10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

(Mark One)

þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIESEXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2016

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIESEXCHANGE ACT OF 1934

For the transition period from _________ to __________

Commission file number 0-53962

Resource Real Estate Investors 7, L.P.

(Exact name of registrant as specified in its charter)

Delaware	26-2726308
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

One Crescent Drive, Suite 203, Navy Yard Corporate Center, Philadelphia, PA  19112

(Address of principal executive offices) (Zip code)

(215) 231-7050

(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	o		Accelerated filer	o
Non-accelerated filer	o	(Do not check if a smaller reporting company)	Smaller reporting company	þ

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes o No þ

1

RESOURCE REAL ESTATE INVESTORS 7, L.P.

INDEX TO ANNUAL REPORT

ON FORM 10-Q

		PAGE
PART I	FINANCIAL INFORMATION
ITEM 1.	Financial Statements
	Consolidated Balance Sheets - September 30, 2016 (unaudited) and December 31, 2015	3
	Consolidated Statements of Operations - Three and Nine Months Ended September 30, 2016 and 2015 (unaudited)	4
	Consolidated Statement of Changes in Partners’ Capital Nine Months Ended September 30, 2016 (unaudited)	5
	Consolidated Statements of Cash Flows Nine Months Ended September 30, 2016 and 2015 (unaudited)	6
	Notes to Consolidated Financial Statements - September 30, 2016 (unaudited)	7
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
ITEM 3.	Quantitative and Qualitative Disclosures about Market Risk	25
ITEM 4.	Controls and Procedures	25
PART II	OTHER INFORMATION
ITEM 6.	Exhibits	25
SIGNATURES		27

2

PART I. FINANCIAL INFORMATION

ITEM 1.                FINANCIAL STATEMENTS

RESOURCE REAL ESTATE INVESTORS 7, L.P.

CONSOLIDATED BALANCE SHEETS

(in thousands)

	September 30, 2016		December 31, 2015
	(unaudited)
ASSETS
Rental properties, at cost:
Land	$	—	$	4,201
Buildings and improvements	—		31,920
Personal property	—		1,551
Identifiable intangible assets	—		1,497
Assets held for sale	6,417		—
	6,417		39,169
Accumulated depreciation and amortization	—		(9,634		)
Total rental properties, net	6,417		29,535
Cash	31,304		6,702
Restricted cash	608		1,600
Accounts receivable, net	99		70
Accounts receivable due from related parties	182		171
Prepaid expenses and other assets	42		71
Total assets	$	38,652	$	38,149
LIABILITIES AND PARTNERS’ CAPITAL
Liabilities:
Mortgage notes payable, net	$	5,840	$	25,630
Accounts payable and accrued expenses	262		574
Real estate tax payable	292		1,132
Accrued interest	29		116
Payables to related parties	222		138
Prepaid rent	24		114
Security deposits	33		170
Total liabilities	6,702		27,874
Partners’ capital	31,950		10,275
Total liabilities and partners’ capital	$	38,652	$	38,149

The accompanying notes are an integral part of these consolidated financial statements.

3

RESOURCE REAL ESTATE INVESTORS 7, L.P.

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per unit data)

(unaudited)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2016			2015			2016			2015
Revenues:
Rental income	$	1,951		$	2,540		$	6,052		$	7,995
Expenses:
Rental operating	1,216			1,364			3,552			4,053
Management fees – related parties	141			184			434			595
General and administrative	119			100			408			438
Depreciation and amortization	102			499			855			1,495
Total expenses	1,578			2,147			5,249			6,581
Income before other income (expense)	373			393			803			1,414
Other income (expense):
Interest expense, net	(439		)	(433		)	(1,155		)	(1,546		)
Loss on extinguishment of debt	(1,781		)	—			(1,781		)	—
Gain on sale of rental properties	24,499			—			24,509			9,603
Loss on disposal of fixed assets	—			(7		)	(2		)	(7		)
Total other income (expenses)	$	22,279		$	(440	)	$	21,571		$	8,050
Net income (loss)	$	22,652		$	(47	)	$	22,374		$	9,464
Weighted average number of limited partner units outstanding	3,270			3,270			3,270			3,270
Net income (loss) per weighted average limited partner unit, basic and diluted	$	6.93		$	(0.01	)	$	6.84		$	2.89

The accompanying notes are an integral part of these consolidated financial statements.

4

RESOURCE REAL ESTATE INVESTORS 7, L.P.

CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS’ CAPITAL

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2016

(in thousands, except units)

(unaudited)

	General		Limited Partners
	Partner		Units	Amount			Total
Balance at January 1, 2016	$	1	3,269,655	$	10,274		$	10,275
Distributions	—		—	(699		)	(699		)
Net income	—		—	22,374			22,374
Balance at September 30, 2016	$	1	3,269,655	$	31,949		$	31,950

The accompanying notes are an integral part of this consolidated financial statement.

5

RESOURCE REAL ESTATE INVESTORS 7, L.P.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

	Nine Months Ended
	September 30,
	2016			2015
Cash flows from operating activities:
Net income	$	22,374		9,464
Adjustments to reconcile net income to net cash provided by operating activities:
Gain on sale of rental properties	(24,509		)	(9,603		)
Loss on extinguishment of debt	1,781			—
Depreciation and amortization	856			1,495
Amortization of deferred financing costs	63			103
Loss on disposal of fixed assets	2			7
Changes in operating assets and liabilities:
Restricted cash	188			390
Tenant receivables, net	54			6
Prepaid expense and other assets	(133		)	(46		)
Accounts receivable due from related parties	(86		)	(32		)
Accounts payable and accrued expenses	(262		)	160
Real estate tax payable	(271		)	(165		)
Accrued interest	(5		)	(28		)
Payables to related parties	83			(1,682		)
Prepaid rent	(63		)	(34		)
Security deposits	(4		)	1
Net cash provided by operating activities	68			36
Cash flows from investing activities:
Capital expenditures	(296		)	(485		)
Restricted cash	(112		)	197
Proceeds from sale of rental properties, net	27,596			11,684
Net cash provided by investing activities	27,188			11,396
Cash flows from financing activities:
Distributions to limited partners	(699		)	(10,102		)
Principal payments on mortgage notes payable	(174		)	(413		)
Payment on debt extinguishment	(1,781		)	—
Net cash (used in) financing activities	(2,654		)	(10,515		)
Net increase in cash	24,602			917
Cash at beginning of period	6,702			4,483
Cash at end of period	$	31,304		$	5,400
Non-cash Investing and Financing Activities
Settlement of mortgage notes payable with proceeds from sale of rental properties	$	19,679		$	12,452

 The accompanying notes are an integral part of these consolidated financial statements.

6

RESOURCE REAL ESTATE INVESTORS 7, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

SEPTEMBER 30, 2016

(unaudited)

NOTE 1 - NATURE OF BUSINESS AND OPERATIONS

Resource Real Estate Investors 7, L.P. (“R-7” or the “Partnership”) is a Delaware limited partnership which owns and operates multifamily residential rental properties located in Texas and South Carolina (the “Properties”). The Partnership also may invest in interests in real estate mortgages and other debt instruments that are secured, directly or indirectly, by multifamily residential rental properties, although the Partnership held no such investments as of September 30, 2016 and December 31, 2015.  The Partnership was formed on March 28, 2008 and commenced operations on June 16, 2008.  The General Partner, Resource Capital Partners, Inc. (“RCP”, the “General Partner”, or the “GP”), is in the business of sponsoring and managing real estate investment limited partnerships and tenant in common programs. RCP contributed $1,000 in cash as its minimum capital contribution to the Partnership.  In addition, RCP held a 5.62% limited partnership interest in the Partnership at September 30, 2016 and December 31, 2015. RCP is an indirect wholly owned subsidiary of Resource America, Inc. (“RAI”), a company operating in the real estate, financial fund management and commercial finance sectors.

On May 22, 2016, RAI agreed to be acquired by C-III Capital Partners LLC ("C-III"), a leading commercial real estate services company engaged in a broad range of activities.  The merger closed on September 8, 2016, and as a result, C-III indirectly controls RCP and all of the partnership units of the Partnership currently owned by RCP. 

In accordance with the First Amended and Restated Agreement of Limited Partnership (the “Agreement”), the GP has the right to extend the Partnership term for a maximum of two years in the aggregate following the initial termination date. In February 2016, the GP extended the Partnership term for one year until March 28, 2017. The Partnership has begun the process of dissolution through the strategic disposal of assets. On March 19, 2015, the Partnership sold its interest in Woodland Hills. On December 1, 2015, the Partnership sold its interest in Tamarlane. On September 12, 2016, the Partnership sold its interest in Bent Oaks and Woodhollow. On September 30, 2016, the Partnership sold its interest in Woodland Village. The Partnership expects to to dispose of the remaining property in the fourth quarter of 2016.

The Agreement provides that income is allocated as follows: first, to the Limited Partners (“LPs”) and the GP (collectively, the “Partners”) in proportion to and to the extent of the deficit balances, if any, in their respective capital accounts; second, to the Partners in proportion to the allocations of Distributable Cash (as defined in the Agreement); and third, 100% to the LPs.  All losses are allocated as follows: first, 100% to the LPs until the LPs have been allocated losses equal to the excess, if any, of their aggregate capital account balances over the aggregate Adjusted Capital Contributions (as defined in the Agreement); second, to the Partners in proportion to and to the extent of their respective remaining positive capital account balances, if any; and third, 100% to the LPs.

Distributable cash from operations, payable monthly, as determined by the GP, is first allocated 100% to the LPs until the LPs have received their Preferred Return (as defined in the Agreement); and thereafter, 80% to the LPs and 20% to the GP.

Distributable cash from capital transactions, as determined by the GP, is first allocated 100% to the LPs until the LPs have received their Preferred Return; second, 100% to the LPs until their Adjusted Capital Contributions have been reduced to zero; and thereafter, 80% to the LPs and 20% to the GP.

The consolidated financial statements and the information and tables contained in the notes thereto as of September 30, 2016 are unaudited. The consolidated balance sheet as of December 31, 2015 was derived from the audited consolidated financial statements as of and for the year ended December 31, 2015. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). However, in the opinion of management, these interim financial statements include all the necessary adjustments to fairly present the results of the interim periods presented. The unaudited interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in the Partnership’s Annual Report on Form 10-K for the year ended December 31, 2015. The results of operations for the three and nine months ended September 30, 2016 may not necessarily be indicative of the results of operations for the full year ending December 31, 2016.

7

RESOURCE REAL ESTATE INVESTORS 7, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

SEPTEMBER 30, 2016

(unaudited)

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A summary of the significant accounting policies consistently applied in the preparation of the accompanying consolidated financial statements follows:

Principles of Consolidation

The consolidated financial statements include the accounts of the Partnership and its wholly-owned subsidiaries, as follows:

Subsidiaries	Number of Units	Location
RRE Tamarlane Holdings, LLC, or Tamarlane Apartments (“Tamarlane”) (1)	—	—
RRE Bent Oaks Holdings, LLC, or Bent Oaks Apartments (“Bent Oaks”) (2)	—	—
RRE Cape Cod Holdings,  LLC, or Cape Cod Apartments (“Cape Cod”)	212	San Antonio, TX
RRE Woodhollow Holdings, LLC, or Woodhollow Apartments (“Woodhollow”) (3)	—	—
RRE Woodland Hills Holdings, LLC (“Hills”) (4)	—	—
RRE Woodland Village Holdings, LLC, or Woodland Village Apartments (“Village”) (5)	—	—
	212

(1) Tamarlane, a 115 unit multifamily apartment complex in Maine, was sold on December 1, 2015.

(2) Bent Oaks, a 146 unit multifamily apartment complex in Texas, was sold on September 12, 2016.

(3) Woodhollow, a 108 unit multifamily apartment complex in Texas, was sold on September 12, 2016.

(4) Hills, a 228 unit multifamily apartment complex in Georgia, was sold on March 19, 2015.

(5) Village, a 308 unit multifamily apartment complex in South Carolina, was sold on September 30, 2016.

All intercompany transactions and balances have been eliminated in consolidation.

Assets Held for Sale

The Partnership presents the assets and liabilities of any rental properties which qualify as held for sale, separately in the consolidated balance sheets. The Partnership does not consider the sale as probable until the purchase and sale agreement has been signed by both parties. Real estate assets held for sale are measured at the lower of carrying amount or fair value less cost to sell. Both the real estate and the corresponding liabilities are presented separately in the Consolidated Balance Sheets. Subsequent to classification of an asset as held for sale, no further depreciation is recorded. The Partnership had one rental property included in assets held for sale as of September 30, 2016.

Geographic Concentration

As of September 30, 2016, the Partnership's net investments in real estate in San Antonio, Texas represented 100% of the Partnership’s total rental properties, net. As a result, the geographic concentration of the Partnership’s portfolio makes it particularly susceptible to adverse economic developments in San Antonio, Texas real estate markets. Any adverse economic or real estate developments in these markets could adversely affect the Partnership’s operating results.

Use of Estimates

The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period.  The Partnership estimates the allowance for uncollectible receivables and loan losses and adjusts the balance quarterly.  The Partnership also estimates the liability for real estate taxes on the properties and adjusts the balance quarterly if necessary. Actual results could differ from those estimates.

8

RESOURCE REAL ESTATE INVESTORS 7, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

SEPTEMBER 30, 2016

(unaudited)

Supplemental Disclosure of Cash Flow Information

During the nine months ended September 30, 2016 and 2015, the Partnership paid $1.1 million and $1.5 million, respectively, in cash for interest.

Advertising

The Partnership expenses advertising costs as they are incurred.  Advertising costs, which are included in rental operating expenses, totaled $45,000 and $93,000 for the three and nine months ended September 30, 2016 and $36,000 and $96,000 for the three and nine months ended September 30, 2015, respectively.

Deferred Financing Costs

Costs incurred to obtain financing have been capitalized and are being amortized over the term of the related debt using the effective yield method. In accordance with adoption of Financial Accounting Standard Board ("FASB") Accounting Standards Update ("ASU") 2015-03 "Simplifying the Presentation of Debt Issuance Costs", the Partnership has recorded deferred financing costs as a direct reduction of the related mortgage notes payable.

Sale of Rental Property

The Partnership recognized the gains on sales of rental properties separately in the Consolidated Statement of Operations. Sales of rental properties completed by the Partnership do not represent a significant strategic shift in operations and , accordingly, the Partnership does not present discontinued operations. For information regarding the sales of the rental properties, see Note 7 .

Income Taxes

Income taxes or credits resulting from earnings or losses are payable by, or accrue to the benefit of, the partners; accordingly, no provision has been made for income taxes in these consolidated financial statements.

The Partnership evaluates the benefits of tax positions taken or expected to be taken in its tax returns under a two-step recognition and measurement process.  Only the largest amount of benefits from the tax positions that will more likely than not be sustainable upon examination are recognized by the Partnership.  The Partnership does not have any unrecognized tax benefits, nor interest and penalties, recorded in the Consolidated Balance Sheets or Consolidated Statements of Operations and does not anticipate significant adjustments to the total amount of unrecognized tax benefits within the next twelve months.

The Partnership is subject to examination by the U.S. Internal Revenue Service and by the taxing authorities in those states in which the Partnership has significant business operations.  The Partnership is not currently undergoing any examinations by taxing authorities.  The Partnership may be subject to U.S. federal income tax and state/local income tax examinations for years 2013 through 2015.

Revenue Recognition

Revenue is primarily derived from the rental of residential housing units with lease agreement terms of generally one year or less.  The Partnership recognizes revenue in the period that rent is earned, which is on a monthly basis.  The Partnership recognizes rent as income on a straight-line basis over the term of the related lease.  Additionally, any incentives included in the lease are amortized on a straight-line basis over the term of the related lease.

Included within rental income are other income amounts such as utility reimbursements, late fees, parking fees, pet fees and lease application fees which are recognized when earned or received. For the three and nine months ended September 30, 2016 other income totaled $235,000 and $691,000, respectively. For the three and nine months ended September 30, 2015 other income totaled $229,000 and $636,000, respectively.

9

RESOURCE REAL ESTATE INVESTORS 7, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

SEPTEMBER 30, 2016

(unaudited)

Long-Lived Assets

The Partnership reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.  If it is determined that an asset’s estimated future cash flows will not be sufficient to recover its carrying amount, an impairment charge will be recorded to reduce the carrying amount for that asset to its estimated fair value. The Partnership has estimated that the future cash flows from its properties will be sufficient to recover their

carrying amounts and, as a result, the Partnership did not recognize any impairment losses with respect to its Properties for the

nine months ended September 30, 2016 and 2015.

Rental Properties

Rental properties are carried at cost, net of accumulated depreciation.  Buildings and improvements and personal property are depreciated for financial reporting purposes on the straight-line method over their estimated useful lives.  The value of in-place leases is amortized over the average remaining term of the respective leases on a straight-line basis.  Useful lives used for calculating depreciation for financial reporting purposes are as follows:

Buildings and improvements	5 - 27.5 years
Personal property	3 - 15 years

Tenant Receivables

Tenant receivables are stated at amounts due from tenants net of an allowance for uncollectible receivables.  Payment terms vary and receivables outstanding longer than the payment terms are considered past due.  The Partnership determines its allowance by considering a number of factors, including the length of time receivables are past due, security deposits held, the Partnership’s previous loss history, the tenants’ current ability to pay their obligations to the Partnership, the general condition of the economy and the condition of the industry as a whole.  The Partnership writes off receivables when they become uncollectible.  At September 30, 2016 and December 31, 2015, there were no allowances for uncollectible receivables.

Redemptions

The LPs may request redemption of their units at any time.  The Partnership has no obligation to redeem any units and will do so only at the GP’s discretion.  If the Partnership redeems units, the redemption price is generally the amount of the initial investment less all distributions from the Partnership to the LP, and less all organization and offering expenses charged to the LP.

Adoption of New Accounting Standards

In January 2015, FASB issued ASU No. 2015-01, "Income Statement - Extraordinary and Unusual Items (Subtopic 225-20), Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items" ("ASU No. 2015-01"). The amendments in ASU No. 2015-01 eliminate from GAAP the concept of extraordinary items. Although the amendment will eliminate the requirements for reporting entities to consider whether an underlying event or transaction is extraordinary, the presentation and disclosure guidance for items that are unusual in nature or occur infrequently will be retained and will be expanded to include items that are both unusual in nature and infrequently occurring.  ASU No. 2015-01 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2015. On January 1, 2016, the Partnership adopted ASU 2015-01 and the adoption had no impact on the Partnership's consolidated financial statements.

In February 2015, FASB issued ASU 2015-02, "Consolidation (Topic 810): Amendments to the Consolidation Analysis" (“ASU 2015-02”), which makes certain changes to both the variable interest model and the voting model, including changes to (1) the identification of variable interests (fees paid to a decision maker or service provider), (2) the variable interest

entity characteristics for a limited partnership or similar entity and (3) the primary beneficiary determination. ASU 2015-02 is effective for the Partnership beginning January 1, 2016. On January 1, 2016, the Partnership adopted ASU 2015-02 and the adoption had no impact on the Partnership's consolidated financial statements.

In April 2015, FASB issued ASU 2015-03, "Simplifying the Presentation of Debt Issuance Costs" ("ASU 2015-03"), which requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected. Upon adoption, the Partnership applied the new guidance on a retrospective basis and adjusted the balance sheet of each individual period presented to reflect the period-specific effects of applying the new guidance. This guidance

10

RESOURCE REAL ESTATE INVESTORS 7, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

SEPTEMBER 30, 2016

(unaudited)

was effective and was adopted by the Partnership on January 1, 2016 and as result the Partnership has reclassified $261,000 of unamortized debt issuance costs at December 31, 2015 from deferred financing costs to liabilities as reduction of the related mortgage notes payable

In September 2015, FASB issued ASU 2015-16, "Simplifying the Accounting for Measurement-Period Adjustments" ("ASU 2015-16"), which eliminates the requirement to retroactively revise comparative financial information for prior periods presented in financial statements due to changes in provisional amounts recorded for acquisitions in subsequent periods. Upon adoption, disclosure of the amounts recorded in current-period earnings that would have been recorded in previous reporting periods if the adjustment to the provisional amounts had been recognized at the acquisition date are required. ASU 2015-16 was effective and adopted by the Partnership on January 1, 2016 and the adoption had no impact on its consolidated financial statements.

Accounting Standards Issued But Not Yet Effective.

In May 2014, FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers” ("ASU No. 2014-09"), which will replace most existing revenue recognition guidance in GAAP.  The core principle of ASU No. 2014-09 is that an entity should recognize revenue for the transfer of goods or services equal to the amount that it expects to be entitled to receive for those goods or services.  ASU No. 2014-09 requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments. ASU No. 2014-09 will be effective for the Partnership beginning January 1, 2018, including interim periods in 2018, and allows for both retrospective and prospective methods of adoption. The Partnership is in the process of determining the method of adoption and assessing the impact of this guidance on the Partnership’s consolidated financial position, results of operations and cash flows.

In August 2014, FASB issued ASU No. 2014-15, "Presentation of Financial Statements-Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern" ("ASU No. 2014-15"). Under the new guidance, an entity should evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued. The guidance is effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. Early adoption is permitted. The adoption of the new requirements is not expected to have a significant impact on the Partnership's consolidated financial statements.

In February 2016, FASB issued ASU No. 2016-02, "Leases" ("ASU No. 2016-02"). which is intended to improve financial reporting about leasing transactions and requires organizations that lease assets to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases. ASU No. 2016-02 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The Partnership is continuing to evaluate this guidance; however, it does not expect the adoption of ASU No. 2016-02 to have a significant impact on its consolidated financial statements.

In June 2016, FASB issued ASU No. 2016-13 “Financial Instruments - Credit Losses” ("ASU No. 2016-13") which requires measurement and recognition of expected credit losses for financial assets held. The standard update is effective for the Partnership beginning January 1, 2019. The Partnership is continuing to evaluate this guidance; however, it does not expect the adoption of ASU No. 2016-13 to have a significant impact on its consolidated financial statements.

In August 2016, FASB issued ASU No. 2016-15 "Classification of Certain Cash Receipts and Cash Payments" ("ASU No. 2016-13"), which addresses eight specific cash flow issues with the objective of reducing existing diversity in practice. ASU 2016-13 has been early adopted by the Partnership. As result of adoption, the Partnership has classified cash paid on early extinguishment of debt as cash used in financing activities.

NOTE 3 - RESTRICTED CASH

Restricted cash represents escrow deposits with lenders to be used to pay real estate taxes, insurance, and capital improvements.  A summary of the components of restricted cash follows (in thousands):

11

RESOURCE REAL ESTATE INVESTORS 7, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

SEPTEMBER 30, 2016

(unaudited)

	September 30, 2016		December 31, 2015
Real estate taxes	$	264	$	1,034
Insurance	37		180
Capital improvements	307		386
Total	$	608	$	1,600

12

RESOURCE REAL ESTATE INVESTORS 7, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

SEPTEMBER 30, 2016

(unaudited)

NOTE 4 - MORTGAGE NOTES PAYABLE, NET

The following is a summary of mortgage notes payable, net (in thousands):

	September 30, 2016							December 31, 2015
Property	Mortgage balance		Deferred Finance Costs, Net (1)			Carrying Value		Mortgage balance		Deferred Finance Costs, Net(1)			Carrying Value
Bent Oaks	$	—	$	—		$	—	$	5,731	$	(50	)	$	5,681
Cape Cod (3)	5,878		(38		)	5,840		5,951		(51		)	5,900
Woodhollow	—		—			—		4,916		(43		)	4,873
Village	—		—			—		9,293		(117		)	9,176
Total	$	5,878	$	(38	)	$	5,840	$	25,891	$	(261	)	$	25,630

(1) Deferred financing costs include unamortized costs incurred to obtain financing which are being amortized over the term of the related debt. 

Bent Oaks and Woodhollow were sold on September 12, 2016. Woodland Village was sold on September 30, 2016. Proceeds from these sales were used to pay the outstanding borrowings. The Partnership incurred losses of $1.8 million on extinguishment of debt due to prepayment penalties.

The following table includes additional information about the Partnership's mortgage notes payable, net (in thousands):

Property Collateral	Maturity Date		Annual Interest Rate	Monthly Debt Service
Cape Cod (3)	01/01/2019	(2)	5.91%	$	38	(1)

(1) Monthly payment includes principal and interest. Interest is at a fixed rate.

(2) The Partnership has an option to extend the maturity date for an additional one year to January 1, 2020. During the extension

period, the interest rate would convert to the Federal Home Loan Mortgage Corporation Bill Index Rate plus 2.5%.

(3) The Property qualifies as held for sale and it is separately presented in the consolidated balance sheet.

Annual contractual principal payments on the mortgage notes payable for the future years ending September 30, are as follows (in thousands):

2017	$	104
2018	110
2019	5,664
	$	5,878

The mortgage notes payable are with recourse only to the Properties securing them subject to certain limited standard exceptions, as defined in the mortgage notes, which the GP has guaranteed with respect to each property.  These exceptions are referred to as “carveouts”.  In general, carveouts relate to damages suffered by the lender for a subsidiary’s failure to pay rents, insurance or condemnation proceeds to the lender, to pay water, sewer and other public assessments or charges, to pay environmental compliance costs or to deliver books and records, in each case as required in the loan documents.  The exceptions also require the GP to guarantee payment of audit costs, lender’s enforcement of its rights under the loan documents and payment of the loan if the subsidiary voluntarily files for bankruptcy or seeks reorganization, or if a related party of the subsidiary does so with respect to the subsidiary.

Deferred financing costs include unamortized costs incurred to obtain financing which are being amortized over the term of the related debt.  Accumulated amortization as of September 30, 2016 and December 31, 2015 was $136,000 and $486,000, respectively.  Estimated amortization of existing deferred financing costs for the next three years ending September 30, is as follows (in thousands):

13

RESOURCE REAL ESTATE INVESTORS 7, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

SEPTEMBER 30, 2016

(unaudited)

2017	$	17
2018	16
2019	5
	$	38

NOTE 5 - CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

     In the ordinary course of its business operations, the Partnership has ongoing relationships with several related entities.

Substantially all of the receivables from related parties represents escrow funds held by RAI for self insurance. The Partnership's properties participate in insurance pools with other properties directly and indirectly managed by RAI for both property insurance and general liability. RAI holds the escrow funds related to the insurance pools on its books. The pool for the property insurance covers losses up to $2.5 million and the pool for the general liability covers losses up to the first $50,000 per incident. Catastrophic insurance would cover property losses in excess of the insurance pool up to $140 million. Therefore, unforeseen or catastrophic losses in excess of the Partnership's insured limits could have a material adverse effect on the Partnership's financial condition and operating results. In the nine months ended September 30, 2016 the Partnership funded $136,523 into the insurance pools.

On May 22, 2016, RAI agreed to be acquired by C-III Capital Partners LLC ("C-III"), a leading commercial real estate services company engaged in a broad range of activities.  The merger closed on September 8, 2016, and as a result, C-III indirectly controls RCP and all of the partnership units of the Partnership currently owned by RCP. 

RCP is entitled to receive an annual investment management fee, payable monthly, equal to 1% of the gross offering proceeds that have been deployed in real estate investments from the offering of partnership units, net of any amounts otherwise attributable to LP interests owned by RCP.  During the term of the Partnership, RCP must subordinate up to 100% of its annual investment management fee to the receipt by the LPs of their Preferred Return.  As of September 30, 2016 and December 31, 2015, the amount of unpaid subordinated investment management fees totaled $149,000 and $15,000, respectively. During the nine months ended September 30, 2016 and 2015 the Partnership paid investment management fees totaling $0 and $1.9 million, respectively.

A wholly-owned subsidiary of RCP, Resource Real Estate Management, LLC (“RREML”) is entitled to receive property and debt management fees. RREML engaged Resource Real Estate Management, Inc (“RREMI”), an indirect wholly owned subsidiary of RAI, to manage the Partnership’s Properties. As of September 30, 2016 and December 31, 2015, property management fees due totaled $37,000 and $62,000, respectively. Because the Partnership has not acquired any real estate debt investments, there were no debt management fees as of September 30, 2016 and December 31, 2015.

During the ordinary course of business, RCP and RREMI advance funds for ordinary operating expenses on behalf of the Properties. As of September 30, 2016 and December 31, 2015, advances due totaled $35,000 and $61,000, respectively. Total reimbursable operating expenses incurred during the three months ended September 30, 2016 and September 30, 2015 were $468,000 and $577,000, respectively. Total reimbursable operating expenses incurred during the nine months ended September 30, 2016 and September 30, 2015 were $1.3 million and $1.6 million, respectively. Reimbursed expenses include payroll and miscellaneous operating expenses. Reimbursed operating expenses are included in property rental operating expenses in the consolidated statements of operations.

The Partnership pays investment management fees and property management fees to related parties.  These expenses are summarized as follows (in thousands):

14

RESOURCE REAL ESTATE INVESTORS 7, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

SEPTEMBER 30, 2016

(unaudited)

	Three Months Ended   September 30,				Nine Months Ended   September 30,
	2016		2015		2016		2015
RCP:
Investment management fees (1)	$	41	$	59	$	134	$	196
RREML:
Property management fees - 5% of gross cash receipts (2)	$	100	125		$	300	399
	$	141	$	184	$	434	$	595

(1) RCP is entitled to receive an annual investment management fee, payable monthly, equal to 1% of the gross proceeds that have been deployed in real estate investments from the offering of partnership units, net of any LP interest owned by RCP. During the term of the Partnership, RCP must subordinate up to 100% of its annual investment management fee to the receipt by the LPs of their Preferred Return.

(2) RREML is entitled to receive monthly property management fees equal to 5% of the gross operating revenues from the Partnership’s 100% owned Properties for managing or obtaining and supervising third party managers.

NOTE 6 - FAIR VALUE OF FINANCIAL INSTRUMENTS

In analyzing the fair value of its financial instruments disclosed or accounted for on a fair value basis, the Partnership follows the fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.  The Partnership determines fair value based on quoted prices when available or, if quoted prices are not available, through the use of alternative approaches, such as discounting the expected cash flows using market interest rates commensurate with the credit quality and duration of the financial instruments.  The fair value of cash, tenant receivables and accounts payable approximate their carrying values due to their short term nature.  The hierarchy followed defines three levels of inputs that may be used to measure fair value:

Level 1 - Quoted prices in active markets for identical assets that the reporting entity has the ability to access at the measurement date. 

Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or can be corroborated with observable market data for substantially the entire contractual term of the asset.

Level 3 - Unobservable inputs that reflect the entity’s own assumptions about the assumptions that market participants would use in the pricing of the asset and are consequently not based on market activity, but rather through particular valuation techniques.

The following methods and assumptions were used to estimate the fair value of the Partnership’s financial instruments:

• Mortgage notes payable.  Rates currently available to the Partnership for debt with similar terms and remaining maturities are used to estimate the fair value of existing debt.

The estimated fair value measurements of the mortgage notes payable are classified within level 3 of the fair value hierarchy.

15

RESOURCE REAL ESTATE INVESTORS 7, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

SEPTEMBER 30, 2016

(unaudited)

The unpaid principle balance and estimated fair values of the Partnership’s financial instruments were as follows (in thousands):

	September 30, 2016				December 31, 2015
	Mortgage Balance		Estimated Fair Value		Mortgage Balance		Estimated Fair Value
Mortgage notes payable:
Bent Oaks	—		—		5,731		6,121
Cape Cod	$	5,878	$	6,352	$	5,951	$	6,343
Woodhollow	—		—		4,916		5,234
Village	—		—		9,293		9,305
Total mortgage notes payable	$	5,878	$	6,352	$	25,891	$	27,003

NOTE 7 - DISPOSITION OF PROPERTIES

The following table presents details of the Partnership's disposition activity during the year ended December 31, 2015 and nine months ended September 30, 2016 (in thousands):

Multifamily Community	Location	Sale Date	Contract Sales Price		Gain on Sale
2016 Dispositions:
Bent Oaks	Austin, TX	9/12/2016	$	15,765	$	9,108
Woodhollow	Austin, TX	9/12/2016	12,420		6,685
Woodland Village	Columbia, SC	9/30/2016	20,650		8,703
			$	48,835	$	24,496
2015 Dispositions:
Hills	Decatur, Georgia	3/19/2015	$	25,200	$	9,603
			$	25,200	$	9,603

The table below presents the revenues and net income attributable to properties sold for the three and nine months ended September 30, 2016 and 2015 (in thousands):

	Revenue Attributable to Properties Sold				Net Income Attributable to Properties Sold
Multifamily Community	Three months ended September 30, 2016		Nine months ended September 30, 2016		Three months ended September 30, 2016		Nine months ended September 30, 2016
2016 Dispositions:
Bent Oaks	$	359	$	1,239	$	8,389	$	8,366
Woodhollow	305		1,031		6,059		6,003
Woodland Village	769		2,248		8,254		8,250
	$	1,433	$	4,518	$	22,702	$	22,619
	Three months ended September 30, 2015		Nine months ended September 30, 2015		Three months ended September 30, 2015		Nine months ended September 30, 2015
2015 Dispositions:
Hills	—		$	602	—		$	9,742
	$	—	$	602	$	—	$	9,742

16

RESOURCE REAL ESTATE INVESTORS 7, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

SEPTEMBER 30, 2016

(unaudited)

NOTE 8 - SUBSEQUENT EVENTS

On October 7, 2016, the Partnership signed a contract to sell Cape Cod Apartments for $15.7 million. The Partnership expects to record gain on the sale during the three months ended December 31, 2016.

On October 14, 2016, the Partnership distributed $28.5 million due to property sales. On October 17, 2016, the Partnership distributed $789,000 to the General Partner for a promote fee.

The Partnership has evaluated subsequent events through the date these consolidated financial statements were issued and determined that no events, other than those disclosed above, have occurred which would require an adjustment to the consolidated financial statements.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (unaudited)

This report contains certain forward-looking statements.  Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts.  In some cases, you can identify forward-looking statements by terms such as “anticipate,” “believe,” “could,” “estimate,” “expects,” “intend,” “may,” “plan,” “potential,” “project,” “should,” “will” and “would” or the negative of these terms or other comparable terminology.  Such statements are subject to the risks and uncertainties inherent in partnerships that invest in real estate and real estate assets, including those referred to in our filings under the Securities Exchange Act of 1934.  These risks and uncertainties could cause actual results to differ materially.  Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof.  We undertake no obligation to publicly revise or update these forward-looking statements to reflect events or circumstances after the date of this report, except as may be required under applicable law.

Overview

We are a Delaware limited partnership that was formed on March 28, 2008 and commenced operations on June 16, 2008.  Through wholly owned subsidiaries, we own in fee, operate and invest in multifamily residential rental property located in San Antonio, Texas, which we refer to as our Property.   

We have begun the process of dissolution through the strategic disposal of assets. As of September 30, 2016, we own one multifamily residential rental property through our 100% owned subsidiary. On March 19, 2015, the Partnership sold its interest in Woodland Hills. On December 1, 2015, the Partnership sold its interest in Tamarlane. On September 12, 2016, the Partnership sold its interest in Bent Oaks and Woodhollow. On September 30, 2016, the Partnership sold its interest in Woodland Village. We expect to dispose the remaining asset in the fourth quarter 2016.

The following table presents our multifamily residential rental properties:

Subsidiary / Property	Purchase Date	Leverage Ratio (1)	Number of Units	Property Location
RRE Tamarlane Holdings, LLC, or Tamarlane (2)	07/31/2008	—	—	—
RRE Bent Oaks Holdings, LLC, or Bent Oaks (3)	12/10/2008	—	—	—
RRE Cape Cod Holdings, LLC, or Cape Cod	12/10/2008	57%	212	San Antonio, TX
RRE Woodhollow Holdings, LLC, or Woodhollow (4)	12/12/2008	—	—	—
RRE Woodland Hills Holdings, LLC, or Hills (5)	12/19/2008	—	—	—
RRE Woodland Village Holdings, LLC, or Village (6)	03/07/2012	—	—	—
			212

(1) Original face value of mortgage divided by total property capitalization, including reserves, escrows, fees and closing costs.

(2) Tamarlane, a 115 unit multifamily apartment complex in Maine, was sold on December 1, 2015.

(3) Bent Oaks, a 146 unit multifamily apartment complex in Texas, was sold on September 12, 2016.

(4) Woodhollow, a 108 unit multifamily apartment complex in Texas, was sold on September 12, 2016.

(5) Hills, a 228 unit multifamily apartment complex in Georgia, was sold on March 19, 2015.

(6) Woodland Village, a 308 unit multifamily apartment complex in South Carolina, was sold on September 30, 2016.

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The following table sets forth operating statistics about our multifamily residential rental properties. This table does not include information with respect to two properties, Woodland Hills and Tamarlane, which were sold during fiscal year 2015:

	Average Occupancy Rate (1)				Average Effective Rent per Square Foot (2)				Ratio of Operating Expense to Revenue (3)
	Three Months Ended   September 30,				Three Months Ended   September 30,				Three Months Ended   September 30,
Property	2016		2015		2016		2015		2016		2015
Bent Oaks	92.8	%	94.0	%	$	1.01	$	1.26	76	%	66	%
Cape Cod	93.9	%	95.0	%	$	1.05	$	1.02	62	%	72	%
Woodhollow	94.1	%	94.6	%	$	0.90	$	1.10	74	%	68	%
Village	93.5	%	94.6	%	$	0.59	$	0.55	56	%	65	%

	Average Occupancy Rate (1)				Average Effective Rent per Square Foot (2)				Ratio of Operating Expense to Revenue (3)
	Nine Months Ended September 30, 2016				Nine Months Ended September 30, 2016				Nine Months Ended September 30, 2016
Property	2016		2015		2016		2015		2016		2015
Bent Oaks	92.5	%	92.3	%	$	1.17	$	1.22	65	%	59	%
Cape Cod	94.2	%	94.0	%	$	1.05	$	0.99	62	%	61	%
Woodhollow	93.9	%	94.0	%	$	1.04	$	1.07	64	%	63	%
Village	93.6	%	94.6	%	$	0.57	$	0.55	59	%	61	%

(1) Number of occupied units divided by total units adjusted for any unrentable units; average calculated on a weekly basis.

(2) Average rental revenue divided by total rentable square footage.  We calculate average rental revenue by dividing gross rental revenue by the number of months in the period.

(3) Rental operating expenses, excluding certain one-time expenses funded from reserves for capital expenditures, and general and administrative expenses, excluding asset management fees and transaction expenses, as a percentage of rental income, excluding any adjustment for concessions.

Results of Operations

We generate our income from the net revenues we receive from our Properties. In addition to the rental revenues we also generate funds from the sales or refinancing of our Properties as seen with the sale of the Hills in the first quarter of 2015, the sale of Tamarlane in the fourth quarter of 2015 and the sale of Bent Oaks, Woodhollow and Woodland Village in September of 2016. Should economic conditions in the areas in which our remaining property is located deteriorate, we could experience lower occupancy, lower rental revenues and higher operating costs, all of which could harm our operations and financial condition, reduce the value of our Properties and limit our ability to make distributions to our limited partners.

Our operating results and cash flows from our Properties are affected by four principal factors:

• occupancy and rental rates,

• property operating expenses,

• interest rates on the related financing,

• capital expenditures, and

• net proceeds from property dispositions.

The amount of rental revenues from our Properties depends upon their occupancy rates and concessions granted.  We seek to maximize our rental revenues through aggressive property-level programs, including, in particular, our Lease Rent Optimizer, or LRO, program which includes rent concessions.  Under our LRO program, we seek to price our rents for apartment units on a daily basis, based upon inventory in the marketplace and competitors’ pricing.  Our Properties experienced an overall decrease in the average occupancy rate during the nine months ended September 30, 2016 of approximately 0.18% with an average occupancy of 93.6% as compared to an average occupancy rate of 93.7% during the same period of 2015. Our Properties average effective

19

rent per square foot of remained the same during the nine months ended September 30, 2016 compared to the same period in 2015 for the same Properties.

We seek to control operating expenses through our General Partner’s automated purchase order system that compares actual to budgeted expenses and requires management approval of variances, and through the use of third-party service providers to seek best available pricing.

Our existing financing is at fixed rates of interest and, accordingly, our interest cost has remained relatively stable during

the period of our ownership of the Properties. Based upon current economic conditions we expect that our financing costs will

remain relatively stable during fiscal year 2016.

Three Months Ended September 30, 2016 Compared to Three Months Ended September 30, 2015

The following table sets forth the results of our operations for the periods indicated (in thousands, except per unit data):

	September 30,						Increase (Decrease)
	2016			2015			Amount			Percent
Revenues:
Rental income	$	1,951		2,540			(589		)	(23	)%
Expenses:
Rental operating	1,216			1,364			(148		)	(11	)%
Management fees – related parties	141			184			(43		)	(23	)%
General and administrative	119			100			19			19	%
Depreciation and amortization	102			499			(397		)	(80	)%
Total expenses	1,578			2,147			(569		)	(27	)%
Income before other income (expense)	373			393			(20		)	(5	)%
Other income (expense):
Interest expense, net	(439		)	(433		)	(6		)	1	%
Gain on sale of rental properties	24,499			—			24,499			100	%
Loss on extinguishment of debt	(1,781		)	—			(1,781		)	100	%
Loss on disposal of fixed assets	—			(7		)	7			(100	)%
Total other income (expenses)	22,279			(440		)	22,719
Net income (loss)	$	22,652		$	(47	)	$	22,699		48,300	%
Weighted average number of limited partner units outstanding	3,270			3,270
Net income (loss) per weighted average limited partner unit, basic and diluted	$	6.93		$	(0.01	)

Revenues

We attribute the $589,000 decrease in revenues principally to the sale of the Tamarlane property in the fourth quarter of 2015. During the three months ended September 30, 2015, revenue attributable to Tamarlane was $515,000. Average effective rent per square foot and occupancy rates have varied within our expected range.

Expenses

We attribute the $569,000 decrease in expenses principally to:

20

• a $148,000 decrease in rental operating expenses primarily due to:

▪ a $31,000 decrease in rental operating expenses due to the sale of the Tamarlane property in the fourth quarter of 2015,

▪a $25,000 decrease in property and general liability insurance claims across the RAI managed portfolio,

▪a $92,000 decrease in real estate taxes primarily attributable to the sale of Tamarlane in the fourth quarter of 2015.

• a $43,000 decrease in management fees corresponding to the decrease in revenues attributable to the sale of the Tamarlane property in the fourth quarter of 2015 and sale of Bent Oaks, Woodhollow and Woodland Village in September 2016.

•a $397,000 decrease in depreciation and amortization related to the sale of the Tamarlane property in the fourth quarter of 2015 and sale of Bent Oaks, Woodhollow and Woodland Village in September 2016 as depreciation was ceased as the assets were considered held for sale.

Other income (expense)

• Gains on sale of rental properties included in Other income (expense) increased by $24.5 million for the three months ended September 30, 2016 compared to the three months ended September 30, 2015 as detailed below (in thousands):

Multifamily Community	Location	Sale Date	Contract Sales Price		Gain on Sale
2016 Dispositions:
Bent Oaks	Austin, TX	9/12/2016	$	15,765	$	9,108
Woodhollow	Austin, TX	9/12/2016	12,420		6,685
Woodland Village	Columbia, SC	9/30/2016	20,650		8,703
			$	48,835	$	24,496
2015 Dispositions:
Hills	Decatur, Georgia	3/19/2015	$	25,200	$	9,603
			$	25,200	$	9,603

Additionally, the Partnership incurred losses of $1.8 million on extinguishment of debt as a result of prepayments on outstanding borrowings.

21

Nine Months Ended September 30, 2016 Compared to Nine Months Ended September 30, 2015

The following table sets forth the results of our operations for the periods indicated (in thousands, except per unit data):

	September 30,						Increase (Decrease)
	2016			2015			Amount		Percent
Revenues:
Rental income	$	6,052		$	7,995		(1,943	)	(24	)%
Expenses:
Rental operating	3,552			4,053			(501	)	(12	)%
Management fees – related parties	434			595			(161	)	(27	)%
General and administrative	408			438			(30	)	(7	)%
Depreciation and amortization	855			1,495			(640	)	(43	)%
Total expenses	5,249			6,581			(1,332	)	(20	)%
Income before other income (expense)	803			1,414			(611	)	(43	)%
Other income (expense):
Interest expense, net	(1,155		)	(1,546		)	391		25	%
Loss on extinguishment of debt	(1,781		)	—			(1,781	)	100	%
Gain on sale of rental properties	24,509			9,603			14,906		155	%
Loss on disposal of fixed assets	(2		)	(7		)	5		(71	)%
Total other income (expenses)	$	21,571		$	8,050		13,521		168	%
Net income	$	22,374		$	9,464		12,910		136	%
Weighted average number of limited partner units outstanding	3,270			3,270
Net income per weighted average limited partner unit, basic and diluted	$	6.84		$	2.89

Revenues

We attribute the $1.9 million decrease in revenues principally to the sale of the Hills and Tamarlane properties in the

first and fourth quarters of 2015, respectively as well as sale of Bent Oaks, Woodhollow and Woodland Village in September 2016. During the nine month ended September 30, 2015 revenue attributable the Hills and Tamarlane were $602,000 and $1.5 million, respectively. Average effective rent per square foot and occupancy rates have varied within our expected range.

Expenses

We attribute the $1.3 decrease in expenses principally to:

• a $501,000 decrease in rental operating expenses primarily due to:

▪ a $33,000 decrease in property and general liability insurance claims across the RAI managed portfolio,

▪ a $320,000 decrease in rental operating expenses due to sale of the Hills and Tamarlane in the first and fourth quarters of 2015, respectively, and sale of Bent Oaks, Woodhollow and Woodland Village in September 2016.

22

▪ a $149,000 decrease in real estate taxes primarily attributable to the sale of the Properties in 2015 and September 2016.

• a $161,000 decrease in management fees corresponding to the decrease in revenues attributable to the sales of both the Hills and Tamarlane.

• a $640,000 decrease in depreciation and amortization related to the sale of the Hills and Tamarlane as well as sale of Bent Oaks, Woodhollow and Woodland Village in September 2016.

Other income (expense)

• a $391,000 decrease in interest expense primarily is related to the payoff of both the Hills and Tamarlane mortgages upon the sales of the Properties.

• Gains on sale of rental properties included in Other income (expense) increased by $14.9 million for the nine months ended September 30, 2016 compared to the nine months ended September 30, 2015 as detailed below (in thousands):

Multifamily Community	Location	Sale Date	Contract Sales Price		Gain on Sale
2016 Dispositions:
Bent Oaks	Austin, TX	9/12/2016	$	15,765	$	9,108
Woodhollow	Austin, TX	9/12/2016	$	12,420	$	6,685
Woodland Village	Columbia, SC	9/30/2016	$	20,650	$	8,703
			$	48.835	$	24.496
2015 Dispositions:
Hills	Decatur, Georgia	3/19/2015	$	25,200	$	9,603
			$	25,200	$	9,603

Additionally, the Partnership incurred losses of $1.8 million on extinguishment of debt as a result of prepayments on outstanding borrowings.

Liquidity and Capital Resources

The following table sets forth our sources and uses of cash (in thousands):

	Nine Months Ended
	September 30,
	2016			2015
Net cash provided by operating activities (1)	$	68		$	36
Net cash provided by investing activities	27,188			11,396
Net cash (used in) financing activities	(2,654		)	(10,515		)
Net increase in cash	$	24,602		$	917

(1) Includes changes in operating assets and liabilities.

Our liquidity needs consist principally of funds used to pay the Properties’ debt service, operating expenses, capital

expenditures and monthly distributions to the limited partners. Our ability to meet our liquidity needs will be subject to our ability to generate cash from both operations and sales, and to control property operating expenses. The ability to generate cash from operations will depend on the occupancy rates, rates charged to tenants compared with competing properties in the area and the ability of tenants to pay rent. Occupancy rates can fluctuate based on changes in local market conditions where the Properties are located such as: excessive building resulting in an oversupply of similar properties, deterioration of surrounding areas, a decrease in market rates or local economic conditions including unemployment rates. The rental rates charged to tenants compared to

23

competing properties can be impacted by a lack of perceived safety, convenience and attractiveness of a property. We have retained a portion of the proceeds from the sales of the the Properties to ensure adequate operating liquidity for the remaining term of the Partnership, pay off related debt and make distributions to investors. We also have retained a portion of the proceeds from the sales of the Properties to ensure adequate funding for any future capital expenditures which we may determine to be necessary to position the remaining properties for eventual sale.

The following table sets forth the capital expenditures incurred during the nine months ended September 30, 2016, which are discretionary in nature (in thousands):

Subsidiaries	Capital Expenditures
Bent Oaks	26
Cape Cod	31
Woodhollow	23
Village	216
Total	$	296

We have begun the process of dissolution through the strategic disposal of assets. As of September 30, 2016, we own one multifamily residential rental Property through our 100% owned subsidiary, which is expected to be disposed of in the fourth quarter of 2016.

In connection with the acquisitions of our Properties, we have $5.9 million carrying value of total mortgage financing outstanding. For information regarding mortgage financing with respect to each Property, see Note 4 of the notes to our consolidated financial statements.

Our payables to related parties consist of primarily of investment management fees due to our General Partner, payable monthly, equal to 1% of the gross offering proceeds, net of any limited partnership interest owned by the General Partner.  The General Partner must subordinate up to 100% of its annual investment management fee to the receipt by the limited partners of their Preferred Return. The limited partners partially received their Preferred Return during 2015 due to the sale of the Hills in the amount of $1.9 million. The investment management fee continues to accrue for the remaining rental properties.

The aggregate debt service requirement for our loans on the one remaining asset for the twelve months ending September 30,2017 is $453,000, including principal payments of $104,000.

Redemption of Units

We are permitted, in our General Partner’s sole discretion, to redeem units upon a unitholder’s request.  However, we have no obligation to redeem units at any time, and we can decline to redeem units for any reason.  Cumulatively through September 30, 2016, a total of 5,000 units have been redeemed at an aggregate price of $46,710, although no units were redeemed in the nine months then ended.

Legal Proceedings

We are a party to various routine legal proceedings arising out of the ordinary course of our business.  Management believes that none of these actions, individually or in the aggregate, will have a material adverse effect on our financial condition or results of operations.

Critical Accounting Policies

The discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America, or GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of our assets, liabilities, revenues and cost and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, we evaluate our estimates, including those related to certain accrued liabilities. We base our estimates on historical experience and on various other assumptions that we believe reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

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For a discussion of our critical accounting policies and estimates, see the discussion in our Annual Report on Form 10-K for the year ended December 31, 2015.

Off-Balance Sheet Arrangements

As of September 30, 2016 and December 31, 2015, we did not have any off-balance sheet arrangements or obligations, including contingent obligations, other than guarantees by the General Partner of certain limited standard expectations to the non-recourse nature of the mortgage notes which are secured by the Properties.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS

Omitted pursuant to Regulation S-K, Item 305(e).

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our periodic reports under the Securities Exchange Act of 1934, as amended, or the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our General Partner, including its chief executive officer and its chief financial officer, as appropriate, to allow timely decisions regarding required disclosure.  In designing and evaluating the disclosure controls and procedures, our management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Under the supervision of the chief executive officer and chief financial officer of our General Partner, we have carried out an evaluation of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report.  Based upon that evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures are effective at the reasonable assurance level.

Changes in Internal Control over Financial Reporting

There has been no change in our internal control over financial reporting that occurred during the quarter ended September 30, 2016 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

25

PART II

OTHER INFORMATION

ITEM 6.        EXHIBITS

Exhibit No.	Description
3.1	Amended and Restated Agreement of Limited Partnership. (1)
3.2	Certificate of Limited Partnership. (1)
4.1	Forms of letters sent to limited partners confirming their investment. (1)
10.1	Agreement of Purchase and Sale - Casco Bay Portfolio (Tamarlane) (incorporated by reference to the Partnership's Annual Report on Form 10-K filed March 29, 2016)
10.2	Agreement of Purchase and Sale - The Hills (incorporated by reference to the Partnership's Annual Report on Form 10-K filed March 29, 2016)
10.3	Agreement of Purchase and Sale - Bent Oaks
10.4	Agreement of Purchase and Sale - Woodhollow
10.5	Agreement of Purchase and Sale - Woodland Village
31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of Chief Executive Officer pursuant to Section 1350 18 U.S.C., as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of Chief Financial Officer pursuant to Section 1350 18 U.S.C., as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.1	Interactive Data Files

(1) Filed previously as an exhibit to the Partnership’s registration statement on Form 10 for the year ended December 31, 2008 and by this reference incorporated herein.

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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 thereunto duly authorized.

	RESOURCE REAL ESTATE INVESTORS 7, L.P.
	By:  Resource Capital Partners, Inc., its general partner
November 14, 2016	By:         /s/ Kevin M. Finkel
	KEVIN M. FINKEL
	President
	(Principal Executive Officer)

November 14, 2016	By:        /s/ Steven R. Saltzman
	STEVEN R. SALTZMAN
	Vice President – Finance
	(Principal Financial and Accounting Officer)

27

EX-10.3

AGREEMENT OF PURCHASE AND SALE

THIS AGREEMENT OF PURCHASE AND SALE (this “Agreement”) is made as of July 28, 2016 (the “Effective Date”), by and between RRE BENT OAKS HOLDINGS, LLC, a Delaware limited liability company, having an address at c/o Resource Real Estate, Inc., 1845 Walnut Street, 18^th Floor, Philadelphia, PA 19103 (“Seller”), and FIRMUS EQUITY PARTNERS, LLC, a Kansas limited liability company, having an address at 770 North Sherman, #102, Denver, CO 80203 (“Buyer”).

WITNESSETH:

In consideration of the covenants and provisions contained herein, and intending to be legally bound hereby, the parties hereto agree as follows:

1.Agreement to Sell and Purchase. Seller agrees to sell to Buyer, and Buyer agrees to purchase from Seller, subject to all of the terms and conditions of this Agreement, all of Seller’s right, title and interest in and to the project commonly known as “Bent Oaks Apartments” containing approximately 146 apartment units located at 3600 North Hills Drive, Austin, TX 78731 and consisting of the following (collectively, the “Property”):

(a)
Real Property. All of that certain tract of land more fully described on Exhibit A to this Agreement (the “Land”) together with all improvements thereon (the “Improvements”), and all appurtenances thereto (including, without limitation, all easements, rights‑of‑way, water rights, privileges, licenses, and other rights and benefits belonging to, running with the owner of, or in any way relating to the aforesaid tract of land and all trees, shrubbery and plants); together with all rights, title and interest of Seller in and to any land lying in the bed of any street, opened or proposed, in front of or abutting or adjoining the aforesaid tract of land, and all right, title and interest of Seller in and to any unpaid award for the taking by eminent domain of any part of the aforesaid tract of land or for damage to such tract of land by reason of a change of grade of any street (collectively, the “Real Property”);

(b)
Personal Property. All fixtures, furniture, equipment, supplies and other tangible and intangible personal property attached or appurtenant to, or located in or on, or used solely in connection with the Real Property, which are owned by Seller excluding, however, any “Thin Client Solutions” hardware and software and any items upon which appears the “Resource Residential” logo, including without limitation, any door rugs, portable movie screens, marketing brochures and other literature (collectively, the “Personal Property”);

(c)
Leases. The Seller’s interest in all leases, tenancies, licenses and other agreements for the use or occupancy of any portion of the Property and all guaranties in connection therewith (the “Leases”); and

(d)
Contracts. To the extent assignable, the Seller’s interest in all leasing, service, supply and maintenance contracts relating to the Land, Improvements, or Personal Property (collectively, the “Contracts”), but only to the extent Buyer elects to have such Contracts assigned to it in accordance with Section 5(c) hereof.

2.
Purchase Price; Deposit. The purchase price (the “Purchase Price”) for the Property, subject to

LW:1033795.4

adjustments as provided in this Agreement, shall be FIFTEEN MILLION FIVE HUNDRED SIXTY-FIVE THOUSAND AND 00/100 DOLLARS ($15,565,000.00), and shall be paid as follows:

(a)
Three Hundred Fifty Thousand and 00/100 Dollars ($350,000.00) (the “Deposit”) to be paid within three (3) business days after the Effective Date in immediately available funds and delivered to Heritage Title Company of Austin, Inc., 401 Congress, Suite 1500, Austin, TX 78701, Attention: John P. Bruce, Phone: (512) 505-5012, Facsimile: (512) 380-8812; Email: jbruce@heritage-title.com (“Escrow Holder” or “Title Company”).

(b)
The Deposit shall be held by Escrow Holder in one or more interest bearing federally‑insured money market accounts acceptable to both Seller and Buyer. As used in this Agreement, “Deposit” shall mean and include the Deposit as defined in Subsection 2(a) above and any interest earned thereon. If requested by Escrow Holder, Buyer shall execute and deliver a Form W-9 to Escrow Holder. Failure by Buyer to deliver the Deposit as provided above shall be a material default hereunder and shall render this Agreement terminable or, alternatively, voidable at the option of the Seller.

(c)
The balance of the Purchase Price, as adjusted in accordance herewith, shall be paid at Closing by wire transfer of immediately available funds and delivered to Escrow Holder.

(d)
Concurrent with its deposit of the Deposit with the Escrow Holder, Buyer shall deposit with the Escrow Holder the additional amount of Fifty Dollars ($50.00) (the “Independent Contract Consideration”) which Seller and Buyer agree shall be paid to Seller if this Agreement is terminated for any reason. Moreover, Seller and Buyer agree and acknowledge that the Independent Contract Consideration has been bargained for and agreed as additional consideration for Seller’s execution and delivery of this Agreement and for Buyer’s rights of review, inspection and termination provided herein. At Closing, the Independent Contract Consideration shall not be applied to the Purchase Price.

3.
Disposition of Deposit; Defaults.

(a)
Held in Escrow. Subject to Section 3(e) below, the Deposit shall be held in escrow and disbursed by Escrow Holder strictly in accordance with the terms of this Agreement.

(b)
Upon Default.

(i)
IF BUYER, WITHOUT THE RIGHT TO DO SO AND IN DEFAULT OF ITS OBLIGATIONS UNDER THIS AGREEMENT, FAILS TO COMPLETE CLOSING OR OTHERWISE DEFAULTS UNDER OR BREACHES THIS AGREEMENT, SELLER SHALL HAVE THE RIGHT TO TERMINATE THIS AGREEMENT AND BE PAID THE DEPOSIT AS LIQUIDATED DAMAGES. THE PARTIES HAVE AGREED THAT SELLER’S ACTUAL DAMAGES, IN THE EVENT OF A BUYER DEFAULT WOULD BE EXTREMELY DIFFICULT OR IMPRACTICABLE TO DETERMINE. AFTER NEGOTIATION, THE PARTIES HAVE AGREED THAT, CONSIDERING ALL THE CIRCUMSTANCES EXISTING ON THE DATE OF

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THIS AGREEMENT, THE AMOUNT OF THE DEPOSIT IS A REASONABLE ESTIMATE OF THE DAMAGES THAT SELLER WOULD INCUR IN SUCH EVENT. EACH PARTY SPECIFICALLY CONFIRMS THE ACCURACY OF THE STATEMENTS MADE ABOVE AND THE FACT THAT EACH PARTY WAS REPRESENTED BY COUNSEL WHO EXPLAINED, AT THE TIME THIS AGREEMENT WAS MADE, THE CONSEQUENCES OF THIS LIQUIDATED DAMAGES PROVISION. THE RIGHT OF SELLER TO BE PAID THE DEPOSIT SHALL BE SELLER’S SOLE AND EXCLUSIVE REMEDY FOR BUYER’S FAILURE TO PURCHASE THE PROPERTY OR OTHER BREACH OR DEFAULT OF THIS AGREEMENT.

(ii)
If Seller, without the right to do so and in default of its obligations under this Agreement, fails to complete Closing or otherwise defaults under or breaches this Agreement, Buyer shall have the right to (i) terminate this Agreement, in which event Buyer shall be entitled to the immediate return of the entire Deposit as its sole and exclusive remedy (subject to the remainder of this paragraph) and neither Seller nor Buyer shall have any further obligations under this Agreement, except those matters expressly provided in this Agreement to survive termination, or (ii) institute a civil court action for specific performance (but not damages); provided that Buyer shall commence its action of specific performance against Seller within ninety (90) days after the scheduled Closing Date. UNDER NO CIRCUMSTANCES MAY BUYER SEEK OR BE ENTITLED TO RECOVER ANY SPECIAL, CONSEQUENTIAL, PUNITIVE, SPECULATIVE OR INDIRECT DAMAGES, ALL OF WHICH BUYER SPECIFICALLY WAIVES, FROM SELLER FOR ANY BREACH BY SELLER OF ITS REPRESENTATIONS, WARRANTIES OR COVENANTS OR ITS OBLIGATIONS UNDER THIS AGREEMENT. BUYER SPECIFICALLY WAIVES THE RIGHT TO FILE ANY LIS PENDENS OR ANY LIEN AGAINST ANY PROPERTY UNLESS AND UNTIL IT HAS FILED AN ACTION SEEKING SPECIFIC PERFORMANCE. Notwithstanding anything to the contrary set forth herein, if Buyer terminates this Agreement pursuant to this paragraph and the Seller default or failure at issue is the failure by Seller to deliver on or before the Closing Date one or more of the documents for the Closing required under Subsections 15(a)(i)-(vii) and (x)-(xii), duly executed and acknowledged by Seller where applicable, then in addition to a return of the entire Deposit, Buyer shall be entitled to damages from Seller in an amount equal to all of the losses, costs and expenses actually incurred by Buyer in connection with this Agreement and the pursuit of the transactions contemplated by same or otherwise in reliance upon Seller timely performing all of its obligations under this Agreement for Closing, such damages not to exceed $500,000 in the aggregate. Buyer’s claim for damages under the preceding sentence shall survive the termination of this Agreement, and Seller acknowledges that such claim shall not be barred by any limitations on damages or remedies within this paragraph or elsewhere in this Agreement.

(c)
Upon Closing. If Closing is completed hereunder, Escrow Holder shall pay the Deposit to Seller as a credit against the Purchase Price.

(d)
Upon Termination by Buyer. If Buyer terminates this Agreement as a result of Seller’s default or pursuant to the exercise of any right of termination permitted by this Agreement, upon the earlier to occur of: (i) receipt by Escrow Holder of written joint instructions consistent with this Agreement from Seller and Buyer or (ii) entry of a final and unappealable adjudication determining which party is entitled to receive the Deposit, the Deposit shall be distributed in accordance with such written instructions or adjudication.

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(e)
Hard Deposit. Notwithstanding any provision herein to the contrary, Buyer hereby acknowledges and agrees that $250,000 of the Deposit (the “Hard Deposit”) shall be (i) a “hard” deposit that is non-refundable to Buyer except as expressly set forth in this Section 3(e) and (ii) immediately released by Escrow Holder to Seller upon Escrow Holder’s receipt of the Deposit pursuant to Section 3(a) above; provided, however, that Buyer shall be entitled to a return by Seller of the Hard Deposit in the case of a termination by Buyer under Section 3(b)(ii) (Seller Default) or a termination by Buyer where authorized under Section 13 or 14 of this Agreement. This provision shall survive termination of this Agreement.

4.
Closing. The consummation of the purchase and sale of the Property (the “Closing”) shall take place on or before September 15, 2016 or at earlier date as mutually agreed to in writing by the parties (the “Closing Date”). The Closing shall be conducted through an escrow with the Escrow Holder, with escrow fees to be paid equally by Seller and Buyer. IT IS AGREED THAT TIME IS OF THE ESSENCE OF THIS AGREEMENT.

5.
Inspection and Title Review.

(a)
Inspection Period. Buyer and its authorized agents and representatives shall have the right to enter upon the Land and Improvements (including all of the apartment units, but subject to the rights of tenants under the Leases and in accordance with applicable law) at all reasonable times during normal business hours to inspect and conduct reasonably necessary inspections and tests on the Property at its sole cost and expense, including, without limitation, engineering and hazardous material inspections; provided, however, any intrusive physical testing will be conducted by Buyer only after obtaining Seller’s prior written consent. The right granted in the immediately preceding sentence may be exercised during the period commencing on the Effective Date and ending on the earlier to occur of the Closing Date or termination of this Agreement. Buyer shall bear the cost of all inspections and tests, and Buyer shall give reasonable notice to the management of any inspection or test to be conducted on the Property. Buyer hereby indemnifies and holds Seller and the Property harmless as to all loss, property damage, bodily injury, cost or expense resulting from Buyer’s inspections and tests of the Property, including, without limitation, claims for services rendered by third parties conducting such inspections and tests. Buyer shall also restore the Land and Improvements to the condition in which the same were found before any such entry upon the Property and inspection or examination was undertaken. Such agreement to repair and restore, and to indemnify and hold harmless Seller shall expressly survive closing or any termination of the Agreement, but shall not apply to pre-existing conditions and matters merely discovered by Buyer or such third parties. Buyer shall maintain, or shall cause its contractors to maintain, public liability and property damage insurance insuring Buyer (and naming Seller as an additional insured party) against any liability arising out of any entry or inspections of the Property or work performed about the Property pursuant to the provisions hereof and shall deliver certificates of insurance evidencing such coverage to Seller prior to any entry by Buyer or its contractors on the Property.

(b)
Document Review. Within three (3) business days after the Effective Date, Seller shall deliver to Buyer (or make available for inspection at the Property) copies of the items listed on Schedule 5(b) attached hereto and made a part hereof, but only to the extent such items are in Seller’s possession or control (collectively, “Documents”); provided that Leases shall be available for inspection at the Property

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only. Except as otherwise expressly set forth in this Agreement, Seller makes no representations or warranties, either express or implied, and shall have no liability with respect to the accuracy or completeness of the information, data or conclusions contained in any information provided to Buyer, and Buyer shall make its own independent inquiry regarding the economic feasibility, physical condition and environmental state of the Property during the period beginning on the Effective Date and ending at 5:00 pm (Eastern) on August 17, 2016 (the “Inspection Period”).

(c)
Assignment or Termination of Contracts. Buyer shall assume all Contracts at Closing subject to this Section 5(c). Prior to the expiration of the Inspection Period, Buyer may advise Seller in writing of any Contracts that it elects to have terminated upon Closing and Seller shall provide timely notices of termination; provided, however, that Seller shall not terminate, and Buyer expressly agrees to assume, all Contracts that are not cancellable by their terms or which cannot be terminated without cost or penalty to Seller. At Closing, Seller shall assign and Buyer shall assume all Contracts that have not terminated as of the Closing Date, including without limitation, any remaining rights and obligations under Contracts under which the notice required to terminate such Contracts, though delivered, will not have run prior to Closing. Notwithstanding the foregoing, all existing agreements for management of the Property shall be terminated as of the Closing Date, as well as any so-called “master” Contracts that pertain to multiple properties controlled by Seller and its affiliates.

(d)
Right of Termination. If Buyer determines that the Property is not suitable in Buyer’s sole discretion, then Buyer may terminate this Agreement by written notice to Seller on or before 5:00 pm (Eastern) on the last day of the Inspection Period and this Agreement shall be null and void for all purposes (except for provisions that expressly survive hereunder) and the Deposit (less the Hard Deposit) shall be returned to Buyer. In the event that Buyer does not deliver notice of termination of this Agreement prior to the expiration of the Inspection Period, Buyer shall be deemed to have waived its right to terminate under this Section 5(d) and the Deposit shall be non-refundable to Buyer except in accordance with the terms of Section 3(b)(ii) above or a termination by Buyer where authorized under Section 13 or 14 of this Agreement.

6.
Condition of Title.

(a)     Commitment to Insure. Within three (3) business days after the Effective Date, Seller shall deliver to Buyer a copy of Seller’s Owner’s Policy of title insurance and Buyer shall promptly order a commitment from the Title Company (the “Title Commitment”) to provide a standard owner’s title insurance policy for the Property in an amount equal to the Purchase Price (the “Title Policy”); and (ii) Seller shall deliver to Buyer a copy the most recent ALTA/ACSM Land Title Survey of the Property in Seller’s possession, if any (the “Existing Survey”). Buyer, at its option and expense, may obtain a new survey, or an update of the Existing Survey of the Real Property (the “Survey”).

(b)    During the Inspection Period, Buyer shall review title to the Real Property as disclosed by the Title Commitment and, if obtained, the Survey. Seller shall have no obligation to cure title objections except to satisfy and remove liens of an ascertainable amount created by, through, or under Seller or its affiliates, which liens Seller shall cause to be released at the Closing or affirmatively insured over by the Title Company. Seller further agrees to remove any exceptions or encumbrances to title which are created by Seller after the Effective Date of this Agreement without Buyer’s written consent or which Seller commits in writing to cure (collectively with the liens addressed in the preceding sentence, the “Seller Cure Items”).

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Buyer may terminate this Agreement and receive a refund of the Deposit (less the Hard Deposit) at any time prior to the expiration of the Inspection Period or if the Title Company revises the Title Commitment after the expiration of the Inspection Period to add or modify exceptions in a material adverse manner, if such additions or modifications are not acceptable to Buyer and are not removed by the Closing Date. Seller shall execute at Closing an affidavit as to authority, the rights of tenants in occupancy and the status of mechanics’ liens (and sufficient to remove from the Title Policy any exception for mechanics’ liens filed against the Real Property which relate to any matters occurring prior to the Closing Date) in form acceptable to Seller as the Title Company shall require for the issuance of the Title Policy. All matters to which exception is taken in the Title Commitment or any revision thereto, other than the Seller Cure Items, constitute the “Permitted Exceptions”. Seller shall cause Title Company to be irrevocably committed at Closing to issue the Title Policy to Buyer, dated effective as of the date of Closing and subject only to the Permitted Exceptions. With such a commitment, the Title Policy may be delivered after Closing if that is customary in the locality.

7.
Delivery of Possession. Actual sole and exclusive physical possession of the Property shall be given to Buyer at Closing unoccupied and free of any leases, claims to or rights of possession other than the rights of tenants under Leases by delivery of the keys to the Property and Seller’s special or limited warranty deed (the “Deed”) in the form attached hereto as Exhibit B, and Seller’s bill of sale in the form of Exhibit C to this Agreement duly executed by Seller (the “Bill of Sale”).

8.
Apportionments. All property related items of income and expense, including but not limited to the following, shall be apportioned between Seller and Buyer as of 11:59 p.m. on the day prior to the Closing Date (the “Pro Ration Date”) as follows:

(a)
Taxes.     All real estate taxes, charges, and assessments affecting the Property (collectively, “Taxes”) shall be prorated on a per diem basis as of the Pro Ration Date, applying any discount for early payment applicable as of the Pro Ration Date, and on the basis of the actual fiscal year for which such taxes are assessed, and Buyer shall assume liability for payment of Taxes accruing in the year in which Closing occurs.  In the event that the amount of Taxes for the current year is unknown at Closing, the Taxes shall be prorated based on the mill rate for taxes assessed for the immediately preceding year, taking into account the current appraised value for the Property issued by the County Appraisal District, and Buyer shall notify Seller of any necessary adjustment to such proration within thirty (30) days after when correct tax figures are known, and thereafter any necessary adjustments shall be made. Buyer hereby acknowledges and agrees that Seller has or may file appeals (the “Appeals”) with respect to the current fiscal year and also with respect to prior year(s) ad valorem property taxes applicable to the Property (the “Appealed Taxes”). Seller shall be entitled, in Seller’s sole discretion, to continue to pursue such Appeals after the Closing Date. In the event that any such Appeal is successful in reducing the amount of Appealed Taxes payable with respect to prior years, Seller shall be entitled to the full amount of any rebate, refund or reduction resulting from such Appeal. In the event that any such Appeal is successful in reducing the amount of Appealed Taxes payable with respect to the current fiscal year, Seller and Buyer shall prorate the net proceeds of any rebate, refund or reduction resulting from such Appeal relating to the current fiscal year, after payment of Seller’s third party costs incurred in connection with the Appeal. This paragraph shall expressly survive Closing and the recordation of the Deed.

(b)
Rents.     Rents and other recurring income relating to the Property and collected by Seller for the month in which Closing occurs shall be deemed earned ratably on a per diem basis and shall be prorated

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as of the Pro Ration Date. Amounts collected by Seller prior to the date of Closing as rent for each day occurring after the Pro Ration Date and all other prepaid amounts shall be credited to the Buyer at Closing. All such amounts collected by Seller or Buyer from tenants or other payors after Closing shall be paid over and applied in the following order of priority: (i) first, on account of rents and other sums due to Seller and Buyer (and pro‑rated between them as of the Pro Ration Date) for the month in which Closing occurs; (ii) then, on account of rents and other sums due to Seller from the respective tenant or payor for any month prior to the month of Closing; and (iii) thereafter, on account of rents and other sums due to Buyer from the respective tenant or payor after Closing.

(c)
Other.All normal and customarily proratable items including without limitation operating expenses, personal property taxes, minimum water and sewer rentals, payments due under the Contracts which are to be assigned to Buyer, prepaid license fees and other charges for licenses and permits for the Real Property which will remain in effect for Buyer’s benefit after Closing and municipal rubbish removal charges, shall be apportioned pro rata between Seller and Buyer on a per diem basis based upon a calendar year or calendar month (as applicable).

(d)
Security Deposits. The total sum of all tenant security deposits currently held by Seller, together with all interest earned thereon as of the Closing Date, shall be transferred to Buyer at Closing by operation of a credit against the Purchase Price.

(e)
Utility Meter Readings. Seller shall obtain readings of the water, electric, gas and other utility meters servicing the Real Property (other than meters measuring exclusively utility consumption which is to be paid in full by tenants under Leases) to a date no sooner than two (2) days prior to the Closing Date. At or prior to Closing, Seller shall pay all charges based upon such meter readings, adjusted to include a reasonable estimate of the additional charges due for the period from the dates of the respective readings until the Closing Date. If Seller is unable to obtain readings of any meters prior to the Closing Date, Closing shall be completed without such readings and upon the obtaining thereof, Seller shall pay the charges incurred prior to the Closing Date as reasonably determined by both Buyer and Seller based upon such readings, and at Closing, Seller shall deposit with the Title Company an amount reasonably estimated to represent the anticipated obligation of Seller under this sentence. This paragraph shall survive Closing accordingly.

(f)
RUBS. In addition to any other prorations described in this Agreement, any ratio utility billing systems (“RUBS”) applicable to the Property, for the following categories of utilities and other reimbursements: (i) electricity, (ii) gas, (iii) water / sewer, (iv) trash, (v) pest control and (vi) other typical items, attributable to the uncollected or trailing collections for the two calendar months prior to Closing will be reflected as a credit to Seller at Closing and will be calculated for closing purposes on the uncollected or trailing collections monthly periods based on the monthly average actual trailing RUBS for six months prior to Closing according to the income statements prepared by Seller and provided to Buyer.  A subsequent cash adjustment of RUBS between Seller and Buyer will be made when actual figures are available for such 2-month period, but in all events within 120 days after the Closing Date.  Seller and Buyer each agree to provide such information as the other may reasonably request regarding RUBS and the billing, collection, and payment thereof.

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(g)
True-up. Subsequent to the Closing, if at any time during the 60-day period following Closing the actual amount of any pro-rated items that were based upon estimations at Closing, including without limitation, utilities and other operating expenses with respect to the Property for the month in which the Closing occurs, are determined, the parties agree to adjust the proration of utilities and other operating expenses and, if necessary, to refund or repay such sums as shall be necessary to effect such adjustment. For clarification, this Section 8(g) shall not apply to Taxes, Rents or RUBS which shall be pro-rated and paid under Sections 8(a), 8(b) and 8(f) respectively. This provision shall survive Closing and recordation of the Deed.

(h)
Closing Costs. Seller shall pay (i) ½ of all escrow fees, (ii) premium for a basic TLTA T-1 owner’s policy(s) of title insurance in the amount of the Purchase Price, and (iii) all of Seller’s legal costs and expenses. Buyer shall pay (i) title premiums for any endorsements to the owner’s policy of title insurance, together with all costs and premiums relating to any loan policy of title insurance and endorsements for the benefit of Buyer’s lender, if any, (ii) cost of the Survey, (iii) ½ of all escrow fees, (iv) all other closing and recording costs with respect to the conveyance of the Property, (v) all costs, fees, recordation taxes and assessments with respect to any financing of Buyer, and (vi) Buyer’s legal costs and expenses. All other costs and expenses incurred in connection with the transaction contemplated hereby and not specifically allocated herein shall be paid by the party incurring the same. It is contemplated by the parties that no realty transfer taxes, including without limitation, any state or local transfer taxes or recordation charges, will be due as a result of this transaction.

(i)
Up Front Payments. Any one-time inducement payments or other non-refundable fees, royalties or other payments made or paid to the owner of the Property under any Contract assumed by Buyer at Closing, including, but not limited to, any payments made to the owner of the Property under any cable agreement (“Up Front Payments”), shall not be apportioned pro rata between Seller and Buyer and Buyer shall not receive any credit from Seller at closing for any portion of any One-Time Payment attributable or allocable to any period of time from and after Closing.

(j)
Any credit due to Buyer pursuant to Section 8 shall be applied as a credit against the Purchase Price, and any credit due to Seller pursuant to Section 8 shall be paid by Buyer to Seller at Closing as an addition to the Purchase Price.

9.
Property Condition. THE PROPERTY IS BEING SOLD IN AN “AS IS,” “WHERE IS” CONDITION AND “WITH ALL FAULTS” AS OF THE EFFECTIVE DATE, SUBJECT TO NORMAL WEAR AND TEAR AND DAMAGE BY FIRE OR OTHER CASUALTY AS SET FORTH HEREIN. EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, BUYER ACKNOWLEDGES AND AGREES THAT SELLER HAS NOT MADE, DOES NOT MAKE AND SPECIFICALLY NEGATES AND DISCLAIMS ANY REPRESENTATIONS, WARRANTIES, PROMISES, COVENANTS, AGREEMENTS OR GUARANTIES OF ANY KIND OR CHARACTER WHATSOEVER, WHETHER EXPRESS OR IMPLIED, ORAL OR WRITTEN, PAST, PRESENT OR FUTURE, AND NO RESPONSIBILITY HAS BEEN OR IS ASSUMED AND/OR UNDERTAKEN BY SELLER OR BY ANY PARTNER, OFFICER, DIRECTOR, PERSON, FIRM, AGENT, ATTORNEY OR REPRESENTATIVE ACTING OR PURPORTING TO ACT ON BEHALF OF SELLER AS TO, CONCERNING OR WITH RESPECT TO (I) THE CONDITION OR STATE OF REPAIR OF THE

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PROPERTY; (II) THE COMPLIANCE OR NONCOMPLIANCE OF THE PROPERTY WITH ANY APPLICABLE LAWS, REGULATIONS OR ORDINANCES (INCLUDING, WITHOUT LIMITATION, ANY APPLICABLE ZONING, BUILDING, HANDICAPPED ACCESSIBILITY, OR DEVELOPMENT LAWS, CODES, RULES AND REGULATIONS); THE HABITABILITY, MERCHANTABILITY, MARKETABILITY, PROFITABILITY, OR FITNESS FOR A PARTICULAR PURPOSE OF THE PROPERTY; (III) THE MANNER OR QUALITY OF THE CONSTRUCTION OR MATERIALS, IF ANY, INCORPORATED WITHIN THE PROPERTY; (IV) THE SUITABILITY OF THE PROPERTY FOR ANY AND ALL ACTIVITIES AND USES WHICH BUYER MAY CONDUCT THEREON; (V) THE VALUE, EXPENSE OF OPERATION, OR INCOME POTENTIAL OF THE PROPERTY; (VI) ANY OTHER FACT OR CONDITION WHICH HAS OR MIGHT AFFECT THE PROPERTY OR THE CONDITION, STATE OF REPAIR, COMPLIANCE, VALUE, EXPENSE OF OPERATION OR INCOME POTENTIAL OF THE PROPERTY OR ANY PORTION THEREOF; OR (VII) WHETHER THE PROPERTY CONTAINS ASBESTOS OR ANY OTHER HARMFUL, HAZARDOUS OR TOXIC SUBSTANCES OR PERTAINING TO THE EXTENT, LOCATION OR NATURE OF SAME, OR THE CONDITION OF THE PROPERTY, INCLUDING WITHOUT LIMITATION, WATER, SOIL, AND GEOLOGY. THE PARTIES AGREE THAT ALL UNDERSTANDINGS AND AGREEMENTS HERETOFORE MADE BETWEEN THEM OR THEIR RESPECTIVE AGENTS OR REPRESENTATIVES ARE MERGED IN THIS AGREEMENT AND THE EXHIBITS HERETO ANNEXED, WHICH ALONE FULLY AND COMPLETELY EXPRESS THEIR AGREEMENT. BUYER SHALL NOT RELY UPON ANY STATEMENT OR REPRESENTATION BY OR ON BEHALF OF SELLER UNLESS SUCH STATEMENT OR REPRESENTATION IS SPECIFICALLY SET FORTH IN THIS AGREEMENT OR ONE OF THE CONVEYANCE DOCUMENTS SERVING AS AN EXHIBIT HERETO.

BUYER WAIVES AND RELEASES SELLER FROM ANY PRESENT OR FUTURE CLAIMS ARISING FROM OR RELATING TO THE PRESENCE OR ALLEGED PRESENCE OF ASBESTOS, OR ANY OTHER HARMFUL, HAZARDOUS OR TOXIC SUBSTANCES IN, ON, UNDER OR ABOUT THE PROPERTY INCLUDING, WITHOUT LIMITATION, ANY CLAIMS UNDER OR ON ACCOUNT OF (I) THE COMPREHENSIVE ENVIRONMENTAL RESPONSE, COMPENSATION AND LIABILITY ACT OF 1980, AS THE SAME MAY HAVE BEEN OR MAY BE AMENDED FROM TIME TO TIME; (II) ANY OTHER FEDERAL, STATE OR LOCAL LAW, ORDINANCE, RULE OR REGULATION, NOW OR HEREAFTER IN EFFECT, THAT DEALS WITH OR OTHERWISE IN ANY MANNER RELATES TO ENVIRONMENTAL MATTERS OF ANY KIND; OR (III) THIS AGREEMENT OR THE COMMON LAW. THE TERMS AND PROVISIONS OF THIS PARAGRAPH SHALL SURVIVE CLOSING HEREUNDER.

BUYER ACKNOWLEDGES THAT BUYER IS A SOPHISTICATED BUYER WHO IS FAMILIAR WITH THIS TYPE OF PROPERTY. BUYER IS ACQUIRING THE PROPERTY “AS IS,” “WHERE IS” AND “WITH ALL FAULTS,” IN ITS PRESENT STATE AND CONDITION, WITHOUT REPRESENTATION OR WARRANTY BY SELLER OR ANY OF ITS REPRESENTATIVES OR AGENTS AS TO ANY MATTERS WHATSOEVER EXCEPT AS OTHERWISE SPECIFICALLY SET FORTH IN THIS AGREEMENT, AND TO THE MAXIMUM EXTENT PERMITTED BY LAW, NO PATENT OR LATENT CONDITION AFFECTING THE PROPERTY IN ANY WAY, WHETHER OR NOT KNOWN OR DISCOVERABLE OR HEREAFTER DISCOVERED, SHALL AFFECT BUYER’S OBLIGATIONS HEREUNDER, NOR SHALL ANY SUCH CONDITION GIVE RISE TO ANY RIGHT OF DAMAGES, RESCISSION OR OTHERWISE AGAINST SELLER.

10.
Representations and Warranties of Seller. Except, in all cases, for any fact, information or

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condition disclosed in the Documents, Title Commitment, Existing Survey, Survey, Contracts or which is otherwise actually known to Buyer as of the Effective Date, Seller makes the following representations and warranties to Buyer, which representations and warranties are true and correct as of the date of this Agreement and, as applicable, as of the Closing Date (the “Seller Representations”):

(a)
Seller is a limited liability company, duly formed, validly existing and in good standing under the laws of the State of Delaware, with all legal power and authority to undertake, observe and perform all of Seller’s agreements and obligations hereunder.

(b)
Seller has full power, authority and legal right to execute, deliver and comply with this Agreement, and all actions of the Seller and other authorizations necessary or appropriate for the execution and delivery of and compliance with this Agreement have been taken or obtained and this Agreement constitutes the valid and legally binding obligation of the Seller enforceable against it in accordance with its terms; and the individual executing this Agreement and each of the documents executed in connection herewith on behalf of the Seller has the power and authority to do so. This Agreement and all documents executed by Seller that are to be delivered to Buyer at Closing (i) are, or at the time of Closing will be, duly authorized, executed and delivered by Seller, and (ii) do not, and at the time of Closing will not, violate any provision of any agreement or judicial order to which Seller is a party; and

(c)
No consents are required to be obtained from, and no filings are required to be made with, any governmental authority or third party in connection with the execution and delivery of this Agreement by Seller or the consummation by Seller of the transactions contemplated hereby.

(d)
Seller is not a foreign person within the meaning of Section 1445 of the Internal Revenue Code of 1986, as amended.

(e)
To Seller’s knowledge, there are no actions, proceedings, litigation or governmental investigations or condemnation actions either pending or threatened with respect to the Property except for matters (i) which, if adversely determined, would have no material adverse effect on (A) the use, operation or value of the Property or (B) Seller’s ability to consummate the transactions contemplated hereby, or (ii) covered by Seller’s current insurance policies.

(f)
To Seller’s knowledge, the rent roll attached hereto as Exhibit “D” is true, correct and genuine in all material respects as of the date shown thereon. To Seller’s knowledge, there are no Leases except those disclosed by such rent roll and those hereafter entered into by Seller consistent with the terms and limitations of this Agreement.

(g)
To Seller’s knowledge, Seller has not received written notice of any material default under any of the Contracts that will not be terminated on the Closing Date.

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(h)
Neither Seller nor any of its affiliates is, nor will they become, a person or entity with whom U.S. persons or entities are restricted from doing business under regulations of the Office of Foreign Asset Control (“OFAC”) of the Department of the Treasury (including those named on OFAC’s Specially Designated and Blocked Persons List) or under any statute, executive order (including the September 24, 2001, Executive Order Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten to Commit, or Support Terrorism) or other governmental action and does not, to its actual knowledge, engage in any dealings or transactions or be otherwise associated with such persons or entities.

Seller and Buyer agree that Seller’s Representations shall survive Closing for a period of six (6) months (the “Survival Period”) and Seller shall have no liability after the Survival Period with respect to any of the Seller Representations contained herein. Any representations or warranties made to “Seller’s knowledge” shall not be deemed to imply any duty of inquiry. Buyer hereby waives any right Buyer may have to commence any action(s) to enforce any alleged breach and/or violation of any representations of Seller as set forth in this Agreement or to seek damages in connection therewith in the event that Buyer obtains actual knowledge of any such alleged breach and/or violation prior to Closing and fails to give Seller notice thereof before the Closing Date.

11.
Representations and Warranties of Buyer. Buyer, to induce Seller to enter into this Agreement and to complete Closing, makes the following representations and warranties to Seller, which representations and warranties are true and correct as of the date of this Agreement, and shall be true and correct at and as of the Closing Date in all respects as though such representations and warranties were made both at and, as of the date of this Agreement, and except as otherwise set forth herein, at and as of the Closing Date.

(a)
Buyer is duly formed, validly existing and in good standing under the laws of the State of its formation, with all legal power and authority to undertake, observe and perform all of Buyer’s agreements and obligations hereunder.

(b)
Buyer has full power, authority and legal right to execute, deliver and comply with this Agreement, and all actions of the Buyer and other authorizations necessary or appropriate for the execution and delivery of and compliance with this Agreement have been taken or obtained and this Agreement constitutes the valid and legally binding obligation of the Buyer enforceable against it in accordance with its terms; and the individual executing this Agreement and each of the documents executed in connection herewith on behalf of the Buyer has the power and authority to do so. This Agreement and all documents executed by Buyer that are to be delivered to Seller at Closing (i) are, or at the time of Closing will be, duly authorized, executed and delivered by Buyer, and (ii) do not, and at the time of Closing will not, violate any provision of any agreement or judicial order to which Buyer is a party.

(c)
No consents are required to be obtained from, and no filings are required to be made with, any governmental authority or third party in connection with the execution and delivery of this Agreement by Buyer or the consummation by Buyer of the transactions contemplated hereby.

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(d)
Neither Buyer nor any of its affiliates is, nor will they become, a person or entity with whom U.S. persons or entities are restricted from doing business under regulations of the OFAC of the Department of the Treasury (including those named on OFAC’s Specially Designated and Blocked Persons List) or under any statute, executive order (including the September 24, 2001, Executive Order Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten to Commit, or Support Terrorism) or other governmental action and does not, to its actual knowledge, engage in any dealings or transactions or be otherwise associated with such persons or entities.

(e)
Buyer acknowledges that the Property may be subject to the federal Americans With Disabilities Act (the "ADA") and the federal Fair Housing Act (the "FHA"). The ADA requires, among other matters, that tenants and/or owners of "public accommodations" remove barriers in order to make the Property accessible to disabled persons and provide auxiliary aids and services for hearing, vision or speech impaired persons. Seller makes no warranty, representation or guarantee of any type or kind with respect to the Property's compliance with the ADA or the FHA (or any similar state or local law), and Seller expressly disclaims any such representation. Buyer acknowledges that it is solely responsible for determining whether the Property complies with the ADA and the FHA. The provisions of this Section 11(e) shall survive indefinitely the Closing or earlier termination of this Agreement and shall not be merged into the Deed or other closing documents.

(f)
It is expressly acknowledged by Buyer that this transaction is not subject to any financing contingency and no financing for this transaction shall be provided by Seller.

(g)
Buyer is a sophisticated and experienced Buyer of commercial properties including without limitation, apartment projects, and has participated in and is familiar with the acquisition, development, redevelopment, ownership, management, and operation of real estate projects similar to the Property. Buyer has or will have under the terms of this Agreement adequate opportunity to complete and will have completed all physical, financial, legal and regulatory investigations and examinations relating to the Property that it deems necessary, and will acquire the same solely on the basis of such investigations and examinations and the title insurance protection afforded by the Title Policy and not on the basis of any information provided or to be provided by Seller other than the express representations and warranties of Seller within this Agreement or one of the conveyance documents serving as Exhibits hereto.

12.
Operations Prior to Closing. Between the date of the execution of this Agreement and Closing:

(a)
Operations and Management. During the pendency of this Agreement, Seller shall carry on its business and activities relating to the Property, substantially in the same manner as it did before the Effective Date. Seller shall maintain the physical condition of the Property in substantially its current condition, reasonable wear and tear and damage by fire and other casualty excepted.

(b)
Compliance with Obligations. Seller shall comply in all material respects with the obligations of Seller under the Leases, the Contracts and all other agreements and contractual arrangements by which

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Seller and/or the Property are bound or affected. Seller shall maintain its current insurance policy in full force and effect and shall pay all required premiums and other charges.

(c)
New Contracts; New Leases. Seller shall not enter into any contract for or on behalf of or affecting the Property which cannot be terminated upon no more than thirty (30) days’ prior notice or without charge, cost, penalty or premium or if such contract provides for any Up Front Payments, and, after expiration of the Inspection Period, shall not renew, fail to give a notice which, in the absence of which, will result in an automatic renewal of, modify, cancel or terminate any Contracts except in accordance with notices given by Buyer under Section 5(c). Notwithstanding anything to the contrary set forth herein, Seller may enter into new leases or renewal leases for all or any portion of the Property in accordance with its current leasing parameters and procedures.

13.
Casualty.

(a)
Destruction. If at any time prior to the Closing Date any portion of the Property should sustain damage by fire or other casualty (a “Casualty”), Seller shall promptly give written notice (“Casualty Notice”) thereof to Buyer, which notice shall include Seller’s estimate of the time and cost necessary to repair or remedy the damage caused by such Casualty. If the Property is the subject of a Casualty which is material, Buyer shall have the right, at its sole option, of terminating this Agreement (by written notice to Seller and Escrow Holder given within ten (10) days after receipt of the Casualty Notice from Seller). For purposes hereof, a “material” Casualty is one where the cost of restoring the Improvements to their condition prior to the Casualty will equal or exceed ten percent (10%) of the Purchase Price. If Buyer does not terminate this Agreement, the proceeds of any insurance with respect to the Property paid to Seller between the date of this Agreement and the Closing Date shall be paid over to Buyer at the time of Closing (less any amount expended by Seller under Section 13(b) below) and all unpaid claims and rights in connection with losses to the Property shall be assigned to Buyer at Closing, and the amount of the deductible required to be paid under the Seller’s applicable insurance policy or policies will be paid by Seller to Buyer, without in any manner affecting the Purchase Price.

(b)
Repairs. If the Property is the subject of a Casualty, but Buyer does not terminate this Agreement pursuant to the provisions of Section 13(a)above, then Seller shall cause all temporary repairs to be made to the Property as shall be required to prevent further deterioration and damage to the Property prior to the Closing Date. Seller shall have the right to be reimbursed from the proceeds of any insurance with respect to the Property paid between the date of this Agreement and the Closing Date for the cost of all such repairs made pursuant to this Section 13(b). Except for the obligation of Seller to repair the Property set forth in this Section 13(b), Seller shall have no other obligation to repair any Casualty, damage or destruction in the event Buyer does not elect to terminate this Agreement pursuant to the provisions of Section 13(a), and in such event, Buyer shall accept the Property at Closing as damaged or destroyed by the Casualty.

14.
Eminent Domain. If any condemnation or eminent domain (a “Taking”) affects all or any part of the Property prior to Closing, or if any proceeding for a Taking is commenced prior to Closing, or if notice of the contemplated commencement of a Taking is given prior to Closing, Seller shall deliver written notice of such Taking to Buyer and Buyer, to the extent such Taking is material, shall have the

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right, at its sole option, of terminating this Agreement (by written notice to Seller within ten (10) days after receipt by Buyer of written notice from Seller of the Taking). For purposes hereof, a “material” Taking shall mean a Taking of all or any portion of the Property which causes (i) a material reduction in the size of the Property or a material interference with the use and operation of the Property, (ii) a material reduction in the number of parking spaces available at the Property, (iii) a material adverse effect on the ingress and egress to and from the Property, or (iv) a material reduction in the gross income that it is anticipated will be generated at the Property. If Buyer does not terminate this Agreement, the Purchase Price shall be reduced by the total of any awards or damages received by Seller, and Seller shall, at Closing, be deemed to have assigned to Buyer all of Seller’s right, title and interest in and to any awards or damages to which Seller may have become entitled or may thereafter be entitled by reason of any exercise of the power of eminent domain or condemnation with respect to or for the Taking of the Property or any portion thereof.

15.
Items to be Delivered at Closing.

(a)
By Seller. At Closing, Seller shall deliver to Buyer the following, duly executed and acknowledged by Seller (where applicable):

(i)
Deed. The Deed;

(ii)
Bill of Sale. The Bill of Sale for the transfer of the Personal Property;

(iii)
Assignments of Leases and Contracts. Assignments in the form of Exhibit Eand Exhibit F, respectively, of Seller’s interest in the Leases and the Contracts (to the extent not required to be terminated before Closing) to be assigned to Buyer, assigning to Buyer or Buyer’s assignee all of the lessor’s and Seller’s rights, title and interest in the Leases and such Contracts;

(iv)
Keys. All keys, security cards and security codes to the Property in Seller’s possession;

(v)
Title Company Affidavits. Such affidavits reasonably required by the Title Company to delete the so-called “standard exceptions” (other than the standard survey exceptions) and date the Title Policy no earlier than the date of Closing;

(vi)
Updated Rent Roll. A rent roll in the form of Exhibit D of the rents and other charges and payments due from tenants under the Leases, including without limitation any which are in arrears, dated as of the Closing Date and certified by Seller as true and correct to the best of Seller’s knowledge;

(vii)
State Forms. Any forms required by the County or State in connection with the conveyance of the Property and the recordation of the Deed;

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(viii)
Plans and Specifications. To the extent in Seller’s possession, all plans and specifications for the improvements which constitute a part of the Property and all alterations and additions thereto, and project manuals for the Property;

(ix)
Books and Records. Duplicate copies of all books, records and operating reports in Seller’s possession which are necessary to insure continuity of operation of the Property;

(x)
FIRPTA. If Seller is not a foreign person or entity within the meaning of Sections 1445 and 7701 of the IRS Code, a form as required by Section 1445 of the Internal Revenue Code of 1986, as amended (the “Code”) in the form attached as Exhibit G hereto; and

(xi)
Tenant Notice Letter. A letter to the tenants of the Property indicating that the Property has been sold to Buyer and directing that all future rental payments be sent to Buyer in the form attached as Exhibit H hereto (the “Tenant Notice Letter”); and

(xii)
Resolutions; Title Company Affidavits, Etc. Resolutions and certificates as required to evidence good standing and the due authorization of the execution and performance of this Agreement and the documents to be delivered pursuant hereto together with all affidavits, indemnities and other agreements required by the Title Company; and

(xiii)
Other Documents. Any other documents required to be delivered pursuant to any other provisions of this Agreement.

(b)
By Buyer. At Closing, Buyer shall deliver to Seller the following:

(i)
Purchase Price. The balance of the Purchase Price;

(ii)
Assumption Agreements. Assumption agreements, in the form of Exhibit E and Exhibit F respectively, of the Leases and of the Contracts to be assigned to Buyer, duly executed by Buyer;

(iii)
Tenant Notice Letter. A counterpart to the Tenant Notice Letter duly executed by Buyer;

(iv)
Resolutions; Title Company Affidavits, Etc. Resolutions and certificates as required to evidence good standing and the due authorization of the execution and performance of this Agreement and the documents to be delivered pursuant hereto together with all affidavits, indemnities and other agreements required by the Title Company; and

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(v)
Other Documents. Any other document required to be delivered pursuant to any other provisions of this Agreement.

16.
Brokerage. Buyer and Seller represent and warrant to the other that it has dealt with no broker, finder or other intermediary in connection with this sale other than CBRE, Inc. (“Broker”). Seller agrees to pay all brokerage commissions due to Broker in connection herewith. Buyer and Seller each agree to indemnify, defend and hold the other harmless from and against all claims, demands, causes of action, loss, damages, liabilities costs and expenses (including without limitation attorneys’ fees and court costs) which the indemnified party may incur arising by reason of the above representation being false. This Section shall survive the Closing or any termination of this Agreement.

17.    Indemnity. Buyer agrees to indemnify, defend and hold harmless Seller from and against, and to reimburse Seller with respect to, any and all claims, demands, causes of action, losses, damages, liabilities, costs and expenses (including without limitation reasonable attorney’s fees and court costs) asserted against or incurred by Seller by reason of or arising out of any Lease, Contract, or claim for damages or any other claim with respect to the Real Property accruing on or after the Closing Date. Seller agrees to indemnify, defend and hold harmless Buyer from and against, and to reimburse Buyer with respect to, any and all claims, demands, causes of action, losses, damages, liabilities, costs and expenses (including without limitation reasonable attorney’s fees and court costs) asserted against or incurred by Buyer by reason of or arising out of any Lease, Contract, or claim for damages or any other claim with respect to the Real Property accruing prior to the Closing Date. The provisions of this Section 17 are not intended to limit or supersede other representations, warranties, releases and indemnities expressly provided elsewhere in this Agreement, which shall control to the extent of any conflict with this Section. The provisions of this Section 17 shall survive Closing and recordation of the Deed.

1.
Confidentiality. Buyer shall not disclose any Confidential Information (as defined below) to any party other than (a) persons within Buyer’s organization, Buyer’s affiliates, persons who may invest in, or co-purchase with Buyer, or person with which Buyer has contracted, including attorneys, accountants, appraisers, engineers, environmental consultants and other professionals engaged for this contemplated transaction who are advised of the confidential nature of the Confidential Information, (b) potential lenders and agents of potential lenders who are advised of the terms of this Agreement related to the Confidentiality Information, (c) as necessary to consummate the terms of this Agreement or any financing relating thereto, and (d) subject to the last sentence of this paragraph, as required by law or court order. “Confidential Information” means the terms of this Agreement and all due diligence information (including the Documents) provided to Buyer by Seller other than information of public record or generally known to the public. Buyer will destroy any electronic or paper documents constituting the Confidential Information, or return it to Seller if appropriate, if the Closing does not occur or this Agreement is terminated by Buyer or Seller before Closing. The confidentiality provisions of this Section 18 shall not apply to any disclosures made by Buyer as required by law, by court order, or in connection with any subpoena served upon Buyer; provided Buyer shall provide Seller with written notice before making any such disclosure. Buyer’s obligations under this Section 18 shall survive termination of this Agreement.

2.
No Other Representations. Buyer acknowledges that neither Seller nor anyone acting, or

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purporting to act, on behalf of Seller, has, except as expressly set forth in this Agreement, made any representation or warranty with respect to the Property.

3.
Assignability. Buyer shall not have the right to assign its interest in this Agreement without Seller’s advance written consent, which consent may be withheld in Seller’s sole and absolute discretion. Buyer hereby agrees that any assignment by Buyer, if consented to by Seller, shall not relieve Buyer of its obligations and liabilities hereunder. Additionally, it shall be a condition of any such assignment that the assignee assumes, in a written instrument delivered to Seller (in form and content reasonably acceptable to Seller), all obligations of Buyer hereunder. Seller’s approval of any assignment of Buyer’s interest in this Agreement shall not constitute a waiver of Seller’s right to approve any subsequent assignments.

Notwithstanding the terms of this Paragraph 20, Buyer shall have the right to assign its rights and obligations under this Agreement to an affiliate of Buyer. For purposes hereof, an affiliate shall include (without limitation) any Tenant-in-Common ownership structure where one or more of the parties to hold an ownership interest in the Property pursuant to such structure is the principal of the original Buyer named herein (or an entity controlled by such principal). Buyer’s right to assign this Agreement shall be subject to execution by Buyer and the assignee of a form of assignment agreement which provides that Buyer is not released from its obligations under this Agreement and under which such assignee assumes all of Buyer’s obligations under this Agreement. Buyer shall give notice of any such proposed assignment to Seller not less than five (5) business days prior to the scheduled the Closing Date. Upon such assignment, the assignee shall succeed to all of the rights of Buyer under this Agreement (including without limitation Buyer’s rights with respect to the Deposit) and shall assume all of Buyer’s obligations under the Agreement. No such assignment shall relieve Buyer of any liability under the Agreement in the event of a default by Buyer or its assignee.

4.
Notices.

(a)
All notices, demands, requests or other communications from each party to the other required or permitted under the term of this Agreement shall be in writing and, unless and until otherwise specified in a written notice by the party to whom notice is intended to be given, shall be sent to the parties at the following respective addresses:

if intended for Buyer:        Firmus Equity Partners, LLC

770 North Sherman, #102

Denver, CO 80203

Attn: Cary S. Krier

Email: csk@firmusep.com

With a copy to:            Munsch Hardt Kopf & Harr PC

500 N. Akard Street, Suite 3800

Dallas, Texas 75201-6659

Attn: Will Themer

Facsimile No.: (214) 978-4333

Email: wthemer@munsch.com

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if intended for Seller:        RRE Bent Oaks Holdings, LLC

c/o Resource Real Estate, Inc.

1845 Walnut Street, 18^th Floor

Philadelphia, PA 19103

Attn: Luke Perl, Transaction Manager

Facsimile No.: (215) 761-0452

Email: LPerl@Resourcerei.com

With a copy to:            Resource Real Estate, Inc.

1845 Walnut Street, 18^th Floor

Philadelphia, PA 19103

Attn: Shelle Weisbaum, General Counsel

Facsimile No.: (215) 761-0452

Email: sweisbaum@resourcerei.com

And with a copy to:        Ledgewood, P.C.

Two Commerce Square

2001 Market Street, Suite 3400

Philadelphia, PA 19103

Attn: Stacy C. Bedwick, Esquire

Facsimile No.: (215) 735-2513

Email: sbedwick@ledgewood.com

Notices may be given on behalf of any party by its legal counsel.

(b)
Each such notice, demand, request or other communication shall be deemed to have been properly given for all purposes if (i) delivered to a nationally recognized overnight courier service for next business day delivery, to its addressee at such party’s address as set forth above or (ii) delivered via facsimile transmission to the facsimile number listed above or via electronic mail to the email address listed above, provided, however, that if such communication is given via facsimile transmission or email, an original counterpart of such communication shall concurrently be sent in the manner specified in clause (i) above.

(c)
Each such notice, demand or request shall be deemed to have been given upon the earlier of (i) actual receipt or refusal by the addressee or (ii) deposit thereof with the courier if sent pursuant to section (b)(i) above.

5.
Additional Escrow Provisions.

(e)
Deposit. Title Company agrees to deposit the Deposit in an interest bearing account, subject to the receipt from Buyer of a form W-9 for the purposes of investing said funds and to hold and disburse said funds, and any interest earned thereon, as hereinafter provided. Upon written notification from Seller or Buyer in accordance with the terms of this Agreement, Title Company shall release the funds in accordance with and pursuant to the written instructions. In the event of a dispute between any of the parties hereto sufficient in the sole discretion of Title Company to justify its doing so, Title Company

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shall be entitled to tender unto the registry or custody of any court of competent jurisdiction all money or property in its hands held under the terms of this Agreement, together with such legal pleading as it deems appropriate, and thereupon be discharged.

(f)
Escrow Holder. Seller and Buyer covenant and agree that in performing any of its duties under this Agreement, Title Company shall not be liable for any loss, costs or damage which it may incur as a result of serving as Escrow Holder hereunder, except for any loss, costs or damage arising out of its willful default or gross negligence. Accordingly, Title Company shall not incur any liability with respect to (i) any action taken or omitted to be taken in good faith upon advice of its counsel given with respect to any questions relating to its duties and responsibilities, or (ii) to any action taken or omitted to be taken in reliance upon any document, including any written notice of instruction provided for in this Agreement, not only as to its due execution and the validity and effectiveness of its provisions, but also to the truth and accuracy of any information contained therein, which Title Company shall in good faith believe to be genuine, to have been signed or presented by a proper person or persons and to conform with the provisions of this Agreement.

(g)
Indemnity. Seller and Buyer hereby agree to indemnify and hold harmless Title Company against any and all losses, claims, damages, liabilities and expenses, including without limitation, reasonable costs of investigation and attorneys' fees and disbursements which may be imposed upon or incurred by Title Company in connection with its serving as Escrow Holder hereunder, except for any loss, costs or damage arising out of its willful default, gross negligence or failure to adhere to the terms or conditions of this Agreement. The provisions of this Section shall survive termination of this Agreement.

6.
Miscellaneous.

(a)
Entire Agreement; Governing Law. This Agreement contains the entire understanding of the parties with respect to the subject matter hereof, supersedes all prior or other negotiations, representations, understandings and agreements of, by or among the parties, express or implied, oral or written, which are fully merged herein. The express terms of this Agreement control and supersede any course of performance and/or customary practice inconsistent with any such terms. Any agreement hereafter made shall be ineffective to change, modify, discharge or effect an abandonment of this Agreement unless such agreement is in writing and signed by the party against whom enforcement of such change, modification, discharge or abandonment is sought. This Agreement shall be governed by and construed under the laws of the State where the Real Property is located.

(b)
Liability. Notwithstanding anything to the contrary contained herein, Seller’s shareholders, partners, members, the partners or members of such partners or members, the shareholders of such partners or members, and the trustees, officers, directors, employees, agents and security holders of Seller and the partners or members of Seller assume no personal liability for any obligations entered into on behalf of Seller and its individual assets shall not be subject to any claims of any person relating to such obligations.  The foregoing shall govern any direct and indirect obligations of Seller under this Agreement. This provision shall expressly survive Closing and recordation of the Deed or termination of this Agreement.

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(c)
Successors and Assigns. This Agreement shall be binding upon and shall inure to the benefit of the parties and their respective heirs, personal representatives, successors and assigns.

(d)
Provisions Separable. The provisions of this Agreement are independent of and separable from each other, and no provision shall be affected or rendered invalid or unenforceable by virtue of the fact that for any reason any other provision may be invalid or unenforceable in whole or in part.

(e)
Gender, etc. Words used in this Agreement, regardless of the number and gender specifically used, shall be deemed and construed to include any other number, singular or plural, and any other gender, masculine, feminine or neuter, as the context indicates is appropriate.

(f)
Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original as against any party whose signature appears thereon, and all of which shall together constitute one and the same instrument. This Agreement shall be binding when one or more counterparts hereof, individually or taken together, shall bear the signatures of all of the parties reflected on this Agreement as the signatories. Electronically transmitted counterparts of this Agreement or signature pages hereof shall have the same force and effect as originals.

(g)
Exhibits. All exhibits attached to this Agreement are incorporated by reference into and made a part of this Agreement.

(h)
No Waiver. Neither the failure nor any delay on the part of either party to this Agreement to exercise any right, remedy, power or privilege under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any right, remedy, power or privilege preclude any other or further exercise of the same or of any other right, remedy, power or privilege, nor shall any waiver of any right, remedy, power or privilege with respect to any occurrence be construed as a waiver of any such right, remedy, power or privilege with respect to any other occurrence. No waiver shall be effective unless it is in writing and is signed by the party asserted to have granted such waiver.

(i)
Headings. The headings incorporated in this Agreement are for convenience in reference only, are not a part of this Agreement and do not in any way limit or add to the terms and provisions of this Agreement.

(j)
Interpretation. No provision of this Agreement is to be interpreted for or against either party because that party or that party’s legal representative or counsel drafted such provision.

(k)
Time. TIME IS OF THE ESSENCE OF THIS AGREEMENT. In computing the number of days for purposes of this Agreement, all days shall be counted, including Saturdays, Sundays and holidays; provided, however, that if the final day of any time period provided in this Agreement shall end on a Saturday, Sunday or legal holiday, then the final day shall extend to 5:00 p.m. Eastern time of the

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next full business day. For the purposes of this Section, the term “holiday” shall mean a day other than a Saturday or Sunday on which banks are closed in the state in which the Real Property is located.

(l)
Attorney’s Fees. In connection with any litigation arising out of this Agreement, the prevailing party shall be entitled to recover all costs incurred, including reasonable attorney’s fees. For purposes of this Agreement, “prevailing party” shall include, without limitation, a party obtaining substantially the relief sought, whether by compromise, settlement or otherwise.

(m)
No Recording of Agreement. Neither Seller nor Buyer shall cause or permit this Agreement to be filed of record in any office or place of public record and, if Buyer or Seller shall fail to comply with the terms hereof by recording or attempting to record the same, such act shall not operate to bind or cloud title to the Real Property.

(n)
Negotiations. Seller shall have the right at all times prior to the expiration of the Inspection Period, to solicit backup offers and enter into discussions, negotiations, or any other communications concerning or related to the sale of the Property with any third party; provided, however, that such communications are subject to the terms of this Agreement and that Seller shall not enter into any contract with a third party for the sale of the Property unless such contract is contingent on the termination of this Agreement without the Property having been conveyed to Buyer.

(o)
WAIVER OF JURY TRIAL. BUYER WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (I) ARISING UNDER THIS AGREEMENT, (II) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALING OF THE BUYER AND SELLER IN RESPECT OF THIS AGREEMENT OR RELATED TRANSACTIONS, IN EACH CASE WHETHER NOW EXISTING OR LATER ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE. BUYER AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION, OR CAUSE OF ACTION WILL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT SELLER MAY FILE A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF BUYER TO THE WAIVER OF ITS RIGHT TO TRIAL BY JURY.

(p)
1031 Exchange. Buyer or Seller may desire to exchange, for other property of like kind and qualifying use within the meaning of Section 1031 of the Internal Revenue Code of 1986, as amended (the "Code"), and the Treasury Regulations promulgated thereunder, fee title in the Real Property. Each of Buyer and Seller expressly reserves the right to assign its rights, but not its obligations, hereunder to a Qualified Intermediary as provided in Treasury Reg. §1.1031(k)-1(g)(4) on or before Closing and each party hereby agrees to fully cooperate with the other party, at no cost to such party, in the furtherance of any such like-kind exchange pursuant to Code §1031 contemplated by either party hereto.

(q)
Reporting Person. Each of Seller and Buyer hereby designate the Escrow Holder as the “Reporting Person” as such term is utilized in Section 6045 of the Internal Revenue Code of 1986, as amended, and regulations thereunder. Seller agrees to provide the Title Company with such information as may be required for the Escrow Holder to file a Form 1099 or other required form relative to the

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Closing with the Internal Revenue Service. A copy of the filed Form 1099 or other filed form shall be provided to Seller and Buyer simultaneously with its being provided to the Internal Revenue Service.

(r)
Obligation to Close on Both Properties. Reference is hereby made to that certain Agreement of Purchase and Sale dated of even date herewith, by and between Seller’s affiliate, RRE Woodhollow Holdings, LLC, a Delaware limited liability company (“Woodhollow Seller”), and Firmus Equity Partners, LLC, with respect to the purchase and sale of that certain project owned by Woodhollow Seller and commonly known as the “Woodhollow Apartments” located in Austin, Texas (as the same may be amended, modified or assigned, the “Woodhollow PSA”). As used in this Section 23(r), the “Woodhollow Property” shall mean the “Property” as defined in the Woodhollow PSA. Notwithstanding any other provision of this Agreement to the contrary, (i) Buyer’s obligation under this Agreement and the Woodhollow PSA to purchase the Property and the Woodhollow Property, respectively, is not severable and Buyer or its affiliates must purchase both the Property and the Woodhollow Property, and (ii) Seller’s obligation to sell the Property and Woodhollow Seller’s obligation to sell the Woodhollow Property are not severable and Seller and Woodhollow Seller must collectively sell both the Property and the Woodhollow Property to Buyer or its affiliates. Accordingly, if Buyer (or its respective affiliate) terminates the Woodhollow PSA, then this Agreement will be deemed timely terminated by Buyer as of the same date pursuant to the corresponding provision of this Agreement and the Deposit under this Agreement and the Woodhollow PSA will be handled as contemplated in connection with the type of termination at issue.

7.
Texas Disclosures. By its signature to this Agreement, Buyer hereby acknowledges its receipt of the following notices at or before the execution of this Agreement:

(a)
Notice Regarding Possible Liability for Additional Taxes. If for the current ad valorem tax year the taxable value of the Property that is the subject of this Agreement is determined by a special appraisal method that allows for appraisal of the Property at less than its market value, the Buyer may not be allowed to qualify the Property for that special appraisal in a subsequent tax year and the Property may then be appraised at its full market value. In addition, the transfer of the Property or a subsequent change in the use of the Property may result in the imposition of an additional tax plus interest as a penalty for the transfer or the change in the use of the Property. The taxable value of the Property and the applicable method of appraisal for the current tax year is public information and may be obtained from the Travis County Appraisal District.

(b)
Notice Regarding Possible Annexation. If the Property that is the subject of this Agreement is located outside the limits of a municipality, the Property may now or later be included in the extraterritorial jurisdiction of a municipality and may now or later be subject to annexation by the municipality. Each municipality maintains a map that depicts its boundaries and extraterritorial jurisdiction. To determine if the Property is located within a municipality's extraterritorial jurisdiction or is likely to be located within a municipality's extraterritorial jurisdiction, contact all municipalities located in the general proximity of the Property for further information.

(c)
Property Located in a Certificated Service Area of a Utility Service Provider. The Property that you are about to purchase may be located in a certificated water or sewer service area, which is authorized by law to provide water or sewer service to the properties in the certificated area. If the Property is

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located in a certificated area there may be special costs or charges that you will be required to pay before you can receive water or sewer service. There may be a period required to construct lines or other facilities necessary to provide water or sewer service to the Property. You are advised to determine if the Property is in a certificated area and contact the utility service provider to determine the cost that you will be required to pay and the period, if any, that is required to provide water or sewer service to the Property.

(d)
Notice Regarding District. If the Property is situated in a utility or other statutorily created district providing water, sewer, drainage, or flood control facilities and services, Chapter 49, Texas Water Code, requires Seller to deliver and Buyer to sign the statutory notice relating to the tax rate, bonded indebtedness, or standby fees of the district before final execution of this Agreement.

(e)
Notice Regarding Coastal Property. If the Property adjoins or shares a common boundary with the tidally influenced submerged lands of the state, Section 33.135, Texas Natural Resources Code, requires a notice regarding coastal area property to be included as part of this Agreement.

(f)
Lead Disclosure. If apartments or other residential units are on the Property and the units were built before 1978, federal law requires a lead-based paint and hazard disclosure statement to be made part of this Agreement.

(g)
Mold Remediation. Section 1958.154, Texas Occupations Code, requires Seller to provide Buyer a copy of any mold remediation certificate issued for the Property during the five (5) years preceding the date the Seller sells the Property.

[SIGNATURES CONTAINED ON FOLLOWING PAGE]

IN WITNESS WHEREOF, intending to be legally bound, the parties have executed this Agreement as a sealed instrument as of the day and year first above written.

SELLER:

RRE BENT OAKS HOLDINGS, LLC, a Delaware limited liability company

By: _________________________________

Name:    Steven R. Saltzman

Title:    VP

BUYER:

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FIRMUS EQUITY PARTNERS, LLC,

a Kansas limited liability company

By: _________________________________

Name:

Title:

Taxpayer ID Number: ____________________

JOINDER OF ESCROW HOLDER

For good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the undersigned, the Escrow Holder named in the annexed Agreement, hereby agrees to be bound by the provisions of the annexed Agreement relating to the holding and disbursement of all monies paid to the undersigned in escrow, and to disburse such sums strictly in accordance with the terms of the Agreement.

Intending to be legally bound, the undersigned has caused this Joinder to be executed by its duly authorized representative the ____day of July, 2016.

HERITAGE TITLE COMPANY OF AUSTIN, INC.

By:_________________________

Name:

Title:

EXHIBIT A

[LEGAL DESCRIPTION OF REAL PROPERTY]

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EXHIBIT B

When recorded, return to:Attention:

NOTICE OF CONFIDENTIALITY RIGHTS: IF YOU ARE A NATURAL PERSON, YOU MAY REMOVE OR STRIKE ANY OF THE FOLLOWING INFORMATION FROM THIS INSTRUMENT BEFORE IT IS FILED FOR RECORD IN THE PUBLIC RECORDS: YOUR SOCIAL SECURITY NUMBER OR YOUR DRIVER’S LICENSE NUMBER.

SPECIAL WARRANTY DEED

RRE BENT OAKS HOLDINGS, LLC, a Delaware limited liability company (“Grantor”), whose address is c/o Resource Real Estate, Inc., 1845 Walnut Street, 18^th Floor, Philadelphia, PA 19103, for and in consideration of the sum of Ten and No/100 Dollars ($10.00) paid to Grantor and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, has GRANTED, BARGAINED, SOLD and CONVEYED and does hereby GRANT, BARGAIN, SELL and CONVEY unto , a (“Grantee”), whose address is ___________________________________, that certain tract of land situated in Travis County, Texas, as more fully described on Exhibit A attached hereto and made a part hereof for all purposes, together with (a) all improvements located thereon, (b) all rights, benefits, privileges, easements, tenements, hereditaments and appurtenances there unto belonging or in any wise, pertaining thereto, and (c) all of Grantor’s right, title and interest in and to adjacent strips, gores, streets, roads, alleys and rights-of-way (said land, improvements, rights, benefits, privileges, easements, tenements, hereditaments, appurtenances and interests being hereinafter referred to as the “Real Property”).

This conveyance is made and accepted subject to all matters set out herein above and in Exhibit B, attached hereto and incorporated herein by reference (“Permitted Exceptions”) but only to the extent the Permitted Exceptions are valid, existing and affect the Real Property.

TO HAVE AND TO HOLD the Real Property, together with all rights and appurtenances pertaining thereto, unto Grantee and Grantee’s successors and assigns forever, and Grantor does hereby bind itself and its successors and assigns to WARRANT and FOREVER DEFEND, all and singular, subject to the Permitted Exceptions, the Real Property unto Grantee and Grantee’s successors and assigns, against every person whomsoever lawfully claiming or to claim the same or any part thereof by, through or under Grantor, but not otherwise.

All ad valorem taxes for the year in which the conveyance occurs have been prorated between Grantor and Grantee and Grantee shall be obligated to pay same.

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DATED effective as of the ___ day of ________, 2016.

GRANTOR:

RRE BENT OAKS HOLDINGS, LLC, a Delaware limited liability company

By:__________________________

Name:

Title:

Acknowledgment

STATE OF     §

§

COUNTY OF     §

BEFORE ME, the undersigned, a Notary Public in and for said County and State, on this day personally appeared ______________, known to me to be the _______________ of RRE Bent Oaks Holdings, LLC, the limited liability company that executed the foregoing instrument, known to me to be the person whose name is subscribed to the foregoing instrument, and acknowledged to me that the same was the act of the said limited liability company, and that he/she executed the same as the act of such limited liability company for the purposes and consideration therein expressed and in the capacity therein stated.

GIVEN UNDER MY HAND AND SEAL OF OFFICE this _____ day of ___________, 2016.

__________________________________________

Notary Public

My Commission Expires:______________

Exhibit A – Legal Description

Exhibit B - Permitted Exceptions

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EXHIBIT A TO DEED

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EXHIBIT B TO DEED

PERMITTED EXCEPTIONS

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EXHIBIT C

BILL OF SALE AND ASSIGNMENT

THIS BILL OF SALE AND ASSIGNMENT (the “Assignment”) is made as of _________________, 2016, by RRE BENT OAKS HOLDINGS, LLC, a Delaware limited liability company (“Seller”), in favor of ___________________, a ________________ (“Buyer”).

RECITALS

A.    Pursuant to a certain Agreement of Purchase and Sale, dated as of ________________, 2016 (the “Agreement of Sale”), Seller has agreed to sell to Buyer, upon the terms, provisions and conditions set forth therein, certain property commonly known as Bent Oaks Apartments located at 3600 North Hills Drive, Austin, TX 78731, all as more particularly described in the Agreement of Sale (the “Property”).

B.    In connection with the sale and purchase of the Property, Seller desires to sell, assign and transfer to Buyer all of Seller’s right, title and interest in and to the Personal Property identified and as defined in the Agreement of Sale, all upon the terms, covenants and conditions set forth in this instrument.

NOW THEREFORE, for an in consideration of Ten Dollars ($10.00), the mutual covenants contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound, Seller hereby agrees as follows:

1.    Definitions. Capitalized terms used herein and not otherwise defined herein shall have the respective meanings given such terms in the Agreement of Sale.

2.Transfer and Assignment. Seller hereby sells, transfers, assigns, delivers and conveys to Buyer, its successors and assigns, all of Seller's right, title and interest in, to and under the Personal Property.

3.Representations and Warranties of Seller. Seller hereby represents and warrants to Buyer as follows:

(i)    Seller is the sole owner and holder of the Personal Property; and

(ii)    Seller has the power, authority and right to execute and deliver this Assignment and to sell, transfer, assign, deliver and convey the Personal Property.

4.AS IS, WHERE IS. THE PERSONAL PROPERTY IS BEING CONVEYED “AS IS”, “WHERE IS”, AND “WITH ALL FAULTS” AS OF THE DATE OF THIS ASSIGNMENT, WITHOUT ANY REPRESENTATION OR WARRANTY WHATSOEVER AS TO ITS CONDITON, FITNESS FOR ANY PARTICULAR PURPOSE, MERCHANTABILITY OR ANY OTHER WARRANTY, EXPRESS OR IMPLIED. SELLER SPECIFICALLY DISCLAIMS ANY WARRANTY, GUARANTY OR REPRESENTATION, ORAL OR WRITTEN, PAST OR PRESENT, THERETO. BUYER IS HEREBY THUS ACQUIRING THE PERSONAL PROPERTY BASED SOLEY UPON BUYER’S OWN INDEPENDENT INVESTIGATIONS AND INSPECTION OF THAT PROPERTY AND NOT IN

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RELIANCE UPON ANY INFORMATION PROVIDED BY SELLER OR SELLER’S AGENTS OR CONTRACTORS.

5.Absolute Transfer. It is the intention of Seller to transfer absolute title of the Personal Property to Buyer, its successors and assigns, free of any equity of redemption by Seller or its successors and assigns

6.Binding Effect. This Assignment shall be binding upon and inure to the benefit of Seller and Buyer and their respective heirs, personal representatives, successors and assigns.

IN WITNESS WHEREOF, intending to be legally bound, Seller has caused this Bill of Sale and Assignment to be executed by its duly authorized officer on the day and year first above written.

SELLER:

RRE BENT OAKS HOLDINGS, LLC, a Delaware limited liability company

By:_________________________

Name:

Title:

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EXHIBIT D

[RENT ROLL]

SEE ATTACHED

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EXHIBIT E

ASSIGNMENT AND ASSUMPTION OF LEASES

THIS ASSIGNMENT AND ASSUMPTION OF LEASES (this “Assignment”) is made and entered into as of __________, 2016, by and between RRE BENT OAKS HOLDINGS, LLC, a Delaware limited liability company (“Assignor”), and _________________, a __________________ (“Assignee”).

RECITALS

A.    Pursuant to a certain Agreement of Purchase and Sale, dated as of ____________, 2016 (the “Agreement of Sale”), Assignor has agreed to sell to Assignee, upon the terms, provisions and conditions set forth therein, certain property commonly known as Bent Oaks Apartments located at 3600 North Hills Drive, Austin, TX 78731, all as more particularly described in the Agreement of Sale (the “Property”)

B.    In connection with the sale and purchase of the Property, Assignor desires to assign to Assignee all tenant leases encumbering the Property and Assignee desires to accept said assignment and assume the obligations of Assignor under said leases, all upon the terms, covenants and conditions set forth in this instrument.

NOW, THEREFORE, in consideration of the purchase price paid by Assignee to Assignor for the Property, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Assignor and Assignee covenant and agree as follows:

1.    Assignment. Assignor hereby assigns, transfers and sets over unto Assignee all of Assignor’s right, title and interest in and to (collectively, the “Assigned Interests”) (a) the leases set forth on the rent roll attached hereto as Exhibit A and made a part of this Assignment and any other lease, license or right of occupancy affecting the Property, together with all amendments, extensions, and other modifications thereto (the “Leases”), (b) any and all rights of Assignor and the lessor under the Leases to collect rents, additional rents, escrow or security deposits, fees, income, charges, and profits now or hereafter arising thereunder, and (c) any guarantees of any Leases, to have and to hold the same unto Assignee, its successors and assigns.

    2.    Assumption. Assignee accepts said assignment and assumes all obligations of Assignor on the part of the lessor/landlord under the Leases first arising or accruing on or after the date of this Assignment.

3.    Indemnification by Assignor. Assignor agrees to indemnify, defend and hold Assignee harmless from and against any claim, demand, cause of action, charge, judgment, damage, liability, cost or expense (including, without limitation, reasonable attorney’s fees and legal costs) (a) arising out of the Assigned Interests in connection with events occurring at any time during Assignor’s ownership of the Property, or (b) arising out of any claim by any tenant arising prior to the date of this Assignment with respect to any security deposit but only to the extent of the amount of such security deposit and interest thereon not transferred by Assignor to Assignee.

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4.    Indemnification by Assignee. Assignee agrees to indemnify, defend and hold Assignor harmless from and against any claim, demand, cause of action, charge, judgment, damage, liability, cost or expense (including, without limitation, reasonable attorneys’ fees and legal costs) arising out of the Assigned Interests in connection with events occurring on or after the date of this Assignment or arising out of any claim by any tenant arising on or after the date of this Assignment with respect to its security deposit but only to the extent of the amount of such security deposit and interest thereon transferred by Assignor to Assignee and not returned to such tenant by Assignee.

5.     Counterparts. This Assignment may be executed and delivered in any number of counterparts, each of which so executed and delivered shall be deemed to be an original and all of which shall constitute one and the same instrument. For purposes of this Assignment, any signature transmitted by e-mail (in pdf format) shall be considered to have the same legal and binding effect as any original signature.

6.    Binding Effect. This Assignment shall be binding upon and inure to the benefit of Assignor and Assignee and their respective heirs, personal representatives, successors and assigns.

IN WITNESS WHEREOF, intending to be legally bound, the parties have caused this Assignment and Assumption of Leases to be executed by their duly authorized officers on the day and year first above written.

ASSIGNOR:

RRE BENT OAKS HOLDINGS, LLC, a Delaware limited liability company

By: ________________________

Name:

Title:

ASSIGNEE:

[_______________________]

By: ________________________

Name:

Title:

Exhibit A – rent roll

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EXHIBIT F

ASSIGNMENT AND ASSUMPTION OF CONTRACTS

THIS ASSIGNMENT AND ASSUMPTION OF CONTRACTS (this “Assignment”) is made and entered into as of __________ 2016, by and between RRE BENT OAKS HOLDINGS, LLC, a Delaware limited liability company (“Assignor”) and _________________, a __________________ (“Assignee”).

R E C I T A L S:

A.    Pursuant to a certain Agreement of Purchase and Sale, dated as of _________, 2016 (the “Agreement of Sale”), Assignor has agreed to sell to Assignee, upon the terms, provisions and conditions set forth therein, certain property commonly known as Bent Oaks Apartments located at 3600 North Hills Drive, Austin, TX 78731, all as more particularly described in the Agreement of Sale (hereinafter “Property”).

B.    In connection with the sale and purchase of the Property, Assignor desires to assign to Assignee all of Assignor’s right, title and interest in and to those agreements set forth on Exhibit A attached to and made a part of this Assignment (collectively, the “Contracts”) and Assignee desires to accept said assignment and assume the obligations of Assignor under the Contracts, all upon the terms, covenants and conditions set forth in this instrument.

NOW, THEREFORE, in consideration of the purchase price paid by Assignor to Assignee for the Property and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Assignor and Assignee covenant and agree as follows:

1.    Assignment. Assignor hereby assigns, transfers and sets over to Assignee all of Assignor’s right, title and interest in and to the Contracts. Assignor agrees to pay and perform all terms, covenants, conditions, agreements and obligations to be kept and performed under the Contracts to the date of this Assignment, together with such other obligations of Assignor concerning the Contracts set forth in the Agreement of Sale.

2.    Assumption. Assignee accepts said assignment and assumes all obligations of Assignor under the Contracts arising or accruing on or after the date of this Assignment.

3.    Indemnification by Assignor. Assignor agrees to indemnify, defend and hold Assignee harmless from and against any claim, demand, cause of action, charge, judgment, damage, liability, cost or expense (including, without limitation, reasonable attorneys’ fees and legal costs) arising out of the Contracts in connection with events occurring prior to the date of this Assignment.

4.    Indemnification by Assignee. Assignee agrees to indemnify, defend and hold Assignor harmless from and against any claim, demand, cause of action, charge, judgment, damage, liability, cost or expense (including, without limitation, reasonable attorneys’ fees and legal costs) arising out of the Contracts in connection with events occurring on or after the date of this Assignment.

5.     Counterparts. This Assignment may be executed and delivered in any number of counterparts, each of which so executed and delivered shall be deemed to be an original and all of which shall constitute one and the same instrument. For purposes of this Assignment, any signature transmitted

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by e-mail (in pdf format) shall be considered to have the same legal and binding effect as any original signature.

6.    Binding Effect. This Assignment shall be binding upon and inure to the benefit of Assignor and Assignee and their respective heirs, personal representatives, successors and assigns.

IN WITNESS WHEREOF, intending to be legally bound, Assignor and Assignee have caused this Assignment and Assumption of Contracts to be executed by their duly authorized officers on the day and year first above written.

ASSIGNOR:

RRE BENT OAKS HOLDINGS, LLC, a Delaware limited liability company

By: _____________________

Name:

Title:

ASSIGNEE:

[________________]

By: _____________________

Name:

Title:

Exhibit A – list of contracts

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EXHIBIT G

FIRPTA

Section 1445 of the Internal Revenue Code provides that a transferee of a U.S. real property interest must withhold tax if the transferor is a foreign person. For U.S. tax purposes (including section 1445), the undersigned “Transferor” which is the owner, directly or indirectly of all of the membership interests of RRE BENT OAKS HOLDINGS, LLC, a Delaware limited liability company, which has legal title to a U.S. real property interest under local law, will be the actual transferor of the property for U.S. tax purposes and not the disregarded entity. To inform the transferee that withholding of tax is not required upon the disposition of a U.S. real property interest by Transferor, the undersigned hereby certifies as follows:

1. Transferor is not a foreign corporation, foreign partnership, foreign trust, or foreign estate (as those terms are defined in the Internal Revenue Code and Income Tax Regulations);

2. Transferor is not a disregarded entity, as defined in Treas. Reg. § 1.1445-2(b)(2)(iii);

3. Transferor’s U.S. taxpayer identification number is _____________________; and

4. Transferor’s office address is 1845 Walnut Street, 18^th Floor, Philadelphia, PA 19103.

Transferor understands that the above information 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 penalties of perjury, the undersigned, in the capacity set forth below, hereby declares that he has examined this instrument and to the best of his knowledge and belief it is true, correct, and complete, and the undersigned further declares that he has the authority to sign this document in such capacity.

TRANSFEROR:

RESOURCE REAL ESTATE INVESTORS 7, L.P., a Delaware limited partnership

By: Resource Capital Partners, Inc., a Delaware corporation, its general partner

By:________________________

Name:

Title:

Dated: _________________, 2016

EXHIBIT H

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NOTICE TO TENANTS

_________, 2016

PERSONAL DELIVERY
Residents of Bent Oaks Apartments

3600 North Hills Drive

Austin, TX 78731

Dear Resident:

Notice is hereby given to the tenants of Bent Oaks Apartments (the “Property”) that the current owner of the Property (the “Seller”), has sold the Property to ____________(“Buyer”), effective as of this date. Buyer has assumed all of the obligations of Seller, as landlord under your lease, including any obligations with respect to your security deposit. Buyer acknowledges that it has received and is responsible for your security deposit in the amount listed on the Addendum hereto, which security deposit has been transferred to Buyer, less any amounts applied by Seller listed on the Addendum attached hereto. Any pending claims by Seller against your security deposit are also described on the Addendum attached hereto. Buyer is now your landlord and all future rent payments under your lease shall be made to Buyer.

In the event that your rent payments are made to Seller via an ACH, other automatic debit system, or the WIPS program, such payments shall be rejected as of the date hereof and you should make alternative arrangements with Buyer for the payment of your rent.

Buyer’s address for purposes of your lease is as follows:

___________________

___________________

Attn: _______________

All future rental payments should be hand delivered to the on-site rental office.

Sincerely,

SELLER:

RRE BENT OAKS HOLDINGS, LLC, a Delaware limited liability company

By:____________________________

Name:

Title:

BUYER:

[_________________]

By:______________________________

Name:

Title:

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ADDENDUM

Tenant: ____________________

Unit No.: ___________________

Original Security Deposit Amount: $___________

Amount of Security Deposit Previously Applied: $____________

Existing Security Deposit Amount Being Transferred: $__________

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SCHEDULE 5(b)

[DOCUMENTS]

To the extent in Seller’s possession or control:

1. Real and personal property tax bills and assessed value for the prior 2 years and year-to-date.

2. Copies of any warranty agreements which Seller may have been covering the Property

3. Copies of all Contracts

4. Current rent roll with a delinquency status report

5. Operating account bank statements for prior 2 years and year-to-date

6. Operating income and expense detail for the prior 2 years and year-to-date

7. Details of any financial arrangements with apartment brokers, locators, etc.

8. Copies of current insurance certificates

9. Copy of Seller’s current Owner’s Policy of title insurance

10. Copy of Seller’s existing survey

11. Login information for Conservice (RUBS)

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EX-10.4

AGREEMENT OF PURCHASE AND SALE

THIS AGREEMENT OF PURCHASE AND SALE (this “Agreement”) is made as of July 28, 2016 (the “Effective Date”), by and between RRE WOODHOLLOW HOLDINGS, LLC, a Delaware limited liability company, having an address at c/o Resource Real Estate, Inc., 1845 Walnut Street, 18^th Floor, Philadelphia, PA 19103 (“Seller”), and FIRMUS EQUITY PARTNERS, LLC, a Kansas limited liability company, having an address at 770 North Sherman, #102, Denver, CO 80203 (“Buyer”).

WITNESSETH:

In consideration of the covenants and provisions contained herein, and intending to be legally bound hereby, the parties hereto agree as follows:

1.Agreement to Sell and Purchase. Seller agrees to sell to Buyer, and Buyer agrees to purchase from Seller, subject to all of the terms and conditions of this Agreement, all of Seller’s right, title and interest in and to the project commonly known as “Woodhollow Apartments” containing approximately 108 apartment units located at 3524 Greystone Drive, Austin, TX 78731 and consisting of the following (collectively, the “Property”):

(a)
Real Property. All of that certain tract of land more fully described on Exhibit A to this Agreement (the “Land”) together with all improvements thereon (the “Improvements”), and all appurtenances thereto (including, without limitation, all easements, rights‑of‑way, water rights, privileges, licenses, and other rights and benefits belonging to, running with the owner of, or in any way relating to the aforesaid tract of land and all trees, shrubbery and plants); together with all rights, title and interest of Seller in and to any land lying in the bed of any street, opened or proposed, in front of or abutting or adjoining the aforesaid tract of land, and all right, title and interest of Seller in and to any unpaid award for the taking by eminent domain of any part of the aforesaid tract of land or for damage to such tract of land by reason of a change of grade of any street (collectively, the “Real Property”);

(b)
Personal Property. All fixtures, furniture, equipment, supplies and other tangible and intangible personal property attached or appurtenant to, or located in or on, or used solely in connection with the Real Property, which are owned by Seller excluding, however, any “Thin Client Solutions” hardware and software and any items upon which appears the “Resource Residential” logo, including without limitation, any door rugs, portable movie screens, marketing brochures and other literature (collectively, the “Personal Property”);

(c)
Leases. The Seller’s interest in all leases, tenancies, licenses and other agreements for the use or occupancy of any portion of the Property and all guaranties in connection therewith (the “Leases”); and

(d)
Contracts. To the extent assignable, the Seller’s interest in all leasing, service, supply and maintenance contracts relating to the Land, Improvements, or Personal Property (collectively, the “Contracts”), but only to the extent Buyer elects to have such Contracts assigned to it in accordance with Section 5(c) hereof.

2.
Purchase Price; Deposit. The purchase price (the “Purchase Price”) for the Property, subject to

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adjustments as provided in this Agreement, shall be TWELVE MILLION SIX HUNDRED TWENTY THOUSAND AND 00/100 DOLLARS ($12,620,000.00), and shall be paid as follows:

(a)
Three Hundred Fifty Thousand and 00/100 Dollars ($350,000.00) (the “Deposit”) to be paid within three (3) business days after the Effective Date in immediately available funds and delivered to Heritage Title Company of Austin, Inc., 401 Congress, Suite 1500, Austin, TX 78701, Attention: John P. Bruce, Phone: (512) 505-5012, Facsimile: (512) 380-8812; Email: jbruce@heritage-title.com (“Escrow Holder” or “Title Company”).

(b)
The Deposit shall be held by Escrow Holder in one or more interest bearing federally‑insured money market accounts acceptable to both Seller and Buyer. As used in this Agreement, “Deposit” shall mean and include the Deposit as defined in Subsection 2(a) above and any interest earned thereon. If requested by Escrow Holder, Buyer shall execute and deliver a Form W-9 to Escrow Holder. Failure by Buyer to deliver the Deposit as provided above shall be a material default hereunder and shall render this Agreement terminable or, alternatively, voidable at the option of the Seller.

(c)
The balance of the Purchase Price, as adjusted in accordance herewith, shall be paid at Closing by wire transfer of immediately available funds and delivered to Escrow Holder.

(d)
Concurrent with its deposit of the Deposit with the Escrow Holder, Buyer shall deposit with the Escrow Holder the additional amount of Fifty Dollars ($50.00) (the “Independent Contract Consideration”) which Seller and Buyer agree shall be paid to Seller if this Agreement is terminated for any reason. Moreover, Seller and Buyer agree and acknowledge that the Independent Contract Consideration has been bargained for and agreed as additional consideration for Seller’s execution and delivery of this Agreement and for Buyer’s rights of review, inspection and termination provided herein. At Closing, the Independent Contract Consideration shall not be applied to the Purchase Price.

3.
Disposition of Deposit; Defaults.

(a)
Held in Escrow. Subject to Section 3(e) below, the Deposit shall be held in escrow and disbursed by Escrow Holder strictly in accordance with the terms of this Agreement.

(b)
Upon Default.

(i)
IF BUYER, WITHOUT THE RIGHT TO DO SO AND IN DEFAULT OF ITS OBLIGATIONS UNDER THIS AGREEMENT, FAILS TO COMPLETE CLOSING OR OTHERWISE DEFAULTS UNDER OR BREACHES THIS AGREEMENT, SELLER SHALL HAVE THE RIGHT TO TERMINATE THIS AGREEMENT AND BE PAID THE DEPOSIT AS LIQUIDATED DAMAGES. THE PARTIES HAVE AGREED THAT SELLER’S ACTUAL DAMAGES, IN THE EVENT OF A BUYER DEFAULT WOULD BE EXTREMELY DIFFICULT OR IMPRACTICABLE TO DETERMINE. AFTER NEGOTIATION, THE PARTIES HAVE AGREED THAT, CONSIDERING ALL THE CIRCUMSTANCES EXISTING ON THE DATE OF

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THIS AGREEMENT, THE AMOUNT OF THE DEPOSIT IS A REASONABLE ESTIMATE OF THE DAMAGES THAT SELLER WOULD INCUR IN SUCH EVENT. EACH PARTY SPECIFICALLY CONFIRMS THE ACCURACY OF THE STATEMENTS MADE ABOVE AND THE FACT THAT EACH PARTY WAS REPRESENTED BY COUNSEL WHO EXPLAINED, AT THE TIME THIS AGREEMENT WAS MADE, THE CONSEQUENCES OF THIS LIQUIDATED DAMAGES PROVISION. THE RIGHT OF SELLER TO BE PAID THE DEPOSIT SHALL BE SELLER’S SOLE AND EXCLUSIVE REMEDY FOR BUYER’S FAILURE TO PURCHASE THE PROPERTY OR OTHER BREACH OR DEFAULT OF THIS AGREEMENT.

(ii)
If Seller, without the right to do so and in default of its obligations under this Agreement, fails to complete Closing or otherwise defaults under or breaches this Agreement, Buyer shall have the right to (i) terminate this Agreement, in which event Buyer shall be entitled to the immediate return of the entire Deposit as its sole and exclusive remedy (subject to the remainder of this paragraph) and neither Seller nor Buyer shall have any further obligations under this Agreement, except those matters expressly provided in this Agreement to survive termination, or (ii) institute a civil court action for specific performance (but not damages); provided that Buyer shall commence its action of specific performance against Seller within ninety (90) days after the scheduled Closing Date. UNDER NO CIRCUMSTANCES MAY BUYER SEEK OR BE ENTITLED TO RECOVER ANY SPECIAL, CONSEQUENTIAL, PUNITIVE, SPECULATIVE OR INDIRECT DAMAGES, ALL OF WHICH BUYER SPECIFICALLY WAIVES, FROM SELLER FOR ANY BREACH BY SELLER OF ITS REPRESENTATIONS, WARRANTIES OR COVENANTS OR ITS OBLIGATIONS UNDER THIS AGREEMENT. BUYER SPECIFICALLY WAIVES THE RIGHT TO FILE ANY LIS PENDENS OR ANY LIEN AGAINST ANY PROPERTY UNLESS AND UNTIL IT HAS FILED AN ACTION SEEKING SPECIFIC PERFORMANCE. Notwithstanding anything to the contrary set forth herein, if Buyer terminates this Agreement pursuant to this paragraph and the Seller default or failure at issue is the failure by Seller to deliver on or before the Closing Date one or more of the documents for the Closing required under Subsections 15(a)(i)-(vii) and (x)-(xii), duly executed and acknowledged by Seller where applicable, then in addition to a return of the entire Deposit, Buyer shall be entitled to damages from Seller in an amount equal to all of the losses, costs and expenses actually incurred by Buyer in connection with this Agreement and the pursuit of the transactions contemplated by same or otherwise in reliance upon Seller timely performing all of its obligations under this Agreement for Closing, such damages not to exceed $500,000 in the aggregate. Buyer’s claim for damages under the preceding sentence shall survive the termination of this Agreement, and Seller acknowledges that such claim shall not be barred by any limitations on damages or remedies within this paragraph or elsewhere in this Agreement.

(c)
Upon Closing. If Closing is completed hereunder, Escrow Holder shall pay the Deposit to Seller as a credit against the Purchase Price.

(d)
Upon Termination by Buyer. If Buyer terminates this Agreement as a result of Seller’s default or pursuant to the exercise of any right of termination permitted by this Agreement, upon the earlier to occur of: (i) receipt by Escrow Holder of written joint instructions consistent with this Agreement from Seller and Buyer or (ii) entry of a final and unappealable adjudication determining which party is entitled to receive the Deposit, the Deposit shall be distributed in accordance with such written instructions or adjudication.

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(e)
Hard Deposit. Notwithstanding any provision herein to the contrary, Buyer hereby acknowledges and agrees that $250,000 of the Deposit (the “Hard Deposit”) shall be (i) a “hard” deposit that is non-refundable to Buyer except as expressly set forth in this Section 3(e) and (ii) immediately released by Escrow Holder to Seller upon Escrow Holder’s receipt of the Deposit pursuant to Section 3(a) above; provided, however, that Buyer shall be entitled to a return by Seller of the Hard Deposit in the case of a termination by Buyer under Section 3(b)(ii) (Seller Default) or a termination by Buyer where authorized under Section 13 or 14 of this Agreement. This provision shall survive termination of this Agreement.

4.
Closing. The consummation of the purchase and sale of the Property (the “Closing”) shall take place on or before September 15, 2016 or at earlier date as mutually agreed to in writing by the parties (the “Closing Date”). The Closing shall be conducted through an escrow with the Escrow Holder, with escrow fees to be paid equally by Seller and Buyer. IT IS AGREED THAT TIME IS OF THE ESSENCE OF THIS AGREEMENT.

5.
Inspection and Title Review.

(a)
Inspection Period. Buyer and its authorized agents and representatives shall have the right to enter upon the Land and Improvements (including all of the apartment units, but subject to the rights of tenants under the Leases and in accordance with applicable law) at all reasonable times during normal business hours to inspect and conduct reasonably necessary inspections and tests on the Property at its sole cost and expense, including, without limitation, engineering and hazardous material inspections; provided, however, any intrusive physical testing will be conducted by Buyer only after obtaining Seller’s prior written consent. The right granted in the immediately preceding sentence may be exercised during the period commencing on the Effective Date and ending on the earlier to occur of the Closing Date or termination of this Agreement. Buyer shall bear the cost of all inspections and tests, and Buyer shall give reasonable notice to the management of any inspection or test to be conducted on the Property. Buyer hereby indemnifies and holds Seller and the Property harmless as to all loss, property damage, bodily injury, cost or expense resulting from Buyer’s inspections and tests of the Property, including, without limitation, claims for services rendered by third parties conducting such inspections and tests. Buyer shall also restore the Land and Improvements to the condition in which the same were found before any such entry upon the Property and inspection or examination was undertaken. Such agreement to repair and restore, and to indemnify and hold harmless Seller shall expressly survive closing or any termination of the Agreement, but shall not apply to pre-existing conditions and matters merely discovered by Buyer or such third parties. Buyer shall maintain, or shall cause its contractors to maintain, public liability and property damage insurance insuring Buyer (and naming Seller as an additional insured party) against any liability arising out of any entry or inspections of the Property or work performed about the Property pursuant to the provisions hereof and shall deliver certificates of insurance evidencing such coverage to Seller prior to any entry by Buyer or its contractors on the Property.

(b)
Document Review. Within three (3) business days after the Effective Date, Seller shall deliver to Buyer (or make available for inspection at the Property) copies of the items listed on Schedule 5(b) attached hereto and made a part hereof, but only to the extent such items are in Seller’s possession or control (collectively, “Documents”); provided that Leases shall be available for inspection at the Property

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only. Except as otherwise expressly set forth in this Agreement, Seller makes no representations or warranties, either express or implied, and shall have no liability with respect to the accuracy or completeness of the information, data or conclusions contained in any information provided to Buyer, and Buyer shall make its own independent inquiry regarding the economic feasibility, physical condition and environmental state of the Property during the period beginning on the Effective Date and ending at 5:00 pm (Eastern) on August 17, 2016 (the “Inspection Period”).

(c)
Assignment or Termination of Contracts. Buyer shall assume all Contracts at Closing subject to this Section 5(c). Prior to the expiration of the Inspection Period, Buyer may advise Seller in writing of any Contracts that it elects to have terminated upon Closing and Seller shall provide timely notices of termination; provided, however, that Seller shall not terminate, and Buyer expressly agrees to assume, all Contracts that are not cancellable by their terms or which cannot be terminated without cost or penalty to Seller. At Closing, Seller shall assign and Buyer shall assume all Contracts that have not terminated as of the Closing Date, including without limitation, any remaining rights and obligations under Contracts under which the notice required to terminate such Contracts, though delivered, will not have run prior to Closing. Notwithstanding the foregoing, all existing agreements for management of the Property shall be terminated as of the Closing Date, as well as any so-called “master” Contracts that pertain to multiple properties controlled by Seller and its affiliates.

(d)
Right of Termination. If Buyer determines that the Property is not suitable in Buyer’s sole discretion, then Buyer may terminate this Agreement by written notice to Seller on or before 5:00 pm (Eastern) on the last day of the Inspection Period and this Agreement shall be null and void for all purposes (except for provisions that expressly survive hereunder) and the Deposit (less the Hard Deposit) shall be returned to Buyer. In the event that Buyer does not deliver notice of termination of this Agreement prior to the expiration of the Inspection Period, Buyer shall be deemed to have waived its right to terminate under this Section 5(d) and the Deposit shall be non-refundable to Buyer except in accordance with the terms of Section 3(b)(ii) above or a termination by Buyer where authorized under Section 13 or 14 of this Agreement.

6.
Condition of Title.

(a)     Commitment to Insure. Within three (3) business days after the Effective Date, Seller shall deliver to Buyer a copy of Seller’s Owner’s Policy of title insurance and Buyer shall promptly order a commitment from the Title Company (the “Title Commitment”) to provide a standard owner’s title insurance policy for the Property in an amount equal to the Purchase Price (the “Title Policy”); and (ii) Seller shall deliver to Buyer a copy the most recent ALTA/ACSM Land Title Survey of the Property in Seller’s possession, if any (the “Existing Survey”). Buyer, at its option and expense, may obtain a new survey, or an update of the Existing Survey of the Real Property (the “Survey”).

(b)    During the Inspection Period, Buyer shall review title to the Real Property as disclosed by the Title Commitment and, if obtained, the Survey. Seller shall have no obligation to cure title objections except to satisfy and remove liens of an ascertainable amount created by, through, or under Seller or its affiliates, which liens Seller shall cause to be released at the Closing or affirmatively insured over by the Title Company. Seller further agrees to remove any exceptions or encumbrances to title which are created by Seller after the Effective Date of this Agreement without Buyer’s written consent or which Seller commits in writing to cure (collectively with the liens addressed in the preceding sentence, the “Seller Cure Items”).

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Buyer may terminate this Agreement and receive a refund of the Deposit (less the Hard Deposit) at any time prior to the expiration of the Inspection Period or if the Title Company revises the Title Commitment after the expiration of the Inspection Period to add or modify exceptions in a material adverse manner, if such additions or modifications are not acceptable to Buyer and are not removed by the Closing Date. Seller shall execute at Closing an affidavit as to authority, the rights of tenants in occupancy and the status of mechanics’ liens (and sufficient to remove from the Title Policy any exception for mechanics’ liens filed against the Real Property which relate to any matters occurring prior to the Closing Date) in form acceptable to Seller as the Title Company shall require for the issuance of the Title Policy. All matters to which exception is taken in the Title Commitment or any revision thereto, other than the Seller Cure Items, constitute the “Permitted Exceptions”. Seller shall cause Title Company to be irrevocably committed at Closing to issue the Title Policy to Buyer, dated effective as of the date of Closing and subject only to the Permitted Exceptions. With such a commitment, the Title Policy may be delivered after Closing if that is customary in the locality.

7.
Delivery of Possession. Actual sole and exclusive physical possession of the Property shall be given to Buyer at Closing unoccupied and free of any leases, claims to or rights of possession other than the rights of tenants under Leases by delivery of the keys to the Property and Seller’s special or limited warranty deed (the “Deed”) in the form attached hereto as Exhibit B, and Seller’s bill of sale in the form of Exhibit C to this Agreement duly executed by Seller (the “Bill of Sale”).

8.
Apportionments. All property related items of income and expense, including but not limited to the following, shall be apportioned between Seller and Buyer as of 11:59 p.m. on the day prior to the Closing Date (the “Pro Ration Date”) as follows:

(a)
Taxes.     All real estate taxes, charges, and assessments affecting the Property (collectively, “Taxes”) shall be prorated on a per diem basis as of the Pro Ration Date, applying any discount for early payment applicable as of the Pro Ration Date, and on the basis of the actual fiscal year for which such taxes are assessed, and Buyer shall assume liability for payment of Taxes accruing in the year in which Closing occurs.  In the event that the amount of Taxes for the current year is unknown at Closing, the Taxes shall be prorated based on the mill rate for taxes assessed for the immediately preceding year, taking into account the current appraised value for the Property issued by the County Appraisal District, and Buyer shall notify Seller of any necessary adjustment to such proration within thirty (30) days after when correct tax figures are known, and thereafter any necessary adjustments shall be made. Buyer hereby acknowledges and agrees that Seller has or may file appeals (the “Appeals”) with respect to the current fiscal year and also with respect to prior year(s) ad valorem property taxes applicable to the Property (the “Appealed Taxes”). Seller shall be entitled, in Seller’s sole discretion, to continue to pursue such Appeals after the Closing Date. In the event that any such Appeal is successful in reducing the amount of Appealed Taxes payable with respect to prior years, Seller shall be entitled to the full amount of any rebate, refund or reduction resulting from such Appeal. In the event that any such Appeal is successful in reducing the amount of Appealed Taxes payable with respect to the current fiscal year, Seller and Buyer shall prorate the net proceeds of any rebate, refund or reduction resulting from such Appeal relating to the current fiscal year, after payment of Seller’s third party costs incurred in connection with the Appeal. This paragraph shall expressly survive Closing and the recordation of the Deed.

(b)
Rents.     Rents and other recurring income relating to the Property and collected by Seller for the month in which Closing occurs shall be deemed earned ratably on a per diem basis and shall be prorated

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as of the Pro Ration Date. Amounts collected by Seller prior to the date of Closing as rent for each day occurring after the Pro Ration Date and all other prepaid amounts shall be credited to the Buyer at Closing. All such amounts collected by Seller or Buyer from tenants or other payors after Closing shall be paid over and applied in the following order of priority: (i) first, on account of rents and other sums due to Seller and Buyer (and pro‑rated between them as of the Pro Ration Date) for the month in which Closing occurs; (ii) then, on account of rents and other sums due to Seller from the respective tenant or payor for any month prior to the month of Closing; and (iii) thereafter, on account of rents and other sums due to Buyer from the respective tenant or payor after Closing.

(c)
Other.All normal and customarily proratable items including without limitation operating expenses, personal property taxes, minimum water and sewer rentals, payments due under the Contracts which are to be assigned to Buyer, prepaid license fees and other charges for licenses and permits for the Real Property which will remain in effect for Buyer’s benefit after Closing and municipal rubbish removal charges, shall be apportioned pro rata between Seller and Buyer on a per diem basis based upon a calendar year or calendar month (as applicable).

(d)
Security Deposits. The total sum of all tenant security deposits currently held by Seller, together with all interest earned thereon as of the Closing Date, shall be transferred to Buyer at Closing by operation of a credit against the Purchase Price.

(e)
Utility Meter Readings. Seller shall obtain readings of the water, electric, gas and other utility meters servicing the Real Property (other than meters measuring exclusively utility consumption which is to be paid in full by tenants under Leases) to a date no sooner than two (2) days prior to the Closing Date. At or prior to Closing, Seller shall pay all charges based upon such meter readings, adjusted to include a reasonable estimate of the additional charges due for the period from the dates of the respective readings until the Closing Date. If Seller is unable to obtain readings of any meters prior to the Closing Date, Closing shall be completed without such readings and upon the obtaining thereof, Seller shall pay the charges incurred prior to the Closing Date as reasonably determined by both Buyer and Seller based upon such readings, and at Closing, Seller shall deposit with the Title Company an amount reasonably estimated to represent the anticipated obligation of Seller under this sentence. This paragraph shall survive Closing accordingly.

(f)
RUBS. In addition to any other prorations described in this Agreement, any ratio utility billing systems (“RUBS”) applicable to the Property, for the following categories of utilities and other reimbursements: (i) electricity, (ii) gas, (iii) water / sewer, (iv) trash, (v) pest control and (vi) other typical items, attributable to the uncollected or trailing collections for the two calendar months prior to Closing will be reflected as a credit to Seller at Closing and will be calculated for closing purposes on the uncollected or trailing collections monthly periods based on the monthly average actual trailing RUBS for six months prior to Closing according to the income statements prepared by Seller and provided to Buyer.  A subsequent cash adjustment of RUBS between Seller and Buyer will be made when actual figures are available for such 2-month period, but in all events within 120 days after the Closing Date.  Seller and Buyer each agree to provide such information as the other may reasonably request regarding RUBS and the billing, collection, and payment thereof.

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(g)
True-up. Subsequent to the Closing, if at any time during the 60-day period following Closing the actual amount of any pro-rated items that were based upon estimations at Closing, including without limitation, utilities and other operating expenses with respect to the Property for the month in which the Closing occurs, are determined, the parties agree to adjust the proration of utilities and other operating expenses and, if necessary, to refund or repay such sums as shall be necessary to effect such adjustment. For clarification, this Section 8(g) shall not apply to Taxes, Rents or RUBS which shall be pro-rated and paid under Sections 8(a), 8(b) and 8(f) respectively. This provision shall survive Closing and recordation of the Deed.

(h)
Closing Costs. Seller shall pay (i) ½ of all escrow fees, (ii) premium for a basic TLTA T-1 owner’s policy(s) of title insurance in the amount of the Purchase Price, and (iii) all of Seller’s legal costs and expenses. Buyer shall pay (i) title premiums for any endorsements to the owner’s policy of title insurance, together with all costs and premiums relating to any loan policy of title insurance and endorsements for the benefit of Buyer’s lender, if any, (ii) cost of the Survey, (iii) ½ of all escrow fees, (iv) all other closing and recording costs with respect to the conveyance of the Property, (v) all costs, fees, recordation taxes and assessments with respect to any financing of Buyer, and (vi) Buyer’s legal costs and expenses. All other costs and expenses incurred in connection with the transaction contemplated hereby and not specifically allocated herein shall be paid by the party incurring the same. It is contemplated by the parties that no realty transfer taxes, including without limitation, any state or local transfer taxes or recordation charges, will be due as a result of this transaction.

(i)
Up Front Payments. Any one-time inducement payments or other non-refundable fees, royalties or other payments made or paid to the owner of the Property under any Contract assumed by Buyer at Closing, including, but not limited to, any payments made to the owner of the Property under any cable agreement (“Up Front Payments”), shall not be apportioned pro rata between Seller and Buyer and Buyer shall not receive any credit from Seller at closing for any portion of any One-Time Payment attributable or allocable to any period of time from and after Closing.

(j)
Any credit due to Buyer pursuant to Section 8 shall be applied as a credit against the Purchase Price, and any credit due to Seller pursuant to Section 8 shall be paid by Buyer to Seller at Closing as an addition to the Purchase Price.

9.
Property Condition. THE PROPERTY IS BEING SOLD IN AN “AS IS,” “WHERE IS” CONDITION AND “WITH ALL FAULTS” AS OF THE EFFECTIVE DATE, SUBJECT TO NORMAL WEAR AND TEAR AND DAMAGE BY FIRE OR OTHER CASUALTY AS SET FORTH HEREIN. EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, BUYER ACKNOWLEDGES AND AGREES THAT SELLER HAS NOT MADE, DOES NOT MAKE AND SPECIFICALLY NEGATES AND DISCLAIMS ANY REPRESENTATIONS, WARRANTIES, PROMISES, COVENANTS, AGREEMENTS OR GUARANTIES OF ANY KIND OR CHARACTER WHATSOEVER, WHETHER EXPRESS OR IMPLIED, ORAL OR WRITTEN, PAST, PRESENT OR FUTURE, AND NO RESPONSIBILITY HAS BEEN OR IS ASSUMED AND/OR UNDERTAKEN BY SELLER OR BY ANY PARTNER, OFFICER, DIRECTOR, PERSON, FIRM, AGENT, ATTORNEY OR REPRESENTATIVE ACTING OR PURPORTING TO ACT ON BEHALF OF SELLER AS TO, CONCERNING OR WITH RESPECT TO (I) THE CONDITION OR STATE OF REPAIR OF THE

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PROPERTY; (II) THE COMPLIANCE OR NONCOMPLIANCE OF THE PROPERTY WITH ANY APPLICABLE LAWS, REGULATIONS OR ORDINANCES (INCLUDING, WITHOUT LIMITATION, ANY APPLICABLE ZONING, BUILDING, HANDICAPPED ACCESSIBILITY, OR DEVELOPMENT LAWS, CODES, RULES AND REGULATIONS); THE HABITABILITY, MERCHANTABILITY, MARKETABILITY, PROFITABILITY, OR FITNESS FOR A PARTICULAR PURPOSE OF THE PROPERTY; (III) THE MANNER OR QUALITY OF THE CONSTRUCTION OR MATERIALS, IF ANY, INCORPORATED WITHIN THE PROPERTY; (IV) THE SUITABILITY OF THE PROPERTY FOR ANY AND ALL ACTIVITIES AND USES WHICH BUYER MAY CONDUCT THEREON; (V) THE VALUE, EXPENSE OF OPERATION, OR INCOME POTENTIAL OF THE PROPERTY; (VI) ANY OTHER FACT OR CONDITION WHICH HAS OR MIGHT AFFECT THE PROPERTY OR THE CONDITION, STATE OF REPAIR, COMPLIANCE, VALUE, EXPENSE OF OPERATION OR INCOME POTENTIAL OF THE PROPERTY OR ANY PORTION THEREOF; OR (VII) WHETHER THE PROPERTY CONTAINS ASBESTOS OR ANY OTHER HARMFUL, HAZARDOUS OR TOXIC SUBSTANCES OR PERTAINING TO THE EXTENT, LOCATION OR NATURE OF SAME, OR THE CONDITION OF THE PROPERTY, INCLUDING WITHOUT LIMITATION, WATER, SOIL, AND GEOLOGY. THE PARTIES AGREE THAT ALL UNDERSTANDINGS AND AGREEMENTS HERETOFORE MADE BETWEEN THEM OR THEIR RESPECTIVE AGENTS OR REPRESENTATIVES ARE MERGED IN THIS AGREEMENT AND THE EXHIBITS HERETO ANNEXED, WHICH ALONE FULLY AND COMPLETELY EXPRESS THEIR AGREEMENT. BUYER SHALL NOT RELY UPON ANY STATEMENT OR REPRESENTATION BY OR ON BEHALF OF SELLER UNLESS SUCH STATEMENT OR REPRESENTATION IS SPECIFICALLY SET FORTH IN THIS AGREEMENT OR ONE OF THE CONVEYANCE DOCUMENTS SERVING AS AN EXHIBIT HERETO.

BUYER WAIVES AND RELEASES SELLER FROM ANY PRESENT OR FUTURE CLAIMS ARISING FROM OR RELATING TO THE PRESENCE OR ALLEGED PRESENCE OF ASBESTOS, OR ANY OTHER HARMFUL, HAZARDOUS OR TOXIC SUBSTANCES IN, ON, UNDER OR ABOUT THE PROPERTY INCLUDING, WITHOUT LIMITATION, ANY CLAIMS UNDER OR ON ACCOUNT OF (I) THE COMPREHENSIVE ENVIRONMENTAL RESPONSE, COMPENSATION AND LIABILITY ACT OF 1980, AS THE SAME MAY HAVE BEEN OR MAY BE AMENDED FROM TIME TO TIME; (II) ANY OTHER FEDERAL, STATE OR LOCAL LAW, ORDINANCE, RULE OR REGULATION, NOW OR HEREAFTER IN EFFECT, THAT DEALS WITH OR OTHERWISE IN ANY MANNER RELATES TO ENVIRONMENTAL MATTERS OF ANY KIND; OR (III) THIS AGREEMENT OR THE COMMON LAW. THE TERMS AND PROVISIONS OF THIS PARAGRAPH SHALL SURVIVE CLOSING HEREUNDER.

BUYER ACKNOWLEDGES THAT BUYER IS A SOPHISTICATED BUYER WHO IS FAMILIAR WITH THIS TYPE OF PROPERTY. BUYER IS ACQUIRING THE PROPERTY “AS IS,” “WHERE IS” AND “WITH ALL FAULTS,” IN ITS PRESENT STATE AND CONDITION, WITHOUT REPRESENTATION OR WARRANTY BY SELLER OR ANY OF ITS REPRESENTATIVES OR AGENTS AS TO ANY MATTERS WHATSOEVER EXCEPT AS OTHERWISE SPECIFICALLY SET FORTH IN THIS AGREEMENT, AND TO THE MAXIMUM EXTENT PERMITTED BY LAW, NO PATENT OR LATENT CONDITION AFFECTING THE PROPERTY IN ANY WAY, WHETHER OR NOT KNOWN OR DISCOVERABLE OR HEREAFTER DISCOVERED, SHALL AFFECT BUYER’S OBLIGATIONS HEREUNDER, NOR SHALL ANY SUCH CONDITION GIVE RISE TO ANY RIGHT OF DAMAGES, RESCISSION OR OTHERWISE AGAINST SELLER.

10.
Representations and Warranties of Seller. Except, in all cases, for any fact, information or

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condition disclosed in the Documents, Title Commitment, Existing Survey, Survey, Contracts or which is otherwise actually known to Buyer as of the Effective Date, Seller makes the following representations and warranties to Buyer, which representations and warranties are true and correct as of the date of this Agreement and, as applicable, as of the Closing Date (the “Seller Representations”):

(a)
Seller is a limited liability company, duly formed, validly existing and in good standing under the laws of the State of Delaware, with all legal power and authority to undertake, observe and perform all of Seller’s agreements and obligations hereunder.

(b)
Seller has full power, authority and legal right to execute, deliver and comply with this Agreement, and all actions of the Seller and other authorizations necessary or appropriate for the execution and delivery of and compliance with this Agreement have been taken or obtained and this Agreement constitutes the valid and legally binding obligation of the Seller enforceable against it in accordance with its terms; and the individual executing this Agreement and each of the documents executed in connection herewith on behalf of the Seller has the power and authority to do so. This Agreement and all documents executed by Seller that are to be delivered to Buyer at Closing (i) are, or at the time of Closing will be, duly authorized, executed and delivered by Seller, and (ii) do not, and at the time of Closing will not, violate any provision of any agreement or judicial order to which Seller is a party; and

(c)
No consents are required to be obtained from, and no filings are required to be made with, any governmental authority or third party in connection with the execution and delivery of this Agreement by Seller or the consummation by Seller of the transactions contemplated hereby.

(d)
Seller is not a foreign person within the meaning of Section 1445 of the Internal Revenue Code of 1986, as amended.

(e)
To Seller’s knowledge, there are no actions, proceedings, litigation or governmental investigations or condemnation actions either pending or threatened with respect to the Property except for matters (i) which, if adversely determined, would have no material adverse effect on (A) the use, operation or value of the Property or (B) Seller’s ability to consummate the transactions contemplated hereby, or (ii) covered by Seller’s current insurance policies.

(f)
To Seller’s knowledge, the rent roll attached hereto as Exhibit “D” is true, correct and genuine in all material respects as of the date shown thereon. To Seller’s knowledge, there are no Leases except those disclosed by such rent roll and those hereafter entered into by Seller consistent with the terms and limitations of this Agreement.

(g)
To Seller’s knowledge, Seller has not received written notice of any material default under any of the Contracts that will not be terminated on the Closing Date.

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(h)
Neither Seller nor any of its affiliates is, nor will they become, a person or entity with whom U.S. persons or entities are restricted from doing business under regulations of the Office of Foreign Asset Control (“OFAC”) of the Department of the Treasury (including those named on OFAC’s Specially Designated and Blocked Persons List) or under any statute, executive order (including the September 24, 2001, Executive Order Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten to Commit, or Support Terrorism) or other governmental action and does not, to its actual knowledge, engage in any dealings or transactions or be otherwise associated with such persons or entities.

Seller and Buyer agree that Seller’s Representations shall survive Closing for a period of six (6) months (the “Survival Period”) and Seller shall have no liability after the Survival Period with respect to any of the Seller Representations contained herein. Any representations or warranties made to “Seller’s knowledge” shall not be deemed to imply any duty of inquiry. Buyer hereby waives any right Buyer may have to commence any action(s) to enforce any alleged breach and/or violation of any representations of Seller as set forth in this Agreement or to seek damages in connection therewith in the event that Buyer obtains actual knowledge of any such alleged breach and/or violation prior to Closing and fails to give Seller notice thereof before the Closing Date.

11.
Representations and Warranties of Buyer. Buyer, to induce Seller to enter into this Agreement and to complete Closing, makes the following representations and warranties to Seller, which representations and warranties are true and correct as of the date of this Agreement, and shall be true and correct at and as of the Closing Date in all respects as though such representations and warranties were made both at and, as of the date of this Agreement, and except as otherwise set forth herein, at and as of the Closing Date.

(a)
Buyer is duly formed, validly existing and in good standing under the laws of the State of its formation, with all legal power and authority to undertake, observe and perform all of Buyer’s agreements and obligations hereunder.

(b)
Buyer has full power, authority and legal right to execute, deliver and comply with this Agreement, and all actions of the Buyer and other authorizations necessary or appropriate for the execution and delivery of and compliance with this Agreement have been taken or obtained and this Agreement constitutes the valid and legally binding obligation of the Buyer enforceable against it in accordance with its terms; and the individual executing this Agreement and each of the documents executed in connection herewith on behalf of the Buyer has the power and authority to do so. This Agreement and all documents executed by Buyer that are to be delivered to Seller at Closing (i) are, or at the time of Closing will be, duly authorized, executed and delivered by Buyer, and (ii) do not, and at the time of Closing will not, violate any provision of any agreement or judicial order to which Buyer is a party.

(c)
No consents are required to be obtained from, and no filings are required to be made with, any governmental authority or third party in connection with the execution and delivery of this Agreement by Buyer or the consummation by Buyer of the transactions contemplated hereby.

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(d)
Neither Buyer nor any of its affiliates is, nor will they become, a person or entity with whom U.S. persons or entities are restricted from doing business under regulations of the OFAC of the Department of the Treasury (including those named on OFAC’s Specially Designated and Blocked Persons List) or under any statute, executive order (including the September 24, 2001, Executive Order Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten to Commit, or Support Terrorism) or other governmental action and does not, to its actual knowledge, engage in any dealings or transactions or be otherwise associated with such persons or entities.

(e)
Buyer acknowledges that the Property may be subject to the federal Americans With Disabilities Act (the "ADA") and the federal Fair Housing Act (the "FHA"). The ADA requires, among other matters, that tenants and/or owners of "public accommodations" remove barriers in order to make the Property accessible to disabled persons and provide auxiliary aids and services for hearing, vision or speech impaired persons. Seller makes no warranty, representation or guarantee of any type or kind with respect to the Property's compliance with the ADA or the FHA (or any similar state or local law), and Seller expressly disclaims any such representation. Buyer acknowledges that it is solely responsible for determining whether the Property complies with the ADA and the FHA. The provisions of this Section 11(e) shall survive indefinitely the Closing or earlier termination of this Agreement and shall not be merged into the Deed or other closing documents.

(f)
It is expressly acknowledged by Buyer that this transaction is not subject to any financing contingency and no financing for this transaction shall be provided by Seller.

(g)
Buyer is a sophisticated and experienced Buyer of commercial properties including without limitation, apartment projects, and has participated in and is familiar with the acquisition, development, redevelopment, ownership, management, and operation of real estate projects similar to the Property. Buyer has or will have under the terms of this Agreement adequate opportunity to complete and will have completed all physical, financial, legal and regulatory investigations and examinations relating to the Property that it deems necessary, and will acquire the same solely on the basis of such investigations and examinations and the title insurance protection afforded by the Title Policy and not on the basis of any information provided or to be provided by Seller other than the express representations and warranties of Seller within this Agreement or one of the conveyance documents serving as Exhibits hereto.

12.
Operations Prior to Closing. Between the date of the execution of this Agreement and Closing:

(a)
Operations and Management. During the pendency of this Agreement, Seller shall carry on its business and activities relating to the Property, substantially in the same manner as it did before the Effective Date. Seller shall maintain the physical condition of the Property in substantially its current condition, reasonable wear and tear and damage by fire and other casualty excepted.

(b)
Compliance with Obligations. Seller shall comply in all material respects with the obligations of Seller under the Leases, the Contracts and all other agreements and contractual arrangements by which

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Seller and/or the Property are bound or affected. Seller shall maintain its current insurance policy in full force and effect and shall pay all required premiums and other charges.

(c)
New Contracts; New Leases. Seller shall not enter into any contract for or on behalf of or affecting the Property which cannot be terminated upon no more than thirty (30) days’ prior notice or without charge, cost, penalty or premium or if such contract provides for any Up Front Payments, and, after expiration of the Inspection Period, shall not renew, fail to give a notice which, in the absence of which, will result in an automatic renewal of, modify, cancel or terminate any Contracts except in accordance with notices given by Buyer under Section 5(c). Notwithstanding anything to the contrary set forth herein, Seller may enter into new leases or renewal leases for all or any portion of the Property in accordance with its current leasing parameters and procedures.

13.
Casualty.

(a)
Destruction. If at any time prior to the Closing Date any portion of the Property should sustain damage by fire or other casualty (a “Casualty”), Seller shall promptly give written notice (“Casualty Notice”) thereof to Buyer, which notice shall include Seller’s estimate of the time and cost necessary to repair or remedy the damage caused by such Casualty. If the Property is the subject of a Casualty which is material, Buyer shall have the right, at its sole option, of terminating this Agreement (by written notice to Seller and Escrow Holder given within ten (10) days after receipt of the Casualty Notice from Seller). For purposes hereof, a “material” Casualty is one where the cost of restoring the Improvements to their condition prior to the Casualty will equal or exceed ten percent (10%) of the Purchase Price. If Buyer does not terminate this Agreement, the proceeds of any insurance with respect to the Property paid to Seller between the date of this Agreement and the Closing Date shall be paid over to Buyer at the time of Closing (less any amount expended by Seller under Section 13(b) below) and all unpaid claims and rights in connection with losses to the Property shall be assigned to Buyer at Closing, and the amount of the deductible required to be paid under the Seller’s applicable insurance policy or policies will be paid by Seller to Buyer, without in any manner affecting the Purchase Price.

(b)
Repairs. If the Property is the subject of a Casualty, but Buyer does not terminate this Agreement pursuant to the provisions of Section 13(a)above, then Seller shall cause all temporary repairs to be made to the Property as shall be required to prevent further deterioration and damage to the Property prior to the Closing Date. Seller shall have the right to be reimbursed from the proceeds of any insurance with respect to the Property paid between the date of this Agreement and the Closing Date for the cost of all such repairs made pursuant to this Section 13(b). Except for the obligation of Seller to repair the Property set forth in this Section 13(b), Seller shall have no other obligation to repair any Casualty, damage or destruction in the event Buyer does not elect to terminate this Agreement pursuant to the provisions of Section 13(a), and in such event, Buyer shall accept the Property at Closing as damaged or destroyed by the Casualty.

14.
Eminent Domain. If any condemnation or eminent domain (a “Taking”) affects all or any part of the Property prior to Closing, or if any proceeding for a Taking is commenced prior to Closing, or if notice of the contemplated commencement of a Taking is given prior to Closing, Seller shall deliver written notice of such Taking to Buyer and Buyer, to the extent such Taking is material, shall have the

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right, at its sole option, of terminating this Agreement (by written notice to Seller within ten (10) days after receipt by Buyer of written notice from Seller of the Taking). For purposes hereof, a “material” Taking shall mean a Taking of all or any portion of the Property which causes (i) a material reduction in the size of the Property or a material interference with the use and operation of the Property, (ii) a material reduction in the number of parking spaces available at the Property, (iii) a material adverse effect on the ingress and egress to and from the Property, or (iv) a material reduction in the gross income that it is anticipated will be generated at the Property. If Buyer does not terminate this Agreement, the Purchase Price shall be reduced by the total of any awards or damages received by Seller, and Seller shall, at Closing, be deemed to have assigned to Buyer all of Seller’s right, title and interest in and to any awards or damages to which Seller may have become entitled or may thereafter be entitled by reason of any exercise of the power of eminent domain or condemnation with respect to or for the Taking of the Property or any portion thereof.

15.
Items to be Delivered at Closing.

(a)
By Seller. At Closing, Seller shall deliver to Buyer the following, duly executed and acknowledged by Seller (where applicable):

(i)
Deed. The Deed;

(ii)
Bill of Sale. The Bill of Sale for the transfer of the Personal Property;

(iii)
Assignments of Leases and Contracts. Assignments in the form of Exhibit Eand Exhibit F, respectively, of Seller’s interest in the Leases and the Contracts (to the extent not required to be terminated before Closing) to be assigned to Buyer, assigning to Buyer or Buyer’s assignee all of the lessor’s and Seller’s rights, title and interest in the Leases and such Contracts;

(iv)
Keys. All keys, security cards and security codes to the Property in Seller’s possession;

(v)
Title Company Affidavits. Such affidavits reasonably required by the Title Company to delete the so-called “standard exceptions” (other than the standard survey exceptions) and date the Title Policy no earlier than the date of Closing;

(vi)
Updated Rent Roll. A rent roll in the form of Exhibit D of the rents and other charges and payments due from tenants under the Leases, including without limitation any which are in arrears, dated as of the Closing Date and certified by Seller as true and correct to the best of Seller’s knowledge;

(vii)
State Forms. Any forms required by the County or State in connection with the conveyance of the Property and the recordation of the Deed;

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(viii)
Plans and Specifications. To the extent in Seller’s possession, all plans and specifications for the improvements which constitute a part of the Property and all alterations and additions thereto, and project manuals for the Property;

(ix)
Books and Records. Duplicate copies of all books, records and operating reports in Seller’s possession which are necessary to insure continuity of operation of the Property;

(x)
FIRPTA. If Seller is not a foreign person or entity within the meaning of Sections 1445 and 7701 of the IRS Code, a form as required by Section 1445 of the Internal Revenue Code of 1986, as amended (the “Code”) in the form attached as Exhibit G hereto; and

(xi)
Tenant Notice Letter. A letter to the tenants of the Property indicating that the Property has been sold to Buyer and directing that all future rental payments be sent to Buyer in the form attached as Exhibit H hereto (the “Tenant Notice Letter”); and

(xii)
Resolutions; Title Company Affidavits, Etc. Resolutions and certificates as required to evidence good standing and the due authorization of the execution and performance of this Agreement and the documents to be delivered pursuant hereto together with all affidavits, indemnities and other agreements required by the Title Company; and

(xiii)
Other Documents. Any other documents required to be delivered pursuant to any other provisions of this Agreement.

(b)
By Buyer. At Closing, Buyer shall deliver to Seller the following:

(i)
Purchase Price. The balance of the Purchase Price;

(ii)
Assumption Agreements. Assumption agreements, in the form of Exhibit E and Exhibit F respectively, of the Leases and of the Contracts to be assigned to Buyer, duly executed by Buyer;

(iii)
Tenant Notice Letter. A counterpart to the Tenant Notice Letter duly executed by Buyer;

(iv)
Resolutions; Title Company Affidavits, Etc. Resolutions and certificates as required to evidence good standing and the due authorization of the execution and performance of this Agreement and the documents to be delivered pursuant hereto together with all affidavits, indemnities and other agreements required by the Title Company; and

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(v)
Other Documents. Any other document required to be delivered pursuant to any other provisions of this Agreement.

16.
Brokerage. Buyer and Seller represent and warrant to the other that it has dealt with no broker, finder or other intermediary in connection with this sale other than CBRE, Inc. (“Broker”). Seller agrees to pay all brokerage commissions due to Broker in connection herewith. Buyer and Seller each agree to indemnify, defend and hold the other harmless from and against all claims, demands, causes of action, loss, damages, liabilities costs and expenses (including without limitation attorneys’ fees and court costs) which the indemnified party may incur arising by reason of the above representation being false. This Section shall survive the Closing or any termination of this Agreement.

17.    Indemnity. Buyer agrees to indemnify, defend and hold harmless Seller from and against, and to reimburse Seller with respect to, any and all claims, demands, causes of action, losses, damages, liabilities, costs and expenses (including without limitation reasonable attorney’s fees and court costs) asserted against or incurred by Seller by reason of or arising out of any Lease, Contract, or claim for damages or any other claim with respect to the Real Property accruing on or after the Closing Date. Seller agrees to indemnify, defend and hold harmless Buyer from and against, and to reimburse Buyer with respect to, any and all claims, demands, causes of action, losses, damages, liabilities, costs and expenses (including without limitation reasonable attorney’s fees and court costs) asserted against or incurred by Buyer by reason of or arising out of any Lease, Contract, or claim for damages or any other claim with respect to the Real Property accruing prior to the Closing Date. The provisions of this Section 17 are not intended to limit or supersede other representations, warranties, releases and indemnities expressly provided elsewhere in this Agreement, which shall control to the extent of any conflict with this Section. The provisions of this Section 17 shall survive Closing and recordation of the Deed.

1.
Confidentiality. Buyer shall not disclose any Confidential Information (as defined below) to any party other than (a) persons within Buyer’s organization, Buyer’s affiliates, persons who may invest in, or co-purchase with Buyer, or person with which Buyer has contracted, including attorneys, accountants, appraisers, engineers, environmental consultants and other professionals engaged for this contemplated transaction who are advised of the confidential nature of the Confidential Information, (b) potential lenders and agents of potential lenders who are advised of the terms of this Agreement related to the Confidentiality Information, (c) as necessary to consummate the terms of this Agreement or any financing relating thereto, and (d) subject to the last sentence of this paragraph, as required by law or court order. “Confidential Information” means the terms of this Agreement and all due diligence information (including the Documents) provided to Buyer by Seller other than information of public record or generally known to the public. Buyer will destroy any electronic or paper documents constituting the Confidential Information, or return it to Seller if appropriate, if the Closing does not occur or this Agreement is terminated by Buyer or Seller before Closing. The confidentiality provisions of this Section 18 shall not apply to any disclosures made by Buyer as required by law, by court order, or in connection with any subpoena served upon Buyer; provided Buyer shall provide Seller with written notice before making any such disclosure. Buyer’s obligations under this Section 18 shall survive termination of this Agreement.

2.
No Other Representations. Buyer acknowledges that neither Seller nor anyone acting, or

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purporting to act, on behalf of Seller, has, except as expressly set forth in this Agreement, made any representation or warranty with respect to the Property.

3.
Assignability. Buyer shall not have the right to assign its interest in this Agreement without Seller’s advance written consent, which consent may be withheld in Seller’s sole and absolute discretion. Buyer hereby agrees that any assignment by Buyer, if consented to by Seller, shall not relieve Buyer of its obligations and liabilities hereunder. Additionally, it shall be a condition of any such assignment that the assignee assumes, in a written instrument delivered to Seller (in form and content reasonably acceptable to Seller), all obligations of Buyer hereunder. Seller’s approval of any assignment of Buyer’s interest in this Agreement shall not constitute a waiver of Seller’s right to approve any subsequent assignments.

Notwithstanding the terms of this Paragraph 20, Buyer shall have the right to assign its rights and obligations under this Agreement to an affiliate of Buyer. For purposes hereof, an affiliate shall include (without limitation) (i) any entity in which the original Buyer, the principal of the original Buyer, or any entity owned or controlled by either of them, holds a direct or indirect ownership interest; and (ii) any Tenant-in-Common ownership structure where one or more of the parties to hold an ownership interest in the Property pursuant to such structure is the principal of the original Buyer named herein (or an entity controlled by such principal). Buyer’s right to assign this Agreement shall be subject to execution by Buyer and the assignee of a form of assignment agreement which provides that Buyer is not released from its obligations under this Agreement and under which such assignee assumes all of Buyer’s obligations under this Agreement. Buyer shall give notice of any such proposed assignment to Seller not less than five (5) business days prior to the scheduled the Closing Date. Upon such assignment, the assignee shall succeed to all of the rights of Buyer under this Agreement (including without limitation Buyer’s rights with respect to the Deposit) and shall assume all of Buyer’s obligations under the Agreement. No such assignment shall relieve Buyer of any liability under the Agreement in the event of a default by Buyer or its assignee.

4.
Notices.

(a)
All notices, demands, requests or other communications from each party to the other required or permitted under the term of this Agreement shall be in writing and, unless and until otherwise specified in a written notice by the party to whom notice is intended to be given, shall be sent to the parties at the following respective addresses:

if intended for Buyer:        Firmus Equity Partners, LLC

770 North Sherman, #102

Denver, CO 80203

Attn: Cary S. Krier

Email: csk@firmusep.com

With a copy to:            Munsch Hardt Kopf & Harr PC

500 N. Akard Street, Suite 3800

Dallas, Texas 75201-6659

Attn: Will Themer

Facsimile No.: (214) 978-4333

Email: wthemer@munsch.com

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if intended for Seller:        RRE Woodhollow Holdings, LLC

c/o Resource Real Estate, Inc.

1845 Walnut Street, 18^th Floor

Philadelphia, PA 19103

Attn: Luke Perl, Transaction Manager

Facsimile No.: (215) 761-0452

Email: LPerl@Resourcerei.com

With a copy to:            Resource Real Estate, Inc.

1845 Walnut Street, 18^th Floor

Philadelphia, PA 19103

Attn: Shelle Weisbaum, General Counsel

Facsimile No.: (215) 761-0452

Email: sweisbaum@resourcerei.com

And with a copy to:        Ledgewood, P.C.

Two Commerce Square

2001 Market Street, Suite 3400

Philadelphia, PA 19103

Attn: Stacy C. Bedwick, Esquire

Facsimile No.: (215) 735-2513

Email: sbedwick@ledgewood.com

Notices may be given on behalf of any party by its legal counsel.

(b)
Each such notice, demand, request or other communication shall be deemed to have been properly given for all purposes if (i) delivered to a nationally recognized overnight courier service for next business day delivery, to its addressee at such party’s address as set forth above or (ii) delivered via facsimile transmission to the facsimile number listed above or via electronic mail to the email address listed above, provided, however, that if such communication is given via facsimile transmission or email, an original counterpart of such communication shall concurrently be sent in the manner specified in clause (i) above.

(c)
Each such notice, demand or request shall be deemed to have been given upon the earlier of (i) actual receipt or refusal by the addressee or (ii) deposit thereof with the courier if sent pursuant to section (b)(i) above.

5.
Additional Escrow Provisions.

(e)
Deposit. Title Company agrees to deposit the Deposit in an interest bearing account, subject to the receipt from Buyer of a form W-9 for the purposes of investing said funds and to hold and disburse said funds, and any interest earned thereon, as hereinafter provided. Upon written notification from Seller or Buyer in accordance with the terms of this Agreement, Title Company shall release the funds in accordance with and pursuant to the written instructions. In the event of a dispute between any of the

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parties hereto sufficient in the sole discretion of Title Company to justify its doing so, Title Company shall be entitled to tender unto the registry or custody of any court of competent jurisdiction all money or property in its hands held under the terms of this Agreement, together with such legal pleading as it deems appropriate, and thereupon be discharged.

(f)
Escrow Holder. Seller and Buyer covenant and agree that in performing any of its duties under this Agreement, Title Company shall not be liable for any loss, costs or damage which it may incur as a result of serving as Escrow Holder hereunder, except for any loss, costs or damage arising out of its willful default or gross negligence. Accordingly, Title Company shall not incur any liability with respect to (i) any action taken or omitted to be taken in good faith upon advice of its counsel given with respect to any questions relating to its duties and responsibilities, or (ii) to any action taken or omitted to be taken in reliance upon any document, including any written notice of instruction provided for in this Agreement, not only as to its due execution and the validity and effectiveness of its provisions, but also to the truth and accuracy of any information contained therein, which Title Company shall in good faith believe to be genuine, to have been signed or presented by a proper person or persons and to conform with the provisions of this Agreement.

(g)
Indemnity. Seller and Buyer hereby agree to indemnify and hold harmless Title Company against any and all losses, claims, damages, liabilities and expenses, including without limitation, reasonable costs of investigation and attorneys' fees and disbursements which may be imposed upon or incurred by Title Company in connection with its serving as Escrow Holder hereunder, except for any loss, costs or damage arising out of its willful default, gross negligence or failure to adhere to the terms or conditions of this Agreement. The provisions of this Section shall survive termination of this Agreement.

6.
Miscellaneous.

(a)
Entire Agreement; Governing Law. This Agreement contains the entire understanding of the parties with respect to the subject matter hereof, supersedes all prior or other negotiations, representations, understandings and agreements of, by or among the parties, express or implied, oral or written, which are fully merged herein. The express terms of this Agreement control and supersede any course of performance and/or customary practice inconsistent with any such terms. Any agreement hereafter made shall be ineffective to change, modify, discharge or effect an abandonment of this Agreement unless such agreement is in writing and signed by the party against whom enforcement of such change, modification, discharge or abandonment is sought. This Agreement shall be governed by and construed under the laws of the State where the Real Property is located.

(b)
Liability. Notwithstanding anything to the contrary contained herein, Seller’s shareholders, partners, members, the partners or members of such partners or members, the shareholders of such partners or members, and the trustees, officers, directors, employees, agents and security holders of Seller and the partners or members of Seller assume no personal liability for any obligations entered into on behalf of Seller and its individual assets shall not be subject to any claims of any person relating to such obligations.  The foregoing shall govern any direct and indirect obligations of Seller under this Agreement. This provision shall expressly survive Closing and recordation of the Deed or termination of this Agreement.

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(c)
Successors and Assigns. This Agreement shall be binding upon and shall inure to the benefit of the parties and their respective heirs, personal representatives, successors and assigns.

(d)
Provisions Separable. The provisions of this Agreement are independent of and separable from each other, and no provision shall be affected or rendered invalid or unenforceable by virtue of the fact that for any reason any other provision may be invalid or unenforceable in whole or in part.

(e)
Gender, etc. Words used in this Agreement, regardless of the number and gender specifically used, shall be deemed and construed to include any other number, singular or plural, and any other gender, masculine, feminine or neuter, as the context indicates is appropriate.

(f)
Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original as against any party whose signature appears thereon, and all of which shall together constitute one and the same instrument. This Agreement shall be binding when one or more counterparts hereof, individually or taken together, shall bear the signatures of all of the parties reflected on this Agreement as the signatories. Electronically transmitted counterparts of this Agreement or signature pages hereof shall have the same force and effect as originals.

(g)
Exhibits. All exhibits attached to this Agreement are incorporated by reference into and made a part of this Agreement.

(h)
No Waiver. Neither the failure nor any delay on the part of either party to this Agreement to exercise any right, remedy, power or privilege under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any right, remedy, power or privilege preclude any other or further exercise of the same or of any other right, remedy, power or privilege, nor shall any waiver of any right, remedy, power or privilege with respect to any occurrence be construed as a waiver of any such right, remedy, power or privilege with respect to any other occurrence. No waiver shall be effective unless it is in writing and is signed by the party asserted to have granted such waiver.

(i)
Headings. The headings incorporated in this Agreement are for convenience in reference only, are not a part of this Agreement and do not in any way limit or add to the terms and provisions of this Agreement.

(j)
Interpretation. No provision of this Agreement is to be interpreted for or against either party because that party or that party’s legal representative or counsel drafted such provision.

(k)
Time. TIME IS OF THE ESSENCE OF THIS AGREEMENT. In computing the number of days for purposes of this Agreement, all days shall be counted, including Saturdays, Sundays and holidays; provided, however, that if the final day of any time period provided in this Agreement shall end on a Saturday, Sunday or legal holiday, then the final day shall extend to 5:00 p.m. Eastern time of the

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next full business day. For the purposes of this Section, the term “holiday” shall mean a day other than a Saturday or Sunday on which banks are closed in the state in which the Real Property is located.

(l)
Attorney’s Fees. In connection with any litigation arising out of this Agreement, the prevailing party shall be entitled to recover all costs incurred, including reasonable attorney’s fees. For purposes of this Agreement, “prevailing party” shall include, without limitation, a party obtaining substantially the relief sought, whether by compromise, settlement or otherwise.

(m)
No Recording of Agreement. Neither Seller nor Buyer shall cause or permit this Agreement to be filed of record in any office or place of public record and, if Buyer or Seller shall fail to comply with the terms hereof by recording or attempting to record the same, such act shall not operate to bind or cloud title to the Real Property.

(n)
Negotiations. Seller shall have the right at all times prior to the expiration of the Inspection Period, to solicit backup offers and enter into discussions, negotiations, or any other communications concerning or related to the sale of the Property with any third party; provided, however, that such communications are subject to the terms of this Agreement and that Seller shall not enter into any contract with a third party for the sale of the Property unless such contract is contingent on the termination of this Agreement without the Property having been conveyed to Buyer.

(o)
WAIVER OF JURY TRIAL. BUYER WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (I) ARISING UNDER THIS AGREEMENT, (II) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALING OF THE BUYER AND SELLER IN RESPECT OF THIS AGREEMENT OR RELATED TRANSACTIONS, IN EACH CASE WHETHER NOW EXISTING OR LATER ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE. BUYER AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION, OR CAUSE OF ACTION WILL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT SELLER MAY FILE A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF BUYER TO THE WAIVER OF ITS RIGHT TO TRIAL BY JURY.

(p)
1031 Exchange. Buyer or Seller may desire to exchange, for other property of like kind and qualifying use within the meaning of Section 1031 of the Internal Revenue Code of 1986, as amended (the "Code"), and the Treasury Regulations promulgated thereunder, fee title in the Real Property. Each of Buyer and Seller expressly reserves the right to assign its rights, but not its obligations, hereunder to a Qualified Intermediary as provided in Treasury Reg. §1.1031(k)-1(g)(4) on or before Closing and each party hereby agrees to fully cooperate with the other party, at no cost to such party, in the furtherance of any such like-kind exchange pursuant to Code §1031 contemplated by either party hereto.

(q)
Reporting Person. Each of Seller and Buyer hereby designate the Escrow Holder as the “Reporting Person” as such term is utilized in Section 6045 of the Internal Revenue Code of 1986, as amended, and regulations thereunder. Seller agrees to provide the Title Company with such information as may be required for the Escrow Holder to file a Form 1099 or other required form relative to the

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Closing with the Internal Revenue Service. A copy of the filed Form 1099 or other filed form shall be provided to Seller and Buyer simultaneously with its being provided to the Internal Revenue Service.

(r)
Obligation to Close on Both Properties. Reference is hereby made to that certain Agreement of Purchase and Sale dated of even date herewith, by and between Seller’s affiliate, RRE Bent Oaks Holdings, LLC, a Delaware limited liability company (“Bent Oaks Seller”), and Firmus Equity Partners, LLC, with respect to the purchase and sale of that certain project owned by Bent Oaks Seller and commonly known as the “Bent Oaks Apartments” located in Austin, Texas (as the same may be amended, modified or assigned, the “Bent Oaks PSA”). As used in this Section 23(r), the “Bent Oaks Property” shall mean the “Property” as defined in the Bent Oaks PSA. Notwithstanding any other provision of this Agreement to the contrary, (i) Buyer’s obligation under this Agreement and the Bent Oaks PSA to purchase the Property and the Bent Oaks Property, respectively, is not severable and Buyer or its affiliates must purchase both the Property and the Bent Oaks Property, and (ii) Seller’s obligation to sell the Property and Bent Oaks Seller’s obligation to sell the Bent Oaks Property are not severable and Seller and Bent Oaks Seller must collectively sell both the Property and the Bent Oaks Property to Buyer or its affiliates. Accordingly, if Buyer (or its respective affiliate) terminates the Bent Oaks PSA, then this Agreement will be deemed timely terminated by Buyer as of the same date pursuant to the corresponding provision of this Agreement and the Deposit under this Agreement and the Bent Oaks PSA will be handled as contemplated in connection with the type of termination at issue.

7.
Texas Disclosures. By its signature to this Agreement, Buyer hereby acknowledges its receipt of the following notices at or before the execution of this Agreement:

(a)
Notice Regarding Possible Liability for Additional Taxes. If for the current ad valorem tax year the taxable value of the Property that is the subject of this Agreement is determined by a special appraisal method that allows for appraisal of the Property at less than its market value, the Buyer may not be allowed to qualify the Property for that special appraisal in a subsequent tax year and the Property may then be appraised at its full market value. In addition, the transfer of the Property or a subsequent change in the use of the Property may result in the imposition of an additional tax plus interest as a penalty for the transfer or the change in the use of the Property. The taxable value of the Property and the applicable method of appraisal for the current tax year is public information and may be obtained from the Travis County Appraisal District.

(b)
Notice Regarding Possible Annexation. If the Property that is the subject of this Agreement is located outside the limits of a municipality, the Property may now or later be included in the extraterritorial jurisdiction of a municipality and may now or later be subject to annexation by the municipality. Each municipality maintains a map that depicts its boundaries and extraterritorial jurisdiction. To determine if the Property is located within a municipality's extraterritorial jurisdiction or is likely to be located within a municipality's extraterritorial jurisdiction, contact all municipalities located in the general proximity of the Property for further information.

(c)
Property Located in a Certificated Service Area of a Utility Service Provider. The Property that you are about to purchase may be located in a certificated water or sewer service area, which is authorized by law to provide water or sewer service to the properties in the certificated area. If the Property is

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located in a certificated area there may be special costs or charges that you will be required to pay before you can receive water or sewer service. There may be a period required to construct lines or other facilities necessary to provide water or sewer service to the Property. You are advised to determine if the Property is in a certificated area and contact the utility service provider to determine the cost that you will be required to pay and the period, if any, that is required to provide water or sewer service to the Property.

(d)
Notice Regarding District. If the Property is situated in a utility or other statutorily created district providing water, sewer, drainage, or flood control facilities and services, Chapter 49, Texas Water Code, requires Seller to deliver and Buyer to sign the statutory notice relating to the tax rate, bonded indebtedness, or standby fees of the district before final execution of this Agreement.

(e)
Notice Regarding Coastal Property. If the Property adjoins or shares a common boundary with the tidally influenced submerged lands of the state, Section 33.135, Texas Natural Resources Code, requires a notice regarding coastal area property to be included as part of this Agreement.

(f)
Lead Disclosure. If apartments or other residential units are on the Property and the units were built before 1978, federal law requires a lead-based paint and hazard disclosure statement to be made part of this Agreement.

(g)
Mold Remediation. Section 1958.154, Texas Occupations Code, requires Seller to provide Buyer a copy of any mold remediation certificate issued for the Property during the five (5) years preceding the date the Seller sells the Property.

[SIGNATURES CONTAINED ON FOLLOWING PAGE]

IN WITNESS WHEREOF, intending to be legally bound, the parties have executed this Agreement as a sealed instrument as of the day and year first above written.

SELLER:

RRE WOODHOLLOW HOLDINGS, LLC, a Delaware limited liability company

By: _________________________________

Name:    Steven R. Saltzman

Title:    VP

BUYER:

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FIRMUS EQUITY PARTNERS, LLC,

a Kansas limited liability company

By: _________________________________

Name:

Title:

Taxpayer ID Number: ____________________

JOINDER OF ESCROW HOLDER

For good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the undersigned, the Escrow Holder named in the annexed Agreement, hereby agrees to be bound by the provisions of the annexed Agreement relating to the holding and disbursement of all monies paid to the undersigned in escrow, and to disburse such sums strictly in accordance with the terms of the Agreement.

Intending to be legally bound, the undersigned has caused this Joinder to be executed by its duly authorized representative the ____day of July, 2016.

HERITAGE TITLE COMPANY OF AUSTIN, INC.

By:_________________________

Name:

Title:

EXHIBIT A

[LEGAL DESCRIPTION OF REAL PROPERTY]

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EXHIBIT B

When recorded, return to:Attention:

NOTICE OF CONFIDENTIALITY RIGHTS: IF YOU ARE A NATURAL PERSON, YOU MAY REMOVE OR STRIKE ANY OF THE FOLLOWING INFORMATION FROM THIS INSTRUMENT BEFORE IT IS FILED FOR RECORD IN THE PUBLIC RECORDS: YOUR SOCIAL SECURITY NUMBER OR YOUR DRIVER’S LICENSE NUMBER.

SPECIAL WARRANTY DEED

RRE WOODHOLLOW HOLDINGS, LLC, a Delaware limited liability company (“Grantor”), whose address is c/o Resource Real Estate, Inc., 1845 Walnut Street, 18^th Floor, Philadelphia, PA 19103, for and in consideration of the sum of Ten and No/100 Dollars ($10.00) paid to Grantor and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, has GRANTED, BARGAINED, SOLD and CONVEYED and does hereby GRANT, BARGAIN, SELL and CONVEY unto , a (“Grantee”), whose address is ___________________________________, that certain tract of land situated in Travis County, Texas, as more fully described on Exhibit A attached hereto and made a part hereof for all purposes, together with (a) all improvements located thereon, (b) all rights, benefits, privileges, easements, tenements, hereditaments and appurtenances there unto belonging or in any wise, pertaining thereto, and (c) all of Grantor’s right, title and interest in and to adjacent strips, gores, streets, roads, alleys and rights-of-way (said land, improvements, rights, benefits, privileges, easements, tenements, hereditaments, appurtenances and interests being hereinafter referred to as the “Real Property”).

This conveyance is made and accepted subject to all matters set out herein above and in Exhibit B, attached hereto and incorporated herein by reference (“Permitted Exceptions”) but only to the extent the Permitted Exceptions are valid, existing and affect the Real Property.

TO HAVE AND TO HOLD the Real Property, together with all rights and appurtenances pertaining thereto, unto Grantee and Grantee’s successors and assigns forever, and Grantor does hereby bind itself and its successors and assigns to WARRANT and FOREVER DEFEND, all and singular, subject to the Permitted Exceptions, the Real Property unto Grantee and Grantee’s successors and assigns, against every person whomsoever lawfully claiming or to claim the same or any part thereof by, through or under Grantor, but not otherwise.

All ad valorem taxes for the year in which the conveyance occurs have been prorated between Grantor and Grantee and Grantee shall be obligated to pay same.

LW:1034353.1

DATED effective as of the ___ day of ________, 2016.

GRANTOR:

RRE WOODHOLLOW HOLDINGS, LLC, a Delaware limited liability company

By:__________________________

Name:

Title:

Acknowledgment

STATE OF     §

§

COUNTY OF     §

BEFORE ME, the undersigned, a Notary Public in and for said County and State, on this day personally appeared ______________, known to me to be the _______________ of RRE Woodhollow Holdings, LLC, the limited liability company that executed the foregoing instrument, known to me to be the person whose name is subscribed to the foregoing instrument, and acknowledged to me that the same was the act of the said limited liability company, and that he/she executed the same as the act of such limited liability company for the purposes and consideration therein expressed and in the capacity therein stated.

GIVEN UNDER MY HAND AND SEAL OF OFFICE this _____ day of ___________, 2016.

__________________________________________

Notary Public

My Commission Expires:______________

Exhibit A – Legal Description

Exhibit B - Permitted Exceptions

LW:1034353.1

EXHIBIT A TO DEED

LW:1034353.1

EXHIBIT B TO DEED

PERMITTED EXCEPTIONS

LW:1034353.1

EXHIBIT C

BILL OF SALE AND ASSIGNMENT

THIS BILL OF SALE AND ASSIGNMENT (the “Assignment”) is made as of _________________, 2016, by RRE WOODHOLLOW HOLDINGS, LLC, a Delaware limited liability company (“Seller”), in favor of ___________________, a ________________ (“Buyer”).

RECITALS

A.    Pursuant to a certain Agreement of Purchase and Sale, dated as of ________________, 2016 (the “Agreement of Sale”), Seller has agreed to sell to Buyer, upon the terms, provisions and conditions set forth therein, certain property commonly known as Woodhollow Apartments located at 3524 Greystone Drive, Austin, TX 78731, all as more particularly described in the Agreement of Sale (the “Property”).

B.    In connection with the sale and purchase of the Property, Seller desires to sell, assign and transfer to Buyer all of Seller’s right, title and interest in and to the Personal Property identified and as defined in the Agreement of Sale, all upon the terms, covenants and conditions set forth in this instrument.

NOW THEREFORE, for an in consideration of Ten Dollars ($10.00), the mutual covenants contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound, Seller hereby agrees as follows:

1.    Definitions. Capitalized terms used herein and not otherwise defined herein shall have the respective meanings given such terms in the Agreement of Sale.

2.Transfer and Assignment. Seller hereby sells, transfers, assigns, delivers and conveys to Buyer, its successors and assigns, all of Seller's right, title and interest in, to and under the Personal Property.

3.Representations and Warranties of Seller. Seller hereby represents and warrants to Buyer as follows:

(i)    Seller is the sole owner and holder of the Personal Property; and

(ii)    Seller has the power, authority and right to execute and deliver this Assignment and to sell, transfer, assign, deliver and convey the Personal Property.

4.AS IS, WHERE IS. THE PERSONAL PROPERTY IS BEING CONVEYED “AS IS”, “WHERE IS”, AND “WITH ALL FAULTS” AS OF THE DATE OF THIS ASSIGNMENT, WITHOUT ANY REPRESENTATION OR WARRANTY WHATSOEVER AS TO ITS CONDITON, FITNESS FOR ANY PARTICULAR PURPOSE, MERCHANTABILITY OR ANY OTHER WARRANTY, EXPRESS OR IMPLIED. SELLER SPECIFICALLY DISCLAIMS ANY WARRANTY, GUARANTY OR REPRESENTATION, ORAL OR WRITTEN, PAST OR PRESENT, THERETO. BUYER IS HEREBY THUS ACQUIRING THE PERSONAL PROPERTY BASED SOLEY UPON BUYER’S OWN INDEPENDENT INVESTIGATIONS AND INSPECTION OF THAT PROPERTY AND NOT IN

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RELIANCE UPON ANY INFORMATION PROVIDED BY SELLER OR SELLER’S AGENTS OR CONTRACTORS.

5.Absolute Transfer. It is the intention of Seller to transfer absolute title of the Personal Property to Buyer, its successors and assigns, free of any equity of redemption by Seller or its successors and assigns

6.Binding Effect. This Assignment shall be binding upon and inure to the benefit of Seller and Buyer and their respective heirs, personal representatives, successors and assigns.

IN WITNESS WHEREOF, intending to be legally bound, Seller has caused this Bill of Sale and Assignment to be executed by its duly authorized officer on the day and year first above written.

SELLER:

RRE WOODHOLLOW HOLDINGS, LLC, a Delaware limited liability company

By:_________________________

Name:

Title:

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LW:1034353.1

EXHIBIT D

[RENT ROLL]

SEE ATTACHED

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EXHIBIT E

ASSIGNMENT AND ASSUMPTION OF LEASES

THIS ASSIGNMENT AND ASSUMPTION OF LEASES (this “Assignment”) is made and entered into as of __________, 2016, by and between RRE WOODHOLLOW HOLDINGS, LLC, a Delaware limited liability company (“Assignor”), and _________________, a __________________ (“Assignee”).

RECITALS

A.    Pursuant to a certain Agreement of Purchase and Sale, dated as of ____________, 2016 (the “Agreement of Sale”), Assignor has agreed to sell to Assignee, upon the terms, provisions and conditions set forth therein, certain property commonly known as Woodhollow Apartments located at 3524 Greystone Drive, Austin, TX 78731, all as more particularly described in the Agreement of Sale (the “Property”)

B.    In connection with the sale and purchase of the Property, Assignor desires to assign to Assignee all tenant leases encumbering the Property and Assignee desires to accept said assignment and assume the obligations of Assignor under said leases, all upon the terms, covenants and conditions set forth in this instrument.

NOW, THEREFORE, in consideration of the purchase price paid by Assignee to Assignor for the Property, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Assignor and Assignee covenant and agree as follows:

1.    Assignment. Assignor hereby assigns, transfers and sets over unto Assignee all of Assignor’s right, title and interest in and to (collectively, the “Assigned Interests”) (a) the leases set forth on the rent roll attached hereto as Exhibit A and made a part of this Assignment and any other lease, license or right of occupancy affecting the Property, together with all amendments, extensions, and other modifications thereto (the “Leases”), (b) any and all rights of Assignor and the lessor under the Leases to collect rents, additional rents, escrow or security deposits, fees, income, charges, and profits now or hereafter arising thereunder, and (c) any guarantees of any Leases, to have and to hold the same unto Assignee, its successors and assigns.

    2.    Assumption. Assignee accepts said assignment and assumes all obligations of Assignor on the part of the lessor/landlord under the Leases first arising or accruing on or after the date of this Assignment.

3.    Indemnification by Assignor. Assignor agrees to indemnify, defend and hold Assignee harmless from and against any claim, demand, cause of action, charge, judgment, damage, liability, cost or expense (including, without limitation, reasonable attorney’s fees and legal costs) (a) arising out of the Assigned Interests in connection with events occurring at any time during Assignor’s ownership of the Property, or (b) arising out of any claim by any tenant arising prior to the date of this Assignment with respect to any security deposit but only to the extent of the amount of such security deposit and interest thereon not transferred by Assignor to Assignee.

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LW:1034353.1

4.    Indemnification by Assignee. Assignee agrees to indemnify, defend and hold Assignor harmless from and against any claim, demand, cause of action, charge, judgment, damage, liability, cost or expense (including, without limitation, reasonable attorneys’ fees and legal costs) arising out of the Assigned Interests in connection with events occurring on or after the date of this Assignment or arising out of any claim by any tenant arising on or after the date of this Assignment with respect to its security deposit but only to the extent of the amount of such security deposit and interest thereon transferred by Assignor to Assignee and not returned to such tenant by Assignee.

5.     Counterparts. This Assignment may be executed and delivered in any number of counterparts, each of which so executed and delivered shall be deemed to be an original and all of which shall constitute one and the same instrument. For purposes of this Assignment, any signature transmitted by e-mail (in pdf format) shall be considered to have the same legal and binding effect as any original signature.

6.    Binding Effect. This Assignment shall be binding upon and inure to the benefit of Assignor and Assignee and their respective heirs, personal representatives, successors and assigns.

IN WITNESS WHEREOF, intending to be legally bound, the parties have caused this Assignment and Assumption of Leases to be executed by their duly authorized officers on the day and year first above written.

ASSIGNOR:

RRE WOODHOLLOW HOLDINGS, LLC, a Delaware limited liability company

By: ________________________

Name:

Title:

ASSIGNEE:

[_______________________]

By: ________________________

Name:

Title:

Exhibit A – rent roll

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LW:1034353.1

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LW:1034353.1

EXHIBIT F

ASSIGNMENT AND ASSUMPTION OF CONTRACTS

THIS ASSIGNMENT AND ASSUMPTION OF CONTRACTS (this “Assignment”) is made and entered into as of __________ 2016, by and between RRE WOODHOLLOW HOLDINGS, LLC, a Delaware limited liability company (“Assignor”) and _________________, a __________________ (“Assignee”).

R E C I T A L S:

A.    Pursuant to a certain Agreement of Purchase and Sale, dated as of _________, 2016 (the “Agreement of Sale”), Assignor has agreed to sell to Assignee, upon the terms, provisions and conditions set forth therein, certain property commonly known as Woodhollow Apartments located at 3524 Greystone Drive, Austin, TX 78731, all as more particularly described in the Agreement of Sale (hereinafter “Property”).

B.    In connection with the sale and purchase of the Property, Assignor desires to assign to Assignee all of Assignor’s right, title and interest in and to those agreements set forth on Exhibit A attached to and made a part of this Assignment (collectively, the “Contracts”) and Assignee desires to accept said assignment and assume the obligations of Assignor under the Contracts, all upon the terms, covenants and conditions set forth in this instrument.

NOW, THEREFORE, in consideration of the purchase price paid by Assignor to Assignee for the Property and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Assignor and Assignee covenant and agree as follows:

1.    Assignment. Assignor hereby assigns, transfers and sets over to Assignee all of Assignor’s right, title and interest in and to the Contracts. Assignor agrees to pay and perform all terms, covenants, conditions, agreements and obligations to be kept and performed under the Contracts to the date of this Assignment, together with such other obligations of Assignor concerning the Contracts set forth in the Agreement of Sale.

2.    Assumption. Assignee accepts said assignment and assumes all obligations of Assignor under the Contracts arising or accruing on or after the date of this Assignment.

3.    Indemnification by Assignor. Assignor agrees to indemnify, defend and hold Assignee harmless from and against any claim, demand, cause of action, charge, judgment, damage, liability, cost or expense (including, without limitation, reasonable attorneys’ fees and legal costs) arising out of the Contracts in connection with events occurring prior to the date of this Assignment.

4.    Indemnification by Assignee. Assignee agrees to indemnify, defend and hold Assignor harmless from and against any claim, demand, cause of action, charge, judgment, damage, liability, cost or expense (including, without limitation, reasonable attorneys’ fees and legal costs) arising out of the Contracts in connection with events occurring on or after the date of this Assignment.

5.     Counterparts. This Assignment may be executed and delivered in any number of counterparts, each of which so executed and delivered shall be deemed to be an original and all of which

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LW:1034353.1

shall constitute one and the same instrument. For purposes of this Assignment, any signature transmitted by e-mail (in pdf format) shall be considered to have the same legal and binding effect as any original signature.

6.    Binding Effect. This Assignment shall be binding upon and inure to the benefit of Assignor and Assignee and their respective heirs, personal representatives, successors and assigns.

IN WITNESS WHEREOF, intending to be legally bound, Assignor and Assignee have caused this Assignment and Assumption of Contracts to be executed by their duly authorized officers on the day and year first above written.

ASSIGNOR:

RRE WOODHOLLOW HOLDINGS, LLC, a Delaware limited liability company

By: _____________________

Name:

Title:

ASSIGNEE:

[________________]

By: _____________________

Name:

Title:

Exhibit A – list of contracts

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EXHIBIT G

FIRPTA

Section 1445 of the Internal Revenue Code provides that a transferee of a U.S. real property interest must withhold tax if the transferor is a foreign person. For U.S. tax purposes (including section 1445), the undersigned “Transferor” which is the owner, directly or indirectly of all of the membership interests of RRE WOODHOLLOW HOLDINGS, LLC, a Delaware limited liability company, which has legal title to a U.S. real property interest under local law, will be the actual transferor of the property for U.S. tax purposes and not the disregarded entity. To inform the transferee that withholding of tax is not required upon the disposition of a U.S. real property interest by Transferor, the undersigned hereby certifies as follows:

1. Transferor is not a foreign corporation, foreign partnership, foreign trust, or foreign estate (as those terms are defined in the Internal Revenue Code and Income Tax Regulations);

2. Transferor is not a disregarded entity, as defined in Treas. Reg. § 1.1445-2(b)(2)(iii);

3. Transferor’s U.S. taxpayer identification number is _____________________; and

4. Transferor’s office address is 1845 Walnut Street, 18^th Floor, Philadelphia, PA 19103.

Transferor understands that the above information 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 penalties of perjury, the undersigned, in the capacity set forth below, hereby declares that he has examined this instrument and to the best of his knowledge and belief it is true, correct, and complete, and the undersigned further declares that he has the authority to sign this document in such capacity.

TRANSFEROR:

RESOURCE REAL ESTATE INVESTORS 7, L.P., a Delaware limited partnership

By: Resource Capital Partners, Inc., a Delaware corporation, its general partner

By:________________________

Name:

Title:

Dated: _________________, 2016

EXHIBIT H

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NOTICE TO TENANTS

_________, 2016

PERSONAL DELIVERY
Residents of Woodhollow Apartments

3524 Greystone Drive

Austin, TX 78731

Dear Resident:

Notice is hereby given to the tenants of Woodhollow Apartments (the “Property”) that the current owner of the Property (the “Seller”), has sold the Property to ____________(“Buyer”), effective as of this date. Buyer has assumed all of the obligations of Seller, as landlord under your lease, including any obligations with respect to your security deposit. Buyer acknowledges that it has received and is responsible for your security deposit in the amount listed on the Addendum hereto, which security deposit has been transferred to Buyer, less any amounts applied by Seller listed on the Addendum attached hereto. Any pending claims by Seller against your security deposit are also described on the Addendum attached hereto. Buyer is now your landlord and all future rent payments under your lease shall be made to Buyer.

In the event that your rent payments are made to Seller via an ACH, other automatic debit system, or the WIPS program, such payments shall be rejected as of the date hereof and you should make alternative arrangements with Buyer for the payment of your rent.

Buyer’s address for purposes of your lease is as follows:

___________________

___________________

Attn: _______________

All future rental payments should be hand delivered to the on-site rental office.

Sincerely,

SELLER:

RRE WOODHOLLOW HOLDINGS, LLC, a Delaware limited liability company

By:____________________________

Name:

Title:

BUYER:

[_________________]

By:______________________________

Name:

Title:

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ADDENDUM

Tenant: ____________________

Unit No.: ___________________

Original Security Deposit Amount: $___________

Amount of Security Deposit Previously Applied: $____________

Existing Security Deposit Amount Being Transferred: $__________

LW:1034353.1

SCHEDULE 5(b)

[DOCUMENTS]

To the extent in Seller’s possession or control:

1. Real and personal property tax bills and assessed value for the prior 2 years and year-to-date.

2. Copies of any warranty agreements which Seller may have been covering the Property

3. Copies of all Contracts

4. Current rent roll with a delinquency status report

5. Operating account bank statements for prior 2 years and year-to-date

6. Operating income and expense detail for the prior 2 years and year-to-date

7. Details of any financial arrangements with apartment brokers, locators, etc.

8. Copies of current insurance certificates

9. Copy of Seller’s current Owner’s Policy of title insurance

10. Copy of Seller’s existing survey

11. Login information for Conservice (RUBS)

LW:1034353.1

EX-10.5

AGREEMENT OF PURCHASE AND SALE

THIS AGREEMENT OF PURCHASE AND SALE (this “Agreement”) is made as of July 14, 2016 (the “Effective Date”), by and between RRE WOODLAND VILLAGE HOLDINGS, LLC, a Delaware limited liability company, having an address at c/o Resource Real Estate, Inc., 1845 Walnut Street, 18^th Floor, Philadelphia, PA 19103 (“Seller”), and DBC REAL ESTATE MANAGEMENT, LLC, a Pennsylvania limited liability company, having an address at 51 Pennwood Place, Suite 200, Warrendale, PA 15086 (“Buyer”).

WITNESSETH:

In consideration of the covenants and provisions contained herein, and intending to be legally bound hereby, the parties hereto agree as follows:

1.Agreement to Sell and Purchase. Seller agrees to sell to Buyer, and Buyer agrees to purchase from Seller, subject to all of the terms and conditions of this Agreement, all of Seller’s right, title and interest in and to the project commonly known as “Woodland Village Apartments” containing approximately 308 apartment and townhome units located at 2221 Bush River Road, Columbia, South Carolina 29210 and consisting of the following (collectively, the “Property”):

(a)Real Property. All of that certain tract of land more fully described on Exhibit A to this Agreement (the “Land”) together with all improvements thereon (the “Improvements”), and all appurtenances thereto (including, without limitation, all easements, rights‑of‑way, water rights, privileges, licenses, and other rights and benefits belonging to, running with the owner of, or in any way relating to the aforesaid tract of land and all trees, shrubbery and plants); together with all rights, title and interest of Seller in and to any land lying in the bed of any street, opened or proposed, in front of or abutting or adjoining the aforesaid tract of land, and all right, title and interest of Seller in and to any unpaid award for the taking by eminent domain of any part of the aforesaid tract of land or for damage to such tract of land by reason of a change of grade of any street (collectively, the “Real Property”);

(b)Personal Property. All fixtures, furniture, equipment (including without limitation, office equipment and computers but excluding network equipment including firewall and router), supplies and other tangible and intangible personal property attached or appurtenant to, or located in or on, or used solely in connection with the Real Property, which are owned by Seller excluding, however, any “Thin Client Solutions” hardware and software and any items upon which appears the “Resource Residential” logo, including without limitation, any door rugs, portable movie screens, marketing brochures and other literature (collectively, the “Personal Property”);

(c)Leases. The Seller’s interest in all leases, tenancies, licenses and other agreements for the use or occupancy of any portion of the Property in effect on the date of this Agreement and all guaranties in connection therewith (the “Leases”); and

(d)Contracts. To the extent assignable, the Seller’s interest in all leasing, service, supply and maintenance contracts relating to the Land, Improvements, or Personal Property (collectively, the “Contracts”), but only to the extent Buyer elects to have such Contracts assigned to it in accordance with Section 5(c) hereof.

2.Purchase Price; Deposit. The purchase price (the “Purchase Price”) for the Property, subject to adjustments as provided in this Agreement, shall be TWENTY MILLION SIX HUNDRED FIFTY THOUSAND AND 00/100 DOLLARS ($20,650,000.00), and shall be paid as follows:

1LW:1030700.3

(a)Two Hundred Thousand and 00/100 Dollars ($200,000.00) (the “Deposit”) to be paid within three (3) business days after the Effective Date in immediately available funds and delivered as follows: (i) $100,000 (the “Escrowed Deposit”) to Bell, Carrington & Price, 408 E. North Street, Greenville, SC 29601, Attention: Brian Price, Esquire, Phone: (864) 272-0556, Email: bprice@bellcarrington.com (“Escrow Holder” or “Title Company”), and (ii) the remaining $100,000 (the “Hard Deposit”) to Seller pursuant to the wire instructions set forth on Schedule 2(a) attached hereto.

(b)The Escrowed Deposit shall be held by Escrow Holder in one or more interest bearing federally‑insured money market accounts acceptable to both Seller and Buyer, or in short‑term United States Government obligations having a maturity date which is not later than the Closing Date (as hereinafter defined). As used in this Agreement, “Deposit” shall mean and include the Deposit as defined in Subsection 2(a) above and any interest earned thereon. If requested by Escrow Holder, Buyer shall execute and deliver a Form W-9 to Escrow Holder. Failure by Buyer to deliver the Deposit as provided above shall be a material default hereunder and shall render this Agreement terminable or, alternatively, voidable at the option of the Seller.

(c)The balance of the Purchase Price, as adjusted in accordance herewith, shall be paid at Closing by wire transfer of immediately available funds and delivered to Escrow Holder.

3.Disposition of Deposit; Defaults.

(a)Held in Escrow. Subject to Section 3(e) below, the Escrowed Deposit shall be held in escrow and disbursed by Escrow Holder strictly in accordance with the terms of this Agreement.

(b)Upon Default.

(i)IF BUYER, WITHOUT THE RIGHT TO DO SO AND IN DEFAULT OF ITS OBLIGATIONS UNDER THIS AGREEMENT, FAILS TO COMPLETE CLOSING OR OTHERWISE DEFAULTS UNDER OR BREACHES THIS AGREEMENT, SELLER SHALL HAVE THE RIGHT TO BE PAID THE DEPOSIT AS LIQUIDATED DAMAGES. THE PARTIES HAVE AGREED THAT SELLER’S ACTUAL DAMAGES, IN THE EVENT OF A BUYER DEFAULT WOULD BE EXTREMELY DIFFICULT OR IMPRACTICABLE TO DETERMINE. AFTER NEGOTIATION, THE PARTIES HAVE AGREED THAT, CONSIDERING ALL THE CIRCUMSTANCES EXISTING ON THE DATE OF THIS AGREEMENT, THE AMOUNT OF THE DEPOSIT IS A REASONABLE ESTIMATE OF THE DAMAGES THAT SELLER WOULD INCUR IN SUCH EVENT. EACH PARTY SPECIFICALLY CONFIRMS THE ACCURACY OF THE STATEMENTS MADE ABOVE AND THE FACT THAT EACH PARTY WAS REPRESENTED BY COUNSEL WHO EXPLAINED, AT THE TIME THIS AGREEMENT WAS MADE, THE CONSEQUENCES OF THIS LIQUIDATED DAMAGES PROVISION. THE RIGHT OF SELLER TO BE PAID THE DEPOSIT SHALL BE SELLER’S SOLE AND EXCLUSIVE REMEDY FOR BUYER’S FAILURE TO PURCHASE THE PROPERTY OR BREACH OF A REPRESENTATION OR WARRANTY.

(ii)If Seller, without the right to do so and in default of its obligations under this Agreement, fails to complete Closing or otherwise defaults under or materially breaches this Agreement, Buyer shall have the right to (i) terminate this Agreement, in which event Buyer shall be entitled to the return of the Deposit as its sole and exclusive remedy and neither Seller nor Buyer shall have any further obligations under this Agreement, except those matters expressly provided in this Agreement to survive termination, or (ii) institute a civil court action for specific performance (but not damages); provided that Buyer shall commence its action of specific performance against Seller within

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thirty (30) days after the scheduled Closing Date. UNDER NO CIRCUMSTANCES MAY BUYER SEEK OR BE ENTITLED TO RECOVER ANY SPECIAL, CONSEQUENTIAL, PUNITIVE, SPECULATIVE OR INDIRECT DAMAGES, ALL OF WHICH BUYER SPECIFICALLY WAIVES, FROM SELLER FOR ANY BREACH BY SELLER OF ITS REPRESENTATIONS, WARRANTIES OR COVENANTS OR ITS OBLIGATIONS UNDER THIS AGREEMENT. BUYER SPECIFICALLY WAIVES THE RIGHT TO FILE ANY LIS PENDENS OR ANY LIEN AGAINST ANY PROPERTY UNLESS AND UNTIL IT HAS FILED AN ACTION SEEKING SPECIFIC PERFORMANCE. Notwithstanding the foregoing, if Seller's default constitutes an Intentional Seller Default (as hereinafter defined) and Buyer makes the election described in clause (a) above, then Buyer shall also have the right to sue Seller for money damages in an amount equal to the amount of the direct, third-party out-of-pocket costs and expenses actually incurred by Buyer in connection with this Agreement and the inspection, acquisition and financing of said Property up to a maximum amount of $100,000. As used herein, "Intentional Seller Default" means any one or more of the following: (a) fraudulent misrepresentation, (b) criminal conduct (i.e. conduct that constitutes a felony under applicable law), or (c) an intentional and deliberate act of Seller taken on or after the Effective Date that is intended to result in, and does result in, Buyer's inability to consummate the transaction contemplated in this Agreement for a reason other than Buyer's default.

(c)Upon Closing. If Closing is completed hereunder, the Deposit shall be reflected as a credit against the Purchase Price.

(d)Upon Termination by Buyer. If Buyer terminates this Agreement as a result of Seller’s default or pursuant to the exercise of any right of termination permitted by this Agreement, upon the earlier to occur of: (i) receipt by Escrow Holder of written joint instructions from Seller and Buyer or (ii) entry of a final and unappealable adjudication determining which party is entitled to receive the Deposit, the Deposit shall be distributed in accordance with such written instructions or adjudication.

(e)Hard Deposit. Notwithstanding any provision herein to the contrary, Buyer hereby acknowledges and agrees that the Hard Deposit shall be a “hard” deposit that is non-refundable to Buyer except as expressly set forth in this Section 3(e); provided, however, that Buyer shall be entitled to a return by Seller of the Hard Deposit in the case of a termination by Buyer under Section 3(b)(ii) (Seller Default). This provision shall survive termination of this Agreement.

4.Closing. The consummation of the purchase and sale of the Property (the “Closing”) shall take place on or before September 21, 2016 or at earlier date as mutually agreed to in writing by the parties (the “Closing Date”). The Closing shall be conducted through an escrow with the Escrow Holder, with escrow fees to be paid by Buyer. IT IS AGREED THAT TIME IS OF THE ESSENCE OF THIS AGREEMENT. Notwithstanding the foregoing, Buyer shall have the option to extend the Closing Date to a date not later than September 30, 2016, provided that at least three (3) business days prior to the then-scheduled Closing Date: (i) the option is exercised by delivery of a written extension notice to Seller, and (ii) an additional Fifty Thousand and 00/100 Dollars ($50,000.00) is tendered to the Seller no later than 5:00 pm (Eastern), in which case such additional $50,000 shall be deemed part of the Hard Deposit as defined above.            

5.Inspection and Title Review.

(a)Inspection Period. Buyer and its authorized agents and representatives shall have the right to enter upon the Land and Improvements (including all of the apartment units, but subject to the rights of tenants under the Leases and in accordance with applicable law) at all reasonable times during

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normal business hours to inspect and conduct reasonably necessary inspections and tests on the Property at its sole cost and expense, including, without limitation, engineering and hazardous material inspections; provided, however, any intrusive physical testing will be conducted by Buyer only after obtaining Seller’s prior written consent. The right granted in the immediately preceding sentence may be exercised during the period commencing on the Effective Date and ending on the earlier to occur of the Closing Date or termination of this Agreement. Buyer shall bear the cost of all inspections and tests, and Buyer shall give reasonable notice to the management of any inspection or test to be conducted on the Property. Buyer hereby indemnifies and holds Seller and the Property harmless as to all loss, property damage, bodily injury, cost or expense resulting from Buyer’s inspections and tests of the Property, including, without limitation, claims for services rendered by third parties conducting such inspections and tests. Buyer shall also restore the Land and Improvements to the condition in which the same were found before any such entry upon the Property and inspection or examination was undertaken. Such agreement to repair and restore, and to indemnify and hold harmless Seller shall expressly survive closing or any termination of the Agreement. Buyer shall maintain, or shall cause its contractors to maintain, public liability and property damage insurance insuring Buyer (and naming Seller as an additional insured party) against any liability arising out of any entry or inspections of the Property or work performed about the Property pursuant to the provisions hereof and shall deliver certificates of insurance evidencing such coverage to Seller prior to any entry by Buyer or its contractors on the Property.

(b)Document Review. Within three (3) business days after the Effective Date, Seller shall deliver to Buyer (or make available for inspection at the Property) copies of the items listed on Schedule 5(b) attached hereto and made a part hereof, but only to the extent such items are in Seller’s possession or control (collectively, “Documents”); provided that Leases shall be available for inspection at the Property only. Except as otherwise expressly set forth in this Agreement, Seller makes no representations or warranties, either express or implied, and shall have no liability with respect to the accuracy or completeness of the information, data or conclusions contained in any information provided to Buyer, and Buyer shall make its own independent inquiry regarding the economic feasibility, physical condition and environmental state of the Property during the period beginning on the Effective Date and ending at 5:00 pm (Eastern) on August 15, 2016 (the “Inspection Period”).

(c)Assignment or Termination of Contracts. Buyer shall assume all Contracts at Closing subject to this Section 5(c). Prior to the expiration of the Inspection Period, Buyer may advise Seller in writing of any Contracts that it elects to have terminated upon Closing and Seller shall provide timely notices of termination; provided, however, that Seller shall not terminate, and Buyer expressly agrees to assume, all Contracts that are not cancellable by their terms or which cannot be terminated without cost or penalty to Seller. At Closing, Seller shall assign and Buyer shall assume all Contracts that have not terminated as of the Closing Date, including without limitation, any remaining rights and obligations under Contracts under which the notice required to terminate such Contracts, though delivered, will not have run prior to Closing. Notwithstanding the foregoing, all existing agreements for management of the Property shall be terminated as of the Closing Date.

(d)Right of Termination. If Buyer determines that the Property is not suitable in Buyer’s sole discretion, then Buyer may terminate this Agreement by written notice to Seller on or before 5:00 pm (Eastern) on the last day of the Inspection Period and this Agreement shall be null and void for all purposes (except for provisions that expressly survive hereunder) and the Deposit (less the Hard Deposit) shall be returned to Buyer. In the event that Buyer does not deliver notice of termination of this Agreement prior to the expiration of the Inspection Period, Buyer shall be deemed to have waived its right to terminate under this Section 5(d) and the Deposit shall be non-refundable to Buyer except in accordance with the terms of Section 3(b)(ii) above.

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6.Condition of Title.

(a)     Commitment to Insure. Within three (3) business days after the Effective Date, Seller shall deliver to Buyer a copy of Seller’s Owner’s Policy of title insurance and Buyer shall promptly order a commitment from the Title Company (the “Title Commitment”) to provide a standard owner’s title insurance policy for the Property in an amount equal to the Purchase Price (the “Title Policy”); and (ii) Seller shall deliver to Buyer a copy the most recent ALTA/ACSM Land Title Survey of the Property in Seller’s possession, if any (the “Existing Survey”). Buyer, at its option and expense, may obtain a new survey, or an update of the Existing Survey of the Real Property (the “Survey”).

(b)    During the Inspection Period, Buyer shall review title to the Real Property as disclosed by the Title Commitment and, if obtained, the Survey. Seller shall have no obligation to cure title objections except to satisfy and remove liens of an ascertainable amount created by Seller, which liens Seller shall cause to be released at the Closing or affirmatively insured over by the Title Company. Seller further agrees to remove any exceptions or encumbrances to title which are created by Seller after the Effective Date of this Agreement without Buyer’s written consent. Buyer may terminate this Agreement and receive a refund of the Deposit (less the Hard Deposit) at any time prior to the expiration of the Inspection Period or if the Title Company revises the Title Commitment after the expiration of the Inspection Period to add or modify exceptions in a material adverse manner, if such additions or modifications are not acceptable to Buyer and are not removed by the Closing Date. Seller shall execute at Closing an affidavit as to authority, the rights of tenants in occupancy and the status of mechanics’ liens (and sufficient to remove from the Title Policy any exception for mechanics’ liens filed against the Real Property which relate to any matters occurring prior to the Closing Date) in form acceptable to Seller as the Title Company shall require for the issuance of the Title Policy. The Title Policy may be delivered after Closing if that is customary in the locality.

7.Delivery of Possession. Actual sole and exclusive physical possession of the Property shall be given to Buyer at Closing unoccupied and free of any leases, claims to or rights of possession other than the rights of tenants under Leases by delivery of the keys to the Property and Seller’s limited warranty deed (the “Deed”) in the form attached hereto as Exhibit B, and Seller’s bill of sale, assignment and assumption of personal property, service contracts, warranties and leases in the form of Exhibit C to this Agreement duly executed by Seller (the “Bill of Sale and Assignment”).

8.Apportionments. All property related items of income and expense, including but not limited to the following, shall be apportioned between Seller and Buyer as of 11:59 p.m. on the day prior to the Closing Date (the “Pro Ration Date”) as follows:

(a)Taxes.     All real estate taxes, charges, and assessments affecting the Property (collectively, “Taxes”) shall be prorated on a per diem basis as of the Pro Ration Date, applying any discount for early payment applicable as of the Pro Ration Date, and on the basis of the actual fiscal year for which such taxes are assessed, and Buyer shall assume liability for payment of Taxes accruing in the year in which Closing occurs.  If any of the same have not been finally assessed, as of the date of Closing, then the same shall be adjusted at Closing based on the actual amount paid by Seller with respect to the most recently issued bills therefor, and shall be re-adjusted within fifteen days of the request of either party following the issuance of final bills. This provision shall expressly survive Closing and the recordation of the Deed.

(b)Rents.     Rents and other recurring income relating to the Property and collected by Seller for the month in which Closing occurs shall be deemed earned ratably on a per diem basis and shall be prorated as of the Pro Ration Date. Amounts collected by Seller prior to the date of Closing as

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rent for each day occurring after the Pro Ration Date and all other prepaid amounts shall be credited to the Buyer at Closing. All such amounts collected by Seller or Buyer from tenants or other payors after Closing shall be paid over and applied in the following order of priority: (i) first, on account of rents and other sums due to Seller and Buyer (and pro‑rated between them as of the Pro Ration Date) for the month in which Closing occurs; (ii) then, on account of rents and other sums due to Buyer for the then-current month; and (iii) thereafter, on account of delinquent rents due to Seller for periods prior to Closing. This provision shall expressly survive Closing and the recordation of the Deed.

(c)Other.All normal and customarily proratable items including without limitation operating expenses, personal property taxes, minimum water and sewer rentals, payments due under the Contracts which are to be assigned to Buyer, prepaid license fees and other charges for licenses and permits for the Real Property which will remain in effect for Buyer’s benefit after Closing and municipal rubbish removal charges, shall be apportioned pro rata between Seller and Buyer on a per diem basis based upon a calendar year.

(d)Security Deposits. The total sum of all tenant security deposits currently held by Seller, together with all interest earned thereon as of the Closing Date, shall be transferred to Buyer at Closing by operation of a credit against the Purchase Price.

(e)Utility Meter Readings. Seller shall obtain readings of the water, electric, gas and other utility meters servicing the Real Property (other than meters measuring exclusively utility consumption which is to be paid in full by tenants under Leases) to a date no sooner than two (2) days prior to the Closing Date. At or prior to Closing, Seller shall pay all charges based upon such meter readings, adjusted to include a reasonable estimate of the additional charges due for the period from the dates of the respective readings until the Closing Date. If Seller is unable to obtain readings of any meters prior to the Closing Date, Closing shall be completed without such readings and upon the obtaining thereof, Seller shall pay the charges incurred prior to the Closing Date as reasonably determined by both Buyer and Seller based upon such readings, and at Closing, Seller shall deposit with the Title Company an amount reasonably estimated to represent the anticipated obligation of Seller under this sentence.

(f)RUBS. In addition to any other prorations described in this Agreement, any ratio utility billing systems (“RUBS”) applicable to the Property, for the following categories of utilities and other reimbursements: (i) electricity, (ii) gas, (iii) water / sewer, (iv) trash, (v) pest control and (vi) other, attributable to the uncollected or trailing collections two calendar months prior to Closing will be reflected as a credit to Seller at Closing and will be calculated for closing purposes on the uncollected or trailing collections monthly periods based on the monthly average actual trailing RUBS for six months prior to Closing according to the income statements prepared by Seller and provided to Buyer.  A subsequent cash adjustment of RUBS between Seller and Buyer will be made when actual figures are available, but in all events within 90 days after the Closing Date.  Seller and Buyer each agree to provide such information as the other may reasonably request regarding RUBS and the billing, collection, and payment thereof. This provision shall expressly survive Closing and the recordation of the Deed.

(g)True-up. Subsequent to the Closing, if at any time during the 30-day period following Closing the actual amount of any pro-rated items that were based upon estimations at Closing, including without limitation, utilities and other operating expenses with respect to the Property for the month in which the Closing occurs, are determined, the parties agree to adjust the proration of utilities and other operating expenses and, if necessary, to refund or repay such sums as shall be necessary to effect such adjustment. For clarification, this Section 8(g) shall not apply to Taxes, Rents or RUBS which

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shall be pro-rated and paid under Sections 8(a), 8(b) and 8(f) respectively. This provision shall survive Closing and recordation of the Deed.

(h)Closing Costs. Seller shall pay (i) ½ of all realty transfer taxes imposed on the Deed and the conveyance of the Real Property, including without limitation, all state and local transfer taxes and recordation charges and (ii) all of Seller’s legal costs and expenses. Buyer shall pay (i) ½ of all realty transfer taxes imposed on the Deed and the conveyance of the Real Property, including without limitation, all state and local transfer taxes and recordation charges, (ii) all title insurance costs and expenses, including without limitation, title search and exam, Owner’s Policy premium and Loan Policy premium, (iii) cost of the Survey, (iv) all other recording costs with respect to the conveyance of the Property, (v) all costs, fees, recordation taxes and assessments with respect to any financing, (vi) all escrow fees, and (vii) Buyer’s legal costs and expenses. All other costs and expenses incurred in connection with the transaction contemplated hereby and not specifically allocated herein shall be paid by the party incurring the same.

(i)Up Front Payments. Any one-time inducement payments or other non-refundable fees, royalties or other payments made or paid to the owner of the Property under any Contract assumed by Buyer at Closing, including, but not limited to, any payments made to the owner of the Property under any cable agreement (“Up Front Payments”), shall not be apportioned pro rata between Seller and Buyer and Buyer shall not receive any credit from Seller at closing for any portion of any One-Time Payment attributable or allocable to any period of time from and after Closing.

(j)Any credit due to Buyer pursuant to Section 8 shall be applied as a credit against the Purchase Price, and any credit due to Seller pursuant to Section 8 shall be paid by Buyer to Seller at Closing as an addition to the Purchase Price.

9.Property Condition. THE PROPERTY IS BEING SOLD IN AN “AS IS,” “WHERE IS” CONDITION AND “WITH ALL FAULTS” AS OF THE EFFECTIVE DATE, SUBJECT TO NORMAL WEAR AND TEAR AND DAMAGE BY FIRE OR OTHER CASUALTY AS SET FORTH HEREIN. EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, BUYER ACKNOWLEDGES AND AGREES THAT SELLER HAS NOT MADE, DOES NOT MAKE AND SPECIFICALLY NEGATES AND DISCLAIMS ANY REPRESENTATIONS, WARRANTIES, PROMISES, COVENANTS, AGREEMENTS OR GUARANTIES OF ANY KIND OR CHARACTER WHATSOEVER, WHETHER EXPRESS OR IMPLIED, ORAL OR WRITTEN, PAST, PRESENT OR FUTURE, AND NO RESPONSIBILITY HAS BEEN OR IS ASSUMED AND/OR UNDERTAKEN BY SELLER OR BY ANY PARTNER, OFFICER, DIRECTOR, PERSON, FIRM, AGENT, ATTORNEY OR REPRESENTATIVE ACTING OR PURPORTING TO ACT ON BEHALF OF SELLER AS TO, CONCERNING OR WITH RESPECT TO (I) THE CONDITION OR STATE OF REPAIR OF THE PROPERTY; (II) THE COMPLIANCE OR NONCOMPLIANCE OF THE PROPERTY WITH ANY APPLICABLE LAWS, REGULATIONS OR ORDINANCES (INCLUDING, WITHOUT LIMITATION, ANY APPLICABLE ZONING, BUILDING, HANDICAPPED ACCESSIBILITY, OR DEVELOPMENT LAWS, CODES, RULES AND REGULATIONS); THE HABITABILITY, MERCHANTABILITY, MARKETABILITY, PROFITABILITY, OR FITNESS FOR A PARTICULAR PURPOSE OF THE PROPERTY; (III) THE MANNER OR QUALITY OF THE CONSTRUCTION OR MATERIALS, IF ANY, INCORPORATED WITHIN THE PROPERTY; (IV) THE SUITABILITY OF THE PROPERTY FOR ANY AND ALL ACTIVITIES AND USES WHICH BUYER MAY CONDUCT THEREON; (V) THE VALUE, EXPENSE OF OPERATION, OR INCOME POTENTIAL OF THE PROPERTY; (VI) ANY OTHER FACT OR CONDITION WHICH HAS OR MIGHT AFFECT THE PROPERTY OR THE CONDITION, STATE OF REPAIR, COMPLIANCE, VALUE, EXPENSE OF OPERATION OR

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INCOME POTENTIAL OF THE PROPERTY OR ANY PORTION THEREOF; OR (VII) WHETHER THE PROPERTY CONTAINS ASBESTOS OR ANY OTHER HARMFUL, HAZARDOUS OR TOXIC SUBSTANCES OR PERTAINING TO THE EXTENT, LOCATION OR NATURE OF SAME, OR THE CONDITION OF THE PROPERTY, INCLUDING WITHOUT LIMITATION, WATER, SOIL, AND GEOLOGY. THE PARTIES AGREE THAT ALL UNDERSTANDINGS AND AGREEMENTS HERETOFORE MADE BETWEEN THEM OR THEIR RESPECTIVE AGENTS OR REPRESENTATIVES ARE MERGED IN THIS AGREEMENT AND THE EXHIBITS HERETO ANNEXED, WHICH ALONE FULLY AND COMPLETELY EXPRESS THEIR AGREEMENT. BUYER SHALL NOT RELY UPON ANY STATEMENT OR REPRESENTATION BY OR ON BEHALF OF SELLER UNLESS SUCH STATEMENT OR REPRESENTATION IS SPECIFICALLY SET FORTH IN THIS AGREEMENT.

BUYER WAIVES AND RELEASES SELLER FROM ANY PRESENT OR FUTURE CLAIMS ARISING FROM OR RELATING TO THE PRESENCE OR ALLEGED PRESENCE OF ASBESTOS, OR ANY OTHR HARMFUL, HAZARDOUS OR TOXIC SUBSTANCES IN, ON, UNDER OR ABOUT THE PROPERTY INCLUDING, WITHOUT LIMITATION, ANY CLAIMS UNDER OR ON ACCOUNT OF (I) THE COMPREHENSIVE ENVIRONMENTAL RESPONSE, COMPENSATION AND LIABILITY ACT OF 1980, AS THE SAME MAY HAVE BEEN OR MAY BE AMENDED FROM TIME TO TIME; (II) ANY OTHER FEDERAL, STATE OR LOCAL LAW, ORDINANCE, RULE OR REGULATION, NOW OR HEREAFTER IN EFFECT, THAT DEALS WITH OR OTHERWISE IN ANY MANNER RELATES TO ENVIRONMENTAL MATTERS OF ANY KIND; OR (III) THIS AGREEMENT OR THE COMMON LAW. THE TERMS AND PROVISIONS OF THIS PARAGRAPH SHALL SURVIVE CLOSING HEREUNDER.

BUYER ACKNOWLEDGES THAT BUYER IS A SOPHISTICATED BUYER WHO IS FAMILIAR WITH THIS TYPE OF PROPERTY. BUYER IS ACQUIRING THE PROPERTY “AS IS,” “WHERE IS” AND “WITH ALL FAULTS,” IN ITS PRESENT STATE AND CONDITION, WITHOUT REPRESENTATION OR WARRANTY BY SELLER OR ANY OF ITS REPRESENTATIVES OR AGENTS AS TO ANY MATTERS WHATSOEVER EXCEPT AS OTHERWISE SPECIFICALLY SET FORTH IN THIS AGREEMENT, AND TO THE MAXIMUM EXTENT PERMITTED BY LAW, NO PATENT OR LATENT CONDITION AFFECTING THE PROPERTY IN ANY WAY, WHETHER OR NOT KNOWN OR DISCOVERABLE OR HEREAFTER DISCOVERED, SHALL AFFECT BUYER’S OBLIGATIONS HEREUNDER, NOR SHALL ANY SUCH CONDITION GIVE RISE TO ANY RIGHT OF DAMAGES, RESCISSION OR OTHERWISE AGAINST SELLER.

10.Representations and Warranties of Seller. Except, in all cases, for any fact, information or condition disclosed in the Documents, Title Commitment, Existing Survey, Survey, Contracts or which is otherwise known to Buyer prior to Closing, Seller makes the following representations and warranties to Buyer, which representations and warranties are true and correct as of the date of this Agreement (the “Seller Representations”):

(a)Seller is a limited liability company, duly formed, validly existing and in good standing under the laws of the State of Delaware, with all legal power and authority to undertake, observe and perform all of Seller’s agreements and obligations hereunder.

(b)Seller has full power, authority and legal right to execute, deliver and comply with this Agreement, and all actions of the Seller and other authorizations necessary or appropriate for the execution and delivery of and compliance with this Agreement have been taken or obtained and this Agreement constitutes the valid and legally binding obligation of the Seller enforceable against it in

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accordance with its terms; and the individual executing this Agreement and each of the documents executed in connection herewith on behalf of the Seller has the power and authority to do so. This Agreement and all documents executed by Seller that are to be delivered to Buyer at Closing (i) are, or at the time of Closing will be, duly authorized, executed and delivered by Seller, and (ii) do not, and at the time of Closing will not, violate any provision of any agreement or judicial order to which Seller is a party; and

(c)No consents are required to be obtained from, and no filings are required to be made with, any governmental authority or third party in connection with the execution and delivery of this Agreement by Seller or the consummation by Seller of the transactions contemplated hereby.

(d)Seller is not a foreign person within the meaning of Section 1445 of the Internal Revenue Code of 1986, as amended.

(e)To Seller’s knowledge, there are no actions, proceedings, litigation or governmental investigations or condemnation actions either pending or threatened with respect to the Property except for matters covered by Seller’s current insurance policies and tenant-related matters.

(f)To Seller’s knowledge, the rent roll attached hereto as Exhibit “D” is true, correct and genuine in all material respects as of the date shown thereon.

(g)To Seller’s knowledge, Seller has not received written notice of any material default under any of the Contracts that will not be terminated on the Closing Date.

Seller and Buyer agree that Seller’s Representations shall survive Closing for a period of six (6) months (the “Survival Period”) and Seller shall have no liability after the Survival Period with respect to any of the Seller Representations contained herein. Any representations or warranties made to “Seller’s knowledge” shall not be deemed to imply any duty of inquiry. Buyer hereby waives any right Buyer may have to commence any action(s) to enforce any alleged breach and/or violation of any representations of Seller as set forth in this Agreement or to seek damages in connection therewith in the event that Buyer obtains actual knowledge of any such alleged breach and/or violation prior to Closing and fails to give Seller notice thereof before the Closing Date.

11.Representations and Warranties of Buyer. Buyer, to induce Seller to enter into this Agreement and to complete Closing, makes the following representations and warranties to Seller, which representations and warranties are true and correct as of the date of this Agreement, and shall be true and correct at and as of the Closing Date in all respects as though such representations and warranties were made both at and, as of the date of this Agreement, and except as otherwise set forth herein, at and as of the Closing Date.

(a)Buyer is a limited liability company, duly formed, validly existing and in good standing under the laws of the Commonwealth of Pennsylvania with all legal power and authority to undertake, observe and perform all of Buyer’s agreements and obligations hereunder.

(b)Buyer has full power, authority and legal right to execute, deliver and comply with this Agreement, and all actions of the Buyer and other authorizations necessary or appropriate for the execution and delivery of and compliance with this Agreement have been taken or obtained and this Agreement constitutes the valid and legally binding obligation of the Buyer enforceable against it in accordance with its terms; and the individual executing this Agreement and each of the documents

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executed in connection herewith on behalf of the Buyer has the power and authority to do so. This Agreement and all documents executed by Buyer that are to be delivered to Seller at Closing (i) are, or at the time of Closing will be, duly authorized, executed and delivered by Buyer, and (ii) do not, and at the time of Closing will not, violate any provision of any agreement or judicial order to which Buyer is a party.

(c)No consents are required to be obtained from, and no filings are required to be made with, any governmental authority or third party in connection with the execution and delivery of this Agreement by Buyer or the consummation by Buyer of the transactions contemplated hereby.

(d)Neither Buyer nor any of its affiliates is, nor will they become, a person or entity with whom U.S. persons or entities are restricted from doing business under regulations of the Office of Foreign Asset Control (“OFAC”) of the Department of the Treasury (including those named on OFAC’s Specially Designated and Blocked Persons List) or under any statute, executive order (including the September 24, 2001, Executive Order Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten to Commit, or Support Terrorism) or other governmental action and does not, to its actual knowledge, engage in any dealings or transactions or be otherwise associated with such persons or entities.

(e)Buyer acknowledges that the Property may be subject to the federal Americans With Disabilities Act (the "ADA") and the federal Fair Housing Act (the "FHA"). The ADA requires, among other matters, that tenants and/or owners of "public accommodations" remove barriers in order to make the Property accessible to disabled persons and provide auxiliary aids and services for hearing, vision or speech impaired persons. Seller makes no warranty, representation or guarantee of any type or kind with respect to the Property's compliance with the ADA or the FHA (or any similar state or local law), and Seller expressly disclaims any such representation. Buyer acknowledges that it is solely responsible for determining whether the Property complies with the ADA and the FHA. The provisions of this Section 11(e) shall survive indefinitely the Closing or earlier termination of this Agreement and shall not be merged into the Deed or other closing documents.

(f)It is expressly acknowledged by Buyer that this transaction is not subject to any financing contingency and no financing for this transaction shall be provided by Seller.

(g)Buyer is a sophisticated and experienced Buyer of commercial properties including without limitation, apartment projects, and has participated in and is familiar with the acquisition, development, redevelopment, ownership, management, and operation of real estate projects similar to the Property. Buyer has or will have under the terms of this Agreement adequate opportunity to complete and will have completed all physical, financial, legal and regulatory investigations and examinations relating to the Property that it deems necessary, and will acquire the same solely on the basis of such investigations and examinations and the title insurance protection afforded by the Title Policy and not on the basis of any information provided or to be provided by Seller.

12.Operations Prior to Closing. Between the date of the execution of this Agreement and Closing:

(a)Operations and Management. During the pendency of this Agreement, Seller shall carry on its business and activities relating to the Property, substantially in the same manner as it did before the Effective Date. Seller shall maintain the physical condition of the Property in substantially its current condition, reasonable wear and tear and damage by fire and other casualty excepted.

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(b)Compliance with Obligations. Seller shall comply in all material respects with the obligations of Seller under the Leases, the Contracts and all other agreements and contractual arrangements by which Seller and/or the Property are bound or affected. Seller shall maintain its current insurance policy in full force and effect and shall pay all required premiums and other charges.

(c)New Contracts; New Leases. Seller shall not enter into any contract for or on behalf of or affecting the Property which cannot be terminated upon no more than thirty (30) days’ prior notice or without charge, cost, penalty or premium, and, after expiration of the Inspection Period, shall not renew, fail to give a notice which, in the absence of which, will result in an automatic renewal of, modify, cancel or terminate any Contracts except in accordance with notices given by Buyer under Section 5(c). Notwithstanding anything to the contrary set forth herein, Seller may enter into new leases or renewal leases for all or any portion of the Property in accordance with its current leasing parameters and procedures.

(d)Updated Rent Rolls. Upon request, Seller shall provide updated rent rolls to Buyer, provided that Seller shall not be required to provide updated rent rolls more frequently than once every two weeks.

13.Casualty.

(a)Destruction. If at any time prior to the Closing Date any portion of the Property should sustain damage by fire or other casualty (a “Casualty”), Seller shall promptly give written notice (“Casualty Notice”) thereof to Buyer, which notice shall include Seller’s estimate of the time and cost necessary to repair or remedy the damage caused by such Casualty. If the Property is the subject of a Casualty which is material, Buyer shall have the right, at its sole option, of terminating this Agreement (by written notice to Seller and Escrow Holder given within ten (10) days after receipt of the Casualty Notice from Seller). For purposes hereof, a “material” Casualty is one where the cost of restoring the Improvements to their condition prior to the Casualty will equal or exceed Five Hundred Thousand Dollars ($500,000). If Buyer does not terminate this Agreement, the proceeds of any insurance with respect to the Property paid to Seller between the date of this Agreement and the Closing Date shall be paid over to Buyer at the time of Closing (less any amount expended by Seller under Section 13(b) below) and all unpaid claims and rights in connection with losses to the Property shall be assigned to Buyer at Closing, and the amount of the deductible required to be paid under the Seller’s applicable insurance policy or policies will be paid to Buyer, without in any manner affecting the Purchase Price.

(b)Repairs. If the Property is the subject of a Casualty, but Buyer does not terminate this Agreement pursuant to the provisions of Section 13(a)above, then Seller shall cause all temporary repairs to be made to the Property as shall be required to prevent further deterioration and damage to the Property prior to the Closing Date. Seller shall have the right to be reimbursed from the proceeds of any insurance with respect to the Property paid between the date of this Agreement and the Closing Date for the cost of all such repairs made pursuant to this Section 13(b). Except for the obligation of Seller to repair the Property set forth in this Section 13(b), Seller shall have no other obligation to repair any Casualty, damage or destruction in the event Buyer does not elect to terminate this Agreement pursuant to the provisions of Section 13(a), and in such event, Buyer shall accept the Property at Closing as damaged or destroyed by the Casualty.

14.Eminent Domain. If any condemnation or eminent domain (a “Taking”) affects all or any part of the Property prior to Closing, or if any proceeding for a Taking is commenced prior to Closing, or if notice of the contemplated commencement of a Taking is given prior to Closing, Seller shall deliver

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written notice of such Taking to Buyer and Buyer, to the extent such Taking is material, shall have the right, at its sole option, of terminating this Agreement (by written notice to Seller within ten (10) days after receipt by Buyer of written notice from Seller of the Taking). For purposes hereof, a “material” Taking shall mean a Taking of all or any portion of the Property which causes (i) a material reduction in the size of the Property or a material interference with the use and operation of the Property, (ii) a material reduction in the number of parking spaces available at the Property, (iii) a material adverse effect on the ingress and egress to and from the Property, or (iv) a material reduction in the gross income that it is anticipated will be generated at the Property. If Buyer does not terminate this Agreement, the Purchase Price shall be reduced by the total of any awards or damages received by Seller, and Seller shall, at Closing, be deemed to have assigned to Buyer all of Seller’s right, title and interest in and to any awards or damages to which Seller may have become entitled or may thereafter be entitled by reason of any exercise of the power of eminent domain or condemnation with respect to or for the Taking of the Property or any portion thereof.

15.Items to be Delivered at Closing.

(a)By Seller. At Closing, Seller shall deliver to Buyer the following:

(i)Deed. The Deed;

(ii)Bill of Sale and Assignment. The Bill of Sale and Assignment for the transfer of the Personal Property and for the assignment to Buyer of Seller’s interest in the Leases, the Contracts (to the extent not required to be terminated before Closing) and any assignable warranties and guaranties relating to the Property or any portion thereof (collectively, the “Warranties”) to be assigned to Buyer, assigning to Buyer or Buyer’s assignee all of the lessor’s and Seller’s rights, title and interest in the Leases, such Contracts and the Warranties;

(iii)Keys. All keys, security cards and security codes to the Property in Seller’s possession;

(iv)Title Company Affidavits. Such affidavits reasonably required by the Title Company to delete the so-called “standard exceptions” (other than the standard survey exceptions) and date the Title Policy no earlier than the date of Closing;

(v)Updated Rent Roll. A rent roll in the form of Exhibit D of the rents and other charges and payments due from tenants under the Leases, including without limitation any which are in arrears, all dated as of the Closing Date and certified by Seller as true and correct to the best of Seller’s knowledge;

(vi)State Forms. Any forms required by the County or State in connection with the conveyance of the Property and the recordation of the Deed;

(vii)Plans and Specifications. To the extent in Seller’s possession, all plans and specifications for the improvements which constitute a part of the Property and all alterations and additions thereto, and project manuals for the Property;

(viii)Books and Records. Duplicate copies of all books, records and operating reports in Seller’s possession which are necessary to insure continuity of operation of the Property;

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(ix)FIRPTA. If Seller is not a foreign person or entity within the meaning of Sections 1445 and 7701 of the IRS Code, a form as required by Section 1445 of the Internal Revenue Code of 1986, as amended (the “Code”) in the form attached as Exhibit E hereto; and

(x)Tenant Notice Letter. A letter to the tenants of the Property indicating that the Property has been sold to Buyer and directing that all future rental payments be sent to Buyer in the form attached as Exhibit F hereto; and

(xi)Resolutions; Title Company Affidavits, Etc. Resolutions and certificates as required to evidence good standing and the due authorization of the execution and performance of this Agreement and the documents to be delivered pursuant hereto together with all affidavits, indemnities and other agreements required by the Title Company; and

(xii)Other Documents. Any other documents required to be delivered pursuant to any other provisions of this Agreement.

(b)By Buyer. At Closing, Buyer shall deliver to Seller the following:

(i)Purchase Price. The balance of the Purchase Price;

(ii)Bill of Sale and Assignment. The Bill of Sale and Assignment, duly executed and acknowledged by Buyer;

(iii)State Forms. Any forms required by the County or State in connection with the conveyance of the Property and the recordation of the Deed;

(iv)Resolutions; Title Company Affidavits, Etc. Resolutions and certificates as required to evidence good standing and the due authorization of the execution and performance of this Agreement and the documents to be delivered pursuant hereto together with all affidavits, indemnities and other agreements required by the Title Company;

(v)Taxpayer I.D. Certificate. A Taxpayer I.D. Certificate, in the form attached to this Agreement as Exhibit G, duly executed by Buyer; and

(vi)Other Documents. Any other document required to be delivered pursuant to any other provisions of this Agreement.

16.Brokerage. Buyer and Seller represent and warrant to the other that it has dealt with no broker, finder or other intermediary in connection with this sale other than Cushman & Wakefield (“Broker”). Seller agrees to pay all brokerage commissions due to Broker in connection herewith. Buyer and Seller each agree to indemnify, defend and hold the other harmless from and against all claims, demands, causes of action, loss, damages, liabilities costs and expenses (including without limitation attorneys’ fees and court costs) which the indemnified party may incur arising by reason of the above representation being false.

17.    Indemnity. Buyer agrees to indemnify, defend and hold harmless Seller from and against, and to reimburse Seller with respect to, any and all claims, demands, causes of action, losses, damages, liabilities, costs and expenses (including without limitation reasonable attorney’s fees and court costs) asserted against or incurred by Seller by reason of or arising out of any Lease, Contract, claim for damages or any other claim with respect to or accruing on or after the Closing Date. Seller agrees to

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indemnify, defend and hold harmless Buyer from and against, and to reimburse Buyer with respect to, any and all claims, demands, causes of action, losses, damages, liabilities, costs and expenses (including without limitation reasonable attorney’s fees and court costs) asserted against or incurred by Buyer by reason of or arising out of any Lease, Contract, claim for damages or any other claim accruing prior to the Closing Date. The provisions of this Section 17 shall survive Closing and recordation of the Deed.

1.Confidentiality. Buyer shall not disclose any Confidential Information (as defined below) to any party other than (a) persons within Buyer’s organization, Buyer’s affiliates, persons who may invest in, or co-purchase with Buyer, or person with which Buyer has contracted, including attorneys, accountants, appraisers, engineers, environmental consultants and other professionals engaged for this contemplated transaction who are advised of the confidential nature of the Confidential Information, (b) potential lenders and agents of potential lenders who are advised of the terms of this Agreement related to the Confidentiality Information, (c) as necessary to consummate the terms of this Agreement or any financing relating thereto, and (d) subject to the last sentence of this paragraph, as required by law or court order. “Confidential Information” means the terms of this Agreement and all due diligence information (including the Documents) provided to Buyer by Seller other than information of public record or generally known to the public. Buyer will destroy any electronic or paper documents constituting the Confidential Information, or return it to Seller if appropriate, if the Closing does not occur or this Agreement is terminated by Buyer or Seller before Closing. The confidentiality provisions of this Section 18 shall not apply to any disclosures made by Buyer as required by law, by court order, or in connection with any subpoena served upon Buyer; provided Buyer shall provide Seller with written notice before making any such disclosure. Buyer’s obligations under this Section 18 shall survive termination of this Agreement.

2.No Other Representations. Buyer acknowledges that neither Seller nor anyone acting, or purporting to act, on behalf of Seller, has, except as expressly set forth in this Agreement, made any representation or warranty with respect to the Property.

3.Assignability. Buyer shall not have the right to assign its interest in this Agreement without Seller’s advance written consent, which consent may be withheld in Seller’s sole and absolute discretion. Buyer hereby agrees that any assignment by Buyer, if consented to by Seller, shall not relieve Buyer of its obligations and liabilities hereunder. Additionally, it shall be a condition of any such assignment that the assignee assumes, in a written instrument delivered to Seller (in form and content reasonably acceptable to Seller), all obligations of Buyer hereunder. Seller’s approval of any assignment of Buyer’s interest in this Agreement shall not constitute a waiver of Seller’s right to approve any subsequent assignments.

Notwithstanding the terms of this Paragraph 20, Buyer shall have the right to assign its rights and obligations under this Agreement to an affiliate of Buyer. Buyer’s right to assign this Agreement shall be subject to execution by Buyer and the assignee of a form of assignment agreement acceptable to Seller. Buyer shall give notice of any such proposed assignment to Seller not less than five (5) business days prior to the scheduled the Closing Date. Upon such assignment, the assignee shall succeed to all of the rights of Buyer under this Agreement (including without limitation Buyer’s rights with respect to the Deposit) and shall assume all of Buyer’s obligations under the Agreement. No such assignment shall relieve Buyer of any liability under the Agreement in the event of a default by Buyer or its assignee.

4.Notices.

(a)All notices, demands, requests or other communications from each party to the other required or permitted under the term of this Agreement shall be in writing and, unless and until

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otherwise specified in a written notice by the party to whom notice is intended to be given, shall be sent to the parties at the following respective addresses:

if intended for Buyer:        DBC Real Estate Management, LLC

51 Pennwood Place, Suite 200

Warrendale, PA 15086

Attn: Gregory A. Hand

Email: ghand@dbcrealestate.com

With a copy to:            DBC Real Estate Management, LLC

51 Pennwood Place, Suite 200

Warrendale, PA 15086

Attn: Victor Son

Email: vson@dbcrealestate.com

if intended for Seller:        RRE Woodland Village Holdings, LLC

c/o Resource Real Estate, Inc.

1845 Walnut Street, 18^th Floor

Philadelphia, PA 19103

Attn: Luke Perl, Transaction Manager

Facsimile No.: (215) 761-0452

Email: LPerl@Resourcerei.com

With a copy to:            Resource Real Estate, Inc.

1845 Walnut Street, 18^th Floor

Philadelphia, PA 19103

Attn: Shelle Weisbaum, General Counsel

Facsimile No.: (215) 761-0452

Email: sweisbaum@resourcerei.com

And with a copy to:        Ledgewood, P.C.

Two Commerce Square

2001 Market Street, Suite 3400

Philadelphia, PA 19103

Attn: Stacy C. Bedwick, Esquire

Facsimile No.: (215) 735-2513

Email: sbedwick@ledgewood.com

Notices may be given on behalf of any party by its legal counsel.

(b)Each such notice, demand, request or other communication shall be deemed to have been properly given for all purposes if (i) delivered to a nationally recognized overnight courier service for next business day delivery, to its addressee at such party’s address as set forth above or (ii) delivered via electronic mail to the email address listed above, provided, however, that if such communication is given via electronic mail, an original counterpart of such communication shall concurrently be sent in the manner specified in clause (i) above.

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(c)Each such notice, demand or request shall be deemed to have been given upon the earlier of (i) actual receipt or refusal by the addressee or (ii) deposit thereof with the courier if sent pursuant to section (b)(ii) above.

5.Additional Escrow Provisions.

(a)Deposit. Escrow Holder agrees to deposit the Escrowed Deposit in an interest bearing account, subject to the receipt from Buyer of a form W-9 for the purposes of investing said funds and to hold and disburse said funds, and any interest earned thereon, as hereinafter provided. Upon written notification from Seller or Buyer in accordance with the terms of this Agreement, Escrow Holder shall release the funds in accordance with and pursuant to the written instructions. In the event of a dispute between any of the parties hereto sufficient in the sole discretion of Escrow Holder to justify its doing so, Escrow Holder shall be entitled to tender unto the registry or custody of any court of competent jurisdiction all money or property in its hands held under the terms of this Agreement, together with such legal pleading as it deems appropriate, and thereupon be discharged.

(b)Escrow Holder. Seller and Buyer covenant and agree that in performing any of its duties under this Agreement, Escrow Holder shall not be liable for any loss, costs or damage which it may incur as a result of serving as Escrow Holder hereunder, except for any loss, costs or damage arising out of its willful default or gross negligence. Accordingly, Escrow Holder shall not incur any liability with respect to (i) any action taken or omitted to be taken in good faith upon advice of its counsel given with respect to any questions relating to its duties and responsibilities, or (ii) to any action taken or omitted to be taken in reliance upon any document, including any written notice of instruction provided for in this Agreement, not only as to its due execution and the validity and effectiveness of its provisions, but also to the truth and accuracy of any information contained therein, which Escrow Holder shall in good faith believe to be genuine, to have been signed or presented by a proper person or persons and to conform with the provisions of this Agreement.

(c)Indemnity. Seller and Buyer hereby agree to indemnify and hold harmless Escrow Holder against any and all losses, claims, damages, liabilities and expenses, including without limitation, reasonable costs of investigation and attorneys' fees and disbursements which may be imposed upon or incurred by Escrow Holder in connection with its serving as Escrow Holder hereunder, except for any loss, costs or damage arising out of its willful default, gross negligence or failure to adhere to the terms or conditions of this Agreement. The provisions of this Section shall survive termination of this Agreement.

6.Miscellaneous.

(a)Entire Agreement; Governing Law. This Agreement contains the entire understanding of the parties with respect to the subject matter hereof, supersedes all prior or other negotiations, representations, understandings and agreements of, by or among the parties, express or implied, oral or written, which are fully merged herein. The express terms of this Agreement control and supersede any course of performance and/or customary practice inconsistent with any such terms. Any agreement hereafter made shall be ineffective to change, modify, discharge or effect an abandonment of this Agreement unless such agreement is in writing and signed by the party against whom enforcement of such change, modification, discharge or abandonment is sought. This Agreement shall be governed by and construed under the laws of the State where the Real Property is located.

(b)Liability. (i) Notwithstanding anything to the contrary contained herein, Seller’s shareholders, partners, members, the partners or members of such partners or members, the shareholders

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of such partners or members, and the trustees, officers, directors, employees, agents and security holders of Seller and the partners or members of Seller assume no personal liability for any obligations entered into on behalf of Seller and its individual assets shall not be subject to any claims of any person relating to such obligations; and (ii) Buyer’s shareholders, partners, members, the partners or members of such partners or members, the shareholders of such partners or members, and the trustees, officers, directors, employees, agents and security holders of Buyer and the partners or members of Buyer assume no personal liability for any obligations entered into on behalf of Buyer and its individual assets shall not be subject to any claims of any person relating to such obligations. The foregoing shall govern any direct and indirect obligations of Seller and Buyer under this Agreement. This provision shall expressly survive Closing and recordation of the Deed or termination of this Agreement.

(c)Successors and Assigns. This Agreement shall be binding upon and shall inure to the benefit of the parties and their respective heirs, personal representatives, successors and assigns.

(d)Provisions Separable. The provisions of this Agreement are independent of and separable from each other, and no provision shall be affected or rendered invalid or unenforceable by virtue of the fact that for any reason any other provision may be invalid or unenforceable in whole or in part.

(e)Gender, etc. Words used in this Agreement, regardless of the number and gender specifically used, shall be deemed and construed to include any other number, singular or plural, and any other gender, masculine, feminine or neuter, as the context indicates is appropriate.

(f)Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original as against any party whose signature appears thereon, and all of which shall together constitute one and the same instrument. This Agreement shall be binding when one or more counterparts hereof, individually or taken together, shall bear the signatures of all of the parties reflected on this Agreement as the signatories. Electronically transmitted counterparts of this Agreement or signature pages hereof shall have the same force and effect as originals.

(g)Exhibits. All exhibits attached to this Agreement are incorporated by reference into and made a part of this Agreement.

(h)No Waiver. Neither the failure nor any delay on the part of either party to this Agreement to exercise any right, remedy, power or privilege under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any right, remedy, power or privilege preclude any other or further exercise of the same or of any other right, remedy, power or privilege, nor shall any waiver of any right, remedy, power or privilege with respect to any occurrence be construed as a waiver of any such right, remedy, power or privilege with respect to any other occurrence. No waiver shall be effective unless it is in writing and is signed by the party asserted to have granted such waiver.

(i)Headings. The headings incorporated in this Agreement are for convenience in reference only, are not a part of this Agreement and do not in any way limit or add to the terms and provisions of this Agreement.

(j)Interpretation. No provision of this Agreement is to be interpreted for or against either party because that party or that party’s legal representative or counsel drafted such provision.

(k)Time. TIME IS OF THE ESSENCE OF THIS AGREEMENT. In computing the number of days for purposes of this Agreement, all days shall be counted, including Saturdays,

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Sundays and holidays; provided, however, that if the final day of any time period provided in this Agreement shall end on a Saturday, Sunday or legal holiday, then the final day shall extend to 5:00 p.m. Eastern time of the next full business day. For the purposes of this Section, the term “holiday” shall mean a day other than a Saturday or Sunday on which banks are closed in the state in which the Real Property is located.

(l)Attorney’s Fees. In connection with any litigation arising out of this Agreement, the prevailing party shall be entitled to recover all costs incurred, including reasonable attorney’s fees. For purposes of this Agreement, “prevailing party” shall include, without limitation, a party obtaining substantially the relief sought, whether by compromise, settlement or otherwise.

(m)No Recording of Agreement. Neither Seller nor Buyer shall cause or permit this Agreement to be filed of record in any office or place of public record and, if Buyer or Seller shall fail to comply with the terms hereof by recording or attempting to record the same, such act shall not operate to bind or cloud title to the Real Property.

(n)Negotiations. Seller shall have the right at all times prior to the expiration of the Inspection Period, to solicit backup offers and enter into discussions, negotiations, or any other communications concerning or related to the sale of the Property with any third party; provided, however, that such communications are subject to the terms of this Agreement and that Seller shall not enter into any contract with a third party for the sale of the Property unless such contract is contingent on the termination of this Agreement without the Property having been conveyed to Buyer.

(o)WAIVER OF JURY TRIAL. BUYER WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (I) ARISING UNDER THIS AGREEMENT, (II) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALING OF THE BUYER AND SELLER IN RESPECT OF THIS AGREEMENT OR RELATED TRANSACTIONS, IN EACH CASE WHETHER NOW EXISTING OR LATER ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE. BUYER AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION, OR CAUSE OF ACTION WILL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT SELLER MAY FILE A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF BUYER TO THE WAIVER OF ITS RIGHT TO TRIAL BY JURY.

(p)1031 Exchange. Buyer or Seller may desire to exchange, for other property of like kind and qualifying use within the meaning of Section 1031 of the Internal Revenue Code of 1986, as amended (the "Code"), and the Treasury Regulations promulgated thereunder, fee title in the Project. Each of Buyer and Seller expressly reserves the right to assign its rights, but not its obligations, hereunder to a Qualified Intermediary as provided in Treasury Reg. §1.1031(k)-1(g)(4) on or before Closing and each party hereby agrees to fully cooperate with the other party, at no cost to such party, in the furtherance of any such like-kind exchange pursuant to Code §1031 contemplated by either party hereto.

(q)Reporting Person. Each of Seller and Buyer hereby designate the Escrow Holder as the “Reporting Person” as such term is utilized in Section 6045 of the Internal Revenue Code of 1986, as amended, and regulations thereunder. Seller agrees to provide the Title Company with such information as may be required for the Escrow Holder to file a Form 1099 or other required form relative to the Closing with the Internal Revenue Service. A copy of the filed Form 1099 or other filed form shall be provided to Seller and Buyer simultaneously with its being provided to the Internal Revenue Service.

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(r)Merger Provision. Except as otherwise expressly provided herein, any and all rights of action of Buyer for any breach by Seller of any representation, warranty or covenant contained in this Agreement shall merge with the Deed and other instruments executed at Closing, shall terminate at Closing and shall not survive Closing.

7.Employees. Notwithstanding any provision herein to the contrary, Buyer and Seller hereby agree that Buyer shall have the right to contact existing property management personnel regarding continuation of employment with Buyer after Closing, provided that no such contact shall occur prior to September 7, 2016.

[SIGNATURES CONTAINED ON FOLLOWING PAGE]

IN WITNESS WHEREOF, intending to be legally bound, the parties have executed this Agreement as a sealed instrument as of the day and year first above written.

SELLER:

RRE WOODLAND VILLAGE HOLDINGS, LLC, a Delaware limited liability company

By: RCP Woodland Village Manager, LLC, a Delaware limited liability company, its manager

By: _________________________________

Name:

Title:

BUYER:

DBC REAL ESTATE MANAGEMENT, LLC, a Pennsylvania limited liability company

By: _________________________________

Name:

Title:

Taxpayer ID Number: 26-1908438

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JOINDER OF ESCROW HOLDER

For good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the undersigned, the Escrow Holder named in the annexed Agreement, hereby agrees to be bound by the provisions of the annexed Agreement relating to the holding and disbursement of all monies paid to the undersigned in escrow, and to disburse such sums strictly in accordance with the terms of the Agreement.

Intending to be legally bound, the undersigned has caused this Joinder to be executed by its duly authorized representative the ____day of July, 2016.

BELL, CARRINGTON & PRICE

By:_________________________

Name:

Title:

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EXHIBIT A

[LEGAL DESCRIPTION OF REAL PROPERTY]

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EXHIBIT B

LIMITED WARRANTY DEED

Prepared by and after recording, return to:

Robinson McFadden & Moore, P.C.

Attn: Wilson W. McDonald, Esq.

Post Office Box 944

Columbia, SC 29202

STATE OF SOUTH CAROLINA COUNTY OF LEXINGTON ) ) ) TITLE TO REAL ESTATE LIMITED WARRANTY DEED

KNOW ALL MEN BY THESE PRESENTS, that RRE Woodland Village Holdings, LLC (“Grantor”), a Delaware limited liability company, in the State aforesaid, for and in consideration of the sum of __________________________________ AND NO/HUNDREDTHS DOLLARS ($____________) to the Grantor paid by _____________, a _______________(“Grantee”), the receipt of which is hereby acknowledged, subject to the Exceptions as set forth and defined below, has granted, bargained, sold and released, and by these presents does grant, bargain, sell and release unto the said Grantee the following described property:

SEE ATTACHED EXHIBIT “A” FOR THE LEGAL DESCRIPTION

Derivation: This being the identical property conveyed to _____________ by deed of _______________, dated ___________ and recorded on ___________, in the Office of the ROD for Lexington County in Deed Book _____ at Page _____.

TMS No. _____________

Grantee’s Address: __________________

__________________

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This conveyance is made subject to 2016 ad valorem real property taxes, and any restrictions, reservations, licenses, zoning ordinances or easements that may appear of record or on any recorded plats of the premises (collectively, the “Permitted Exceptions”). THIS CONVEYANCE IS WITHOUT FURTHER REPRESENTATION OR WARRANTIES, EXPRESS OR IMPLIED, BY GRANTOR AS TO THE VALUE, CONDITION, MERCHANTABILITY, FITNESS FOR ANY PARTICULAR USE OR PURPOSE, ENVIRONMENTAL CONDITION OR STATUS OF THE PROPERTY OR ANY PART THEREOF OR AS TO THE ABSENCE OF LATENT OR OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE UPON INSPECTION OF THE SUBJECT PROPERTY, IT BEING THE EXPRESS INTENTION OF GRANTOR THAT THE REAL PROPERTY DESCRIBED ABOVE IS TRANSFERRED IN ITS CURRENT CONDITION AND STATE “AS-IS” AND “WHERE-IS”.

Together with all and singular, the rights, members, hereditaments and appurtenances to the said premises belonging to or in anywise incident or appertaining.

TO HAVE AND TO HOLD all and singular the premises before mentioned unto the said Grantee, his heirs, successors and assigns forever.

And the Grantor does hereby bind itself, its successors and assigns, to warrant and forever defend all and singular the premises unto the said Grantee, and Grantee’s heirs, successors and assigns, against the Grantor and Grantor’s successors and assigns lawfully claiming by and through the Grantor, but against none others.

[remainder of page intentionally blank – signatures to follow]

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WITNESS the Hand and Seal of the Grantor this ____ day of ____________, 2016.

Signed, sealed and delivered in the presence of:	RRE WOODLAND VILLAGE HOLDINGS, LLC, a Delaware limited liability company By: RCP Woodland Village Manager, LLC, a Delaware limited liability company, its manager
	By:
	Name: Title:

STATE OF )

)        ACKNOWLEDGMENT

COUNTY OF )

On this ________ day of ___________, 2016, before me personally came the within-named Grantor, RRE Woodland Village Holdings, LLC by and through RCP Woodland Village Manager, LLC, a Delaware limited liability company, its manager by and through ____________ its _______________, who acknowledged to me that s/he executed the foregoing instrument; and who is personally known to me, or who was proved to me on the basis of satisfactory evidence to be the person who executed the foregoing instrument.

______________________________________

(Signature of Notary Public)

Name:________________________________

Notary Public for the State of _______________

My Commission expires:__________________

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EXHIBIT C

BILL OF SALE, ASSIGNMENT AND ASSUMPTION OF
PERSONAL PROPERTY, SERVICE CONTRACTS, WARRANTIES AND LEASES

RRE WOODLAND VILLAGE HOLDINGS, LLC, a Delaware limited liability company (“Grantor”), for and in consideration of the sum of Ten and No/100 Dollars ($10.00) and other good and valuable consideration to it in hand paid by ________________________________________, a ____________________ (“Grantee”), the receipt and sufficiency of which are hereby acknowledged, has Granted, Sold, Assigned, Transferred, Conveyed, and Delivered and does by these presents Grant, Sell, Assign, Transfer, Convey and Deliver unto Grantee, all of Grantor’s rights, titles, and interests in and to the following described properties located in, affixed to, and/or arising or used in connection with the improved property with parking and other amenities (the “Project”) situated on the land in the County of Lexington, State of South Carolina more particularly described on Exhibit A attached hereto and made a part hereof for all purposes (the “Land,” which together with the Project is sometimes hereinafter called the “Property”):

(a)    All fixtures, furniture, equipment, supplies and other tangible and intangible personal property attached or appurtenant to, or located in or on, or used solely in connection with the Real Property, which are owned by Seller excluding, however, any “Thin Client Solutions” hardware and software and any items upon which appears the “Resource Residential” logo, including without limitation, any door rugs, portable movie screens, marketing brochures and other literature (the “Personal Property”), and located on, attached to, relating to, or used in connection with the operation and maintenance of the Property;

(b)    The Grantor’s interest in all leases, tenancies, licenses and other agreements for the use or occupancy of any portion of the Project in effect as of the date hereof and all guaranties in connection therewith (the “Leases”), together with security and other deposits owned or held by Grantor pursuant to the Leases, which Leases and security deposits are described on the rent roll attached hereto as Exhibit B;

(c)    All assignable leasing, service, supply and maintenance contracts relating to the ownership and operation of the Property (the “Service Contracts”) listed on Exhibit Cattached hereto; and

(d)    Any assignable warranties and guaranties relating to the Property or any portion thereof (collectively, the “Warranties”).

Grantor and Grantee hereby covenant and agree as follows:

(i)    Grantee accepts the aforesaid assignment and Grantee assumes and agrees to be bound by and timely perform, observe, discharge, and otherwise comply with each and every one of the agreements, duties, obligations, covenants and undertakings upon the lessor’s part to be kept and performed under the Leases and any obligations of Grantor under the Service Contracts.

(ii)    Grantee hereby indemnifies and agrees to hold harmless Grantor from and against any and all liabilities, claims, demands, obligations, assessments, losses, costs, damages, and expenses of any nature whatsoever (including, without limited the generality of the foregoing, reasonable attorneys’ fees and court costs) which Grantor may incur, sustain, or suffer, or which may be asserted or assessed against Grantor on or after the date hereof, arising out of, pertaining to or in any way connected with the obligations, duties, and liabilities under the Leases and the Service Contracts, or any of them, arising from and after the date hereof.

A-1

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(iii)    The burden of the indemnity made in paragraph (ii) hereof shall not be assigned. Except as aforesaid, this Agreement shall bind and inure to the benefit of the parties and their respective successors, legal representatives and assigns.

(iv)    Neither this Agreement nor any term, provision, or condition hereof may be changed, amended or modified, and no obligation, duty or liability or any party hereby may be released, discharged or waived, except in a writing signed by all parties hereto.

GRANTEE ACKNOWLEDGES AND AGREES THAT, EXCEPT AS EXPRESSLY PROVIDED IN THAT CERTAIN AGREEMENT OF PURCHASE AND SALE DATED AS OF JULY ___, 2016, GRANTOR HAS NOT MADE, DOES NOT MAKE AND SPECIFICALLY NEGATES AND DISCLAIMS ANY REPRESENTATIONS, WARRANTIES (OTHER THAN THE WARRANTY OF TITLE AS SET OUT IN THE DEED), PROMISES, COVENANTS, AGREEMENTS OR GUARANTIES OF ANY KIND OR CHARACTER WHATSOEVER, WHETHER EXPRESS OR IMPLIED, ORAL OR WRITTEN, PAST, PRESENT OR FUTURE, OF, AS TO, CONCERNING OR WITH RESPECT TO (A) THE VALUE, NATURE, QUALITY OR CONDITION OF THE PROPERTY, INCLUDING, WITHOUT LIMITATION, THE WATER, SOIL AND GEOLOGY, (B) THE INCOME TO BE DERIVED FROM THE PROPERTY, (C) THE SUITABILITY OF THE PROPERTY FOR ANY AND ALL ACTIVITIES AND USES WHICH GRANTEE MAY CONDUCT THEREON, (D) THE COMPLIANCE OF OR BY THE PROPERTY OR ITS OPERATION WITH ANY LAWS, RULES, ORDINANCES OR REGULATIONS OF ANY APPLICABLE GOVERNMENTAL AUTHORITY OR BODY, (E) THE HABITABILITY, MERCHANTABILITY, MARKETABILITY, PROFITABILITY OR FITNESS FOR A PARTICULAR PURPOSE OF THE PROPERTY, (F) THE MANNER OR QUALITY OF THE CONSTRUCTION OR MATERIALS, IF ANY, INCORPORATED INTO THE PROPERTY, (G) THE MANNER, QUALITY, STATE OF REPAIR OR LACK OF REPAIR OF THE PROPERTY, OR (H) ANY OTHER MATTER WITH RESPECT TO THE PROPERTY, AND SPECIFICALLY, THAT GRANTOR HAS NOT MADE, DOES NOT MAKE AND SPECIFICALLY DISCLAIMS ANY REPRESENTATIONS REGARDING COMPLIANCE WITH ANY ENVIRONMENTAL PROTECTION, POLLUTION OR LAND USE LAWS, RULES, REGULATIONS, ORDERS OR REQUIREMENTS, INCLUDING THE EXISTENCE IN OR ON THE PROPERTY OF HAZARDOUS MATERIALS OR SUBSTANCES. GRANTEE FURTHER ACKNOWLEDGES AND AGREES THAT HAVING BEEN GIVEN THE OPPORTUNITY TO INSPECT THE PROPERTY, GRANTEE IS RELYING SOLELY ON ITS OWN INVESTIGATION OF THE PROPERTY AND NOT ON ANY INFORMATION PROVIDED OR TO BE PROVIDED BY GRANTOR AND ACCEPTS THE PROPERTY AND WAIVES ALL OBJECTIONS OR CLAIMS AGAINST GRANTOR (INCLUDING, BUT NOT LIMITED TO, ANY RIGHT OR CLAIM OF CONTRIBUTION) ARISING FROM OR RELATED TO THE PROPERTY OR TO ANY HAZARDOUS MATERIALS ON THE PROPERTY. GRANTEE FURTHER ACKNOWLEDGES AND AGREES THAT ANY INFORMATION PROVIDED OR TO BE PROVIDED WITH RESPECT TO THE PROPERTY WAS OBTAINED FROM A VARIETY OF SOURCES AND THAT GRANTOR HAS NOT MADE ANY INDEPENDENT INVESTIGATION OR VERIFICATION OF SUCH INFORMATION AND MAKES NO REPRESENTATIONS AS TO THE ACCURACY OR COMPLETENESS OF SUCH INFORMATION. GRANTOR IS NOT LIABLE OR BOUND IN ANY MANNER BY ANY VERBAL OR WRITTEN STATEMENTS, REPRESENTATIONS OR INFORMATION PERTAINING TO THE PROPERTY, OR THE OPERATION THEREOF, FURNISHED BY ANY REAL ESTATE BROKER, AGENT, EMPLOYEE, SERVANT OR OTHER PERSON. GRANTEE FURTHER ACKNOWLEDGES AND AGREES THAT TO THE MAXIMUM EXTENT PERMITTED BY LAW, THE SALE OF THE PROPERTY AS PROVIDED FOR HEREIN IS MADE ON AN “AS IS” CONDITION AND BASIS WITH ALL FAULTS. IT IS UNDERSTOOD AND AGREED THAT THE PURCHASE PRICE FOR THE PROPERTY HAS BEEN

C-2

26

ADJUSTED BY PRIOR NEGOTIATION TO REFLECT THAT ALL OF THE PROPERTY IS SOLD BY GRANTOR AND PURCHASED BY GRANTEE SUBJECT TO THE FOREGOING.

C-2

27

IN WITNESS WHEREOF, Grantor and Grantee have executed this Assignment of Personal Property, Service Contracts, Warranties and Leases effective as of _______________, 2016

GRANTOR:

RRE WOODLAND VILLAGE HOLDINGS, LLC, a Delaware limited liability company

By: RCP Woodland Village Manager, LLC, a Delaware limited liability company, its manager

By: _____________________________

               Name:

               Title:

GRANTEE:

[______________], a _____________

By: _________________________

Name:

Title:

Bill of Sale Exhibit A – legal description

Bill of Sale Exhibit B – rent roll

Bill of Sale Exhibit C – list of assumed contracts

C-2

28

EXHIBIT D

[RENT ROLL]

SEE ATTACHED

D-1

EXHIBIT E

FIRPTA

Section 1445 of the Internal Revenue Code provides that a transferee of a U.S. real property interest must withhold tax if the transferor is a foreign person. For U.S. tax purposes (including section 1445), the undersigned “Transferor” which is the owner, directly or indirectly of all of the membership interests of RRE WOODLAND VILLAGE HOLDINGS, LLC, a Delaware limited liability company, which has legal title to a U.S. real property interest under local law, will be the actual transferor of the property for U.S. tax purposes and not the disregarded entity. To inform the transferee that withholding of tax is not required upon the disposition of a U.S. real property interest by Transferor, the undersigned hereby certifies as follows:

1. Transferor is not a foreign corporation, foreign partnership, foreign trust, or foreign estate (as those terms are defined in the Internal Revenue Code and Income Tax Regulations);

2. Transferor is not a disregarded entity, as defined in Treas. Reg. § 1.1445-2(b)(2)(iii);

3. Transferor’s U.S. taxpayer identification number is _____________________; and

4. Transferor’s office address is 1845 Walnut Street, 18^th Floor, Philadelphia, PA 19103.

Transferor understands that the above information 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 penalties of perjury, the undersigned, in the capacity set forth below, hereby declares that he has examined this instrument and to the best of his knowledge and belief it is true, correct, and complete, and the undersigned further declares that he has the authority to sign this document in such capacity.

TRANSFEROR:

RESOURCE REAL ESTATE INVESTORS 7, LP, a Delaware limited partnership

By: Resource Capital Partners, Inc., a Delaware corporation, its general partner

By: _________________________

Name:

Title:

Dated: _________________, 2016

E-1

EXHIBIT F

TAXPAYER I.D. CERTIFICATE

In connection with certain Internal Revenue Service reporting requirements imposed upon Seller, Buyer hereby certifies that listed below is Buyer’s address and taxpayer I.D. number, true and correct as of the Closing Date.

Address:    

Taxpayer I.D. No.:    

Buyer hereby consents to Seller’s release of the above information in connection with any reporting requirements imposed upon Seller by any governmental authority.

,

a     
By:    
Name:    
Title:    

F-1

EXHIBIT G

NOTICE TO TENANTS

September ___, 2016

Residents of Woodland Village Apartments

2221 Bush Rover Road

Columbia, SC 29210

Dear Resident:

Notice is hereby given to the tenants of Woodland Village Apartments (the “Property”) that the current owner of the Property (the “Seller”), has sold the Property to ______________ (“Buyer”) effective as of this date. Buyer has assumed all of the obligations of Seller, as landlord under your lease, including any obligations with respect to your security deposit. Buyer is now your landlord and all future rent payments under your lease shall be made to Buyer.

In the event that your rent payments are made to Seller via an ACH, other automatic debit system, or the WIPS program, such payments shall be rejected as of the date hereof and you should make alternative arrangements with Buyer for the payment of your rent.

Buyer’s address for purposes of your lease is as follows:

________________

________________

________________

Attn:

Phone:

All future rental payments should be hand delivered to the on-site rental office or made through the new resident online portal.

Sincerely,

RRE WOODLAND VILLAGE HOLDINGS, LLC, a Delaware limited liability company

By: RCP Woodland Village Manager, LLC, its manager

By:

Name:

Title:

G-1

SCHEDULE 2(a)

Wire Instructions

33

SCHEDULE 5(b)

[DOCUMENTS]

To the extent in Seller’s possession or control:

a. internally prepared financial statements and operating statements for the three (3) full consecutive years immediately preceding the date of the execution of the Purchase and Sale Agreement, and year-to-date operating statements for the current year certified by Seller.

b. Current rent roll or other reports reflecting actual rent; any concessions; any prepaid rent; security, pet, key, or any other deposits; and delinquencies.

c. Historical occupancy reports for the period covered by the financial and operating statements and the current year.

d. Copies of all leases, lease files, and tenant correspondence or notices (available on-site)

e. Copies of all tenant work orders and summary of other repairs made for the period covered by the financial and operating statements and the current year (or report generated by Yardi accounting software)

f. Detailed breakdown of all capital expenditures for the Property for the period covered by the financial and operating statements and the current year.

g. Copies of the real estate and personal property tax bills for the Property for the period covered by the financial and operating statements and the current year.

h. Copies of all utility bills for the Property for the twelve (12) most recent months including water, sewer, electricity, gas, cable television, internet and phone (available via Conservice)

i. Copies of all maintenance, service, employment or vendor contracts for the Property.

j. Copies of all Seller’s owner’s title policies issued for the Property as of, or following, the Seller’s acquisition

k. Copies of any existing plans and specifications for the improvements on the Property including renovation and repairs, and cost breakdowns if available.

n. Copies of any existing surveys and/or metes and bounds descriptions of the Property.

o. Certificates of Occupancy for the Property.

p. All information or documentation related to any threatened, pending, or existing litigation by or with tenants, contractors, subcontractors, vendors, service providers, lenders, partners or members any way related to the Property (other than those related to tenant matters)

34

EX-31.1

EXHIBIT 31.1

CERTIFICATION

I, Kevin M. Finkel, certify that:

1) I have reviewed this quarterly report on Form 10-Q for the quarter ended September 30, 2016 of Resource Real Estate Investors 7, L.P.;

2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4) The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5) The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

	RESOURCE REAL ESTATE INVESTORS 7, L.P.
	By:  Resource Capital Partners, Inc., its general partner
November 14, 2016	By:        /s/ Kevin M. Finkel
	Kevin M. Finkel
	President
	(Principal Executive Officer)

EX-31.2

EXHIBIT 31.2

CERTIFICATION

I, Steven R. Saltzman, certify that:

1) I have reviewed this quarterly report on Form 10-Q for the quarter ended September 30, 2016 of Resource Real Estate Investors 7, L.P.;

2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4) The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5) The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

	RESOURCE REAL ESTATE INVESTORS 7, L.P.
	By:  Resource Capital Partners, Inc., its general partner
November 14, 2016	By:          /s/ Steven R. Saltzman
	Steven R. Saltzman
	Vice President - Finance
	(Principal Accounting Officer)

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Resource Real Estate Investors 7, L.P. (“the Company”) on Form 10-Q for the quarter ended September 30, 2016 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Kevin M. Finkel, President of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

	RESOURCE REAL ESTATE INVESTORS 7, L.P.
	By:  Resource Capital Partners, Inc., its general partner
November 14, 2016	By:      /s/ Kevin M. Finkel
	Kevin M. Finkel
	President
	(Principal Executive Officer)

EX-32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Resource Real Estate Investors 7, L.P. (“the Company”) on Form 10-Q for the quarter ended September 30, 2016 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Steven R. Saltzman, Vice President - Finance of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

	RESOURCE REAL ESTATE INVESTORS 7, L.P.
	By:  Resource Capital Partners, Inc., its general partner
November 14, 2016	By:      /s/ Steven R. Saltzman
	Steven R. Saltzman
	Vice President - Finance
	(Principal Accounting Officer)

XML

Document and Entity Information	9 Months Ended
	Sep. 30, 2016 shares
Document and Entity Information [Abstract]
Entity Registrant Name	Resource Real Estate Investors 7, L.P.
Entity Central Index Key	0001486279
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding	0
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	Q3
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2016

XML

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Rental properties, at cost:
Land	$ 0	$ 4,201
Buildings and improvements	0	31,920
Personal property	0	1,551
Identifiable intangible assets	0	1,497
Assets held for sale	6,417	0
Total rental properties, at cost	6,417	39,169
Accumulated depreciation and amortization	0	(9,634)
Total rental properties, net	6,417	29,535
Cash	31,304	6,702
Restricted cash	608	1,600
Accounts receivable, net	99	70
Accounts receivable due from related parties	182	171
Prepaid expenses and other assets	42	71
Total assets	38,652	38,149
Liabilities:
Mortgage notes payable, net	5,840	25,630
Accounts payable and accrued expenses	262	574
Real estate tax payable	292	1,132
Accrued interest	29	116
Payables to related parties	222	138
Prepaid rent	24	114
Security deposits	33	170
Total liabilities	6,702	27,874
Partners’ capital	31,950	10,275
Total liabilities and partners’ capital	$ 38,652	$ 38,149

XML

CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Revenues:
Rental income	$ 1,951	$ 2,540	$ 6,052	$ 7,995
Expenses:
Rental operating	1,216	1,364	3,552	4,053
Management fees – related parties	141	184	434	595
General and administrative	119	100	408	438
Depreciation and amortization	102	499	855	1,495
Total expenses	1,578	2,147	5,249	6,581
Income before other income (expense)	373	393	803	1,414
Other income (expense):
Interest expense, net	(439)	(433)	(1,155)	(1,546)
Loss on extinguishment of debt	(1,781)	0	(1,781)	0
Gain on sale of rental properties	24,499	0	24,509	9,603
Loss on disposal of fixed assets	0	(7)	(2)	(7)
Total other income (expenses)	22,279	(440)	21,571	8,050
Net income (loss)	$ 22,652	$ (47)	$ 22,374	$ 9,464
Weighted average number of limited partner units outstanding (in units)	3,270	3,270	3,270	3,270
Net (loss) income per weighted average limited partner unit, basic and diluted (in usd per share)	$ 6.93	$ (0.01)	$ 6.84	$ 2.89

XML

CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' CAPITAL - 9 months ended Sep. 30, 2016 - USD ($) $ in Thousands	Total	General Partner	Limited Partners
Beginning balance at Dec. 31, 2015	$ 10,275	$ 1	$ 10,274
Beginning balance (in units) at Dec. 31, 2015			3,269,655
Increase (Decrease) in Partners' Capital [Roll Forward]
Distributions	(699)		$ (699)
Net income	22,374		22,374
Ending balance at Sep. 30, 2016	$ 31,950	$ 1	$ 31,949
Ending balance (in units) at Sep. 30, 2016			3,269,655

XML

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Cash flows from operating activities:
Net income	$ 22,374	$ 9,464
Adjustments to reconcile net income to net cash provided by operating activities:
Gain on sale of rental properties	(24,509)	(9,603)
Loss on extinguishment of debt	1,781	0
Depreciation and amortization	856	1,495
Amortization of deferred financing costs	63	103
Loss on disposal of fixed assets	2	7
Changes in operating assets and liabilities:
Restricted cash	188	390
Tenant receivables, net	54	6
Prepaid expense and other assets	(133)	(46)
Accounts receivable due from related parties	(86)	(32)
Accounts payable and accrued expenses	(262)	160
Real estate tax payable	(271)	(165)
Accrued interest	(5)	(28)
Payables to related parties	83	(1,682)
Prepaid rent	(63)	(34)
Security deposits	(4)	1
Net cash provided by operating activities	68	36
Cash flows from investing activities:
Capital expenditures	(296)	(485)
Restricted cash	(112)	197
Proceeds from sale of rental properties, net	27,596	11,684
Net cash provided by investing activities	27,188	11,396
Cash flows from financing activities:
Distributions to limited partners	(699)	(10,102)
Principal payments on mortgage notes payable	(174)	(413)
Payment on debt extinguishment	(1,781)	0
Net cash (used in) financing activities	(2,654)	(10,515)
Net increase in cash	24,602	917
Cash at beginning of period	6,702	4,483
Cash at end of period	31,304	5,400
Settlement of mortgage notes payable with proceeds from sale of rental properties	$ 19,679	$ 12,452

XML

NATURE OF BUSINESS AND OPERATIONS

9 Months Ended

Sep. 30, 2016

Organization, Consolidation and Presentation of Financial Statements [Abstract]

NATURE OF BUSINESS AND OPERATIONS

NOTE 1 - NATURE OF BUSINESS AND OPERATIONS

Resource Real Estate Investors 7, L.P. (“R-7” or the “Partnership”) is a Delaware limited partnership which owns and operates multifamily residential rental properties located in Texas and South Carolina (the “Properties”). The Partnership also may invest in interests in real estate mortgages and other debt instruments that are secured, directly or indirectly, by multifamily residential rental properties, although the Partnership held no such investments as of September 30, 2016 and December 31, 2015.  The Partnership was formed on March 28, 2008 and commenced operations on June 16, 2008.  The General Partner, Resource Capital Partners, Inc. (“RCP”, the “General Partner”, or the “GP”), is in the business of sponsoring and managing real estate investment limited partnerships and tenant in common programs. RCP contributed $1,000 in cash as its minimum capital contribution to the Partnership.  In addition, RCP held a 5.62% limited partnership interest in the Partnership at September 30, 2016 and December 31, 2015. RCP is an indirect wholly owned subsidiary of Resource America, Inc. (“RAI”), a company operating in the real estate, financial fund management and commercial finance sectors.

On May 22, 2016, RAI agreed to be acquired by C-III Capital Partners LLC ("C-III"), a leading commercial real estate services company engaged in a broad range of activities.  The merger closed on September 8, 2016, and as a result, C-III indirectly controls RCP and all of the partnership units of the Partnership currently owned by RCP. 

In accordance with the First Amended and Restated Agreement of Limited Partnership (the “Agreement”), the GP has the right to extend the Partnership term for a maximum of two years in the aggregate following the initial termination date. In February 2016, the GP extended the Partnership term for one year until March 28, 2017. The Partnership has begun the process of dissolution through the strategic disposal of assets. On March 19, 2015, the Partnership sold its interest in Woodland Hills. On December 1, 2015, the Partnership sold its interest in Tamarlane. On September 12, 2016, the Partnership sold its interest in Bent Oaks and Woodhollow. On September 30, 2016, the Partnership sold its interest in Woodland Village. The Partnership expects to to dispose of the remaining property in the fourth quarter of 2016.

The Agreement provides that income is allocated as follows: first, to the Limited Partners (“LPs”) and the GP (collectively, the “Partners”) in proportion to and to the extent of the deficit balances, if any, in their respective capital accounts; second, to the Partners in proportion to the allocations of Distributable Cash (as defined in the Agreement); and third, 100% to the LPs.  All losses are allocated as follows: first, 100% to the LPs until the LPs have been allocated losses equal to the excess, if any, of their aggregate capital account balances over the aggregate Adjusted Capital Contributions (as defined in the Agreement); second, to the Partners in proportion to and to the extent of their respective remaining positive capital account balances, if any; and third, 100% to the LPs.

Distributable cash from operations, payable monthly, as determined by the GP, is first allocated 100% to the LPs until the LPs have received their Preferred Return (as defined in the Agreement); and thereafter, 80% to the LPs and 20% to the GP.

Distributable cash from capital transactions, as determined by the GP, is first allocated 100% to the LPs until the LPs have received their Preferred Return; second, 100% to the LPs until their Adjusted Capital Contributions have been reduced to zero; and thereafter, 80% to the LPs and 20% to the GP.

The consolidated financial statements and the information and tables contained in the notes thereto as of September 30, 2016 are unaudited. The consolidated balance sheet as of December 31, 2015 was derived from the audited consolidated financial statements as of and for the year ended December 31, 2015. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). However, in the opinion of management, these interim financial statements include all the necessary adjustments to fairly present the results of the interim periods presented. The unaudited interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in the Partnership’s Annual Report on Form 10-K for the year ended December 31, 2015. The results of operations for the three and nine months ended September 30, 2016 may not necessarily be indicative of the results of operations for the full year ending December 31, 2016.

XML

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

9 Months Ended

Sep. 30, 2016

Accounting Policies [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A summary of the significant accounting policies consistently applied in the preparation of the accompanying consolidated financial statements follows:

Principles of Consolidation

The consolidated financial statements include the accounts of the Partnership and its wholly-owned subsidiaries, as follows:

Subsidiaries	Number of Units	Location
RRE Tamarlane Holdings, LLC, or Tamarlane Apartments (“Tamarlane”) (1)	—	—
RRE Bent Oaks Holdings, LLC, or Bent Oaks Apartments (“Bent Oaks”) (2)	—	—
RRE Cape Cod Holdings,  LLC, or Cape Cod Apartments (“Cape Cod”)	212	San Antonio, TX
RRE Woodhollow Holdings, LLC, or Woodhollow Apartments (“Woodhollow”) (3)	—	—
RRE Woodland Hills Holdings, LLC (“Hills”) (4)	—	—
RRE Woodland Village Holdings, LLC, or Woodland Village Apartments (“Village”) (5)	—	—
	212

(1) Tamarlane, a 115 unit multifamily apartment complex in Maine, was sold on December 1, 2015.

(2) Bent Oaks, a 146 unit multifamily apartment complex in Texas, was sold on September 12, 2016.

(3) Woodhollow, a 108 unit multifamily apartment complex in Texas, was sold on September 12, 2016.

(4) Hills, a 228 unit multifamily apartment complex in Georgia, was sold on March 19, 2015.

(5) Village, a 308 unit multifamily apartment complex in South Carolina, was sold on September 30, 2016.

All intercompany transactions and balances have been eliminated in consolidation.

Assets Held for Sale

The Partnership presents the assets and liabilities of any rental properties which qualify as held for sale, separately in the consolidated balance sheets. The Partnership does not consider the sale as probable until the purchase and sale agreement has been signed by both parties. Real estate assets held for sale are measured at the lower of carrying amount or fair value less cost to sell. Both the real estate and the corresponding liabilities are presented separately in the Consolidated Balance Sheets. Subsequent to classification of an asset as held for sale, no further depreciation is recorded. The Partnership had one rental property included in assets held for sale as of September 30, 2016.

Geographic Concentration

As of September 30, 2016, the Partnership's net investments in real estate in San Antonio, Texas represented 100% of the Partnership’s total rental properties, net. As a result, the geographic concentration of the Partnership’s portfolio makes it particularly susceptible to adverse economic developments in San Antonio, Texas real estate markets. Any adverse economic or real estate developments in these markets could adversely affect the Partnership’s operating results.

Use of Estimates

The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period.  The Partnership estimates the allowance for uncollectible receivables and loan losses and adjusts the balance quarterly.  The Partnership also estimates the liability for real estate taxes on the properties and adjusts the balance quarterly if necessary. Actual results could differ from those estimates.

Supplemental Disclosure of Cash Flow Information

During the nine months ended September 30, 2016 and 2015, the Partnership paid $1.1 million and $1.5 million, respectively, in cash for interest.

Advertising

The Partnership expenses advertising costs as they are incurred.  Advertising costs, which are included in rental operating expenses, totaled $45,000 and $93,000 for the three and nine months ended September 30, 2016 and $36,000 and $96,000 for the three and nine months ended September 30, 2015, respectively.

Deferred Financing Costs

Costs incurred to obtain financing have been capitalized and are being amortized over the term of the related debt using the effective yield method. In accordance with adoption of Financial Accounting Standard Board ("FASB") Accounting Standards Update ("ASU") 2015-03 "Simplifying the Presentation of Debt Issuance Costs", the Partnership has recorded deferred financing costs as a direct reduction of the related mortgage notes payable.

Sale of Rental Property

The Partnership recognized the gains on sales of rental properties separately in the Consolidated Statement of Operations. Sales of rental properties completed by the Partnership do not represent a significant strategic shift in operations and , accordingly, the Partnership does not present discontinued operations. For information regarding the sales of the rental properties, see Note 7 .

Income Taxes

Income taxes or credits resulting from earnings or losses are payable by, or accrue to the benefit of, the partners; accordingly, no provision has been made for income taxes in these consolidated financial statements.

The Partnership evaluates the benefits of tax positions taken or expected to be taken in its tax returns under a two-step recognition and measurement process.  Only the largest amount of benefits from the tax positions that will more likely than not be sustainable upon examination are recognized by the Partnership.  The Partnership does not have any unrecognized tax benefits, nor interest and penalties, recorded in the Consolidated Balance Sheets or Consolidated Statements of Operations and does not anticipate significant adjustments to the total amount of unrecognized tax benefits within the next twelve months.

The Partnership is subject to examination by the U.S. Internal Revenue Service and by the taxing authorities in those states in which the Partnership has significant business operations.  The Partnership is not currently undergoing any examinations by taxing authorities.  The Partnership may be subject to U.S. federal income tax and state/local income tax examinations for years 2013 through 2015.

Revenue Recognition

Revenue is primarily derived from the rental of residential housing units with lease agreement terms of generally one year or less.  The Partnership recognizes revenue in the period that rent is earned, which is on a monthly basis.  The Partnership recognizes rent as income on a straight-line basis over the term of the related lease.  Additionally, any incentives included in the lease are amortized on a straight-line basis over the term of the related lease.

Included within rental income are other income amounts such as utility reimbursements, late fees, parking fees, pet fees and lease application fees which are recognized when earned or received. For the three and nine months ended September 30, 2016 other income totaled $235,000 and $691,000, respectively. For the three and nine months ended September 30, 2015 other income totaled $229,000 and $636,000, respectively.

Long-Lived Assets

The Partnership reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.  If it is determined that an asset’s estimated future cash flows will not be sufficient to recover its carrying amount, an impairment charge will be recorded to reduce the carrying amount for that asset to its estimated fair value. The Partnership has estimated that the future cash flows from its properties will be sufficient to recover their

carrying amounts and, as a result, the Partnership did not recognize any impairment losses with respect to its Properties for the

nine months ended September 30, 2016 and 2015.

Rental Properties

Rental properties are carried at cost, net of accumulated depreciation.  Buildings and improvements and personal property are depreciated for financial reporting purposes on the straight-line method over their estimated useful lives.  The value of in-place leases is amortized over the average remaining term of the respective leases on a straight-line basis.  Useful lives used for calculating depreciation for financial reporting purposes are as follows:

Buildings and improvements	5 - 27.5 years
Personal property	3 - 15 years

Tenant Receivables

Tenant receivables are stated at amounts due from tenants net of an allowance for uncollectible receivables.  Payment terms vary and receivables outstanding longer than the payment terms are considered past due.  The Partnership determines its allowance by considering a number of factors, including the length of time receivables are past due, security deposits held, the Partnership’s previous loss history, the tenants’ current ability to pay their obligations to the Partnership, the general condition of the economy and the condition of the industry as a whole.  The Partnership writes off receivables when they become uncollectible.  At September 30, 2016 and December 31, 2015, there were no allowances for uncollectible receivables.

Redemptions

The LPs may request redemption of their units at any time.  The Partnership has no obligation to redeem any units and will do so only at the GP’s discretion.  If the Partnership redeems units, the redemption price is generally the amount of the initial investment less all distributions from the Partnership to the LP, and less all organization and offering expenses charged to the LP.

Adoption of New Accounting Standards

In January 2015, FASB issued ASU No. 2015-01, "Income Statement - Extraordinary and Unusual Items (Subtopic 225-20), Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items" ("ASU No. 2015-01"). The amendments in ASU No. 2015-01 eliminate from GAAP the concept of extraordinary items. Although the amendment will eliminate the requirements for reporting entities to consider whether an underlying event or transaction is extraordinary, the presentation and disclosure guidance for items that are unusual in nature or occur infrequently will be retained and will be expanded to include items that are both unusual in nature and infrequently occurring.  ASU No. 2015-01 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2015. On January 1, 2016, the Partnership adopted ASU 2015-01 and the adoption had no impact on the Partnership's consolidated financial statements.

In February 2015, FASB issued ASU 2015-02, "Consolidation (Topic 810): Amendments to the Consolidation Analysis" (“ASU 2015-02”), which makes certain changes to both the variable interest model and the voting model, including changes to (1) the identification of variable interests (fees paid to a decision maker or service provider), (2) the variable interest

entity characteristics for a limited partnership or similar entity and (3) the primary beneficiary determination. ASU 2015-02 is effective for the Partnership beginning January 1, 2016. On January 1, 2016, the Partnership adopted ASU 2015-02 and the adoption had no impact on the Partnership's consolidated financial statements.

In April 2015, FASB issued ASU 2015-03, "Simplifying the Presentation of Debt Issuance Costs" ("ASU 2015-03"), which requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected. Upon adoption, the Partnership applied the new guidance on a retrospective basis and adjusted the balance sheet of each individual period presented to reflect the period-specific effects of applying the new guidance. This guidance was effective and was adopted by the Partnership on January 1, 2016 and as result the Partnership has reclassified $261,000 of unamortized debt issuance costs at December 31, 2015 from deferred financing costs to liabilities as reduction of the related mortgage notes payable

In September 2015, FASB issued ASU 2015-16, "Simplifying the Accounting for Measurement-Period Adjustments" ("ASU 2015-16"), which eliminates the requirement to retroactively revise comparative financial information for prior periods presented in financial statements due to changes in provisional amounts recorded for acquisitions in subsequent periods. Upon adoption, disclosure of the amounts recorded in current-period earnings that would have been recorded in previous reporting periods if the adjustment to the provisional amounts had been recognized at the acquisition date are required. ASU 2015-16 was effective and adopted by the Partnership on January 1, 2016 and the adoption had no impact on its consolidated financial statements.

Accounting Standards Issued But Not Yet Effective.

In May 2014, FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers” ("ASU No. 2014-09"), which will replace most existing revenue recognition guidance in GAAP.  The core principle of ASU No. 2014-09 is that an entity should recognize revenue for the transfer of goods or services equal to the amount that it expects to be entitled to receive for those goods or services.  ASU No. 2014-09 requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments. ASU No. 2014-09 will be effective for the Partnership beginning January 1, 2018, including interim periods in 2018, and allows for both retrospective and prospective methods of adoption. The Partnership is in the process of determining the method of adoption and assessing the impact of this guidance on the Partnership’s consolidated financial position, results of operations and cash flows.

In August 2014, FASB issued ASU No. 2014-15, "Presentation of Financial Statements-Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern" ("ASU No. 2014-15"). Under the new guidance, an entity should evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued. The guidance is effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. Early adoption is permitted. The adoption of the new requirements is not expected to have a significant impact on the Partnership's consolidated financial statements.

In February 2016, FASB issued ASU No. 2016-02, "Leases" ("ASU No. 2016-02"). which is intended to improve financial reporting about leasing transactions and requires organizations that lease assets to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases. ASU No. 2016-02 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The Partnership is continuing to evaluate this guidance; however, it does not expect the adoption of ASU No. 2016-02 to have a significant impact on its consolidated financial statements.

In June 2016, FASB issued ASU No. 2016-13 “Financial Instruments - Credit Losses” ("ASU No. 2016-13") which requires measurement and recognition of expected credit losses for financial assets held. The standard update is effective for the Partnership beginning January 1, 2019. The Partnership is continuing to evaluate this guidance; however, it does not expect the adoption of ASU No. 2016-13 to have a significant impact on its consolidated financial statements.

In August 2016, FASB issued ASU No. 2016-15 "Classification of Certain Cash Receipts and Cash Payments" ("ASU No. 2016-13"), which addresses eight specific cash flow issues with the objective of reducing existing diversity in practice. ASU 2016-13 has been early adopted by the Partnership. As result of adoption, the Partnership has classified cash paid on early extinguishment of debt as cash used in financing activities.

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RESTRICTED CASH

9 Months Ended

Sep. 30, 2016

Restricted Cash and Investments [Abstract]

RESTRICTED CASH

NOTE 3 - RESTRICTED CASH

Restricted cash represents escrow deposits with lenders to be used to pay real estate taxes, insurance, and capital improvements.  A summary of the components of restricted cash follows (in thousands):

	September 30, 2016		December 31, 2015
Real estate taxes	$	264	$	1,034
Insurance	37		180
Capital improvements	307		386
Total	$	608	$	1,600

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MORTGAGE NOTES PAYABLE, NET

9 Months Ended

Sep. 30, 2016

Notes Payable [Abstract]

MORTGAGE NOTES PAYABLE, NET

NOTE 4 - MORTGAGE NOTES PAYABLE, NET

The following is a summary of mortgage notes payable, net (in thousands):

	September 30, 2016							December 31, 2015
Property	Mortgage balance		Deferred Finance Costs, Net (1)			Carrying Value		Mortgage balance		Deferred Finance Costs, Net(1)			Carrying Value
Bent Oaks	$	—	$	—		$	—	$	5,731	$	(50	)	$	5,681
Cape Cod (3)	5,878		(38		)	5,840		5,951		(51		)	5,900
Woodhollow	—		—			—		4,916		(43		)	4,873
Village	—		—			—		9,293		(117		)	9,176
Total	$	5,878	$	(38	)	$	5,840	$	25,891	$	(261	)	$	25,630

(1) Deferred financing costs include unamortized costs incurred to obtain financing which are being amortized over the term of the related debt. 

Bent Oaks and Woodhollow were sold on September 12, 2016. Woodland Village was sold on September 30, 2016. Proceeds from these sales were used to pay the outstanding borrowings. The Partnership incurred losses of $1.8 million on extinguishment of debt due to prepayment penalties.

The following table includes additional information about the Partnership's mortgage notes payable, net (in thousands):

Property Collateral	Maturity Date		Annual Interest Rate	Monthly Debt Service
Cape Cod (3)	01/01/2019	(2)	5.91%	$	38	(1)

(1) Monthly payment includes principal and interest. Interest is at a fixed rate.

(2) The Partnership has an option to extend the maturity date for an additional one year to January 1, 2020. During the extension

period, the interest rate would convert to the Federal Home Loan Mortgage Corporation Bill Index Rate plus 2.5%.

(3) The Property qualifies as held for sale and it is separately presented in the consolidated balance sheet.

Annual contractual principal payments on the mortgage notes payable for the future years ending September 30, are as follows (in thousands):

2017	$	104
2018	110
2019	5,664
	$	5,878

The mortgage notes payable are with recourse only to the Properties securing them subject to certain limited standard exceptions, as defined in the mortgage notes, which the GP has guaranteed with respect to each property.  These exceptions are referred to as “carveouts”.  In general, carveouts relate to damages suffered by the lender for a subsidiary’s failure to pay rents, insurance or condemnation proceeds to the lender, to pay water, sewer and other public assessments or charges, to pay environmental compliance costs or to deliver books and records, in each case as required in the loan documents.  The exceptions also require the GP to guarantee payment of audit costs, lender’s enforcement of its rights under the loan documents and payment of the loan if the subsidiary voluntarily files for bankruptcy or seeks reorganization, or if a related party of the subsidiary does so with respect to the subsidiary.

Deferred financing costs include unamortized costs incurred to obtain financing which are being amortized over the term of the related debt.  Accumulated amortization as of September 30, 2016 and December 31, 2015 was $136,000 and $486,000, respectively.  Estimated amortization of existing deferred financing costs for the next three years ending September 30, is as follows (in thousands):

2017	$	17
2018	16
2019	5
	$	38

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CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

9 Months Ended

Sep. 30, 2016

Related Party Transactions [Abstract]

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

NOTE 5 - CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

     In the ordinary course of its business operations, the Partnership has ongoing relationships with several related entities.

Substantially all of the receivables from related parties represents escrow funds held by RAI for self insurance. The Partnership's properties participate in insurance pools with other properties directly and indirectly managed by RAI for both property insurance and general liability. RAI holds the escrow funds related to the insurance pools on its books. The pool for the property insurance covers losses up to $2.5 million and the pool for the general liability covers losses up to the first $50,000 per incident. Catastrophic insurance would cover property losses in excess of the insurance pool up to $140 million. Therefore, unforeseen or catastrophic losses in excess of the Partnership's insured limits could have a material adverse effect on the Partnership's financial condition and operating results. In the nine months ended September 30, 2016 the Partnership funded $136,523 into the insurance pools.

On May 22, 2016, RAI agreed to be acquired by C-III Capital Partners LLC ("C-III"), a leading commercial real estate services company engaged in a broad range of activities.  The merger closed on September 8, 2016, and as a result, C-III indirectly controls RCP and all of the partnership units of the Partnership currently owned by RCP. 

RCP is entitled to receive an annual investment management fee, payable monthly, equal to 1% of the gross offering proceeds that have been deployed in real estate investments from the offering of partnership units, net of any amounts otherwise attributable to LP interests owned by RCP.  During the term of the Partnership, RCP must subordinate up to 100% of its annual investment management fee to the receipt by the LPs of their Preferred Return.  As of September 30, 2016 and December 31, 2015, the amount of unpaid subordinated investment management fees totaled $149,000 and $15,000, respectively. During the nine months ended September 30, 2016 and 2015 the Partnership paid investment management fees totaling $0 and $1.9 million, respectively.

A wholly-owned subsidiary of RCP, Resource Real Estate Management, LLC (“RREML”) is entitled to receive property and debt management fees. RREML engaged Resource Real Estate Management, Inc (“RREMI”), an indirect wholly owned subsidiary of RAI, to manage the Partnership’s Properties. As of September 30, 2016 and December 31, 2015, property management fees due totaled $37,000 and $62,000, respectively. Because the Partnership has not acquired any real estate debt investments, there were no debt management fees as of September 30, 2016 and December 31, 2015.

During the ordinary course of business, RCP and RREMI advance funds for ordinary operating expenses on behalf of the Properties. As of September 30, 2016 and December 31, 2015, advances due totaled $35,000 and $61,000, respectively. Total reimbursable operating expenses incurred during the three months ended September 30, 2016 and September 30, 2015 were $468,000 and $577,000, respectively. Total reimbursable operating expenses incurred during the nine months ended September 30, 2016 and September 30, 2015 were $1.3 million and $1.6 million, respectively. Reimbursed expenses include payroll and miscellaneous operating expenses. Reimbursed operating expenses are included in property rental operating expenses in the consolidated statements of operations.

The Partnership pays investment management fees and property management fees to related parties.  These expenses are summarized as follows (in thousands):

	Three Months Ended   September 30,				Nine Months Ended   September 30,
	2016		2015		2016		2015
RCP:
Investment management fees (1)	$	41	$	59	$	134	$	196
RREML:
Property management fees - 5% of gross cash receipts (2)	$	100	125		$	300	399
	$	141	$	184	$	434	$	595

(1) RCP is entitled to receive an annual investment management fee, payable monthly, equal to 1% of the gross proceeds that have been deployed in real estate investments from the offering of partnership units, net of any LP interest owned by RCP. During the term of the Partnership, RCP must subordinate up to 100% of its annual investment management fee to the receipt by the LPs of their Preferred Return.

(2) RREML is entitled to receive monthly property management fees equal to 5% of the gross operating revenues from the Partnership’s 100% owned Properties for managing or obtaining and supervising third party managers.

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FAIR VALUE OF FINANCIAL INSTRUMENTS

9 Months Ended

Sep. 30, 2016

Fair Value Disclosures [Abstract]

FAIR VALUE OF FINANCIAL INSTRUMENTS

NOTE 6 - FAIR VALUE OF FINANCIAL INSTRUMENTS

In analyzing the fair value of its financial instruments disclosed or accounted for on a fair value basis, the Partnership follows the fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.  The Partnership determines fair value based on quoted prices when available or, if quoted prices are not available, through the use of alternative approaches, such as discounting the expected cash flows using market interest rates commensurate with the credit quality and duration of the financial instruments.  The fair value of cash, tenant receivables and accounts payable approximate their carrying values due to their short term nature.  The hierarchy followed defines three levels of inputs that may be used to measure fair value:

Level 1 - Quoted prices in active markets for identical assets that the reporting entity has the ability to access at the measurement date. 

Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or can be corroborated with observable market data for substantially the entire contractual term of the asset.

Level 3 - Unobservable inputs that reflect the entity’s own assumptions about the assumptions that market participants would use in the pricing of the asset and are consequently not based on market activity, but rather through particular valuation techniques.

The following methods and assumptions were used to estimate the fair value of the Partnership’s financial instruments:

• Mortgage notes payable.  Rates currently available to the Partnership for debt with similar terms and remaining maturities are used to estimate the fair value of existing debt.

The estimated fair value measurements of the mortgage notes payable are classified within level 3 of the fair value hierarchy.

The unpaid principle balance and estimated fair values of the Partnership’s financial instruments were as follows (in thousands):

	September 30, 2016				December 31, 2015
	Mortgage Balance		Estimated Fair Value		Mortgage Balance		Estimated Fair Value
Mortgage notes payable:
Bent Oaks	—		—		5,731		6,121
Cape Cod	$	5,878	$	6,352	$	5,951	$	6,343
Woodhollow	—		—		4,916		5,234
Village	—		—		9,293		9,305
Total mortgage notes payable	$	5,878	$	6,352	$	25,891	$	27,003

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DISPOSITION OF PROPERTIES

9 Months Ended

Sep. 30, 2016

Discontinued Operations and Disposal Groups [Abstract]

DISPOSITION OF PROPERTIES

NOTE 7 - DISPOSITION OF PROPERTIES

The following table presents details of the Partnership's disposition activity during the year ended December 31, 2015 and nine months ended September 30, 2016 (in thousands):

Multifamily Community	Location	Sale Date	Contract Sales Price		Gain on Sale
2016 Dispositions:
Bent Oaks	Austin, TX	9/12/2016	$	15,765	$	9,108
Woodhollow	Austin, TX	9/12/2016	12,420		6,685
Woodland Village	Columbia, SC	9/30/2016	20,650		8,703
			$	48,835	$	24,496
2015 Dispositions:
Hills	Decatur, Georgia	3/19/2015	$	25,200	$	9,603
			$	25,200	$	9,603

The table below presents the revenues and net income attributable to properties sold for the three and nine months ended September 30, 2016 and 2015 (in thousands):

	Revenue Attributable to Properties Sold				Net Income Attributable to Properties Sold
Multifamily Community	Three months ended September 30, 2016		Nine months ended September 30, 2016		Three months ended September 30, 2016		Nine months ended September 30, 2016
2016 Dispositions:
Bent Oaks	$	359	$	1,239	$	8,389	$	8,366
Woodhollow	305		1,031		6,059		6,003
Woodland Village	769		2,248		8,254		8,250
	$	1,433	$	4,518	$	22,702	$	22,619
	Three months ended September 30, 2015		Nine months ended September 30, 2015		Three months ended September 30, 2015		Nine months ended September 30, 2015
2015 Dispositions:
Hills	—		$	602	—		$	9,742
	$	—	$	602	$	—	$	9,742

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SUBSEQUENT EVENTS

9 Months Ended

Sep. 30, 2016

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

NOTE 8 - SUBSEQUENT EVENTS

On October 7, 2016, the Partnership signed a contract to sell Cape Cod Apartments for $15.7 million. The Partnership expects to record gain on the sale during the three months ended December 31, 2016.

On October 14, 2016, the Partnership distributed $28.5 million due to property sales. On October 17, 2016, the Partnership distributed $789,000 to the General Partner for a promote fee.

The Partnership has evaluated subsequent events through the date these consolidated financial statements were issued and determined that no events, other than those disclosed above, have occurred which would require an adjustment to the consolidated financial statements.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

9 Months Ended

Sep. 30, 2016

Accounting Policies [Abstract]

Partners' Capital, Distributions Policies

The Agreement provides that income is allocated as follows: first, to the Limited Partners (“LPs”) and the GP (collectively, the “Partners”) in proportion to and to the extent of the deficit balances, if any, in their respective capital accounts; second, to the Partners in proportion to the allocations of Distributable Cash (as defined in the Agreement); and third, 100% to the LPs.  All losses are allocated as follows: first, 100% to the LPs until the LPs have been allocated losses equal to the excess, if any, of their aggregate capital account balances over the aggregate Adjusted Capital Contributions (as defined in the Agreement); second, to the Partners in proportion to and to the extent of their respective remaining positive capital account balances, if any; and third, 100% to the LPs.

Principles of Consolidation

Principles of Consolidation

The consolidated financial statements include the accounts of the Partnership and its wholly-owned subsidiaries, as follows:

Subsidiaries	Number of Units	Location
RRE Tamarlane Holdings, LLC, or Tamarlane Apartments (“Tamarlane”) (1)	—	—
RRE Bent Oaks Holdings, LLC, or Bent Oaks Apartments (“Bent Oaks”) (2)	—	—
RRE Cape Cod Holdings,  LLC, or Cape Cod Apartments (“Cape Cod”)	212	San Antonio, TX
RRE Woodhollow Holdings, LLC, or Woodhollow Apartments (“Woodhollow”) (3)	—	—
RRE Woodland Hills Holdings, LLC (“Hills”) (4)	—	—
RRE Woodland Village Holdings, LLC, or Woodland Village Apartments (“Village”) (5)	—	—
	212

(1) Tamarlane, a 115 unit multifamily apartment complex in Maine, was sold on December 1, 2015.

(2) Bent Oaks, a 146 unit multifamily apartment complex in Texas, was sold on September 12, 2016.

(3) Woodhollow, a 108 unit multifamily apartment complex in Texas, was sold on September 12, 2016.

(4) Hills, a 228 unit multifamily apartment complex in Georgia, was sold on March 19, 2015.

(5) Village, a 308 unit multifamily apartment complex in South Carolina, was sold on September 30, 2016.

All intercompany transactions and balances have been eliminated in consolidation.

Assets Held For Sale

Sale of Rental Property

The Partnership recognized the gains on sales of rental properties separately in the Consolidated Statement of Operations. Sales of rental properties completed by the Partnership do not represent a significant strategic shift in operations and , accordingly, the Partnership does not present discontinued operations.

Assets Held for Sale

The Partnership presents the assets and liabilities of any rental properties which qualify as held for sale, separately in the consolidated balance sheets. The Partnership does not consider the sale as probable until the purchase and sale agreement has been signed by both parties. Real estate assets held for sale are measured at the lower of carrying amount or fair value less cost to sell. Both the real estate and the corresponding liabilities are presented separately in the Consolidated Balance Sheets. Subsequent to classification of an asset as held for sale, no further depreciation is recorded.

Use of Estimates

Use of Estimates

The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period.  The Partnership estimates the allowance for uncollectible receivables and loan losses and adjusts the balance quarterly.  The Partnership also estimates the liability for real estate taxes on the properties and adjusts the balance quarterly if necessary. Actual results could differ from those estimates.

Advertising

Advertising

The Partnership expenses advertising costs as they are incurred.  Advertising costs, which are included in rental operating expenses

Deferred Financing Costs

Deferred Financing Costs

Costs incurred to obtain financing have been capitalized and are being amortized over the term of the related debt using the effective yield method.

Income Taxes

Income Taxes

Income taxes or credits resulting from earnings or losses are payable by, or accrue to the benefit of, the partners; accordingly, no provision has been made for income taxes in these consolidated financial statements.

The Partnership evaluates the benefits of tax positions taken or expected to be taken in its tax returns under a two-step recognition and measurement process.  Only the largest amount of benefits from the tax positions that will more likely than not be sustainable upon examination are recognized by the Partnership.  The Partnership does not have any unrecognized tax benefits, nor interest and penalties, recorded in the Consolidated Balance Sheets or Consolidated Statements of Operations and does not anticipate significant adjustments to the total amount of unrecognized tax benefits within the next twelve months.

The Partnership is subject to examination by the U.S. Internal Revenue Service and by the taxing authorities in those states in which the Partnership has significant business operations.  The Partnership is not currently undergoing any examinations by taxing authorities.  The Partnership may be subject to U.S. federal income tax and state/local income tax examinations for years 2013 through 2015.

Revenue Recognition

Revenue Recognition

Revenue is primarily derived from the rental of residential housing units with lease agreement terms of generally one year or less.  The Partnership recognizes revenue in the period that rent is earned, which is on a monthly basis.  The Partnership recognizes rent as income on a straight-line basis over the term of the related lease.  Additionally, any incentives included in the lease are amortized on a straight-line basis over the term of the related lease.

Included within rental income are other income amounts such as utility reimbursements, late fees, parking fees, pet fees and lease application fees which are recognized when earned or received.

Long-Lived Assets

Long-Lived Assets

The Partnership reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.  If it is determined that an asset’s estimated future cash flows will not be sufficient to recover its carrying amount, an impairment charge will be recorded to reduce the carrying amount for that asset to its estimated fair value. The Partnership has estimated that the future cash flows from its properties will be sufficient to recover their

carrying amounts and, as a result, the Partnership did not recognize any impairment losses with respect to its Properties for the

nine months ended September 30, 2016 and 2015.

Rental Properties

Rental Properties

Rental properties are carried at cost, net of accumulated depreciation.  Buildings and improvements and personal property are depreciated for financial reporting purposes on the straight-line method over their estimated useful lives.  The value of in-place leases is amortized over the average remaining term of the respective leases on a straight-line basis.  Useful lives used for calculating depreciation for financial reporting purposes are as follows:

Buildings and improvements	5 - 27.5 years
Personal property	3 - 15 years

Tenant Receivables

Tenant Receivables

Tenant receivables are stated at amounts due from tenants net of an allowance for uncollectible receivables.  Payment terms vary and receivables outstanding longer than the payment terms are considered past due.  The Partnership determines its allowance by considering a number of factors, including the length of time receivables are past due, security deposits held, the Partnership’s previous loss history, the tenants’ current ability to pay their obligations to the Partnership, the general condition of the economy and the condition of the industry as a whole.  The Partnership writes off receivables when they become uncollectible.

Redemptions

Redemptions

The LPs may request redemption of their units at any time.  The Partnership has no obligation to redeem any units and will do so only at the GP’s discretion.  If the Partnership redeems units, the redemption price is generally the amount of the initial investment less all distributions from the Partnership to the LP, and less all organization and offering expenses charged to the LP.

Recent Accounting Pronouncements

Adoption of New Accounting Standards

In January 2015, FASB issued ASU No. 2015-01, "Income Statement - Extraordinary and Unusual Items (Subtopic 225-20), Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items" ("ASU No. 2015-01"). The amendments in ASU No. 2015-01 eliminate from GAAP the concept of extraordinary items. Although the amendment will eliminate the requirements for reporting entities to consider whether an underlying event or transaction is extraordinary, the presentation and disclosure guidance for items that are unusual in nature or occur infrequently will be retained and will be expanded to include items that are both unusual in nature and infrequently occurring.  ASU No. 2015-01 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2015. On January 1, 2016, the Partnership adopted ASU 2015-01 and the adoption had no impact on the Partnership's consolidated financial statements.

In February 2015, FASB issued ASU 2015-02, "Consolidation (Topic 810): Amendments to the Consolidation Analysis" (“ASU 2015-02”), which makes certain changes to both the variable interest model and the voting model, including changes to (1) the identification of variable interests (fees paid to a decision maker or service provider), (2) the variable interest

entity characteristics for a limited partnership or similar entity and (3) the primary beneficiary determination. ASU 2015-02 is effective for the Partnership beginning January 1, 2016. On January 1, 2016, the Partnership adopted ASU 2015-02 and the adoption had no impact on the Partnership's consolidated financial statements.

In April 2015, FASB issued ASU 2015-03, "Simplifying the Presentation of Debt Issuance Costs" ("ASU 2015-03"), which requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected. Upon adoption, the Partnership applied the new guidance on a retrospective basis and adjusted the balance sheet of each individual period presented to reflect the period-specific effects of applying the new guidance. This guidance was effective and was adopted by the Partnership on January 1, 2016 and as result the Partnership has reclassified $261,000 of unamortized debt issuance costs at December 31, 2015 from deferred financing costs to liabilities as reduction of the related mortgage notes payable

In September 2015, FASB issued ASU 2015-16, "Simplifying the Accounting for Measurement-Period Adjustments" ("ASU 2015-16"), which eliminates the requirement to retroactively revise comparative financial information for prior periods presented in financial statements due to changes in provisional amounts recorded for acquisitions in subsequent periods. Upon adoption, disclosure of the amounts recorded in current-period earnings that would have been recorded in previous reporting periods if the adjustment to the provisional amounts had been recognized at the acquisition date are required. ASU 2015-16 was effective and adopted by the Partnership on January 1, 2016 and the adoption had no impact on its consolidated financial statements.

Accounting Standards Issued But Not Yet Effective.

In May 2014, FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers” ("ASU No. 2014-09"), which will replace most existing revenue recognition guidance in GAAP.  The core principle of ASU No. 2014-09 is that an entity should recognize revenue for the transfer of goods or services equal to the amount that it expects to be entitled to receive for those goods or services.  ASU No. 2014-09 requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments. ASU No. 2014-09 will be effective for the Partnership beginning January 1, 2018, including interim periods in 2018, and allows for both retrospective and prospective methods of adoption. The Partnership is in the process of determining the method of adoption and assessing the impact of this guidance on the Partnership’s consolidated financial position, results of operations and cash flows.

In August 2014, FASB issued ASU No. 2014-15, "Presentation of Financial Statements-Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern" ("ASU No. 2014-15"). Under the new guidance, an entity should evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued. The guidance is effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. Early adoption is permitted. The adoption of the new requirements is not expected to have a significant impact on the Partnership's consolidated financial statements.

In February 2016, FASB issued ASU No. 2016-02, "Leases" ("ASU No. 2016-02"). which is intended to improve financial reporting about leasing transactions and requires organizations that lease assets to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases. ASU No. 2016-02 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The Partnership is continuing to evaluate this guidance; however, it does not expect the adoption of ASU No. 2016-02 to have a significant impact on its consolidated financial statements.

In June 2016, FASB issued ASU No. 2016-13 “Financial Instruments - Credit Losses” ("ASU No. 2016-13") which requires measurement and recognition of expected credit losses for financial assets held. The standard update is effective for the Partnership beginning January 1, 2019. The Partnership is continuing to evaluate this guidance; however, it does not expect the adoption of ASU No. 2016-13 to have a significant impact on its consolidated financial statements.

In August 2016, FASB issued ASU No. 2016-15 "Classification of Certain Cash Receipts and Cash Payments" ("ASU No. 2016-13"), which addresses eight specific cash flow issues with the objective of reducing existing diversity in practice. ASU 2016-13 has been early adopted by the Partnership. As result of adoption, the Partnership has classified cash paid on early extinguishment of debt as cash used in financing activities.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)

9 Months Ended

Sep. 30, 2016

Accounting Policies [Abstract]

Schedule of consolidated subsidiaries

The consolidated financial statements include the accounts of the Partnership and its wholly-owned subsidiaries, as follows:

Subsidiaries	Number of Units	Location
RRE Tamarlane Holdings, LLC, or Tamarlane Apartments (“Tamarlane”) (1)	—	—
RRE Bent Oaks Holdings, LLC, or Bent Oaks Apartments (“Bent Oaks”) (2)	—	—
RRE Cape Cod Holdings,  LLC, or Cape Cod Apartments (“Cape Cod”)	212	San Antonio, TX
RRE Woodhollow Holdings, LLC, or Woodhollow Apartments (“Woodhollow”) (3)	—	—
RRE Woodland Hills Holdings, LLC (“Hills”) (4)	—	—
RRE Woodland Village Holdings, LLC, or Woodland Village Apartments (“Village”) (5)	—	—
	212

(1) Tamarlane, a 115 unit multifamily apartment complex in Maine, was sold on December 1, 2015.

(2) Bent Oaks, a 146 unit multifamily apartment complex in Texas, was sold on September 12, 2016.

(3) Woodhollow, a 108 unit multifamily apartment complex in Texas, was sold on September 12, 2016.

(4) Hills, a 228 unit multifamily apartment complex in Georgia, was sold on March 19, 2015.

(5) Village, a 308 unit multifamily apartment complex in South Carolina, was sold on September 30, 2016.

Useful lives used for calculating depreciation for financial reporting

Useful lives used for calculating depreciation for financial reporting purposes are as follows:

Buildings and improvements	5 - 27.5 years
Personal property	3 - 15 years

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RESTRICTED CASH (Tables)

9 Months Ended

Sep. 30, 2016

Restricted Cash and Investments [Abstract]

Summary of components of restricted cash

A summary of the components of restricted cash follows (in thousands):

	September 30, 2016		December 31, 2015
Real estate taxes	$	264	$	1,034
Insurance	37		180
Capital improvements	307		386
Total	$	608	$	1,600

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MORTGAGE NOTES PAYABLE, NET (Tables)

9 Months Ended

Sep. 30, 2016

Notes Payable [Abstract]

Summary of mortgage notes payable

The following is a summary of mortgage notes payable, net (in thousands):

	September 30, 2016							December 31, 2015
Property	Mortgage balance		Deferred Finance Costs, Net (1)			Carrying Value		Mortgage balance		Deferred Finance Costs, Net(1)			Carrying Value
Bent Oaks	$	—	$	—		$	—	$	5,731	$	(50	)	$	5,681
Cape Cod (3)	5,878		(38		)	5,840		5,951		(51		)	5,900
Woodhollow	—		—			—		4,916		(43		)	4,873
Village	—		—			—		9,293		(117		)	9,176
Total	$	5,878	$	(38	)	$	5,840	$	25,891	$	(261	)	$	25,630

(1) Deferred financing costs include unamortized costs incurred to obtain financing which are being amortized over the term of the related debt. 

Bent Oaks and Woodhollow were sold on September 12, 2016. Woodland Village was sold on September 30, 2016. Proceeds from these sales were used to pay the outstanding borrowings. The Partnership incurred losses of $1.8 million on extinguishment of debt due to prepayment penalties.

The following table includes additional information about the Partnership's mortgage notes payable, net (in thousands):

Property Collateral	Maturity Date		Annual Interest Rate	Monthly Debt Service
Cape Cod (3)	01/01/2019	(2)	5.91%	$	38	(1)

(1) Monthly payment includes principal and interest. Interest is at a fixed rate.

(2) The Partnership has an option to extend the maturity date for an additional one year to January 1, 2020. During the extension

period, the interest rate would convert to the Federal Home Loan Mortgage Corporation Bill Index Rate plus 2.5%.

(3) The Property qualifies as held for sale and it is separately presented in the consolidated balance sheet.

Schedule of annual principal payments on mortgage notes payable

Annual contractual principal payments on the mortgage notes payable for the future years ending September 30, are as follows (in thousands):

2017	$	104
2018	110
2019	5,664
	$	5,878

Schedule of amortization of deferred financing costs

Estimated amortization of existing deferred financing costs for the next three years ending September 30, is as follows (in thousands):

2017	$	17
2018	16
2019	5
	$	38

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CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS (Tables)

9 Months Ended

Sep. 30, 2016

Related Party Transactions [Abstract]

Summary of receivables and payables, fees paid and expenses reimbursed to related parties

The Partnership pays investment management fees and property management fees to related parties.  These expenses are summarized as follows (in thousands):

	Three Months Ended   September 30,				Nine Months Ended   September 30,
	2016		2015		2016		2015
RCP:
Investment management fees (1)	$	41	$	59	$	134	$	196
RREML:
Property management fees - 5% of gross cash receipts (2)	$	100	125		$	300	399
	$	141	$	184	$	434	$	595

(1) RCP is entitled to receive an annual investment management fee, payable monthly, equal to 1% of the gross proceeds that have been deployed in real estate investments from the offering of partnership units, net of any LP interest owned by RCP. During the term of the Partnership, RCP must subordinate up to 100% of its annual investment management fee to the receipt by the LPs of their Preferred Return.

(2) RREML is entitled to receive monthly property management fees equal to 5% of the gross operating revenues from the Partnership’s 100% owned Properties for managing or obtaining and supervising third party managers.

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FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables)

9 Months Ended

Sep. 30, 2016

Fair Value Disclosures [Abstract]

Carrying and fair values of financial instruments

The unpaid principle balance and estimated fair values of the Partnership’s financial instruments were as follows (in thousands):

	September 30, 2016				December 31, 2015
	Mortgage Balance		Estimated Fair Value		Mortgage Balance		Estimated Fair Value
Mortgage notes payable:
Bent Oaks	—		—		5,731		6,121
Cape Cod	$	5,878	$	6,352	$	5,951	$	6,343
Woodhollow	—		—		4,916		5,234
Village	—		—		9,293		9,305
Total mortgage notes payable	$	5,878	$	6,352	$	25,891	$	27,003

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DISPOSITION OF PROPERTIES (Tables)

9 Months Ended

Sep. 30, 2016

Discontinued Operations and Disposal Groups [Abstract]

Partnership's Disposition Activity

The following table presents details of the Partnership's disposition activity during the year ended December 31, 2015 and nine months ended September 30, 2016 (in thousands):

Multifamily Community	Location	Sale Date	Contract Sales Price		Gain on Sale
2016 Dispositions:
Bent Oaks	Austin, TX	9/12/2016	$	15,765	$	9,108
Woodhollow	Austin, TX	9/12/2016	12,420		6,685
Woodland Village	Columbia, SC	9/30/2016	20,650		8,703
			$	48,835	$	24,496
2015 Dispositions:
Hills	Decatur, Georgia	3/19/2015	$	25,200	$	9,603
			$	25,200	$	9,603

The table below presents the revenues and net income attributable to properties sold for the three and nine months ended September 30, 2016 and 2015 (in thousands):

	Revenue Attributable to Properties Sold				Net Income Attributable to Properties Sold
Multifamily Community	Three months ended September 30, 2016		Nine months ended September 30, 2016		Three months ended September 30, 2016		Nine months ended September 30, 2016
2016 Dispositions:
Bent Oaks	$	359	$	1,239	$	8,389	$	8,366
Woodhollow	305		1,031		6,059		6,003
Woodland Village	769		2,248		8,254		8,250
	$	1,433	$	4,518	$	22,702	$	22,619
	Three months ended September 30, 2015		Nine months ended September 30, 2015		Three months ended September 30, 2015		Nine months ended September 30, 2015
2015 Dispositions:
Hills	—		$	602	—		$	9,742
	$	—	$	602	$	—	$	9,742

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NATURE OF BUSINESS AND OPERATIONS (Details) - USD ($)	1 Months Ended	3 Months Ended	9 Months Ended
	Feb. 29, 2016	Mar. 31, 2016	Sep. 30, 2016	Dec. 31, 2015
Limited Partnership, Summary of Ownership Structure [Line Items]
Partnership term extension maximum		2 years
Partnership term extended until March 28, 2017	1 year
General Partner
Limited Partnership, Summary of Ownership Structure [Line Items]
Minimum capital contribution			$ 1,000
Limited partnership interest			5.62%	5.62%
Distributable cash from operations allocated, excess			20.00%
Distributable cash from capital transactions allocated, excess			20.00%
Limited Partners
Limited Partnership, Summary of Ownership Structure [Line Items]
Income allocation to Limited Partners			100.00%
Losses allocated to Limited Partners until their aggregate capital account balances			100.00%
Losses allocated to Limited Partners, excess			100.00%
Distributable cash from operations allocated to Limited Partners			100.00%
Distributable cash from operations allocated, excess			80.00%
Distributable cash from capital transactions allocated to Limited Partners after receiving Preferred Return			100.00%
Distributable cash from capital transactions allocated to Limited Partners after receiving Adjusted Capital Contributions			100.00%
Distributable cash from capital transactions allocated, excess			80.00%

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details)	3 Months Ended		9 Months Ended
	Sep. 30, 2016 USD ($) Property Unit	Sep. 30, 2015 USD ($)	Sep. 30, 2016 USD ($) Property Unit	Sep. 30, 2015 USD ($)	Sep. 12, 2016 Property	Dec. 31, 2015 USD ($)	Dec. 01, 2015 Unit	Mar. 19, 2015 Unit
Subsidiary of Limited Liability Company or Limited Partnership [Line Items]
Number of units	212		212
Number of rental properties, held for sale | Property	1		1
Reclassfications [Abstract]
Deferred finance costs | $	$ 38,000		$ 38,000
Revenue Recognition [Abstract]
Approximate lease agreement term			1 year
Supplemental Disclosure of Cash Flow Information [Abstract]
Cash paid for interest | $			$ 1,100,000	$ 1,500,000
Advertising [Abstract]
Advertising expense | $	45,000	$ 36,000	93,000	96,000
Tenant Receivables [Abstract]
Allowance for uncollectible receivables | $	0		0			$ 0
Other Noncurrent Assets | Accounting Standards Update 2015-03
Reclassfications [Abstract]
Deferred finance costs | $						261,000
Long-term Debt | Accounting Standards Update 2015-03
Reclassfications [Abstract]
Deferred finance costs | $						$ 261,000
Rental Income
Revenue Recognition [Abstract]
Other Income included in rental income | $	$ 235,000	$ 229,000	$ 691,000	$ 636,000
Geographic Concentration Risk | Partnership Total Assets | Texas
Subsidiary of Limited Liability Company or Limited Partnership [Line Items]
Concentration risk, percentage			100.00%
Buildings and improvements | Minimum
Property, Plant and Equipment [Line Items]
Estimated useful life			5 years
Buildings and improvements | Maximum
Property, Plant and Equipment [Line Items]
Estimated useful life			27 years 6 months
Personal Property | Minimum
Property, Plant and Equipment [Line Items]
Estimated useful life			3 years
Personal Property | Maximum
Property, Plant and Equipment [Line Items]
Estimated useful life			15 years
RRE Tamarlane Holdings, LLC
Subsidiary of Limited Liability Company or Limited Partnership [Line Items]
Number of units	0		0
Number of units sold in real estate							115
Bent Oaks
Subsidiary of Limited Liability Company or Limited Partnership [Line Items]
Number of units	0		0
Number of units sold in real estate | Property					146
Cape Cod
Subsidiary of Limited Liability Company or Limited Partnership [Line Items]
Number of units	212		212
Woodhollow
Subsidiary of Limited Liability Company or Limited Partnership [Line Items]
Number of units	0		0
Number of units sold in real estate | Property					108
RRE Woodland Hills Holdings, LLC
Subsidiary of Limited Liability Company or Limited Partnership [Line Items]
Number of units	0		0
Number of units sold in real estate								228
Village
Subsidiary of Limited Liability Company or Limited Partnership [Line Items]
Number of units	0		0
Number of units sold in real estate	308		308

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RESTRICTED CASH (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Restricted Cash and Cash Equivalents Items [Line Items]
Restricted cash	$ 608	$ 1,600
Real Estate Taxes
Restricted Cash and Cash Equivalents Items [Line Items]
Restricted cash	264	1,034
Insurance
Restricted Cash and Cash Equivalents Items [Line Items]
Restricted cash	37	180
Capital Improvements
Restricted Cash and Cash Equivalents Items [Line Items]
Restricted cash	$ 307	$ 386

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MORTGAGE NOTES PAYABLE, NET (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015	Dec. 31, 2015
Debt Instrument [Line Items]
Deferred finance costs, net	$ (38)		$ (38)
Total long-term debt	5,878		5,878
Loss on extinguishment of debt	1,781	$ 0	1,781	$ 0
Annual principal payments on the mortgage notes payable [Abstract]
2017	104		104
2018	110		110
2019	5,664		5,664
Total long-term debt	5,878		5,878
Amortization of financing costs and discounts [Abstract]
Accumulated amortization	136		136		$ 486
2017	17		17
2018	16		16
2019	5		5
Total deferred finance costs	(38)		(38)
Mortgage Notes Payable
Debt Instrument [Line Items]
Mortgage balance	5,878		5,878		25,891
Deferred finance costs, net	(38)		(38)		(261)
Total long-term debt	5,840		5,840		25,630
Annual principal payments on the mortgage notes payable [Abstract]
Total long-term debt	5,840		5,840		25,630
Amortization of financing costs and discounts [Abstract]
Total deferred finance costs	(38)		(38)		(261)
Mortgage Notes Payable | Bent Oaks
Debt Instrument [Line Items]
Mortgage balance	0		0		5,731
Deferred finance costs, net	0		0		(50)
Total long-term debt	0		0		5,681
Annual principal payments on the mortgage notes payable [Abstract]
Total long-term debt	0		0		5,681
Amortization of financing costs and discounts [Abstract]
Total deferred finance costs	0		0		(50)
Mortgage Notes Payable | Cape Cod
Debt Instrument [Line Items]
Mortgage balance	5,878		5,878		5,951
Deferred finance costs, net	(38)		(38)		(51)
Total long-term debt	$ 5,840		$ 5,840		5,900
Maturity date			Jan. 01, 2019
Annual interest rate	5.91%		5.91%
Monthly debt service			$ 38
Option to extend maturity			1 year
Annual principal payments on the mortgage notes payable [Abstract]
Total long-term debt	$ 5,840		$ 5,840		5,900
Amortization of financing costs and discounts [Abstract]
Total deferred finance costs	(38)		$ (38)		(51)
Mortgage Notes Payable | Cape Cod | LIBOR
Debt Instrument [Line Items]
Basis points added to variable interest rate			2.50%
Mortgage Notes Payable | Woodhollow
Debt Instrument [Line Items]
Mortgage balance	0		$ 0		4,916
Deferred finance costs, net	0		0		(43)
Total long-term debt	0		0		4,873
Annual principal payments on the mortgage notes payable [Abstract]
Total long-term debt	0		0		4,873
Amortization of financing costs and discounts [Abstract]
Total deferred finance costs	0		0		(43)
Mortgage Notes Payable | Village
Debt Instrument [Line Items]
Mortgage balance	0		0		9,293
Deferred finance costs, net	0		0		(117)
Total long-term debt	0		0		9,176
Annual principal payments on the mortgage notes payable [Abstract]
Total long-term debt	0		0		9,176
Amortization of financing costs and discounts [Abstract]
Total deferred finance costs	$ 0		$ 0		$ (117)

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CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015	Dec. 31, 2015
Related Party Transaction [Line Items]
Insurance coverage, maximum amount for property losses			$ 2,500,000
Insurance coverage, maximum amount for general liability losses			50,000
Insurance coverage, catastrophic, maximum amount for property losses			140,000,000
Insurance coverage, insurance pools, amount funded by partnership			136,523
Total fees	$ 141,000	$ 184,000	$ 434,000	$ 595,000
RCP
Related Party Transaction [Line Items]
Annual investment management fee as a percentage of gross proceeds (in hundredths)			1.00%
Percentage of annual investment management fee subordinated to the receipt by the Limited Partners (in hundredths)			100.00%
Investment management fees due	149,000		$ 149,000		$ 15,000
Management fees - related parties	$ 41,000	59,000	$ 134,000	196,000
Monthly management fee entitled to receive	1.00%
Investment management fee that general partner must subordinate to its preferred returns	100.00%		100.00%
RREML
Related Party Transaction [Line Items]
Management fees - related parties	$ 100,000	$ 125,000	$ 300,000	$ 399,000
Fees and advances due	$ 37,000		$ 37,000		62,000
Property management fee, percent	5.00%	5.00%	5.00%	5.00%
Monthly management fee entitled to receive	5.00%
Investment management fee that general partner must subordinate to its preferred returns	100.00%		100.00%
RCP and RREMI
Related Party Transaction [Line Items]
Fees and advances due	$ 35,000		$ 35,000		$ 61,000
Investment Management Fees | RCP
Related Party Transaction [Line Items]
Management fees - related parties			0	$ 1,900,000
Reimbursed Expenses Including Payroll and Miscellaneous Operating Expenses | RCP and RREMI
Related Party Transaction [Line Items]
Management fees - related parties	$ 468,000	$ 577,000	$ 1,300,000	$ 1,600,000

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FAIR VALUE OF FINANCIAL INSTRUMENTS (Details) - Fair Value, Inputs, Level 3 - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Mortgage Balance
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Mortgage notes payable	$ 5,878	$ 25,891
Mortgage Balance | Bent Oaks
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Mortgage notes payable	0	5,731
Mortgage Balance | Cape Cod
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Mortgage notes payable	5,878	5,951
Mortgage Balance | Woodhollow
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Mortgage notes payable	0	4,916
Mortgage Balance | Village
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Mortgage notes payable	0	9,293
Estimated Fair Value
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Mortgage notes payable	6,352	27,003
Estimated Fair Value | Bent Oaks
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Mortgage notes payable	0	6,121
Estimated Fair Value | Cape Cod
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Mortgage notes payable	6,352	6,343
Estimated Fair Value | Woodhollow
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Mortgage notes payable	0	5,234
Estimated Fair Value | Village
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Mortgage notes payable	$ 0	$ 9,305

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DISPOSITION OF PROPERTIES (Details) - USD ($) $ in Thousands				3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2016	Sep. 12, 2016	Mar. 19, 2015	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015	Dec. 31, 2015
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Contract Sales Price	$ 48,835			$ 48,835		$ 48,835		$ 25,200
Gain on Sale						24,496		$ 9,603
Revenue Attributable to Properties Sold				1,433	$ 0	4,518	$ 602
Net Income Attributable to Properties Sold				22,702	0	22,619	9,742
Bent Oaks
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Contract Sales Price		$ 15,765
Gain on Sale		9,108
Revenue Attributable to Properties Sold				359		1,239
Net Income Attributable to Properties Sold				8,389		8,366
Woodhollow
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Contract Sales Price		12,420
Gain on Sale		$ 6,685
Revenue Attributable to Properties Sold				305		1,031
Net Income Attributable to Properties Sold				6,059		6,003
Village
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Contract Sales Price	20,650			20,650		20,650
Gain on Sale	$ 8,703
Revenue Attributable to Properties Sold				769		2,248
Net Income Attributable to Properties Sold				$ 8,254		$ 8,250
RRE Woodland Hills Holdings, LLC
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Contract Sales Price			$ 25,200
Gain on Sale			$ 9,603
Revenue Attributable to Properties Sold					0		602
Net Income Attributable to Properties Sold					$ 0		$ 9,742

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SUBSEQUENT EVENTS (Details) - USD ($) $ in Thousands			9 Months Ended
	Oct. 17, 2016	Oct. 14, 2016	Sep. 30, 2016	Sep. 30, 2015	Oct. 07, 2016	Dec. 31, 2015
Subsequent Event [Line Items]
Expected consideration for sale of properties			$ 48,835			$ 25,200
Distribution due to property sales			$ 699	$ 10,102
Subsequent Event | Cape Cod
Subsequent Event [Line Items]
Expected consideration for sale of properties					$ 15,700
Cash Distribution | Subsequent Event
Subsequent Event [Line Items]
Distribution due to property sales		$ 28,500
Distribution for a promote fee	$ 789