments (the “Arbor Pointe Property”), through SIR Arbor Pointe, LLC (“SIR Arbor Pointe”), a wholly-owned subsidiary of the Company’s operating partnership. On February 16, 2011, Steadfast Asset Holdings, Inc. (“Steadfast Holdings”), an affiliate of the Company’s sponsor, entered into a Real Estate Purchase and Sale Agreement for the purchase of Arbor Pointe Property (the “Purchase Agreement”) with Arbor Pointe, L.P., an unaffiliated third party (the “Seller”). On the Closing Date, Steadfast Holdings assigned the Purchase Agreement to SIR Arbor Pointe.

     SIR Arbor Pointe acquired the Arbor Pointe Property for an aggregate purchase price of $6,500,000, exclusive of closing costs. SIR Arbor Pointe financed the payment of the purchase price for the Arbor Pointe Property with a combination of (1) proceeds from the Company’s public offering and (2) a loan in the aggregate principal amount of $5,200,000 from PNC Bank, National Association (the “Lender”) pursuant to the requirements of the Fannie Mae DUS Supplement Loan Program and evidenced by a promissory note dated May 4, 2011 (“Arbor Pointe Note”). For additional information on the terms of the Arbor Pointe Note, see Item 2.03 below.

     An acquisition fee of approximately $135,000 was earned by the Company’s advisor in connection with the acquisition of the Arbor Pointe Property, which acquisition fee is expected to be paid to the Company’s advisor subject to the terms of the advisory agreement between the Company, the Company’s advisor and the Company’s operating partnership.

     The Arbor Pointe Property was constructed in 1995 and consists of 60 two-bedroom, garden style apartments and 70 three-bedroom townhouses. The apartment units at the Arbor Pointe Property average approximately 1,150 square feet and each apartment unit includes two bathrooms, central heat and air conditioning, a full set of kitchen appliances, washer and dryer connections and private patios or balconies. Common area amenities at the Arbor Pointe Property include an on-site management office, swimming pool, playground and community room. The Arbor Pointe Property is located in the Hurstbourne Acres submarket of downtown Louisville, Kentucky, which enjoys convenient access to employment centers, large national retailers, several institutions of higher learning and Louisville’s downtown medical research campus. The Arbor Pointe Property operates under the Low Income Housing Tax Credit (LIHTC) program, which requires that 100% of the units at the Arbor Pointe Property be rented to tenants earning no more than 60% of the area’s median income. As of April 28, 2011, the Arbor Pointe Property was approximately 97% occupied.

     The material terms of the agreements related to the acquisition of Arbor Pointe Property described herein are qualified in their entirety by the agreements attached as Exhibits 10.1 through 10.3 to this Current Report on Form 8-K and incorporated herein by reference.

Management of Property

     On the Closing Date, SIR Arbor Pointe and Steadfast Management Co., Inc. (the “Property Manager”), an affiliate of the Company’s sponsor, entered into a Property Management Agreement (the “Management Agreement”), pursuant to which the Property Manager will serve as the exclusive leasing agent and manager of the Arbor Pointe Property. Pursuant to the Management Agreement, SIR Arbor Pointe will pay the Property Manager a monthly management fee in an amount equal to 3.5% of the Arbor Pointe Property’s gross collections (as defined in the Management Agreement) for each month. The Management Agreement has an initial one year term and will continue thereafter on a month-to-month

basis unless either party gives thirty (30) days’ prior notice of its desire to terminate the Management Agreement; provided, that SIR Arbor Pointe may terminate the Management Agreement at any time without cause upon thirty (30) days’ prior written notice to the Property Manager and upon five (5) days’ prior written notice to the Property Manager in the event of the gross negligence, willful misconduct or bad acts of the Property Manager or any of the Property Manager’s employees.

     The material terms of the Management Agreement described herein are qualified in their entirety by the Management Agreement, a copy of which is attached as Exhibit 10.4 to this Current Report on Form 8-K and incorporated herein by reference.

Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

Arbor Pointe Note

     In connection with the acquisition of the Arbor Pointe Property, SIR Arbor Pointe borrowed $5,200,000 from Lender pursuant to the Arbor Pointe Note. The Arbor Pointe Note has an 84 month term with a maturity date of June 1, 2018 (the “Maturity Date”), and payments under the Arbor Pointe Note are based upon a 30 year amortization schedule. SIR Arbor Pointe paid a loan origination fee of $52,000 to the Lender in connection with the Arbor Pointe Note.

     Interest on the outstanding principal balance of the Arbor Pointe Note will accrue at a rate of 4.86% per annum (the “Interest Rate”), and a monthly payment of principal and interest in the amount of $27,472 will be due and payable on the first day of each month, commencing June 1, 2011, until the Maturity Date. The entire outstanding principal balance of the Arbor Pointe Note, plus any accrued and unpaid interest thereon, is due and payable in full on the Maturity Date. So long as any monthly payment or any other amount due under the Arbor Pointe Note remains past due for 30 days or more, interest will accrue on the unpaid principal balance of the Arbor Pointe Note at a rate equal to the lesser of (1) the Interest Rate plus 4.0% or (2) the maximum interest rate which may be collected by the Lender under applicable law. So long as any payment due under the Arbor Pointe Note is not received by the Lender within ten days after such payment is due, SIR Arbor Pointe will pay to the Lender, immediately and without demand by the Lender, a late charge equal to 5.0% of the amount of the payment due. SIR Arbor Pointe may voluntarily prepay all, but not less than all, of the unpaid principal balance of the Arbor Pointe Note and all accrued interest thereon and other sums due to the Lender under the Arbor Pointe Note on the last day of any calendar month during the term of the Arbor Pointe Note, provided that SIR Arbor Pointe must provide the Lender with at least thirty (30) days and not more than sixty (60) days prior written notice of such prepayment. SIR Arbor Pointe must also pay a prepayment fee to the Lender, calculated in accordance with the terms of the Arbor Pointe Note, in connection with any voluntary prepayment of the Arbor Pointe Note, provided that no prepayment fee will be payable in connection with any prepayment of the Arbor Pointe Note made during the three calendar months prior to the Maturity Date.

     The performance of the obligations of SIR Arbor Pointe under the Arbor Pointe Note is secured by (1) a Multifamily Mortgage, Assignment of Rents and Security Agreement by and between SIR Arbor Pointe and Lender with respect to the Arbor Pointe Property (the “Multifamily Mortgage”) and (2) an assignment of the Management Agreement by SIR Arbor Pointe and the Property Manager for the benefit of the Lender (the “Management Agreement Assignment”). Pursuant to the Management Agreement Assignment, SIR Arbor Pointe may not transfer the management responsibilities with respect to Arbor Pointe Property to any other property manager or terminate or amend the Management Agreement without the Lender’s prior written consent, and upon any event of default under the Arbor Pointe Note or the Multifamily Mortgage, Lender may terminate the Management Agreement without cause upon prior written notice to the Property Manager.

     SIR Arbor Pointe will have no personal liability under the Arbor Pointe Note or any other loan document for the repayment of the principal and interest and any other amounts due under the Arbor Pointe Note or any other loan document (“Indebtedness”) or for the performance of any other obligations under the Arbor Pointe Note or any other loan documents; provided, however, that SIR Arbor Pointe will be personally liable to the Lender for the repayment of a portion of the Indebtedness equal to any loss or damage suffered by Lender as a result of, among other events, (1) failure of SIR Arbor Pointe to pay to Lender upon demand after an event of default all rents and security deposits to which Lender is entitled under the Multifamily Mortgage, (2) failure of SIR Arbor Pointe to apply all insurance proceeds and

condemnation proceeds as required by the Multifamily Mortgage, (3) fraud or written material misrepresentation by SIR Arbor Pointe or any officer, director, partner, member or employee of SIR Arbor Pointe in connection with the Indebtedness or any request for any action or consent by Lender, (4) waste or abandonment of the Arbor Pointe Property, (5) SIR Arbor Pointe’s acquisition of any real property other than the Arbor Pointe Property or operation of any business other than the management of the Arbor Pointe Property, (6) certain prohibited transfers of ownership interests in SIR Arbor Pointe or the Arbor Pointe Property under the Multifamily Mortgage, and (7) certain bankruptcy and insolvency events with respect to SIR Arbor Pointe.

     In connection with the Arbor Pointe Note, the Company absolutely, unconditionally and irrevocably guaranteed to the Lender the full and prompt payment when due of all amounts for which SIR Arbor Pointe is personally liable under the Arbor Pointe Note, as described above.

     In connection with the Arbor Point Note, SIR Arbor Pointe deposited the sum of $144,889 (the “Deposit”), with the Lender. Upon SIR Arbor Pointe’s request, the Lender will disburse the Deposit to SIR Arbor Pointe in order to reimburse SIR Arbor Pointe for the cost of certain required repairs and upgrades to the Arbor Pointe Property to be completed over the next twelve months, including but not limited to parking lot repairs, landscaping, roof repairs, balcony and deck repairs, drainage improvements, siding repairs and partial door replacements.

     The material terms of the Arbor Pointe Note and the other agreements described herein are subject to and qualified in their entirety by the agreements attached hereto as Exhibits 10.5 through 10.7 to this Current Report on Form 8-K and incorporated herein by reference.

Item 7.01 Regulation FD Disclosure.

     On May 9, 2011, the Company distributed a press release announcing the completion of the acquisition of the Arbor Pointe Property. The full text of the press release is attached as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated by reference into this Item 7.01.

     The information furnished under Item 7.01 of this Current Report on Form 8-K, including Exhibit 99.1, shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section.

Item 9.01 Financial Statements and Exhibits.

(a) Financial Statements of Businesses Acquired.

     Because it is impracticable to provide the required financial statements for the acquisition of the real property described above at the time of this filing, and no financial statements (audited or unaudited) are available at this time, the Company hereby confirms that the required financial statements will be filed as an amendment to this Current Report on Form 8-K no later than 71 days after the deadline for filing this Current Report on Form 8-K.

(b) Pro Forma Financial Information.

     See Paragraph (a) above.

(d) Exhibits.

Exhibit	Description
10.1	Real Estate Purchase and Sale Agreement With Escrow Instructions, dated as February 16, 2011, by and between Arbor Pointe, L.P. and Steadfast Asset Holdings, Inc.
10.2	Notice, dated April 11, 2011, from Steadfast Asset Holdings, Inc. to Arbor Pointe, L.P.
10.3	Assignment and Assumption of Purchase Agreement, dated May 5, 2011, by and between Steadfast Asset Holdings, Inc. and SIR Arbor Pointe, LLC
10.4	Property Management Agreement, dated as of May 5, 2011, by and between SIR Arbor Pointe, LLC and Steadfast Management Co., Inc.
10.5	Multifamily Note, dated May 4, 2011, by SIR Arbor Pointe, LLC in favor of PNC Bank, National Association

Exhibit	Description
	and Acknowledgement and Agreement of Key Principal to Personal Liability for Exceptions to Non-Recourse Liability by Steadfast Income REIT, Inc.
10.6	Multifamily Mortgage, Assignment of Rents and Security Agreement, dated as of May 4, 2011, by and among SIR Arbor Pointe, LLC and PNC Bank, National Association
10.7	Assignment of Management Agreement, dated as of May 4, 2011, by and among SIR Arbor Pointe, LLC, Steadfast Management Co., Inc. and PNC Bank, National Association
99.1	Press Release dated May 9, 2011

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	STEADFAST INCOME REIT, INC.
Date: May 9, 2011	By:	/s/ Rodney F. Emery
		Rodney F. Emery
		Chief Executive Officer and President

EXHIBIT INDEX

Exhibit	Description
10.1	Real Estate Purchase and Sale Agreement With Escrow Instructions, dated as February 16, 2011, by and between Arbor Pointe, L.P. and Steadfast Asset Holdings, Inc.
10.2	Notice, dated April 11, 2011, from Steadfast Asset Holdings, Inc. to Arbor Pointe, L.P.
10.3	Assignment and Assumption of Purchase Agreement, dated May 5, 2011, by and between Steadfast Asset Holdings, Inc. and SIR Arbor Pointe, LLC
10.4	Property Management Agreement, dated as of May 5, 2011, by and between SIR Arbor Pointe, LLC and Steadfast Management Co., Inc.
10.5	Multifamily Note, dated May 4, 2011, by SIR Arbor Pointe, LLC in favor of PNC Bank, National Association and Acknowledgement and Agreement of Key Principal to Personal Liability for Exceptions to Non-Recourse Liability by Steadfast Income REIT, Inc.
10.6	Multifamily Mortgage, Assignment of Rents and Security Agreement, dated as of May 4, 2011, by and among SIR Arbor Pointe, LLC and PNC Bank, National Association
10.7	Assignment of Management Agreement, dated as of May 4, 2011, by and among SIR Arbor Pointe, LLC, Steadfast Management Co., Inc. and PNC Bank, National Association
99.1	Press Release dated May 9, 2011

EX-10.1

Exhibit 10.1

REAL ESTATE PURCHASE AND SALE AGREEMENT WITH
ESCROW INSTRUCTIONS

Dated as of

February 16, 2011

By and Between

Arbor Pointe, L.P., an Ohio limited partnership,

As Seller

and

Steadfast Asset Holdings, Inc., a California corporation,

As Purchaser

regarding

Arbor Pointe Apartments

REAL ESTATE PURCHASE AND SALE AGREEMENT WITH
ESCROW INSTRUCTIONS

     THIS REAL ESTATE PURCHASE AND SALE AGREEMENT WITH ESCROW INSTRUCTIONS (“Agreement”) is dated as of February 16, 2011, and is entered into by and between Arbor Pointe, L.P., an Ohio limited partnership (“Seller”), and Steadfast Asset Holdings, Inc., a California corporation (“Purchaser”). As used herein the term “Buyer” shall mean Purchaser or its Permitted Assign (as defined in this Agreement).

RECITALS

     WHEREAS, Seller is the owner of the land and improvements, including an apartment complex commonly known as Arbor Pointe Apartments, as further described on Exhibit “A” attached hereto.

     WHEREAS, Buyer desires to purchase from Seller, and Seller desires to sell to Buyer, the Property (as defined in this Agreement), subject to the terms and conditions of this Agreement and the exhibits attached hereto.

AGREEMENT

     NOW, THEREFORE, in consideration of the covenants set forth herein and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto, intending to be legally bound, agree as follows:

     1. Definitions. When used in this Agreement and the exhibits attached hereto, the following terms shall have the following meanings unless otherwise specifically defined. The singular shall include the plural and the masculine gender shall include the feminine and the neuter unless otherwise required by the context.

     “Additional Deposit” shall have the meaning set forth in Paragraph 4 of this Agreement.

     “Additional Title Policy Charge” shall have the meaning set forth in Paragraph 11 of this Agreement.

     “Anti-Terrorism Laws” shall mean any laws related to terrorism or money laundering, including Executive Order 13224 and the USA Patriot Act, and any regulations promulgated under either of them.

     “Broker” shall mean Marcus & Millichap, National Tax Credit Property Advisors.

     “Buyer’s Title Notice” shall have the meaning set forth in Paragraph 8(a) of this Agreement.

     “Cash Equivalent” shall mean a wire transfer of funds or other good and immediately available funds.

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     “Closing” shall have the meaning set forth in Paragraph 18 of this Agreement.

     “Closing Date” shall mean the date of the Closing.

     “Code” shall mean the Internal Revenue Code of 1986, as amended.

     “Contingency Expiration Date” shall mean the date which is thirty (30) days after the date of this Agreement, or such earlier date as may be specified by Buyer by delivering written notice thereof to Seller and Escrow Agent.

     “County” shall mean the County in which the Real Property is located.

     “Deposit” shall mean, to the extent deposited with Escrow Agent, the Initial Deposit and the Additional Deposit.

     “Endorsements” shall have the meaning set forth in Paragraph 11 of this Agreement.

     “Escrow Agent” shall mean Chicago Title Insurance Company.

     “Extended Coverage Title Policy” shall have the meaning set forth in Paragraph 11 of this Agreement.

     “Funds” shall mean all escrows, reserves, funds, letters of credit, bonds, security deposits or other funds deposited by Seller with respect to the Property, including, without limitation, (a) any utility deposits and (b) any such funds deposited with respect to any existing mortgage on the Property.

     “General Assignment” shall mean a General Assignment and Bill of Sale in the form of Exhibit “E” attached hereto.

     “Hazardous Materials” shall have the meaning set forth in Paragraph 17(d) of this Agreement.

     “Housing Authority” shall mean the Kentucky Housing Corporation, the relevant tax credit allocation agency and any other federal, state or local agency with jurisdiction or other rights or authority over the Property or the Tax Credits related thereto.

     “Improvements” shall mean the apartment complex and all other buildings, structures and improvements located upon the Real Property.

     “Initial Deposit” shall have the meaning set forth in Paragraph 4 of this Agreement.

     “Intangibles” shall mean, to the extent assignable by and in the possession or control of Seller: (i) any and all permits, licenses, certificates of occupancy and the like relating to the Property; (ii) any and all bonds, warranties, and guaranties relating to the Property; (iii) any and

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all third party site plans, surveys, environment, soil and substrata studies or assessments, plans and specifications, engineering plans and drawings, landscaping plans or other plans, diagrams or studies of any kind relating to the Property; (iv) books and records relating to the Tenants; (v) the name “Arbor Pointe Apartments”; (vi) the telephone numbers, fax numbers and email addresses for the Property; and (vii) any and all goodwill or other intangible property directly relating to the Property.

     “Lease Assignment” shall mean an Assignment and Assumption of Leases in the form of Exhibit “D” attached hereto.

     “Limited Partner Consent” shall mean the prior written consent of SHF.

     “Non-Delinquent Rents” shall mean rents that are equal to or less than thirty (30) days past due as of the Closing Date.

     “Opening of Escrow” shall mean the date both (i) a fully executed copy of this Agreement and (ii) the Initial Deposit have been delivered to Escrow Agent.

     “Outside Closing Date” shall have the meaning set forth in Paragraph 18 of this Agreement.

     “Permitted Assign” shall mean any subsidiary or affiliate of Purchaser in which Purchaser directly or indirectly is under common control with the managing member or general partner of such subsidiary or affiliate assignee and in which Purchaser directly or indirectly is under common with the individual or entity that controls the day-to-day management of the Property, or, with the prior written consent of Seller, any other person or entity.

     “Permitted Exceptions” shall mean (i) all items and matters identified as a “Permitted Exception” in Paragraph 8(a) of this Agreement, (ii) the Tenant Leases, and (iii) all items and matters which would be shown on an ALTA survey.

     “Personal Property” shall mean the mechanical systems, fixtures, furniture, appliances, tools, supplies, inventories, furnishings, equipment and other items of tangible personal property placed or installed on or about the Real Property or the Improvements and which are owned by Seller and used as a part of or in connection with the Property, including, without limitation, all heating, ventilation and air conditioning compressors, engines, systems and equipment; any and all elevators, electrical fixtures, systems and equipment; all plumbing fixtures, systems and equipment; and all keys. Personal Property shall exclude personal property that is owned by the Tenants, former tenants or the management company, or which is leased pursuant to a Service Contract or Permitted Exception.

     “Prior Noncompliance” shall have the meaning set forth in Paragraph 23(f) of this Agreement.

     “Prohibited Person” shall mean (i) a person or entity subject to the provisions of Executive Order 13224; (ii) a person or entity owned or controlled by, or acting for or on behalf

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of, an entity subject to the provisions of Executive Order 13224; (iii) a person or entity with whom Seller or Buyer (as applicable) is prohibited from dealing by any of the Anti-Terrorism Laws; (iv) a person or entity that is named as a “specially designated national and blocked person” on the most current list published by the U.S. Treasury Department’s Office of Foreign Assets Control; or (v) a person or entity that is affiliated with a person or entity described in clauses (i) through (iv) of this definition, if an entity existing in the United States is prohibited from doing business with such affiliated person or entity.

     “Property” shall mean Seller’s right, title and interest in the Real Property, the Improvements, the Personal Property, and, to the extent assignable, the Intangibles, the Tenant Leases and those Service Contracts being assigned to and assumed by Buyer pursuant to this Agreement.

     “Property Files” shall have the meaning set forth in Paragraph 8(b) of this Agreement.

     “Purchase Price” shall mean the monetary consideration specified in Paragraph 3 of this Agreement.

     “Real Property” shall mean the certain real estate, located in the County and State, and further described on Exhibit “A” attached hereto.

     “Regulatory Agreements” shall have the meaning set forth in Paragraph 23(a) of this Agreement.

     “Rejected Exceptions” shall have the meaning set forth in Paragraph 8(a) of this Agreement.

     “Representatives” shall mean, with respect to any person or entity, the direct and indirect directors, principals, officers, partners, members, shareholders, agents, contractors, employees, lawyers, accountants, advisors, consultants, and other representatives of such person or entity, and its prospective lenders and investors.

     “Required Consents” shall mean the timely notice to, and/or the written consent or approval of, each governmental or regulatory body (including the Housing Authority), in each case pursuant to the requirements applicable thereto and in each case to the extent required for the consummation of the transactions contemplated by this Agreement and the exhibits attached hereto.

     “Seller’s Title Notice” shall have the meaning set forth in Paragraph 8(a) of this Agreement.

     “Service Contracts” shall mean all service, equipment, supply, management, maintenance, utility, listing and other operating contracts relating to the Property.

     “SHF” shall mean SunAmerica Housing Fund 103, a California limited partnership, a limited partner of Seller.

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     “Special Warranty Deed” shall mean a deed in the form of Exhibit “B” attached hereto.

     “State” shall mean the State in which the Real Property is located.

     “Survey” shall mean the new or updated survey, if any, of the Real Property and Improvements obtained by Buyer.

     “Tax Credit Laws” shall have the meaning set forth in Paragraph 23(a) of this Agreement.

     “Tax Credits” shall have the meaning set forth in Paragraph 23(a) of this Agreement.

     “Tenant Deposits” shall mean the deposits, if any, made by Tenants (including any interest accrued and unpaid thereon for the benefit of Tenants) less the amount such deposits have been charged, offset or otherwise reduced by Seller under the Tenant Leases or under applicable law.

     “Tenant Leases” shall mean the agreements affecting the Property pursuant to which Tenants are leasing, renting and/or occupying space within the Improvements.

     “Tenant Notice Letter” shall mean a Tenant Notice Letter in the form of Exhibit “F” attached hereto.

     “Tenants” shall mean the tenants of the Real Property and Improvements as of the Closing.

     “Threshold Amount” shall mean an amount equal to the product of (a) ten percent (10%) times (b) the Purchase Price.

     “Title Commitment” shall have the meaning set forth in Paragraph 8(a) of this Agreement.

     “Title Company” shall mean Chicago Title Insurance Company.

     “Title Policy” shall have the meaning set forth in Paragraph 9(a)(ii) of this Agreement.

     “Title Requirements” shall mean those requirements set forth in the Title Commitment which are to be performed or otherwise satisfied as a condition to the issuance of the Title Policy by the Title Company.

     2. Purchase and Sale. Seller hereby agrees to assign, sell and convey the Property to Buyer, and Buyer hereby agrees to purchase, accept and acquire the Property from Seller, subject to the terms and provisions of this Agreement and the exhibits attached hereto.

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     3. Price. The total Purchase Price to be paid by Buyer to Seller for the Property shall be the sum of Six Million Five Hundred Thousand Dollars ($6,500,000.00), subject to adjustments, credits and prorations as set forth in this Agreement.

     4. Payment of Purchase Price. The Purchase Price shall be payable as follows:

          (a) Initial Deposit. Within two (2) business days after execution and delivery of this Agreement by all parties hereto, Buyer shall deposit with Escrow Agent cash or Cash Equivalent in the amount of One Hundred Thousand Dollars ($100,000.00) (“Initial Deposit”).

          (b) Additional Deposit. Unless this Agreement is sooner terminated by either Buyer or Seller in accordance with the terms of this Agreement, upon the Contingency Expiration Date, Buyer shall deposit with Escrow Agent cash or Cash Equivalent in the additional amount of One Hundred Thousand Dollars ($100,000.00) (“Additional Deposit”).

          (c) Cash Balance. On or before the Closing Date, Buyer shall deposit with Escrow Agent additional cash or Cash Equivalent equal to the sum of (i) the amount of the Purchase Price minus (ii) the amount of the Deposit plus (iii) the amount of Buyer’s share of expenses plus (or minus) (iv) the amount of adjustments, credits and prorations due from (or owed to) Buyer in accordance with Paragraph 13 of this Agreement.

          (d) Interest. While held by the Escrow Agent, upon the request and at the direction of Buyer, the Deposit shall be placed in an interest-bearing account and all interest so earned in connection with the Deposit shall be deemed a part of the Deposit.

          (e) Deposit Refundability. The Initial Deposit shall remain refundable to Buyer if this Agreement is terminated in accordance with the provisions of this Agreement on or before the Contingency Expiration Date. After the Contingency Expiration Date, the entire Deposit shall be nonrefundable, unless (i) Buyer is not in default hereunder and (ii) this Agreement is terminated in accordance with the provisions of Paragraph 20(a) of this Agreement or if Buyer is expressly entitled to a refund of the Deposit pursuant to Paragraph 9(c) or any other provision of this Agreement. The Deposit shall be credited to Buyer and applied toward payment of the Purchase Price upon the Closing.

     5. Special Warranty Deed. At the Closing, Seller shall convey the Real Property and Improvements to Buyer by the Special Warranty Deed and the other documents to be delivered under this Agreement.

     6. Delivery of Agreement; Failure of the Opening of Escrow. A fully executed copy of this Agreement shall be delivered to the Escrow Agent by Seller, and this Agreement shall, thereupon, constitute escrow instructions. If the Opening of Escrow has not occurred within seven (7) days after the date of this Agreement, this Agreement shall be null and void ab initio and of no further force and effect.

     7. Operation of Property Through Closing. From the Opening of Escrow until the Closing (or earlier termination of this Agreement):

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          (a) Except as otherwise provided in this Paragraph 7, Seller shall manage and operate the Property in accordance with Seller’s current business practices. Subject to comparable coverage for renewal policies being available at commercially reasonable rates, Seller shall maintain in full force and effect insurance coverage comparable to its current insurance policies with respect to the Property.

          (b) Without the prior written consent of Buyer, Seller shall not sell, mortgage, pledge, hypothecate or otherwise transfer or dispose of all or any part of the Property or any interest therein, except in the ordinary course of business or except for such mortgages, pledges or hypothecations as shall be released at or prior to Closing. Notwithstanding the foregoing, Seller may replace depreciated Personal Property and may otherwise deal with Tenant Leases in a commercially reasonable manner.

          (c) Except as otherwise provided herein, without the prior written consent of Buyer, which consent shall not be unreasonably withheld, conditioned or delayed, Seller shall not terminate (except for those Service Contracts which Seller and Buyer have agreed in writing to terminate), modify, extend, amend or renew any Service Contract or enter into any new Service Contract, except in each case as may be reasonably necessary to protect the health or safety of individuals or the preservation of the Property or otherwise in accordance with Seller’s current business practices. All new Service Contracts must be terminable, without penalty, on not more than thirty (30) days’ notice.

          (d) From time to time Seller and Seller’s agents may (in their sole discretion or as otherwise required under this Agreement) sign certifications, notices or other documents or take other action in connection with Buyer’s financing, approval by the Housing Authority, or otherwise in connection with the transactions contemplated by this Agreement. Except with respect to Seller’s representations and warranties expressly set forth in this Agreement, Buyer hereby agrees to indemnify, defend and hold harmless Seller and its direct and indirect partners, principals and agents from and against any and all claims, demands, losses, liabilities and expenses, including attorneys’ and accountants’ fees, asserted against or incurred by Seller or its direct and indirect partners, principals, and agents in connection with such certifications, notices, or other documents or actions, except to the extent such claims, demands, losses and liabilities are caused by Seller’s or Seller’s agents’ intentional misconduct. The indemnity set forth in this Paragraph 7(d) shall survive any termination of this Agreement and shall survive Closing and the delivery of the Special Warranty Deed at Closing.

     8. Title; Property Files and Buyer’s Inspection Rights.

          (a) Title.

               (i) Commitment. Within five (5) business days after the Opening of Escrow, the Title Company shall issue and deliver to Buyer a commitment to insure the Real Property to be conveyed hereunder (“Title Commitment”, as further defined in Paragraph 8(a)(vi) of this Agreement). Title Company shall provide Buyer with copies of all recorded documents shown as exceptions to title on the Title Commitment (the “Exception Documents”).

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               (ii) Title Notices. Within five (5) business days following the receipt by Buyer of the Title Commitment and the Exception Documents, Buyer shall notify Seller in writing (the “Buyer’s Title Notice”) as to which items, if any, disclosed in the Title Commitment are not acceptable to Buyer. Within five (5) business days following Seller’s receipt of Buyer’s Title Notice, Seller (with Limited Partner Consent) shall notify Buyer (“Seller’s Title Notice”) that, with respect to each matter objected to in Buyer’s Title Notice: (A) it shall take such actions as may be reasonably necessary to eliminate such matter as an exception in the Title Commitment; or (B) it shall not take any or all of the actions identified in Buyer’s Title Notice with respect to such matter. Except to the extent Seller’s Title Notice expressly states that Seller will take an action with respect to a matter identified in Buyer’s Title Notice (or if Seller fails to deliver Seller’s Title Notice within such five (5) business day period), then Seller shall be deemed to have elected clause (B) of this Paragraph 8(a)(ii).

               (iii) Rejected Exception. As used in this Paragraph 8(a), the term “Rejected Exception” means a matter which is both: (x) expressly objected to in Buyer’s Title Notice (to the extent of such objection); and (y) expressly agreed to be eliminated in Seller’s Title Notice (to the extent of such agreement).

               (iv) Title Contingency. In the event Buyer fails to timely deliver Buyer’s Title Notice, then Buyer shall be deemed to have waived all title objections to matters shown in the Title Commitment. If Buyer has timely delivered Buyer’s Title Notice and Seller elects (or is deemed to have elected) to proceed (in whole or in part) in accordance with clause (B) of Paragraph 8(a)(ii) of this Agreement, then Buyer shall have until the Contingency Expiration Date to terminate this Agreement by delivering written notice thereof to Seller and Escrow Agent, in which case the provisions of Paragraph 9(c) of this Agreement shall govern. If Buyer shall fail to provide Seller and Escrow Agent with written notice of termination on or before the Contingency Expiration Date, then Buyer shall be deemed to have waived all of its title objections (except with respect to the Rejected Exceptions).

               (v) Title Policy. Each item and matter revealed by the Title Commitment (other than the Rejected Exceptions) shall be a “Permitted Exception” under this Agreement. At Closing, the Title Policy (as further defined in Paragraph 9(a)(ii) of this Agreement) shall be as described in the Title Commitment (but free of each Rejected Exception), subject to the provisions of this Paragraph 8(a). Buyer shall use commercially reasonable efforts to satisfy or eliminate, on or before the Closing Date, those Title Requirements to be performed or otherwise satisfied by Buyer. Seller shall use commercially reasonable efforts to satisfy or eliminate, on or before the Closing Date, those Title Requirements to be performed or otherwise satisfied by Seller. Notwithstanding anything to the contrary in this Agreement, (x) Seller shall not be required to expend any funds in connection with the Title Policy except (i) as expressly set forth in Seller’s Title Notice, and (ii) in an amount not to exceed $50,000 in the aggregate to satisfy or eliminate the other Title Requirements to be performed or otherwise satisfied by Seller and other items and matters not revealed by the Title Commitment; (y) Seller shall have no obligation to execute, perform, satisfy, incur, make or otherwise undertake any affidavit, indemnity, disclosure, certificate, or other document, action, expense or liability requested or required by the Title Company in connection with the Title Policy (including, without limitation,

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such requirements as may be set forth in the Title Commitment); and (z) Seller may satisfy the Rejected Exceptions, the Title Requirements to be performed or otherwise satisfied by Seller, and any other items and matters not revealed by the Title Commitment in any manner that will result in the Title Company issuing the Title Policy (e.g. by providing a surety bond or other collateral acceptable to the Title Company). Except as expressly required under the foregoing sentence, or as expressly set forth in Seller’s Title Notice, (A) Seller shall have no obligation to incur any expense or liability to satisfy or eliminate any Rejected Exception, Title Requirement or other item or matter not revealed by the Title Commitment, (B) no failure by Seller to satisfy or eliminate any Rejected Exception, Title Requirement or other item or matter not revealed by the Title Commitment shall constitute a breach of or default under this Agreement by Seller and Seller shall not have any liability for damages and Buyer shall have no recourse to equitable relief based on any such failure, and (C) if Seller fails to eliminate or satisfy, on or before the Closing Date, any Rejected Exception, Title Requirement or other item or matter not revealed by the Title Commitment, then Buyer shall have the sole option of either: (x) terminating this Agreement for failure to satisfy a Buyer closing condition under Paragraph 9(a) of this Agreement by delivering written notice thereof to Seller and Escrow Agent prior to Closing, in which case the Deposit shall be returned to Buyer and the other provisions of Paragraph 9(c) of this Agreement shall govern; or (y) proceeding to Closing, subject to the provisions set forth herein. In the event that (I) Buyer elects to terminate this Agreement pursuant to clause (x) of this Paragraph 8(a)(v) due to Seller’s failure to eliminate or satisfy a Rejected Exception as expressly set forth in Seller’s Title Notice and (II) Buyer is not in default under this Agreement, then and only then Seller shall reimburse Buyer for Buyer’s reasonable and actual out-of-pocket costs (documented by paid invoices to third parties) incurred with respect to this agreement, the transaction described herein and the due diligence performed in connection herewith, not to exceed $150,000.00 in the aggregate. Upon Closing, Buyer shall be deemed to have waived all objections to the items and matters reflected on the Title Policy and each such item and matter shall thereafter be a “Permitted Exception” under this Agreement.

               (vi) Supplemental Title Commitment. In the event the Title Company issues one or more supplemental Title Commitments, the “Title Commitment” shall be deemed amended to incorporate the changes reflected in such supplemental Title Commitments. Notwithstanding the foregoing, Buyer shall have three (3) business days following receipt by Buyer of a supplemental Title Commitment to deliver a supplemental Buyer’s Title Notice with respect to any new item not shown on either the Title Commitment or any existing survey delivered to Buyer as part of the Property Files. Within two (2) business days following Seller’s receipt of the supplemental Buyer’s Title Notice, Seller (with Limited Partner Consent) shall provide Buyer with a supplemental Seller’s Title Notice. If Buyer has timely delivered a supplemental Buyer’s Title Notice and Seller elects (or is deemed to have elected) to proceed (in whole or in part) in accordance with clause (B) of Paragraph 8(a)(ii) of this Agreement, then Buyer shall have until the earlier of (a) the Closing Date and (b) 10 days following receipt by Buyer of a supplemental Title Commitment to terminate this Agreement by delivering written notice thereof to Seller and Escrow Agent, in which case the Deposit shall be returned to Buyer and the other provisions of Paragraph 9(c) of this Agreement shall govern. If Buyer shall fail to provide Seller and Escrow Agent with written notice of termination on or before such date, then Buyer shall be deemed to have waived all of its objections to the items appearing in such supplemental Title Commitment (except with respect to the Rejected Exceptions). Except as

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expressly modified herein, the provisions of Paragraph 8(a) of this Agreement, including, without limitation, the timing and effect of any notices to be delivered and the effect of any failure to deliver same, shall govern with respect to any such additional Buyer’s Title Notice.

               (vii) Survey Matters. Buyer shall have until the date Buyer’s Title Notice is due under Paragraph 8(a)(ii) of this Agreement to review and approve or disapprove of any survey of the Property delivered by Seller to Buyer as part of the Property Files, and any such objections shall be treated in the same manner as objections to matters shown on the Title Commitment as set forth in Paragraph 8(a)(ii)-(v) of this Agreement. With regard to the Survey obtained by Buyer in accordance with the provisions of Paragraph 11 of this Agreement, Buyer shall have until the earlier of (A) five (5) business days after its receipt of the Survey or (B) the Contingency Expiration Date to deliver an additional Buyer’s Title Notice with respect to any new item not shown on either the Title Commitment or any existing survey delivered to Buyer as part of the Property Files. The provisions of Paragraph 8(a) of this Agreement, including, without limitation, the timing and effect of any notices to be delivered and the effect of any failure to deliver same, shall govern with respect to any such additional Buyer’s Title Notice.

          (b) Documents and Materials To Be Made Available to Buyer. Within five (5) business days after the Opening of Escrow, Seller will make available to Buyer the Property Files (as defined in this Paragraph 8(b)) of Seller. To the extent Seller currently possesses or controls the same, the “Property Files” are defined as the items set forth on Exhibit “I” attached hereto; provided, however, Seller shall not be obligated to update, prepare, or cause to be prepared any of the above-referenced items which may or may not be contained in the Property Files. Property Files shall not include any appraisals or other indications of the market value of the Property. Buyer understands and acknowledges that neither Seller nor any of Seller’s Representatives makes and/or has made any representation or warranty to Buyer as to the accuracy or completeness of the Property Files and that neither Seller nor any of Seller’s Representatives has made or will make any attempt to verify the data contained therein. Buyer agrees that Seller shall not have any liability to Buyer as a result of Buyer’s use of the Property Files.

          (c) Buyer’s Inspection Rights. From the Opening of Escrow and until the Closing or earlier termination of this Agreement, Buyer shall be provided with access to the Property and shall be permitted to inspect and examine the Property upon reasonable advance notice to Seller, subject in all cases to the provisions of this Paragraph 8(c) of this Agreement and the indemnification provisions described in Paragraph 8(d) of this Agreement. Subject to the rights of the tenants, Buyer and its Representatives shall have the right to conduct one or more “walk throughs” of the Property. It is understood and agreed that Buyer shall be responsible to perform such inspections and other examinations of the Property as Buyer deems necessary or desirable (including, without limitation, any tests, studies, investigations, inspections and other examinations of physical and environmental conditions of the Property); provided, however, that as a condition precedent to exercising such rights, Buyer shall deliver to Seller a Certificate of Insurance evidencing commercial general liability coverage of not less than $1,000,000 combined limits, worker’s compensation insurance at statutory limits, and employer’s liability coverage of not less than $1,000,000. Buyer’s commercial liability insurance shall name Seller as an additional insured with respect to the Property, including, without limitation, in connection

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with Buyer’s access to the Property and its tests, studies, investigations, inspections and other examinations of physical and environmental conditions of the Property. All tests, studies, investigations, inspections and other examinations by Buyer of the Property shall be conducted in a non-invasive manner. Buyer shall restore the Property to its original condition promptly after completing each such test, study, investigation, inspection and other examination. Buyer’s foregoing agreement shall survive any termination of this Agreement and shall survive Closing and the delivery of the Special Warranty Deed at Closing.

          (d) Buyer’s Termination Right; Indemnity. Buyer may terminate this Agreement by delivering written notice thereof to Seller and Escrow Agent on or before the Contingency Expiration Date, in which event the provisions of Paragraph 9(c) of this Agreement shall govern. If Buyer shall fail to provide Seller and Escrow Agent with written notice of termination on or before the Contingency Expiration Date, then Buyer shall be deemed to have affirmatively and expressly approved and accepted the Property Files, the Property and all conditions, elements and matters pertinent thereto including, without limitation, soil conditions, zoning, drainage, flood control, water, sewage, electricity, gas and other utility connections, economic feasibility, construction suitability, submittals, the parcel map (and any conditions thereto), any survey or any other matter which was or could have been inspected or examined by Buyer, and Buyer and Seller shall proceed to Closing, subject to the provisions set forth herein. On or before the Contingency Expiration Date, the parties may agree on other Service Contracts to be terminated by Seller on or before Closing. Seller shall terminate only those Service Contracts which the parties agree shall be terminated and Buyer shall assume, from and after the Closing Date, the obligations arising or accruing under all of the other Service Contracts. In the event of termination of this Agreement and within a reasonable period of time after Seller requests such information, Buyer shall deliver to Seller copies of all third-party reports, plans, studies, applications or any other matters obtained by or prepared for Buyer in connection with Buyer’s review of the Property and which relate to the physical condition of the Property, including, without limitation, any engineering and environmental reports completed and/or obtained by Buyer in connection with Buyer’s review of the Property. IN ALL EVENTS, BUYER SHALL INDEMNIFY, DEFEND, EXONERATE, HOLD HARMLESS AND SAVE SELLER AND ITS REPRESENTATIVES FREE FROM AND AGAINST: (i) ANY AND ALL LOSSES, COSTS, DAMAGES, EXPENSES, LIENS, LIABILITIES, AND CLAIMS IN ANY WAY ARISING OUT OF, OCCASIONED BY OR IN CONNECTION WITH THE ACCESS, INSPECTIONS AND OTHER EXAMINATIONS CONDUCTED BY BUYER OR ITS REPRESENTATIVES ON, TO OR WITH RESPECT TO THE PROPERTY (“ACCESS”), WHETHER SUCH ACCESS OCCURRED BEFORE OR AFTER THE DATE OF THIS AGREEMENT, INCLUDING, WITHOUT LIMITATION, ANY CLAIMS BY A THIRD PARTY ARISING FROM ANY ACT OR FAILURE TO ACT AUTHORIZED BY BUYER OR ITS REPRESENTATIVES, BUT EXCLUDING ANY PREEXISTING CONDITIONS (EXCEPT TO THE EXTENT EXACERBATED BY THE ACTIVITIES OF BUYER AND/OR ITS REPRESENTATIVES) AND EXCLUDING ANY LOSSES ARISING OUT OF THE DISCOVERY OR DISCLOSURE OF THE PROPERTY’S CONDITION; (ii) ANY DAMAGE OR INJURY TO PERSON OR PROPERTY CAUSED BY BUYER AND/OR ITS REPRESENTATIVES; AND (iii) ALL COSTS AND EXPENSES, INCLUDING ATTORNEY’S FEES, INCURRED BY SELLER AS A RESULT OF THE FOREGOING. WITHOUT LIMITING THE FOREGOING, BUYER SHALL, AND SHALL CAUSE ITS

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REPRESENTATIVES TO, KEEP THE PROPERTY FREE AND CLEAR OF ANY MECHANICS’ LIENS OR MATERIALMEN’S LIENS BEING CLAIMED BY, THROUGH OR UNDER BUYER AND/OR ITS REPRESENTATIVES AND RELATED TO ANY SUCH ACCESS PRIOR TO THE CLOSING DATE. NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED HEREIN, BUYER’S OBLIGATIONS UNDER THIS PARAGRAPH 8(d) SHALL SURVIVE ANY TERMINATION OF THIS AGREEMENT AND SHALL SURVIVE CLOSING AND THE DELIVERY OF THE SPECIAL WARRANTY DEED AT CLOSING.

     9. Conditions to the Closing.

          (a) Conditions Precedent to Buyer’s Obligations. The Closing and Buyer’s obligation to consummate the transactions contemplated by this Agreement and the exhibits attached hereto are subject to the satisfaction of the following conditions (which can be waived by Buyer):

               (i) Seller’s delivery of the items described in Paragraph 10(a) of this Agreement, not later than the Closing Date (unless otherwise provided).

               (ii) Title Company’s issuance or irrevocable commitment to issue on or before the Closing Date, a standard form Owner’s Policy of Title Insurance (the “Title Policy”, as further defined in Paragraph 8(a) of this Agreement), in the amount of the Purchase Price, insuring Buyer as the fee simple owner of the Real Property to be conveyed hereunder, subject to the Permitted Exceptions.

               (iii) Seller’s representations and warranties contained in this Agreement shall be true and correct in all material respects as of the Closing, and Seller shall have otherwise performed in all material respects its obligations under this Agreement which are required to be performed by Seller prior to the Closing Date.

               (iv) Buyer shall have obtained the Required Consents at least three (3) days prior to Closing; provided, however, that nothing herein shall relieve Buyer from its obligations with respect to the Required Consents under this Agreement, including without limitation, under Paragraph 23(h) of this Agreement.

          (b) Conditions Precedent to Seller’s Obligations. The Closing and Seller’s obligation to consummate the transactions contemplated by this Agreement and the exhibits attached hereto are subject to the satisfaction of the following conditions (which can be waived by Seller, with Limited Partner Consent):

               (i) Buyer’s delivery to Escrow Agent on or before the Closing Date, for disbursement as provided herein, of the Purchase Price (with credit for the Deposit), plus Buyer’s share of costs (as set forth in Paragraph 12 of this Agreement), plus or minus prorations (as set forth in Paragraph 13 of this Agreement) and the other sums, documents and materials described in Paragraph 10(b) of this Agreement.

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               (ii) Buyer’s representations and warranties contained in this Agreement shall be true and correct in all material respects as of the Closing, and Buyer shall have otherwise performed in all material respects its obligations under this Agreement which are required to be performed by it prior to the Closing Date.

               (iii) Buyer shall have provided Seller with a copy of each Required Consent at least three (3) days prior to Closing.

               (iv) The Housing Authority shall have provided any required consents or approvals of the transaction contemplated by this Agreement.

               (v) Seller’s mortgage lender shall have provided any required consents or approvals of the transaction contemplated by this Agreement. If the Close of Escrow does not occur due to the failure of the condition set forth in this Paragraph 9(b)(v), then Buyer shall receive a refund of the Deposit and the other provisions of Paragraph 9(c) of this Agreement shall govern.

          (c) Failure of Conditions to Closing. If any of the conditions set forth in Paragraphs 9(a) or 9(b) of this Agreement are not timely satisfied or waived, or if this Agreement is otherwise terminated in accordance with the terms of this Agreement with reference to the provisions of this Paragraph 9(c), then:

               (i) This Agreement and the rights and obligations of Buyer and Seller hereunder shall terminate, and this Agreement shall be of no further force or effect, except for those matters which, by the express terms of this Agreement, survive the termination of this Agreement; and

               (ii) All documents deposited by Buyer shall be promptly returned by or through Escrow Agent to Buyer, and all documents deposited by Seller shall be promptly returned by or through Escrow Agent to Seller; and

               (iii) Except in the event that either Buyer or Seller is in default under this Agreement (in which case the provisions of Paragraph 20 of this Agreement shall apply) or in the event that Seller has an outstanding claim for indemnification under the terms of this Agreement (in which case Escrow Agent shall hold the Deposit and disburse the same as mutually agreed by Buyer and Seller, with Limited Partner Consent), all funds held by Escrow Agent for the benefit of Buyer (including, without limitation, the Deposit) shall be promptly delivered by Escrow Agent to Buyer, and all funds held by Escrow Agent for the benefit of Seller shall be promptly delivered by Escrow Agent to Seller, less, in each case, the amount of any fees and expenses required to be paid by such party under Paragraph 9(d) of this Agreement.

          (d) Fees and Expenses. If this Agreement terminates because of the non-satisfaction of any condition to Closing, the fees and expenses of the Escrow Agent and/or the Title Company shall be borne one-half (1/2) by Seller and one-half (1/2) by Buyer (except in the event that either Buyer or Seller are in default under this Agreement, in which case the defaulting party shall pay the entire amount of such fees and expenses).

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     10. Deliveries to Escrow Agent.

          (a) Seller’s Deliveries. Seller hereby covenants and agrees to deliver or cause to be delivered to Escrow Agent, in the number of original counterparts requested by Escrow Agent, on or before the Closing Date the following instruments and documents, the delivery of each of which shall be a condition to Closing:

               (i) Special Warranty Deed. The Special Warranty Deed, duly executed and acknowledged by Seller.

               (ii) Non-Foreign Certificate. A Non-Foreign Certificate, duly executed by Seller (or, where appropriate, Seller’s parent entity) in the form of Exhibit “C” attached hereto.

               (iii) Lease Assignment. The Lease Assignment, duly executed by Seller.

               (iv) General Assignment. The General Assignment, duly executed by Seller.

               (v) Proof of Authority. Such proof of Seller’s authority and authorization to enter into this Agreement and the documents to be executed and delivered in connection herewith, and the transactions contemplated hereby and thereby, and such proof of the power and authority of the individual(s) executing and/or delivering any instruments, documents or certificates on behalf of Seller to act for and bind Seller as may be reasonably required by Title Company.

               (vi) Seller’s Settlement Statement. A statement setting forth the Purchase Price and all prorations, adjustments, debits and credits pursuant to the terms of this Agreement, duly executed by Seller.

               (vii) Rent Roll. An updated rent roll dated within ten (10) business days prior to the Closing.

               (viii) Housing Authority Documents. Any and all documents reasonably required of Seller by the Housing Authority in connection with the Required Consents, duly executed by Seller; provided, however, that Seller shall not be obligated to incur any cost, expense or liability in connection therewith.

          (b) Buyer’s Deliveries. Buyer hereby covenants and agrees to deliver or cause to be delivered to Escrow Agent, in the number of original counterparts requested by Escrow Agent, on or before the Closing Date the following instruments, documents and funds, the delivery of each of which shall be condition to Closing:

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               (i) Purchase Price. The entire Purchase Price in accordance with the provisions of Paragraph 4 of this Agreement.

               (ii) Costs; Prorations; Cash Balance. Buyer’s share of costs and expenses as adjusted by the net adjustments, credits, prorations and other amounts due hereunder.

               (iii) Lease Assignment. The Lease Assignment duly executed by Buyer.

               (iv) General Assignment. The General Assignment duly executed by Buyer.

               (v) Tenant Notice Letter. A sample Tenant Notice Letter duly executed by Buyer or Buyer’s management company, which can be delivered to Tenants by either Seller or Buyer.

               (vi) Housing Authority Documents. Any and all documents required of Buyer by the Housing Authority, duly executed by Buyer.

               (vii) Proof of Authority. Such proof of Buyer’s authority and authorization to enter into this Agreement and the documents to be executed and delivered in connection herewith, and the transactions contemplated hereby and thereby, and such proof of the power and authority of the individual(s) executing and/or delivering any instruments, documents or certificates on behalf of Buyer to act for and bind such entity as may be reasonably required by Title Company.

               (viii) Buyer’s Settlement Statement. A statement setting forth the Purchase Price and all prorations, adjustments, debits and credits pursuant to the terms of this Agreement, duly executed by Buyer.

          (c) Other Required Documents. In addition, Buyer and Seller agree to execute such other instruments and documents as may be reasonably required in order to consummate the transactions contemplated in this Agreement and the exhibits attached hereto; provided, however, that such other instruments and documents are consistent with the terms hereof and thereof and are customarily executed and/or delivered in similar transactions. The obligations set forth in this Paragraph 10(c) of this Agreement shall survive Closing and the delivery of the Special Warranty Deed at Closing.

     11. Title Insurance. At the Closing, the Escrow Agent shall direct the Title Company to issue the Title Policy to Buyer in the amount of the Purchase Price, as described in Paragraph 9(a)(ii) of this Agreement. In the event that Buyer desires to obtain (with respect to the Real Property and the Improvements to be conveyed hereunder) an extended coverage owner’s policy of title insurance (“Extended Coverage Title Policy”) and/or any endorsements (“Endorsements”) to the Title Policy for the Real Property to be conveyed hereunder, Buyer shall notify Escrow Agent and Seller within five (5) business days after the Opening of Escrow. Buyer shall be responsible for the payment of the difference between (a) the cost of an Extended Coverage Title

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Policy, including any and all Endorsements and (b) the cost of a standard form Owner’s Policy of Title Insurance (“Additional Title Policy Charge”). Buyer shall timely satisfy all additional requirements of the Title Company to the issuance of the Extended Coverage Title Policy and any Endorsements. If the Title Company requires a new Survey as a condition to the issuance of an Extended Coverage Title Policy, Buyer shall timely make the necessary arrangements to engage a surveyor, specify requirements, approve and pay the cost of, and otherwise cause a Survey to be timely obtained at Buyer’s expense. Any such Survey shall be in a form acceptable to remove the survey exception(s) from the Title Policy as required by the Title Company and shall otherwise be in the following form: (i) the Survey shall be made in accordance with the “2005 Minimum Standard Detail Requirements for ALTA/ACSM Land Title Surveys” as jointly established and adopted by American Land Title Association and National Society of Professional Surveyors; (ii) the Survey shall be certified by the surveyor to Seller, Buyer, Buyer’s lender, if any, and the Title Company. If Buyer obtains a Survey, it shall deliver a copy of the Survey to Seller and Title Company. Buyer’s ability to obtain the Extended Coverage Title Policy and/or any Endorsements shall not be a condition to the Closing.

     12. Costs.

          (a) Seller shall pay: (i) all transfer taxes; (ii) one-half (1/2) of all escrow fees and costs; (iii) any document recording charges to record the Special Warranty Deed; and (iv) Seller’s share of prorations (as set forth in Paragraph 13 of this Agreement).

          (b) Buyer shall pay: (i) the cost of the Title Policy, including any Additional Title Policy Charge; (ii) all sales, excise, or similar taxes; (iii) any other document recording charges (i.e. Buyer’s financing documents, etc.); (iv) one-half (1/2) of all escrow fees and costs; (v) Buyer’s share of prorations (as set forth in Paragraph 13 of this Agreement); and (vi) all fees and expenses associated with all consents or other approvals by the Housing Authority of the transactions contemplated by this Agreement and the exhibits attached hereto. In addition, Buyer shall pay one hundred percent (100%) of all costs of Buyer’s due diligence, including, without limitation, all fees due its consultants, advisors and attorneys and all costs and expenses of any Survey or Phase I or other physical or environmental studies or examinations which Buyer desires to obtain, and all lenders’ fees related to any financing to be obtained by Buyer.

          (c) Except as otherwise expressly provided for herein, Buyer and Seller shall each pay their own respective legal and professional fees and fees of other consultants respectively incurred by each of Buyer and Seller.

          (d) All other costs and expenses shall be allocated between Buyer and Seller in accordance with the customary practice of the County.

          (e) The terms set forth in this Paragraph 12 shall survive Closing and the delivery of the Special Warranty Deed at Closing.

     13. Prorations.

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          (a) General. Non-Delinquent Rents, revenues, receivables and other income, if any, from the Property, and real estate and personal property taxes and the operating expenses described below affecting the Property shall be prorated as of 11:59 P.M. on the day preceding the Closing. For purposes of calculating prorations, Buyer shall be deemed to be in title to the Property, and therefore entitled to the income and responsible for the expenses, for the entire day upon which the Closing occurs. Seller shall be entitled to all third party reimbursements and payments (including, without limitation, all Section 8 and similar payments) which relate to the period prior to the Closing. Buyer shall be entitled to all third party reimbursements and payments (including, without limitation, all Section 8 and similar payments) which relate to periods on or after the Closing. Buyer shall use commercially reasonable efforts to collect Non-Delinquent Rents after the Closing in accordance with its current management practices. If Buyer has not collected Non-Delinquent Rents with respect to one or more Tenants after using commercially reasonable efforts attempting to do so for at least sixty (60) days after the Closing, then Seller shall, within ten (10) business days after Buyer represents and evidences the same to Seller in writing, refund to Buyer the prorated amount of such Non-Delinquent Rents received by Seller from Buyer on the Closing relating to such Tenants. Any leasing commissions with respect to Tenants of the Property as of the Closing shall be the sole responsibility of Seller.

          (b) Taxes and Assessments. All non-delinquent real estate and personal property taxes and assessments on the Property shall be prorated based on the tax bill for the fiscal year in which the Closing occurs. If the tax bill for the current fiscal year is not available, then the proration shall be based on the prior fiscal year’s assessment; and the parties shall reprorate such real estate and personal property taxes and assessments upon the issuance of the final tax bill. If after the Closing, any supplemental real estate and personal property taxes and assessments are assessed against the Property by reason of any event occurring prior to the Closing, or if there is any refund or other reduction in the taxes or assessed value of the Property for any period prior to Closing, then Buyer and Seller shall re-prorate the real estate and personal property taxes and assessments following the Closing. Any delinquent real estate and personal property taxes and assessments on the Property shall be paid at the Closing from funds accruing to Seller.

          (c) Delinquent and Past Due Rents. From and after the Closing, Buyer shall use commercially reasonable efforts to collect, in accordance with its current management practices (but with no obligation to commence litigation to collect such amounts), any rents or other charges under the leases which are delinquent (i.e. more than thirty (30) days past due) as of the Closing. The amounts collected after the Closing from a Tenant shall be applied first to any Non-Delinquent Rents and other charges due as of the Closing, second to any rents and other charges then due for any period from and after the Closing, and third to any Past Due Rents (as defined in this Paragraph 13(c)) as of the Closing in reverse chronological order of the date such amounts became due. As an incentive to Buyer to attempt to collect delinquent rents due to Seller, Seller agrees that Buyer may retain twenty-five percent (25%) of the Past Due Rents which are collected by Buyer after the Closing. For purposes of this Paragraph 13(c), “Past Due Rents” are defined as those rents or other charges which are, upon the Closing, more than sixty (60) days past due. Past Due Rents do not include any Section 8 or similar payments, whether delinquent or not. All Section 8 and similar payments shall be prorated in accordance with Paragraph 13(a) of this Agreement.

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          (d) Operating Expenses. All utility service charges for electricity, heat and air conditioning service, other utilities, taxes (other than real estate and personal property taxes) such as rental taxes, other expenses incurred in operating the Property that Seller customarily pays, and any other costs incurred in the ordinary course of business or the management and operation of the Property shall be prorated on an accrual basis as of the Closing Date. Seller shall pay all such expenses that accrue prior to the Closing and Buyer shall pay all such expenses accruing on the Closing and thereafter. To the extent possible, Seller and Buyer shall obtain billings and meter readings as of the Closing to aid in such prorations.

          (e) Service Contracts. Charges and prepayments under the Service Contracts shall be prorated on the basis of the periods to which such Service Contracts relate.

          (f) Tenant Deposits and Prepaid Rents. Upon Closing, Seller shall retain any and all bank accounts, certificates of deposit, or any other cash or Cash Equivalent representing Tenant Deposits and prepaid rents and Buyer shall be credited and Seller shall be debited with an amount equal to the amount of the Tenant Deposits and prepaid rents. Upon the Closing, Buyer shall assume all of Seller’s obligations with respect to the Tenant Deposits and prepaid rents.

          (g) Funds. Buyer shall either (i) cause any person or entity that is holding Funds to return such Funds to Seller; (ii) pay Seller an amount equal to the amount of the Funds held by such person or entity, in which case Buyer shall retain such Funds; or (iii) replace the Funds held by such person or entity, in which case such Funds shall be returned to Seller.

          (h) Rent Ready. Not more than forty-eight (48) hours prior to Closing, a representative of Buyer and Seller shall conduct an onsite walk-through of the then unoccupied rental units on the Property to determine whether any of such unoccupied rental units are in “rent ready” condition. With respect to any rental unit which is vacated on or before five (5) days prior to the Closing, Seller shall, at Seller’s option, either (i) make such unoccupied rental unit into a “rent ready” condition, or (ii) provide Buyer with a credit against the Purchase Price due at Closing, which credit shall be equal to the amount, if any, reasonably required to put said unoccupied rental units in “rent-ready” condition, provided, however, that such credit shall not exceed Five Hundred Dollars ($500.00) per unoccupied rental unit. With respect to any rental unit which is vacated later than five (5) days prior to the Closing, Seller shall have no responsibility or liability to put such unoccupied rental unit into a “rent ready” condition, and Seller shall not have to compensate Buyer if such unit is not “rent ready” as of Closing. “Rent ready” condition shall mean Seller’s current practice of placing units in “rent ready” condition.

          (i) Method of Proration. All prorations shall be made in accordance with customary practice in the County, except as expressly provided herein. Such prorations, if and to the extent known and agreed upon as of the Closing, shall be paid by Buyer to Seller (if the prorations result in a net credit to Seller) or by Seller to Buyer (if the prorations result in a net credit to Buyer) by increasing or reducing the cash to be paid by Buyer at the Closing. Any such prorations not determined or not agreed upon as of the Closing shall be paid by Buyer to Seller, or by Seller to Buyer, as the case may be, in cash, as soon as practicable following the Closing, but in no event shall Buyer or Seller have any liability for any claim under this Paragraph 13

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made more than twelve (12) months after the Closing. The terms set forth in this Paragraph 13 shall survive Closing and the delivery of the Special Warranty Deed at Closing.

     14. Disbursements and Other Actions by Escrow Agent. On the Closing Date, Escrow Agent shall promptly undertake all of the following in the manner indicated in this Paragraph 14:

          (a) Disbursements. Disburse all funds deposited with Escrow Agent by Buyer in payment of the Purchase Price (and in payment of any adjustments, credits and prorations to be charged to account of Buyer as set forth in Paragraph 13 of this Agreement) as follows:

               (i) Deduct all items chargeable to the account of Seller pursuant to Paragraph 12 of this Agreement.

               (ii) Deduct and disburse payment for obligations of Seller pursuant to Paragraph 8(a) of this Agreement.

               (iii) If, as the result of the adjustments, credits and prorations pursuant to Paragraph 13 of this Agreement, amounts are to be charged to account of Seller, deduct the total amount of such charges.

               (iv) Disburse the remaining balance of the Purchase Price (and any adjustments, credits and prorations) to or at the direction of SHF in immediately available funds.

          (b) Recording. Direct the Title Company to record, the Special Warranty Deed and any other documents required by the Title Company or which the parties hereto may mutually direct to be recorded in the official records of the County and obtain conformed copies thereof for distribution to Buyer and Seller.

          (c) Title Policy. Direct the Title Company to issue the Title Policy to Buyer.

          (d) Delivery of Documents to Buyer. Deliver to Buyer any documents (or copies thereof) deposited with the Escrow Agent by Seller pursuant hereto.

          (e) Delivery of Documents to Seller. Deliver to Seller any documents (or copies thereof) deposited with the Escrow Agent by Buyer pursuant hereto.

     15. Seller’s Representations and Warranties. Seller hereby warrants and represents to Buyer as of the date of this Agreement and as of the Closing Date as follows:

          (a) Seller is a limited partnership duly organized and validly existing under the laws of the State of Ohio.

          (b) Seller has all requisite corporate, company or partnership power and authority to execute and deliver this Agreement and to perform its obligations hereunder. The person signing this Agreement on behalf of Seller has the authority to do so.

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          (c) Upon execution by all parties thereto, this Agreement and all other agreements, instruments and documents required to be executed or delivered by Seller pursuant hereto have been or (if and when executed) will be duly executed and delivered by Seller, and are or will be the legal, valid and binding obligations of Seller, enforceable against Seller in accordance with their terms, subject only to the effect of bankruptcy, insolvency or similar laws. Other than any approval of Seller’s mortgage lender and the Required Consents from the Housing Authority and such consents as shall have been obtained prior to Closing, to Seller’s actual knowledge, there are no other approvals, authorizations, consents or other actions by or filings which are required to be obtained or completed by Seller in connection with the execution and delivery of this Agreement or any of the exhibits attached hereto at Closing, or the sale of the Property or the consummation of the transactions contemplated hereunder or thereunder.

          (d) The consummation of the transactions contemplated herein and the fulfillment of the terms hereof will not result in a material breach of any of the material terms or provisions of, or constitute a material default under, any material agreement or material document to which Seller is a party or by which it is bound.

          (e) Seller is not a “foreign corporation”, “foreign partnership” or “foreign estate” as those terms are defined in the Code.

          (f) Seller is not a Prohibited Person.

          (g) To Seller’s actual knowledge, as of the date set forth thereon, (i) the rent roll attached hereto as Exhibit “H” (“Rent Roll”) lists all existing Tenant Leases related to the Property, and (ii) the information set forth on the Rent Roll with respect to rent, deposits, delinquencies and credits is true and correct, except for such inaccuracies which are not material when taken in the aggregate. To Seller’s actual knowledge, as of the date set forth thereon, (A) the rent roll to be delivered to Buyer in connection with the Closing will list all then-existing Tenant Leases related to the Property and (B) the information set forth on such rent roll with respect to rent, deposits, delinquencies and credits will be true and correct, except for such inaccuracies which are not material when taken in the aggregate.

          (h) To Seller’s actual knowledge, it has received no written notices during the three (3) years prior to the date of this Agreement from any federal, state or local governmental authority of any zoning, safety, building, fire, environmental or health code violations with respect to the Property which have not been heretofore corrected. To Seller’s actual knowledge, all permits, licenses and occupancy certificates necessary for the operation and occupancy of the Property have been obtained. To Seller’s actual knowledge, Seller is in compliance, in all material respects, with all material state and municipal laws, ordinances and regulations regarding tenant security deposits and the payment of interest thereon. To Seller’s actual knowledge, there are not presently any special assessment actions pending or overtly threatened against the Property. To Seller’s actual knowledge, (i) it has received no written notices from any governmental authority regarding any claims relating to the presence or use of any Hazardous Materials at the Property in violation of any applicable law and (ii) except for Hazardous Materials used in the normal operation of the Property (such as cleaning materials,

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toner, etc.), it has not released any Hazardous Materials on or about the Property in violation of any applicable law.

          (i) There is no litigation or proceeding (including, but not limited to, condemnation or eminent domain proceedings, arbitration proceedings or foreclosure proceedings) pending or, to Seller’s actual knowledge, overtly threatened, against the Property except as disclosed to Buyer. Seller has not commenced bankruptcy or insolvency proceedings and, to Seller’s actual knowledge, there are no overtly threatened bankruptcy or insolvency proceedings against Seller or any of its general partners.

          (j) As used in this Agreement, (i) the phrase “to Seller’s actual knowledge” or words of similar import means the actual knowledge, without independent inquiry or duty of investigation, of Hillary B. Zimmerman (who is a senior employee in Seller’s general partner’s organization and is familiar with the operations of the Property) (notwithstanding anything to the contrary set forth in this Agreement, the foregoing individual shall not have any personal liability with respect to any matters set forth in this Agreement or any of Seller’s representations and/or warranties herein being or becoming untrue, inaccurate or incomplete) but shall not include the knowledge, actual or implied, of any direct or indirect partner, principal, affiliate, independent contractor, consultant, property manager, asset manager or agent of Seller, or any employee of any thereof (i.e. Buyer acknowledges and agrees that the knowledge of any of the foregoing parties, including, without limitation, the property manager, shall not be imputed to Seller); and (ii) the phrase “Seller Qualification Matter” means any existing or new item, fact or circumstance which renders a representation or warranty of Seller set forth herein incorrect or untrue in any material respect. If, prior to the Closing, to Seller’s actual knowledge, there exists a Seller Qualification Matter, then Seller shall promptly give written notice thereof to Buyer. If, prior to the Closing, Buyer has actual knowledge of or is notified in writing of a Seller Qualification Matter by Seller or otherwise, then (x) Seller’s representations and warranties shall be automatically amended and limited to account for such Seller Qualification Matter, and (y) Buyer shall have, as Buyer’s sole and exclusive remedy therefore (unless such matter is cured, in which case Buyer shall have no remedy therefore), the right to terminate this Agreement prior to Closing by providing written notice thereof to Seller no later than three (3) business days after Buyer has actual knowledge of or is notified in writing of such Seller Qualification Matter (in which case the Deposit shall be returned to Buyer and the other provisions of Paragraph 9(c) of this Agreement shall govern). Notwithstanding anything herein to the contrary, if Buyer does not timely terminate this Agreement per the terms of this Paragraph 15(j), then (A) Seller’s representations and warranties shall be automatically amended and limited to account for such Seller Qualification Matter, (B) Buyer shall be deemed to have waived Buyer’s right to pursue any remedy for breach of the representation or warranty made untrue on account of such Seller Qualification Matter and (C) the parties shall proceed to the Closing.

          (k) Seller shall indemnify and hold Buyer harmless from and against any and all claims, demands, liabilities, liens, costs, expenses, penalties, damages and losses suffered by Buyer as a result of any breach of warranty or representation made by Seller in this Paragraph 15 (except as provided in Paragraph 15(j) of this Agreement); provided, however, that the representations, warranties and indemnities set forth in this Paragraph 15 shall survive Closing and the delivery of the Special Warranty Deed at Closing for a period of six (6) months after the

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Closing and in no event shall Seller have any liability under this Paragraph 15 for any claim made after such period.

     16. Buyer’s Representations and Warranties. Buyer hereby warrants and represents to Seller as of the date of this Agreement and as of the Closing Date as follows:

          (a) Purchaser is a corporation duly organized and validly existing under the laws of the State of California. As of the Closing Date, Buyer will be qualified to transact business in the State.

          (b) Buyer has all requisite corporate, company or partnership power and authority to execute and deliver this Agreement and to perform its obligations hereunder. The person signing this Agreement on behalf of Buyer has the authority to do so.

          (c) Upon execution by all parties thereto, this Agreement and all other agreements, instruments and documents required to be executed or delivered by Buyer pursuant hereto have been or (if and when executed) will be duly executed and delivered by Buyer, and are or will be the legal, valid and binding obligations of Buyer, enforceable against Buyer in accordance with their terms, subject only to the effect of bankruptcy, insolvency or similar laws. Other than the Required Consents from the Housing Authority and such consents as shall have been obtained prior to Closing, to Buyer’s actual knowledge, there are no other approvals, authorizations, consents or other actions by or filings which are required to be obtained or completed by Buyer in connection with the execution and delivery of this Agreement or any of the exhibits attached hereto at Closing, or the sale of the Property or the consummation of the transactions contemplated hereunder or thereunder.

          (d) The consummation of the transactions contemplated herein and the fulfillment of the terms hereof will not result in a material breach of any of the material terms or provisions of, or constitute a material default under, any material agreement or material document to which Buyer is a party or by which it is bound.

          (e) Buyer is not a Prohibited Person.

          (f) The written financial information, if any, delivered by Buyer (or any affiliate of Buyer, or any of their attorneys, accountants, or officers) to Seller, Seller’s general partner or SHF regarding Buyer is not misleading and is true and correct in all material respects.

          (g) To Buyer’s actual knowledge, there are no actions, suits or proceedings pending or overtly threatened against Buyer which would prevent Buyer from acquiring the Property in accordance with the terms of this Agreement.

          (h) Buyer shall indemnify and hold Seller harmless from and against any and all claims, demands, liabilities, liens, costs, expenses, penalties, damages and losses suffered by Seller as a result of any breach of warranty or representation made by Buyer in this Paragraph 16; provided, however, that the representations, warranties and indemnities set forth in this Paragraph 16 shall survive Closing and the delivery of the Special Warranty Deed at Closing for

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a period of six (6) months after the Closing and in no event shall Buyer have any liability under this Paragraph 16 for any claim made after such period.

     17. AS-IS, WHERE IS, AND WITH ALL FAULTS CONDITION.

          (a) Buyer does hereby acknowledge, represent, warrant and agree, to and with Seller, that (i) Buyer is purchasing the Property in an “AS IS, WHERE IS, AND WITH ALL FAULTS” condition with respect to any facts, circumstances, conditions and defects of all kinds; (ii) Seller has no obligation to repair or correct any such facts, circumstances, conditions or defects or compensate Buyer for same; (iii) Buyer is and will be relying strictly and solely upon the advice and counsel of its own agents and officers and such physical inspections, examinations and tests of the Property as Buyer deems necessary or appropriate under the circumstances, and Buyer is and will be fully satisfied that the Purchase Price is fair and adequate consideration for the Property; (iv) Buyer has had and will have, pursuant to this Agreement, an adequate opportunity to make such legal, factual and other inquiries and investigations as Buyer deems necessary, desirable or appropriate with respect to the Property; (v) except as otherwise expressly provided in this Agreement, Seller is not making and has not made any warranty or representation with respect to the Property as an inducement to Buyer to enter into this Agreement and thereafter to purchase the Property, or for any other purpose; and (vi) by reason of all of the foregoing, from and after the Closing, Buyer shall assume the full risk of any loss or damage occasioned by any fact, circumstance, condition or defect pertaining to the physical and other conditions of the Property and/or the operation of the Property, regardless of whether the same is capable of being observed or ascertained.

          (b) EXCEPT AS EXPRESSLY SET FORTH IN PARAGRAPH 15 OF THIS AGREEMENT, SELLER HAS NOT, DOES NOT AND WILL NOT, WITH RESPECT TO THE PROPERTY, MAKE ANY REPRESENTATIONS, EXPRESS OR IMPLIED, OR ARISING BY OPERATION OF LAW, INCLUDING, BUT IN NO WAY LIMITED TO, ANY WARRANTY OF CONDITION OR MERCHANTABILITY, OR WITH RESPECT TO THE VALUE, PROFITABILITY OR OPERATING POTENTIAL OF THE PROPERTY.

          (c) Except with respect to actions arising from a breach by Seller of its express representations and warranties contained in Paragraph 15 of this Agreement, notwithstanding any provision of this Agreement and the exhibits attached hereto to the contrary, Buyer hereby releases Seller from any liability, claims, damages, penalties, costs, fees, charges, losses, causes of action, demands, expenses of any kind or nature or any other claim it has or may have against Seller resulting from the presence, removal or other remediation of “Hazardous Materials” (as hereinafter defined) on or under the Real Property or which has migrated from adjacent lands to the Real Property or from the Real Property to adjacent lands.

          (d) The term “Hazardous Materials” shall mean asbestos, any petroleum fuel and any hazardous or toxic substance, material or waste which is or becomes regulated by any local governmental authority, the state where the Property is located or the United States Government, including, but not limited to, any material or substance defined as a “hazardous waste,” “extremely hazardous waste,” “restricted hazardous waste,” “hazardous substance,”

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“hazardous material” or “toxic pollutant” under state law and/or under the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. § 9601, et seq.

          (e) BUYER AGREES THAT, IF AT ANY TIME AT OR AFTER CLOSING, A CONDOMINIUM MAP, DECLARATION OF CONDOMINIUM OWNERSHIP OR OTHER DEVICE FOR THE PURPOSE OF CREATING FRACTIONALIZED OWNERSHIP IS MADE EFFECTIVE WITH RESPECT TO THE PROPERTY (BY BUYER OR ANY AFFILIATE THEREOF), BUYER WILL INDEMNIFY, DEFEND AND HOLD HARMLESS SELLER AND EACH OF ITS DIRECT AND INDIRECT PARTNERS AND PRINCIPALS AND THEIR RESPECTIVE AFFILIATES (INCLUDING ANY CONTRACTOR) FROM AND AGAINST ANY CLAIM MADE BY ANY OWNER OR OCCUPANT OF A RESIDENTIAL UNIT IN THE PROPERTY OR ANY OWNERS’ ASSOCIATION OR SIMILAR ENTITY ACTING ON BEHALF OF UNIT OWNERS, AS WELL AS ALL RELATED LOSS, DAMAGE, LIABILITY, OBLIGATION, SUIT, CAUSE OF ACTION, JUDGMENT, SETTLEMENT, PENALTY, FINE OR COST OR EXPENSE (INCLUDING FEES AND DISBURSEMENTS OF ATTORNEYS AND OTHER PROFESSIONALS AND COURT COSTS). BUYER’S OBLIGATIONS UNDER THIS PARAGRAPH SHALL APPLY REGARDLESS OF THE BASIS OF A CLAIM, AND SHALL EXTEND TO, AMONG OTHERS, CLAIMS BASED ON NEGLIGENCE ON THE PART OF SELLER OR ITS AFFILIATES (INCLUDING CONTRACTOR) OR ANY WARRANTY, INCLUDING WARRANTIES OF HABITABILITY, MERCHANTABILITY, WORKMANLIKE CONSTRUCTION AND FITNESS FOR USE OR ACCEPTABILITY FOR THE INTENDED PURPOSE. NOTHING HEREIN SHALL PERMIT BUYER TO TAKE ANY ACTION WHICH CONFLICTS WITH PARAGRAPH 23 OF THIS AGREEMENT.

          (f) The provisions of this Paragraph 17 shall survive any termination of this Agreement and shall survive Closing and the delivery of the Special Warranty Deed at Closing.

     18. Closing. The purchase and sale of the Property shall be consummated (the “Closing”) on or before the thirtieth (30^th) day after the later of (x) the date Buyer and/or Seller obtains all Required Consents (each party shall promptly notify each other party to this Agreement and the Escrow Agent upon receipt of same) and (y) the Contingency Expiration Date, but in no event shall the Closing occur later than April 12, 2011 (the “Outside Closing Date”), time being of the essence. The Closing shall take place at the offices of the Escrow Agent, or via an escrow administered by the Escrow Agent pursuant to escrow instructions mutually agreed upon among the parties and consistent with the terms of this Agreement. Buyer is entitled to extend the Outside Closing Date for a period of up to thirty (30) days following the Outside Closing Date as originally set forth in the first sentence of this Paragraph 18; provided, however, that Seller and Escrow Agent shall receive written notice (the “Extension Notice”) of Buyer’s election to extend the Outside Closing Date on or before five (5) business days prior to the Outside Closing Date set forth in the first sentence of this Paragraph 18. Seller is entitled to extend the Outside Closing Date for a period of up to thirty (30) days following the Outside Closing Date set forth in the first sentence of this Paragraph 18 (or following such later date as Buyer may have extended such date pursuant to a valid Extension Notice) by providing written notice thereof to Buyer and Escrow Agent on or before three (3) days prior to such Outside Closing Date.

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     19. Notices. All notices or other communications required or permitted hereunder shall be in writing, and shall be personally delivered (including by means of professional messenger service) or sent by registered or certified mail, postage prepaid, return receipt requested, or by a nationally recognized overnight courier service that provides tracing and proof of receipt of items mailed or by facsimile transmission followed by delivery of a hard copy. Such notices or other communications shall be deemed received: (1) if personally delivered, when so personally delivered, (2) if sent by mail, two business days after deposited with the United States postal service, (3) if sent by overnight courier service, the business day after deposited with such service or (4) if sent by facsimile, when transmitted (with proof of transmission).

To Seller:	Arbor Pointe, L.P.
	c/o McCormack Baron Salazar, Inc.
	720 Olive Street, Suite 2500
	St. Louis, Missouri 63101
	Attn: Hillary Zimmerman
	Fax No.: (314) 335-2891
With a copy to:	SunAmerica Affordable Housing Partners
	1 SunAmerica Center, 36th Floor
	Los Angeles, California 90067-6022
	Attn: Thomas Musante
	Fax: (310) 772-6794
And with a copy to:	Bouza, Klein & Kaminsky
	950 S. Flower Street, Suite 100
	Los Angeles, California 90015
	Attn: Joseph S. Klein, Esq.
	Fax: (213) 488-1316
To Buyer:	Steadfast Asset Holdings, Inc.
	18100 Von Karman, Suite 500
	Irvine, California 92612
	Attn: Ana Marie del Rio, Esq.
	Fax No.: (949) 852-0143
With a copy to:	Katten Muchin Rosenman LLP
	2900 K Street NW, North Tower — Suite 200
	Washington, DC 20007-5118
	Attn: Virginia Davis, Esq.
	Fax: (202) 298-7570
To Escrow Agent:	Chicago Title Insurance Company
	2001 Bryan Street, Suite 1700
	Dallas, Texas 75201
	Attn: Shannon Bright
	Fax: (214) 965-1627

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     Notice of change of address shall be given by written notice in the manner detailed in this Paragraph 19.

     20. Default. If either party defaults in its obligation to complete the transaction contained in this Agreement, the parties agree to the following remedies:

          (a) Breach by Seller. IN THE EVENT THE CLOSING AND THE CONSUMMATION OF THE TRANSACTIONS HEREIN CONTEMPLATED DO NOT OCCUR AS HEREIN PROVIDED BY REASON OF A BREACH OF ANY OF THE TERMS OF THIS AGREEMENT BY SELLER, WHICH BREACH IS NOT CURED WITHIN TEN (10) BUSINESS DAYS AFTER SELLER RECEIVES WRITTEN NOTICE THEREOF FROM BUYER, SUCH BREACH SHALL CONSTITUTE A DEFAULT UNDER THIS AGREEMENT AND BUYER SHALL BE ENTITLED TO TERMINATE THIS AGREEMENT AND BE RELEASED FROM ITS OBLIGATION TO PURCHASE THE PROPERTY FROM SELLER. IN THE EVENT OF TERMINATION OF THIS AGREEMENT UNDER THIS PARAGRAPH 20(a), BUYER SHALL, AS BUYER’S SOLE AND EXCLUSIVE REMEDY THEREFORE, BE ENTITLED TO A REFUND OF THE DEPOSIT AND TO RECOVER BUYER’S REASONABLE AND ACTUAL OUT-OF-POCKET COSTS (DOCUMENTED BY PAID INVOICES TO THIRD PARTIES) INCURRED WITH RESPECT TO THIS AGREEMENT, THE TRANSACTION DESCRIBED HEREIN AND THE DUE DILIGENCE PERFORMED IN CONNECTION HEREWITH, NOT TO EXCEED $150,000.00 IN THE AGGREGATE. EXCEPT AS SET FORTH IN THIS PARAGRAPH 20(a), BUYER SHALL HAVE NO RIGHT TO RECEIVE ANY EQUITABLE RELIEF. BUYER EXPRESSLY WAIVES ANY RIGHT UNDER THE LAW OF THE STATE OR AT COMMON LAW OR OTHERWISE TO RECORD A LIS PENDENS OR A NOTICE OF PENDENCY OF ACTION OR SIMILAR NOTICE AGAINST ALL OR ANY PORTION OF THE PROPERTY IN CONNECTION WITH ANY ALLEGED DEFAULT BY SELLER HEREUNDER. NOTWITHSTANDING THE FOREGOING, IF SELLER SHALL BREACH THIS AGREEMENT SOLELY BY FAILING TO DELIVER ANY OF THE DOCUMENTS SET FORTH IN PARAGRAPH 10(a) OF THIS AGREEMENT AND BUYER HAS TIMELY PERFORMED ALL OF ITS COVENANTS AND CONDITIONS UNDER THE TERMS OF THIS AGREEMENT (INCLUDING, WITHOUT LIMITATION, DEPOSITING THE PURCHASE PRICE INTO ESCROW) AND IS OTHERWISE PREPARED TO CLOSE THIS TRANSACTION, THEN, AND ONLY THEN, BUYER SHALL BE ENTITLED TO ELECT THE ALTERNATIVE REMEDY OF SPECIFIC PERFORMANCE. THE FOREGOING OPTIONS ARE MUTUALLY EXCLUSIVE AND ARE THE SOLE AND EXCLUSIVE RIGHTS AND REMEDIES AVAILABLE TO BUYER AT LAW OR IN EQUITY IN THE EVENT OF A SELLER BREACH OF OR DEFAULT UNDER THIS AGREEMENT PRIOR TO THE CLOSING. NOTWITHSTANDING THE FOREGOING, BUYER SHALL BE CONCLUSIVELY AND IRREVOCABLY DEEMED TO WAIVED THE REMEDY OF SPECIFIC PERFORMANCE IF BUYER FAILS TO FILE SUIT FOR SPECIFIC PERFORMANCE AGAINST SELLER IN A COURT HAVING JURISDICTION IN THE COUNTY AND STATE IN WHICH THE PROPERTY IS LOCATED ON OR BEFORE SIXTY

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(60) DAYS FOLLOWING THE OUTSIDE CLOSING DATE OR EARLIER DATE UPON WHICH THE CLOSING WAS TO HAVE OCCURRED.

          (b) Breach by Buyer. IN THE EVENT THE CLOSING AND THE CONSUMMATION OF THE TRANSACTIONS HEREIN CONTEMPLATED DO NOT OCCUR AS HEREIN PROVIDED BY REASON OF A BREACH OF ANY OF THE TERMS OF THIS AGREEMENT BY BUYER, WHICH BREACH IS NOT CURED WITHIN TEN (10) BUSINESS DAYS AFTER BUYER RECEIVES WRITTEN NOTICE THEREOF FROM SELLER OR SHF, SUCH BREACH SHALL CONSTITUTE A DEFAULT UNDER THIS AGREEMENT AND SELLER SHALL BE RELEASED FROM ITS OBLIGATION TO SELL THE PROPERTY TO BUYER. BUYER AND SELLER AGREE THAT IT WOULD BE IMPRACTICAL AND EXTREMELY DIFFICULT TO ESTIMATE THE DAMAGES WHICH SELLER MAY SUFFER AS A RESULT OF SUCH BREACH. THEREFORE BUYER AND SELLER DO HEREBY AGREE THAT A REASONABLE ESTIMATE OF THE TOTAL NET DETRIMENT THAT SELLER WOULD SUFFER IN THE EVENT THAT BUYER DEFAULTS AND FAILS TO COMPLETE THE PURCHASE OF THE PROPERTY IS AND SHALL BE, AS SELLER’S SOLE AND EXCLUSIVE REMEDY (WHETHER AT LAW OR IN EQUITY), THE AMOUNT OF THE DEPOSIT. SAID AMOUNT SHALL BE THE FULL, AGREED AND LIQUIDATED DAMAGES FOR THE BREACH OF OR DEFAULT UNDER THIS AGREEMENT BY BUYER, ALL OTHER CLAIMS TO DAMAGES OR OTHER REMEDIES BEING HEREIN EXPRESSLY WAIVED BY SELLER. BUYER HEREBY AUTHORIZES AND INSTRUCTS ESCROW AGENT TO DISBURSE THE DEPOSIT TO SELLER THIRTY (30) DAYS FOLLOWING NOTICE OF A BREACH AS SET FORTH IN THIS PARAGRAPH 20(b) UNLESS (i) SELLER (WITH LIMITED PARTNER CONSENT) AND BUYER OTHERWISE AGREE IN WRITING OR (ii) BUYER OBTAINS THE ORDER OF A COURT OF COMPETENT JURISDICTION PREVENTING ESCROW AGENT FROM MAKING SUCH DISBURSEMENT. THE PAYMENT OF SUCH AMOUNT AS LIQUIDATED DAMAGES IS NOT INTENDED AS A FORFEITURE OR PENALTY WITHIN THE MEANING OF THE LAW OF THE STATE, BUT IS INTENDED TO CONSTITUTE LIQUIDATED DAMAGES TO SELLER PURSUANT TO THE LAW OF THE STATE. UPON DEFAULT BY BUYER, THIS AGREEMENT SHALL BE TERMINATED AND NEITHER PARTY SHALL HAVE ANY FURTHER RIGHTS OR OBLIGATIONS HEREUNDER, EXCEPT FOR THE RIGHT OF SELLER TO COLLECT SUCH LIQUIDATED DAMAGES FROM BUYER AND ESCROW AGENT AND EXCEPT FOR THOSE MATTERS WHICH, BY THE EXPRESS TERMS OF THIS AGREEMENT, SURVIVE THE TERMINATION OF THIS AGREEMENT. NOTWITHSTANDING ANYTHING CONTAINED HEREIN TO THE CONTRARY, SELLER’S RIGHT TO OBTAIN LIQUIDATED DAMAGES SHALL IN NO EVENT LIMIT SELLER’S RIGHT TO ENFORCE AND COLLECT UPON ANY INDEMNIFICATION RIGHTS AFFORDED UNDER THIS AGREEMENT.

DD	HBZ
PURCHASER’S INITIALS	SELLER’S INITIALS

     21. Damage, Destruction or Condemnation. If prior to the Closing, there occurs any destruction of or damage or loss to the Property or any portion thereof from any cause whatsoever, including, but not limited to, any flood, accident or other casualty which, according

27

to Seller’s good faith estimate (the “Estimate”), would cost, with respect to the Property, more than the Threshold Amount to repair, or any condemnation proceedings are commenced or overtly threatened which would involve the taking of any portion of the Property valued at more than the Threshold Amount, then Buyer shall have the right, exercisable by delivering written notice to Seller and Escrow Agent within ten (10) days after Buyer’s receipt of Seller’s written Estimate of the amount of such cost or the scope of any taking, to either (a) terminate this Agreement, in which case the Deposit shall be returned to Buyer and the other provisions of Paragraph 9(c) of this Agreement shall govern, or (b) accept the Property in its then condition and proceed with the Closing, in which case Buyer shall receive a credit against the Purchase Price equal to the amount of the deductible under Seller’s insurance policies (to the extent not satisfied by Seller prior to Closing), and Seller shall assign to Buyer its rights to any insurance proceeds or condemnation award received as a result of such event. Buyer’s failure to deliver such notice within the time period specified shall be deemed to constitute Buyer’s election to terminate this Agreement. In the event the Estimate of the cost of repair or the amount of the taking, with respect to the Property, is less than or equal to the Threshold Amount, then Buyer shall not have the option to terminate this Agreement, and the parties shall proceed to the Closing, in which case Buyer shall, (x) in the event of a casualty to the Property, receive a credit against the Purchase Price equal to the amount of the deductible under Seller’s insurance policies (to the extent not satisfied by Seller prior to Closing) (or the Estimate amount if such casualty is not covered by Seller’s insurance policy), and Seller shall assign to Buyer its rights to any insurance proceeds received as a result of such event and (y) in the event of a condemnation relating to the Property, Seller shall assign to Buyer its rights to any condemnation award received as a result of such event.

     22. Brokerage. Buyer and Seller warrant that they have had no dealings with any real estate brokers in connection with the transaction set forth herein other than Broker. Seller shall pay Broker a commission pursuant to a separate agreement. Seller shall not be responsible for any commissions, finder’s fees or similar compensation to any other broker or similar person. Buyer shall have the right, but not the obligation, to utilize the services of a real estate broker other than Broker; provided, however, that Buyer shall be solely responsible for the payment of any and all commissions, finder’s fees or similar compensation to such broker that Buyer might employ. Seller and Buyer each warrant to the other that, except for the Broker, neither has dealt with or engaged any other brokers, realtors, finders or agents in connection with the negotiation of this Agreement. Seller and Buyer shall defend, indemnify and hold each other harmless from any cost or liability for any compensation, commission or charges claimed by any other brokers, realtors, finders or agents claiming by, through or on behalf of the respective indemnitor. This covenant shall survive any termination of this Agreement and shall survive Closing and the delivery of the Special Warranty Deed at Closing.

     23. Tax Credits.

          (a) Tax Credits and Affordability Requirements. Seller acquired, developed, owned and operated the Property as a project intended to generate tax credits (“Tax Credits”), including, without limitation, low-income housing tax credits under Section 42 of the Code and the Treasury Regulations promulgated thereunder (collectively, “Section 42”). The Property is subject to regulatory and other agreements recorded against the Real Property and relating to

28

income, rent or other affordable housing restrictions (collectively referred to as the “Regulatory Agreements”). In order to maintain and preserve the Tax Credits, the Property must be operated in compliance with the Regulatory Agreements and all applicable rules, procedures, regulations, guidelines and other requirements under Section 42 and all other applicable federal, state or local affordable housing laws, regulations and other requirements relating to the Property (collectively, the “Tax Credit Laws”). Buyer acknowledges that the failure to operate the Property in compliance with the Regulatory Agreements and Tax Credit Laws may cause the recapture (and/or related liability) of all or a portion of such Tax Credits and/or result in other significant damages and economic loss related to the Tax Credits.

          (b) Covenants. Buyer hereby covenants to Seller that, from and after Closing, Buyer, at its sole cost and expense and for the duration of all applicable time periods, shall (x) assume, undertake and cause to be performed all of the obligations under the Regulatory Agreements and the Tax Credit Laws applicable to the Property, including, without limitation, all ownership and operating restrictions and all tenant qualification and rent restrictions applicable to the Property, and (y) make timely, accurate and complete submissions of all reports to governmental agencies and any other reports reasonably required to be delivered with respect to the Property pursuant to the Tax Credit Laws, the Regulatory Agreements and any other documents or regulations related to the Tax Credits (including, without limitation, any applicable Housing Authority monitoring requirements). Upon Seller’s reasonable request, Buyer shall deliver to Seller copies of any back-up or supporting documentation in Buyer’s possession or control relating to any obligation of Buyer under this Paragraph 23.

          (c) Indemnification. As a material inducement for Seller to enter into this Agreement, Buyer hereby agrees to indemnify and hold Seller and its direct and indirect partners, principals, affiliates, and all of their respective employees, agents and asset managers (collectively, the “Seller Indemnified Parties”) free and harmless from: (i) the amount of any recapture of any Tax Credits; (ii) any penalties, interest or other claims by the IRS or any other governmental agency in connection with the Tax Credits; and (iii) any liabilities, claims, damages, penalties, costs, fees, charges, losses, causes of action, demands, and expenses of any kind or nature, including attorneys’ and accountants’ fees (collectively “Losses”), which Losses are related to, arise out of or are in any way connected with (A) the breach of any of the covenants in this Paragraph 23; (B) the violation of any Regulatory Agreement; or (C) any failure to maintain ownership, use and operation of the Property in accordance with the Tax Credit Laws; provided, however, that the indemnity set forth in this Paragraph 23(c) shall not apply to any Prior Noncompliance to the extent provided in Paragraph 23(f) of this Agreement.

          (d) Further Covenants. Notwithstanding anything to the contrary contained herein, following any sale, transfer or other conveyance of any or all of the interests in the Property, directly or indirectly, Buyer shall remain directly liable to the Seller Indemnified Parties and shall not be released from any obligations to the Seller Indemnified Parties under this Paragraph 23, whether accruing before or after the date of such sale, transfer or other conveyance.

          (e) [reserved]

29

          (f) Prior Non-Compliance. Except as otherwise set forth in this Paragraph 23, Buyer shall have no obligations or liabilities to the Seller Indemnified Parties, whether to indemnify, perform covenants, or to pay any damages, costs, or expenses, with respect to any noncompliance with any Regulatory Agreement or with the Tax Credit Laws, to the extent such noncompliance occurred prior to Closing (“Prior Noncompliance”). Buyer shall promptly notify Seller of any Prior Noncompliance of which it becomes aware. Notwithstanding anything to the contrary set forth herein, Buyer agrees to reasonably cooperate and/or jointly undertake with Seller, at Seller’s expense, any corrective action Seller determines is necessary to remedy the Prior Noncompliance or to mitigate Seller’s liability with respect thereto, including, without limitation, allowing Seller and its Representatives to have access to the Property and the Property files and to communicate directly with the tenants and other appropriate persons as to any such matters.

          (g) Covenant Regarding Change of Status. Buyer hereby covenants that it shall not, prior to Closing, contact any federal, state or local governmental or quasi-governmental authority, tenant, tenant association, tenant’s rights group, or similar person or organization, regarding the feasibility or possibility of changing the status of the Property from an affordable housing project as currently operated, or modifying any Regulatory Agreement, whether any such change would occur prior to or after the expiration of the Tax Credits, or in any way indicate the intention to do the same. Any breach of this covenant by Buyer, whether occurring before or after the date of this Agreement, shall constitute a default hereunder by Buyer, in which event Seller (with Limited Partner Consent) may elect to terminate this Agreement by delivering notice to Buyer and Escrow Agent of such election, whereupon this Agreement shall be terminated and the Deposit shall be retained by Seller (and the other provisions of Paragraphs 9(c) and 20(b) of this Agreement shall govern).

          (h) Regulatory Approval.

               (i) Buyer’s Obligations. In connection with all Required Consents, including, without limitation, the consent and approval of the Housing Authority, Buyer covenants to timely: (x) pay all fees and costs required by the Housing Authority in connection with such consents and approvals; and (y) deliver all documents, certifications, information, representations, agreements and other materials reasonably required to obtain such Required Consents. Buyer shall timely (and in any event within fifteen (15) days after the Opening of Escrow) file all applications required by the Housing Authority for its consent and approval to the transactions contemplated herein and shall promptly respond to all additional requests of the Housing Authority for additional information. Buyer shall use its good faith and commercially reasonable efforts to timely obtain all Required Consents. Buyer shall keep Seller timely informed of the consent process and the status of its efforts. Seller shall reasonably cooperate with Buyer’s efforts to obtain the Required Consents but Seller shall not be obligated to incur any cost, expense or liability in so doing and Buyer shall indemnify Seller as set forth in Paragraph 7(d) of this Agreement in connection with such efforts.

               (ii) Failure to Obtain Consent. In the event all Required Consents have not been obtained at least two (2) days prior to the Outside Closing Date (as the same may

30

be extended in accordance with the terms of Paragraph 18 hereof), this Agreement shall be terminated (in which case the provisions of Paragraph 9(c) of this Agreement shall govern).

          (i) Third Party Beneficiary. The provisions of this Paragraph 23 shall inure to the benefit of both Seller and SHF (which is expressly made a third party beneficiary of this Agreement and the exhibits attached hereto, with the right to take direct action hereon and to exercise any rights or remedies afforded to Seller hereunder), and each of their respective successors and assigns, and shall bind the heirs, executors, administrators, successors and assigns of Buyer.

          (j) Survival. The provisions of this Paragraph 23 shall survive Closing and the delivery of the Special Warranty Deed at Closing.

     24. Miscellaneous.

          (a) Partial Invalidity. If any term or provision of this Agreement or the exhibits attached hereto or the application thereof to any person or circumstance shall, to any extent, be invalid or unenforceable, the remainder of this Agreement and the exhibits attached hereto, or the application of such term or provision to persons or circumstances other than those as to which it is held invalid or unenforceable, shall not be affected thereby, and each such term and provision of this Agreement and the exhibits attached hereto shall be valid and shall be enforced to the fullest extent permitted by law.

          (b) No Waivers. No waiver of any breach of any covenant or provision herein contained shall be deemed a waiver of any preceding or succeeding breach thereof, or of any other covenant or provision herein contained. No extension of time for performance of any obligation or act shall be deemed an extension of the time for performance of any other obligation or act.

          (c) Successors and Assigns. This Agreement and the exhibits attached hereto shall be binding upon and shall inure to the benefit of the permitted successors and assigns of the parties hereto.

          (d) Entire Agreement. This Agreement (including all exhibits attached hereto) is the final expression of, and contains the entire agreement among, the parties with respect to the subject matter hereof and supersedes all prior understandings with respect thereto. Neither this Agreement nor any of the other documents to be executed hereunder may be modified, changed, supplemented or terminated, nor may any obligations hereunder or thereunder be waived, except by written instrument signed by the party to be charged (and in the event Seller is to be charged, with Limited Partner Consent) or as otherwise expressly permitted herein. The parties do not intend to confer any benefit hereunder on any person, firm or corporation other than the parties hereto and their permitted successors and assigns.

          (e) Time of Essence. The parties hereby acknowledge and agree that time is strictly of the essence with respect to each and every term, condition, obligation and provision of this Agreement and that failure to timely perform any of the terms, conditions, obligations or

31

provisions of this Agreement by either party shall constitute a material breach of and a non-curable (but waivable in accordance with Paragraph 24(d) of this Agreement) default under this Agreement by the party so failing to perform.

          (f) Construction. Headings at the beginning of each paragraph and subparagraph are solely for the convenience of the parties and are not a part of this Agreement. Whenever required by the context of this Agreement and the exhibits attached hereto, the singular shall include the plural and the masculine shall include the feminine and vice versa. This Agreement and the exhibits attached hereto shall not be construed as if they had been prepared by one of the parties, but rather as if all parties had prepared the same. Unless otherwise indicated, all references to paragraphs and subparagraphs are to this Agreement.

          (g) Governing Law. The parties hereto acknowledge that this Agreement has been negotiated and entered into in the State. The parties hereto expressly agree that this Agreement shall be governed by, interpreted under, and construed and enforced in accordance with the laws of the State. Any dispute arising under this Agreement or the documents referred to herein will be adjudicated exclusively in the courts of the State with venue in the County.

          (h) Non-Binding. No party shall have any legal rights or obligations with respect to any other party, and no party should or may take any action or fail to take any action in detrimental reliance, unless and until this Agreement is executed by all of the parties hereto.

          (i) Exhibits. All exhibits referred to in this Agreement are attached hereto and are fully incorporated herein by this reference as though set forth at length herein.

          (j) Assignment. Buyer shall not assign its rights under this Agreement. Notwithstanding the foregoing sentence, prior to Closing Purchaser may assign its rights under this Agreement to a Permitted Assign; provided, however, that such assignee shall assume all of Purchaser’s obligations under this Agreement; provided, further, that Purchaser shall remain jointly and severally liable with its Permitted Assign for all obligations of Buyer under this Agreement and under the documents to be executed and delivered in connection herewith. This Agreement and the documents to be executed and delivered hereunder may be assigned by Seller to any affiliate of any partner of Seller. Notwithstanding any assignment or any other provision of this Agreement to the contrary, in no event shall Buyer be released from any of its obligations under this Agreement and/or the exhibits attached hereto, including, without limitation, the indemnification obligations under Paragraph 23(c) of this Agreement.

          (k) Counterparts. This Agreement may be executed in counterparts, each of which shall constitute a separate document but all of which together shall constitute one and the same agreement. Signature pages may be detached and reattached to physically form one document. This Agreement may be executed by facsimile or electronic (scanned) signature.

          (l) Further Assurances. To the extent consistent with the terms of this Agreement and customarily executed and/or delivered in similar transactions, Buyer and Seller will make, execute, and deliver such documents and undertake such other and further acts as may be reasonably necessary to complete the transaction contemplated herein.

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          (m) Third Party Beneficiary. Except for SHF, which is expressly made a third party beneficiary of this Agreement, no term or provision of this Agreement or the documents to be executed and delivered hereunder is intended to be, nor will any such term or provision be construed to be, for the benefit of any person, firm, corporation or other entity not a party hereto (including, without limitation, any broker), and no other person, firm, corporation or entity will have any right or cause of action hereunder.

          (n) No Recording. The provisions of this Agreement will not constitute a lien on the Property and neither this Agreement nor any notice or memorandum of this Agreement will be recorded by Buyer.

          (o) Business Days. If, under the terms of this Agreement, the time for the performance of any act, giving of notice, or making any payment falls on a Saturday, Sunday, or legal holiday, such time for performance shall be extended to the next succeeding business day.

          (p) Limited Partner of Seller. Buyer acknowledges that each limited partner (“Limited Partner”) of Seller, including, without limitation, SHF, is a limited partner of Seller and, therefore, does not have any personal liability for Seller’s obligations. Even though any such Limited Partner may have been involved in the preparation, negotiation and consummation of this Agreement and the exhibits attached hereto, such involvement does not, in any manner whatsoever, modify or change any such Limited Partner’s status as a limited partner of Seller. Buyer has no claim against any Limited Partner (or any of its direct or indirect partners, principals, asset managers, contractors, agents, affiliates, successors or assigns) for the obligations of Seller hereunder.

          (q) 1031 Exchange. Any party may consummate the purchase or sale (as applicable) of the Real Property to be conveyed hereunder as part of a so-called like-kind exchange (an “Exchange”) pursuant to Section 1031 of the Code, as amended; provided, however, that: (i) the Closing shall not be delayed or affected by reason of the Exchange nor shall the consummation or accomplishment of an Exchange be a condition precedent or condition subsequent to the exchanging party’s obligations under this Agreement; (ii) any assignment of this Agreement necessary to effect its Exchange shall comply with all of the terms of this Agreement; (iii) no party shall be required to take an assignment of any agreement for the relinquished or replacement property or be required to acquire or hold title to any real property for purposes of consummating an Exchange desired by the other party; (iv) the exchanging party shall pay any additional costs that would not otherwise have been incurred by the non-exchanging party had the exchanging party not consummated the transaction through an Exchange; and (v) the non-exchanging party shall not incur any liabilities. No party shall by this Agreement or acquiescence to an Exchange desired by the other party have its rights under this Agreement affected or diminished in any manner or be responsible for compliance with or be deemed to have warranted to the exchanging party that its Exchange in fact complies with Section 1031 of the Code. Subject to the provisions of this Paragraph 24(q), each party shall cooperate with the other party in effecting an Exchange.

33

     (r) Confidentiality. Buyer shall treat this Agreement and the Property Files as confidential in all respects and shall not disclose the existence of this Agreement, the terms of this Agreement, the Property Files or the results of its due diligence under this Agreement without the advance written consent of Seller, except for (i) disclosure only to the extent reasonably necessary to Buyer’s Representatives in connection with the transactions contemplated hereby or, after the Closing Date, for the operation of the Property; (ii) disclosure required by law or by regulators, including in response to a subpoena or similar process or as part of a filing required to be made under securities laws; (iii) disclosure in connection with litigation to enforce the terms of this Agreement; (iv) disclosure by a party required to satisfy a condition precedent to Closing; and (v) after the Closing Date, the fact of the purchase of the Property, the Purchase Price, the identity of the Seller (but not the members thereof) and other publicly available information.

     (s) SHF Consent. Notwithstanding anything contained herein to the contrary, Seller cannot, without first obtaining Limited Partner Consent: (a) amend this Agreement; (b) waive any rights Seller may have under this Agreement; (c) incur any non-customary charges or expenses in connection with the transactions contemplated by this Agreement and/or (d) incur any additional liabilities (except as expressly contemplated hereunder) in connection with the transactions contemplated by this Agreement. In addition, if the consent of Seller is required under this Agreement and/or requested of Seller, Seller shall not grant such consent without first obtaining Limited Partner Consent.

      (t) Survival. The provisions of this Paragraph 24 shall survive any termination of this Agreement and shall survive Closing and the delivery of the Special Warranty Deed at Closing.

      (u) Merger. All provisions of this Agreement (except for the terms of this Agreement which expressly survive Closing and the delivery of the Special Warranty Deed at Closing) shall merge into the Special Warranty Deed with the delivery of the Special Warranty Deed, and the delivery of the Special Warranty Deed to Buyer shall constitute the full performance of Seller under this Agreement.

     (v) Record Access and Retention. To the extent Seller possesses or controls the same, prior to Closing, Seller shall use commercially reasonable efforts to provide Buyer with copies of, or reasonable access to, such factual information as may be reasonably requested by Buyer in connection with an audit, in accordance with Rule 3-14 of Securities and Exchange Commission Regulation S-X, of the income statements of the Property for the year to date of the year in which Closing occurs plus one (1) prior calendar year (provided, however, such audit shall not include an audit of management fees or interest expenses attributable to the Seller). Buyer shall be responsible to engage the auditor and to pay all costs associated with such audit. Notwithstanding anything in this Paragraph 24(v) to the contrary, Seller shall not have or be required to incur any cost, expense or liability in connection with such audit.

<Parties’ Signatures On Next Page>

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          IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first set forth above.

SELLER:

Arbor Pointe, L.P., an Ohio limited partnership

By:   MBS GP 76, L.L.C., a Delaware limited liability company, its general partner  

By:   MUDCO 4, INC., a Missouri corporation, its Sole Member  

By:	/s/ Hillary B. Zimmerman
	Hillary, B. Zimmerman, Vice President

PURCHASER: Steadfast Asset Holdings, Inc., a California corporation
By:	/s/ Dinesh Davar
	Name:	Dinesh Davar
	Title:	Chief Financial Officer

Signature page for REAL ESTATE PURCHASE AND SALE AGREEMENT WITH ESCROW
INSTRUCTIONS dated as of February 16, 2011 by and between Arbor Pointe, L.P., an Ohio
limited partnership and Steadfast Asset Holdings, Inc., a California corporation

s-1

ACCEPTANCE BY CHICAGO TITLE INSURANCE COMPANY

     Chicago Title Insurance Company, referred to in this Agreement as the “Escrow Agent” and “Title Company,” hereby acknowledges receipt of the Initial Deposit in the amount of One Hundred Thousand Dollars ($100,000.00), together with a fully executed copy of this Agreement. Chicago Title Insurance Company certifies that it has received and understands this Agreement and hereby accepts the obligations of the Escrow Agent and the Title Company as set forth herein, including, without limitation, its agreement to hold the Deposit and disburse same, in strict accordance with the terms and provisions of this Agreement.

Date: February 16, 2011

Chicago Title Insurance Company
By:	/s/ Shannon Bright
	Name:	Shannon Bright
	Title:

s-2

SCHEDULE OF EXHIBITS

EXHIBIT A	Legal Description
EXHIBIT B	Form of Special Warranty Deed
EXHIBIT C	Form of FIRPTA Certificate
EXHIBIT D	Form of Assignment and Assumption of Leases
EXHIBIT E	Form of General Assignment and Bill of Sale
EXHIBIT F	Form of Tenant Notice Letter
EXHIBIT G	[reserved]
EXHIBIT H	Rent Roll
EXHIBIT I	List of Property Files
EXHIBIT J	[reserved]

s-3

EXHIBIT “A”
LEGAL DESCRIPTION OF PROPERTY

Located in Jefferson County, Kentucky:

Being all of Residual Tract “13R” as shown on approved Minor Subdivision Plat bearing Docket #126-93 attached to and made a part of instrument recorded in Deed Book 6330, page 761, in the Office of the Clerk of Jefferson County, Kentucky.

Being the same property conveyed to Arbor Pointe Limited Partnership, an Ohio limited partnership, by Deed dated December 7, 1993, recorded in Deed Book 6391, Page 693, in the Office of the Clerk of Jefferson County, Kentucky.

a-1

EXHIBIT “B”
[FORM OF]
Special Warranty Deed

     THIS DEED is made and entered into as of                     , 2011, between

Arbor Pointe, L.P., an Ohio limited partnership
c/o McCormack Baron Salazar, Inc.
720 Olive Street, Suite 2500
St. Louis, Missouri 63101
Attn: Hillary Zimmerman

(“Grantor”)

and

Attn:                     

(“Grantee”).

WITNESSETH

     For a total consideration of                      Dollars ($                    .00), the receipt and sufficiency of which are acknowledged, Grantor grants and conveys to Grantee in fee simple with covenant of Special Warranty the real property located in Jefferson County, Kentucky, and more particularly described on EXHIBIT A attached hereto and made a part hereof (the “Property”).

     Grantor covenants and warrants specially the Property and will forever warrant and defend the Property against the claims and demands of Grantor and all persons claiming by, through or under Grantor, but not otherwise. This conveyance is made subject to all (i) easements, restrictions and stipulations of record, (ii) governmental laws, ordinances and regulations affecting the Property and (iii) liens for real property taxes and assessments due and payable in 2011 and thereafter, which Grantee assumes and agrees to pay.

     For purposes of KRS 382.135, Grantor and Grantee, by execution of this Deed, certify that the consideration reflected in this Deed is the full consideration paid for the Property.

     For purposes of KRS 382.135, the in-care-of address to which the property tax bill for 201_ may be sent to is: c/o                     , a                     ,                     ; Attn: ___________.

b-1

     IN WITNESS WHEREOF, Grantor and Grantee have executed this Deed as of the date first set forth above but actually on the dates set forth below.

GRANTOR:

Arbor Pointe, L.P., an Ohio limited partnership

By:   MBS GP 76, L.L.C., a Delaware limited liability company, its general partner  

By:   MUDCO 4, INC., a Missouri corporation, its Sole Member  

By:
	Hillary B. Zimmerman, Vice President

Date:                     , 2011

GRANTEE:

By:

Name:

Title:

Date:                     , 2011

b-2

This Deed Prepared By:

Joseph S. Klein, Esq.

Bouza, Klein & Kaminsky

950 S. Flower Street, Suite 100

Los Angeles, California 90015

When Recorded Return to:

b-3

[CONFORM FORM OF NOTARY TO LOCAL LAW]

STATE OF                     )
: ss.
COUNTY OF                     )

The foregoing instrument was acknowledged before me this ______ day of                     , 20____ by                     . He or she is personally known to me or has produced                      as identification and did (did not) take an oath.

                                                                                  
NOTARY PUBLIC
Residing at:                                                              

My Commission Expires:

b-4

EXHIBIT “A” TO SPECIAL WARRANTY DEED
LEGAL DESCRIPTION OF PROPERTY

Located in Jefferson County, Kentucky:

Being all of Residual Tract “13R” as shown on approved Minor Subdivision Plat bearing Docket #126-93 attached to and made a part of instrument recorded in Deed Book 6330, page 761, in the Office of the Clerk of Jefferson County, Kentucky.

Being the same property conveyed to Arbor Pointe Limited Partnership, an Ohio limited partnership, by Deed dated December 7, 1993, recorded in Deed Book 6391, Page 693, in the Office of the Clerk of Jefferson County, Kentucky.

b-5

EXHIBIT “C”
[FORM OF]
TAXPAYER’S CERTIFICATION OF NON-FOREIGN STATUS

          To inform Steadfast Asset Holdings, Inc., a California corporation (“Transferee”) that withholding of tax under Section 1445 of the Internal Revenue Code of 1986, as amended (“Code”), will not be required upon the transfer of certain real property to the Transferee by Arbor Pointe, L.P., an Ohio limited partnership, the undersigned (“Taxpayer”) hereby certifies the following on behalf of the Taxpayer:

          1. That Taxpayer is a United States person and is not a foreign person, foreign corporation, foreign partnership, foreign trust, or foreign estate (as those terms are defined in the Code and the Income Tax Regulations promulgated thereunder);

          2. The Taxpayer’s U.S. employer identification number is 31-1393134; and

          3. The Taxpayer’s office address is 720 Olive Street, Suite 2500, St. Louis, Missouri 63101.

          The Taxpayer understands that this Certification may be disclosed to the Internal Revenue Service by the Transferee and that any false statement contained herein could be punished by fine, imprisonment, or both.

          Under penalty of perjury I declare that I have examined this Certification and to the best of my knowledge and belief it is true, correct and complete, and I further declare that I have authority to sign this document on behalf of the Taxpayer.

Date:                                                               

Arbor Pointe, L.P., an Ohio limited partnership

By:   MBS GP 76, L.L.C., a Delaware limited liability company, its general partner  

By:   MUDCO 4, INC., a Missouri corporation, its Sole Member  

By:
	Hillary, B. Zimmerman, Vice President

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EXHIBIT “D”
[FORM OF]
ASSIGNMENT AND ASSUMPTION OF LEASES

     THIS ASSIGNMENT AND ASSUMPTION OF LEASES (“Assignment”) is dated as of                     , and is entered into by and between Arbor Pointe, L.P., an Ohio limited partnership (“Assignor”) and                      (“Assignee”), with respect to the following matters.

W I T N E S S E T H:

     Assignor and Steadfast Asset Holdings, Inc., a California corporation (“Purchaser”) entered into that certain Real Estate Purchase And Sale Agreement With Escrow Instructions, dated as of February __, 2011 (“Agreement”), regarding the sale of that certain real property being more fully described on Exhibit “A” attached hereto and made a part hereof, together with all improvements and other property comprising Property (as defined in the Agreement). Unless otherwise indicated herein, all capitalized terms in this Assignment shall have the meaning ascribed to them in the Agreement.

     In accordance with the terms of the Agreement, Purchaser assigned its interests to Assignee.

     Assignor, as lessor, and Tenants have entered into the Tenant Leases covering certain premises located on the Property.

     Under the Agreement, to the extent assignable, Assignor is obligated to: (a) assign to Assignee any and all of its right, title and interest in and to all Tenant Leases; and (b) give Assignee a credit in an amount equal to the amount of the Tenant Deposits and prepaid rents.

     Under the Agreement, Assignee is obligated to assume all of Seller’s obligations with respect to the Tenant Deposits and prepaid rents.

A G R E E M E N T

     NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows.

     Assignor hereby assigns, sells, transfers, sets over and delivers unto Assignee all of Assignor’s estate, right, title and interest in and to the Tenant Leases, as set forth on Exhibit “B” hereto and Assignee hereby accepts such assignment and hereby assumes all of the obligations and agrees to pay, perform and discharge all of the terms, covenants and conditions, in each case arising or accruing under or in connection with the Tenant Leases and Tenant Deposits from and after the date of this Assignment.

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     Assignee hereby acknowledges receipt of funds equal to the amount of, and in payment of, all Tenant Deposits and prepaid rents and hereby assumes all of the obligations in connection therewith.

     In the event of the bringing of any action or suit by a party hereto against another party thereunder by reason of any breach of any of the covenants, conditions, agreements or provisions on the part of the other party arising out of this Assignment, then in that event the prevailing party shall be entitled to have and recover of and from the other party all costs and expenses of the action or suit, including actual attorneys’ fees and costs.

     The transfers and assumptions given effect by this Assignment are limited by and made expressly subject to the terms, covenants and conditions set forth in the Agreement.

     This Assignment may be executed simultaneously in counterparts, each of which shall be deemed an original, but all of which, together, shall constitute one and the same instrument.

     This Assignment shall be binding upon and inure to the benefit of the successors, assignees, personal representatives, heirs and legatees of all the respective parties hereto.

     This Assignment shall be governed by, interpreted under, and construed and enforceable in accordance with, the laws of the State.

<Parties’ Signatures On Next Page>

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     IN WITNESS WHEREOF, Assignor and Assignee have executed and delivered this Assignment as of the day and year first above written.

ASSIGNOR:

Arbor Pointe, L.P., an Ohio limited partnership

By:   MBS GP 76, L.L.C., a Delaware limited liability company, its general partner  

By:   MUDCO 4, INC., a Missouri corporation, its Sole Member  

By:
	Hillary, B. Zimmerman, Vice President

ASSIGNEE:

By:

Name:

Title:

Attachments:

Exhibit “A” — Legal Description

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EXHIBIT “A” TO ASSIGNMENT AND ASSUMPTION OF LEASES
LEGAL DESCRIPTION OF THE PROPERTY

Located in Jefferson County, Kentucky:

Being all of Residual Tract “13R” as shown on approved Minor Subdivision Plat bearing Docket #126-93 attached to and made a part of instrument recorded in Deed Book 6330, page 761, in the Office of the Clerk of Jefferson County, Kentucky.

Being the same property conveyed to Arbor Pointe Limited Partnership, an Ohio limited partnership, by Deed dated December 7, 1993, recorded in Deed Book 6391, Page 693, in the Office of the Clerk of Jefferson County, Kentucky.

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EXHIBIT “E”
[FORM OF]
GENERAL ASSIGNMENT AND BILL OF SALE

     THIS GENERAL ASSIGNMENT AND BILL OF SALE (“Assignment”) is dated as of                     , and is entered into by and between Arbor Pointe, L.P., an Ohio limited partnership (“Assignor”) and                      (“Assignee”), with respect to the following matters.

W I T N E S S E T H:

     Assignor and Steadfast Asset Holdings, Inc., a California corporation (“Purchaser”) entered into that certain Real Estate Purchase And Sale Agreement With Escrow Instructions, dated as of February __, 2011 (“Agreement”), regarding the sale of that certain real property being more fully described on Exhibit “A” attached hereto and made a part hereof, together with all improvements and other property comprising Property (as defined in the Agreement). Unless otherwise indicated herein, all capitalized terms in this Assignment shall have the meaning ascribed to them in the Agreement.

     In accordance with the terms of the Agreement, Purchaser assigned its interests to Assignee.Steadfast Asset Holdings, Inc., a California corporation (“Assignee”), with respect to the following matters.

     Pursuant to the Agreement (except as otherwise provided for therein), Assignor is obligated to transfer, sell, convey and assign any and all of Assignor’s right, title and interest in and to the Personal Property, and to the extent assignable, the Intangibles and the Service Contracts (collectively, the “Assigned Properties”) and to delegate any and all of its obligations and responsibilities in the Assigned Properties from and after the date hereof to Assignee and Assignee is obligated to assume such obligations and responsibilities.

     Further, pursuant to the Agreement, Assignee is obligated to assume such obligations and responsibilities arising or accruing under the Regulatory Agreements and the Tax Credit Laws applicable to the Property.

A G R E E M E N T

     NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows.

     Assignor hereby assigns, sells, transfers, sets over and delivers unto Assignee all of Assignor’s estate, right, title and interest in and to the Assigned Properties and Assignee hereby accepts such assignment and hereby assumes all of the obligations and agrees to pay, perform and discharge all of the terms, covenants and conditions, in each case arising or accruing under the Assigned Properties from and after the date of this Assignment.

     Assignor hereby assigns, sells, transfers, sets over and delivers unto Assignee all of Assignor’s estate, right, title and interest in and to the Regulatory Agreements and Assignee

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hereby accepts such assignment and hereby assumes, confirms and agrees to undertake all of the obligations arising or accruing under the Regulatory Agreements and the Tax Credit Laws applicable to the Property from and after the date of this Assignment. The provisions of this Paragraph shall survive any termination of this Assignment.

     In the event of the bringing of any action or suit by a party hereto against another party hereunder by reason of any breach of any of the covenants, conditions, agreements or provisions on the part of the other party arising out of this Assignment, then in that event the prevailing party shall be entitled to have and recover of and from the other party all costs and expenses of the action or suit, including actual attorneys’ fees and costs.

     The transfers and assumptions given effect by this Assignment are limited by and made expressly subject to the terms, covenants and conditions set forth in the Agreement.

     This Assignment shall be binding upon and inure to the benefit of the successors, assignees, personal representatives, heirs and legatees of all the respective parties hereto.

     This Assignment shall be governed by, interpreted under, and construed and enforceable in accordance with, the laws of the State.

     This Assignment may be executed in counterparts, each of which shall be deemed an original, but all of which, together, shall constitute one and the same instrument.

<Parties’ Signatures On Next Page>

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     IN WITNESS WHEREOF, Assignor and Assignee have executed and delivered this Assignment as of the day and year first above written.

ASSIGNOR:

Arbor Pointe, L.P., an Ohio limited partnership

By:   MBS GP 76, L.L.C., a Delaware limited liability company, its general partner  

By:   MUDCO 4, INC., a Missouri corporation, its Sole Member  

By:
	Hillary, B. Zimmerman, Vice President

ASSIGNEE:

By:

Name:

Title:

Attachments:

Exhibit “A” — Legal Description

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EXHIBIT “A” TO GENERAL ASSIGNMENT AND BILL OF SALE
LEGAL DESCRIPTION OF THE PROPERTY

Located in Jefferson County, Kentucky:

Being all of Residual Tract “13R” as shown on approved Minor Subdivision Plat bearing Docket #126-93 attached to and made a part of instrument recorded in Deed Book 6330, page 761, in the Office of the Clerk of Jefferson County, Kentucky.

Being the same property conveyed to Arbor Pointe Limited Partnership, an Ohio limited partnership, by Deed dated December 7, 1993, recorded in Deed Book 6391, Page 693, in the Office of the Clerk of Jefferson County, Kentucky.

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EXHIBIT “F”
FORM OF TENANT NOTICE LETTER

ARBOR POINTE APARTMENTS

[CLOSING DATE]

Tenant Name:

Unit #:

Re: Notice of Sale regarding Arbor Pointe Apartments, located at 2051 Stoney Brook Drive, Louisville, Kentucky 40299 (the “Property”)

Dear Resident:

You are hereby notified as follows:

1.	As of the date hereof, the Property has been sold to a new owner.
2.	The new owner has received and is now responsible for your tenant security, pet and other deposits and credits with respect to your lease at the Property. Any inquiries regarding your deposit should be directed to the on-site manager of the Property.
3.	Future rental payments with respect to your lease at the Property should be made to the new owner by delivering a check or money order payable to the order of [                    ] to the on-site manager of the Property.

Very truly yours, [BUYER OR BUYER’S MANAGEMENT COMPANY]
By:
	Name:
	Title:

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EXHIBIT “G”
[reserved]

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EXHIBIT “H”
RENT ROLL

<Attached>

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EXHIBIT “I”
LIST OF PROPERTY FILES

1.	Current rent roll
2.	Current standard tenant lease form (with all addendums, riders and exhibits)
3.	Copies of current tenant leases (including amendments) and copies of tenant files (available on-site)
4.	Unaudited monthly income statements for the Property, year-to-date and for the previous three (3) years
5.	Current year budget for the Property
6.	Occupancy report (by month) for the past three (3) years
7.	Copy of the property management agreement
8.	Listing of current on-site employees, their titles and duties / job description / compensation structure
9.	Service Contracts
10.	Three (3) year loss run, and copies of insurance certificates
11.	The utility bills for the Property for the past twelve (12) calendar months
12.	List of capital expenses for the previous two (2) years for the Property
13.	Regulatory Agreements
14.	Licenses, permits, and certificates of occupancy
15.	As-built (ALTA or other) surveys for the Property
16.	Phase I Environmental Site Assessments
17.	Third party engineering reports
18.	Most recent compliance audit from the Housing Authority
19.	Outstanding, unresolved IRS Form 8823s
20.	Schedule of Personal Property
21.	List of capital expenses for the previous three (3) years for the Property
22.	8609’s
23.	Aged delinquency report
24.	2009 audited financial statement
25.	2010 trial balance
26.	2010 general ledger
27.	2010 monthly rent rolls
28.	2010 monthly bank statements and reconciliations
29.	2010 real property tax invoices with check copies
30.	2010 insurance invoices with check copies
31.	Access to reasonable number of 2010 invoices to be selected by Auditors for      review
32.	Year to date general ledger
33.	Year to date monthly rent rolls
34.	Year to date monthly bank statements and reconciliations
35.	Current year real property tax invoices with check copies (if paid)
36.	Current year to date insurance invoices with check copies (if paid)
37.	Access to reasonable number of current year to date invoices to be selected by Auditors for review
38.	2010 cash disbursement journal

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39.	Year to date trial balance
40.	Year to date cash disbursement journal

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EXHIBIT “J”
[reserved]

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EX-10.2

Exhibit 10.2

April 11, 2011

VIA FACSIMILE AND FEDERAL EXPRESS

Hillary Zimmerman
Arbor Pointe, L.P.
c/o McCormack Baron Salazar, Inc.
720 Olive Street, Suite 2500
St. Louis, Missouri 63101
Fax: (314) 335-2891

Shannon Bright
Chicago Title Insurance Company
2001 Bryan Street, Suite 1700
Dallas, Texas 75201
Fax: (214) 965-1627

Re:  Real Estate Purchase and Sale Agreement with Escrow Instructions, dated as of February 16, 2011 (as amended by the certain First Amendment dated March 18, 2011, the “Purchase Agreement”) between ARBOR POINTE, L.P., an Ohio limited partnership, as Seller (“Seller”) and STEADFAST ASSET HOLDINGS, INC., a California corporation, or its assigns, as Buyer (“Buyer”) for the sale and purchase of certain “Property” (as defined in the Purchase Agreement) including a multi-family residential apartment building commonly known as Arbor Pointe located in Jefferson County, Kentucky. Capitalized terms not defined in this letter shall have the respective meanings assigned to such terms in the Purchase Agreement.

Ms. Zimmerman and Ms. Bright:

     In accordance with Section 18 of the Purchase Agreement, Buyer hereby notifies Seller that Buyer is hereby exercising its right under Section 18 to extend the Outside Closing Date one time for up to thirty (30) days beyond the initial Outside Closing Date (the “Extension”). The Deposit shall remain with the Escrow Agent and shall be subject to the terms and conditions of the Purchase Agreement. Nothing in this letter shall be deemed to waive any rights of Buyer or Seller as otherwise set forth in the Purchase Agreement.

Very truly yours, SREADFAST ASSET HOLDINGS, INC.
By:	/s/ Ana Marie Del Rio
	Name:	ANA MARIE DEL RIO
	Title:	SECREATARY

April 11, 2011
Page 2

cc: Thomas Musante
SunAmerica Affordable Housing Partners
1 SunAmerica Center, 36th Floor
Los Angeles, California 90067-6022
Fax: (310) 772-6794

Joseph S. Klein, Esq.
Bouza, Klein & Kaminsky
950 S. Flower Street, Suite 100
Los Angeles, California 90015
Fax: (213) 488-1316

EX-10.3

Exhibit 10.3

ASSIGNMENT AND ASSUMPTION OF PURCHASE AGREEMENT

For good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, STEADFAST ASSET HOLDINGS, INC., a California corporation (“Assignor”), hereby assigns to SIR ARBOR POINTE, LLC, a Delaware limited liability company (“Assignee”), all of Assignor’s rights and obligations under and in regard to that certain Real Estate Purchase and Sale Agreement with Escrow Instructions dated February 16, 2011, as amended to the date hereof (as amended, the “Purchase Agreement”), between Arbor Pointe, L.P. (“Seller”) and Assignor for the purchase and sale of that certain real property located in Louisville, Kentucky, as more particularly described in Exhibit A attached hereto (the “Property”).

Assignee hereby agrees to and shall assume, perform and be fully responsible for the performance of all of the obligations of Assignor under the Purchase Agreement.

All of the provisions, covenants and agreements contained in the Assignment shall extend to and be binding upon the respective legal representatives, successors and assigns of Assignor and Assignee. This Assignment represents the entire agreement between Assignor and Assignee with respect to the subject matter of the Assignment , and all prior or contemporaneous agreements regarding such matters are hereby rendered null and void and of no force and effect.

(SIGNATURES APPEARS ON FOLLOWING PAGE)

WITNESS THE EXECUTION HEREOF, as of this May 5, 2011.

ASSIGNOR:
STEADFAST ASSET HOLDINGS, INC., a California corporation
By:	/s/ Dinesh Davar
Name:	Dinesh Davar
Title:	Chief Financial Officer
ASSIGNEE:
SIR ARBOR POINTE, LLC an Delaware limited liability company
By:	Steadfast Income Advisor, LLC, a Delaware limited liability company, its Manager
	By:	/s/ Ana Marie del Rio
	Name:	Ana Marie del Rio
	Title:	Secretary

Exhibit A

DESCRIPTION OF THE LAND

Located in Jefferson County, Kentucky:

Being all of Residual Tract “13R” as shown on approved Minor Subdivision Plat bearing Docket #126-93 attached to and made a part of instrument recorded in Deed Book 6330, page 761, in the Office of the Clerk of Jefferson County, Kentucky.

Being the same property conveyed to Arbor Pointe Limited Partnership, an Ohio limited partnership, by Deed dated December 7, 1993, recorded in Deed Book 6391, Page 693, in the Office of the Clerk of Jefferson County, Kentucky.

EX-10.4

Exhibit 10.4

PROPERTY MANAGEMENT AGREEMENT

     THIS PROPERTY MANAGEMENT AGREEMENT (this “Agreement”) is made and entered into as of May 5, 2011 (the “Effective Date”), by and between SIR ARBOR POINTE, LLC, a Delaware limited liability company (“Owner”), and STEADFAST MANAGEMENT CO., INC., a California corporation (“Manager”).

ARTICLE 1
DEFINITIONS

     Section 1.1 Definitions. The following terms shall have the following meanings when used in this Agreement:

     “Agreement” has the meaning given in the introductory paragraph.

     “Annual Business Plan” has the meaning given in Section 3.11(a).

     “Capital Budget” has the meaning given in Section 3.11(a).

     “Depository” means such bank or federally-insured or other financial institution as Owner shall designate in writing.

     “Effective Date” has the meaning given in the introductory paragraph.

     “Fiscal Year” means the calendar year beginning January 1 and ending December 31 of each calendar year, or such other fiscal year as determined by Owner and of which Manager is notified in writing; provided that the first Fiscal Year of this Agreement shall be the period beginning on the Effective Date and ending on December 31 of the calendar year in which the Effective Date occurs.

     “Governmental Requirements” has the meaning given in Section 3.14.

     “Gross Collections” means all amounts actually collected as rents or other charges for use and occupancy of apartment units and from users of garage spaces (if any), leases of other non-dwelling facilities in the Property and concessionaires (if any) in respect of the Property, including furniture rental, parking fees, forfeited security deposits, application fees, late charges, income from coin-operated machines, proceeds from rental interruption insurance, and other miscellaneous income collected at the Property; excluding, however, all other receipts, including but not limited to, income derived from interest on investments or otherwise, proceeds of claims on account of insurance policies (other than rental interruptions insurance), abatement of taxes, franchise fees, and awards arising out of eminent domain proceedings, discounts and dividends on insurance policies.

     “Hazardous Materials” means any material defined as a hazardous substance under the Comprehensive Environmental Response, Compensation and Liability Act of 1980, the Resource Conservation and Recovery Act, or any state or local statute regulating the storage, release,

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transportation or other disposition of hazardous material, as any of those laws may have been amended to the date hereof, and the administrative regulations promulgated thereunder prior to the date hereof, and, whether or not defined as hazardous substances under the foregoing Governmental Requirements, petroleum products (other than petroleum products used in accordance with Governmental Requirements by Owner or its tenants in the usual and ordinary course of their activities), PCBs and radon gas.

     “Major Capital Improvements” has the meaning given in Section 3.6.

     “Management Fee” has the meaning given in Section 4.1.

     “Manager” has the meaning given in the introductory paragraph.

     “Operating Budget” has the meaning given in Section 3.11(a).

     “Owner” has the meaning given in the introductory paragraph.

     “Owner’s Representative” has the meaning given in Section 2.2.

     “Pass-Through Amounts” means additional fees for services provided to the Property but not covered by the Management Fee as described in Exhibit A attached hereto and made a part hereof.

     “Property” means the multifamily apartment project listed and described on Exhibit B attached hereto and made a part hereof.

     “Security Deposit Account” has the meaning given in Section 2.3.

     “State” means the state in which the Property is located.

ARTICLE 2
APPOINTMENT OF AGENCY AND RENTAL RESPONSIBILITY

     Section 2.1 Appointment. Owner hereby appoints Manager and Manager hereby accepts appointment as the sole and exclusive leasing agent and manager of the Property on the terms and conditions set forth herein. Owner warrants and represents to Manager that Owner owns fee simple title to the Property with all requisite authority to hereby appoint Manager and to enter into this Agreement.

     Section 2.2 Owner’s Representative. Owner shall from time to time designate one or more persons to serve as Owner’s representative (“Owner’s Representative”) in all dealings with Manager hereunder. Whenever the approval, consent or other action of Owner is called for hereunder, such approval, consent or action shall be binding on Owner if specified in writing and signed by Owner’s Representative. The initial Owner’s Representative shall be Kyle Winning. Any Owner’s Representative may be changed at the discretion of Owner, at any time, and shall be effective upon Manager’s receipt of written notice identifying the new Owner’s Representative.

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     Section 2.3 Leasing. Manager shall perform all promotional, leasing and management activities required to lease apartment units in the Property. Throughout the term of this Agreement, Manager shall use its diligent efforts to lease apartment units in the Property. Manager shall advertise the Property, prepare and secure advertising signs, space plans, circulars, marketing brochures and other forms of advertising. Owner hereby authorizes Manager pursuant to the terms of this Agreement to advertise the Property in conjunction with institutional advertising campaigns and allocate costs on a pro rata basis among the Properties being advertised (to the extent authorized by the Annual Business Plan). All inquiries for any leases or renewals or agreements for the rental of the Property or portions thereof shall be referred to Manager and all negotiations connected therewith shall be conducted solely by or under the direction of Manager. Manager is hereby authorized to execute, deliver and renew residential tenant leases on behalf of Owner. Manager is authorized to utilize the services of apartment locator services and the fees of such services shall be operating expenses of the Property and, to the extent paid by Manager, reimbursable by Owner.

     Section 2.4 Manager’s Standard of Care. Manager shall perform its duties under this Agreement in a manner consistent with professional property management services. In no event shall the scope or quality of services provided by Manager for the Property hereunder be less than those generally performed by professional property managers of similar properties in the market area where the Property is located. Manager shall make available to Owner the full benefit of the judgment, experience, and advice of the members and employees of Manager’s organization with respect to the policies to be pursued by Owner in operating the Property, and will perform the services set forth herein and such other services as may be requested by Owner in managing, operating, maintaining and servicing the Property.

ARTICLE 3
SERVICES TO BE PERFORMED BY MANAGER

     Section 3.1 Expense of Owner. All acts performed by Manager in the performance of its obligations under this Agreement shall be performed as an independent contractor of Owner, and all obligations or expenses incurred thereby, shall be for the account of, on behalf of, and at the expense of Owner, except as otherwise specifically provided in this Article 3, provided Owner shall be obligated to reimburse Manager only for the following:

          (a) Costs and Expenses. All costs and expenses incurred by Manager on behalf of Owner in connection with the management and operation of the Property, including but not limited to all compensation payable to the employees at the Property and identified in the Operating Budget and taxes and assessments payable in connection therewith and reasonable travel and expenses associated therewith, all marketing costs, all collection and lease enforcement costs, all maintenance and repair costs incurred in accordance with Section 3.5 hereof, all utilities and related services, all on-site overhead costs and all other costs reasonably incurred by Manager in the operation and management of the Property, excluding, however, all of Manager’s general overhead costs, including without limitation, all expenses incurred at Manager’s corporate headquarters and other Manager office sites other than the property management office located at the Property (i.e., office expenses, long distance phone calls, employee training, postage, copying, supplies, electronic data processing and accounting

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expenses), general accounting and reporting expenses for services included among Manager’s duties under the Agreement; and

          (b) Other. All sums otherwise due and payable by Owner as expenses of the Property authorized to be incurred by Manager under the terms of this Agreement and the Operating Budget, including compensation payable under Section 4.1 hereof to Manager for its services hereunder.

     Manager may use employees normally assigned to other work centers or part-time employees to properly staff the Property, reduced, increased or emergency work load and the like including the property manager, business manager, assistant managers, leasing directors, or other administrative personnel, maintenance employees or maintenance supervisors whose wages and related expenses shall be reimbursed on a pro rata basis for the time actually spent at the Property. A property manager or business manager at the Property and any other persons performing functions substantially similar to those of a business manager, including but not limited to assistant managers, leasing directors, leasing agents, sales directors, sales agents, bookkeepers, and other administrative and/or maintenance personnel performing work at the site, and on-site maintenance personnel, shall not be considered executive employees of Manager. All reimbursable payments made by Manager hereunder shall be reimbursed from funds deposited in an account established pursuant to Section 5.2 of this Agreement. Manager shall not be obligated to make any advance to or for the account of Owner nor shall Manager be obligated to incur any liability or obligation for the account of Owner without assurance that the necessary funds for the discharge thereof will be provided by Owner. In the performance of its duties as agent and manager of the Property, Manager shall act solely as an independent contractor of Owner. All debts and liabilities to third persons incurred by Manager in the course of its operation and management of the Property shall be the debts and liabilities of Owner only, and Manager shall not be liable for any such debt or liabilities, except to the extent Manager has exceeded its authority hereunder.

     Section 3.2 Covenants Concerning Payment of Operating Expenses. Owner covenants to pay all sums for reasonable operating expenses in excess of gross receipts required to operate the Property upon written notice and demand from Manager within five days after receipt of written notice for payment thereof.

     Section 3.3 Employment of Personnel. Manager shall use its diligent efforts to investigate, hire, pay, supervise and discharge the personnel necessary to be employed by it to properly maintain, operate and lease the Property, including without limitation a property manager or business manager at the Property. Such personnel shall in every instance be deemed agents or employees, as the case may be, of Manager. Owner has no right of supervision or direction of agents or employees of Manager whatsoever; however, Owner shall have the right to require the reassignment or termination of any employee. All Owner directives shall be communicated to Manager’s senior level management employees. Manager and all personnel of Manager who handle or who are responsible for handling Owner’s monies shall be bonded in favor of Owner. Manager agrees to obtain and keep in effect fidelity insurance in an amount not less than Two Hundred Fifty Thousand Dollars ($250,000). All reasonable salaries, wages and other compensation of personnel employed by Manager, including so-called fringe benefits, worker’s compensation, medical and health insurance and the like, shall be deemed to be

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reimbursable expenses of Manager. Manager may allow its employees who work at the Property and provide services to the Property after normal business hours, to reside at the Property for reduced rents (or rent fee as provided in the Operating Budget) in consideration of their benefit to Owner and the Property, provided such reduced rents are reflected in the Annual Business Plan.

     Section 3.4 Utility and Service Contracts. Manager shall make, at Owner’s expense and in Owner’s name or in Manager’s name, as agent for Owner, contracts for water, electricity, gas, fuel, oil, telephone, vermin extermination, trash removal, cable television, security protection and other services deemed by Manager to be necessary or advisable for the operation of the Property. In Owner’s name or in Manager’s name, as agent for Owner, and at Owner’s expense, Manager shall also place orders for such equipment, tools, appliances, materials, and supplies as are reasonable and necessary to properly maintain the Property. Owner agrees to pay or reimburse Manager for all expenses and liabilities incurred by reason of this Section provided that such amounts are in accordance with the Operating Budget.

     Section 3.5 Maintenance and Repair of Property. Manager shall use its diligent efforts to maintain, at Owner’s expense, the buildings, appurtenances and grounds of the Property in good condition and repair, including interior and exterior cleaning, painting and decorating, plumbing, carpentry and such other normal maintenance and repair work as may be reasonably desirable taking into consideration the amount allocated therefor in the Annual Business Plan. With respect to any expenditure not contemplated by the Annual Business Plan, Manager shall not incur any individual item of repair or replacement in excess of Five Thousand Dollars ($5,000.00) unless authorized in writing by Owner’s Representative, excepting, however, that emergency repairs immediately necessary for the preservation and safety of the Property or to avoid the suspension of any service to the Property or danger of injury to persons or damage to property may be made by Manager without the approval of Owner’s Representative. Owner shall not establish standards of maintenance and repair that violate or may violate any laws, rules, restrictions or regulations applicable to Manager or the Property or that expose Manager to risk of liability to tenants or other persons. Manager shall not be obligated by this Section to perform any Major Capital Improvements.

     Section 3.6 Supervision of Capital Improvements or Major Repairs. When requested by Owner in writing or set forth in an Approved Business Plan, Manager, at Owner’s expense and in Owner’s name or in Manager’s name, as agent for Owner, shall supervise the installation and construction of all Major Capital Improvements to the Property where such work constitutes other than normal maintenance and repair, for additional compensation as set forth in a separate agreement. In such events, Manager may negotiate contracts with all necessary contractors, subcontractors, materialmen, suppliers, architects, and engineers on behalf of, and in the name of, Owner, and may compromise and settle any dispute or claim arising therefrom on behalf of and in the name of Owner; provided only that Manager shall act in good faith and in the best interest of Owner at all times and Owner shall approve all contracts for such work. Manager will furnish or will cause to be furnished all personnel necessary for proper supervision of the work and may assign personnel located at the Property where such work is being performed to such supervisory work (and such assignment shall not reduce or abate any other fees or compensation owed to Manager under this Agreement). Owner acknowledges that Manager, or an affiliate

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of Manager, may bid on any such work, and that Manager, or an affiliate of Manager, may be selected to perform part or all of the work; provided that if Manager desires to select itself, or its affiliate to do any work, it shall first notify Owner of the terms upon which it, or its affiliate, proposes to contract for the work, and terms upon which the independent contractors have offered to perform, and shall state the reasons for preferring itself, or its affiliate, over independent contractors and Owner shall have fifteen days to disapprove Manager, or its affiliate, and to request performance by an independent contractor. Only Owner shall have the power to compromise or settle any dispute or claim arising from work performed by Manager, or its affiliate; and it is expressly understood that the selection of Manager, or its affiliate, will not affect any fee or other compensation payable to Manager hereunder. For the purposes of this Agreement, the term “Major Capital Improvements” shall mean work having an estimated cost of $25,000 or more. If Owner and Manager fail to reach an agreement for Manager’s additional compensation as provided in this Section 3.6, Owner may contract with a third party to supervise installation or construction of Major Capital Improvements.

     Section 3.7 Insurance.

          (a) Owner Requirements. Owner agrees to maintain all forms of insurance required by law or any loan documents covering the Property and as reasonably deemed by Owner to be necessary or needed to adequately protect Owner and Manager, including but not limited to public liability insurance, boiler insurance, fire and extended coverage insurance, and burglary and theft insurance. All insurance coverage shall be placed with such companies, in such amounts and with such beneficial interest appearing therein as shall be reasonably acceptable to Owner. Public liability insurance shall be maintained in such amounts as Owner determines as commercially reasonable or as otherwise required by its lenders or investors.

          (b) Manager Requirements. Manager agrees to maintain, at its own expense, public liability insurance in an amount not less than Three Million Dollars ($3,000,000) and all other forms of insurance required by law or any loan documents covering the Property and as reasonably deemed by Owner and Manager to be necessary or needed to adequately protect Owner and Manager, including but not limited to workers compensation insurance, professional liability, employee practices, and fidelity insurance. Manager shall use its diligent efforts to investigate and make a written report to the insurance company as to all accidents, claims for damage relating to the ownership, operation and maintenance of the Property, any damage or destruction to the Property and the estimated cost of repair thereof, and shall prepare any and all reports for any insurance company in connection therewith. All such reports shall be timely filed with the insurance company as required under the terms of the insurance policy involved. With the prior written approval of Owner, Manager is authorized to settle any and all claims against insurance companies arising out of any policies, including the execution of proofs of loss, the adjustment of losses, signing of receipts and collection of monies (no approval by Owner shall be required for the settlement of claims of $5,000 or less). Manager is further authorized to contract for the maintenance and repair of any damage or casualty in accordance with Section 3.6 above. Manager shall receive as an additional fee for such services that fee designated in the loss adjustment as a general contractor’s fee, provided that insurance proceeds that exceed the cost of repairing the damage or restoring the loss are available to pay such fees. In such event Manager shall be responsible for all costs incurred by Manager in adjusting such loss and contracting for repairs.

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          (c) Loss or Liability Claims. Owner and Manager mutually agree for the benefit of each other to look only to the appropriate insurance coverages in effect pursuant to this Agreement in the event any demand, claim, action, damage, loss, liability or expense occurs as a result of injury to person or damage to property, regardless whether any such demand, claim, action, damage, loss, liability or expense is caused or contributed to, by or results from the negligence of Owner or Manager or their respective subsidiaries, affiliates, employees, directors, officers, agents or independent contractors and regardless whether the injury to person or damage to property occurs in and about the Property or elsewhere as a result of the performance of this Agreement. Except for claims that are covered by the indemnity contained in Section 3.7(d) below, Owner agrees that Owner’s insurance shall be primary without right of subrogation against Manager with respect to all claims, actions, damage, loss or liability in or about the Property. Nevertheless, in the event such insurance proceeds are insufficient to satisfy (or such insurance does not cover) the demand, claim, action, loss, liability or expense, Owner agrees, at its expense, to indemnify and hold Manager and its subsidiaries, affiliates, officers, directors, employees, agents or independent contractors harmless to the extent of the excess liability. For purposes of this Section 3.7(c), any deductible amount under any policy of insurance shall not be deemed to be included as part of collectible insurance proceeds.

          (d) Manager Indemnity. Notwithstanding anything contained in this Agreement to the contrary, Manager shall indemnify and hold harmless Owner, and its representative subsidiaries, affiliates, officers, directors, employees, agents or independent contractors, from all demands, claims, actions, losses, liabilities or expenses that are not covered by insurance and which is determined to have resulted from the gross negligence, willful misconduct or breach of this Agreement by Manager in connection with the performance of its duties and obligations under this Agreement.

          (e) Acts of Tenants and Third Parties. In no event shall Manager have any liability to Owner or others for any acts of vandalism, trespass or criminal activity of any kind by tenants or third parties on or with respect to the Property and Owner’s insurance shall be primary insurance without right of subrogation against Manager regarding claims arising out of or resulting from acts of vandalism, trespass or criminal activity.

     Section 3.8 Collection of Monies. Manager shall use its diligent efforts to collect all rents and other charges due from tenants, users of garage spaces, carports, storage spaces (if any), commercial lessees (if any) and concessionaires (if any) in respect of the Property and otherwise due Owner with respect to the Property in the ordinary course of business, provided that Manager does not guarantee the creditworthiness of any tenants, users, lessees or concessionaires or collectability of accounts receivable from any of the foregoing. Owner authorizes Manager to request, demand, collect, receive and receipt for all such rent and other charges and to institute legal proceedings in the name of Owner, and at Owner’s expense, for the collection thereof, and for the dispossession of tenants and other persons from the Property or to cancel or terminate any lease, license or concession agreement for breach or default thereunder, and such expense may include the engaging of legal counsel for any such matter. All monies collected by Manager shall be deposited in the separate bank account referred to in Section 5.2 herein.

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     Section 3.9 Manager Disbursements.

          (a) Manager’s Compensation and Reimbursements. From Gross Collections, Manager shall be authorized to retain and pay (1) Manager’s compensation, together with all sales or other taxes (other than income) which Manager is obligated, presently or in the future, to collect and pay to the State or any other governmental authority with respect to the Property or employees at the Property, (2) the amounts reimbursable to Manager under this Agreement, (3) the amount of all real estate taxes and other impositions levied by appropriate authorities with respect to the Property which, if not escrowed with any mortgagee, shall be paid upon specific written direction of Owner before interest begins to accrue thereon; and (4) amounts otherwise due and payable as operating expenses of the Property authorized to be incurred under the terms of this Agreement.

          (b) Debt Service. The provisions of this Section 3.9 regarding disbursements shall include the payment of debt service related to any mortgages of the Property, unless otherwise instructed in writing by Owner.

          (c) Third Parties. All costs, expenses, debts and liabilities owed to third persons that are incurred by Manager pursuant to the terms of this Agreement and in the course of managing, leasing and operating the Property shall be the responsibility of Owner and not Manager. Owner agrees to provide sufficient working capital funds to Manager so that all amounts due and owing may be promptly paid by Manager. Manager is not obligated to advance any funds. If at any time there is not sufficient cash in the account available to Manager pursuant to Section 5.2 with which to promptly pay the bills due and owing, Manager will request that the necessary additional funds be deposited by Owner in an amount sufficient to meet the shortfall. Owner will deposit the additional funds requested by Manager within five days.

          (d) Other Provisions. The provisions of this Section 3.9 regarding reimbursements to Manager shall not limit Manager’s rights under any other provision of this Agreement.

     Section 3.10 Use and Maintenance of Premises. Manager agrees that it will not knowingly permit the use of the Property for any purpose that might void any insurance policy held by Owner or that might render any loss thereunder uncollectible, or that would be in violation of Governmental Requirements, or any covenant or restriction of any lease of the Property. Manager shall use its good faith efforts to secure substantial compliance by the tenants with the terms and conditions of their respective leases. All costs of correcting or complying with, and all fines payable in connection with, all orders or violations affecting the Property placed thereon by any governmental authority or Board of Fire Underwriters or other similar body shall be at the cost and expense of Owner.

     Section 3.11 Annual Business Plan.

          (a) Submission. On or before November 1 of each Fiscal Year during the term of this Agreement, or such earlier date as reasonably requested by Owner, its lenders or investors, Manager shall prepare and submit to Owner for Owner’s approval, an Annual

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Business Plan for the promotion, leasing, operations, repair and maintenance of the Property for the succeeding Fiscal Year during which this Agreement is to remain in effect (the “Annual Business Plan”). The Annual Business Plan shall include a detailed budget of projected income and expenses for the Property for such Fiscal Year (the “Operating Budget”) and a detailed budget of projected capital improvements for the Property for such Fiscal Year (the “Capital Budget”).

          (b) Approval. Manager shall meet with Owner to discuss the proposed Annual Business Plan and Owner shall approve the proposed Annual Business Plan within 20 days of its submission to Owner, or as soon thereafter as commercially practicable. To be effective, any notice which disapproves a proposed Annual Business Plan must contain specific objections in reasonable detail to individual line items. If Owner fails to provide an effective notice disapproving a proposed Annual Business Plan within such 20-day period, the proposed Annual Business Plan shall be deemed to be approved. Owner acknowledges that the Operating Budget is intended only to be a reasonable estimate of the income and expenses of the Property for the ensuing Fiscal Year. Manager shall not be deemed to have made any guarantee, warranty or representation whatsoever in connection with the Operating Budget.

          (c) Revision. Manager may revise the Operating Budget from time to time, as necessary, to reflect any unpredicted significant changes, variables or events or to include significant additional, unanticipated items of revenue and expense. Any such revision shall be submitted to Owner for approval, which approval shall not be unreasonably withheld, delayed or conditioned.

          (d) Implementation. Manager agrees to use diligence and to employ all reasonable efforts to ensure that the actual costs of maintaining and operating the Property shall not exceed the Operating Budget either in total or in any one accounting category. Any expense causing or likely to cause a variance of greater than ten percent (10%) or $25,000, whichever is greater, in any one accounting category for the current month cumulative year-to-date total shall be promptly explained to Owner by Manager in the next operating statement submitted by Manager to Owner.

     Section 3.12 Records, Reporting. Manager shall maintain at the regular business office of Manager or at such other address as Manager shall advise Owner in writing, separate books and journals and orderly files, containing rental records, insurance policies, leases, correspondence, receipts, bills and vouchers, and all other documents and papers pertaining directly to the Property and the operation thereof. All corporate statements, receipts, invoices, checks, leases, contracts, worksheets, financial statements, books and records, and all other instruments and documents relating to or arising from the operation or management of the Property shall be and remain the property of Owner and the Owner shall have the right to inspect such records at any reasonable time upon prior notice; Manager shall have the right to request and maintain copies of all such matters, at Manager’s cost and expense, at all reasonable times during the term of this Agreement, and for a reasonable time thereafter not to exceed three years. All on-site records, including leases, rent rolls, and other related documents shall remain at the respective Property for which such records are maintained as the property of Owner.

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     Section 3.13 Financial Reports.

          (a) Monthly Reports. On or before the tenth day of each month during the term of this Agreement, Manager shall deliver or cause to be delivered to Owner’s Representative a statement of cash flow for the Property (on a cash and not an accrual basis) for the preceding calendar month. All notices from any mortgagee claiming any default in any mortgage on the Property, and any other notice from any mortgagee not of a routine nature, shall be promptly delivered by Manager to Owner’s Representative.

          (b) Annual Reports. Within 45 days after the end of each Fiscal Year, Manager shall deliver to Owner’s Representative a statement of cash flow showing the results of operations for the Fiscal Year or portion thereof during which the provisions of this Agreement were in effect.

          (c) Employee Files. Manager shall execute and file punctually when due all forms, reports and returns required by law relating to the employment of personnel.

     Section 3.14 Compliance with Governmental Requirements. Manager shall comply with all laws, ordinances and regulations relating to the management, leasing and occupancy of the Property, including any regulatory or use agreements. Owner acknowledges that Manager does not hold itself out to be an expert or consultant with respect to, or represent that, the Property currently complies with applicable ordinances, regulations, rules, statutes, or laws of governmental entities having jurisdiction over the Properties or the requirements of the Board of Fire Underwriters or other similar bodies (collectively, “Governmental Requirements”). Manager shall take such action as may be reasonably necessary to comply with any Governmental Requirements applicable to Manager, including the collection and payment of all sales and other taxes (other than income taxes) which may be assessed or charged by the State or any governmental entities in connection with Manager’s compensation. If Manager discovers that the Property does not comply with any Governmental Requirements, Manager shall take such action as may be reasonably necessary to bring the Property into compliance with such Governmental Requirements, subject to the limitation contained in Section 3.5 of this Agreement regarding the making of alterations and repairs. Manager, however, shall not take any such action as long as Owner is contesting or has affirmed its intention to contest and promptly institute proceedings contesting any such order or requirement. If, however, failure to comply promptly with any such order or requirement would or might expose Manager to civil or criminal liability, Manager shall have the right, but not the obligation, to cause the same to be complied with and Owner agrees to indemnify and hold Manager harmless for taking such actions and to promptly reimburse Manager for expenses incurred thereby. Manager shall promptly, and in no event later than 72 hours from the time of receipt, notify Owner’s Representative in writing of all such orders or notices. Manager shall not be liable for any effort or judgment or for any mistake of fact or of law, or for anything that it may do or refrain from doing, except in cases of willful misconduct or gross negligence of Manager.

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ARTICLE 4
MANAGER’S COMPENSATION, TERM

     Section 4.1 Fees Paid to Manager. Commencing on the date hereof, Owner shall pay to Manager a fee (the “Management Fee”), payable monthly in arrears, in an amount equal to Three and One-half Percent (3.5%) of Gross Collections for such month. The Management Fee shall not be subject to off-sets and charges unless agreed upon by the parties. Pass-Through Amounts shall be collected monthly by Manager, as applicable.

     Section 4.2 Term. This Agreement shall commence on the Effective Date, and shall thereafter continue for a period of one (1) year from the Effective Date, unless otherwise terminated as provided herein. Thereafter, if neither party gives written notice to the other at least 30 days prior to the expiration date hereof that this Agreement is to terminate, then this Agreement shall be automatically renewed on a month-to-month basis.

     Section 4.3 Termination Rights. Notwithstanding anything that may be contained herein to the contrary, with or without grounds or cause therefor, Owner may terminate this Agreement at any time by giving Manager thirty (30) days written notice thereof; provided, however, upon a determination that this Agreement may be terminated for cause due to the gross negligence, willful misconduct or bad acts of Manager or any of its employees, Owner may immediately terminate with contract by giving Manager five (5) days written notice thereof. Any notice given pursuant to this Article 4, shall be sent by certified mail.

     Section 4.4 Duties on Termination. Upon any termination of this Agreement as contemplated in this Section 4.4, Manager shall be entitled to receive all compensation and reimbursements, if any, due to Manager through the date of termination. If Owner or Manager shall materially breach its obligations hereunder, and such breach remains uncured for a period of 10 days after written notification of such breach, the party not in breach hereunder may terminate this Agreement by giving written notice to the other. Within 30 days after any termination, Manager shall deliver to Owner’s Representative, the report required by Section 3.13(a) for any period not covered by such a report at time of termination, and within 30 days after any such termination, Manager shall deliver to Owner’s Representative, as required by Section 3.13(b), the statement of cash flow for the Fiscal Year or portion thereof ending on the date of termination. In addition, upon termination of this Agreement for any reason, Manager will submit to Owner within 30 days after termination any reports required hereunder, all of the cash and bank accounts of the Property, including, without limitation, the Security Deposit Account, investments and records. Manager will, within 30 days after termination, turn over to Owner all copies of all books and records kept for the Property. If Manager desires to retain records of the Property, Manager must reproduce them at its own expense.

ARTICLE 5
PROCEDURES FOR HANDLING RECEIPTS AND OPERATING CAPITAL

     Section 5.1 Security Deposits. Manager shall collect, deposit, hold, disburse and pay security deposits as required by applicable State law and all other applicable laws, and in accordance with the terms of each tenant’s lease. The amount of each security deposit will be specified in the tenant’s lease. Security deposits will be deposited at the direction of Owner into

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a separate interest-bearing account (the “Security Deposit Account”) at a Depository selected by Owner. The Security Deposit Account shall be established in the name of the Owner and held separate from all other of Manager’s funds and accounts, unless the Owner informs Manager, in writing that it intends to hold the Security Deposit Account. If such account is held by Manager, only representatives of Manager will be signatories to this account. To the extent possible, the Security Deposit Account shall be fully insured by the Federal Deposit Insurance Corporation (FDIC). Owner agrees to indemnify and hold harmless Manager, and Manager’s representatives, officers, directors and employees for any loss or liability with respect to any use by Owner of the tenant security deposits that is inconsistent with the terms of tenant leases and applicable laws.

     Section 5.2 Separation of Owner’s Monies. Manager shall deliver all collected rents, charges and other amounts received in connection with the management and operation of the Property (except for tenants’ security deposits, which will be handled as specified in this Agreement) to a Depository designated by Owner.

     Section 5.3 Depository Accounts. Except to the extent that Manager has not complied with its obligations under Section 2.3(c), Owner and Manager agree that Manager shall have no liability for loss of funds of Owner contained in the bank accounts for the Property maintained by Owner or Manager pursuant to this Agreement due to insolvency of the bank or financial institution in which its accounts are kept, whether or not the amounts in such accounts exceed the maximum amount of federal or other deposit insurance applicable with respect to the financial institution in question.

     Section 5.4 Working Capital. In addition to the funds derived from the operation of the Property, Owner shall furnish and maintain in the operating accounts of the Property such other funds as may be necessary to discharge financial commitments required to efficiently operate the Property and to meet all payrolls and satisfy, before delinquency, and to discharge all accounts payable. Manager shall have no responsibility or obligation with respect to the furnishing of any such funds. Nevertheless, Manager shall have the right, but not the obligation, to advance funds or contribute property on behalf of Owner to satisfy obligations of Owner in connection with this Agreement and the Property. Manager shall keep appropriate records to document all reimbursable expenses paid by Manager, which records shall be made available for inspection by Owner or its agents on request. Owner agrees to reimburse Manager upon demand for money paid or property contributed in connection with the Property and this Agreement.

     Section 5.5 Authorized Signatures. Any persons from time to time designated by Manager shall be authorized signatories on all bank accounts established by Manager pursuant to this Agreement and shall have authority to make disbursements from such accounts. Funds may be withdrawn from all bank accounts established by Manager, in accordance with this Article 5, only upon the signature of an individual who has been granted that authority by Manager and funds may not be withdrawn from such accounts by Owner unless Manager is in default hereunder.

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ARTICLE 6
MISCELLANEOUS

     Section 6.1 Assignment. Upon 30 days written notification, Owner may assign its rights and obligations to any successor in title to the Property and upon such assignment shall be relieved of all liability accruing after the effective date of such assignment. This Agreement may not be assigned or delegated by Manager without the prior written consent of Owner, which Owner may withhold in its sole discretion. Manager shall assign or provide a security interest in this Agreement at the request of Owner, its lenders or investors. Any unauthorized assignment shall be null and void ab initio, and shall not in any event release Manager from any liabilities hereunder.

     Section 6.2 Notices. All notices required or permitted by this Agreement shall be in writing and shall be sent by registered or certified mail, addressed in the case of Owner to SIR Arbor Pointe, LLC, 18100 Von Karman Avenue, Suite 500, Irvine, CA 92612, Attn: Ana Marie del Rio; and in the case of Manager to Steadfast Management Company, Inc., 18100 Von Karman Avenue, Suite 500, Irvine, CA 92612, Attention: Christopher Hilbert, or to such other address as shall, from time to time, have been designated by written notice by either party given to the other party as herein provided.

     Section 6.3 Entire Agreement. This Agreement shall constitute the entire agreement between the parties hereto and no modification thereof shall be effective unless in writing executed by the parties hereto.

     Section 6.4 No Partnership. Nothing contained in this Agreement shall constitute or be construed to be or create a partnership or joint venture between Owner, its successors or assigns, on the one part, and Manager, its successors and assigns, on the other part.

     Section 6.5 No Third Party Beneficiary. Neither this Agreement nor any part hereof nor any service relationship shall inure to the benefit of any third party, to any trustee in bankruptcy, to any assignee for the benefit of creditors, to any receiver by reason of insolvency, to any other fiduciary or officer representing a bankrupt or insolvent estate of either party, or to the creditors or claimants of such an estate. Without limiting the generality of the foregoing sentence, it is specifically understood and agreed that such insolvency or bankruptcy of either party hereto shall, at the option of the other party, void all rights of such insolvent or bankrupt party hereunder (or so many of such rights as the other party shall elect to void).

     Section 6.6 Severability. If any one or more of the provisions of this Agreement, or the applicability of any such provision to a specific situation, shall be held invalid or unenforceable, such provision should be modified to the minimum extent necessary to make it or its application valid and enforceable, and the validity and enforceability of all other provisions of this Agreement and all other applications of such provisions shall not be affected thereby.

     Section 6.7 Captions, Plural Terms. Unless the context clearly requires otherwise, the singular number herein shall include the plural, the plural number shall include the singular and any gender shall include all genders. Titles and captions herein shall not affect the construction of this Agreement.

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     Section 6.8 Attorneys’ Fees. Should either party employ an attorney to enforce any of the provisions of this Agreement, or to recover damages for breach of this Agreement, the non-prevailing party in any action agrees to pay to the prevailing party all reasonable costs, damages and expenses, including reasonable attorneys’ fees, expended or incurred by the prevailing party in connection therewith.

     Section 6.9 Signs. Manager shall have the right to place signs on the Property in accordance with applicable Governmental Requirements stating that Manager is the manager and leasing agent for the Property.

     Section 6.10 Survival of Indemnities. The indemnification obligations of the parties to this Agreement shall survive the termination of this Agreement to the extent of any claim or cause of action based on an event occurring prior to the date of termination.

     Section 6.11 Governing Law. This Agreement shall be construed under and in accordance with the laws of the State and is fully performable with respect to the Property in the county in which the Property is located.

     Section 6.12 Competitive Properties. Manager may, individually or with others, engage or possess an interest in any other project or venture of every nature and description, including but not limited to, the ownership, financing, leasing, operation, management, brokerage and sale of real estate projects including apartment projects other than the Property, whether or not such other venture or projects are competitive with the Property and Owner shall not have any claim as to such project or venture or to the income or profits derived therefrom.

     Section 6.13 Set Off. Without prejudice to Manager’s right to terminate this Agreement in accordance with the terms of this Agreement, Manager may at any time and without notice to Owner, set off or transfer any sums held by Manager for or on behalf of Owner in the accounts (other than the Security Deposit Account) maintained pursuant to this Agreement in or towards satisfaction of any of Owner’s liabilities to Manager in respect of any sums due to Manager under this Agreement.

     Section 6.14 Notice of Default. Manager shall not be deemed in default under this Agreement, and Owner’s right to terminate Manager as a result of such default shall not accrue, until Owner has delivered written notice of default to Manager and Manager has failed to cure same within 30 days from the date of receipt of such notice.

     Section 6.15 Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed to be an original.

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This Property Management Agreement is hereby executed by duly authorized representatives of the parties hereto as of the Effective Date.

OWNER:	SIR ARBOR POINTE, LLC,
	a Delaware limited liability company
	By:	Steadfast Income Advisor, LLC, its Manager
		By:	/s/ Ana Marie del Rio
		Name:	Ana Marie del Rio
		Title:	Secretary
MANAGER:	STEADFAST MANAGEMENT CO., INC.
	By:	/s/ Dinesh Davar
	Name:	Dinesh Davar
	Title:	Treasurer/CFO

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EXHIBIT A

Estimated Pass-Through Amounts

Benefits Administration (at 3% of total emp. costs)	$	398.50
IT Infrastructure, Licenses and Support (assumes 3 computers)	$	381.25
Marketing/Training/Continuing Educations ($20.00 p.u.p.y.)	$	217.00

Exhibit B

THE PROPERTY

Legal Description: 2405 Pointe Arbor Drive, Louisville, KY 40220

The real property situated in the City of Louisville, County of Jefferson, State of Kentucky, and described as follows:

The Property consists of 60 two-bedroom garden style apartments and 70 three-bedroom townhomes. All units have two baths. Site amenities include a management office, community room, playground, and swimming pool. Unit amenities include a well equipped kitchen, central heat and air conditioning, mini blinds, washer and dryer connections, and private patios for units with ground floor access and a balcony for the upstairs units.

EX-10.5

Exhibit 10.5

MULTIFAMILY NOTE

US $5,200,000.00 May 4, 2011

     FOR VALUE RECEIVED, the undersigned (“Borrower”) jointly and severally (if more than one) promises to pay to the order of PNC BANK, NATIONAL ASSOCIATION, a national banking association, the principal sum of Five Million Two Hundred Thousand and 00/100 Dollars (US $5,200,000.00), with interest accruing at the Interest Rate on the unpaid principal balance from the Disbursement Date until fully paid.

         1. Defined Terms. In addition to defined terms found elsewhere in this Note, as used in this Note, the following definitions shall apply:

Amortization Period: 360 months.

Business Day: Any day other than a Saturday, Sunday or any other day on which Lender is not open for business.

Debt Service Amounts: Amounts payable under this Note, the Security Instrument or any other Loan Document.

Default Rate: A rate equal to the lesser of 4 percentage points above the Interest Rate or the maximum interest rate which may be collected from Borrower under applicable law.

Disbursement Date: The date of disbursement of Loan proceeds hereunder.

First Payment Date: The first day of July, 2011.

Indebtedness: The principal of, interest on, or any other amounts due at any time under, this Note, the Security Instrument or any other Loan Document, including prepayment premiums, late charges, default interest, and advances to protect the security of the Security Instrument under Section 12 of the Security Instrument.

Interest Rate: The annual rate of four and eighty-six one-hundredths percent (4.86%).

Lender: The holder of this Note.

Loan: The loan evidenced by this Note.

Loan Term: 84 months.

Maturity Date: The first day of June, 2018, or any earlier date on which the unpaid principal balance of this Note becomes due and payable by acceleration or otherwise.

Property Jurisdiction: The jurisdiction in which the Land is located.

Multifamily Non-Recourse Fixed Rate Note – Kentucky	Form 4118	Page 1
Fannie Mae	08-09	© 1997-2009 Fannie Mae

Security Instrument: A multifamily mortgage, deed to secure debt or deed of trust dated as of the date of this Note.

Yield Maintenance Period Term or Prepayment Premium Period Term: 78 months.

Yield Maintenance Period End Date or Prepayment Premium Period End Date: The last day of November, 2017.

Event of Default, Key Principal and other capitalized terms used but not defined in this Note shall have the meanings given to such terms in the Security Instrument.

     2. Address for Payment. All payments due under this Note shall be payable at 26901 Calabasas Road, Suite 200, Calabasas Hills, California 91301, or such other place as may be designated by written notice to Borrower from or on behalf of Lender.

     3. Payment of Principal and Interest. Principal and interest shall be paid as follows:

     (a) Short Month Interest. If disbursement of principal is made by Lender to Borrower on any day other than the first day of the month, interest for the period beginning on the Disbursement Date and ending on and including the last day of the month in which such disbursement is made shall be payable simultaneously with the execution of this Note.

     (b) Interest Computation. Interest under this Note shall be computed on the basis of (check one only):

o 30/360. A 360-day year consisting of twelve 30-day months.

þ Actual/360. A 360-day year. The amount of each monthly payment made by Borrower pursuant to Paragraph 3(c) below that is allocated to interest will be based on the actual number of calendar days during such month and shall be calculated by multiplying the unpaid principal balance of this Note by the per annum Interest Rate, dividing the product by 360 and multiplying the quotient by the actual number of days elapsed during the month. Borrower understands that the amount allocated to interest for each month will vary depending on the actual number of calendar days during such month.

     (c) Monthly Installments. Consecutive monthly installments of principal and interest, each in the amount of Twenty-Seven Thousand Four Hundred Seventy-One and 50/100 Dollars (US $27,471.50), shall be payable on the First Payment Date and on the first day of every month thereafter, until the entire unpaid principal balance evidenced by this Note is fully paid. Any remaining principal and interest shall be due and payable on the Maturity Date. The unpaid principal balance shall continue to bear interest after the Maturity Date at the Default Rate set forth in this Note until and including the date on which it is paid in full.

     (d) Payments Before Due Date. Any regularly scheduled monthly installment of principal and interest that is received by Lender before the date it is due shall be deemed to have been received on the due date solely for the purpose of calculating interest due.

Multifamily Non-Recourse Fixed Rate Note – Kentucky	Form 4118	Page 2
Fannie Mae	08-09	© 1997-2009 Fannie Mae

     (e) Accrued Interest. Any accrued interest remaining past due for 30 days or more shall be added to and become part of the unpaid principal balance and shall bear interest at the rate or rates specified in this Note. Any reference herein to “accrued interest” shall refer to accrued interest which has not become part of the unpaid principal balance. Any amount added to principal pursuant to the Loan Documents shall bear interest at the applicable rate or rates specified in this Note and shall be payable with such interest upon demand by Lender and absent such demand, as provided in this Note for the payment of principal and interest.

     4. Application of Payments. If at any time Lender receives, from Borrower or otherwise, any amount applicable to the Indebtedness which is less than all amounts due and payable at such time, Lender may apply that payment to amounts then due and payable in any manner and in any order determined by Lender, in Lender’s discretion. Borrower agrees that neither Lender’s acceptance of a payment from Borrower in an amount that is less than all amounts then due and payable nor Lender’s application of such payment shall constitute or be deemed to constitute either a waiver of the unpaid amounts or an accord and satisfaction.

     5. Security. The Indebtedness is secured, among other things, by the Security Instrument, and reference is made to the Security Instrument for other rights of Lender concerning the collateral for the Indebtedness.

     6. Acceleration. If an Event of Default has occurred and is continuing, the entire unpaid principal balance, any accrued interest, the prepayment premium payable under Paragraph 10, if any, and all other amounts payable under this Note and any other Loan Document shall at once become due and payable, at the option of Lender, without any prior notice to Borrower. Lender may exercise this option to accelerate regardless of any prior forbearance.

     7. Late Charge. If any monthly installment due hereunder is not received by Lender on or before the 10th day of each month or if any other amount payable under this Note or under the Security Instrument or any other Loan Document is not received by Lender within 10 days after the date such amount is due, counting from and including the date such amount is due, Borrower shall pay to Lender, immediately and without demand by Lender, a late charge equal to 5 percent of such monthly installment or other amount due. Borrower acknowledges that its failure to make timely payments will cause Lender to incur additional expenses in servicing and processing the Loan and that it is extremely difficult and impractical to determine those additional expenses. Borrower agrees that the late charge payable pursuant to this Paragraph represents a fair and reasonable estimate, taking into account all circumstances existing on the date of this Note, of the additional expenses Lender will incur by reason of such late payment. The late charge is payable in addition to, and not in lieu of, any interest payable at the Default Rate pursuant to Paragraph 8.

     8. Default Rate. So long as any monthly installment or any other payment due under this Note remains past due for 30 days or more, interest under this Note shall accrue on the unpaid principal balance from the earlier of the due date of the first unpaid monthly installment or other payment due, as applicable, at the Default Rate. If the unpaid principal balance and all accrued interest are not paid in full on the Maturity Date, the unpaid principal balance and all accrued interest shall bear interest from the Maturity Date at the Default Rate. Borrower also acknowledges that its failure to make timely payments will cause Lender to incur additional expenses in servicing and processing the Loan, that, during the time that any monthly installment or payment under this Note is delinquent for more than 30 days, Lender will incur additional costs and expenses arising from its loss of the use of the money due

Multifamily Non-Recourse Fixed Rate Note – Kentucky	Form 4118	Page 3
Fannie Mae	08-09	© 1997-2009 Fannie Mae

and from the adverse impact on Lender’s ability to meet its other obligations and to take advantage of other investment opportunities, and that it is extremely difficult and impractical to determine those additional costs and expenses. Borrower also acknowledges that, during the time that any monthly installment or other payment due under this Note is delinquent for more than 30 days, Lender’s risk of nonpayment of this Note will be materially increased and Lender is entitled to be compensated for such increased risk. Borrower agrees that the increase in the rate of interest payable under this Note to the Default Rate represents a fair and reasonable estimate, taking into account all circumstances existing on the date of this Note, of the additional costs and expenses Lender will incur by reason of the Borrower’s delinquent payment and the additional compensation Lender is entitled to receive for the increased risks of nonpayment associated with a delinquent loan.

     9. Limits on Personal Liability.

     (a) Except as otherwise provided in this Paragraph 9, Borrower shall have no personal liability under this Note, the Security Instrument or any other Loan Document for the repayment of the Indebtedness or for the performance of any other obligations of Borrower under the Loan Documents, and Lender’s only recourse for the satisfaction of the Indebtedness and the performance of such obligations shall be Lender’s exercise of its rights and remedies with respect to the Mortgaged Property (as such term is defined in the Security Instrument) and any other collateral held by Lender as security for the Indebtedness. This limitation on Borrower’s liability shall not limit or impair Lender’s enforcement of its rights against any guarantor of the Indebtedness or any guarantor of any obligations of Borrower.

     (b) Borrower shall be personally liable to Lender for the repayment of a portion of the Indebtedness equal to any loss or damage suffered by Lender as a result of:

     (1) failure of Borrower to pay to Lender upon demand after an Event of Default, all Rents to which Lender is entitled under Section 3(a) of the Security Instrument and the amount of all security deposits collected by Borrower from tenants then in residence;

     (2) failure of Borrower to apply all insurance proceeds and condemnation proceeds as required by the Security Instrument;

     (3) failure of Borrower to comply with Section 14(d) or (e) of the Security Instrument relating to the delivery of books and records, statements, schedules and reports;

     (4) fraud or written material misrepresentation by Borrower, Key Principal or any officer, director, partner, member or employee of Borrower in connection with the application for or creation of the Indebtedness or any request for any action or consent by Lender;

     (5) failure to apply Rents, first, to the payment of reasonable operating expenses (other than Property management fees that are not currently payable pursuant to the terms of an Assignment of Management Agreement or any other agreement with Lender executed in connection with the Loan) and then to Debt Service Amounts, except that Borrower will not be personally liable (i) to the extent that Borrower lacks the legal right to direct the disbursement of such sums because of a bankruptcy, receivership or similar judicial proceeding, or (ii) with respect to Rents that are distributed in any calendar year if Borrower has paid all operating expenses and Debt Service Amounts for that calendar year; or

Multifamily Non-Recourse Fixed Rate Note – Kentucky	Form 4118	Page 4
Fannie Mae	08-09	© 1997-2009 Fannie Mae

     (6) failure by Borrower to comply with the provisions of Section 17(a) of the Security Instrument.

     (c) Borrower shall become personally liable to Lender for the repayment of all of the Indebtedness upon the occurrence of any of the following Events of Default:

     (1) Borrower’s acquisition of any property or operation of any business not permitted by Section 33 of the Security Instrument;

     (2) a Transfer that is an Event of Default under Section 21 of the Security Instrument; or

     (3) the occurrence of a Bankruptcy Event (but only if the Bankruptcy Event occurs with the consent, encouragement or active participation of Borrower, Key Principal or any Borrower Affiliate).

     (d) To the extent that Borrower has personal liability under this Paragraph 9, Lender may exercise its rights against Borrower personally without regard to whether Lender has exercised any rights against the Mortgaged Property or any other security, or pursued any rights against any guarantor, or pursued any other rights available to Lender under this Note, the Security Instrument, any other Loan Document or applicable law. For purposes of this Paragraph 9, the term “Mortgaged Property” shall not include any funds that (1) have been applied by Borrower as required or permitted by the Security Instrument prior to the occurrence of an Event of Default, or (2) Borrower was unable to apply as required or permitted by the Security Instrument because of a bankruptcy, receivership, or similar judicial proceeding.

     10. Voluntary and Involuntary Prepayments.

     (a) A prepayment premium shall be payable in connection with any prepayment made under this Note as provided below:

     (1) Borrower may voluntarily prepay all (but not less than all) of the unpaid principal balance of this Note only on the last calendar day of a calendar month (the “Last Day of the Month”) and only if Borrower has complied with all of the following:

(i)

Borrower must give Lender at least 30 days (if given via U.S. Postal Service) or 20 days (if given via facsimile, email or overnight courier), but not more than 60 days, prior written notice of Borrower’s intention to make a prepayment (the “Prepayment Notice”). The Prepayment Notice shall be given in writing (via facsimile, email, U.S. Postal Service or overnight courier) and addressed to Lender. The Prepayment Notice shall include, at a minimum, the Business Day upon which Borrower intends to make the prepayment (the “Intended Prepayment Date”).

(ii)

Borrower acknowledges that the Lender is not required to accept any voluntary prepayment of this Note on any day other than the Last Day of the Month even (A) if Borrower has given a Prepayment Notice with an Intended Prepayment Date other than the Last Day of the Month or (B) if the Last Day of the Month is not a Business Day. Therefore, even if

Multifamily Non-Recourse Fixed Rate Note – Kentucky	Form 4118	Page 5
Fannie Mae	08-09	© 1997-2009 Fannie Mae

	Lender accepts a voluntary prepayment on any day other than the Last Day of the Month, for all purposes (including the accrual of interest and the calculation of the prepayment premium), any prepayment received by Lender on any day other than the Last Day of the Month shall be deemed to have been received by Lender on the Last Day of the Month and any prepayment calculation will include interest to and including the Last Day of the Month in which such prepayment occurs. If the Last Day of the Month is not a Business Day, then the Borrower must make the payment on the Business Day immediately preceding the Last Day of the Month.
(iii)	Any prepayment shall be made by paying (A) the amount of principal being prepaid, (B) all accrued interest (calculated to the Last Day of the Month), (C) all other sums due Lender at the time of such prepayment, and (D) the prepayment premium calculated pursuant to Schedule A.
(iv)	If, for any reason, Borrower fails to prepay this Note (A) within five (5) Business Days after the Intended Prepayment Date or (B) if the prepayment occurs in a month other than the month stated in the original Prepayment Notice, then Lender shall have the right, but not the obligation, to recalculate the prepayment premium based upon the date that Borrower actually prepays this Note and to make such calculation as described in Schedule A attached hereto. For purposes of such recalculation, such new prepayment date shall be deemed the “Intended Prepayment Date.”

     (2) Upon Lender’s exercise of any right of acceleration under this Note, Borrower shall pay to Lender, in addition to the entire unpaid principal balance of this Note outstanding at the time of the acceleration, (i) all accrued interest and all other sums due Lender under this Note and the other Loan Documents, and (ii) the prepayment premium calculated pursuant to Schedule A.

     (3) Any application by Lender of any collateral or other security to the repayment of any portion of the unpaid principal balance of this Note prior to the Maturity Date and in the absence of acceleration shall be deemed to be a partial prepayment by Borrower, requiring the payment to Lender by Borrower of a prepayment premium.

     (b) Notwithstanding the provisions of Paragraph 10(a), no prepayment premium shall be payable (1) with respect to any prepayment occurring as a result of the application of any insurance proceeds or condemnation award under the Security Instrument, or (2) as provided in subparagraph (c) of Schedule A.

     (c) Schedule A is hereby incorporated by reference into this Note.

     (d) Any required prepayment of less than the entire unpaid principal balance of this Note shall not extend or postpone the due date of any subsequent monthly installments or change the amount of such installments, unless Lender agrees otherwise in writing.

Multifamily Non-Recourse Fixed Rate Note – Kentucky	Form 4118	Page 6
Fannie Mae	08-09	© 1997-2009 Fannie Mae

     (e) Borrower recognizes that any prepayment of the unpaid principal balance of this Note, whether voluntary or involuntary or resulting from a default by Borrower, will result in Lender’s incurring loss, including reinvestment loss, additional expense and frustration or impairment of Lender’s ability to meet its commitments to third parties. Borrower agrees to pay to Lender upon demand damages for the detriment caused by any prepayment, and agrees that it is extremely difficult and impractical to ascertain the extent of such damages. Borrower therefore acknowledges and agrees that the formula for calculating prepayment premiums set forth on Schedule A represents a reasonable estimate of the damages Lender will incur because of a prepayment.

     (f) Borrower further acknowledges that the prepayment premium provisions of this Note are a material part of the consideration for the loan evidenced by this Note, and acknowledges that the terms of this Note are in other respects more favorable to Borrower as a result of the Borrower’s voluntary agreement to the prepayment premium provisions.

     11. Costs and Expenses. Borrower shall pay on demand all expenses and costs, including fees and out-of-pocket expenses of attorneys and expert witnesses and costs of investigation, incurred by Lender as a result of any default under this Note or in connection with efforts to collect any amount due under this Note, or to enforce the provisions of any of the other Loan Documents, including those incurred in post-judgment collection efforts and in any bankruptcy proceeding (including any action for relief from the automatic stay of any bankruptcy proceeding) or judicial or non-judicial foreclosure proceeding.

     12. Forbearance. Any forbearance by Lender in exercising any right or remedy under this Note, the Security Instrument, or any other Loan Document or otherwise afforded by applicable law, shall not be a waiver of or preclude the exercise of that or any other right or remedy. The acceptance by Lender of any payment after the due date of such payment, or in an amount which is less than the required payment, shall not be a waiver of Lender’s right to require prompt payment when due of all other payments or to exercise any right or remedy with respect to any failure to make prompt payment. Enforcement by Lender of any security for Borrower’s obligations under this Note shall not constitute an election by Lender of remedies so as to preclude the exercise of any other right or remedy available to Lender.

     13. Waivers. Presentment, demand, notice of dishonor, protest, notice of acceleration, notice of intent to demand or accelerate payment or maturity, presentment for payment, notice of nonpayment, grace, and diligence in collecting the Indebtedness are waived by Borrower, Key Principal, and all endorsers and guarantors of this Note and all other third party obligors.

     14. Loan Charges. Borrower agrees to pay an effective rate of interest equal to the sum of the Interest Rate provided for in this Note and any additional rate of interest resulting from any other charges of interest or in the nature of interest paid or to be paid in connection with the loan evidenced by this Note and any other fees or amounts to be paid by Borrower pursuant to any of the other Loan Documents. Neither this Note nor any of the other Loan Documents shall be construed to create a contract for the use, forbearance or detention of money requiring payment of interest at a rate greater than the maximum interest rate permitted to be charged under applicable law. If any applicable law limiting the amount of interest or other charges permitted to be collected from Borrower in connection with the Loan is interpreted so that any interest or other charge provided for in any Loan Document, whether considered separately or together with other charges provided for in any other Loan Document, violates that law, and Borrower is entitled to the benefit of that law, that interest or charge is hereby

Multifamily Non-Recourse Fixed Rate Note – Kentucky	Form 4118	Page 7
Fannie Mae	08-09	© 1997-2009 Fannie Mae

reduced to the extent necessary to eliminate that violation. The amounts, if any, previously paid to Lender in excess of the permitted amounts shall be applied by Lender to reduce the unpaid principal balance of this Note. For the purpose of determining whether any applicable law limiting the amount of interest or other charges permitted to be collected from Borrower has been violated, all Indebtedness that constitutes interest, as well as all other charges made in connection with the Indebtedness that constitute interest, shall be deemed to be allocated and spread ratably over the stated term of the Note. Unless otherwise required by applicable law, such allocation and spreading shall be effected in such a manner that the rate of interest so computed is uniform throughout the stated term of the Note.

     15. Commercial Purpose. Borrower represents that the Indebtedness is being incurred by Borrower solely for the purpose of carrying on a business or commercial enterprise, and not for personal, family or household purposes.

     16. Counting of Days. Except where otherwise specifically provided, any reference in this Note to a period of “days” means calendar days, not Business Days.

     17. Governing Law. This Note shall be governed by the law of the jurisdiction in which the Land is located.

     18. Captions. The captions of the paragraphs of this Note are for convenience only and shall be disregarded in construing this Note.

     19. Notices. All notices, demands and other communications required or permitted to be given by Lender to Borrower pursuant to this Note shall be given in accordance with Section 31 of the Security Instrument.

     20. Consent to Jurisdiction and Venue. Borrower and Key Principal each agrees that any controversy arising under or in relation to this Note shall be litigated exclusively in the Property Jurisdiction. The state and federal courts and authorities with jurisdiction in the Property Jurisdiction shall have exclusive jurisdiction over all controversies which shall arise under or in relation to this Note. Borrower and Key Principal each irrevocably consents to service, jurisdiction, and venue of such courts for any such litigation and waives any other venue to which it might be entitled by virtue of domicile, habitual residence or otherwise.

     21. WAIVER OF TRIAL BY JURY. BORROWER, KEY PRINCIPAL AND LENDER EACH (A) AGREES NOT TO ELECT A TRIAL BY JURY WITH RESPECT TO ANY ISSUE ARISING OUT OF THIS NOTE OR THE RELATIONSHIP BETWEEN THE PARTIES AS LENDER, KEY PRINCIPAL AND BORROWER THAT IS TRIABLE OF RIGHT BY A JURY AND (B) WAIVES ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO SUCH ISSUE TO THE EXTENT THAT ANY SUCH RIGHT EXISTS NOW OR IN THE FUTURE. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS SEPARATELY GIVEN BY EACH PARTY, KNOWINGLY AND VOLUNTARILY WITH THE BENEFIT OF COMPETENT LEGAL COUNSEL.

Multifamily Non-Recourse Fixed Rate Note – Kentucky	Form 4118	Page 8
Fannie Mae	08-09	© 1997-2009 Fannie Mae

     ATTACHED SCHEDULES. The following Schedules are attached to this Note and incorporated herein by reference:

þ Schedule A Prepayment Premium (required)

þ Schedule B-1 Modifications to Acknowledgment and Agreement of Key Principal

þ Schedule B-2 Modification to Multifamily Note (Waste)

[CONTINUED ON FOLLOWING PAGE]

Multifamily Non-Recourse Fixed Rate Note – Kentucky	Form 4118	Page 9
Fannie Mae	08-09	© 1997-2009 Fannie Mae

     IN WITNESS WHEREOF, Borrower has signed and delivered this Note or has caused this Note to be signed and delivered by its duly authorized representative.

SIR ARBOR POINTE, LLC,
a Delaware limited liability company
By:	Steadfast Income Advisor, LLC,
	a Delaware limited liability company,
Its:	Manager
	By: Name:	/s/ Ana Marie del Rio Ana Marie del Rio
	Title:	Secretary

PNC Loan No. 310401108
Fannie Mae Commitment No. 864670     

Multifamily Non-Recourse Fixed Rate Note – Kentucky	Form 4118	Page 10
Fannie Mae	08-09	© 1997-2009 Fannie Mae

PAY TO THE ORDER OF

FANNIE MAE

WITHOUT RECOURSE

PNC BANK, NATIONAL ASSOCIATION,
a national banking association
By:	/s/ Kelli A. Tyler
Name:	Kelli A. Tyler
Title:	Vice President

Multifamily Non-Recourse Fixed Rate Note – Kentucky	Form 4118	Page 11
Fannie Mae	08-09	© 1997-2009 Fannie Mae

ACKNOWLEDGMENT AND AGREEMENT OF KEY PRINCIPAL TO
PERSONAL LIABILITY FOR EXCEPTIONS TO NON-RECOURSE LIABILITY

     Key Principal, who has an economic interest in SIR Arbor Pointe, LLC, a Delaware limited liability company (“Borrower”), or who will otherwise obtain a material financial benefit from the Loan, hereby absolutely, unconditionally and irrevocably agrees to pay to Lender, or its assigns, on demand, all amounts for which Borrower is personally liable under Paragraph 9 of the Multifamily Note dated May 4, 2011 in the amount of $5,200,000.00 to which this Acknowledgment is attached (the “Note”). The obligations of Key Principal shall survive any foreclosure proceeding, any foreclosure sale, any delivery of any deed in lieu of foreclosure, and any release of record of the Security Instrument. Lender may pursue its remedies against Key Principal without first exhausting its remedies against the Borrower or the Mortgaged Property. All capitalized terms used but not defined in this Acknowledgment shall have the meanings given to such terms in the Security Instrument. As used in this Acknowledgment, the term “Key Principal” (each if more than one) shall mean only those individuals or entities that execute this Acknowledgment.

     The obligations of Key Principal shall be performed without demand by Lender and shall be unconditional irrespective of the genuineness, validity, or enforceability of the Note, or any other Loan Document, and without regard to any other circumstance which might otherwise constitute a legal or equitable discharge of a surety or a guarantor. Key Principal hereby waives the benefit of all principles or provisions of law, which are or might be in conflict with the terms of this Acknowledgment, and agrees that Key Principal’s obligations shall not be affected by any circumstances which might otherwise constitute a legal or equitable discharge of a surety or a guarantor. Key Principal hereby waives the benefits of any right of discharge and all other rights under any and all statutes or other laws relating to guarantors or sureties, to the fullest extent permitted by law, diligence in collecting the Indebtedness, presentment, demand for payment, protest, all notices with respect to the Note including this Acknowledgment, which may be required by statute, rule of law or otherwise to preserve Lender’s rights against Key Principal under this Acknowledgment, including notice of acceptance, notice of any amendment of the Loan Documents, notice of the occurrence of any default or Event of Default, notice of intent to accelerate, notice of acceleration, notice of dishonor, notice of foreclosure, notice of protest, notice of the incurring by Borrower of any obligation or indebtedness and all rights to require Lender to (a) proceed against Borrower, (b) proceed against any general partner of Borrower, (c) proceed against or exhaust any collateral held by Lender to secure the repayment of the Indebtedness, or (d) if Borrower is a partnership, pursue any other remedy it may have against Borrower, or any general partner of Borrower.

     At any time without notice to Key Principal, and without affecting the liability of Key Principal hereunder, (a) the time for payment of the principal of or interest on the Indebtedness may be extended or the Indebtedness may be renewed in whole or in part; (b) the time for Borrower’s performance of or compliance with any covenant or agreement contained in the Note, or any other Loan Document, whether presently existing or hereinafter entered into, may be extended or such performance or compliance may be waived; (c) the maturity of the Indebtedness may be accelerated as provided in the Note or any other Loan Document; (d) the Note or any other Loan Document may be modified or amended by Lender and Borrower in any respect, including an increase in the principal amount; and (e) any security for the Indebtedness may be modified, exchanged, surrendered or otherwise dealt with or additional security may be pledged or mortgaged for the Indebtedness.

Multifamily Non-Recourse Fixed Rate Note – Kentucky	Form 4118	Page 12
Fannie Mae	08-09	© 1997-2009 Fannie Mae

     Key Principal acknowledges that Key Principal has received a copy of the Note and all other Loan Documents. Neither this Acknowledgment nor any of its provisions may be waived, modified, amended, discharged, or terminated except by an agreement in writing signed by the party against which the enforcement of the waiver, modification, amendment, discharge, or termination is sought, and then only to the extent set forth in that agreement. Key Principal agrees to notify Lender (in the manner for giving notices provided in Section 31 of the Security Instrument) of any change of Key Principal’s address within 10 Business Days after such change of address occurs. Any notices to Key Principal shall be given in the manner provided in Section 31 of the Security Instrument. Key Principal agrees to be bound by Paragraphs 20 and 21 of the Note.

     CONFESSION OF JUDGMENT. Key Principal hereby irrevocably authorizes any attorney-at-law, including an attorney employed by or retained by Lender, to appear in any court of record in or of the Commonwealth of Kentucky, or in any other state or territory of the United States or the District of Columbia, at any time after all amounts under Paragraph 9 of this Note become due, whether by acceleration or otherwise, to waive the issuing and service of process and to confess a judgment against Key Principal in favor of Lender, for all amounts due and owing by Key Principal to Lender under this Acknowledgment, together with costs of suit and thereupon to release all errors and waive all right of appeal or stays of execution in any court of record. Key Principal hereby expressly acknowledges that an attorney-at-law employed or retained by Lender may confess judgment against Key Principal, and further expressly consents to Lender’s payment of the legal fees of such attorney-at-law.

WARNING. BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT TRIAL. IF YOU DO NOT PAY ON TIME, A COURT JUDGMENT MAY BE TAKEN AGAINST YOU WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO COLLECT FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR WHETHER FOR RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH THE AGREEMENT, OR ANY OTHER CAUSE.

     THIS ACKNOWLEDGMENT IS AN INSTRUMENT SEPARATE FROM, AND NOT A PART OF, THE NOTE. BY SIGNING THIS ACKNOWLEDGMENT, KEY PRINCIPAL DOES NOT INTEND TO BECOME AN ACCOMMODATION PARTY TO, OR AN ENDORSER OF, THE NOTE.

[CONTINUED ON FOLLOWING PAGE]

Multifamily Non-Recourse Fixed Rate Note – Kentucky	Form 4118	Page 13
Fannie Mae	08-09	© 1997-2009 Fannie Mae

     IN WITNESS WHEREOF, Key Principal has signed and delivered this Acknowledgment or has caused this Acknowledgment to be signed and delivered by its duly authorized representative.

KEY PRINCIPAL
STEADFAST INCOME REIT, INC.,
a Maryland corporation
By:	/s/ Ana Marie del Rio
Name:	Ana Marie del Rio
Title:	Secretary
Address:	18100 Von Karman Avenue, Suite 500
	Irvine, California 92612

Multifamily Non-Recourse Fixed Rate Note – Kentucky	Form 4118	Page 14
Fannie Mae	08-09	© 1997-2009 Fannie Mae

SCHEDULE A

PREPAYMENT PREMIUM

Any prepayment premium payable under Paragraph 10 of this Note shall be computed as follows:

(a) If the prepayment is made at any time after the date of this Note and before the Yield Maintenance Period End Date, the prepayment premium shall be the greater of:

(i)	1% of the amount of principal being prepaid; or
(ii)	The product obtained by multiplying:

(A)	the amount of principal being prepaid,
by
(B)	the difference obtained by subtracting from the Interest Rate on this Note the Yield Rate (as defined below), on the twenty-fifth Business Day preceding (x) the Intended Prepayment Date, or (y) the date Lender accelerates the Loan or otherwise accepts a prepayment pursuant to Paragraph 10(a)(3) of this Note,
by
(C)	the present value factor calculated using the following formula:

[r =	Yield Rate
n =	the number of months remaining between (1) either of the following: (x) in the case of a voluntary prepayment, the Last Day of the Month during which the prepayment is made, or (y) in any other case, the date on which Lender accelerates the unpaid principal balance of this Note and (2) the Yield Maintenance Period End Date.

Multifamily Non-Recourse Fixed Rate Note – Kentucky	Form 4118	Page A-1
Fannie Mae	08-09	© 1997-2009 Fannie Mae

For purposes of this clause (ii), the “Yield Rate” means the yield calculated by interpolating the yields for the immediately shorter and longer term U.S. “Treasury constant maturities” (as reported in the Federal Reserve Statistical Release H.15 Selected Interest Rates (the “Fed Release”) under the heading “U.S. government securities”) closest to the remaining term of the Yield Maintenance Period Term, as follows (rounded to three decimal places):

a =	the yield for the longer U.S. Treasury constant maturity
b =	the yield for the shorter U.S. Treasury constant maturity
x =	the term of the longer U.S. Treasury constant maturity
y =	the term of the shorter U.S. Treasury constant maturity
z =	“n” (as defined in the present value factor calculation above) divided by 12.

Notwithstanding any provision to the contrary, if “z” equals a term reported under the U.S. “Treasury constant maturities” subheading in the Fed Release, the yield for such term shall be used, and interpolation shall not be necessary. If publication of the Fed Release is discontinued by the Federal Reserve Board, Lender shall determine the Yield Rate from another source selected by Lender. Any determination of the Yield Rate by Lender will be binding absent manifest error.]

(b)	If the prepayment is made on or after the Yield Maintenance Period End Date but before the last calendar day of the 4th month prior to the month in which the Maturity Date occurs, the prepayment premium shall be 1% of the amount of principal being prepaid.
(c)	Notwithstanding the provisions of Paragraph 10(a) of this Note, no prepayment premium shall be payable with respect to any prepayment made on or after the last calendar day of the 4th month prior to the month in which the Maturity Date occurs.

/s/ Ana Marie del Rio                   
Borrower Initials

Multifamily Non-Recourse Fixed Rate Note – Kentucky	Form 4118	Page A-2
Fannie Mae	08-09	© 1997-2009 Fannie Mae

SCHEDULE B-l

MODIFICATIONS TO ACKNOWLEGEMENT AND AGREEMENT
OF KEY PRINCIPAL

(Non-Standard Modifications)

     The following modifications are made to the text of the Acknowledgement and Agreement of Key Principal to Personal Liability for Exceptions to Non-Recourse Liability (the “Acknowledgement and Agreement”) that precedes this Exhibit:

1. The second sentence of the first paragraph is amended and restated in its entirety as follows:

“The obligations of Key Principal shall survive any foreclosure proceeding, any foreclosure sale, any delivery of any deed in lieu of foreclosure, and any release of record of the Security Instrument; provided, however, that notwithstanding anything to the contrary herein, Key Principal’s liability to Lender shall not include any loss, liability or expense arising or occurring from and after the date of the foreclosure or deed in lieu of foreclosure which relates to actions or omissions of Lender or any future assignee or holder of the Note occurring after such foreclosure or deed in lieu of foreclosure.”

2.	The following text is added (i) at the beginning of the first and second sentences of the paragraph entitled “Confession of Judgment” on the second page of the Acknowledgement and Agreement, and (ii) immediately prior to the words “BY SIGNING THIS PAPER . . .” in the immediately following paragraph entitled “Warning”.
	“To the extent permitted by applicable law,”

	Schedule B-l	Page B-1-1
Non-Standard Rider to Acknowledgment
and Agreement of Key Principal

3. All capitalized terms used in this Exhibit not specifically defined herein shall have the meanings set forth in the text of the Acknowledgement and Agreement that precedes this Exhibit.

BORROWER’S INITIALS:

/s/ Ana Marie del Rio

Non-Standard Rider to Acknowledgment	Signature Page
and Agreement of Key Principal

SCHEDULE B—2

MODIFICATIONS TO MULTIFAMILY NOTE
(Waste)

     The following modification is made to the text of the Multifamily Note that precedes this Schedule:

     1. Paragraph 9(b) of the Note is hereby modified by deleting clause (6) in its entirety and inserting the following in lieu thereof:

          “(6) waste or abandonment of the Mortgaged Property by Borrower.”

     All capitalized terms used but not defined in the Note (including this Schedule B) shall have the meanings given to such terms in the Security Instrument (as that term is defined in this Note).

/s/ Ana Marie del Rio                
Borrower Initials

Schedule B — Waste	Form 4199	Page B-2
Fannie Mae	11-09	© 2008-2009 Fannie Mae

EX-10.6

Exhibit 10.6

Prepared by:

Andrew S. Begun, Esq.
Alston & Bird, LLP
2801 Townsgate Road, Suite 215
Westlake Village, California 91361

Signature of Preparer

After recording mail to:

PNC Bank, National Association
10731 Treena Street, Suite 101
San Diego, CA 92131
Attention: Kelli A. Tyler
PNC Loan No. 310401108
Fannie Mae No. 864670

Principal place of business:
26901 Agoura Rd., Suite 200
Calabasas Hills, California 91301

MULTIFAMILY MORTGAGE,
ASSIGNMENT OF RENTS
AND SECURITY AGREEMENT

FANNIE MAE MULTIFAMILY SECURITY INSTRUMENT – KENTUCKY	Form 4018       06/09
	© 1998-2009 Fannie Mae

TABLE OF CONTENTS

	Page
1. DEFINITIONS		1
2. UNIFORM COMMERCIAL CODE SECURITY AGREEMENT		7
3. ASSIGNMENT OF RENTS; APPOINTMENT OF RECEIVER; LENDER IN POSSESSION		7
4. ASSIGNMENT OF LEASES; LEASES AFFECTING THE MORTGAGED PROPERTY		10
5. PAYMENT OF INDEBTEDNESS; PERFORMANCE UNDER LOAN DOCUMENTS; PREPAYMENT PREMIUM		11
6. EXCULPATION		12
7. DEPOSITS FOR TAXES, INSURANCE AND OTHER CHARGES		12
8. COLLATERAL AGREEMENTS		13
9. APPLICATION OF PAYMENTS		13
10. COMPLIANCE WITH LAWS		13
11. USE OF PROPERTY		14
12. PROTECTION OF LENDER’S SECURITY		14

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	Page
13. INSPECTION		14
14. BOOKS AND RECORDS; FINANCIAL REPORTING		15
15. TAXES; OPERATING EXPENSES		16
16. LIENS; ENCUMBRANCES		17
17. PRESERVATION, MANAGEMENT AND MAINTENANCE OF MORTGAGED PROPERTY		17
18. ENVIRONMENTAL HAZARDS		18
19. PROPERTY AND LIABILITY INSURANCE		24
20. CONDEMNATION		25
21. TRANSFERS OF THE MORTGAGED PROPERTY OR INTERESTS IN BORROWER		26
22. EVENTS OF DEFAULT		31
23. REMEDIES CUMULATIVE		32
24. FORBEARANCE		32
25. LOAN CHARGES		32
26. WAIVER OF STATUTE OF LIMITATIONS		33
27. WAIVER OF MARSHALLING		33

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	Page
28. FURTHER ASSURANCES		33
29. ESTOPPEL CERTIFICATE		33
30. GOVERNING LAW; CONSENT TO JURISDICTION AND VENUE		34
31. NOTICE		34
32. SALE OF NOTE; CHANGE IN SERVICER		35
33. SINGLE ASSET BORROWER		35
34. SUCCESSORS AND ASSIGNS BOUND		35
35. JOINT AND SEVERAL LIABILITY		35
36. RELATIONSHIP OF PARTIES; NO THIRD PARTY BENEFICIARY		35
37. SEVERABILITY; AMENDMENTS		36
38. CONSTRUCTION		36
39. LOAN SERVICING		36
40. DISCLOSURE OF INFORMATION		36
41. NO CHANGE IN FACTS OR CIRCUMSTANCES		36
42. SUBROGATION		37

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	© 1998-2009 Fannie Mae

	Page
43. ACCELERATION; REMEDIES		37
44. RELEASE		37
45. WAIVER OF HOMESTEAD		37
46. WAIVER OF CERTAIN OTHER LAWS		37
47. FUTURE ADVANCES		38
48. WAIVER OF TRIAL BY JURY		38

FANNIE MAE MULTIFAMILY SECURITY INSTRUMENT – KENTUCKY	Form 4018       06/09       Page iv
	© 1998-2009 Fannie Mae

MULTIFAMILY MORTGAGE,
ASSIGNMENT OF RENTS
AND SECURITY AGREEMENT

     THIS MULTIFAMILY MORTGAGE, ASSIGNMENT OF RENTS AND SECURITY AGREEMENT (the “Instrument”) is dated as of the 4th day of May, 2011, and effective as of May 5, 2011, between SIR ARBOR POINTE, LLC, a limited liability company organized and existing under the laws of Delaware, and whose office address is 18100 Von Karman Avenue, Suite 500, Irvine, Orange County, California 92612, as mortgagor (“Borrower”), and PNC BANK, NATIONAL ASSOCIATION, a national banking association, whose principal place of business is 26901 Agoura Rd., Suite 200, Calabasas Hills, California 91301, as mortgagee (“Lender”).

     Borrower is indebted to Lender in the principal amount of $5,200,000.00, as evidenced by Borrower’s Multifamily Note payable to Lender dated as of the date of this Instrument, and maturing on June 1, 2018.

     TO SECURE TO LENDER the repayment of the Indebtedness, and all renewals, extensions and modifications of the Indebtedness, and the performance of the covenants and agreements of Borrower contained in the Loan Documents, Borrower mortgages, warrants, grants, conveys and assigns to Lender, with power of sale, the Mortgaged Property, including the Land located in Jefferson County, State of Kentucky, and described in Exhibit A attached to this Instrument.

     Borrower represents and warrants that Borrower is lawfully seized of the Mortgaged Property and has the right, power and authority to mortgage, grant, convey and assign the Mortgaged Property, and that the Mortgaged Property is unencumbered. Borrower covenants that Borrower will warrant and defend generally the title to the Mortgaged Property against all claims and demands, subject to any easements and restrictions listed in a schedule of exceptions to coverage in any title insurance policy issued to Lender contemporaneously with the execution and recordation of this Instrument and insuring Lender’s interest in the Mortgaged Property.

Covenants. Borrower and Lender covenant and agree as follows:

     1. DEFINITIONS.

     The following terms, when used in this Instrument (including when used in the above recitals), shall have the following meanings:

     (a) “Borrower” means all persons or entities identified as “Borrower” in the first paragraph of this Instrument, together with their successors and assigns.

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     (b) “Collateral Agreement” means any separate agreement between Borrower and Lender for the purpose of establishing replacement reserves for the Mortgaged Property, establishing a fund to assure completion of repairs or improvements specified in that agreement, or assuring reduction of the outstanding principal balance of the Indebtedness if the occupancy of or income from the Mortgaged Property does not increase to a level specified in that agreement, or any other agreement or agreements between Borrower and Lender which provide for the establishment of any other fund, reserve or account.

     (c) “Environmental Permit” means any permit, license, or other authorization issued under any Hazardous Materials Law with respect to any activities or businesses conducted on or in relation to the Mortgaged Property.

     (d) “Event of Default” means the occurrence of any event listed in Section 22.

     (e) “Fixtures” means all property which is so attached to the Land or the Improvements as to constitute a fixture under applicable law, including: machinery, equipment, engines, boilers, incinerators, installed building materials; systems and equipment for the purpose of supplying or distributing heating, cooling, electricity, gas, water, air, or light; antennas, cable, wiring and conduits used in connection with radio, television, security, fire prevention, or fire detection or otherwise used to carry electronic signals; telephone systems and equipment; elevators and related machinery and equipment; fire detection, prevention and extinguishing systems and apparatus; security and access control systems and apparatus; plumbing systems; water heaters, ranges, stoves, microwave ovens, refrigerators, dishwashers, garbage disposers, washers, dryers and other appliances; light fixtures, awnings, storm windows and storm doors; pictures, screens, blinds, shades, curtains and curtain rods; mirrors; cabinets, paneling, rugs and floor and wall coverings; fences, trees and plants; swimming pools; and exercise equipment.

     (f) “Governmental Authority” means any board, commission, department or body of any municipal, county, state or federal governmental unit, or any subdivision of any of them, that has or acquires jurisdiction over the Mortgaged Property or the use, operation or improvement of the Mortgaged Property.

     (g) “Hazardous Materials” means petroleum and petroleum products and compounds containing them, including gasoline, diesel fuel and oil; explosives; flammable materials; radioactive materials; polychlorinated biphenyls (“PCBs”) and compounds containing them; lead and lead-based paint; asbestos or asbestos-containing materials in any form that is or could become friable; underground or above-ground storage tanks, whether empty or containing any substance; any substance the presence of which on the Mortgaged Property is prohibited by any federal, state or local authority; any substance that requires special handling; and any other material or substance now or in the future defined as a “hazardous substance,” “hazardous material,” “hazardous waste,” “toxic substance,” “toxic pollutant,” “contaminant,” or “pollutant” within the meaning of any Hazardous Materials Law.

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     (h) “Hazardous Materials Laws” means all federal, state, and local laws, ordinances and regulations and standards, rules, policies and other governmental requirements, administrative rulings and court judgments and decrees in effect now or in the future and including all amendments, that relate to Hazardous Materials and apply to Borrower or to the Mortgaged Property. Hazardous Materials Laws include, but are not limited to, the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. Section 9601, et seq., the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901, et seq., the Toxic Substance Control Act, 15 U.S.C. Section 2601, et seq., the Clean Water Act, 33 U.S.C. Section 1251, et seq., and the Hazardous Materials Transportation Act, 49 U.S.C. Section 5101, and their state analogs.

     (i) “Impositions” and “Imposition Deposits” are defined in Section 7(a).

     (j) “Improvements” means the buildings, structures, improvements, and alterations now constructed or at any time in the future constructed or placed upon the Land, including any future replacements and additions.

     (k) “Indebtedness” means the principal of, interest on, and all other amounts due at any time under, the Note, this Instrument or any other Loan Document, including prepayment premiums, late charges, default interest, and advances as provided in Section 12 to protect the security of this Instrument.

     (l) [Intentionally omitted]

     (m) “Key Principal” means (A) the natural person(s) or entity identified as such at the foot of this Instrument; (B) the natural person or entity who signed either the Acknowledgement and Agreement of Key Principal to Personal Liability for Exceptions to Non-Recourse Liability or the Exceptions to Non-Recourse Guaranty (or is otherwise a guarantor on the Indebtedness); and (C) any person or entity who becomes a Key Principal after the date of this Instrument and is identified as such in an assumption agreement, or another amendment or supplement to this Instrument or who otherwise signs either the Acknowledgement and Agreement of Key Principal to Personal Liability for Exceptions to Non-Recourse Liability or Exceptions to Non-Recourse Guaranty (or any other guaranty of the Indebtedness).

     (n) “Land” means the land described in Exhibit A.

     (o) “Leases” means all present and future leases, subleases, licenses, concessions or grants or other possessory interests now or hereafter in force, whether oral or written, covering or affecting the Mortgaged Property, or any portion of the Mortgaged Property (including proprietary leases or occupancy agreements if Borrower is a cooperative housing corporation), and all modifications, extensions or renewals.

     (p) “Lender” means the entity identified as “Lender” in the first paragraph of this Instrument and its successors and assigns, or any subsequent holder of the Note.

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     (q) “Loan Documents” means the Note, this Instrument, all guaranties, all indemnity agreements, all Collateral Agreements, O&M Programs, and any other documents now or in the future executed by Borrower, Key Principal, any guarantor or any other person in connection with the loan evidenced by the Note, as such documents may be amended from time to time.

     (r) “Loan Servicer” means the entity that from time to time is designated by Lender to collect payments and deposits and receive notices under the Note, this Instrument and any other Loan Document, and otherwise to service the loan evidenced by the Note for the benefit of Lender. Unless Borrower receives notice to the contrary, the Loan Servicer is the entity identified as “Lender” in the first paragraph of this Instrument.

     (s) “Mortgaged Property” means all of Borrower’s present and future right, title and interest in and to all of the following:

(1)	the Land;
(2)	the Improvements;
(3)	the Fixtures;
(4)	the Personalty;
(5)	all current and future rights, including air rights, development rights, zoning rights and other similar rights or interests, easements, tenements, rights-of-way, strips and gores of land, streets, alleys, roads, sewer rights, waters, watercourses, and appurtenances related to or benefitting the Land or the Improvements, or both, and all rights-of-way, streets, alleys and roads which may have been or may in the future be vacated;
(6)	all proceeds paid or to be paid by any insurer of the Land, the Improvements, the Fixtures, the Personalty or any other part of the Mortgaged Property, whether or not Borrower obtained the insurance pursuant to Lender’s requirement;
(7)	all awards, payments and other compensation made or to be made by any municipal, state or federal authority with respect to the Land, the Improvements, the Fixtures, the Personalty or any other part of the Mortgaged Property, including any awards or settlements resulting from condemnation proceedings or the total or partial taking of the Land, the Improvements, the Fixtures, the Personalty or any other part of the Mortgaged Property under the power of eminent domain or otherwise and including any conveyance in lieu thereof;

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(8)	all contracts, options and other agreements for the sale of the Land, the Improvements, the Fixtures, the Personalty or any other part of the Mortgaged Property entered into by Borrower now or in the future, including cash or securities deposited to secure performance by parties of their obligations;
(9)	all proceeds from the conversion, voluntary or involuntary, of any of the above into cash or liquidated claims, and the right to collect such proceeds;
(10)	all Rents and Leases;
(11)	all earnings, royalties, accounts receivable, issues and profits from the Land, the Improvements or any other part of the Mortgaged Property, and all undisbursed proceeds of the loan secured by this Instrument and, if Borrower is a cooperative housing corporation, maintenance charges or assessments payable by shareholders or residents;
(12)	all Imposition Deposits;
(13)	all refunds or rebates of Impositions by any municipal, state or federal authority or insurance company (other than refunds applicable to periods before the real property tax year in which this Instrument is dated);
(14)	all tenant security deposits which have not been forfeited by any tenant under any Lease; and
(15)	all names under or by which any of the above Mortgaged Property may be operated or known, and all trademarks, trade names, and goodwill relating to any of the Mortgaged Property.

     (t) “Note” means the Multifamily Note described on page 1 of this Instrument, including the Acknowledgment and Agreement of Key Principal to Personal Liability for Exceptions to Non-Recourse Liability (if any), and all schedules, riders, allonges and addenda, as such Multifamily Note may be amended from time to time.

     (u) “O&M Program” is defined in Section 18(a).

     (v) “Personalty” means all equipment, inventory, general intangibles which are used now or in the future in connection with the ownership, management or operation of the Land or the Improvements or are located on the Land or in the Improvements, including furniture, furnishings, machinery, building materials, appliances, goods, supplies, tools, books, records (whether in written or electronic form), computer equipment (hardware and software) and other tangible personal

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property (other than Fixtures) which are used now or in the future in connection with the ownership, management or operation of the Land or the Improvements or are located on the Land or in the Improvements, and any operating agreements relating to the Land or the Improvements, and any surveys, plans and specifications and contracts for architectural, engineering and construction services relating to the Land or the Improvements and all other intangible property and rights relating to the operation of, or used in connection with, the Land or the Improvements, including all governmental permits relating to any activities on the Land.

     (w) “Property Jurisdiction” is defined in Section 30(a).

     (x) “Rents” means all rents (whether from residential or non-residential space), revenues and other income of the Land or the Improvements, including subsidy payments received from any sources (including, but not limited to payments under any Housing Assistance Payments Contract), parking fees, laundry and vending machine income and fees and charges for food, health care and other services provided at the Mortgaged Property, whether now due, past due, or to become due, and deposits forfeited by tenants.

     (y) “Taxes” means all taxes, assessments, vault rentals and other charges, if any, general, special or otherwise, including all assessments for schools, public betterments and general or local improvements, which are levied, assessed or imposed by any public authority or quasi-public authority, and which, if not paid, will become a lien, on the Land or the Improvements.

     (z) “Transfer” means (A) a sale, assignment, transfer, or other disposition (whether voluntary, involuntary or by operation of law); (B) the grant, creation, or attachment of a lien, encumbrance, or security interest (whether voluntary, involuntary or by operation of law); (C) the issuance or other creation of a direct or indirect ownership interest; or (D) the withdrawal, retirement, removal or involuntary resignation of any owner or manager of a legal entity.

     (aa) “Bankruptcy Event” means any one or more of the following: (i) the commencement of a voluntary case under one or more of the Insolvency Laws by the Borrower; (ii) the acknowledgment in writing by the Borrower that it is unable to pay its debts generally as they mature; (iii) the making of a general assignment for the benefit of creditors by the Borrower; (iv) an involuntary case under one or more Insolvency Laws against the Borrower; (v) the appointment of a receiver, liquidator, custodian, sequestrator, trustee or other similar officer who exercises control over the Borrower or any substantial part of the assets of the Borrower provided that any proceeding or case under (iv) or (v) above is not dismissed within 90 days after filing.

     (bb) “Borrower Affiliate” means, as to either Borrower or Key Principal, (i) any entity that directly or indirectly owns, controls, or holds with power to vote, 20 percent or more of the outstanding voting securities of Borrower or of Key Principal, (ii) any corporation 20 percent or more of whose outstanding voting securities are directly or indirectly owned, controlled or held with power to vote by Borrower or by Key Principal, (iii) any partner, shareholder or, if a limited

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liability company, member of Borrower or Key Principal, or (iv) any other entity that is related (to the third degree of consanguinity) by blood or marriage to Borrower or Key Principal.

     (cc) “Insolvency Laws” means the United States Bankruptcy Code, 11 U.S.C. § 101, et seq., together with any other federal or state law affecting debtor and creditor rights or relating to the bankruptcy, insolvency, reorganization, arrangement, readjustment of debt, dissolution, liquidation or similar proceeding, as amended from time to time, to the extent applicable to the Borrower.

     2. UNIFORM COMMERCIAL CODE SECURITY AGREEMENT.

     This Instrument is also a security agreement under the Uniform Commercial Code for any of the Mortgaged Property which, under applicable law, may be subject to a security interest under the Uniform Commercial Code, whether acquired now or in the future, and all products and cash and non-cash proceeds thereof (collectively, “UCC Collateral”), and Borrower hereby grants to Lender a security interest in the UCC Collateral. Borrower hereby authorizes Lender to file financing statements, continuation statements and financing statement amendments in such form as Lender may require to perfect or continue the perfection of this security interest and Borrower agrees, if Lender so requests, to execute and deliver to Lender such financing statements, continuation statements and amendments. Borrower shall pay all filing costs and all costs and expenses of any record searches for financing statements that Lender may require. Without the prior written consent of Lender, Borrower shall not create or permit to exist any other lien or security interest in any of the UCC Collateral. If an Event of Default has occurred and is continuing, Lender shall have the remedies of a secured party under the Uniform Commercial Code, in addition to all remedies provided by this Instrument or existing under applicable law. In exercising any remedies, Lender may exercise its remedies against the UCC Collateral separately or together, and in any order, without in any way affecting the availability of Lender’s other remedies. This Instrument constitutes a financing statement with respect to any part of the Mortgaged Property which is or may become a Fixture.

     3. ASSIGNMENT OF RENTS; APPOINTMENT OF RECEIVER; LENDER IN POSSESSION.

     (a) As part of the consideration for the Indebtedness, Borrower absolutely and unconditionally assigns and transfers to Lender all Rents. It is the intention of Borrower to establish a present, absolute and irrevocable transfer and assignment to Lender of all Rents and to authorize and empower Lender to collect and receive all Rents without the necessity of further action on the part of Borrower. Promptly upon request by Lender, Borrower agrees to execute and deliver such further assignments as Lender may from time to time require. Borrower and Lender intend this assignment of Rents to be immediately effective and to constitute an absolute present assignment and not an assignment for additional security only. For purposes of giving effect to this absolute assignment of Rents, and for no other purpose, Rents shall not be deemed to be a part of the “Mortgaged Property,” as that term is defined in Section l(s). However, if this present, absolute and unconditional assignment of Rents is not enforceable by its terms under the laws of the

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Property Jurisdiction, then the Rents shall be included as a part of the Mortgaged Property and it is the intention of the Borrower that in this circumstance this Instrument create and perfect a lien on Rents in favor of Lender, which lien shall be effective as of the date of this Instrument.

     (b) After the occurrence of an Event of Default, Borrower authorizes Lender to collect, sue for and compromise Rents and directs each tenant of the Mortgaged Property to pay all Rents to, or as directed by, Lender, and Borrower shall, upon Borrower’s receipt of any Rents from any sources (including, but not limited to subsidy payments under any Housing Assistance Payments Contract), pay the total amount of such receipts to the Lender. However, until the occurrence of an Event of Default, Lender hereby grants to Borrower a revocable license to collect and receive all Rents, to hold all Rents in trust for the benefit of Lender and to apply all Rents to pay the installments of interest and principal then due and payable under the Note and the other amounts then due and payable under the other Loan Documents, including Imposition Deposits, and to pay the current costs and expenses of managing, operating and maintaining the Mortgaged Property, including utilities, Taxes and insurance premiums (to the extent not included in Imposition Deposits), tenant improvements and other capital expenditures. So long as no Event of Default has occurred and is continuing, the Rents remaining after application pursuant to the preceding sentence may be retained by Borrower free and clear of, and released from, Lender’s rights with respect to Rents under this Instrument. From and after the occurrence of an Event of Default, and without the necessity of Lender entering upon and taking and maintaining control of the Mortgaged Property directly, or by a receiver, Borrower’s license to collect Rents shall automatically terminate and Lender shall without notice be entitled to all Rents as they become due and payable, including Rents then due and unpaid. Borrower shall pay to Lender upon demand all Rents to which Lender is entitled. At any time on or after the date of Lender’s demand for Rents, Lender may give, and Borrower hereby irrevocably authorizes Lender to give, notice to all tenants of the Mortgaged Property instructing them to pay all Rents to Lender, no tenant shall be obligated to inquire further as to the occurrence or continuance of an Event of Default, and no tenant shall be obligated to pay to Borrower any amounts which are actually paid to Lender in response to such a notice. Any such notice by Lender shall be delivered to each tenant personally, by mail or by delivering such demand to each rental unit. Borrower shall not interfere with and shall cooperate with Lender’s collection of such Rents.

     (c) Borrower represents and warrants to Lender that Borrower has not executed any prior assignment of Rents (other than an assignment of Rents securing indebtedness that will be paid off and discharged with the proceeds of the loan evidenced by the Note), that Borrower has not performed, and Borrower covenants and agrees that it will not perform, any acts and has not executed, and shall not execute, any instrument which would prevent Lender from exercising its rights under this Section 3, and that at the time of execution of this Instrument there has been no anticipation or prepayment of any Rents for more than two months prior to the due dates of such Rents. Borrower shall not collect or accept payment of any Rents more than two months prior to the due dates of such Rents.

     (d) If an Event of Default has occurred and is continuing, Lender may, regardless of the adequacy of Lender’s security or the solvency of Borrower and even in the absence of waste, enter

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upon and take and maintain full control of the Mortgaged Property in order to perform all acts that Lender in its discretion determines to be necessary or desirable for the operation and maintenance of the Mortgaged Property, including the execution, cancellation or modification of Leases, the collection of all Rents, the making of repairs to the Mortgaged Property and the execution or termination of contracts providing for the management, operation or maintenance of the Mortgaged Property, for the purposes of enforcing the assignment of Rents pursuant to Section 3(a), protecting the Mortgaged Property or the security of this Instrument, or for such other purposes as Lender in its discretion may deem necessary or desirable. Alternatively, if an Event of Default has occurred and is continuing, regardless of the adequacy of Lender’s security, without regard to Borrower’s solvency and without the necessity of giving prior notice (oral or written) to Borrower, Lender may apply to any court having jurisdiction for the appointment of a receiver for the Mortgaged Property to take any or all of the actions set forth in the preceding sentence. If Lender elects to seek the appointment of a receiver for the Mortgaged Property at any time after an Event of Default has occurred and is continuing, Borrower, by its execution of this Instrument, expressly consents to the appointment of such receiver, including the appointment of a receiver ex parte if permitted by applicable law. Lender or the receiver, as the case may be, shall be entitled to receive a reasonable fee for managing the Mortgaged Property. Immediately upon appointment of a receiver or immediately upon the Lender’s entering upon and taking possession and control of the Mortgaged Property, Borrower shall surrender possession of the Mortgaged Property to Lender or the receiver, as the case may be, and shall deliver to Lender or the receiver, as the case may be, all documents, records (including records on electronic or magnetic media), accounts, surveys, plans, and specifications relating to the Mortgaged Property and all security deposits and prepaid Rents. In the event Lender takes possession and control of the Mortgaged Property, Lender may exclude Borrower and its representatives from the Mortgaged Property. Borrower acknowledges and agrees that the exercise by Lender of any of the rights conferred under this Section 3 shall not be construed to make Lender a mortgagee-in-possession of the Mortgaged Property so long as Lender has not itself entered into actual possession of the Land and Improvements.

     (e) If Lender enters the Mortgaged Property, Lender shall be liable to account only to Borrower and only for those Rents actually received. Lender shall not be liable to Borrower, anyone claiming under or through Borrower or anyone having an interest in the Mortgaged Property, by reason of any act or omission of Lender under this Section 3, and Borrower hereby releases and discharges Lender from any such liability to the fullest extent permitted by law.

     (f) If the Rents are not sufficient to meet the costs of taking control of and managing the Mortgaged Property and collecting the Rents, any funds expended by Lender for such purposes shall become an additional part of the Indebtedness as provided in Section 12.

     (g) Any entering upon and taking of control of the Mortgaged Property by Lender or the receiver, as the case may be, and any application of Rents as provided in this Instrument shall not cure or waive any Event of Default or invalidate any other right or remedy of Lender under applicable law or provided for in this Instrument.

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     4. ASSIGNMENT OF LEASES; LEASES AFFECTING THE MORTGAGED PROPERTY.

     (a) As part of the consideration for the Indebtedness, Borrower absolutely and unconditionally assigns and transfers to Lender all of Borrower’s right, title and interest in, to and under the Leases, including Borrower’s right, power and authority to modify the terms of any such Lease, or extend or terminate any such Lease. It is the intention of Borrower to establish a present, absolute and irrevocable transfer and assignment to Lender of all of Borrower’s right, title and interest in, to and under the Leases. Borrower and Lender intend this assignment of the Leases to be immediately effective and to constitute an absolute present assignment and not an assignment for additional security only. For purposes of giving effect to this absolute assignment of the Leases, and for no other purpose, the Leases shall not be deemed to be a part of the “Mortgaged Property,” as that term is defined in Section l(s). However, if this present, absolute and unconditional assignment of the Leases is not enforceable by its terms under the laws of the Property Jurisdiction, then the Leases shall be included as a part of the Mortgaged Property and it is the intention of the Borrower that in this circumstance this Instrument create and perfect a lien on the Leases in favor of Lender, which lien shall be effective as of the date of this Instrument.

     (b) Until Lender gives notice to Borrower of Lender’s exercise of its rights under this Section 4, Borrower shall have all rights, power and authority granted to Borrower under any Lease (except as otherwise limited by this Section or any other provision of this Instrument), including the right, power and authority to modify the terms of any Lease or extend or terminate any Lease. Upon the occurrence of an Event of Default, the permission given to Borrower pursuant to the preceding sentence to exercise all rights, power and authority under Leases shall automatically terminate. Borrower shall comply with and observe Borrower’s obligations under all Leases, including Borrower’s obligations pertaining to the maintenance and disposition of tenant security deposits.

     (c) Borrower acknowledges and agrees that the exercise by Lender, either directly or by a receiver, of any of the rights conferred under this Section 4 shall not be construed to make Lender a mortgagee-in-possession of the Mortgaged Property so long as Lender has not itself entered into actual possession of the Land and the Improvements. The acceptance by Lender of the assignment of the Leases pursuant to Section 4(a) shall not at any time or in any event obligate Lender to take any action under this Instrument or to expend any money or to incur any expenses. Lender shall not be liable in any way for any injury or damage to person or property sustained by any person or persons, firm or corporation in or about the Mortgaged Property. Prior to Lender’s actual entry into and taking possession of the Mortgaged Property, Lender shall not (i) be obligated to perform any of the terms, covenants and conditions contained in any Lease (or otherwise have any obligation with respect to any Lease); (ii) be obligated to appear in or defend any action or proceeding relating to the Lease or the Mortgaged Property; or (iii) be responsible for the operation, control, care, management or repair of the Mortgaged Property or any portion of the Mortgaged Property. The execution of this Instrument by Borrower shall constitute conclusive evidence that all responsibility for the operation, control, care, management and repair of the Mortgaged Property is and shall be that of Borrower, prior to such actual entry and taking of possession.

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     (d) Upon delivery of notice by Lender to Borrower of Lender’s exercise of Lender’s rights under this Section 4 at any time after the occurrence of an Event of Default, and without the necessity of Lender entering upon and taking and maintaining control of the Mortgaged Property directly, by a receiver, or by any other manner or proceeding permitted by the laws of the Property Jurisdiction, Lender immediately shall have all rights, powers and authority granted to Borrower under any Lease, including the right, power and authority to modify the terms of any such Lease, or extend or terminate any such Lease.

     (e) Borrower shall, promptly upon Lender’s request, deliver to Lender an executed copy of each residential Lease then in effect. All Leases for residential dwelling units shall be on forms approved by Lender, shall be for initial terms of at least six months and not more than two years, and shall not include options to purchase. If customary in the applicable market, residential Leases with terms of less than six months may be permitted with Lender’s prior written consent.

     (f) Borrower shall not lease any portion of the Mortgaged Property for non-residential use except with the prior written consent of Lender and Lender’s prior written approval of the Lease agreement. Borrower shall not modify the terms of, or extend or terminate, any Lease for non- residential use (including any Lease in existence on the date of this Instrument) without the prior written consent of Lender. Borrower shall, without request by Lender, deliver an executed copy of each non-residential Lease to Lender promptly after such Lease is signed. All non-residential Leases, including renewals or extensions of existing Leases, shall specifically provide that (1) such Leases are subordinate to the lien of this Instrument (unless waived in writing by Lender); (2) the tenant shall attorn to Lender and any purchaser at a foreclosure sale, such attornment to be self-executing and effective upon acquisition of title to the Mortgaged Property by any purchaser at a foreclosure sale or by Lender in any manner; (3) the tenant agrees to execute such further evidences of attornment as Lender or any purchaser at a foreclosure sale may from time to time request; (4) the Lease shall not be terminated by foreclosure or any other transfer of the Mortgaged Property; (5) after a foreclosure sale of the Mortgaged Property, Lender or any other purchaser at such foreclosure sale may, at Lender’s or such purchaser’s option, accept or terminate such Lease; and (6) the tenant shall, upon receipt after the occurrence of an Event of Default of a written request from Lender, pay all Rents payable under the Lease to Lender.

     (g) Borrower shall not receive or accept Rent under any Lease (whether residential or non-residential) for more than two months in advance.

     5. PAYMENT OF INDEBTEDNESS; PERFORMANCE UNDER LOAN DOCUMENTS; PREPAYMENT PREMIUM.

     Borrower shall pay the Indebtedness when due in accordance with the terms of the Note and the other Loan Documents and shall perform, observe and comply with all other provisions of the Note and the other Loan Documents. Borrower shall pay a prepayment premium in connection with certain prepayments of the Indebtedness, including a payment made after Lender’s exercise of any right of acceleration of the Indebtedness, as provided in the Note.

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     6. EXCULPATION.

     Borrower’s personal liability for payment of the Indebtedness and for performance of the other obligations to be performed by it under this Instrument is limited in the manner, and to the extent, provided in the Note.

     7. DEPOSITS FOR TAXES, INSURANCE AND OTHER CHARGES.

     (a) Borrower shall deposit with Lender on the day monthly installments of principal or interest, or both, are due under the Note (or on another day designated in writing by Lender), until the Indebtedness is paid in full, an additional amount sufficient to accumulate with Lender the entire sum required to pay, when due (1) any water and sewer charges which, if not paid, may result in a lien on all or any part of the Mortgaged Property, (2) the premiums for fire and other hazard insurance, rent loss insurance and such other insurance as Lender may require under Section 19, (3) Taxes, and (4) amounts for other charges and expenses which Lender at any time reasonably deems necessary to protect the Mortgaged Property, to prevent the imposition of liens on the Mortgaged Property, or otherwise to protect Lender’s interests, all as reasonably estimated from time to time by Lender. The amounts deposited under the preceding sentence are collectively referred to in this Instrument as the “Imposition Deposits”. The obligations of Borrower for which the Imposition Deposits are required are collectively referred to in this Instrument as “Impositions”. The amount of the Imposition Deposits shall be sufficient to enable Lender to pay each Imposition before the last date upon which such payment may be made without any penalty or interest charge being added. Lender shall maintain records indicating how much of the monthly Imposition Deposits and how much of the aggregate Imposition Deposits held by Lender are held for the purpose of paying Taxes, insurance premiums and each other obligation of Borrower for which Imposition Deposits are required. Any waiver by Lender of the requirement that Borrower remit Imposition Deposits to Lender may be revoked by Lender, in Lender’s discretion, at any time upon notice to Borrower.

     (b) Imposition Deposits shall be held in an institution (which may be Lender, if Lender is such an institution) whose deposits or accounts are insured or guaranteed by a federal agency. Lender shall not be obligated to open additional accounts or deposit Imposition Deposits in additional institutions when the amount of the Imposition Deposits exceeds the maximum amount of the federal deposit insurance or guaranty. Lender shall apply the Imposition Deposits to pay Impositions so long as no Event of Default has occurred and is continuing. Unless applicable law requires, Lender shall not be required to pay Borrower any interest, earnings or profits on the Imposition Deposits. Borrower hereby pledges and grants to Lender a security interest in the Imposition Deposits as additional security for all of Borrower’s obligations under this Instrument and the other Loan Documents. Any amounts deposited with Lender under this Section 7 shall not be trust funds, nor shall they operate to reduce the Indebtedness, unless applied by Lender for that purpose under Section 7(e).

     (c) If Lender receives a bill or invoice for an Imposition, Lender shall pay the Imposition from the Imposition Deposits held by Lender. Lender shall have no obligation to pay

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any Imposition to the extent it exceeds Imposition Deposits then held by Lender. Lender may pay an Imposition according to any bill, statement or estimate from the appropriate public office or insurance company without inquiring into the accuracy of the bill, statement or estimate or into the validity of the Imposition.

     (d) If at any time the amount of the Imposition Deposits held by Lender for payment of a specific Imposition exceeds the amount reasonably deemed necessary by Lender, the excess shall be credited against future installments of Imposition Deposits. If at any time the amount of the Imposition Deposits held by Lender for payment of a specific Imposition is less than the amount reasonably estimated by Lender to be necessary, Borrower shall pay to Lender the amount of the deficiency within 15 days after notice from Lender.

     (e) If an Event of Default has occurred and is continuing, Lender may apply any Imposition Deposits, in any amounts and in any order as Lender determines, in Lender’s discretion, to pay any Impositions or as a credit against the Indebtedness. Upon payment in full of the Indebtedness, Lender shall refund to Borrower any Imposition Deposits held by Lender.

     8. COLLATERAL AGREEMENTS.

     Borrower shall deposit with Lender such amounts as may be required by any Collateral Agreement and shall perform all other obligations of Borrower under each Collateral Agreement.

     9. APPLICATION OF PAYMENTS.

     If at any time Lender receives, from Borrower or otherwise, any amount applicable to the Indebtedness which is less than all amounts due and payable at such time, then Lender may apply that payment to amounts then due and payable in any manner and in any order determined by Lender, in Lender’s discretion. Neither Lender’s acceptance of an amount which is less than all amounts then due and payable nor Lender’s application of such payment in the manner authorized shall constitute or be deemed to constitute either a waiver of the unpaid amounts or an accord and satisfaction. Notwithstanding the application of any such amount to the Indebtedness, Borrower’s obligations under this Instrument and the Note shall remain unchanged.

     10. COMPLIANCE WITH LAWS.

     Borrower shall comply with all laws, ordinances, regulations and requirements of any Governmental Authority and all recorded lawful covenants and agreements relating to or affecting the Mortgaged Property, including all laws, ordinances, regulations, requirements and covenants pertaining to health and safety, construction of improvements on the Mortgaged Property, fair housing, zoning and land use, and Leases. Borrower also shall comply with all applicable laws that pertain to the maintenance and disposition of tenant security deposits. Borrower shall at all times maintain records sufficient to demonstrate compliance with the provisions of this Section 10. Borrower shall take appropriate measures to prevent, and shall not engage in or knowingly permit, any illegal activities at the Mortgaged Property that could endanger tenants or visitors, result in

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damage to the Mortgaged Property, result in forfeiture of the Mortgaged Property, or otherwise materially impair the lien created by this Instrument or Lender’s interest in the Mortgaged Property. Borrower represents and warrants to Lender that no portion of the Mortgaged Property has been or will be purchased with the proceeds of any illegal activity.

     11. USE OF PROPERTY.

     Unless required by applicable law, Borrower shall not (a) except for any change in use approved by Lender, allow changes in the use for which all or any part of the Mortgaged Property is being used at the time this Instrument was executed, (b) convert any individual dwelling units or common areas to commercial use, (c) initiate or acquiesce in a change in the zoning classification of the Mortgaged Property, or (d) establish any condominium or cooperative regime with respect to the Mortgaged Property.

     12. PROTECTION OF LENDER’S SECURITY.

     (a) If Borrower fails to perform any of its obligations under this Instrument or any other Loan Document, or if any action or proceeding (including a Bankruptcy Event) is commenced which purports to affect the Mortgaged Property, Lender’s security or Lender’s rights under this Instrument, including eminent domain, insolvency, code enforcement, civil or criminal forfeiture, enforcement of Hazardous Materials Laws, fraudulent conveyance or reorganizations or proceedings involving a bankrupt or decedent, then Lender at Lender’s option may make such appearances, disburse such sums and take such actions as Lender reasonably deems necessary to perform such obligations of Borrower and to protect Lender’s interest, including (1) payment of fees and out-of-pocket expenses of attorneys, accountants, inspectors and consultants, (2) entry upon the Mortgaged Property to make repairs or secure the Mortgaged Property, (3) procurement of the insurance required by Section 19, and (4) payment of amounts which Borrower has failed to pay under Sections 15 and 17.

     (b) Any amounts disbursed by Lender under this Section 12, or under any other provision of this Instrument that treats such disbursement as being made under this Section 12, shall be added to, and become part of, the principal component of the Indebtedness, shall be immediately due and payable and shall bear interest from the date of disbursement until paid at the “Default Rate”, as defined in the Note.

     (c) Nothing in this Section 12 shall require Lender to incur any expense or take any action.

     13. INSPECTION.

     Lender, its agents, representatives, and designees may make or cause to be made entries upon and inspections of the Mortgaged Property (including environmental inspections and tests) during normal business hours, or at any other reasonable time.

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     14. BOOKS AND RECORDS; FINANCIAL REPORTING.

     (a) Borrower shall keep and maintain at all times at the Mortgaged Property or the management agent’s offices, and upon Lender’s request shall make available at the Mortgaged Property, complete and accurate books of account and records (including copies of supporting bills and invoices) adequate to reflect correctly the operation of the Mortgaged Property, and copies of all written contracts, Leases, and other instruments which affect the Mortgaged Property. The books, records, contracts, Leases and other instruments shall be subject to examination and inspection at any reasonable time by Lender.

     (b) Borrower shall furnish to Lender:

(1)	(i) except as provided in clause (ii) below, within 45 days after the end of each fiscal quarter of Borrower, a statement of income and expenses for Borrower’s operation of the Mortgaged Property on a year-to-date basis as of the end of each fiscal quarter, (ii) within 120 days after the end of each fiscal year of Borrower, (A) a statement of income and expenses for Borrower’s operation of the Mortgaged Property for such fiscal year, (B) a statement of changes in financial position of Borrower relating to the Mortgaged Property for such fiscal year, and (C) when requested by Lender, a balance sheet showing all assets and liabilities of Borrower relating to the Mortgaged Property as of the end of such fiscal year; and (iii) any of the foregoing at any other time upon Lender’s request;
(2)	(i) except as provided in clause (ii) below, within 45 days after the end of each fiscal quarter of Borrower, and (ii) within 120 days after the end of each fiscal year of Borrower, and at any other time upon Lender’s request, a rent schedule for the Mortgaged Property showing the name of each tenant, and for each tenant, the space occupied, the lease expiration date, the rent payable for the current month, the date through which rent has been paid, and any related information requested by Lender;
(3)	within 120 days after the end of each fiscal year of Borrower, and at any other time upon Lender’s request, an accounting of all security deposits held pursuant to all Leases, including the name of the institution (if any) and the names and identification numbers of the accounts (if any) in which such security deposits are held and the name of the person to contact at such financial institution, along with any authority or release necessary for Lender to access information regarding such accounts;
(4)	within 120 days after the end of each fiscal year of Borrower, and at any other time upon Lender’s request, a statement that identifies all owners of any interest in Borrower and the interest held by each, if Borrower is a

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corporation, all officers and directors of Borrower, and if Borrower is a limited liability company, all managers who are not members;

(5)	upon Lender’s request, a monthly property management report for the Mortgaged Property, showing the number of inquiries made and rental applications received from tenants or prospective tenants and deposits received from tenants and any other information requested by Lender;
(6)	upon Lender’s request, a balance sheet, a statement of income and expenses for Borrower and a statement of changes in financial position of Borrower for Borrower’s most recent fiscal year; and
(7)	if required by Lender, within 30 days of the end of each calendar month, a monthly statement of income and expenses for such calendar month on a year-to-date basis for Borrower’s operation of the Mortgaged Property.

     (c) Each of the statements, schedules and reports required by Section 14(b) shall be certified to be complete and accurate by an individual having authority to bind Borrower, and shall be in such form and contain such detail as Lender may reasonably require. Lender also may require that any statements, schedules or reports be audited at Borrower’s expense by independent certified public accountants acceptable to Lender.

     (d) If Borrower fails to provide in a timely manner the statements, schedules and reports required by Section 14(b), Lender shall have the right to have Borrower’s books and records audited, at Borrower’s expense, by independent certified public accountants selected by Lender in order to obtain such statements, schedules and reports, and all related costs and expenses of Lender shall become immediately due and payable and shall become an additional part of the Indebtedness as provided in Section 12.

     (e) If an Event of Default has occurred and is continuing, Borrower shall deliver to Lender upon written demand all books and records relating to the Mortgaged Property or its operation.

     (f) Borrower authorizes Lender to obtain a credit report on Borrower at any time.

     15. TAXES; OPERATING EXPENSES.

     (a) Subject to the provisions of Section 15(c) and Section 15(d), Borrower shall pay, or cause to be paid, all Taxes when due and before the addition of any interest, fine, penalty or cost for nonpayment.

     (b) Subject to the provisions of Section 15(c), Borrower shall pay the expenses of operating, managing, maintaining and repairing the Mortgaged Property (including insurance

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premiums, utilities, repairs and replacements) before the last date upon which each such payment may be made without any penalty or interest charge being added.

     (c) As long as no Event of Default exists and Borrower has timely delivered to Lender any bills or premium notices that it has received, Borrower shall not be obligated to pay Taxes, insurance premiums or any other individual Imposition to the extent that sufficient Imposition Deposits are held by Lender for the purpose of paying that specific Imposition. If an Event of Default exists, Lender may exercise any rights Lender may have with respect to Imposition Deposits without regard to whether Impositions are then due and payable. Lender shall have no liability to Borrower for failing to pay any Impositions to the extent that any Event of Default has occurred and is continuing, insufficient Imposition Deposits are held by Lender at the time an Imposition becomes due and payable or Borrower has failed to provide Lender with bills and premium notices as provided above.

     (d) Borrower, at its own expense, may contest by appropriate legal proceedings, conducted diligently and in good faith, the amount or validity of any Imposition other than insurance premiums, if (1) Borrower notifies Lender of the commencement or expected commencement of such proceedings, (2) the Mortgaged Property is not in danger of being sold or forfeited, (3) Borrower deposits with Lender reserves sufficient to pay the contested Imposition, if requested by Lender, and (4) Borrower furnishes whatever additional security is required in the proceedings or is reasonably requested by Lender, which may include the delivery to Lender of the reserves established by Borrower to pay the contested Imposition.

     (e) Borrower shall promptly deliver to Lender a copy of all notices of, and invoices for, Impositions, and if Borrower pays any Imposition directly, Borrower shall promptly furnish to Lender receipts evidencing such payments.

     16. LIENS; ENCUMBRANCES.

     Borrower acknowledges that, to the extent provided in Section 21, the grant, creation or existence of any mortgage, deed of trust, deed to secure debt, security interest or other lien or encumbrance (a “Lien”) on the Mortgaged Property (other than the lien of this Instrument) or on certain ownership interests in Borrower, whether voluntary, involuntary or by operation of law, and whether or not such Lien has priority over the lien of this Instrument, is a “Transfer” which constitutes an Event of Default.

     17. PRESERVATION, MANAGEMENT AND MAINTENANCE OF MORTGAGED PROPERTY.

     (a) Borrower (1) shall not commit waste or permit impairment or deterioration of the Mortgaged Property, (2) shall not abandon the Mortgaged Property, (3) shall restore or repair promptly, in a good and workmanlike manner, any damaged part of the Mortgaged Property to the equivalent of its original condition, or such other condition as Lender may approve in writing, whether or not insurance proceeds or condemnation awards are available to cover any costs of such

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restoration or repair, (4) shall keep the Mortgaged Property in good repair, including the replacement of Personalty and Fixtures with items of equal or better function and quality, (5) shall provide for professional management of the Mortgaged Property by a residential rental property manager satisfactory to Lender under a contract approved by Lender in writing, and (6) shall give notice to Lender of and, unless otherwise directed in writing by Lender, shall appear in and defend any action or proceeding purporting to affect the Mortgaged Property, Lender’s security or Lender’s rights under this Instrument. Borrower shall not (and shall not permit any tenant or other person to) remove, demolish or alter the Mortgaged Property or any part of the Mortgaged Property except in connection with the replacement of tangible Personalty.

     (b) If, in connection with the making of the loan evidenced by the Note or at any later date, Lender waives in writing the requirement of Section 17(a)(5) above that Borrower enter into a written contract for management of the Mortgaged Property and if, after the date of this Instrument, Borrower intends to change the management of the Mortgaged Property, Lender shall have the right to approve such new property manager and the written contract for the management of the Mortgaged Property and require that Borrower and such new property manager enter into an Assignment of Management Agreement on a form approved by Lender. If required by Lender (whether before or after an Event of Default), Borrower will cause any Affiliate of Borrower to whom fees are payable for the management of the Mortgaged Property to enter into an agreement with Lender, in a form approved by Lender, providing for subordination of those fees and such other provisions as Lender may require. “Affiliate of Borrower” means any corporation, partnership, joint venture, limited liability company, limited liability partnership, trust or individual controlled by, under common control with, or which controls Borrower (the term “control” for these purposes shall mean the ability, whether by the ownership of shares or other equity interests, by contract or otherwise, to elect a majority of the directors of a corporation, to make management decisions on behalf of, or independently to select the managing partner of, a partnership, or otherwise to have the power independently to remove and then select a majority of those individuals exercising managerial authority over an entity, and control shall be conclusively presumed in the case of the ownership of 50% or more of the equity interests).

     18. ENVIRONMENTAL HAZARDS.

     (a) Except for matters covered by a written program of operations and maintenance approved in writing by Lender (an “O&M Program”) or matters described in Section 18(b), Borrower shall not cause or permit any of the following:

(1)	the presence, use, generation, release, treatment, processing, storage (including storage in above ground and underground storage tanks), handling, or disposal of any Hazardous Materials on or under the Mortgaged Property or any other property of Borrower that is adjacent to the Mortgaged Property;
(2)	the transportation of any Hazardous Materials to, from, or across the Mortgaged Property;

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(3)	any occurrence or condition on the Mortgaged Property or any other property of Borrower that is adjacent to the Mortgaged Property, which occurrence or condition is or may be in violation of Hazardous Materials Laws; or
(4)	any violation of or noncompliance with the terms of any Environmental Permit with respect to the Mortgaged Property or any property of Borrower that is adjacent to the Mortgaged Property.

The matters described in clauses (1) through (4) above are referred to collectively in this Section 18 as “Prohibited Activities or Conditions”.

     (b) Prohibited Activities and Conditions shall not include the safe and lawful use and storage of quantities of (1) pre-packaged supplies, cleaning materials and petroleum products customarily used in the operation and maintenance of comparable multifamily properties, (2) cleaning materials, personal grooming items and other items sold in pre-packaged containers for consumer use and used by tenants and occupants of residential dwelling units in the Mortgaged Property; and (3) petroleum products used in the operation and maintenance of motor vehicles from time to time located on the Mortgaged Property’s parking areas, so long as all of the foregoing are used, stored, handled, transported and disposed of in compliance with Hazardous Materials Laws.

     (c) Borrower shall take all commercially reasonable actions (including the inclusion of appropriate provisions in any Leases executed after the date of this Instrument) to prevent its employees, agents, and contractors, and all tenants and other occupants from causing or permitting any Prohibited Activities or Conditions. Borrower shall not lease or allow the sublease or use of all or any portion of the Mortgaged Property to any tenant or subtenant for nonresidential use by any user that, in the ordinary course of its business, would cause or permit any Prohibited Activity or Condition.

     (d) If an O&M Program has been established with respect to Hazardous Materials, Borrower shall comply in a timely manner with, and cause all employees, agents, and contractors of Borrower and any other persons present on the Mortgaged Property to comply with the O&M Program. All costs of performance of Borrower’s obligations under any O&M Program shall be paid by Borrower, and Lender’s out-of-pocket costs incurred in connection with the monitoring and review of the O&M Program and Borrower’s performance shall be paid by Borrower upon demand by Lender. Any such out-of-pocket costs of Lender which Borrower fails to pay promptly shall become an additional part of the Indebtedness as provided in Section 12.

     (e) Borrower represents and warrants to Lender that, except as previously disclosed by Borrower to Lender in writing:

(1) Borrower has not at any time engaged in, caused or permitted any Prohibited Activities or Conditions;

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(2)	to the best of Borrower’s knowledge after reasonable and diligent inquiry, no Prohibited Activities or Conditions exist or have existed;
(3)	except to the extent previously disclosed by Borrower to Lender in writing, the Mortgaged Property does not now contain any underground storage tanks, and, to the best of Borrower’s knowledge after reasonable and diligent inquiry, the Mortgaged Property has not contained any underground storage tanks in the past. If there is an underground storage tank located on the Property which has been previously disclosed by Borrower to Lender in writing, that tank complies with all requirements of Hazardous Materials Laws;
(4)	Borrower has complied with all Hazardous Materials Laws, including all requirements for notification regarding releases of Hazardous Materials. Without limiting the generality of the foregoing, Borrower has obtained all Environmental Permits required for the operation of the Mortgaged Property in accordance with Hazardous Materials Laws now in effect and all such Environmental Permits are in full force and effect;
(5)	no event has occurred with respect to the Mortgaged Property that constitutes, or with the passing of time or the giving of notice would constitute, noncompliance with the terms of any Environmental Permit;
(6)	there are no actions, suits, claims or proceedings pending or, to the best of Borrower’s knowledge after reasonable and diligent inquiry, threatened that involve the Mortgaged Property and allege, arise out of, or relate to any Prohibited Activity or Condition; and
(7)	Borrower has not received any complaint, order, notice of violation or other communication from any Governmental Authority with regard to air emissions, water discharges, noise emissions or Hazardous Materials, or any other environmental, health or safety matters affecting the Mortgaged Property or any other property of Borrower that is adjacent to the Mortgaged Property.

The representations and warranties in this Section 18 shall be continuing representations and warranties that shall be deemed to be made by Borrower throughout the term of the loan evidenced by the Note, until the Indebtedness has been paid in full.

     (f) Borrower shall promptly notify Lender in writing upon the occurrence of any of the following events:

(1) Borrower’s discovery of any Prohibited Activity or Condition;

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(2)	Borrower’s receipt of or knowledge of any complaint, order, notice of violation or other communication from any Governmental Authority or other person with regard to present or future alleged Prohibited Activities or Conditions or any other environmental, health or safety matters affecting the Mortgaged Property or any other property of Borrower that is adjacent to the Mortgaged Property; and
(3)	any representation or warranty in this Section 18 becomes untrue after the date of this Agreement.

Any such notice given by Borrower shall not relieve Borrower of, or result in a waiver of, any obligation under this Instrument, the Note, or any other Loan Document.

     (g) Borrower shall pay promptly the costs of any environmental inspections, tests or audits (“Environmental Inspections”) required by Lender in connection with any foreclosure or deed in lieu of foreclosure, or as a condition of Lender’s consent to any Transfer under Section 21, or required by Lender following a reasonable determination by Lender that Prohibited Activities or Conditions may exist. Any such costs incurred by Lender (including the fees and out-of-pocket costs of attorneys and technical consultants whether incurred in connection with any judicial or administrative process or otherwise) which Borrower fails to pay promptly shall become an additional part of the Indebtedness as provided in Section 12. The results of all Environmental Inspections made by Lender shall at all times remain the property of Lender and Lender shall have no obligation to disclose or otherwise make available to Borrower or any other party such results or any other information obtained by Lender in connection with its Environmental Inspections. Lender hereby reserves the right, and Borrower hereby expressly authorizes Lender, to make available to any party, including any prospective bidder at a foreclosure sale of the Mortgaged Property, the results of any Environmental Inspections made by Lender with respect to the Mortgaged Property. Borrower consents to Lender notifying any party (either as part of a notice of sale or otherwise) of the results of any of Lender’s Environmental Inspections. Borrower acknowledges that Lender cannot control or otherwise assure the truthfulness or accuracy of the results of any of its Environmental Inspections and that the release of such results to prospective bidders at a foreclosure sale of the Mortgaged Property may have a material and adverse effect upon the amount which a party may bid at such sale. Borrower agrees that Lender shall have no liability whatsoever as a result of delivering the results of any of its Environmental Inspections to any third party, and Borrower hereby releases and forever discharges Lender from any and all claims, damages, or causes of action, arising out of, connected with or incidental to the results of, the delivery of any of Lender’s Environmental Inspections.

     (h) If any investigation, site monitoring, containment, clean-up, restoration or other remedial work (“Remedial Work”) is necessary to comply with any Hazardous Materials Law or order of any Governmental Authority that has or acquires jurisdiction over the Mortgaged Property or the use, operation or improvement of the Mortgaged Property under any Hazardous Materials Law, Borrower shall, by the earlier of (1) the applicable deadline required by Hazardous Materials

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Law or (2) 30 days after notice from Lender demanding such action, begin performing the Remedial Work, and thereafter diligently prosecute it to completion, and shall in any event complete the work by the time required by applicable Hazardous Materials Law. If Borrower fails to begin on a timely basis or diligently prosecute any required Remedial Work, Lender may, at its option, cause the Remedial Work to be completed, in which case Borrower shall reimburse Lender on demand for the cost of doing so. Any reimbursement due from Borrower to Lender shall become part of the Indebtedness as provided in Section 12.

     (i) Borrower shall cooperate with any inquiry by any Governmental Authority and shall comply with any governmental or judicial order which arises from any alleged Prohibited Activity or Condition.

     (j) Borrower shall indemnify, hold harmless and defend (i) Lender, (ii) any prior owner or holder of the Note, (iii) the Loan Servicer, (iv) any prior Loan Servicer, (v) the officers, directors, shareholders, partners, employees and trustees of any of the foregoing, and (vi) the heirs, legal representatives, successors and assigns of each of the foregoing (collectively, the “Indemnitees”) from and against all proceedings, claims, damages, penalties and costs (whether initiated or sought by Governmental Authorities or private parties), including fees and out-of-pocket expenses of attorneys and expert witnesses, investigatory fees, and remediation costs, whether incurred in connection with any judicial or administrative process or otherwise, arising directly or indirectly from any of the following:

(1)	any breach of any representation or warranty of Borrower in this Section 18;
(2)	any failure by Borrower to perform any of its obligations under this Section 18;
(3)	the existence or alleged existence of any Prohibited Activity or Condition;
(4)	the presence or alleged presence of Hazardous Materials on or under the Mortgaged Property or any property of Borrower that is adjacent to the Mortgaged Property; and
(5)	the actual or alleged violation of any Hazardous Materials Law.

     (k) Counsel selected by Borrower to defend Indemnitees shall be subject to the approval of those Indemnitees. However, any Indemnitee may elect to defend any claim or legal or administrative proceeding at the Borrower’s expense.

     (l) Borrower shall not, without the prior written consent of those Indemnitees who are named as parties to a claim or legal or administrative proceeding (a “Claim”), settle or compromise the Claim if the settlement (1) results in the entry of any judgment that does not include as an unconditional term the delivery by the claimant or plaintiff to Lender of a written release of those

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Indemnitees, satisfactory in form and substance to Lender; or (2) may materially and adversely affect Lender, as determined by Lender in its discretion.

     (m) Lender agrees that the indemnity under this Section 18 shall be limited to the assets of Borrower and Lender shall not seek to recover any deficiency from any natural persons who are general partners of Borrower.

     (n) Borrower shall, at its own cost and expense, do all of the following:

(1)	pay or satisfy any judgment or decree that may be entered against any Indemnitee or Indemnitees in any legal or administrative proceeding incident to any matters against which Indemnitees are entitled to be indemnified under this Section 18;
(2)	reimburse Indemnitees for any expenses paid or incurred in connection with any matters against which Indemnitees are entitled to be indemnified under this Section 18; and
(3)	reimburse Indemnitees for any and all expenses, including fees and out-of- pocket expenses of attorneys and expert witnesses, paid or incurred in connection with the enforcement by Indemnitees of their rights under this Section 18, or in monitoring and participating in any legal or administrative proceeding.

     (o) In any circumstances in which the indemnity under this Section 18 applies, Lender may employ its own legal counsel and consultants to prosecute, defend or negotiate any claim or legal or administrative proceeding and Lender, with the prior written consent of Borrower (which shall not be unreasonably withheld, delayed or conditioned), may settle or compromise any action or legal or administrative proceeding. Borrower shall reimburse Lender upon demand for all costs and expenses incurred by Lender, including all costs of settlements entered into in good faith, and the fees and out-of-pocket expenses of such attorneys and consultants.

     (p) The provisions of this Section 18 shall be in addition to any and all other obligations and liabilities that Borrower may have under applicable law or under other Loan Documents, and each Indemnitee shall be entitled to indemnification under this Section 18 without regard to whether Lender or that Indemnitee has exercised any rights against the Mortgaged Property or any other security, pursued any rights against any guarantor, or pursued any other rights available under the Loan Documents or applicable law. If Borrower consists of more than one person or entity, the obligation of those persons or entities to indemnify the Indemnitees under this Section 18 shall be joint and several. The obligation of Borrower to indemnify the Indemnitees under this Section 18 shall survive any repayment or discharge of the Indebtedness, any foreclosure proceeding, any foreclosure sale, any delivery of any deed in lieu of foreclosure, and any release of record of the lien of this Instrument.

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     19. PROPERTY AND LIABILITY INSURANCE.

     (a) Borrower shall keep the Improvements insured at all times against such hazards as Lender may from time to time require, which insurance shall include but not be limited to coverage against loss by fire and allied perils, general boiler and machinery coverage, and business income coverage. Lender’s insurance requirements may change from time to time throughout the term of the Indebtedness. If Lender so requires, such insurance shall also include sinkhole insurance, mine subsidence insurance, earthquake insurance, and, if the Mortgaged Property does not conform to applicable zoning or land use laws, building ordinance or law coverage. If any of the Improvements is located in an area identified by the Federal Emergency Management Agency (or any successor to that agency) as an area having special flood hazards, and if flood insurance is available in that area, Borrower shall insure such Improvements against loss by flood.

     (b) All premiums on insurance policies required under Section 19(a) shall be paid in the manner provided in Section 7, unless Lender has designated in writing another method of payment. All such policies shall also be in a form approved by Lender. All policies of property damage insurance shall include a non-contributing, non-reporting mortgage clause in favor of, and in a form approved by, Lender. Lender shall have the right to hold the original policies or duplicate original policies of all insurance required by Section 19(a). Borrower shall promptly deliver to Lender a copy of all renewal and other notices received by Borrower with respect to the policies and all receipts for paid premiums. At least 30 days prior to the expiration date of a policy, Borrower shall deliver to Lender the original (or a duplicate original) of a renewal policy in form satisfactory to Lender.

     (c) Borrower shall maintain at all times commercial general liability insurance, workers’ compensation insurance and such other liability, errors and omissions and fidelity insurance coverages as Lender may from time to time require.

     (d) All insurance policies and renewals of insurance policies required by this Section 19 shall be in such amounts and for such periods as Lender may from time to time require, and shall be issued by insurance companies satisfactory to Lender.

     (e) Borrower shall comply with all insurance requirements and shall not permit any condition to exist on the Mortgaged Property that would invalidate any part of any insurance coverage that this Instrument requires Borrower to maintain.

     (f) In the event of loss, Borrower shall give immediate written notice to the insurance carrier and to Lender. Borrower hereby authorizes and appoints Lender as attorney-in-fact for Borrower to make proof of loss, to adjust and compromise any claims under policies of property damage insurance, to appear in and prosecute any action arising from such property damage insurance policies, to collect and receive the proceeds of property damage insurance, and to deduct from such proceeds Lender’s expenses incurred in the collection of such proceeds. This power of attorney is coupled with an interest and therefore is irrevocable. However, nothing contained in this Section 19 shall require Lender to incur any expense or take any action. Lender may, at Lender’s

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option, (1) hold the balance of such proceeds to be used to reimburse Borrower for the cost of restoring and repairing the Mortgaged Property to the equivalent of its original condition or to a condition approved by Lender (the “Restoration”), or (2) apply the balance of such proceeds to the payment of the Indebtedness, whether or not then due. To the extent Lender determines to apply insurance proceeds to Restoration, Lender shall do so in accordance with Lender’s then-current policies relating to the restoration of casualty damage on similar multifamily properties.

     (g) Lender shall not exercise its option to apply insurance proceeds to the payment of the Indebtedness if all of the following conditions are met: (1) no Event of Default (or any event which, with the giving of notice or the passage of time, or both, would constitute an Event of Default) has occurred and is continuing; (2) Lender determines, in its discretion, that there will be sufficient funds to complete the Restoration; (3) Lender determines, in its discretion, that the net operating income generated by the Mortgaged Property after completion of the Restoration will be sufficient to support a debt service coverage ratio not less than the greater of (A) the debt service coverage ratio as of the date of this Instrument (based on the final underwriting of the Mortgaged Property) or (B) the debt service coverage ratio immediately prior to the loss (in each case, Lender’s determination shall include all operating costs and other expenses, Imposition Deposits, deposits to reserves and loan repayment obligations relating to the Mortgaged Property); (4) Lender determines, in its discretion, that the Restoration will be completed before the earlier of (A) one year before the maturity date of the Note or (B) one year after the date of the loss or casualty; and (5) upon Lender’s request, Borrower provides Lender evidence of the availability during and after the Restoration of the insurance required to be maintained by Borrower pursuant to this Section 19.

     (h) If the Mortgaged Property is sold at a foreclosure sale or Lender acquires title to the Mortgaged Property, Lender shall automatically succeed to all rights of Borrower in and to any insurance policies and unearned insurance premiums and in and to the proceeds resulting from any damage to the Mortgaged Property prior to such sale or acquisition.

     20. CONDEMNATION.

     (a) Borrower shall promptly notify Lender of any action or proceeding relating to any condemnation or other taking, or conveyance in lieu thereof, of all or any part of the Mortgaged Property, whether direct or indirect (a “Condemnation”). Borrower shall appear in and prosecute or defend any action or proceeding relating to any Condemnation unless otherwise directed by Lender in writing. Borrower authorizes and appoints Lender as attorney-in-fact for Borrower to commence, appear in and prosecute, in Lender’s or Borrower’s name, any action or proceeding relating to any Condemnation and to settle or compromise any claim in connection with any Condemnation. This power of attorney is coupled with an interest and therefore is irrevocable. However, nothing contained in this Section 20 shall require Lender to incur any expense or take any action. Borrower hereby transfers and assigns to Lender all right, title and interest of Borrower in and to any award or payment with respect to (i) any Condemnation, or any conveyance in lieu of Condemnation, and (ii) any damage to the Mortgaged Property caused by governmental action that does not result in a Condemnation.

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     (b) Lender may apply such awards or proceeds, after the deduction of Lender’s expenses incurred in the collection of such amounts, at Lender’s option, to the restoration or repair of the Mortgaged Property or to the payment of the Indebtedness, with the balance, if any, to Borrower. Unless Lender otherwise agrees in writing, any application of any awards or proceeds to the Indebtedness shall not extend or postpone the due date of any monthly installments referred to in the Note, Section 7 of this Instrument or any Collateral Agreement, or change the amount of such installments. Borrower agrees to execute such further evidence of assignment of any awards or proceeds as Lender may require.

     21. TRANSFERS OF THE MORTGAGED PROPERTY OR INTERESTS IN BORROWER.

     (a) The occurrence of any of the following events shall constitute an Event of Default under this Instrument:

     (1) a Transfer of all or any part of the Mortgaged Property or any interest in the Mortgaged Property;

     (2) a Transfer of a Controlling Interest in Borrower;

     (3) a Transfer of a Controlling Interest in any entity which owns, directly or indirectly through one or more intermediate entities, a Controlling Interest in Borrower;

     (4) a Transfer of all or any part of a Key Principal’s ownership interests in Borrower, or in any other entity which owns, directly or indirectly through one or more intermediate entities, an ownership interest in Borrower (other than a Transfer of an aggregate beneficial ownership interest in the Borrower of 49% or less of such Key Principal’s original ownership interest in the Borrower and which does not otherwise result in a Transfer of the Key Principal’s Controlling Interest in such intermediate entities or in the Borrower);

     (5) if Key Principal is an entity, (A) a Transfer of a Controlling Interest in Key Principal, or (B) a Transfer of a Controlling Interest in any entity which owns, directly or indirectly through one or more intermediate entities, a Controlling Interest in Key Principal;

     (6) if Borrower or Key Principal is a trust, the termination or revocation of such trust; unless the trust is terminated as a result of the death of an individual trustor, in which event Lender must be notified and such Borrower or Key Principal must be replaced with an individual or entity acceptable to Lender, in accordance with the provisions of Section 21(c) hereof, within 90 days of such death (provided however that no property inspection shall be required and a 1% transfer fee will not be charged);

     (7) if Key Principal is a natural person, the death of such individual; unless the Lender is notified and such individual is replaced with an individual or entity acceptable to

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Lender, in accordance with the provisions of Section 21(c) hereof, within 90 days of such death (provided however that no property inspection shall be required and a 1% transfer fee will not be charged);

     (8) the merger, dissolution, liquidation, or consolidation of (i) Borrower, (ii) any Key Principal that is a legal entity, or (iii) any legal entity holding, directly or indirectly, a Controlling Interest in the Borrower or in any Key Principal that is an entity;

     (9) a conversion of Borrower from one type of legal entity into another type of legal entity (including the conversion of a general partnership into a limited partnership and the conversion of a limited partnership into a limited liability company), whether or not there is a Transfer; if such conversion results in a change in any assets, liabilities, legal rights or obligations of Borrower (or of Key Principal, guarantor, or any general partner of Borrower, as applicable), by operation of law or otherwise; and

     (10) a Transfer of the economic benefits or right to cash flows attributable to the ownership interests in Borrower and/or, if Key Principal is an entity, Key Principal, separate from the Transfer of the underlying ownership interests, unless the Transfer of the underlying ownership interests would otherwise not be prohibited by this Agreement

Lender shall not be required to demonstrate any actual impairment of its security or any increased risk of default in order to exercise any of its remedies with respect to an Event of Default under this Section 21.

     (b) The occurrence of any of the following events shall not constitute an Event of Default under this Instrument, notwithstanding any provision of Section 21(a) to the contrary:

     (1) a Transfer to which Lender has consented;

     (2) except as provided in Section 21(a)(6) and (7), a Transfer that occurs by devise, descent, pursuant to the provisions of a trust, or by operation of law upon the death of a natural person;

     (3) the grant of a leasehold interest in an individual dwelling unit for a term of two years or less not containing an option to purchase;

     (4) a Transfer of obsolete or worn out Personalty or Fixtures that are contemporaneously replaced by items of equal or better function and quality, which are free of liens, encumbrances and security interests other than those created by the Loan Documents or consented to by Lender;

     (5) the grant of an easement, servitude, or restrictive covenant if, before the grant, Lender determines that the easement, servitude, or restrictive covenant will not materially affect the operation or value of the Mortgaged Property or Lender’s interest in the

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Mortgaged Property, and Borrower pays to Lender, upon demand, all costs and expenses incurred by Lender in connection with reviewing Borrower’s request;

     (6) the creation of a tax lien or a mechanic’s, materialman’s, or judgment lien against the Mortgaged Property which is bonded off, released of record, or otherwise remedied to Lender’s satisfaction within 45 days after Borrower has actual or constructive notice of the existence of such lien; and

     (7) the conveyance of the Mortgaged Property at a judicial or non-judicial foreclosure sale under this Instrument.

     (c) Lender shall consent to a Transfer that would otherwise violate this Section 21 if, prior to the Transfer, Borrower has satisfied each of the following requirements:

     (1) the submission to Lender of all information required by Lender to make the determination required by this Section 21(c);

     (2) the absence of any Event of Default;

     (3) the transferee meets all of the eligibility, credit, management, and other standards (including any standards with respect to previous relationships between Lender and the transferee and the organization of the transferee) customarily applied by Lender at the time of the proposed Transfer to the approval of borrowers in connection with the origination or purchase of similar mortgage finance structures on similar multifamily properties, unless partially waived by Lender in exchange for such additional conditions as Lender may require;

     (4) the Mortgaged Property, at the time of the proposed Transfer, meets all standards as to its physical condition that are customarily applied by Lender at the time of the proposed Transfer to the approval of properties in connection with the origination or purchase of similar mortgage finance structures on similar multifamily properties, unless partially waived by Lender in exchange for such additional conditions as Lender may require;

     (5) if transferor or any other person has obligations under any Loan Document, the execution by the transferee or one or more individuals or entities acceptable to Lender of an assumption agreement (including, if applicable, an Acknowledgement and Agreement of Key Principal to Personal Liability for Exceptions to Non-Recourse Liability) that is acceptable to Lender and that, among other things, requires the transferee to perform all obligations of transferor or such person set forth in such Loan Document, and may require that the transferee comply with any provisions of this Instrument or any other Loan Document which previously may have been waived by Lender;

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     (6) if a guaranty has been executed and delivered in connection with the Note, this Instrument or any of the other Loan Documents, the Borrower causes one or more individuals or entities acceptable to Lender to execute and deliver to Lender a substitute guaranty in a form acceptable to Lender;

     (7) Lender’s receipt of all of the following:

(A) a non-refundable review fee in the amount of $3,000 and a transfer fee equal to 1 percent of the outstanding Indebtedness immediately prior to the Transfer; and

(B) Borrower’s reimbursement of all of Lender’s out-of-pocket costs (including reasonable attorneys’ fees) incurred in reviewing the Transfer request, to the extent such expenses exceed $3,000; and

     (8) Borrower has agreed to Lender’s conditions to approve such Transfer, which may include, but are not limited to (A) providing additional collateral, guaranties, or other credit support to mitigate any risks concerning the proposed transferee or the performance or condition of the Mortgaged Property, and (B) amending the Loan Documents to (i) delete any specially negotiated terms or provisions previously granted for the exclusive benefit of transferor and (ii) restore to original provisions of the standard Fannie Mae form multifamily loan documents, to the extent such provisions were previously modified.

     (d) For purposes of this Section, the following terms shall have the meanings set forth below:

     (1) “Initial Owners” means, with respect to Borrower or any other entity, the persons or entities who on the date of the Note, directly or indirectly, own in the aggregate 100% of the ownership interests in Borrower or that entity.

     (2) A Transfer of a “Controlling Interest” shall mean:

(A) with respect to any entity, the following:

     (i) if such entity is a general partnership or a joint venture, a Transfer of any general partnership interest or joint venture interest which would cause the Initial Owners to own less than 51% of all general partnership or joint venture interests in such entity;

     (ii) if such entity is a limited partnership, (A) a Transfer of any general partnership interest, or (B) a Transfer of any partnership interests which would cause the Initial Owners to own less than 51% of all limited partnership interests in such entity;

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     (iii) if such entity is a limited liability company or a limited liability partnership, (A) a Transfer of any membership or other ownership interest which would cause the Initial Owners to own less than 51% of all membership or other ownership interests in such entity, (B) a Transfer of any membership, or other interest of a manager, in such entity that results in a change of manager, or (C) a change of the non-member manager;

     (iv) if such entity is a corporation (other than a Publicly-Held Corporation) with only one class of voting stock, a Transfer of any voting stock which would cause the Initial Owners to own less than 51% of voting stock in such corporation;

     (v) if such entity is a corporation (other than a Publicly-Held Corporation) with more than one class of voting stock, a Transfer of any voting stock which would cause the Initial Owners to own less than a sufficient number of shares of voting stock having the power to elect the majority of directors of such corporation; and

     (vi) if such entity is a trust (other than a Publicly-Held Trust), the removal, appointment or substitution of a trustee of such trust other than (A) in the case of a land trust, or (B) if the trustee of such trust after such removal, appointment, or substitution is a trustee identified in the trust agreement approved by Lender; and/or

     (B) any agreement (including provisions contained in the organizational and/or governing documents of Borrower or Key Principal) or Transfer not specified in clause (A), the effect of which, either immediately or after the passage of time or occurrence of a specified event or condition, including the failure of a specified event or condition to occur or be satisfied, would (i) cause a change in or replacement of the Person that controls the management and operations of the Borrower or Key Principal or (ii) limit or otherwise modify the extent of such Person’s control over the management and operations of Borrower or Key Principal.

     (3) “Publicly-Held Corporation” shall mean a corporation the outstanding voting stock of which is registered under Section 12(b) or 12(g) of the Securities and Exchange Act of 1934, as amended.

     (4) “Publicly-Held Trust” shall mean a real estate investment trust the outstanding voting shares or beneficial interests of which are registered under Section 12 (b) or 12 (g) of the Securities Exchange Act of 1934, as amended.

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     (e) Lender shall be provided with written notice of all Transfers under this Section 21, whether or not such Transfers are permitted under Section 21(b) or approved by Lender under Section 21(c), no later than 10 days prior to the date of the Transfer.”

     22. EVENTS OF DEFAULT.

     The occurrence of any one or more of the following shall constitute an Event of Default under this Instrument:

     (a) any failure by Borrower to pay or deposit when due any amount required by the Note, this Instrument or any other Loan Document;

     (b) any failure by Borrower to maintain the insurance coverage required by Section 19;

     (c) any failure by Borrower to comply with the provisions of Section 33;

     (d) fraud or material misrepresentation or material omission by Borrower, or any of its officers, directors, trustees, general partners or managers, Key Principal or any guarantor in connection with (A) the application for or creation of the Indebtedness, (B) any financial statement, rent roll, or other report or information provided to Lender during the term of the Indebtedness, or (C) any request for Lender’s consent to any proposed action, including a request for disbursement of funds under any Collateral Agreement;

     (e) any (i) Event of Default under Section 21 and/or (ii) occurrence of a Bankruptcy Event;

     (f) the commencement of a forfeiture action or proceeding, whether civil or criminal, which, in Lender’s reasonable judgment, could result in a forfeiture of the Mortgaged Property or otherwise materially impair the lien created by this Instrument or Lender’s interest in the Mortgaged Property;

     (g) any failure by Borrower to perform any of its obligations under this Instrument (other than those specified in Sections 22(a) through (f)), as and when required, which continues for a period of 30 days after notice of such failure by Lender to Borrower, but no such notice or grace period shall apply in the case of any such failure which could, in Lender’s judgment, absent immediate exercise by Lender of a right or remedy under this Instrument, result in harm to Lender, impairment of the Note or this Instrument or any other security given under any other Loan Document;

     (h) any failure by Borrower to perform any of its obligations as and when required under any Loan Document other than this Instrument which continues beyond the applicable cure period, if any, specified in that Loan Document; and

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     (i) any exercise by the holder of any other debt instrument secured by a mortgage, deed of trust or deed to secure debt on the Mortgaged Property of a right to declare all amounts due under that debt instrument immediately due and payable.

     23. REMEDIES CUMULATIVE.

     Each right and remedy provided in this Instrument is distinct from all other rights or remedies under this Instrument or any other Loan Document or afforded by applicable law, and each shall be cumulative and may be exercised concurrently, independently, or successively, in any order.

     24. FORBEARANCE.

     (a) Lender may (but shall not be obligated to) agree with Borrower, from time to time, and without giving notice to, or obtaining the consent of, or having any effect upon the obligations of, any guarantor or other third party obligor, to take any of the following actions: extend the time for payment of all or any part of the Indebtedness; reduce the payments due under this Instrument, the Note, or any other Loan Document; release anyone liable for the payment of any amounts under this Instrument, the Note, or any other Loan Document; accept a renewal of the Note; modify the terms and time of payment of the Indebtedness; join in any extension or subordination agreement; release any Mortgaged Property; take or release other or additional security; modify the rate of interest or period of amortization of the Note or change the amount of the monthly installments payable under the Note; and otherwise modify this Instrument, the Note, or any other Loan Document.

     (b) Any forbearance by Lender in exercising any right or remedy under the Note, this Instrument, or any other Loan Document or otherwise afforded by applicable law, shall not be a waiver of or preclude the exercise of any other right or remedy. The acceptance by Lender of payment of all or any part of the Indebtedness after the due date of such payment, or in an amount which is less than the required payment, shall not be a waiver of Lender’s right to require prompt payment when due of all other payments on account of the Indebtedness or to exercise any remedies for any failure to make prompt payment. Enforcement by Lender of any security for the Indebtedness shall not constitute an election by Lender of remedies so as to preclude the exercise of any other right available to Lender. Lender’s receipt of any awards or proceeds under Sections 19 and 20 shall not operate to cure or waive any Event of Default.

     25. LOAN CHARGES.

     If any applicable law limiting the amount of interest or other charges permitted to be collected from Borrower is interpreted so that any charge provided for in any Loan Document, whether considered separately or together with other charges levied in connection with any other Loan Document, violates that law, and Borrower is entitled to the benefit of that law, that charge is hereby reduced to the extent necessary to eliminate that violation. The amounts, if any, previously paid to Lender in excess of the permitted amounts shall be applied by Lender to reduce the principal

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of the Indebtedness. For the purpose of determining whether any applicable law limiting the amount of interest or other charges permitted to be collected from Borrower has been violated, all Indebtedness which constitutes interest, as well as all other charges levied in connection with the Indebtedness which constitute interest, shall be deemed to be allocated and spread over the stated term of the Note. Unless otherwise required by applicable law, such allocation and spreading shall be effected in such a manner that the rate of interest so computed is uniform throughout the stated term of the Note.

     26. WAIVER OF STATUTE OF LIMITATIONS.

     Borrower hereby waives the right to assert any statute of limitations as a bar to the enforcement of the lien of this Instrument or to any action brought to enforce any Loan Document.

     27. WAIVER OF MARSHALLING.

     Notwithstanding the existence of any other security interests in the Mortgaged Property held by Lender or by any other party, Lender shall have the right to determine the order in which any or all of the Mortgaged Property shall be subjected to the remedies provided in this Instrument, the Note, any other Loan Document or applicable law. Lender shall have the right to determine the order in which any or all portions of the Indebtedness are satisfied from the proceeds realized upon the exercise of such remedies. Borrower and any party who now or in the future acquires a security interest in the Mortgaged Property and who has actual or constructive notice of this Instrument waives any and all right to require the marshalling of assets or to require that any of the Mortgaged Property be sold in the inverse order of alienation or that any of the Mortgaged Property be sold in parcels or as an entirety in connection with the exercise of any of the remedies permitted by applicable law or provided in this Instrument.

     28. FURTHER ASSURANCES.

     Borrower shall execute, acknowledge, and deliver, at its sole cost and expense, all further acts, deeds, conveyances, assignments, estoppel certificates, financing statements, transfers and assurances as Lender may require from time to time in order to better assure, grant, and convey to Lender the rights intended to be granted, now or in the future, to Lender under this Instrument and the Loan Documents.

     29. ESTOPPEL CERTIFICATE.

     Within 10 days after a request from Lender, Borrower shall deliver to Lender a written statement, signed and acknowledged by Borrower, certifying to Lender or any person designated by Lender, as of the date of such statement, (i) that the Loan Documents are unmodified and in full force and effect (or, if there have been modifications, that the Loan Documents are in full force and effect as modified and setting forth such modifications); (ii) the unpaid principal balance of the Note; (iii) the date to which interest under the Note has been paid; (iv) that Borrower is not in

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default in paying the Indebtedness or in performing or observing any of the covenants or agreements contained in this Instrument or any of the other Loan Documents (or, if the Borrower is in default, describing such default in reasonable detail); (v) whether or not there are then existing any setoffs or defenses known to Borrower against the enforcement of any right or remedy of Lender under the Loan Documents; and (vi) any additional facts requested by Lender.

     30. GOVERNING LAW; CONSENT TO JURISDICTION AND VENUE.

     (a) This Instrument, and any Loan Document which does not itself expressly identify the law that is to apply to it, shall be governed by the laws of the jurisdiction in which the Land is located (the “Property Jurisdiction”).

     (b) Borrower agrees that any controversy arising under or in relation to the Note, this Instrument, or any other Loan Document shall be litigated exclusively in the Property Jurisdiction. The state and federal courts and authorities with jurisdiction in the Property Jurisdiction shall have exclusive jurisdiction over all controversies which shall arise under or in relation to the Note, any security for the Indebtedness, or any other Loan Document. Borrower irrevocably consents to service, jurisdiction, and venue of such courts for any such litigation and waives any other venue to which it might be entitled by virtue of domicile, habitual residence or otherwise.

     31. NOTICE.

     (a) All notices, demands and other communications (“notice”) under or concerning this Instrument shall be in writing. Each notice shall be addressed to the intended recipient at its address set forth in this Instrument, and shall be deemed given on the earliest to occur of (1) the date when the notice is received by the addressee; (2) the first Business Day after the notice is delivered to a recognized overnight courier service, with arrangements made for payment of charges for next Business Day delivery; or (3) the third Business Day after the notice is deposited in the United States mail with postage prepaid, certified mail, return receipt requested. As used in this Section 31, the term “Business Day” means any day other than a Saturday, a Sunday or any other day on which Lender is not open for business.

     (b) Any party to this Instrument may change the address to which notices intended for it are to be directed by means of notice given to the other party in accordance with this Section 31. Each party agrees that it will not refuse or reject delivery of any notice given in accordance with this Section 31, that it will acknowledge, in writing, the receipt of any notice upon request by the other party and that any notice rejected or refused by it shall be deemed for purposes of this Section 31 to have been received by the rejecting party on the date so refused or rejected, as conclusively established by the records of the U.S. Postal Service or the courier service.

     (c) Any notice under the Note and any other Loan Document which does not specify how notices are to be given shall be given in accordance with this Section 31.

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     32. SALE OF NOTE; CHANGE IN SERVICER.

     The Note or a partial interest in the Note (together with this Instrument and the other Loan Documents) may be sold one or more times without prior notice to Borrower. A sale may result in a change of the Loan Servicer. There also may be one or more changes of the Loan Servicer unrelated to a sale of the Note. If there is a change of the Loan Servicer, Borrower will be given notice of the change.

     33. SINGLE ASSET BORROWER.

     Until the Indebtedness is paid in full, Borrower (a) shall not acquire any real or personal property other than the Mortgaged Property and personal property related to the operation and maintenance of the Mortgaged Property; (b) shall not operate any business other than the management and operation of the Mortgaged Property; and (c) shall not maintain its assets in a way difficult to segregate and identify.

     34. SUCCESSORS AND ASSIGNS BOUND.

     This Instrument shall bind, and the rights granted by this Instrument shall inure to, the respective successors and assigns of Lender and Borrower. However, a Transfer not permitted by Section 21 shall be an Event of Default.

     35. JOINT AND SEVERAL LIABILITY.

     If more than one person or entity signs this Instrument as Borrower, the obligations of such persons and entities shall be joint and several.

     36. RELATIONSHIP OF PARTIES; NO THIRD PARTY BENEFICIARY.

     (a) The relationship between Lender and Borrower shall be solely that of creditor and debtor, respectively, and nothing contained in this Instrument shall create any other relationship between Lender and Borrower.

     (b) No creditor of any party to this Instrument and no other person shall be a third party beneficiary of this Instrument or any other Loan Document. Without limiting the generality of the preceding sentence, (1) any arrangement (a “Servicing Arrangement”) between the Lender and any Loan Servicer for loss sharing or interim advancement of funds shall constitute a contractual obligation of such Loan Servicer that is independent of the obligation of Borrower for the payment of the Indebtedness, (2) Borrower shall not be a third party beneficiary of any Servicing Arrangement, and (3) no payment by the Loan Servicer under any Servicing Arrangement will reduce the amount of the Indebtedness.

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     37. SEVERABILITY; AMENDMENTS.

     The invalidity or unenforceability of any provision of this Instrument shall not affect the validity or enforceability of any other provision, and all other provisions shall remain in full force and effect. This Instrument contains the entire agreement among the parties as to the rights granted and the obligations assumed in this Instrument. This Instrument may not be amended or modified except by a writing signed by the party against whom enforcement is sought.

     38. CONSTRUCTION.

     The captions and headings of the sections of this Instrument are for convenience only and shall be disregarded in construing this Instrument. Any reference in this Instrument to an “Exhibit” or a “Section” shall, unless otherwise explicitly provided, be construed as referring, respectively, to an Exhibit attached to this Instrument or to a Section of this Instrument. All Exhibits attached to or referred to in this Instrument are incorporated by reference into this Instrument. Any reference in this Instrument to a statute or regulation shall be construed as referring to that statute or regulation as amended from time to time. Use of the singular in this Agreement includes the plural and use of the plural includes the singular. As used in this Instrument, the term “including” means “including, but not limited to.”

     39. LOAN SERVICING.

     All actions regarding the servicing of the loan evidenced by the Note, including the collection of payments, the giving and receipt of notice, inspections of the Property, inspections of books and records, and the granting of consents and approvals, may be taken by the Loan Servicer unless Borrower receives notice to the contrary. If Borrower receives conflicting notices regarding the identity of the Loan Servicer or any other subject, any such notice from Lender shall govern.

     40. DISCLOSURE OF INFORMATION.

     Lender may furnish information regarding Borrower or the Mortgaged Property to third parties with an existing or prospective interest in the servicing, enforcement, evaluation, performance, purchase or securitization of the Indebtedness, including trustees, master servicers, special servicers, rating agencies, and organizations maintaining databases on the underwriting and performance of multifamily mortgage loans. Borrower irrevocably waives any and all rights it may have under applicable law to prohibit such disclosure, including any right of privacy.

     41. NO CHANGE IN FACTS OR CIRCUMSTANCES.

     All information in the application for the loan submitted to Lender (the “Loan Application”) and in all financial statements, rent rolls, reports, certificates and other documents submitted in connection with the Loan Application are complete and accurate in all material respects. There has been no material adverse change in any fact or circumstance that would make any such information incomplete or inaccurate.

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     42. SUBROGATION.

     If, and to the extent that, the proceeds of the loan evidenced by the Note are used to pay, satisfy or discharge any obligation of Borrower for the payment of money that is secured by a pre-existing mortgage, deed of trust or other lien encumbering the Mortgaged Property (a “Prior Lien”), such loan proceeds shall be deemed to have been advanced by Lender at Borrower’s request, and Lender shall automatically, and without further action on its part, be subrogated to the rights, including lien priority, of the owner or holder of the obligation secured by the Prior Lien, whether or not the Prior Lien is released.

     43. ACCELERATION; REMEDIES.

     At any time during the existence of an Event of Default, Lender, at Lender’s option, may declare the Indebtedness to be immediately due and payable without further demand, and may enforce the lien of this Instrument by judicial proceeding and may invoke any one or more other remedies permitted by applicable law or provided in this Instrument or in any other Loan Document. Lender shall be entitled to collect all costs and expenses incurred in pursuing such remedies, including attorneys’ fees, costs of documentary evidence, abstracts and title reports.

     44. RELEASE.

     Upon payment of the Indebtedness, Lender shall release this Instrument. Borrower shall pay Lender’s reasonable costs incurred in releasing this Instrument.

     45. WAIVER OF HOMESTEAD.

     Borrower waives all right of homestead exemption in the Mortgaged Property.

     46. WAIVER OF CERTAIN OTHER LAWS.

     Borrower further waives the benefit of all laws now existing or that hereafter may be enacted (a) providing for any appraisement before sale of any portion of the Mortgaged Property, and (b) extending in any way the time of enforcement of the collection of the Note or the Indebtedness or creating or extending beyond any statutory time a period of redemption from any sale made in collecting the Indebtedness. To the full extent Borrower may do so, Borrower agrees that Borrower will not at any time insist upon, plead, claim or take the benefit or advantage of any law now or hereafter in force providing for appraisement, valuation, stay, extension or redemption, and Borrower, for Borrower, and its representatives, successors and assigns, and for any and all persons ever claiming any interest in the Mortgaged Property, to the extent permitted by law, hereby waives and releases all rights of redemption, valuation, appraisement, stay of execution, notice of election to mature or declare due the whole of the Indebtedness in the event of foreclosure of the lien created by this Instrument.

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     47. FUTURE ADVANCES.

     Upon request of Borrower, Lender, at Lender’s sole option and discretion prior to discharge of this Instrument, may make Future Advances to Borrower. Such Future Advances, with interest thereon, shall be secured by this Instrument regardless of whether the advance is designated as being secured hereby. At no time shall the principal amount of the Indebtedness, not including sums advanced in accordance with this Instrument to protect the security of this Instrument, exceed 200% of the original principal amount of the Note. The preceding sentence shall not limit the amount secured by this Instrument if such amount is increased by accrued interest, advances made by Lender pursuant to Section 12 to protect the security or costs of collection and foreclosure.

     48. WAIVER OF TRIAL BY JURY.

     BORROWER AND LENDER EACH (A) COVENANTS AND AGREES NOT TO ELECT A TRIAL BY JURY WITH RESPECT TO ANY ISSUE ARISING OUT OF THIS INSTRUMENT OR THE RELATIONSHIP BETWEEN THE PARTIES AS BORROWER AND LENDER THAT IS TRIABLE OF RIGHT BY A JURY AND (B) WAIVES ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO SUCH ISSUE TO THE EXTENT THAT ANY SUCH RIGHT EXISTS NOW OR IN THE FUTURE. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS SEPARATELY GIVEN BY EACH PARTY, KNOWINGLY AND VOLUNTARILY WITH THE BENEFIT OF COMPETENT LEGAL COUNSEL.

     ATTACHED EXHIBITS. The following Exhibits are attached to this Instrument:

[X]	Exhibit A	Description of the Land (required).
[X]	Exhibit B-1	Modifications to Instrument (Tax Credit Rider)
[X]	Exhibit B-2	Modifications to Instrument (Non-Standard Modifications)

[CONTINUED ON FOLLOWING PAGE]

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     IN WITNESS WHEREOF, Borrower has signed and delivered this Instrument or has caused this Instrument to be signed and delivered by its duly authorized representative.

SIR ARBOR POINTE, LLC,
a Delaware limited liability company
By:	Steadfast Income Advisor, LLC,
	a Delaware limited liability company,
Its:	Manager
	By:	/s/ Ana Marie del Rio
	Name:	Ana Marie del Rio
	Title:	Secretary

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ACKNOWLEDGMENT

STATE OF CALIFORNIA	)
	)	SS.
COUNTY OF ORANGE	)

     On April 29th, 2011 before me Debra A. Parks, a Notary Public, personally appeared Ana Marie del Rio, who proved to me on the basis of satisfactory evidence to be the person whose name is subscribed to the within instrument and acknowledged to me that he/she executed the same in his/her authorized capacity, and that by his/her signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument.

     I certify under penalty of perjury under the laws of the State of California that the foregoing paragraph is true and correct.

     WITNESS my hand and official seal.

/s/ Debra A. Parks

Notary Public

[Seal]

FANNIE MAE MULTIFAMILY SECURITY INSTRUMENT –
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© 1998-2009 Fannie Mae

KEY PRINCIPAL

Key Principal

Name:	Steadfast Income REIT, Inc.
Address:	181 Von Karman Avenue, Suite 500 Irvine, California 92312

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EXHIBIT A

DESCRIPTION OF THE LAND

Real property located in the County of Jefferson, Commonwealth of Kentucky, described as follows:

Being all of Residual Tract “13R” as shown on approved Minor Subdivision Plat bearing Docket #126-93 attached to and made a part of instrument recorded in Deed Book 6330, page 761, in the Office of the Clerk of Jefferson County, Kentucky.

Being the same property conveyed to Arbor Pointe Limited Partnership, an Ohio limited partnership, by Deed dated December 7, 1993, recorded in Book 6391, Page 693, in the Office of the Clerk of Jefferson County, Kentucky.

Tax Parcel No. 22-0038-0770-0000

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EXHIBIT B-1

MODIFICATIONS TO INSTRUMENT
(Tax Credit Properties)

The following sections are added to the text of the Instrument that precedes this Exhibit:

     49. EXTENDED LOW-INCOME HOUSING COMMITMENT. Lender agrees that the lien of this Instrument shall be subordinate to any extended low-income housing commitment (as such term is defined in Section 42(h)(6)(B) of the Internal Revenue Code) (the “Extended Use Agreement”) recorded against the Mortgaged Property; provided that such Extended Use Agreement, by its terms, must terminate upon foreclosure under this Instrument or upon a transfer of the Mortgaged Property by instrument in lieu of foreclosure, in accordance with Section 42(h)(6)(E) of the Internal Revenue Code.

     50. ANNUAL LIHTC REPORTING REQUIREMENTS. Borrower must submit to Lender, each year at the time of annual submission of Borrower’s financial analysis of operations, a copy of the following sections of Borrower’s federal tax return (if such sections are required to be filed): Internal Revenue Forms 1065, 8586, 8609 and Form 8609, Schedule A, which must reflect the total low-income housing tax credits (“LIHTCs”) allocated to the Mortgaged Property and the LIHTCs claimed for the Mortgaged Property in the preceding year.

     51. CROSS-DEFAULT. Borrower acknowledges and agrees that any default, event of default, or breach (however such terms may be defined) after the expiration of any applicable notice and/or cure periods under the Extended Use Agreement shall be an Event of Default under this Instrument and that any costs, damages or other amounts, including reasonable attorney’s fees incurred by the Lender as a result of such an Event of Default by Borrower, including amounts paid to cure any default or event of default, under the Extended Use Agreement shall be an obligation of Borrower and become a part of the Indebtedness secured by this Instrument.

     52. ANNUAL COMPLIANCE. Borrower shall submit to Lender on an annual basis, evidence that the Mortgaged Property is in ongoing compliance with all income, occupancy and rent restrictions under the Extended Use Agreement relating to the Mortgaged Property. Such submissions shall be made contemporaneously with Borrower’s reports required to be made to the regulator under the Extended Use Agreement.”

[CONTINUED ON FOLLOWING PAGE]

Tax Credit Modifications to Instrument Form 4065     04/00     Page B-1-1

© 1997-2000 Fannie Mae

EXHIBIT B-1

2. All capitalized terms used in this Exhibit not specifically defined herein shall have the meanings set forth in the text of the Instrument that precedes this Exhibit.

BORROWER’S INITIALS: /s/ Ana Marie del Rio               

Tax Credit Modifications to Instrument Form 4065     04/00     Signature Page

© 1997-2000 Fannie Mae

EXHIBIT B-2

MODIFICATIONS TO INSTRUMENT
(Non-Standard Modifications)

         The following modifications are made to the text of the Instrument that precedes this Exhibit:

1. The fourth paragraph on page 1 of Instrument is amended and restated in its entirety as follows:

“Borrower represents and warrants that Borrower is lawfully seized of the Mortgaged Property and has the right, power and authority to mortgage, grant, convey and assign the Mortgaged Property, and that the Mortgaged Property is not encumbered by any Lien (as defined in Section 16 of this Security Instrument) other than Permitted Encumbrances (as defined below). Borrower covenants that Borrower will warrant and defend generally the title to the Mortgaged Property against all claims and demands other than the Permitted Encumbrances. “Permitted Encumbrances” shall mean the easements and restrictions listed in a schedule of exceptions to coverage in any title insurance policy issued to Lender contemporaneously with the execution and recordation of this Instrument and insuring Lender’s interest in the Mortgaged Property.”

2. Section 1(s)(15) is amended by adding the following text at the end thereof:

“, excluding therefrom, however, the names “SIR” and “Steadfast” (or any derivation of either such name) and/or trademark rights associated with such names or derivations thereof.”

3. Section 1(z) is amended and restated in its entirety as follows:

“(z) “Transfer” means (A) a sale, assignment, transfer, or other disposition (whether voluntary, involuntary or by operation of law (other than a condemnation, which is governed by Section 20 below)); (B) the grant, creation, or attachment of a lien, encumbrance, or security interest (whether voluntary, involuntary or by operation of law); (C) the issuance or other creation of a direct or indirect ownership interest; or (D) the withdrawal, retirement, removal or involuntary resignation of any owner or manager of a legal entity.”

4. Section 3(b) is amended and restated in its entirety as follows:

Non-Standard Rider to Mortgage Exhibit B-2 Page B-2-1

“(b) During the continuance of an Event of Default, Borrower authorizes Lender to collect, sue for and compromise Rents and directs each tenant of the Mortgaged Property to pay all Rents to, or as directed by, Lender, and Borrower shall, upon (i) Borrower’s receipt of any Rents from any sources (including, but not limited to subsidy payments under any Housing Assistance Payments Contract), and (ii) such direction from Lender, pay the total amount of such receipts to the Lender. However, until the occurrence of an Event of Default, Lender hereby grants to Borrower a revocable license to collect and receive all Rents, to hold all Rents in trust for the benefit of Lender and to apply all Rents to pay the installments of interest and principal then due and payable under the Note and the other amounts then due and payable under the other Loan Documents, including Imposition Deposits, and to pay the current costs and expenses of managing, operating and maintaining the Mortgaged Property, including utilities, Taxes and insurance premiums (to the extent not included in Imposition Deposits), tenant improvements and other capital expenditures. So long as no Event of Default has occurred and is continuing, the Rents remaining after application pursuant to the preceding sentence may be retained by Borrower free and clear of, and released from, Lender’s rights with respect to Rents under this Instrument. During the continuance of an Event of Default, and without the necessity of Lender entering upon and taking and maintaining control of the Mortgaged Property directly, or by a receiver, Borrower’s license to collect Rents shall automatically terminate and Lender shall without notice be entitled to all Rents as they become due and payable, including Rents then due and unpaid. Upon the direction of Lender during the continuance of an Event of Default, Borrower shall pay to Lender upon demand all Rents actually received by Borrower or its agent to which Lender is entitled. At any time on or after the date of Lender’s demand for Rents, Lender may give, and Borrower hereby irrevocably authorizes Lender to give, notice to all tenants of the Mortgaged Property instructing them to pay all Rents to Lender, no tenant shall be obligated to inquire further as to the occurrence or continuance of an Event of Default, and no tenant shall be obligated to pay to Borrower any amounts which are actually paid to Lender in response to such a notice. Any such notice by Lender shall be delivered to each tenant personally, by mail or by delivering such demand to each rental unit. Borrower shall not interfere with and shall cooperate with Lender’s collection of such Rents.”

5. The third sentence of Section 3(e) is amended by adding the following text at the beginning thereof:

“Except to the extent caused by the gross negligence or willful misconduct of Lender.”

Non-Standard Rider to Mortgage Exhibit B-2 Page B-2-2

6.	The second sentence of Section 4(b) is amended by deleting the words “Upon the occurrence” at the beginning of said sentence and replacing them with the words “During the continuance”.
7.	The second sentence of Section 4(c) is amended by adding the following text at the beginning thereof:

“Except to the extent caused by the gross negligence or willful misconduct of Lender,”

8.	The first sentence of Section 4(d) is amended by deleting the words “Upon the occurrence” at the beginning of said sentence and replacing them with the words “During the continuance”.
9.	Section 13 is amended and restated in its entirety as follows:

“Lender, its agents, representatives, and designees may make or cause to be made entries upon and inspections of the Mortgaged Property (including environmental inspections and tests) during normal business hours, or at any other reasonable time upon prior written notice, except in the event of an emergency in which event such entry may occur at any time and without prior written notice.”

10. The last sentence of Section 14(a) is amended and restated in its entirety as follows:

“The books, records, contracts, Leases and other instruments shall be subject to examination and inspection at any reasonable time by Lender upon prior written notice.”

11. The following text is hereby added as a new paragraph immediately following Section 14(b)(7) and immediately preceding Section 14(c):

“Notwithstanding the foregoing, with respect to any item in this subsection 14(b) that Lender may request at any time or from time to time, Lender agrees that, provided no Event of Default exists, it shall not request such item more frequently than quarterly. Additionally, Lender hereby agrees that, for so long as Key Principal is a regulated public company, nothing herein or in any other Loan Document shall be deemed to require Borrower or Key Principal to deliver any information in violation of applicable law or any non-public information unless Lender has provided a customary non-disclosure agreement.”

12. Section 14(c) is amended and restated in its entirety as follows:

Non-Standard Rider to Mortgage Exhibit B-2 Page B-2-3

“(c) Each of the statements, schedules and reports required by Section 14(b) shall be certified to be complete and accurate in all material respects as of the date made by an individual having authority to bind Borrower, and shall be in such form and contain such detail as Lender may reasonably require. Lender also may require that any statements, schedules or reports be audited at Borrower’s expense by independent certified public accountants acceptable to Lender if an Event of Default exists or Lender otherwise has a reasonable basis to believe that such audit is necessary for an accurate assessment of the financial information provided.”

13. Section 14(d) is amended and restated in its entirety as follows:

“(d) If Borrower fails to provide in a timely manner the statements, schedules and reports required by Section 14(b) after written notice to Borrower and a reasonable amount of time thereafter to cure as determined by Lender in its sole discretion (unless an Event of Default shall then exist, in which event no such notice and cure period shall be required or provided), Lender shall have the right to have Borrower’s books and records audited, at Borrower’s expense, by independent certified public accountants selected by Lender in order to obtain such statements, schedules and reports, and all related costs and expenses of Lender shall become immediately due and payable and shall become an additional part of the Indebtedness as provided in Section 12.”

14. Section 17(a) is amended and restated in its entirety as follows:

“(a) Borrower (1) shall not commit waste or permit impairment or deterioration of the Mortgaged Property except for ordinary and reasonable wear and tear, (2) shall not abandon the Mortgaged Property, (3) shall restore or repair promptly, in a good and workmanlike manner, any damaged part of the Mortgaged Property to the equivalent of its original condition as of the date of this Instrument, or such other condition as Lender may approve in writing, whether or not insurance proceeds or condemnation awards are available to cover any costs of such restoration or repair, unless Lender has elected to apply such proceeds to the Indebtedness in which event Borrower’s failure to make the restoration and/or repair(s) related to such insurance and/or condemnation proceeds shall not constitute a violation of the requirements of this Section 17(a), (4) shall keep the Mortgaged Property in good repair, including the replacement of Personalty and Fixtures with items of equal or better function and quality, (5) shall provide for professional management of the Mortgaged Property by a residential rental property manager satisfactory to Lender under a contract approved by Lender in writing, and (6) shall give notice to Lender of and, unless otherwise directed in writing by Lender, shall appear in and defend any action or proceeding purporting to affect the Mortgaged Property, Lender’s security or Lender’s rights under this Instrument. Borrower shall not (and shall not permit any tenant or other person to) remove, demolish or alter the Mortgaged Property or any part of the Mortgaged Property except in connection with the replacement of tangible Personalty and making individual apartment units within the Mortgaged Property ready for occupancy by new tenants.”

Non-Standard Rider to Mortgage Exhibit B-2 Page B-2-4

15. Section 18(e)(3) is amended and restated in its entirety as follows:

“(3) except to the extent previously disclosed by Borrower to Lender in writing, the Mortgaged Property does not now contain any underground storage tanks, and, to the best of Borrower’s knowledge after reasonable and diligent inquiry, the Mortgaged Property has not contained any underground storage tanks in the past which have not been removed and remediated in accordance with all applicable Hazardous Materials Laws. If there is an underground storage tank located on the Property which has been previously disclosed by Borrower to Lender in writing, that tank complies with all requirements of Hazardous Materials Laws;”

16. Section 18(e)(5) is amended and restated in its entirety as follows:

“(5) to the best of Borrower’s knowledge after reasonable and diligent inquiry, no event has occurred with respect to the Mortgaged Property that constitutes, or with the passing of time or the giving of notice would constitute, noncompliance with the terms of any Environmental Permit;”

17. The third sentence of Section 18(g) is amended and restated in its entirety as follows:

“The results of all Environmental Inspections made by Lender shall at all times remain the property of Lender and Lender shall have no obligation to disclose or otherwise make available to Borrower or any other party such results or any other information obtained by Lender in connection with its Environmental Inspections unless Borrower paid or reimbursed Lender for such Environmental Inspection and no Event of Default has occurred and is continuing.”

18. Section 18(j) is amended and restated in its entirety as follows:

“Borrower shall indemnify, hold harmless and defend (i) Lender, (ii) any prior owner or holder of the Note, (iii) the Loan Servicer, (iv) any prior Loan Servicer, (v) the officers, directors, shareholders, partners, employees and trustees of any of the foregoing, and (vi) the heirs, legal representatives, successors and assigns of each of the foregoing (collectively, the “Indemnitees”) from and against all proceedings, claims, damages, penalties and costs (whether initiated or sought by Governmental Authorities or private parties), including fees and out-of-pocket expenses of attorneys and expert witnesses, investigatory fees, and remediation costs, whether incurred in connection with any judicial or administrative process or otherwise, arising directly or indirectly from any of the following; provided, however, that nothing in this Section 18(j) shall require Borrower to indemnify any Indemnitee for such costs or claims to the extent caused by the gross negligence or willful misconduct of such Indemnitee.”

Non-Standard Rider to Mortgage Exhibit B-2 Page B-2-5

19. Section 18(m) is amended and restated in its entirety as follows:

“Lender agrees that the indemnity under this Section 18 shall be limited to the assets of Borrower and Lender shall not seek to recover any deficiency from any natural persons who are general partners or members or managers of Borrower.”

20. The following text is added as a new Section 21(a)(11):

“Lender acknowledges and agrees that (i) as of the date hereof, Key Principal is a non-traded public real estate investment company which is not currently a Publicly-Held Trust but is expected to become a Publicly-Held Trust during the term of the Loan, and (ii) neither (x) the registration of the outstanding voting shares or beneficial interests of Key Principal under Section 12(b) or 12(g) of the Securities Exchange Act of 1934, as amended, nor (y) the sale or transfer of shares in Key Principal (provided that Key Principal continues to be a non-traded public real estate investment company or a Publicly-Held Trust), nor (z) the conversion of Key Principal from a non-traded public real estate investment company to a traded public real estate investment company, shall be considered a Transfer or shall constitute a default or Event of Default, and no fees under Section 21(c)(7) below or otherwise shall be due or payable to Lender in connection therewith.”

21. The following text is added as a new Section 21(b)(8):

“any Transfer of shares of a non-traded public real estate investment company or Publicly-Held Trust.”

22. Section 21(c)(7)(A) is amended and restated in its entirety as follows:

“(A) a non-refundable review fee in the amount of $3,000 and a transfer fee equal to 1 percent of the outstanding Indebtedness immediately prior to the Transfer (provided, however, that such 1 percent fee shall not be due in connection with a merger or consolidation of Key Principal with another public real estate investment company); and”

23. Section 21(d)(2)(B) is amended and restated in its entirety as follows (to delete all references therein to the Key Principal):

“(B) any agreement (including provisions contained in the organizational and/or governing documents of Borrower) or Transfer not specified in clause (A), the effect of which, either immediately or after the passage of time or occurrence of a specified event or condition, including the failure of a specified event or condition to occur or be satisfied, would (i) cause a change in or replacement of the Person that controls

Non-Standard Rider to Mortgage Exhibit B-2 Page B-2-6

the management and operations of the Borrower or (ii) limit or otherwise modify the extent of such Person’s control over the management and operations of Borrower.”

24. Section 21(e) is amended and restated in its entirety as follows:

“(e) Lender shall be provided with written notice of all Transfers under this Section 21, whether or not such Transfers are permitted under Section 21(b) or approved by Lender under Section 21(c), no later than 10 days prior to the date of the Transfer; provided, however that such prior written notice shall not be required for any involuntary Transfer, it being understood and agreed that Borrower may provide written notice of any involuntary Transfer promptly after becoming aware thereof.”

25. Section 22(f) is amended and restated in its entirety as follows:

“(f) the commencement of a forfeiture action or proceeding, whether civil or criminal, which, in Lender’s reasonable judgment, could result in a forfeiture of the Mortgaged Property or otherwise materially impair the lien created by this Instrument or Lender’s interest in the Mortgaged Property, and such action or proceeding is not dismissed or otherwise bonded over or insured in a manner reasonably acceptable to Lender within thirty (30) days of commencement; provided, however, that no such notice or grace period shall apply in the case of any such failure which could, in Lender’s sole and absolute judgment, absent immediate exercise by Lender of a right or remedy under this Instrument, result in harm to Lender, impairment of the Note or this Instrument or any other security given under any other Loan Document;”

26. Section 22(g) is amended and restated in its entirety as follows:

“(g) any failure by Borrower to perform any of its obligations under this Instrument (other than those specified in Sections 22(a) through (f)), as and when required, which continues for a period of 30 days after notice of such failure by Lender to Borrower, but no such notice or grace period shall apply in the case of any such failure which could, in Lender’s judgment, absent immediate exercise by Lender of a right or remedy under this Instrument, result in harm to Lender, impairment of the Note or this Instrument or any other security given under any other Loan Document; further provided, however, that the 30-day grace period noted above (to the extent applicable) may be extended by 60 additional days (for a total grace period of 90 days) if (i) Borrower requests such extension in writing, (ii) Lender determines, in its sole discretion, that the nature of such default reasonably requires such additional time to cure, and (iii) Borrower has diligently commenced to cure such default during the 30-day grace period noted above and diligently pursues such cure at all times thereafter;”

27. The following text is added as a new Section 31(d):

Non-Standard Rider to Mortgage Exhibit B-2 Page B-2-7

“(d) Lender shall endeavor to give Borrower’s counsel a courtesy copy of any notice given to Borrower by Lender, at the address set forth below; provided, however, failure to provide such courtesy copy notice shall not affect the validity or sufficiency of any notice to Borrower, shall not affect Lender’s rights and remedies hereunder or under any other Loan Documents, nor subject Lender to any claims by or liability to Borrower.

Katten Muchin Rosenman LLP
2900 K Street NW, Suite 200
Washington, D.C. 2007
Attn: Virginia A. Davis”

28. Section 41 is amended and restated in its entirety as follows:

“All information in the application for the loan submitted to Lender (the “Loan Application”) and in all financial statements, rent rolls, reports, certificates and other documents submitted in connection with the Loan Application are complete and accurate in all material respects in each case as of the date thereof. There has been no material adverse change in any fact or circumstance that would make any such information incomplete or inaccurate.”

[CONTINUED ON FOLLOWING PAGE]

Non-Standard Rider to Mortgage Exhibit B-2 Page B-2-8

29. All capitalized terms used in this Exhibit not specifically defined herein shall have the meanings set forth in the text of the Instrument that precedes this Exhibit.

BORROWER’S INITIALS:

/s/ Ana Marie del Rio

Non-Standard Rider to Mortgage Exhibit B-2 Signature Page

EX-10.7

Exhibit 10.7

ASSIGNMENT OF MANAGEMENT AGREEMENT

     THIS ASSIGNMENT OF MANAGEMENT AGREEMENT (this “Assignment”) is made and entered into as of May 4, 2011 by and among (i) SIR ARBOR POINTE, LLC, a Delaware limited liability company (“Borrower”), (ii) PNC BANK, NATIONAL ASSOCIATION, a national banking association (“Lender”), and (iii) STEADFAST MANAGEMENT COMPANY, INC., a California corporation (the “Manager”).

Recitals

     A. Borrower is the owner of a multifamily residential apartment project located at 2405 Arbor Pointe Drive, Louisville, Kentucky 40220 (the “Mortgaged Property”).

     B. Manager is the managing agent of the Mortgaged Property pursuant to a Management Agreement dated May 4, 2011, between Borrower and Manager (the “Management Agreement”).

     C. Lender is about to make a loan to Borrower in the amount of $5,200,000.00 (the “Loan”). The Loan will be evidenced by a Multifamily Note and will be secured by a Multifamily Mortgage, Assignment of Rents and Security Agreement (the “Security Instrument”) which encumbers the Mortgaged Property.

     D. Borrower is willing to assign its rights under the Management Agreement to Lender as additional security for the Loan.

     E. Manager is willing to consent to this Assignment and to attorn to Lender upon a default by Borrower under the documents evidencing and securing the Loan, and perform its obligations under the Management Agreement for Lender, or its successors in interest, or to permit Lender to terminate the Management Agreement without liability.

     NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound, Borrower, Lender and Manager agree as follows:

     1. Borrower hereby transfers, assigns and sets over to Lender, its successors and assigns, all right, title and interest of Borrower in and to the Management Agreement. Manager hereby consents to the foregoing assignment. The foregoing assignment is being made by Borrower to Lender as collateral security for the full payment and performance by Borrower of all of its obligations under the loan documents evidencing and securing the Loan. However, until the occurrence of an Event of Default (as such term is defined in the loan documents evidencing and securing the Loan) Borrower may exercise all rights as owner of the Mortgaged Property under the Management Agreement, except as otherwise provided in this Assignment. The foregoing assignment shall remain in effect as long as the Loan, or any part thereof, remains

Fannie Mae Assignment of Management Agreement Form 4508       4/98      (Page 1)

© 1997-1998 Fannie Mae

unpaid, but shall automatically terminate upon the release of the Security Instrument as a lien on the Mortgaged Property.

     2. Borrower and Manager represent and warrant to Lender that (i) the Management Agreement is unmodified and is in full force and effect, (ii) the Management Agreement is a valid and binding agreement enforceable against the parties in accordance with its terms, and (iii) neither party is in default in performing any of its obligations under the Management Agreement.

     3. Borrower hereby covenants with Lender that during the term of this Assignment: (a) Borrower shall not transfer the responsibility for management of the Mortgaged Property from Manager to any other person or entity without the prior written consent of Lender; (b) Borrower shall not terminate or amend any of the terms or provisions of the Management Agreement without the prior written consent of Lender; and (c) Borrower shall, give Lender written notice of any notice or information that Borrower receives which indicates that Manager is terminating the Management Agreement or that Manager is otherwise discontinuing its management of the Mortgaged Property.

     4. Upon receipt by Manager of written notice from Lender that an Event of Default (as that term is defined in the loan documents evidencing and securing the Loan) has occurred and is continuing, Lender shall have the right to exercise all rights as owner of the Mortgaged Property under the Management Agreement.

     5. After the occurrence of an Event of Default, Lender (or its nominee) shall have the right any time thereafter to terminate the Management Agreement, without cause and without liability, by giving written notice to Manager of its election to do so. Lender’s notice shall specify the date of termination, which shall not be less than 30 days after the date of such notice.

     6. On the effective date of termination of the Management Agreement, Manager shall turn over to Lender all books and records relating to the Mortgaged Property (copies of which may be retained by Manager, at Manager’s expense), together with such authorizations and letters of direction addressed to tenants, suppliers, employees, banks and other parties as Lender may reasonably require: Manager shall cooperate with Lender in the transfer of management responsibilities to Lender or its designee. A final accounting of unpaid fees (if any) due to Manager under the Management Agreement shall be made within 60 days after the effective date of termination, but Lender shall not have any liability or obligation to Manager for unpaid fees or other amounts payable under the Management Agreement which accrue before Lender (or its nominee) acquires title to the Mortgaged Property, or Lender becomes a mortgagee in possession.

Fannie Mae Assignment of Management Agreement Form 4508       4/98       (Page 2)

© 1997-1998 Fannie Mae

     7. Manager’s address for notice is 18100 Von Karman Avenue, Suite 500, Irvine, California 92612. All notices to be given by Lender to Manager shall be given in the same manner as notices to Borrower pursuant to the notice provisions contained in the Security Instrument.

     8. Modifications to this Assignment are attached as Exhibit A and Exhibit B to this Assignment and are incorporated herein by reference.

     9. This Assignment may be executed in any number of counterparts, each of which shall be considered an original for all purposes; provided, however, that all such counterparts shall constitute one and the same instrument.

[CONTINUED ON FOLLOWING PAGE]

Fannie Mae Assignment of Management Agreement Form 4508       4/98      (Page 3)

© 1997-1998 Fannie Mae

     IN WITNESS WHEREOF, Borrower, Lender and Manager have executed this Assignment as of the day and year first above written.

Borrower:
SIR ARBOR POINTE, LLC, a Delaware limited liability company
By:	Steadfast Income Advisor, LLC, a Delaware limited liability company
Its:	Manager

By: Name:	/s/ Ana Marie del Rio Ana Marie del Rio
Title:	Secretary

[SIGNATURES CONTINUED ON FOLLOWING PAGE]

Fannie Mae Assignment of Management Agreement Form 4508       4/98      (Page 4)

© 1997-1998 Fannie Mae

Lender:
PNC BANK, NATIONAL ASSOCIATION, a national banking association
By: Name:	/s/ Kelli A. Tyler Kelli A. Tyler
Title:	Vice President

[SIGNATURES CONTINUED ON FOLLOWING PAGE]

Fannie Mae Assignment of Management Agreement Form 4508       4/98      (page 5)

© 1997-1998 Fannie Mae

Manager:
STEADFAST MANAGEMENT COMPANY, INC., a California corporation
By: Name:	/s/ Dinesh Davar Dinesh Davar
Title:	Treasurer/CFO

Fannie Mae Assignment of Management Agreement Form 4508       4/98      (Page 6)

© 1997-1998 Fannie Mae

EXHIBIT A

MODIFICATIONS TO ASSIGNMENT OF MANAGEMENT AGREEMENT

     The following modifications are made to the text of the Assignment that precedes this Exhibit:

     The Assignment is modified by adding a new Section 10 and a new Section 11 as follows:

     “10. Manager agrees that:

     (a) (i) any fees payable to Manager pursuant to the Management Agreement are and shall be subordinated in right of payment, to the extent and in the manner provided in this Assignment, to the prior payment in full of the Indebtedness (as defined in the Security Instrument), and (ii) the Management Agreement is and shall be subject and subordinate in all respects to the liens, terms, covenants and conditions of the Security Instrument and the other loan documents evidencing and securing the Loan and to all advances heretofore made or which may hereafter be made pursuant to the Security Instrument (including all sums advanced for the purposes of (x) protecting or further securing the lien of the Security Instrument, curing defaults by Borrower under the Security Instrument or for any other purposes expressly permitted by the Security Instrument, or (y) constructing, renovating, repairing, furnishing, fixturing or equipping the Mortgaged Property);

     (b) if, by reason of its exercise of any other right or remedy under the Management Agreement, Manager acquires by right of subrogation or otherwise a lien on the Mortgaged Property which (but for this subsection) would be senior to the lien of the Security Instrument, then, in that event, such lien shall be subject and subordinate to the lien of the Security Instrument;

     (c) until Manager receives notice (or otherwise acquires actual knowledge) of an Event of Default, Manager shall be entitled to retain for its own account all payments made under or pursuant to the Management Agreement;

     (d) after Manager receives notice (or otherwise acquires actual knowledge) of an Event of Default, it will not accept any payment of fees under or pursuant to the Management Agreement without Lender’s prior written consent;

Subordination of Property Management Fees	Form 4508-A      4/98      Page A-l
Modifications to Assignment of Management Agreement

© 1997-1998 Fannie Mae

     (e) if, after Manager receives notice (or otherwise acquires actual knowledge) of an Event of Default, Manager receives any payment of fees under the Management Agreement, or if Manager receives any other payment or distribution of any kind from Borrower or from any other person or entity in connection with the Management Agreement which Manager is not permitted by this Assignment to retain for its own account, such payment or other distribution will be received and held in trust for Lender and unless Lender otherwise notifies Manager, will be promptly remitted, in cash or readily available funds, to Lender, properly endorsed to Lender, to be applied to the principal of, interest on and other amounts due under the loan documents evidencing and securing the Loan in such order and in such manner as Lender shall determine in its sole and absolute discretion. Manager hereby irrevocably designates, makes, constitutes and appoints Lender (and all persons or entities designated by Lender) as Manager’s true and lawful attorney in fact with power to endorse the name of Manager upon any checks representing payments referred to in this subsection;

     (f) Manager shall notify (telephonically, followed by written notice) Lender of Manager’s receipt from any person or entity other than Borrower of a payment with respect to Borrower’s obligations under the loan documents evidencing and securing the Loan, promptly after Manager obtains knowledge of such payment; and

     (g) during the term of this Assignment Manager will not commence, or join with any other creditor in commencing any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings with respect to Borrower, without Lender’s prior written consent.

     11. Borrower agrees that after Borrower receives notice (or otherwise has actual knowledge) of an Event of Default, it will not make any payment of fees under or pursuant to the Management Agreement without Lender’s prior written consent.”

/s/ Ana Marie del Rio Borrower Initials

/s/ Kelli A. Tyler Lender Initials

/s/ ILLEGIBLE Manager Initials

Subordination of Property Management Fees	Form 4508-A       4/98      Page A-2
Modifications to Assignment of Management Agreement

© 1997-1998 Fannie Mae

EXHIBIT B

MODIFICATIONS TO ASSIGNMENT OF MANAGEMENT AGREEMENT
(Non-Standard Modifications)

     The following modifications are made to the text of the Agreement that precedes this Exhibit:

1. Recital E is amended and restated in its entirety as follows:

     “E. Manager is willing to consent to this Assignment and, subject to the terms and conditions of this Agreement, to attorn to Lender upon a default by Borrower under the documents evidencing and securing the Loan, and perform its obligations under the Management Agreement for Lender, or its successors in interest, or to permit Lender to terminate the Management Agreement without liability.”

2. In the third sentence of Section 1, the words “until the occurrence of an Event of Default” are deleted and replaced with the words “other than during the continuance of an Event of Default”.

3. Clause (ii) of Section 2 is amended and restated in its entirety as follows:

     “(ii) the Management Agreement is a valid and binding agreement enforceable against the parties in accordance with its terms, subject to bankruptcy, insolvency, reorganization, arrangement, moratorium and other similar laws relating to or affecting the rights of creditors generally,”

4. The first sentence of Section 6 is amended and restated in its entirety as follows:

     “On the effective date of termination of the Management Agreement, Manager shall turn over to Lender all books and records relating to the Mortgaged Property (copies of which may be retained by Manager, at Manager’s expense), but only to the extent permitted by applicable law with respect to non-public information or upon receipt of a customary non-disclosure agreement, together with such authorizations and letters of direction addressed to tenants, suppliers, employees, banks and other parties as Lender may reasonably require.”

Non-Standard Rider to	Exhibit B	Page B-1
Assignment of Management Agreement

     5. All capitalized terms used in this Exhibit not specifically defined herein shall have the meanings set forth in the text of the Agreement that precedes this Exhibit.

/s/ Ana Marie del Rio Borrower’s Initials

/s/ Kelli A. Tyler Lender Initials

/s/ ILLEGIBLE Manager Initials

Non-Standard Rider to	Exhibit B	Signature Page
Assignment of Management Agreement

EX-99.1

Exhibit 99.1

18100 Von Karman Avenue
Suite 500
Irvine, CA 92612
949.852.0700

NEWS RELEASE

Contact:	Jennifer Schmidt
Phone:	949.333.1721
Email:	jschmidt@steadfastcmg.com

STEADFAST INCOME REIT ACQUIRES
ARBOR POINTE APARTMENTS IN LOUISVILLE, KENTUCKY
Acquisition Marks REIT’s First Low-income Multifamily Asset

IRVINE, Calif., May 9, 2011 — Steadfast Income REIT, Inc. announced today the $6.5 million acquisition of Arbor Pointe Apartments, a 130-unit complex in the Hurstbourne Acres area of Louisville, KY. The property operates under the Low Income Housing Tax Credit (LIHTC) program with an agreement requiring that 100 percent of the units be rented to tenants earning no more than 60 percent of the area’s median income.

“We are pleased to add this well-maintained, stable multifamily community to our portfolio,” said Rodney F. Emery, CEO and president of Steadfast Income REIT. “Steadfast Management Company, Inc. will manage Arbor Pointe and brings valuable experience in the day-to-day management of affordable housing, as well as with the ongoing regulatory and compliance obligations that pertain to these assets.”

Arbor Pointe was built in 1995 and consists of 60 two-bedroom garden style apartments and 70 three-bedroom townhomes. The units average 1,150 square feet and each include two bathrooms, central heat and air conditioning, a full set of kitchen appliances, washer and dryer connections and private patios or balconies. Additionally, the property has a management office, swimming pool, playground and community room on-site.

Hurstbourne Acres has been a growing submarket of downtown Louisville for the past 20 years with area residents enjoying an average median household income above the national average and convenient access to employment centers, large national retailers, several institutions of higher learning and Louisville’s thriving downtown medical research campus. As the area’s only affordable housing

(more)

2-2-2 Steadfast income REIT Acquires Arbor Pointe Apartments

community, Arbor Pointe consistently operates with a waitlist and occupancy in the high 90 percent range.

About Steadfast Income REIT

Steadfast Income REIT is a real estate investment trust that intends to use the proceeds from its ongoing public offering of up to $1.65 billion of common stock to acquire and operate a diverse portfolio of real estate investments focused primarily on the multifamily sector, including stabilized, income-producing and value-added properties.

Steadfast Income REIT is sponsored by Steadfast REIT Investments LLC, an affiliate of Steadfast Companies, an Orange County, Calif.-based group of affiliated real estate investment and operating companies that acquire, develop and manage real estate in the U.S. and Mexico.

This release contains certain forward-looking statements. Because such statements include risks, uncertainties and contingencies, actual results may differ materially from those expressed or implied by such forward-looking statements and you should not place undue reliance on any such statements. A number of important factors could cause actual results to differ materially from the forward-looking statements contained in this release. Such factors include those described in the Risk Factors sections of the offering documents for the offering of equity of Steadfast Income REIT, Inc. Forward-looking statements in this document speak only as of the date on which such statements were made, and we undertake no obligation to update any such statements that may become untrue because of subsequent events. We claim the safe harbor protection for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.

THIS PRESS RELEASE SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY, NOR SHALL THERE BE ANY OFFER OR SALE OF SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION, OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE. AN OFFER OF SECURITIES IS MADE ONLY BY A PROSPECTUS. FOR A COPY OF THE PROSPECTUS, PLEASE CONTACT YOUR INVESTMENT PROFESSIONAL OR STEADFAST CAPITAL MARKETS GROUP AT 877.525.SCMG (7264).

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