FORM 10-QSB—QUARTERLY OR TRANSITIONAL REPORT UNDER SECTION 13 OR 15(d) OF

0000711642-08-000556.txt : 20081113 0000711642-08-000556.hdr.sgml : 20081113 20081113120914 ACCESSION NUMBER: 0000711642-08-000556 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20080930 FILED AS OF DATE: 20081113 DATE AS OF CHANGE: 20081113 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES CENTRAL INDEX KEY: 0000352983 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 942744492 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-10831 FILM NUMBER: 081183626 BUSINESS ADDRESS: STREET 1: 55 BEATTIE PLACE STREET 2: PO BOX 1089 CITY: GREENVILLE STATE: SC ZIP: 29602 BUSINESS PHONE: 3037578101 MAIL ADDRESS: STREET 1: 1873 SOUTH BELLAIRE STREET 17TH FLOOR STREET 2: PO BOX 1089 CITY: DENVER STATE: CO ZIP: 80222 10-Q 1 ccip908test_10q.htm 10Q FORM 10-QSB—QUARTERLY OR TRANSITIONAL REPORT UNDER SECTION 13 OR 15(d) OF

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2008

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________to _________

Commission file number 0-10831

CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES, LP

(Exact name of registrant as specified in its charter)

Delaware	94-2744492
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

55 Beattie Place, PO Box 1089

Greenville, South Carolina 29602

(Address of principal executive offices)

(864) 239-1000

(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. [X] Yes [ ] No

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 [ ]

Accelerated filer [ ]

Non-accelerated filer [ ]

(Do not check if a smaller reporting company)

Smaller reporting company [X]

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

PART I – FINANCIAL INFORMATION

ITEM 1. Financial Statements.

CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES, LP

CONSOLIDATED BALANCE SHEETS

(in thousands, except unit data)

	September 30,	December 31,
	2008	2007
	(Unaudited)	(Note)
		(Restated)
Assets
Cash and cash equivalents	$ 978	$ 2,961
Receivables and deposits	855	815
Deferred tax asset (Note F)	391	361
Other assets	2,301	1,782
Investment in affiliated partnerships (Note C)	616	627

Investment properties:
Land	15,392	15,392
Buildings and related personal property	109,161	108,844
	124,553	124,236
Less accumulated depreciation	(44,818)	(39,130)
	79,735	85,106
Assets held for sale (Note A)	2,718	2,557
	$ 87,594	$ 94,209
Liabilities and Partners' Capital (Deficiency)
Liabilities
Accounts payable	$ 490	$ 781
Tenant security deposit liabilities	985	914
Accrued property taxes	770	61
Other liabilities	1,471	1,404
Due to affiliates (Note B)	91	- --
Mortgage notes payable (Note H)	128,470	130,130
Liabilities related to assets held for sale (Note A)	4,520	4,486
	136,797	137,776
Partners' Capital (Deficiency)
General partner	117	166
Limited partners (199,041.2 units issued and
outstanding)	(49,320)	(43,733)
	(49,203)	(43,567)
	$ 87,594	$ 94,209

Note: The consolidated balance sheet at December 31, 2007 has been derived from the audited financial statements at that date but does not include all the information and footnotes required by generally accepted accounting principles for complete financial statements.

See Accompanying Notes to Consolidated Financial Statements

CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES, LP

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(in thousands, except per unit data)

	Three Months Ended		Nine Months Ended
	September 30,		September 30,
	2008	2007	2008	2007
		(Restated)		(Restated)
Revenues:
Rental income	$ 5,783	$ 5,614	$17,312	$16,761
Other income	606	580	1,799	1,673
Total revenues	6,389	6,194	19,111	18,434
Expenses:
Operating	3,025	2,735	8,417	7,814
General and administrative	184	157	520	528
Depreciation	1,933	1,775	5,697	5,116
Interest	1,959	1,179	5,892	3,361
Property taxes	429	443	1,337	1,381
Total expenses	7,530	6,289	21,863	18,200

(Loss) income before income taxes, discontinued
operations, casualty (loss)
gain, distributions in excess of investment, equity
in loss from investment,
and impairment loss	(1,141)	(95)	(2,752)	234
Income tax (expense) benefit Note F):
Current	(25)	(25)	(77)	(77)
Deferred	- --	14	30	347
Casualty (loss) gain (Note E)	(27)	43	(27)	70
Distributions in excess of investment (Note C)	33	- --	33	- --
Equity in loss from investment (Note C)	(3)	(2)	(11)	(5)
Impairment loss (Note G)	(2,400)	--	(2,400)	--
(Loss) income before discontinued operations	(3,563)	(65)	(5,204)	569
Income from discontinued operations (Note A)	134	10	318	45
Net (loss) income	$(3,429)	$ (55)	$(4,886)	$ 614

Net (loss) income allocated to
general partner	$ (34)	$ (1)	$ (49)	$ 6
Net (loss) income allocated to
limited partners	- --	(54)	(1,095)	608
(Series A) (Note A)	(594)	- --	(690)	- --
(Series B) (Note A)	(2,722)	- --	(2,934)	- --
(Series C) (Note A)	(79)	--	(118)	--
	$(3,429)	$ (55)	$(4,886)	$ 614

CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES, LP

CONSOLIDATED STATEMENTS OF OPERATIONS (continued)

(Unaudited)

(in thousands, except per unit data)


Per limited partnership unit:
(Loss) income before discontinued operations	$ - --	$ (0.32)	$ (5.88)	$ 2.83
(Series A) (Note A)	(3.66)	- --	(4.66)	- --
(Series B) (Note A)	(13.67)	- --	(14.74)	- --
(Series C) (Note A)	(0.40)	- --	(0.60)	- --
Income from discontinued operations	- --	0.05	0.39	0.22
Income from discontinued operations (Series A)	0.67	--	1.19	--
Net (loss) income	$(17.06)	$ (0.27)	$(24.30)	$ 3.05
Distribution per limited
partnership unit	$ - --	$ - --	$ 3.77	$ - --

See Accompanying Notes to Consolidated Financial Statements

CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES, LP

CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' CAPITAL (DEFICIENCY)

(Unaudited)

(in thousands, except unit data)

		Limited			Limited	Limited	Limited	Subtotal
		Partnership	General	Limited	Partners	Partners	Partners	Limited
		Units	Partner	Partners	(Series A)	(Series B)	(Series C)	Partners	Total


Partners’ capital
	(deficiency) at
	December 31, 2007	199,041.2	$ 166	$(43,733)	$ --	$ --	$ --	$(43,733)	$(43,567)

	Distribution to	- --	--	(750)	--	--	--	(750)	(750)
	partners

	Net loss for the
	period
	January 1, 2008
	through
	April 30, 2008	- --	(11)	(1,095)	--	- --	--	(1,095)	(1,106)

	Partners’ capital
	(deficiency) at
	April 30, 2008	199,041.2	155	(45,578)	--	--	--	(45,578)	(45,423)

	Transfer of
	interest
	(Note A)	- --	--	45,578	(25,985)	(16,722)	(2,871)	--	--

	Net loss for
	the period
	May 1, 2008
	through
	September 30, 2008	- --	(38)	- --	(690)	(2,934)	(118)	(3,742)	(3,780)

	Partners’ capital
	(deficiency) at
	September 30, 2008	199,041.2	$ 117	$ --	$(26,675)	$(19,656)	$(2,989)	$(49,320)	$(49,203)

See Accompanying Notes to Consolidated Financial Statements

CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES, LP

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(in thousands)

	Nine Months Ended
	September 30,
	2008	2007
Cash flows from operating activities:
Net (loss) income	$ (4,886)	$ 614
Adjustments to reconcile net (loss) income to net
cash provided by operating activities:
Depreciation	5,800	5,423
Amortization of loan costs, lease commissions and
mortgage premiums	26	(113)
Equity in loss from investment	11	5
Impairment loss	2,400	--
Loss on early extinguishment of debt	--	77
Casualty loss	27	2
Casualty gain	--	(72)
Distributions in excess of investment	(33)	--
Change in accounts:
Receivables and deposits	(46)	(956)
Deferred tax asset	(30)	(347)
Other assets	(550)	(393)
Accounts payable	38	61
Tenant security deposit liabilities	81	98
Accrued property taxes	788	758
Other liabilities	67	(105)
Due to affiliates	56	(781)
Net cash provided by operating activities	3,749	4,271
Cash flows from investing activities:
Net receipts from restricted escrows	--	33
Property improvements and replacements	(3,348)	(4,425)
Distributions from affiliated partnerships	33	--
Insurance proceeds received	--	1,339
Net cash used in investing activities	(3,315)	(3,053)
Cash flows from financing activities:
Payments on mortgage notes payable	(1,613)	(1,235)
Repayment of mortgage notes payable	--	(14,075)
Proceeds from mortgage notes payable	--	36,255
Prepayment penalties	--	(414)
Loan costs paid	(15)	(450)
Lease commissions paid	(74)	--
Distributions to partners	(750)	--
Advances from affiliate	35	93
Repayment of advances from affiliate	--	(8,769)
Net cash (used in) provided by financing
activities	(2,417)	11,405
Net (decrease) increase in cash and cash equivalents	(1,983)	12,623
Cash and cash equivalents at beginning of period	2,961	1,138
Cash and cash equivalents at end of period	$ 978	$ 13,761
Supplemental disclosure of cash flow information:
Cash paid for interest, net of capitalized interest	$ 6,079	$ 4,489
Supplemental disclosure of non-cash activity:
Property improvements and replacements included in
accounts payable	$ 160	$ 210
Lease commissions included in accounts payable	$ --	$ 62

Included in property improvements and replacements for the nine months ended September 30, 2008 and 2007 are approximately $489,000 and $736,000 of improvements which were included in accounts payable at December 31, 2007 and 2006, respectively.

See Accompanying Notes to Consolidated Financial Statements

CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note A – Basis of Presentation

The accompanying unaudited consolidated financial statements of Consolidated Capital Institutional Properties, LP (the "Partnership" or "Registrant") have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 8-03 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of ConCap Equities, Inc. (the "General Partner"), which is ultimately owned by Apartment Investment and Management Company ("AIMCO"), a publicly traded real estate investment trust, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and nine month periods ended September 30, 2008 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2008. For further information, refer to the consolidated financial statements and footnotes thereto included in the Partnership's Annual Report on Form 10-K for the fiscal year ended December 31, 2007.

In accordance with Statement of Financial Accounting Standards (“SFAS”) No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets”, the accompanying consolidated statements of operations for the three and nine months ended September 30, 2008 and 2007 reflect the operations of The Loft Apartments as income from discontinued operations as it meets the criteria in SFAS No. 144 to be classified as held for sale. The Partnership has been actively marketing the property for sale during 2008, and the Partnership entered into a sale contract on October 28, 2008 to sell the Loft Apartments to a third party. Included in income from discontinued operations for the three months ended September 30, 2008 and 2007 are results of the property’s operations of approximately $134,000 and $10,000, respectively, including revenues of approximately $422,000 and $392,000, respectively. Included in income from discontinued operations for the nine months ended September 30, 2008 and 2007 are results of the property’s operations of approximately $318,000 and $45,000, respectively, including revenues of approximately $1,236,000 and $1,187,000, respectively. As a result of The Loft Apartments meeting all criteria in SFAS No. 144 to be classified as held for sale at September 30, 2008, its assets and liabilities are classified as held for sale as of September 30, 2008 and December 31, 2007.

Organization: On April 25, 2008, the Partnership changed its domicile from California to Delaware by merging with and into Consolidated Capital Institutional Properties, LP, a Delaware limited partnership, with the Delaware partnership as the surviving entity in the merger. The merger was undertaken pursuant to an Agreement and Plan of Merger, dated as of March 19, 2008, by and between the California partnership and the Delaware partnership.

Under the merger agreement, each unit of limited partnership interest in the California partnership was converted into an identical unit of limited partnership in the Delaware partnership and the general partnership interest in the California partnership previously held by the general partner was converted into a general partnership interest in the Delaware partnership. All interests in the Delaware partnership outstanding immediately prior to the merger were cancelled in the merger.

The voting and other rights of the limited partners provided for in the partnership agreement were not changed as a result of the merger. In the merger, the partnership agreement of the California partnership was adopted as the partnership agreement of the Delaware partnership, with the following changes: (i) references therein to the California Uniform Limited Partnership Act were amended to refer to the Delaware Revised Uniform Limited Partnership Act; (ii) a description of the merger was added; (iii) the name of the partnership was changed to “Consolidated Capital Institutional Properties, LP” and (iv) a provision was added that gives the general partner authority to establish different designated series of limited partnership interests that have separate rights with respect to specified partnership property, and profits and losses associated with such specified property.

On April 30, 2008, the General Partner amended the Partnership Agreement to establish, and convert existing limited partnership interests into, different designated series of limited partnership interests that have separate rights with respect to specified partnership property. Effective as of the close of business on April 30, 2008 (the “Establishment Date”), each then outstanding Unit of limited partnership interest in the Partnership was converted into one Series A Unit, one Series B Unit and one Series C Unit. Except as described below, the Series A Units, Series B Units and Series C Units entitle the holders thereof to the same rights as the holders of Units of limited partnership interests had prior to the Establishment Date.

From and after the Establishment Date, the Series A Units will be entitled to all of the Partnership’s interests in any entity in which the Partnership owns an interest, other than the Series B Subsidiary and Series C Subsidiary (as defined below), including, but not limited to, all profits, losses and distributions from such entities.

From and after the Establishment Date, the Series B Units will be entitled to all of the Partnership’s membership interest in CCIP Knolls, L.L.C., a Delaware limited liability company (the “Series B Subsidiary”), including, but not limited to, all profits, losses and distributions from The Knolls Apartments.

From and after the Establishment Date, the Series C Units will be entitled to all of the Partnership’s membership interest in CCIP Society Park East, L.L.C., a Delaware limited liability company (the “Series C Subsidiary”), including, but not limited to, all profits, losses and distributions from The Dunes Apartments.

Reclassifications: Certain reclassifications have been made to the 2007 balances to conform to the 2008 presentation.

Segment Reporting: SFAS No. 131, "Disclosure about Segments of an Enterprise and Related Information" established standards for the way that public business enterprises report information about operating segments in annual financial statements and requires that those enterprises report selected information about operating segments in interim financial reports. SFAS No. 131 also established standards for related disclosures about products and services, geographic areas, and major customers. (See "Note D" for detailed disclosure of the Partnership's segments).

Note B – Transactions with Affiliated Parties

The Partnership has no employees and depends on the General Partner and its affiliates for the management and administration of all Partnership activities. The Partnership Agreement provides for certain payments to affiliates for services and reimbursement of certain expenses incurred by affiliates on behalf of the Partnership.

Affiliates of the General Partner receive 5% of gross receipts from all of the Partnership's properties as compensation for providing property management services. The Partnership paid to such affiliates approximately $995,000 and $970,000 for the nine months ended September 30, 2008 and 2007, respectively, which are included in operating expenses and income from discontinued operations.

Affiliates of the General Partner charged the Partnership for reimbursement of accountable administrative expenses amounting to approximately $588,000 and $681,000 for the nine months ended September 30, 2008 and 2007, respectively, which are included in general and administrative expenses, investment properties and assets held for sale. The portion of these reimbursements included in investment properties and assets held for sale for the nine months ended September 30, 2008 and 2007 are construction management services provided by an affiliate of the General Partner of approximately $234,000 and $295,000, respectively. At September 30, 2008, approximately $56,000 of these expenses are outstanding and included in due to affiliates. There were no such expenses outstanding at December 31, 2007.

In accordance with the Partnership Agreement, AIMCO Properties, L.P., an affiliate of the General Partner, advanced the Partnership funds to cover expenses at the Partnership’s properties and redevelopment costs at The Sterling Apartment Homes and The Knolls Apartments prior to 2007. During the nine months ended September 30, 2008 AIMCO Properties, L.P., an affiliate of the General Partner, advanced the Partnership approximately $35,000 to fund operations at The Knolls Apartments. During the nine months ended September 30, 2007, AIMCO Properties, L.P., an affiliate of the General Partner advanced the Partnership approximately $93,000 for expenses at Palm Lake Apartments and to fund costs related to the refinancing of the mortgage encumbering Regency Oaks Apartments. Interest was charged at the prime rate plus 2% (7.00% at September 30, 2008) and interest expense was less than $1,000 and approximately $729,000 for the nine months ended September 30, 2008 and 2007, respectively. During the nine months ended September 30, 2007 the Partnership made payments on the outstanding loans and accrued interest of approximately $10,274,000 from operations and proceeds from the refinancing of the mortgages encumbering Plantation Gardens Apartments and Regency Oaks Apartments. There were no such payments made during the nine months ended September 30, 2008. At September 30, 2008, the amount of the outstanding advances and accrued interest was approximately $35,000 and is included in due to affiliates. At December 31, 2007, there were no outstanding advances or accrued interest payable to AIMCO Properties, L.P. The Partnership may receive additional advances of funds from AIMCO Properties, L.P. although AIMCO Properties, L.P. is not obligated to provide such advances. For more information on AIMCO Properties, L.P., including copies of its audited balance sheet, please see its reports filed with the Securities and Exchange Commission.

The Partnership insures its properties up to certain limits through coverage provided by AIMCO which is generally self-insured for a portion of losses and liabilities related to workers’ compensation, property casualty, general liability and vehicle liability. The Partnership insures its properties above the AIMCO limits through insurance policies obtained by AIMCO from insurers unaffiliated with the General Partner. During the nine months ended September 30, 2008, the Partnership was charged by AIMCO and its affiliates approximately $587,000 for insurance coverage and fees associated with policy claims administration. Additional charges will be incurred by the Partnership during 2008 as other insurance policies renew later in the year. The Partnership was charged by AIMCO and its affiliates approximately $579,000 for insurance coverage and fees associated with policy claims administration during the year ended December 31, 2007.

Note C - Investment in Affiliated Partnerships

		Ownership	Investment Balance
Partnership	Type of Ownership	Percentage	September 30, 2008
			(in thousands)
Consolidated Capital	Special Limited
Growth Fund	Partner	0.40%	$ --
Consolidated Capital	Special Limited
Properties III	Partner	1.86%	5
Consolidated Capital	Special Limited
Properties IV	Partner	1.86%	611
			$ 616

These investments are accounted for using the equity method of accounting. Distributions from the affiliated partnerships are accounted for as a reduction of the investment balance until the investment balance is reduced to zero. When the investment balance has been reduced to zero, subsequent distributions received are recognized as income in the accompanying consolidated statements of operations. During the three and nine months ended September 30, 2008, the Partnership received approximately $33,000 of distributions from refinance proceeds of one of its affiliated partnerships, Consolidated Capital Growth Fund, which was recognized as income as that investment balance had been reduced to zero. There were no distributions received during the nine months ended September 30, 2007. During the three and nine months ended September 30, 2008, the Partnership recognized approximately $3,000 and $11,000, respectively, in equity in loss from investments related to its allocated share of the loss from one of the affiliated partnerships. During the three and nine months ended September 30, 2007, the Partnership recognized approximately $2,000 and $5,000, respectively, in equity in loss related to its allocated share of the loss from one of the affiliated partnerships.

Note D – Segment Reporting

Description of the types of products and services from which the reportable segment derives its revenues: The Partnership has two reportable segments: residential properties and commercial property. The Partnership’s property segments consist of six apartment complexes; one in North Carolina, which is classified as held for sale, one in Colorado, four in Florida and one multiple use facility consisting of apartment units and commercial space in Pennsylvania. The Partnership rents apartment units to tenants for terms that are typically less than twelve months. The commercial property leases space to various medical offices, career service facilities, and retail shops at terms ranging from month to month to ten years.

Measurement of segment profit and loss: The Partnership evaluates performance based on segment profit (loss) before depreciation. The accounting policies of the reportable segments are the same as those described in the summary of significant accounting policies included in the Partnership’s Annual Report on Form 10-K for the fiscal year ended December 31, 2007.

Factors management used to identify the Partnership's reportable segment: The Partnership’s reportable segments are business units (investment properties) that offer different products and services. The reportable segments are each managed separately because they provide distinct services with different types of products and customers.

Segment information for the three and nine months ended September 30, 2008 and 2007 is shown in the tables below (in thousands). The "Other" column includes Partnership administration related items and income and expense not allocated to reportable segments.

For the three months ended
September 30, 2008	Residential	Commercial	Other	Totals
Rental income	$ 5,356	$ 427	$ --	$ 5,783
Other income	503	103	--	606
Casualty loss	(27)	--	--	(27)
Income from discontinued operations	134	--	--	134
Distributions in excess of investment	--	--	33	33
Equity in loss from investment	--	--	(3)	(3)
Impairment loss	(2,400)	--	--	(2,400)
Interest expense	1,781	175	3	1,959
Depreciation	1,866	67	--	1,933
General and administrative
expenses	--	--	184	184
Current income tax expense	25	--	--	25
Segment loss	(3,223)	(49)	(157)	(3,429)

For the nine months ended
September 30, 2008	Residential	Commercial	Other	Totals
Rental income	$16,112	$ 1,200	$ --	$17,312
Other income	1,537	215	47	1,799
Casualty loss	(27)	- --	- --	(27)
Income from discontinued operations	318	- --	- --	318
Distributions in excess of investment	- --	- --	33	33
Equity in loss from investment	- --	- --	(11)	(11)
Impairment loss	(2,400)	- --	- --	(2,400)
Interest expense	5,361	523	8	5,892
Depreciation	5,537	160	- --	5,697
General and administrative
expenses	- --	- --	520	520
Current income tax expense	77	- --	- --	77
Deferred income tax benefit	(30)			(30)
Segment loss	(4,224)	(203)	(459)	(4,886)
Total assets	85,357	1,597	640	87,594
Capital expenditures for
investment properties	2,531	488	- --	3,019

For the three months ended
September 30, 2007	Residential	Commercial	Other	Totals
	(Restated)			(Restated)
Rental income	$ 5,275	$ 339	$ --	$ 5,614
Other income	528	48	4	580
Casualty gain	43	--	- --	43
Income from discontinued operations	10	--	- --	10
Equity in loss from investment	--	--	(2)	(2)
Interest expense	884	54	241	1,179
Depreciation	1,727	48	- --	1,775
General and administrative
expenses	--	--	157	157
Current income tax expense	25	--	- --	25
Deferred tax benefit	14	--	- --	14
Segment profit (loss)	339	2	(396)	(55)

For the nine months ended
September 30, 2007	Residential	Commercial	Other	Totals
	(Restated)			(Restated)
Rental income	$15,716	$ 1,045	$ --	$16,761
Other income	1,538	126	9	1,673
Casualty gain	70	--	- --	70
Income from discontinued operations	45	--	- --	45
Equity in loss from investment	--	--	(5)	(5)
Interest expense	2,474	158	729	3,361
Depreciation	4,959	157	- --	5,116
General and administrative
expenses	--	--	528	528
Current income tax expense	77	--	- --	77
Deferred tax benefit	347	--	- --	347
Segment profit (loss)	1,844	23	(1,253)	614
Total assets	91,161	1,162	13,373	105,696
Capital expenditures for
investment properties	3,894	5	- --	3,899

Note E – Casualty Events

In August 2008, The Dunes Apartments sustained damages from Tropical Storm Fay of approximately $40,000, including estimated clean up costs of approximately $20,000, which were included in operating expenses during the three and nine months ended September 30, 2008. During the three and nine months ended September 30, 2008 the Partnership recognized a casualty loss of approximately $13,000 as a result of the write off of undepreciated damaged assets, as insurance proceeds are not expected to be received.

In August 2008, Regency Oaks Apartments sustained damages from Tropical Storm Fay of approximately $55,000, including estimated clean up costs of approximately $28,000, which were included in operating expenses during the three and nine months ended September 30, 2008. During the three and nine months ended September 30, 2008 the Partnership recognized a casualty loss of approximately $14,000 as a result of the write off of undepreciated damaged assets of approximately $18,000, partially offset by anticipated insurance proceeds of approximately $4,000.

In August 2008, Plantation Gardens Apartments sustained damages from Tropical Storm Fay of approximately $8,000, which were estimated clean up costs and were included in operating expenses during the three and nine months ended September 30, 2008.

In April 2007, there was a fire at Palm Lake Apartments. The property incurred damages of approximately $38,000. During the three and nine months ended September 30, 2007, the Partnership recorded a casualty loss of approximately $2,000 as a result of the write off of undepreciated damaged assets of approximately $30,000 net of the receipt of insurance proceeds of approximately $28,000.

In September 2006, there was a fire at Plantation Gardens Apartments. The property incurred damages of approximately $82,000. During the nine months ended September 30, 2007, the Partnership recorded a casualty gain of approximately $3,000 as a result of the receipt of insurance proceeds of approximately $71,000 net of the write off of undepreciated damaged assets of approximately $68,000.

During 2005, Plantation Gardens Apartments sustained damages from Hurricane Wilma. During 2006, the Partnership recognized a casualty loss as a result of the write off of undepreciated damaged assets, net of the receipt of insurance proceeds, approximately $1,171,000 of which was received by and held on deposit with the mortgage lender at December 31, 2006. These proceeds were released by the mortgage lender to the Partnership during the nine months ended September 30, 2007. During the three and nine months ended September 30, 2007, the Partnership recognized an additional casualty gain of approximately $45,000 and $69,000, respectively, as a result of the receipt of additional insurance proceeds.

Note F – Partnership Income Taxes

In conjunction with the payment of local income taxes with respect to The Sterling Apartment Homes and Commerce Center, the Partnership has recorded a deferred tax asset in the amount of approximately $391,000. The deferred tax asset consists primarily of temporary differences related to land, buildings and accumulated depreciation. In a prior year, the Partnership had established a valuation allowance in the amount of approximately $333,000 against the deferred tax asset, as the Partnership believed it was more likely than not that the deferred tax asset would not be realized. During the nine months ended September 30, 2007, the Partnership reconsidered its assessment of whether the deferred tax asset would be realized. As a result of the completion of the redevelopment project at The Sterling Apartment Homes, the Partnership now believes that it is more likely than not that the full value of the deferred tax asset will be realized through future taxable income of the property. Accordingly, the reduction of the valuation allowance of approximately $333,000 is reflected as a deferred income tax benefit on the consolidated statement of operations for the nine months ended September 30, 2007. During the three months ended September 30, 2007, the Partnership recognized an additional benefit of approximately $14,000. An additional benefit of approximately $30,000 was recognized during the nine months ended September 30, 2008. During each of the three and nine months ended September 30, 2008 and 2007, the Partnership recognized approximately $25,000 and $77,000, respectively, in current income tax expense related to local income taxes with respect to The Sterling Apartments Homes and Commerce Center.

Note G – Investment Properties

Subsequent to September 30, 2008, the Partnership entered into a sale contract with a third party relating to the sale of The Knolls Apartments. The Partnership determined that certain criteria of SFAS No. 144 were not met at September 30, 2008 and therefore continues to report the assets and liabilities of the investment property as held for investment and its respective operations as continuing operations. In accordance with the Partnership’s impairment policy and SFAS No. 144, during the three and nine months ended September 30, 2008, the Partnership recorded an impairment loss of approximately $2,400,000, to write the carrying amount of the property down to the expected sale price. The Partnership expects to sell the property during the fourth quarter of 2008.

Subsequent to September 30, 2008, the Partnership entered into a sale contract with a third party relating to the sale of Palm Lake Apartments, which is projected to close during the fourth quarter of 2008. The Partnership determined that certain criteria of SFAS No. 144 were not met at September 30, 2008 and therefore continues to report the assets and liabilities of the investment property as held for investment and its operations as continuing operations.

Note H – Refinancing of Mortgage Notes Payable

On September 28, 2007, the Partnership refinanced the mortgage encumbering Plantation Gardens Apartments. The refinancing replaced the existing mortgage of approximately $7,884,000 with a new mortgage in the amount of approximately $24,815,000. The new mortgage requires monthly payments of principal and interest beginning on November 1, 2007 until the loan matures October 1, 2017, with a fixed interest rate of 6.08% and a balloon payment of approximately $20,855,000 due at maturity. If no event of default exists at maturity, the maturity date will automatically be extended for one additional year, to October 1, 2018. Total capitalized loan costs associated with the new mortgage were approximately $326,000, of which approximately $316,000 was recognized during the nine months ended September 30, 2007 and are included in other assets. The Partnership recorded a loss on the early extinguishment of debt of approximately $44,000, which is included in interest expense, as a result of a prepayment penalty, partially offset by the write off of the unamortized mortgage premium. As a condition of the new mortgage loan, the lender required AIMCO Properties, L.P., an affiliate of the General Partner, to guarantee the obligations and liabilities of the Partnership with respect to the new mortgage.

On September 28, 2007, the Partnership refinanced the mortgage encumbering Regency Oaks Apartments. The refinancing replaced the existing mortgage of approximately $6,191,000 with a new mortgage in the amount of approximately $11,440,000. The new mortgage requires monthly payments of principal and interest beginning on November 1, 2007 until the loan matures October 1, 2017, with a fixed interest rate of 6.16% and a balloon payment of approximately $9,635,000 due at maturity. If no event of default exists at maturity, the maturity date will automatically be extended for one additional year, to October 1, 2018. Total capitalized loan costs associated with the new mortgage were approximately $144,000, of which approximately $134,000 was recognized during the nine months ended September 30, 2007 and are included in other assets. The Partnership recorded a loss on the early extinguishment of debt of approximately $33,000, which is included in interest expense, as a result of a prepayment penalty, partially offset by the write off of the unamortized mortgage premium. As a condition of the new mortgage loan, the lender required AIMCO Properties, L.P., an affiliate of the General Partner, to guarantee the obligations and liabilities of the Partnership with respect to the new mortgage.

During the fourth quarter of 2007, the Partnership refinanced the mortgage debt encumbering The Sterling Apartment Homes by defeasing the existing mortgage of approximately $20,278,000 at a fixed interest rate of 6.77% scheduled to mature in October 2008 with a portion of the proceeds from a new mortgage in the amount of $80,000,000. The new mortgage requires monthly payments of principal and interest beginning on January 1, 2008 until the loan matures December 1, 2017, with a fixed interest rate of 5.84% and a balloon payment of approximately $66,807,000 due at maturity. If no event of default exists at maturity, the maturity date will automatically be extended for one additional year, to December 1, 2018. Total capitalized loan costs associated with the new mortgage were approximately $571,000, of which approximately $15,000 was recognized during the nine months ended September 30, 2008 and are included in other assets. During the fourth quarter of 2007 the Partnership recorded a loss on the early extinguishment of debt of approximately $566,000 as a result of the payment of costs associated with the defeasance of the previous debt and the write off of unamortized loan costs. As a condition of the new mortgage loan, the lender required AIMCO Properties, L.P., an affiliate of the General Partner, to guarantee certain obligations and liabilities of the Partnership with respect to the new mortgage.

Note I – Contingencies

The Partnership has previously disclosed in its quarterly, annual and current reports the legal proceedings related to the Nuanes and Heller actions. On June 30, 2006, the trial court entered an order confirming its approval of the class action settlement and entering judgment thereto after the Court of Appeal had remanded the matter for further findings. On August 31, 2006, an objector filed an appeal from the order. The Court of Appeal issued an opinion on February 20, 2008, affirming the order approving the settlement and judgment entered thereto, and the California Supreme Court thereafter denied the objector’s petition for review. All appeals have now been exhausted, and the Court’s order approving the settlement and entering judgment is now final. Payments associated with the settlement were disbursed during September 2008.

As previously disclosed, AIMCO Properties, L.P. and NHP Management Company, both affiliates of the General Partner, were defendants in a lawsuit, filed as a collective action in August 2003 in the United States District Court for the District of Columbia, alleging that they willfully violated the Fair Labor Standards Act (“FLSA”) by failing to pay maintenance workers overtime for time worked in excess of 40 hours per week (“overtime claims”). The plaintiffs also contended that AIMCO Properties, L.P. and NHP Management Company failed to compensate maintenance workers for time that they were required to be "on-call" (“on-call claims”). In March 2007, the court in the District of Columbia decertified the collective action. In July 2007, plaintiffs’ counsel filed individual cases in Federal court in 22 jurisdictions. In the second quarter 2008, AIMCO Properties, L.P. settled the overtime cases involving 652 plaintiffs and established a framework for resolving the 88 remaining “on-call” claims and the attorneys’ fees claimed by plaintiffs’ counsel. As a result, the lawsuits asserted in the 22 Federal courts will be dismissed. During the three months ended September 30, 2008, the Partnership was charged approximately $8,000 for settlement amounts for alleged unpaid overtime to employees who had worked at the Partnership’s investment properties. At this time, the 88 remaining “on-call” claims and the attorneys’ fees claimed by plaintiffs’ counsel are not resolved. The General Partner is uncertain as to the amount of any additional loss that may be allocable to the Partnership. Therefore, the Partnership cannot estimate whether any additional loss will occur or a potential range of loss.

The Partnership is unaware of any other pending or outstanding litigation matters involving it or its investment properties that are not of a routine nature arising in the ordinary course of business.

Environmental

Various Federal, state and local laws subject property owners or operators to liability for management, and the costs of removal or remediation, of certain hazardous substances present on a property. Such laws often impose liability without regard to whether the owner or operator knew of, or was responsible for, the release or presence of the hazardous substances. The presence of, or the failure to manage or remedy properly, hazardous substances may adversely affect occupancy at affected apartment communities and the ability to sell or finance affected properties. In addition to the costs associated with investigation and remediation actions brought by government agencies, and potential fines or penalties imposed by such agencies in connection therewith, the presence of hazardous substances on a property could result in claims by private plaintiffs for personal injury, disease, disability or other infirmities. Various laws also impose liability for the cost of removal, remediation or disposal of hazardous substances through a licensed disposal or treatment facility. Anyone who arranges for the disposal or treatment of hazardous substances is potentially liable under such laws. These laws often impose liability whether or not the person arranging for the disposal ever owned or operated the disposal facility. In connection with the ownership, operation and management of its properties, the Partnership could potentially be liable for environmental liabilities or costs associated with its properties.

Mold

The Partnership is aware of lawsuits against owners and managers of multifamily properties asserting claims of personal injury and property damage caused by the presence of mold, some of which have resulted in substantial monetary judgments or settlements. The Partnership has only limited insurance coverage for property damage loss claims arising from the presence of mold and for personal injury claims related to mold exposure. Affiliates of the General Partner have implemented policies, procedures, third-party audits and training and the General Partner believes that these measures will prevent or eliminate mold exposure and will minimize the effects that mold may have on residents. To date, the Partnership has not incurred any material costs or liabilities relating to claims of mold exposure or to abate mold conditions. Because the law regarding mold is unsettled and subject to change the General Partner can make no assurance that liabilities resulting from the presence of or exposure to mold will not have a material adverse effect on the Partnership’s consolidated financial condition or results of operations.

ITEM 2. Management's Discussion and Analysis Of Financial Condition and Results of Operations

The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for forward-looking statements in certain circumstances. Certain information included in this Report contains or may contain information that is forward-looking, including, without limitation, statements regarding the effect of redevelopments, the Partnership’s future financial performance, including the Partnership’s ability to maintain current or meet projected occupancy and rent levels, and the effect of government regulations. Actual results may differ materially from those described in the forward-looking statements and, in addition, will be affected by a variety of risks and factors that are beyond the Partnership’s control including, without limitation: natural disasters such as hurricanes; national and local economic conditions; the general level of interest rates; energy costs; the terms of governmental regulations that affect the Partnership’s properties and interpretations of those regulations; the competitive environment in which the Partnership operates; financing risks, including the risk that the Partnership’s cash flows from operations may be insufficient to meet required payments of principal and interest; real estate risks, including fluctuations in real estate values and the general economic climate in local markets and competition for tenants in such markets; insurance risks; development risks; litigation, including costs associated with prosecuting or defending claims and any adverse outcomes; and possible environmental liabilities, including costs, fines or penalties that may be incurred due to necessary remediation of contamination of properties presently owned or previously owned by the Partnership. Readers should carefully review the Partnership’s consolidated financial statements and the notes thereto and the other documents the Partnership files from time to time with the Securities and Exchange Commission.

The Partnership's investment properties consist of six properties and one property which is classified as held for sale at September 30, 2008. The Sterling is a multiple-use facility which consists of an apartment complex and commercial space. The following table sets forth the average occupancy of the properties for the nine months ended September 30, 2008 and 2007:

	Average Occupancy
Property	2008	2007

The Sterling Apartment Homes	97%	96%
The Sterling Commerce Center	80%	80%
Philadelphia, Pennsylvania
The Knolls Apartments (1)	96%	89%
Colorado Springs, Colorado
Plantation Gardens Apartments	96%	98%
Plantation, Florida
Palm Lake Apartments	94%	93%
Tampa, Florida
The Dunes Apartments (2)	88%	83%
Indian Harbor, Florida
Regency Oaks Apartments (2)	93%	90%
Fern Park, Florida

(1) The General Partner attributes the increase in occupancy at The Knolls Apartments to the completion of the redevelopment project in July 2006; the project began during the fourth quarter of 2004.

(2) The General Partner attributes the increase in occupancy at The Dunes Apartments and Regency Oaks Apartments to increased marketing efforts.

The Partnership’s financial results depend upon a number of factors including the ability to attract and maintain tenants at the investment properties, interest rates on mortgage loans, costs incurred to operate the investment properties, general economic conditions and weather. As part of the ongoing business plan of the Partnership, the General Partner monitors the rental market environment of its investment properties to assess the feasibility of increasing rents, maintaining or increasing occupancy levels and protecting the Partnership from increases in expenses. As part of this plan, the General Partner attempts to protect the Partnership from the burden of inflation-related increases in expenses by increasing rents and maintaining a high overall occupancy level. However, the General Partner may use rental concessions and rental rate reductions to offset softening market conditions; accordingly, there is no guarantee that the General Partner will be able to sustain such a plan. Further, a number of factors that are outside the control of the Partnership, such as the local economic climate and weather, can adversely or positively affect the Partnership’s financial results.

Results of Operations

The Partnership recognized a net loss of approximately $3,429,000 and $4,886,000 for the three and nine months ended September 30, 2008, respectively, compared to net loss of approximately $55,000 and net income of approximately $614,000 for the three and nine months ended September 30, 2007, respectively. In accordance with Statement of Financial Accounting Standards (“SFAS”) No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets”, the consolidated statements of operations included in “Item 1. Financial Statements” for the three and nine months ended September 30, 2008 and 2007 reflect the operations of The Loft Apartments as income from discontinued operations as it meets the criteria in SFAS No. 144 to be classified as held for sale. The Partnership has been actively marketing the property for sale during 2008 and the Partnership entered into a sale contract on October 28, 2008 to sell The Loft Apartments to a third party. Included in income from discontinued operations for the three months ended September 30, 2008 and 2007 are results of the property’s operations of approximately $134,000 and $10,000, respectively, including revenues of approximately $422,000 and $392,000, respectively. Included in income from discontinued operations for the nine months ended September 30, 2008 and 2007 are results of the property’s operations of approximately $318,000 and $45,000, respectively, including revenues of approximately $1,236,000 and $1,187,000, respectively. As a result of The Loft Apartments meeting all criteria in SFAS No. 144 to be classified as held for sale at September 30, 2008, its assets and liabilities are classified as held for sale as of September 30, 2008 and December 31, 2007.

The Partnership recognized loss before discontinued operations of approximately $3,563,000 and $5,204,000 for the three and nine months ended September 30, 2008, respectively, compared to loss before discontinued operations of approximately $65,000 and income before discontinued operations of approximately $569,000 for the three and nine months ended September 30, 2007, respectively. The increase in loss before discontinued operations for the three and nine months ended September 30, 2008 is due to the recognition of an impairment loss during 2008, a decrease in deferred tax benefit, casualty losses in 2008, an increase in equity in loss from investment and an increase in total expenses, partially offset by increases in total revenues and distributions received in excess of investment in 2008.

The increase in total expenses for the three and nine months ended September 30, 2008 is due to increases in operating, depreciation and interest expenses. General and administrative expenses and property tax expenses remained relatively constant for the comparable periods. The increase in operating expenses for both periods is primarily due to increases in hazard insurance premiums at four of the Partnership’s residential properties and the commercial property and repairs incurred during the three and nine months ended September 30, 2008 related to various minor casualties at five of the Partnership’s properties and clean up costs incurred from Tropical Storm Fay at Plantation Gardens Apartments, The Dunes Apartment Homes and Regency Oaks Apartments, as discussed below. The increase in operating expenses for the three months ended September 30, 2008 is also due to an increase in salaries and related benefits at four of the Partnership’s residential properties and the commercial property and contract services at five of the Partnership’s residential properties, partially offset by decreases in salaries and related benefits at two of the Partnership’s residential properties and utilities at four of the Partnership’s residential properties. The increase in operating expenses for the nine months ended September 30, 2008 is also due to an increase in salaries and related benefits at five of the Partnership’s residential properties and the commercial property, partially offset by a decrease in salaries and related benefits at one of the Partnership’s residential properties. Depreciation expense increased for both periods primarily due to property improvements and replacements placed into service at four of the Partnership’s residential properties during the past twelve months. The increase in interest expense for both periods is primarily due to an increase in the carrying balance of the mortgage notes as a result of the refinancings of the mortgages encumbering The Sterling Apartment Homes, Plantation Gardens Apartments and Regency Oaks Apartments in 2007, partially offset by a decrease in interest incurred on advances from an affiliate of the General Partner.

Included in general and administrative expenses for the three and nine months ended September 30, 2008 are reimbursements to the General Partner as allowed under the Partnership Agreement, costs associated with the quarterly and annual communications with investors and regulatory agencies and the annual audit required by the Partnership Agreement.

The increase in total revenues for the three and nine months ended September 30, 2008 is primarily due to an increase in rental income. The increase in total revenues for the nine month period is also due to an increase in other income, which remained relatively constant for the three month period. The increase in rental income for both periods is primarily due to increases in average rental rates at three of the Partnership’s residential properties and the commercial property and increases in occupancy at five of the Partnership’s residential properties, partially offset by decreases in the average rental rate at three of the Partnership’s residential properties. The increase in other income for the nine month period is due to increases in utility reimbursements at the Sterling Apartment Homes, common area maintenance reimbursements at The Sterling Commerce Center and interest income as a result of higher average cash balances.

During the three and nine months ended September 30, 2008, the Partnership recognized approximately $3,000 and $11,000, respectively, in equity in loss from investments related to its allocated share of the loss from one of the affiliated partnerships. During the three and nine months ended September 30, 2007, the Partnership recognized approximately $2,000 and $5,000, respectively, in equity in loss related to its allocated share of the loss from one of the affiliated partnerships. These investments are accounted for using the equity method of accounting. Distributions from the affiliated partnerships are accounted for as a reduction of the investment balance until the investment balance is reduced to zero. When the investment balance has been reduced to zero, subsequent distributions received are recognized as income in the consolidated statements of operations included in “Item 1. Financial Statements”. During the three and nine months ended September 30, 2008, the Partnership received approximately $33,000 of distributions from refinance proceeds of one of its affiliated partnerships, Consolidated Capital Growth Fund, which was recognized as income as that investment balance had been reduced to zero. There were no distributions received during the nine months ended September 30, 2007.

Liquidity and Capital Resources

At September 30, 2008, the Partnership had cash and cash equivalents of approximately $978,000, compared to approximately $13,761,000 at September 30, 2007. Cash and cash equivalents decreased approximately $1,983,000, from December 31, 2007, due to approximately $3,315,000 and $2,417,000 of cash used in investing and financing activities, respectively, partially offset by approximately $3,749,000 of cash provided by operating activities. Cash used in investing activities consisted of property improvements and replacements, partially offset by distributions from an affiliated partnership. Cash used in financing activities consisted of principal payments made on the mortgages encumbering the Partnership's properties, a distribution to partners, lease commissions paid and loan costs paid, partially offset by advances from an affiliate. The Partnership invests its working capital reserves in interest bearing accounts.

The sufficiency of existing liquid assets to meet future liquidity and capital expenditure requirements is directly related to the level of capital expenditures required at the properties to adequately maintain the physical assets and other operating needs of the Partnership and to comply with Federal, state, and local legal and regulatory requirements. The General Partner monitors developments in the area of legal and regulatory compliance. Capital improvements planned for each of the Partnership’s properties are detailed below.

The Loft Apartments

During the nine months ended September 30, 2008, the Partnership completed approximately $262,000 of capital improvements at the property, consisting primarily of heating and air conditioning unit upgrades and floor covering replacement. These improvements were funded from operating cash flow. This property is classified as held for sale at September 30, 2008.

The Sterling Apartment Homes and Commerce Center

During the nine months ended September 30, 2008, the Partnership completed approximately $815,000 of capital improvements at the property consisting primarily of tenant improvements, heating and swimming pool upgrades, structural improvements and floor covering replacement. These improvements were funded from operating cash flow. The Partnership regularly evaluates the capital improvement needs of the property. While the Partnership has no material commitments for property improvements and replacements, certain routine capital expenditures are anticipated during the remainder of 2008. Such capital expenditures will depend on the physical condition of the property as well as anticipated cash flow generated by the property.

The Knolls Apartments

During the nine months ended September 30, 2008, the Partnership completed approximately $237,000 of capital improvements at the property consisting primarily of kitchen and bath upgrades and window and floor covering replacements. These improvements were funded from operating cash flow and advances from affiliates. The Partnership regularly evaluates the capital improvement needs of the property. While the Partnership has no material commitments for property improvements and replacements, certain routine capital expenditures are anticipated during the remainder of 2008. Such capital expenditures will depend on the physical condition of the property as well as anticipated cash flow generated by the property.

Plantation Gardens Apartments

During the nine months ended September 30, 2008, the Partnership completed approximately $515,000 of capital improvements at the property consisting primarily of electrical, elevator, air conditioning unit and kitchen and bath upgrades and floor covering replacement. These improvements were funded from operating cash flow. The Partnership regularly evaluates the capital improvement needs of the property. While the Partnership has no material commitments for property improvements and replacements, certain routine capital expenditures are anticipated during the remainder of 2008. Such capital expenditures will depend on the physical condition of the property as well as anticipated cash flow generated by the property.

Palm Lake Apartments

During the nine months ended September 30, 2008, the Partnership completed approximately $475,000 of capital improvements at the property consisting primarily of kitchen and bath upgrades, air conditioning unit upgrades, electrical upgrades and cabinet, appliance and floor covering replacements. These improvements were funded from operating cash flow. The Partnership regularly evaluates the capital improvement needs of the property. While the Partnership has no material commitments for property improvements and replacements, certain routine capital expenditures are anticipated during the remainder of 2008. Such capital expenditures will depend on the physical condition of the property as well as anticipated cash flow generated by the property.

The Dunes Apartments

During the nine months ended September 30, 2008, the Partnership completed approximately $333,000 of capital improvements at the property consisting primarily of interior improvements, kitchen and bath upgrades, swimming pool upgrades, and appliance and floor covering replacements. These improvements were funded from operating cash flow. The Partnership regularly evaluates the capital improvement needs of the property. While the Partnership has no material commitments for property improvements and replacements, certain routine capital expenditures are anticipated during the remainder of 2008. Such capital expenditures will depend on the physical condition of the property as well as anticipated cash flow generated by the property.

Regency Oaks Apartments

During the nine months ended September 30, 2008, the Partnership completed approximately $382,000 of capital improvements at the property consisting primarily of air conditioning unit and lighting upgrades, roof replacement, kitchen and bath upgrades, major landscaping, signage and floor covering replacement. These improvements were funded from operating cash flow. The Partnership regularly evaluates the capital improvement needs of the property. While the Partnership has no material commitments for property improvements and replacements, certain routine capital expenditures are anticipated during the remainder of 2008. Such capital expenditures will depend on the physical condition of the property as well as anticipated cash flow generated by the property.

Capital expenditures will be incurred only to the extent of cash available from operations or from Partnership reserves. To the extent that capital improvements are completed, the Partnership's distributable cash flow, if any, may be adversely affected, at least in the short term.

The Partnership's assets are thought to be generally sufficient for any near-term needs (exclusive of capital improvements) of the Partnership. The mortgage indebtedness encumbering the Partnership’s properties of approximately $128,470,000 requires monthly payments of principal and interest and balloon payments of approximately $12,223,000 and $97,297,000 during 2010 and 2017, respectively. The General Partner will attempt to refinance such indebtedness and/or sell the properties prior to such maturity dates. If the properties cannot be refinanced or sold for a sufficient amount, the Partnership will risk losing such properties through foreclosure.

The Partnership distributed the following amounts during the nine months ended September 30, 2008 and 2007 (in thousands, except per unit data):

	Nine Months	Per Limited	Nine Months
	Ended	Partnership	Ended	Per Limited
	September 30,	Unit	September 30,	Partnership
	2008	(Series A)	2007	Unit

Refinance (1)	$ 750	$ 3.77	$ --	$ --

(1) Distribution consists of refinance proceeds from the November 2007 refinance of The Sterling Apartment Homes.

Future cash distributions will depend on the levels of net cash generated from operations, the timing of debt maturities, property sales and/or refinancings. The Partnership's cash available for distribution is reviewed on a monthly basis. There can be no assurance, however, that the Partnership will generate sufficient funds from operations, after planned capital improvement expenditures, to permit additional distributions to its partners in 2008 or subsequent periods.

Other

In addition to its indirect ownership of the general partner interests in the Partnership, AIMCO and its affiliates owned 152,648.05 limited partnership units (the "Units") in the Partnership representing 76.69% of the outstanding Units at September 30, 2008. A number of these Units were acquired pursuant to tender offers made by AIMCO or its affiliates. It is possible that AIMCO or its affiliates will acquire additional Units in exchange for cash or a combination of cash and units in AIMCO Properties, L.P., the operating partnership of AIMCO, either through private purchases or tender offers. Pursuant to the Partnership Agreement, unitholders holding a majority of the Units are entitled to take action with respect to a variety of matters that would include, but are not limited to, voting on certain amendments to the Partnership Agreement and voting to remove the General Partner. As a result of its ownership of 76.69% of the outstanding Units, AIMCO and its affiliates are in a position to control all such voting decisions with respect to the Partnership. Although the General Partner owes fiduciary duties to the limited partners of the Partnership, the General Partner also owes fiduciary duties to AIMCO as its sole stockholder. As a result, the duties of the General Partner, as general partner, to the Partnership and its limited partners may come into conflict with the duties of the General Partner to AIMCO as its sole stockholder.

Critical Accounting Policies and Estimates

The consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States, which require the Partnership to make estimates and assumptions. The Partnership believes that of its significant accounting policies, the following may involve a higher degree of judgment and complexity.

Impairment of Long-Lived Assets

Investment properties are recorded at cost less accumulated depreciation, unless the carrying amount of the asset is not recoverable, and the investment properties foreclosed upon in the third quarter of 2002 and fourth quarter of 2003 were recorded at fair market value at the time of the foreclosures. If events or circumstances indicate that the carrying amount of a property may not be recoverable, the Partnership will make an assessment of its recoverability by comparing the carrying amount to the Partnership’s estimate of the undiscounted future cash flows, excluding interest charges, of the property. If the carrying amount exceeds the aggregate undiscounted future cash flows, the Partnership would recognize an impairment loss to the extent the carrying amount exceeds the estimated fair value of the property.

Real property investment is subject to varying degrees of risk. Several factors may adversely affect the economic performance and value of the Partnership’s investment properties. These factors include, but are not limited to, general economic climate; competition from other apartment communities and other housing options; local conditions, such as loss of jobs or an increase in the supply of apartments that might adversely affect apartment occupancy or rental rates; changes in governmental regulations and the related cost of compliance; increases in operating costs (including real estate taxes) due to inflation and other factors, which may not be offset by increased rents; and changes in tax laws and housing laws, including the enactment of rent control laws or other laws regulating multi-family housing. Any adverse changes in these factors could cause impairment of the Partnership’s assets.

Capitalized Costs Related to Redevelopment and Construction Projects

The Partnership capitalizes costs incurred in connection with capital expenditure activities, including redevelopment and construction projects. Costs including interest, property taxes and operating costs associated with redevelopment and construction projects are capitalized during periods in which redevelopment and construction projects are in progress in accordance with SFAS No. 34, “Capitalization of Interest Costs”, and SFAS No. 67, “Accounting for Costs and the Initial Rental Operations of Real Estate Properties.” Included in these capitalized costs are payroll costs associated with time spent by site employees in connection with the planning, execution and control of all capital expenditure activities at the property level.

Revenue Recognition

The Partnership generally leases apartment units for twelve-month terms or less. The Partnership will offer rental concessions during particularly slow months or in response to heavy competition from other similar complexes in the area. Rental income attributable to leases, net of any concessions, is recognized on a straight-line basis over the term of the lease. The Partnership evaluates all accounts receivable from residents and establishes an allowance, after the application of security deposits, for accounts greater than 30 days past due on current tenants and all receivables due from former tenants.

The Partnership leases certain commercial space to tenants under various lease terms. The leases are accounted for as operating leases in accordance with SFAS No. 13, "Accounting for Leases". Some of the leases contain stated rental increases during their term. For leases with fixed rental increases, rents are recognized on a straight-line basis over the terms of the leases. For all other leases, minimum rents are recognized over the terms of the leases.

Item 4T. Controls and Procedures.

(a) Disclosure Controls and Procedures.

The Partnership’s management, with the participation of the principal executive officer and principal financial officer of the General Partner, who are the equivalent of the Partnership’s principal executive officer and principal financial officer, respectively, has evaluated the effectiveness of the Partnership’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report. Based on such evaluation, the principal executive officer and principal financial officer of the General Partner, who are the equivalent of the Partnership’s principal executive officer and principal financial officer, respectively, have concluded that, as of the end of such period, the Partnership’s disclosure controls and procedures are effective.

(b) Changes in Internal Control Over Financial Reporting.

There have not been any changes in the Partnership’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, the Partnership’s internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

Item 6. Exhibits.

See Exhibit Index Attached.

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.

	CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES, LP

	By: ConCap Equities, Inc.
	General Partner

Date: November 12, 2008	By: /s/Martha L. Long
	Martha L. Long
	Senior Vice President

Date: November 12, 2008	By: /s/Stephen B. Waters
	Stephen B. Waters
	Vice President

CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES, LP

EXHIBIT INDEX

Exhibit

Number Description

3 Certificates of Limited Partnership, as amended to date. (Incorporated by reference to the Annual Report on Form 10-K for the fiscal year ended December 31, 1991 ("1991 Annual Report")).

3.1 Certificate of Limited Partnership of Registrant, dated March 19, 2008 (incorporated herein by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K, dated April 30, 2008).

3.2 Amendment to Certificate of Limited Partnership of Registrant, dated April 30, 2008 (incorporated herein by reference to Exhibit 3.2 to the Registrant’s Current Report on Form 8-K, dated April 30, 2008).

3.3 Limited Partnership Agreement of Registrant, dated April 28, 1981 (incorporated herein by reference to Appendix A to the Prospectus included in the Registrant’s Registration Statement on Form S-11 (Reg. No. 2-72384)).

3.4 First Amendment to the Limited Partnership Agreement of Registrant, dated July 11, 1985.

3.5 Second Amendment to the Limited Partnership Agreement of Registrant, dated October 23, 1990.

3.6 Third Amendment to the Limited Partnership Agreement of Registrant, dated October 17, 2000 (incorporated herein by reference to Exhibit 10.23 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2001).

3.7 Fourth Amendment to the Limited Partnership Agreement of Registrant, dated May 25, 2001 (incorporated herein by reference to Exhibit 10.24 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2001).

3.8 Fifth Amendment to the Limited Partnership Agreement of Registrant, dated March 19, 2008 (incorporated herein by reference to Exhibit 3.3 to the Registrant’s Current Report on Form 8-K, dated April 30, 2008).

3.9 Sixth Amendment to the Limited Partnership Agreement of Registrant, dated April 30, 2008 (incorporated herein by reference to Exhibit 3.4 to the Registrant’s Current Report on Form 8-K, dated April 30, 2008).

10.28 Form of Amended Order Setting Foreclosure Sale Date pursuant to amending the foreclosure date filed on September 25, 2003.*

10.29 Form of Certificate of Sale as to Property "1" pursuant to sale of Palm Lake Apartments to CCIP Palm Lake, L.L.C. filed October 28, 2003.*

10.30 Form of Certificate of Sale as to Property "2" pursuant to sale of Regency Oaks Apartments to CCIP Regency Oaks, L.L.C. filed October 28, 2003.*

10.31 Form of Certificate of Sale as to Property "3" pursuant to sale of The Dunes Apartments (formerly known as Society Park East Apartments) to CCIP Society Park East, L.L.C. filed October 28, 2003.*

10.32 Form of Certificate of Sale as to Property "4" pursuant to sale of Plantation Gardens Apartments to CCIP Plantation Gardens, L.L.C. filed October 28, 2003.*

10.38 Deed of Trust, Assignment of Leases and Rents and Security Agreement dated August 31, 2005 between CCIP Loft, LLC, a Delaware limited liability company and New York Life Insurance Company, filed as exhibit 10.38, to the Current Report on Form 8-K filed on September 7, 2005 and incorporated herein by reference.

10.39 Promissory Note dated August 31, 2005 between CCIP Loft, LLC, a Delaware limited liability company and New York Life Insurance Company, filed as exhibit 10.39 to the Current Report on Form 8-K filed on September 7, 2005 and incorporated herein by reference.

10.40 Guaranty dated August 31, 2005 between AIMCO Properties, L.P., for the benefit of New York Life Insurance Company, filed as exhibit 10.40 to the Current Report on Form 8-K filed on September 7, 2005 and incorporated herein by reference.

10.45 Multifamily Note dated September 28, 2000 between Consolidated Capital Equity Partners, a California Limited Partnership, and GMAC Commercial Mortgage Corporation, incorporated herein by reference to Current Report on Form 8-K dated September 29, 2000.

10.47 Multifamily Note dated September 28, 2000 between Consolidated Capital Equity Partners, a California Limited Partnership, and GMAC Commercial Mortgage Corporation, incorporated herein by reference to Current Report on Form 8-K dated September 29, 2000.

10.51 Multifamily Note dated October 6, 2000 between Consolidated Capital Equity Partners, a California Limited Partnership, and GMAC Commercial Mortgage Corporation, incorporated herein by reference to Current Report on Form 8-K dated September 29, 2000.

10.53 Amended and Restated Multifamily Note, dated September 28, 2007 between CCIP Plantation Gardens, L.L.C., a Delaware limited liability company, and Capmark Bank, a Utah industrial bank. Filed on Current Report on Form 8-K dated September 28, 2007 and incorporated herein by reference.

10.54 Amended and Restated Multifamily Mortgage, Assignment of Rents and Security Agreement, dated September 28, 2007 between CCIP Plantation Gardens, L.L.C., a Delaware limited liability company, and Capmark Bank, a Utah industrial bank. Filed on Current Report on Form 8-K dated September 28, 2007 and incorporated herein by reference.

10.55 Amended and Restated Multifamily Note, dated September 28, 2007 between CCIP Regency Oaks, L.L.C., a Delaware limited liability company, and Capmark Bank, a Utah industrial bank. Filed on Current Report dated September 28, 2007 and incorporated herein by reference.

10.56 Amended and Restated Multifamily Mortgage, Assignment of Rents and Security Agreement, dated September 28, 2007 between CCIP Regency Oaks, L.L.C., a Delaware limited liability company, and Capmark Bank, a Utah industrial bank. Filed on Current Report on Form 8-K dated September 28, 2007 and incorporated herein by reference.

10.57 Multifamily Note, dated November 30, 2007 between CCIP Sterling, L.P., a Pennsylvania limited partnership, and Wachovia Multifamily Capital, Inc., a Delaware corporation. Filed on Current Report on Form 8-K dated November 30, 2007 and incorporated herein by reference.

10.58 Multifamily Mortgage, Assignment of Rents and Security Agreement, dated November 30, 2007 between CCIP Sterling, L.P., a Pennsylvania limited partnership, and Wachovia Multifamily Capital, Inc., a Delaware corporation. Filed on Current Report on Form 8-K dated November 30, 2007 and incorporated herein by reference.

10.64 Purchase and Sale Contract between CCIP Knolls, L.L.C., a Delaware limited liability company and Hamilton Zanze & Company, a California corporation, dated October 10, 2008.

10.65 Purchase and Sale Contract between CCIP Palm Lake, L.L.C., a Delaware limited liability company, and Blackhawk Apartments Opportunity Fund II LLC, an Illinois limited liability company, dated October 24, 2008. Incorporated by reference to the Partnership’s Current Report on Form 8-K dated October 24, 2008.

10.66 Purchase and Sale Contract between CCIP Loft, L.L.C., a Delaware limited liability company, and The Embassy Group LLC, a New York limited liability company, dated October 28, 2008. Incorporated by reference to the Partnership’s Current Report on Form 8-K dated October 28, 2008.

10.67 First Amendment to Purchase and Sale Contract between CCIP Knolls, L.L.C., a Delaware limited liability company, and Hamilton Zanze & Company, a California corporation, dated November 5, 2008. Incorporated by reference to the Partnership's Current Report on Form 8-K dated November 5, 2008.

31.1 Certification of equivalent of Chief Executive Officer pursuant to Securities Exchange Act Rules 13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2 Certification of equivalent of Chief Financial Officer pursuant to Securities Exchange Act Rules 13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1 Certification of the equivalent of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

*Filed as exhibits 10.28 through 10.32 in the Registrant’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2003 incorporated herein by reference.

EX-31.1 2 ccip_ex31z1.htm EXHIBIT 31.1 Exhibit 31

Exhibit 31.1

CERTIFICATION

I, Martha L. Long, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Consolidated Capital Institutional Properties, LP;

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.

Date: November 12, 2008

/s/Martha L. Long

Martha L. Long

Senior Vice President of ConCap Equities, Inc., equivalent of the chief executive officer of the Partnership

EX-31.2 3 ccip_ex31z2.htm EXHIBIT 31.2 Exhibit 31

Exhibit 31.2

CERTIFICATION

I, Stephen B. Waters, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Consolidated Capital Institutional Properties, LP;

(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.

Date: November 12, 2008

/s/Stephen B. Waters

Stephen B. Waters

Vice President of ConCap Equities, Inc., equivalent of the chief financial officer of the Partnership

EX-32.1 4 ccip_ex32z1.htm EXHIBIT 32.1 Exhibit 32

Exhibit 32.1

Certification of CEO and CFO

Pursuant to 18 U.S.C. Section 1350,

As Adopted Pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report on Form 10-Q of Consolidated Capital Institutional Properties, LP (the "Partnership"), for the quarterly period ended September 30, 2008 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), Martha L. Long, as the equivalent of the chief executive officer of the Partnership, and Stephen B. Waters, as the equivalent of the chief financial officer of the Partnership, each hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of his knowledge:

(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 Partnership.

	/s/Martha L. Long
	Name: Martha L. Long
	Date: November 12, 2008

	/s/Stephen B. Waters
	Name: Stephen B. Waters
	Date: November 12, 2008

This certification is furnished with this Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed filed by the Partnership for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

EX-10.64 5 ccipknolls_ex10z64.htm EXHIBIT 10.64 AIMCO - The Knolls - Purchase Contract

EXHIBIT 10.64

PURCHASE AND SALE CONTRACT

BETWEEN

CCIP KNOLLS, L.L.C.,

a Delaware limited liability company

AS SELLER

AND

HAMILTON ZANZE & COMPANY,

a California corporation

AS PURCHASER

The Knolls
1510 Gatehouse Circle S
Colorado Springs, Colorado 80904

TABLE OF CONTENTS

ARTICLE I	DEFINED TERMS	1
ARTICLE II	PURCHASE AND SALE, PURCHASE PRICE & DEPOSIT	2
2.1	Purchase and Sale	2
2.2	Purchase Price and Deposit	2
2.3	Escrow Provisions Regarding Deposit	3
ARTICLE III	FEASIBILITY PERIOD	5
3.1	Feasibility Period	5
3.2	Expiration of Feasibility Period	6
3.3	Conduct of Investigation	6
3.4	Purchaser Indemnification	7
3.5	Property Materials	8
3.6	Property Contracts	10
ARTICLE IV	TITLE	11
4.1	Title Documents	11
4.2	Survey	11
4.3	Objection and Response Process	12
4.4	Permitted Exceptions	13
4.5	Existing Deed of Trust	13
4.6	Subsequently Disclosed Exceptions	14
4.7	Purchaser Financing	14
4.8	Housing Assistance Program Vouchers	8
ARTICLE V	CLOSING	16
5.1	Closing Date	16
5.2	Seller Closing Deliveries	16
5.3	Purchaser Closing Deliveries	18
5.4	Closing Prorations and Adjustments	19
5.5	Post Closing Adjustments	24
ARTICLE VI	REPRESENTATIONS AND WARRANTIES OF SELLER AND PURCHASER	24
6.1	Seller’s Representations	25
6.2	AS-IS	27
6.3	Survival of Seller’s Representations	29
6.4	Definition of Seller’s Knowledge	29
6.5	Representations and Warranties of Purchaser	30
6.6	Definition of Purchaser’s Knowledge	31
ARTICLE VII	OPERATION OF THE PROPERTY	32
7.1	Leases and Property Contracts	32
7.2	General Operation of Property	33
7.3	Liens	33
ARTICLE VIII	CONDITIONS PRECEDENT TO CLOSING	33
8.1	Purchaser’s Conditions to Closing	33
8.2	Seller’s Conditions to Closing	35
ARTICLE IX	BROKERAGE	36
9.1	Indemnity	36
9.2	Broker Commission	36
ARTICLE X	DEFAULTS AND REMEDIES	37
10.1	Purchaser Default	37
10.2	Seller Default	38
ARTICLE XI	RISK OF LOSS OR CASUALTY	40
11.1	Major Damage	40
11.2	Minor Damage	40
11.3	Closing	40
11.4	Repairs	41
ARTICLE XII	EMINENT DOMAIN	41
12.1	Eminent Domain	41
ARTICLE XIII	MISCELLANEOUS	42
13.1	Binding Effect of Contract	42
13.2	Exhibits and Schedules	42
13.3	Assignability	42
13.4	Captions	43
13.5	Number and Gender of Words	43
13.6	Notices	43
13.7	Governing Law and Venue	46
13.8	Entire Agreement	47
13.9	Amendments	47
13.10	Severability	47
13.11	Multiple Counterparts/Facsimile Signatures	47
13.12	Construction	47
13.13	Confidentiality	48
13.14	Time of the Essence	48
13.15	Waiver	48
13.16	Attorneys Fees	49
13.17	Time Zone/Time Periods	49
13.18	1031 Exchange	49
13.19	No Personal Liability of Officers, Trustees or Directors of Seller’s Partners	50
13.20	Intentionally Omitted	50
13.21	ADA Disclosure	50
13.22	No Recording	50
13.23	Relationship of Parties	51
13.24	Dispute Resolution	51
13.25	AIMCO Marks	52
13.26	Non-Solicitation of Employees	52
13.27	Survival	52
13.28	Multiple Purchasers	53
ARTICLE XIV	LEAD-BASED PAINT DISCLOSURE	53
14.1	Disclosure	53
14.2	Consent Agreement	30

PURCHASE AND SALE CONTRACT

THIS PURCHASE AND SALE CONTRACT (this "Contract") is entered into as of the 10^th day of October, 2008 (the "Effective Date"), by and between CCIP KNOLLS, L.L.C., a Delaware limited liability company, having an address at 4582 South Ulster Street Parkway, Suite 1100, Denver, Colorado 80237 ("Seller"), and HAMILTON ZANZE & COMPANY, a California corporation, having a principal address at 37 Graham Street, Suite 200B, San Francisco, California 94129 ("Purchaser").

NOW, THEREFORE, in consideration of mutual covenants set forth herein, Seller and Purchaser hereby agree as follows:

RECITALS

A. Seller owns the real estate located in El Paso County, as more particularly described in Exhibit A attached hereto and made a part hereof, and the improvements thereon, commonly known as The Knolls and having an address at 1510 Gatehouse Circle S, Colorado Springs, CO 80904.

B. Purchaser desires to purchase, and Seller desires to sell, such land, improvements and certain associated property, on the terms and conditions set forth below.

Article I
DEFINED TERMS

Unless otherwise defined herein, any term with its initial letter capitalized in this Contract shall have the meaning set forth in Schedule 1 attached hereto and made a part hereof.

Article II
PURCHASE AND SALE, PURCHASE PRICE & DEPOSIT

2.1 Purchase and Sale.

Seller agrees to sell and convey the Property to Purchaser and Purchaser agrees to purchase the Property from Seller, all in accordance with the terms and conditions set forth in this Contract.

2.2 Purchase Price and Deposit.

The total purchase price ("Purchase Price") for the Property shall be an amount equal to $16,000,000, payable by Purchaser, as follows:

2.2.1 Within 2 Business Days following the Effective Date, Purchaser shall deliver to Stewart Title Insurance Company, 1980 Post Oak Boulevard, Suite 610, Houston, Texas 77056, Attention Wendy Howell, Telephone: (713) 625-8161; Fax: (713) 552-1703 ("Escrow Agent" or "Title Insurer") an initial deposit (the "Initial Deposit") of $160,000 by wire transfer of immediately available funds ("Good Funds").

2.2.2 Within 1 Business Day after the day that the Feasibility Period expires, Purchaser shall deliver to Escrow Agent an additional deposit (the "Additional Deposit") of $160,000 by wire transfer of Good Funds.

2.2.3 The balance of the Purchase Price for the Property shall be paid to and received by Escrow Agent by wire transfer of Good Funds no later than 10:00 a.m. (Central Standard Time) on the Closing Date.

2.2.4 Seller and Purchaser acknowledge and agree that (i) the Fixtures and Tangible Personal Property are incidental to the use and operation of the Property, and (ii) no portion of the Purchase Price is allocable to the Fixtures and Tangible Personal Property.

2.2.5 Any and all provisions of this Contract which provide that the Deposit shall be nonrefundable are subject to the other provisions of this Contract which set forth limited circumstances under which the Deposit may become refundable which are the following: (i) Section 3.2 (which provides that the Initial Deposit is refundable if the Contract is timely terminated on or before the expiration of the Feasibility Period); (ii) Section 8.1 (which grants Purchaser the right to terminate this Contract in the event that a condition precedent to Purchaser’s obligation to close is not satisfied and to obtain a refund of the Deposit); (iii) Section 10.2 (which grants Purchaser the right to terminate this Contract on account of a default by Seller and recover the Deposit); (iv) Section 11.1 (which grants Purchaser the right to terminate this Contract as a result of Major Damage and recover the Deposit); and (v) Section 12.1 (which grants Purchaser the right to terminate this Contract as a result of the exercise of a right of eminent domain and recover the Deposit).

2.3 Escrow Provisions Regarding Deposit.

2.3.1 Escrow Agent shall hold the Deposit and make delivery of the Deposit to the party entitled thereto under the terms of this Contract. Escrow Agent shall invest the Deposit in such short-term, high-grade securities, interest-bearing bank accounts, money market funds or accounts, bank certificates of deposit or bank repurchase contracts as Escrow Agent, in its discretion, deems suitable, and all interest and income thereon shall become part of the Deposit and shall be remitted to the party entitled to the Deposit pursuant to this Contract.

2.3.2 Escrow Agent shall hold the Deposit until the earlier occurrence of (i) the Closing Date, at which time the Deposit shall be applied against the Purchase Price, or released to Seller pursuant to Section 10.1, or (ii) the date on which Escrow Agent shall be authorized to disburse the Deposit as set forth in Section 2.3.3. The tax identification numbers of the parties shall be furnished to Escrow Agent upon request.

2.3.3 If prior to the Closing Date either party makes a written demand upon Escrow Agent for payment of the Deposit, Escrow Agent shall give written notice to the other party of such demand. If Escrow Agent does not receive a written objection from the other party to the proposed payment within 5 Business Days after the giving of such notice, Escrow Agent is hereby authorized to make such payment. If Escrow Agent does receive such written objection within such 5-Business Day period, Escrow Agent shall continue to hold such amount until otherwise directed by written instructions from the parties to this Contract or a final judgment or arbitrator's decision. However, Escrow Agent shall have the right at any time to deliver the Deposit and interest thereon, if any, with a court of competent jurisdiction in the state in which the Property is located. Escrow Agent shall give written notice of such deposit to Seller and Purchaser. Upon such deposit, Escrow Agent shall be relieved and discharged of all further obligations and responsibilities hereunder. Any return of the Deposit to Purchaser provided for in this Contract shall be subject to Purchaser’s obligations set forth in Section 3.5.2.

2.3.4 The parties acknowledge that Escrow Agent is acting solely as a stakeholder at their request and for their convenience, and that Escrow Agent shall not be deemed to be the agent of either of the parties for any act or omission on its part unless taken or suffered in bad faith in willful disregard of this Contract or involving gross negligence. Seller and Purchaser jointly and severally shall indemnify and hold Escrow Agent harmless from and against all costs, claims and expenses, including reasonable attorney's fees, incurred in connection with the performance of Escrow Agent's duties hereunder, except with respect to actions or omissions taken or suffered by Escrow Agent in bad faith, in willful disregard of this Contract or involving gross negligence on the part of the Escrow Agent.

2.3.5 The parties shall deliver to Escrow Agent an executed copy of this Contract, which shall constitute the sole instructions to Escrow Agent. Escrow Agent shall execute the signature page for Escrow Agent attached hereto solely with respect to the provisions of this Section 2.3.

2.3.6 Escrow Agent, as the person responsible for closing the transaction within the meaning of Section 6045(e)(2)(A) of the Internal Revenue Code of 1986, as amended (the "Code"), shall file all necessary information, reports, returns, and statements regarding the transaction required by the Code including, but not limited to, the tax reports required pursuant to Section 6045 of the Code. Further, Escrow Agent agrees to indemnify and hold Purchaser, Seller, and their respective attorneys and brokers harmless from and against any Losses resulting from Escrow Agent's failure to file the reports Escrow Agent is required to file pursuant to this section.

Article III
FEASIBILITY PERIOD

3.1 Feasibility Period.

The Feasibility Period begins on the Effective Date and continues up to and including November 21, 2008 (the "Feasibility Period"). Subject to the terms of Section 3.3 and 3.4 and the rights of Tenants under the Leases, Purchaser, and its agents, contractors, engineers, surveyors, attorneys, and employees (collectively, "Consultants") shall, at no cost or expense to Seller, have the right from and after the Effective Date to enter onto the Property to conduct and make any and all customary studies, tests, examinations, inquiries, inspections and investigations of or concerning the Property, review the Materials and otherwise confirm any and all matters which Purchaser may reasonably desire to confirm with respect to the Property and Purchaser’s intended use thereof (collectively, the “Inspections”).

3.2 Expiration of Feasibility Period.

If any of the matters in Section 3.1 or any other title or survey matters are unsatisfactory to Purchaser for any reason, or for no reason whatsoever, in Purchaser's sole and absolute discretion, then Purchaser shall have the right to terminate this Contract by giving written notice to that effect to Seller and Escrow Agent no later than 5:00 p.m. on or before the date of expiration of the Feasibility Period. If Purchaser provides such notice, this Contract shall terminate and be of no further force and effect subject to and except for the Survival Provisions, and Escrow Agent shall return the Initial Deposit to Purchaser. If Purchaser fails to provide Seller with written notice of termination prior to the expiration of the Feasibility Period, Purchaser's right to terminate under this Section 3.2 shall be permanently waived and this Contract shall remain in full force and effect, the Deposit shall be non-refundable, and Purchaser's obligation to purchase the Property shall be conditional only as provided in Section 8.1.

3.3 Conduct of Investigation.

Purchaser shall not permit any mechanics' or materialmens’ liens or any other liens to attach to the Property by reason of the performance of any work or the purchase of any materials by Purchaser or any other party in connection with any Inspections conducted by or for Purchaser. Purchaser shall give reasonable advanced notice to Seller prior to any entry onto the Property and shall permit Seller to have a representative present during all Inspections conducted at the Property. Purchaser shall take all reasonable actions and implement all protections necessary to ensure that all actions taken in connection with the Inspections, and all equipment, materials and substances generated, used or brought onto the Property pose no material threat to the safety of persons, property or the environment.

3.4 Purchaser Indemnification.

3.4.1 Purchaser shall indemnify, hold harmless and, if requested by Seller (in Seller's sole discretion), defend (with counsel approved by Seller) Seller, together with Seller's affiliates, parent and subsidiary entities, successors, assigns, partners, managers, members, employees, officers, directors, trustees, shareholders, counsel, representatives, agents, Property Manager, Regional Property Manager, and AIMCO (collectively, including Seller, "Seller's Indemnified Parties"), from and against any and all damages, mechanics' liens, liabilities, penalties, interest, losses, demands, actions, causes of action, claims, costs and expenses (including reasonable attorneys' fees, including the cost of in-house counsel and appeals) (collectively, "Losses") arising from or related to Purchaser's or its Consultants' entry onto the Property, and any Inspections or other acts by Purchaser or Purchaser’s Consultants with respect to the Property during the Feasibility Period or otherwise.

3.4.2 Notwithstanding anything in this Contract to the contrary, Purchaser shall not be permitted to perform any invasive tests on the Property without Seller's prior written consent, which consent may be withheld in Seller's sole discretion. Further, Seller shall have the right, without limitation, to disapprove any and all entries, surveys, tests (including, without limitation, a Phase II environmental study of the Property), investigations and other matters that in Seller's reasonable judgment could result in any injury to the Property or breach of any contract, or expose Seller to any Losses or violation of applicable law, or otherwise adversely affect the Property or Seller's interest therein. Purchaser shall use reasonable efforts to minimize disruption to Tenants in connection with Purchaser's or its Consultants' activities pursuant to this Section. No consent by the Seller to any such activity shall be deemed to constitute a waiver by Seller or assumption of liability or risk by Seller. Purchaser hereby agrees to restore, at Purchaser's sole cost and expense, the Property to the same condition existing immediately prior to Purchaser's exercise of its rights pursuant to this Article III, provided the foregoing shall not require Purchaser to repair or remediate any pre-existing conditions on the Property that are merely discovered by Purchaser in the course of its investigations. Purchaser shall maintain and cause its third party consultants to maintain (a) casualty insurance and commercial general liability insurance with coverages of not less than $1,000,000.00 for injury or death to any one person and $3,000,000.00 for injury or death to more than one person and $1,000,000.00 with respect to property damage, and (b) worker's compensation insurance for all of their respective employees in accordance with the law of the state in which the Property is located. Purchaser shall deliver proof of the insurance coverage required pursuant to this Section 3.4.2 to Seller (in the form of a certificate of insurance) prior to the earlier to occur of (i) Purchaser's or Purchaser's Consultants' entry onto the Property, or (ii) the expiration of 5 days after the Effective Date.

3.5 Property Materials.

3.5.1 Within 5 Business Days after the Effective Date, and to the extent the same exist and are in Seller’s possession or reasonable control (subject to Section 3.5.2), Seller agrees to make the documents set forth on Schedule 3.5 (together with any other documents or information provided by Seller or its agents to Purchaser with respect to the Property, the “Materials”) available at the Property for review and copying by Purchaser at Purchaser’s sole cost and expense. In the alternative, at Seller’s option and within the foregoing time period, Seller may deliver some or all of the Materials to Purchaser, or make the same available to Purchaser on a secure web site (Purchaser agrees that any item to be delivered by Seller under this Contract shall be deemed delivered to the extent available to Purchaser on such secured web site). To the extent that Purchaser determines that any of the Materials have not been made available or delivered to Purchaser pursuant to this Section 3.5.1, Purchaser shall notify Seller and Seller shall use commercially reasonable efforts to deliver the same to Purchaser within 5 Business Days after such notification is received by Seller; provided, however, that under no circumstances will the Feasibility Period be extended and Purchaser’s sole remedy will be to terminate this Contract pursuant to Section 3.2.

3.5.2 In providing the Materials to Purchaser, other than Seller’s Representations, Seller makes no representation or warranty, express, written, oral, statutory, or implied, and all such representations and warranties are hereby expressly excluded and disclaimed. All Materials are provided for informational purposes only and, together with all Third-Party Reports, shall be returned by Purchaser to Seller (or the destruction thereof shall be certified in writing by Purchaser to Seller) as a condition to return of the Deposit to Purchaser if this Contract is terminated for any reason. Recognizing that the Materials delivered or made available by Seller pursuant to this Contract may not be complete or constitute all of such documents which are in Seller’s possession or control, but are those that are readily and reasonably available to Seller, Purchaser shall not in any way be entitled to rely upon the completeness or accuracy of the Materials and will instead in all instances rely exclusively on its own Inspections and Consultants with respect to all matters which it deems relevant to its decision to acquire, own and operate the Property.

3.5.3 In addition to the items set forth on Schedule 3.5, no later than 5 Business Days after the Effective Date, Seller shall deliver to Purchaser (or otherwise make available to Purchaser as provided under Section 3.5.1) the most recent rent roll for the Property listing the move-in date, monthly base rent payable, lease expiration date and unapplied security deposit for each Lease (the “Rent Roll”). Seller makes no representations or warranties regarding the Rent Roll other than the express representation set forth in Section 6.1.6.

3.5.4 In addition to the items set forth on Schedule 3.5, no later than 5 Business Days after the Effective Date, Seller shall deliver to Purchaser (or otherwise make available to Purchaser as provided under Section 3.5.1) a list of all current Property Contracts (the "Property Contracts List"). Seller makes no representations or warranties regarding the Property Contracts List other than the express representations set forth in Section 6.1.7.

3.6 Property Contracts.

On or before the expiration of the Feasibility Period, Purchaser may deliver written notice to Seller (the "Property Contracts Notice") specifying any Property Contracts which Purchaser desires to terminate at the Closing (the "Terminated Contracts"); provided that (a) the effective date of such termination on or after Closing shall be subject to the express terms of such Terminated Contracts, (b) if any such Property Contract cannot by its terms be terminated at Closing, it shall be assumed by Purchaser and not be a Terminated Contract, and (c) to the extent that any such Terminated Contract requires payment of a penalty, premium, or damages, including liquidated damages, for cancellation, Purchaser shall be solely responsible for the payment of any such cancellation fees, penalties, or damages, including liquidated damages. If Purchaser fails to deliver the Property Contracts Notice on or before the expiration of the Feasibility Period, there shall be no Terminated Contracts and Purchaser shall assume all Property Contracts at the Closing. To the extent that any Property Contract to be assigned to Purchaser requires vendor consent, then, prior to the Closing, Purchaser may attempt to obtain from each applicable vendor a consent (each a "Required Assignment Consent") to such assignment. Seller shall, at no cost and expense to Seller, cooperate reasonably with Purchaser in Purchaser’s efforts to obtain any Required Assignment Consent. Purchaser shall indemnify, hold harmless and, if requested by Seller (in Seller's sole discretion), defend (with counsel approved by Seller) Seller's Indemnified Parties from and against any and all Losses arising from or related to Purchaser's failure to obtain any Required Assignment Consent. Additionally, in respect of any commercial lease affecting the Property, including, without limitation, any lease for laundry equipment, Seller shall, at no cost or expense to Seller, cooperate reasonably with Purchaser in Purchaser’s efforts to obtain on or before Closing any subordination, nondisturbance and attornment agreement (“Subordination Agreement”) that may be required by any lender to Purchaser as a condition to funding any loan to be secured by the Property. It is understood and agreed by Seller and Purchaser that the receipt by Purchaser of such Subordination Agreement from any such commercial tenant shall not be a condition to Closing hereunder.

Article IV
TITLE

4.1 Title Documents.

Within 5 days after the Effective Date, Seller shall cause to be delivered to Purchaser a standard form commitment ("Title Commitment") to provide an extended coverage American Land Title Association owner’s title insurance policy for the Property, using the current policy jacket customarily provided by the Title Insurer, in an amount equal to the Purchase Price (the "Title Policy"), together with copies of all instruments identified as exceptions therein (together with the Title Commitment, referred to herein as the "Title Documents"). Seller shall be responsible only for payment of the basic premium for the Title Policy. Purchaser shall be solely responsible for payment of all other costs relating to procurement of the Title Commitment, the Title Policy, and any requested endorsements.

4.2 Survey.

Subject to Section 3.5.2, within 5 days after the Effective Date, Seller shall deliver to Purchaser or make available at the Property any existing survey of the Property (the "Existing Survey"). Purchaser may, at its sole cost and expense, order a new or updated survey of the Property either before or after the Effective Date (such new or updated survey, together with the Existing Survey, is referred to herein as the "Survey").

4.3 Objection and Response Process.

On or before November 11, 2008 (the "Objection Deadline"), Purchaser shall give written notice (the "Objection Notice") to the attorneys for Seller of any matter set forth in the Title Documents or the Survey to which Purchaser objects (the "Objections"). If Purchaser fails to tender an Objection Notice on or before the Objection Deadline, Purchaser shall be deemed to have approved and irrevocably waived any objections to any matters covered by the Title Documents and the Survey. On or before November 17, 2008 (the "Response Deadline"), Seller may, in Seller's sole discretion, give Purchaser notice (the "Response Notice") of those Objections which Seller is willing to cure, if any. Seller shall be entitled to reasonable adjournments of the Closing Date to cure the Objections. If Seller fails to deliver a Response Notice by the Response Deadline, Seller shall be deemed to have elected not to cure or otherwise resolve any matter set forth in the Objection Notice. If Purchaser is dissatisfied with the Response Notice or the lack of Response Notice, Purchaser may, as its exclusive remedy, exercise its right to terminate this Contract prior to the expiration of the Feasibility Period in accordance with the provisions of Section 3.2. If Purchaser fails to timely exercise such right, Purchaser shall be deemed to accept the Title Documents and Survey with resolution, if any, of the Objections set forth in the Response Notice (or if no Response Notice is tendered, without any resolution of the Objections) and without any reduction or abatement of the Purchase Price.

4.4 Permitted Exceptions.

The Deed delivered pursuant to this Contract shall be subject to the following, all of which shall be deemed "Permitted Exceptions":

4.4.1 All matters shown in the Title Documents and the Survey, other than (a) those Objections, if any, which Seller has agreed to cure pursuant to the Response Notice under Section 4.3, (b) mechanics' liens and taxes due and payable with respect to the period preceding Closing, (c) the standard exception regarding the rights of parties in possession, which shall be limited to those parties in possession pursuant to the Leases, and (d) the standard exception pertaining to taxes, which shall be limited to taxes and assessments payable in the year in which the Closing occurs and subsequent taxes and assessments;

4.4.2 All Leases;

4.4.3 Applicable zoning and governmental regulations and ordinances;

4.4.4 Any defects in or objections to title to the Property, or title exceptions or encumbrances, arising by, through or under Purchaser; and

4.4.5 The terms and conditions of this Contract.

4.5 Existing Deed of Trust.

It is understood and agreed that, whether or not Purchaser gives an Objection Notice with respect thereto, any deeds of trust and/or mortgages which secure the Note (collectively, the "Deed of Trust") shall not be deemed Permitted Exceptions, whether Purchaser gives further written notice of such or not, and shall be paid off, satisfied, discharged and/or cured from proceeds of the Purchase Price at Closing.

4.6 Subsequently Disclosed Exceptions.

If at any time after the expiration of the Feasibility Period, any update to the Title Commitment discloses any additional item that materially adversely affects title to the Property which was not disclosed on any version of the Title Commitment delivered to Purchaser during the Feasibility Period (the "New Exception"), Purchaser shall have a period of 5 days from the date of its receipt of such update (the "New Exception Review Period") to review and notify Seller in writing of Purchaser's approval or disapproval of the New Exception. If Purchaser disapproves of the New Exception, Seller may, in Seller's sole discretion, notify Purchaser as to whether it is willing to cure the New Exception. If Seller elects to cure the New Exception, Seller shall be entitled to reasonable adjournments of the Closing Date to cure the New Exception. If Seller fails to deliver a notice to Purchaser within 3 days after the expiration of the New Exception Review Period, Seller shall be deemed to have elected not to cure the New Exception. If Purchaser is dissatisfied with Seller's response, or lack thereof, Purchaser may, as its exclusive remedy elect either: (i) to terminate this Contract, in which event the Deposit shall be promptly returned to Purchaser or (ii) to waive the New Exception and proceed with the transactions contemplated by this Contract, in which event Purchaser shall be deemed to have approved the New Exception. If Purchaser fails to notify Seller of its election to terminate this Contract in accordance with the foregoing clause within 6 days after the expiration of the New Exception Review Period, Purchaser shall be deemed to have elected to approve and irrevocably waive any objections to the New Exception.

4.7 Purchaser Financing.

Purchaser assumes full responsibility to obtain the funds required for settlement, and Purchaser's acquisition of such funds shall not be a contingency to the Closing.

4.8 Housing Assistance Program Vouchers.

Purchaser recognizes and agrees that the Property is and may become the subject of one or more Housing Assistance Payment voucher (tenant based) contracts (collectively, the “HAP Contracts”), which regulate Section 8 payments to the Property under existing vouchers administered by the local housing authorities (collectively, the “Housing Authority”). Within 5 calendar days after the Effective Date, Seller agrees to deliver or make available to Purchaser as part of the Materials, copies of the HAP Contracts which are in Seller’s possession or reasonable control (subject to Section 3.5.2). At Closing, Purchaser either (a) shall assume all obligations under the HAP Contracts and accept title to the Property subject to the same, or (b) the existing HAP Contracts shall be terminated, and Purchaser shall enter into replacement Housing Assistance Payment contracts which are acceptable to the Housing Authority (either (a) or (b) meaning the “HAP Assumption”). No later than 15 days after the Effective Date, Purchaser, at its sole cost and expense, shall submit all applications, documents, information, materials, and fees to the Housing Authority, required in order for the Housing Authority to approve Purchaser’s request for pre-approval as an entity qualified to assume the HAP Contracts, and shall diligently proceed using its best efforts to obtain such pre-approval as soon as possible. Purchaser agrees to provide Seller with copies of such applications no later than 5 Business Days after submittal thereof to the Housing Authority. Purchaser shall make such filings with the Housing Authority, deliver such documents, pay such fees and costs (if any), and pay such reserves, impounds, escrows and other amounts (if any) post-Closing as required by the Housing Authority with respect to the HAP Contracts (which may include, but not be limited to, a change in ownership form, name of the new owner, name of the property manager, evidence that title to the applicable Property has transferred and an IRS form W-9). From and after the Effective Date, Seller shall promptly deliver to Purchaser copies of any new HAP Contracts entered into by Seller after the Effective Date with respect to the Property. The provisions of this Section 4.8 shall survive Closing, and Purchaser shall accomplish the HAP Assumption after the Closing and Seller shall have no obligations with respect to such HAP Assumption; provided, however Seller agrees to reasonably cooperate with Purchaser to accomplish the HAP Assumption (to the extent necessary) at no out of pocket cost to Seller.

Article V
CLOSING

5.1 Closing Date.

On or before the expiration of the Feasibility Period, Seller shall deliver to Purchaser a written notice setting forth the date that the Closing shall occur (such date, the "Closing Date"); provided, however, that the Closing Date shall be a Business Day that is not earlier than December 2, 2008 and not later than January 15, 2009. The Closing shall occur through an escrow with Escrow Agent, whereby the Seller, Purchaser and their attorneys need not be physically present at the Closing and may deliver documents by overnight air courier or other means.

5.2 Seller Closing Deliveries.

No later than 1 Business Day prior to the Closing Date, Seller shall deliver to Escrow Agent, each of the following items:

5.2.1 Special Warranty Deed (the "Deed") in the form attached as Exhibit B to Purchaser, subject to the Permitted Exceptions.

5.2.2 A Bill of Sale in the form attached as Exhibit C.

5.2.3 Two (2) originals of a General Assignment in the form attached as Exhibit D (the "General Assignment").

5.2.4 Two (2) originals of an Assignment of Leases and Security Deposits in the form attached as Exhibit E (the "Leases Assignment").

5.2.5 A letter in the form attached hereto as Exhibit F prepared and addressed by Purchaser, and countersigned by Seller, to each of the vendors under the Terminated Contracts informing them of the termination of such Terminated Contract as of the Closing Date (subject to any delay in the effectiveness of such termination pursuant to the express terms of each applicable Terminated Contract) (the "Vendor Terminations").

5.2.6 Seller's closing statement.

5.2.7 A title affidavit or an indemnity form reasonably acceptable to Seller, which is sufficient to enable Title Insurer to delete the standard pre-printed exceptions to the title insurance policy to be issued pursuant to the Title Commitment.

5.2.8 A certification of Seller's non-foreign status pursuant to Section 1445 of the Internal Revenue Code of 1986, as amended.

5.2.9 Resolutions, certificates of good standing, and such other organizational documents as Title Insurer shall reasonably require evidencing Seller's authority to consummate this transaction.

5.2.10 An updated Rent Roll effective as of a date no more than 3 Business Days prior to the Closing Date; provided, however, that the content of such updated Rent Roll shall in no event expand or modify the conditions to Purchaser's obligation to close as specified under Section 8.1.

5.2.11 Intentionally Omitted.

5.2.12 An updated Property Contracts List effective as of a date no more than 3 Business Days prior to the Closing Date; provided, however, that the content of such updated Property Contracts List shall in no event expand or modify the conditions to Purchaser's obligation to close as specified under Section 8.1.

5.3 Purchaser Closing Deliveries.

No later than 1 Business Day prior to the Closing Date (except for the balance of the Purchase Price which is to be delivered at the time specified in Section 2.2.3), Purchaser shall deliver to the Escrow Agent (for disbursement to Seller upon the Closing) the following items:

5.3.1 The full Purchase Price (with credit for the Deposit), plus or minus the adjustments or prorations required by this Contract.

5.3.2 A title affidavit or an indemnity form (pertaining to Purchaser's activity on the Property prior to Closing), reasonably acceptable to Purchaser, which is sufficient to enable Title Insurer to delete the standard pre-printed exceptions to the title insurance policy to be issued pursuant to the Title Commitment.

5.3.3 Any declaration or other statement which may be required to be submitted to the local assessor.

5.3.4 Purchaser's closing statement.

5.3.5 Two (2) countersigned counterparts of the General Assignment.

5.3.6 Two (2) countersigned counterparts of the Leases Assignment.

5.3.7 Notification letters to all Tenants prepared and executed by Purchaser in the form attached hereto as Exhibit G.

5.3.8 The Vendor Terminations.

5.3.9 Any cancellation fees or penalties due to any vendor under any Terminated Contract as a result of the termination thereof.

5.3.10 Resolutions, certificates of good standing, and such other organizational documents as Title Insurer shall reasonably require evidencing Purchaser's authority to consummate this transaction.

5.3.11 Any applicable transfer tax forms or conveyance forms, including, without limitation, the Real Property Transfer Declaration (TD-1000).

5.4 Closing Prorations and Adjustments.

5.4.1 General. All normal and customarily proratable items, including, without limitation, collected rents, operating expenses, personal property taxes, other operating expenses and fees, shall be prorated as of the Closing Date, Seller being charged or credited, as appropriate, for all of same attributable to the period up to the Closing Date (and credited for any amounts paid by Seller attributable to the period on or after the Closing Date, if assumed by Purchaser) and Purchaser being responsible for, and credited or charged, as the case may be, for all of the same attributable to the period on and after the Closing Date. Seller shall prepare a proration schedule (the "Proration Schedule") of the adjustments described in this Section 5.4 and shall deliver such Proration Schedule to both Purchaser and the Escrow Agent no later than three (3) Business Days prior to the scheduled Closing Date.

5.4.2 Operating Expenses. All of the operating, maintenance, taxes (other than real estate taxes), and other expenses incurred in operating the Property that Seller customarily pays, and any other costs incurred in the ordinary course of business for the management and operation of the Property, shall be prorated on an accrual basis. Seller shall pay all such expenses that accrue prior to the Closing Date and Purchaser shall pay all such expenses that accrue from and after the Closing Date.

5.4.3 Utilities. The final readings and final billings for utilities will be made if possible as of the Closing Date, in which case Seller shall pay all such bills as of the Closing Date and no proration shall be made at the Closing with respect to utility bills. Otherwise, a proration shall be made based upon the parties' reasonable good faith estimate. Seller shall be entitled to the return of any deposit(s) posted by it with any utility company, and Seller shall notify each utility company serving the Property to terminate Seller's account, effective as of noon on the Closing Date.

5.4.4 Real Estate Taxes. Any real estate ad valorem or similar taxes for the Property, or any installment of assessments payable in installments which installment is payable in the calendar year of Closing, shall be prorated to the date of Closing, based upon actual days involved. The proration of real property taxes or installments of assessments shall be based upon the assessed valuation and tax rate figures (assuming payment at the earliest time to allow for the maximum possible discount) for the year in which the Closing occurs to the extent the same are available; provided, however, that in the event that actual figures (whether for the assessed value of the Property or for the tax rate) for the year of Closing are not available at the Closing Date, the proration shall be made using figures from the preceding year (assuming payment at the earliest time to allow for the maximum possible discount). The proration of real property taxes or installments of assessments shall be final and not subject to re-adjustment after Closing.

5.4.5 Property Contracts. Purchaser shall assume at Closing the obligations under the Property Contracts assumed by Purchaser (other than the Terminated Contacts, if any); however, operating expenses shall be prorated under Section 5.4.2.

5.4.6 Leases.

5.4.6.1 All collected rent (whether fixed monthly rentals, additional rentals, escalation rentals, retroactive rentals, operating cost pass-throughs or other sums and charges payable by Tenants under the Leases), income and expenses from any portion of the Property shall be prorated as of the Closing Date. Purchaser shall receive all collected rent and income attributable to dates from and after the Closing Date. Seller shall receive all collected rent and income attributable to dates prior to the Closing Date. Notwithstanding the foregoing, no prorations shall be made in relation to either (a) non-delinquent rents which have not been collected as of the Closing Date, or (b) delinquent rents existing, if any, as of the Closing Date (the foregoing (a) and (b) referred to herein as the “Uncollected Rents”). In adjusting for Uncollected Rents, no adjustments shall be made in Seller’s favor for rents which have accrued and are unpaid as of the Closing, but Purchaser shall pay Seller such accrued Uncollected Rents as and when collected by Purchaser. Purchaser agrees to bill Tenants of the Property for all Uncollected Rents and to take reasonable actions to collect Uncollected Rents. Notwithstanding the foregoing, Purchaser’s obligation to collect Uncollected Rents shall be limited to Uncollected Rents of not more than 90 days past due, and Purchaser’s collection of rents shall be applied, first, towards current rent due and owing under the Leases, and, second, to Uncollected Rents. After the Closing, Seller shall continue to have the right, but not the obligation, in its own name, to demand payment of and to collect Uncollected Rents owed to Seller by any Tenant, which right shall include, without limitation, the right to continue or commence legal actions or proceedings against any Tenant and the delivery of the Leases Assignment shall not constitute a waiver by Seller of such right; provided however, that the foregoing right of Seller shall be limited to actions seeking monetary damages and, in no event, shall Seller seek to evict any Tenants in any action to collect Uncollected Rents. Purchaser agrees to cooperate reasonably with Seller in connection with all efforts by Seller to collect such Uncollected Rents and to take all steps, whether before or after the Closing Date, as may be reasonably necessary to carry out the intention of the foregoing, including, without limitation, the delivery to Seller, within 7 days after a written request, of any relevant books and records (including, without limitation, rent statements, receipted bills and copies of tenant checks used in payment of such rent), the execution of any and all consents or other documents, and the undertaking of any act reasonably necessary for the collection of such Uncollected Rents by Seller; provided, however, that Purchaser’s obligation to cooperate with Seller pursuant to this sentence shall not obligate Purchaser to terminate any Tenant lease with an existing Tenant or evict any existing Tenant from the Property.

5.4.6.2 At Closing, Purchaser shall receive a credit against the Purchase Price in an amount equal to the received and unapplied balance of all cash (or cash equivalent) Tenant Deposits, including, but not limited to, security, damage or other refundable deposits paid by any of the Tenants to secure their respective obligations under the Leases, together, in all cases, with any interest payable to the Tenants thereunder as may be required by their respective Tenant Lease or state law (the “Tenant Security Deposit Balance”). Any cash (or cash equivalents) held by Seller which constitutes the Tenant Security Deposit Balance shall be retained by Seller in exchange for the foregoing credit against the Purchase Price and shall not be transferred by Seller pursuant to this Contract (or any of the documents delivered at Closing), but the obligation with respect to the Tenant Security Deposit Balance nonetheless shall be assumed by Purchaser. The Tenant Security Deposit Balance shall not include any non-refundable deposits or fees paid by Tenants to Seller, either pursuant to the Leases or otherwise.

5.4.7 Insurance. No proration shall be made in relation to insurance premiums and insurance policies will not be assigned to Purchaser. Seller shall have the risk of loss of the Property until 11:59 p.m. the day prior to the Closing Date, after which time the risk of loss shall pass to Purchaser and Purchaser shall be responsible for obtaining its own insurance thereafter.

5.4.8 Employees. All of Seller's and Seller's manager's on-site employees shall have their employment at the Property terminated as of the Closing Date.

5.4.9 Closing Costs. Purchaser shall pay any transfer (including, without limitation, the State documentary fee), sales, use, gross receipts or similar taxes, the cost of recording any instruments required to discharge any liens or encumbrances against the Property, any fees for recording the Deed and any other conveyance forms required to be recorded or filed under local law or custom, any premiums or fees required to be paid by Purchaser with respect to the Title Policy pursuant to Section 4.1 (other than the base premium for the Title Policy), and one-half of the customary closing costs of the Escrow Agent. Seller shall pay the base premium for the Title Policy and one-half of the customary closing costs of the Escrow Agent.

5.4.10 Utility Contracts. If Seller has entered into an agreement for the purchase of electricity, gas or other utility service for the Property or a group of properties (including the Property) (a "Utility Contract"), or an affiliate of Seller has entered into a Utility Contract, then, at the option of Seller, either (a) Purchaser either shall assume the Utility Contract with respect to the Property, or (b) the reasonably calculated costs of the Utility Contract attributable to the Property from and after the Closing shall be paid to Seller at the Closing and Seller shall remain responsible for payments under the Utility Contract.

5.4.11 Possession. Possession of the Property, subject to the Leases, Property Contracts, other than Terminated Contracts, and Permitted Exceptions, shall be delivered to Purchaser at the Closing upon release from escrow of all items to be delivered by Purchaser pursuant to Section 5.3. To the extent reasonably available to Seller, originals or copies of the Leases and Property Contracts, lease files, warranties, guaranties, operating manuals, keys to the property, and Seller's books and records (other than proprietary information) (collectively, "Seller's Property-Related Files and Records") regarding the Property shall be made available to Purchaser at the Property after the Closing. Purchaser agrees, for a period of not less than three (3) years after the Closing (the "Records Hold Period"), to (a) provide and allow Seller reasonable access to Seller's Property-Related Files and Records for purposes of inspection and copying thereof at Seller’s sole cost and expense, and (b) reasonably maintain and preserve Seller's Property-Related Files and Records. If at any time after the Records Hold Period, Purchaser desires to dispose of Seller's Property-Related Files and Records, Purchaser must first provide Seller prior written notice (the "Records Disposal Notice"). Seller shall have a period of 30 days after receipt of the Records Disposal Notice to enter the Property (or such other location where such records are then stored) and remove or copy, at Seller’s sole cost and expense, those of Seller's Property-Related Files and Records that Seller desires to retain.

5.5 Post Closing Adjustments.

Purchaser or Seller may request that Purchaser and Seller undertake to re-adjust any item on the Proration Schedule (or any item omitted therefrom), with the exception of real property taxes which shall be final and not subject to readjustment, in accordance with the provisions of Section 5.4 of this Contract; provided, however, that neither party shall have any obligation to re-adjust any items (a) after the expiration of 60 days after Closing, or (b) subject to such 60-day period, unless such items exceed $5,000.00 in magnitude (either individually or in the aggregate).

Article VI
REPRESENTATIONS AND WARRANTIES OF SELLER AND PURCHASER

6.1 Seller's Representations.

Except, in all cases, for any fact, information or condition disclosed in the Title Documents, the Permitted Exceptions, the Property Contracts, or the Materials, or which is otherwise known by Purchaser prior to the Closing, Seller represents and warrants to Purchaser the following (collectively, the "Seller's Representations") as of the Effective Date and as of the Closing Date; provided that Purchaser's remedies if any such Seller's Representations are untrue as of the Closing Date are limited to those set forth in Section 8.1:

6.1.1 Seller is validly existing and in good standing under the laws of the state of its formation set forth in the initial paragraph of this Contract; and, subject to Section 8.2.4, has or at the Closing shall have the entity power and authority to sell and convey the Property and to execute the documents to be executed by Seller and prior to the Closing will have taken as applicable, all corporate, partnership, limited liability company or equivalent entity actions required for the execution and delivery of this Contract, and the consummation of the transactions contemplated by this Contract. The compliance with or fulfillment of the terms and conditions hereof will not conflict with, or result in a breach of, the terms, conditions or provisions of, or constitute a default under, any contract to which Seller is a party or by which Seller is otherwise bound, which conflict, breach or default would have a material adverse affect on Seller’s ability to consummate the transaction contemplated by this Contract or on the Property. Subject to Section 8.2.4, this Contract is a valid and binding agreement against Seller in accordance with its terms;

6.1.2 Seller is not a “foreign person,” as that term is used and defined in the Internal Revenue Code, Section 1445, as amended;

6.1.3 Except for (a) any actions by Seller to evict Tenants under the Leases, or (b) any matter covered by Seller’s current insurance policy(ies), to Seller’s knowledge, there are no material actions, proceedings, litigation or governmental investigations or condemnation actions either pending or threatened against the Property, which will adversely impact Seller’s ability to convey the Property;

6.1.4 To Seller's knowledge, Seller has not received any written notice from a governmental agency of any uncured material violations of any federal, state, county or municipal law, ordinance, order, regulation or requirement affecting the Property;

6.1.5 To Seller's knowledge, Seller has not received any written notice of any material default by Seller under any of the Property Contracts that will not be terminated on the Closing Date;

6.1.6 To Seller's knowledge, the Rent Roll (as updated pursuant to Section 5.2.10) is accurate in all material respects;

6.1.7 To Seller's knowledge, the Property Contracts List (as updated pursuant to Section 5.2.12) is accurate in all material respects;

6.1.8 Seller has not, and, as of the Closing, shall not have (A) made a general assignment for the benefit of creditors, (B) filed any voluntary petition in bankruptcy or suffered the filing of any involuntary petition by Seller’s creditors, (C) suffered the appointment of a receiver to take possession of all, or substantially all, of Seller’s assets, which remains pending as of such time, (D) suffered the attachment or other judicial seizure of all, or substantially all, of Seller’s assets, which remains pending as of such time, (E) admitted in writing its inability to pay its debts as they come due, or (F) made an offer of settlement, extension or composition to its creditors generally; and

6.1.9 To Seller’s knowledge, there are no condemnation proceedings pending or threatened that would result in the taking of any portion of the Property. To Seller’s knowledge, Seller has not received any written notice of any special assessment proceedings affecting the Property.

6.2 AS-IS.

Except for Seller's Representations, the Property is expressly purchased and sold "AS IS," "WHERE IS," and "WITH ALL FAULTS." The Purchase Price and the terms and conditions set forth herein are the result of arm's-length bargaining between entities familiar with transactions of this kind, and said price, terms and conditions reflect the fact that Purchaser shall have the benefit of, and, except for Seller’s Representations, is not relying upon, any information provided by Seller or Broker or statements, representations or warranties, express or implied, made by or enforceable directly against Seller or Broker, including, without limitation, any relating to the value of the Property, the physical or environmental condition of the Property, any state, federal, county or local law, ordinance, order or permit; or the suitability, compliance or lack of compliance of the Property with any regulation, or any other attribute or matter of or relating to the Property (other than any covenants of title contained in the Deed conveying the Property and Seller's Representations). Purchaser agrees that Seller shall not be responsible or liable to Purchaser for any defects, errors or omissions, or on account of any conditions affecting the Property. Purchaser, its successors and assigns, and anyone claiming by, through or under Purchaser, hereby fully releases Seller's Indemnified Parties from, and irrevocably waives its right to maintain, any and all claims and causes of action that it or they may now have or hereafter acquire against Seller's Indemnified Parties with respect to any and all Losses arising from or related to any defects, errors, omissions or other conditions affecting the Property except, subject to the terms of set forth in Section 6.3 below, for claims or causes of action arising from the fraud or misrepresentation of Seller. Purchaser represents and warrants that, as of the date hereof and as of the Closing Date, it has and shall have reviewed and conducted such independent analyses, studies (including, without limitation, environmental studies and analyses concerning the presence of lead, asbestos, water intrusion and/or fungal growth and any resulting damage, PCBs and radon in and about the Property), reports, investigations and inspections as it deems appropriate in connection with the Property. If Seller provides or has provided any documents, summaries, opinions or work product of consultants, surveyors, architects, engineers, title companies, governmental authorities or any other person or entity with respect to the Property, including, without limitation, the offering prepared by Broker, Purchaser and Seller agree that Seller has done so or shall do so only for the convenience of both parties, subject to Seller’s Representations, Purchaser shall not rely thereon and the reliance by Purchaser upon any such documents, summaries, opinions or work product shall not create or give rise to any liability of or against Seller's Indemnified Parties. Purchaser acknowledges and agrees that, except for Seller’s Representations, no representation has been made and no responsibility is assumed by Seller with respect to current and future applicable zoning or building code requirements or the compliance of the Property with any other laws, rules, ordinances or regulations, the financial earning capacity or expense history of the Property, the continuation of contracts, continued occupancy levels of the Property, or any part thereof, or the continued occupancy by tenants of any Leases or, without limiting any of the foregoing, occupancy at Closing. Prior to Closing, Seller shall have the right, but not the obligation, to enforce its rights against any and all Property occupants, guests or tenants. Purchaser agrees that the departure or removal, prior to Closing, of any of such guests, occupants or tenants shall not be the basis for, nor shall it give rise to, any claim on the part of Purchaser, nor shall it affect the obligations of Purchaser under this Contract in any manner whatsoever; and Purchaser shall close title and accept delivery of the Deed with or without such tenants in possession and without any allowance or reduction in the Purchase Price under this Contract. Purchaser hereby releases Seller from any and all claims and liabilities relating to the foregoing matters, except, subject to the terms of set forth in Section 6.3 below, for claims and liabilities arising from or in any way connected with the fraud or misrepresentation of Seller.

6.3 Survival of Seller's Representations.

Seller and Purchaser agree that Seller's Representations shall survive Closing for a period of 6 months (the "Survival Period"). Seller shall have no liability after the Survival Period with respect to Seller's Representations contained herein except to the extent that Purchaser has requested arbitration against Seller during the Survival Period for breach of any of Seller's Representations. Under no circumstances shall Seller be liable to Purchaser for more than $150,000 in any individual instance or in the aggregate for all breaches of Seller's Representations, nor shall Purchaser be entitled to bring any claim for a breach of Seller's Representations unless the claim for damages (either in the aggregate or as to any individual claim) by Purchaser exceeds $5,000. In the event that Seller breaches any representation contained in Section 6.1 and Purchaser had knowledge of such breach prior to the Closing Date, and elected to close regardless, Purchaser shall be deemed to have waived any right of recovery, and Seller shall not have any liability in connection therewith.

6.4 Definition of Seller's Knowledge.

Any representations and warranties made "to the knowledge of Seller" shall not be deemed to imply any duty of inquiry. For purposes of this Contract, the term Seller's "knowledge" shall mean and refer only to actual knowledge of the Designated Representative of the Seller and shall not be construed to refer to the knowledge of any other partner, officer, director, agent, employee or representative of the Seller, or any affiliate of the Seller, or to impose upon such Designated Representative any duty to investigate the matter to which such actual knowledge or the absence thereof pertains, or to impose upon such Designated Representative any individual personal liability. As used herein, the term Designated Representative shall refer to Kendra Miller, who is the Regional Property Manager handling this Property (the "Regional Property Manager").

6.5 Representations and Warranties of Purchaser.

For the purpose of inducing Seller to enter into this Contract and to consummate the sale and purchase of the Property in accordance herewith, Purchaser represents and warrants to Seller the following as of the Effective Date and as of the Closing Date:

6.5.1 Purchaser is a corporation duly organized, validly existing and in good standing under the laws of the State of California.

6.5.2 Purchaser, acting through any of its or their duly empowered and authorized officers or members, has all necessary entity power and authority to own and use its properties and to transact the business in which it is engaged, and has full power and authority to enter into this Contract, to execute and deliver the documents and instruments required of Purchaser herein, and to perform its obligations hereunder; and no consent of any of Purchaser's partners, directors, officers or members are required to so empower or authorize Purchaser. The compliance with or fulfillment of the terms and conditions hereof will not conflict with, or result in a breach of, the terms, conditions or provisions of, or constitute a default under, any contract to which Purchaser is a party or by which Purchaser is otherwise bound, which conflict, breach or default would have a material adverse affect on Purchaser's ability to consummate the transaction contemplated by this Contract. This Contract is a valid and binding agreement against Purchaser in accordance with its terms.

6.5.3 No pending or, to the knowledge of Purchaser, threatened litigation exists which if determined adversely would restrain the consummation of the transactions contemplated by this Contract or would declare illegal, invalid or non-binding any of Purchaser's obligations or covenants to Seller.

6.5.4 Other than Seller's Representations, Purchaser has not relied on any representation or warranty made by Seller or any representative of Seller (including, without limitation, Broker) in connection with this Contract and the acquisition of the Property.

6.5.5 The Broker and its affiliates do not, and will not at the Closing, have any direct or indirect legal, beneficial, economic or voting interest in Purchaser (or in an assignee of Purchaser, which pursuant to Section 13.3, acquires the Property at the Closing), nor has Purchaser or any affiliate of Purchaser granted (as of the Effective Date or the Closing Date) the Broker or any of its affiliates any right or option to acquire any direct or indirect legal, beneficial, economic or voting interest in Purchaser.

6.5.6 Purchaser is not a Prohibited Person.

6.5.7 To Purchaser's knowledge, none of its investors, affiliates or brokers or other agents (if any), acting or benefiting in any capacity in connection with this Contract is a Prohibited Person.

6.5.8 The funds or other assets Purchaser will transfer to Seller under this Contract are not the property of, or beneficially owned, directly or indirectly, by a Prohibited Person.

6.5.9 The funds or other assets Purchaser will transfer to Seller under this Contract are not the proceeds of specified unlawful activity as defined by 18 U.S.C. § 1956(c)(7).

6.6 Definition of Purchaser’s Knowledge.

Any representations and warranties made “to the knowledge of Purchaser” shall not be deemed to imply any duty of inquiry. For purposes of this Contract, including, without limitation, the provisions of Section 6.5 above, the term Purchaser’s “knowledge” shall mean and refer only to actual knowledge of Kurt E. Houtkooper or David Nelson and shall not be construed to refer to the knowledge of any other partner, officer, director, agent, employee or representative of Purchaser, or any affiliate of Purchaser, or to impose upon Kurt E. Houtkooper or David Nelson any duty to investigate the matter to which such actual knowledge or the absence thereof pertains, or to impose upon Kurt E. Houtkooper or upon David Nelson any individual personal liability.

Article VII
OPERATION OF THE PROPERTY

7.1 Leases and Property Contracts.

During the period of time from the Effective Date to the Closing Date, in the ordinary course of business Seller may enter into new Property Contracts, new Leases, renew existing Leases or modify, terminate or accept the surrender or forfeiture of any of the Leases, modify any Property Contracts, or institute and prosecute any available remedies for default under any Lease or Property Contract without first obtaining the written consent of Purchaser; provided, however, Seller agrees that (a) Seller may only enter into any such new Property Contract if it is terminable on not more than thirty (30) days’ prior notice, and (b) no new or renewed Leases shall have a term in excess of 1 year without the prior written consent of Purchaser, which consent shall not be unreasonably withheld, conditioned or delayed. Seller shall terminate at or prior to the Closing, at no cost or expense to Purchaser, any and all management agreements affecting the Property. Seller shall use commercially reasonable efforts to deliver all apartment units which are vacant as of the Closing Date (each, a "Vacant Unit") in Rent Ready Condition (as hereinafter defined). Not less than three (3) Business Days prior to the Closing Date, Seller and Purchaser shall jointly inspect the Property and shall mutually agree on a list of the Vacant Units, which list shall specify those Vacant Units that are not in Rent Ready Condition. At Closing, Purchaser shall receive a credit against the Purchase Price in the amount of Five Hundred Dollars ($500) for each Vacant Unit which is not in Rent Ready Condition as of the Closing. For purposes hereof, the term "Rent Ready Condition" shall mean interior carpets have been shampooed, interior walls have been freshly painted, kitchen appliances (and water heaters and HVAC to the extent such items serve only the individual Vacant Unit(s)) are in working order, and there is no material damage to the doors, walls, ceilings, floors and windows inside such Vacant Units..

7.2 General Operation of Property.

Except as specifically set forth in this Article VII, Seller shall operate the Property after the Effective Date in the ordinary course of business, and except as necessary in the Seller's sole discretion to address (a) any life or safety issue at the Property or (b) any other matter which in Seller's reasonable discretion materially adversely affects the use, operation or value of the Property, Seller will not make any material alterations to the Property or remove any material Fixtures and Tangible Personal Property without the prior written consent of Purchaser which consent shall not be unreasonably withheld, denied or delayed.

7.3 Liens.

Other than utility easements and temporary construction easements granted by Seller in the ordinary course of business, Seller covenants that it will not voluntarily create or cause any lien or encumbrance to attach to the Property between the Effective Date and the Closing Date (other than Leases and Property Contracts as provided in Section 7.1) unless Purchaser approves such lien or encumbrance in writing, which approval shall not be unreasonably withheld or delayed. If Purchaser approves any such subsequent lien or encumbrance, the same shall be deemed a Permitted Encumbrance for all purposes hereunder.

Article VIII
CONDITIONS PRECEDENT TO CLOSING

8.1 Purchaser's Conditions to Closing.

Without limiting the rights of Purchaser elsewhere provided for in this Contract, Purchaser's obligation to close under this Contract, shall be subject to and conditioned upon the fulfillment of the following conditions precedent:

8.1.1 All of the documents required to be delivered by Seller to Purchaser at the Closing pursuant to the terms and conditions hereof shall have been delivered;

8.1.2 Each of Seller's Representations shall be true in all material respects as of the Closing Date;

8.1.3 Seller shall have complied with, fulfilled and performed in all material respects each of the covenants, terms and conditions to be complied with, fulfilled or performed by Seller hereunder; and

8.1.4 Neither Seller nor Seller's member shall be a debtor in any bankruptcy proceeding nor shall have been in the last 6 months a debtor in any bankruptcy proceeding.

8.1.5 There shall not be pending or, to the knowledge of either Purchaser or Seller, any litigation or threatened litigation which, if determined adversely, would restrain, in all material respects, the consummation of any of the transactions contemplated by this Contract or declare illegal, invalid or nonbinding any of the material covenants or material obligations of Seller.

Notwithstanding anything to the contrary, there are no other conditions on Purchaser's obligation to Close except as expressly set forth in this Section 8.1. If any condition set forth in Sections 8.1.1, 8.1.3 or 8.1.4 is not met, Purchaser may (a) waive any of the foregoing conditions and proceed to Closing on the Closing Date with no offset or deduction from the Purchase Price, or (b) if such failure constitutes a default by Seller, exercise any of its remedies pursuant to Section 10.2. If the condition set forth in Section 8.1.2 or 8.1.5 is not met, Seller shall not be in default pursuant to Section 10.2, and Purchaser may, as its sole and exclusive remedy, (i) notify Seller of Purchaser's election to terminate this Contract and receive a return of the Deposit from the Escrow Agent, or (ii) waive such condition and proceed to Closing on the Closing Date with no offset or deduction from the Purchase Price.

8.2 Seller's Conditions to Closing.

Without limiting any of the rights of Seller elsewhere provided for in this Contract, Seller's obligation to close with respect to conveyance of the Property under this Contract shall be subject to and conditioned upon the fulfillment of the following conditions precedent:

8.2.1 All of the documents and funds required to be delivered by Purchaser to Seller at the Closing pursuant to the terms and conditions hereof shall have been delivered;

8.2.2 Each of the representations, warranties and covenants of Purchaser contained herein shall be true in all material respects as of the Closing Date;

8.2.3 Purchaser shall have complied with, fulfilled and performed in all material respects each of the covenants, terms and conditions to be complied with, fulfilled or performed by Purchaser hereunder;

8.2.4 Seller shall have received all consents, documentation and approvals necessary to consummate and facilitate the transactions contemplated hereby, including, without limitation, a tax free exchange pursuant to Section 13.18 (and the amendment of Seller's (or Seller's affiliates') partnership or other organizational documents in connection therewith), (a) from Seller's partners, members, managers, shareholders or directors to the extent required by Seller's (or Seller's affiliates') organizational documents, and (b) as required by law;

8.2.5 There shall not be pending or, to the knowledge of either Purchaser or Seller, any litigation or threatened litigation which, if determined adversely, would restrain the consummation of any of the transactions contemplated by this Contract or declare illegal, invalid or nonbinding any of the covenants or obligations of the Purchaser; and

If any of the foregoing conditions to Seller's obligation to close with respect to conveyance of the Property under this Contract are not met, Seller may (a) waive any of the foregoing conditions and proceed to Closing on the Closing Date, or (b) terminate this Contract, and, if such failure constitutes a default by Purchaser, exercise any of its remedies under Section 10.1.

Article IX
BROKERAGE

9.1 Indemnity.

Seller represents and warrants to Purchaser that it has dealt only with CB Richard Ellis-Capital Markets, 2415 E. Camelback Road, Phoenix, AZ 85016, Attention: Sean Cunningham ("Broker") in connection with this Contract. Seller and Purchaser each represents and warrants to the other that, other than Broker, it has not dealt with or utilized the services of any other real estate broker, sales person or finder in connection with this Contract, and each party agrees to indemnify, hold harmless, and, if requested in the sole and absolute discretion of the indemnitee, defend (with counsel approved by the indemnitee) the other party from and against all Losses relating to brokerage commissions and finder's fees arising from or attributable to the acts or omissions of the indemnifying party.

9.2 Broker Commission.

If the Closing occurs, Seller agrees to pay Broker a commission according to the terms of a separate contract. Broker shall not be deemed a party or third party beneficiary of this Contract. As a condition to Seller's obligation to pay the commission, Broker shall execute the signature page for Broker attached hereto solely for purposes of confirming the matters set forth therein.

Article X
DEFAULTS AND REMEDIES

10.1 Purchaser Default.

If Purchaser defaults in its obligations hereunder to (a) deliver the Initial Deposit or Additional Deposit (or any other deposit or payment required of Purchaser hereunder), (b) deliver to the Seller the deliveries specified under Section 5.3 on the date required thereunder, or (c) deliver the Purchase Price at the time required by Section 2.2.3 and close on the purchase of the Property on the Closing Date, then, immediately and without the right to receive notice or to cure pursuant to Section 2.3.3, Purchaser shall forfeit the Deposit, and the Escrow Agent shall deliver the Deposit to Seller, and neither party shall be obligated to proceed with the purchase and sale of the Property. If, Purchaser defaults in any of its other representations, warranties or obligations under this Contract, and such default continues for more than 10 days after written notice from Seller, then Purchaser shall forfeit the Deposit, and the Escrow Agent shall deliver the Deposit to Seller, and neither party shall be obligated to proceed with the purchase and sale of the Property. The Deposit is liquidated damages and recourse to the Deposit is, except for Purchaser's indemnity and confidentiality obligations hereunder, Seller's sole and exclusive remedy for Purchaser's failure to perform its obligation to purchase the Property or breach of a representation or warranty. Seller expressly waives the remedies of specific performance and additional damages for such default by Purchaser. SELLER AND PURCHASER ACKNOWLEDGE THAT SELLER'S DAMAGES WOULD BE DIFFICULT TO DETERMINE, AND THAT THE DEPOSIT IS A REASONABLE ESTIMATE OF SELLER'S DAMAGES RESULTING FROM A DEFAULT BY PURCHASER IN ITS OBLIGATION TO PURCHASE THE PROPERTY. SELLER AND PURCHASER FURTHER AGREE THAT THIS SECTION 10.1 IS INTENDED TO AND DOES LIQUIDATE THE AMOUNT OF DAMAGES DUE SELLER, AND SHALL BE SELLER'S EXCLUSIVE REMEDY AGAINST PURCHASER, BOTH AT LAW AND IN EQUITY, ARISING FROM OR RELATED TO A BREACH BY PURCHASER OF ITS OBLIGATION TO CONSUMMATE THE TRANSACTIONS CONTEMPLATED BY THIS CONTRACT, OTHER THAN WITH RESPECT TO PURCHASER'S INDEMNITY AND CONFIDENTIALITY OBLIGATIONS HEREUNDER.

10.2 Seller Default.

If Seller, prior to the Closing, defaults in its covenants, or obligations under this Contract, including to sell the Property as required by this Contract and such default continues for more than 10 days after written notice from Purchaser, then, at Purchaser's election and as Purchaser's sole and exclusive remedy, either (a) this Contract shall terminate, and all payments and things of value, including the Deposit, provided by Purchaser hereunder shall be returned to Purchaser and Purchaser may recover, as its sole recoverable damages (but without limiting its right to receive a refund of the Deposit), its direct and actual out-of-pocket expenses and costs (documented by paid invoices to third parties) in connection with this transaction, which damages shall not exceed $35,000 in aggregate, provided, however, (i) if such default is solely as a result of Seller’s failure to obtain by the Closing Date the consent of the required number of members or limited partners, as the case may be, to consummate the transactions contemplated herein and (ii) Purchaser is not otherwise in default under this Contract and is ready, willing and able to consummate the Closing on the Closing Date, then the amount of direct and actual out-of-pocket expenses and costs that Purchaser may recover as a result of such default shall not exceed $150,000 in the aggregate, or (b) subject to the conditions below, Purchaser may seek specific performance of Seller’s obligation to deliver the Deed pursuant to this Contract (but not damages). Purchaser may seek specific performance of Seller's obligation to deliver the Deed pursuant to this Contract only if, as a condition precedent to initiating such litigation for specific performance, Purchaser first shall (i) deliver all Purchaser Closing documents to Escrow Agent in accordance with the requirements of this Contract, including, without limitation, Sections 2.2.3 and 5.3 (with the exception of Section 5.3.1); (ii) not otherwise be in default under this Contract; and (iii) file suit therefor with the court on or before the 90th day after the Closing Date; if Purchaser fails to file an action for specific performance within 90 days after the Closing Date, then Purchaser shall be deemed to have elected to terminate the Contract in accordance with subsection (a) above. Purchaser agrees that it shall promptly deliver to Seller an assignment of all of Purchaser's right, title and interest in and to (together with possession of) all plans, studies, surveys, reports, and other materials paid for with the out-of-pocket expenses reimbursed by Seller pursuant to the foregoing sentence. SELLER AND PURCHASER FURTHER AGREE THAT THIS SECTION 10.2 IS INTENDED TO AND DOES LIMIT THE AMOUNT OF DAMAGES DUE PURCHASER AND THE REMEDIES AVAILABLE TO PURCHASER, AND SHALL BE PURCHASER'S EXCLUSIVE REMEDY AGAINST SELLER, BOTH AT LAW AND IN EQUITY ARISING FROM OR RELATED TO A BREACH BY SELLER OF ITS REPRESENTATIONS, WARRANTIES, OR COVENANTS OR ITS OBLIGATION TO CONSUMMATE THE TRANSACTIONS CONTEMPLATED BY THIS CONTRACT. UNDER NO CIRCUMSTANCES MAY PURCHASER SEEK OR BE ENTITLED TO RECOVER ANY SPECIAL, CONSEQUENTIAL, PUNITIVE, SPECULATIVE OR INDIRECT DAMAGES, ALL OF WHICH PURCHASER SPECIFICALLY WAIVES, FROM SELLER FOR ANY BREACH BY SELLER, OF ITS REPRESENTATIONS, WARRANTIES, OR COVENANTS OR ITS OBLIGATIONS UNDER THIS CONTRACT. PURCHASER SPECIFICALLY WAIVES THE RIGHT TO FILE ANY LIS PENDENS OR ANY LIEN AGAINST THE PROPERTY UNLESS AND UNTIL IT HAS IRREVOCABLY ELECTED TO SEEK SPECIFIC PERFORMANCE OF THIS CONTRACT AND HAS FILED AN ACTION SEEKING SUCH REMEDY.

Article XI
RISK OF LOSS OR CASUALTY

11.1 Major Damage.

In the event that the Property is damaged or destroyed by fire or other casualty prior to Closing, and the cost for demolition, site cleaning, restoration, replacement, or other repairs (collectively, the "Repairs") is more than $250,000, then Seller shall have no obligation to make such Repairs, and shall notify Purchaser in writing of such damage or destruction (the "Damage Notice"). Within 10 days after Purchaser's receipt of the Damage Notice, Purchaser may elect at its option to terminate this Contract by delivering written notice to Seller in which event the Deposit shall be refunded to Purchaser. In the event Purchaser fails to terminate this Contract within the foregoing 10-day period, this transaction shall be closed in accordance with Section 11.3 below.

11.2 Minor Damage.

In the event that the Property is damaged or destroyed by fire or other casualty prior to the Closing, and the cost of Repairs is equal to or less than $250,000, this transaction shall be closed in accordance with Section 11.3, notwithstanding such casualty. In such event, Seller may at its election endeavor to make such Repairs to the extent of any recovery from insurance carried on the Property, if such Repairs can be reasonably effected before the Closing. Regardless of Seller's election to commence such Repairs, or Seller's ability to complete such Repairs prior to Closing, this transaction shall be closed in accordance with Section 11.3 below.

11.3 Closing.

In the event Purchaser fails to terminate this Contract following a casualty as set forth in Section 11.1, or in the event of a casualty as set forth in Section 11.2, then this transaction shall be closed in accordance with the terms of this Contract, at Seller's election, either (i) for the full Purchase Price, notwithstanding any such casualty, in which case Purchaser shall, at Closing, execute and deliver an assignment and assumption (in a form reasonably required by Seller) of Seller's rights and obligations with respect to the insurance claim related to such casualty, and thereafter Purchaser shall receive all insurance proceeds pertaining to such claim, less any amounts which may already have been spent by Seller for Repairs (plus a credit against the Purchase Price at Closing in the amount of any deductible payable by Seller in connection therewith); or (ii) for the full Purchase Price less a credit to Purchaser in the amount necessary to complete such Repairs (less any amounts which may already have been spent by Seller for Repairs).

11.4. Repairs.

To the extent that Seller elects to commence any Repairs prior to Closing, then Seller shall be entitled to receive and apply available insurance proceeds to any portion of such Repairs completed or installed prior to Closing, with Purchaser being responsible for completion of such Repairs after Closing. To the extent that any Repairs have been commenced prior to Closing, then the Property Contracts shall include, and Purchaser shall assume at Closing, all construction and other contracts entered into by Seller in connection with such Repairs.

Article XII
EMINENT DOMAIN

12.1 Eminent Domain.

In the event that, at the time of Closing, any material part of the Property is (or previously has been) acquired, or is about to be acquired, by any governmental agency by the powers of eminent domain or transfer in lieu thereof (or in the event that at such time there is any notice of any such acquisition or intent to acquire by any such governmental agency), Purchaser shall have the right, at Purchaser's option, to terminate this Contract by giving written notice within 10 days after Purchaser's receipt from Seller of notice of the occurrence of such event, and if Purchaser so terminates this Contract, Purchaser shall recover the Deposit hereunder. If Purchaser fails to terminate this Contract within such 10-day period, this transaction shall be closed in accordance with the terms of this Contract for the full Purchase Price and Purchaser shall receive the full benefit of any condemnation award. It is expressly agreed between the parties hereto that this section shall in no way apply to customary dedications for public purposes which may be necessary for the development of the Property.

Article XIII
MISCELLANEOUS

13.1 Binding Effect of Contract.

This Contract shall not be binding on either party until executed by both Purchaser and Seller. Neither the Escrow Agent's nor the Broker's execution of this Contract shall be a prerequisite to its effectiveness. Subject to Section 13.3, this Contract shall be binding upon and inure to the benefit of Seller and Purchaser, and their respective successors, heirs and permitted assigns.

13.2 Exhibits and Schedules.

All Exhibits and Schedules, whether or not annexed hereto, are a part of this Contract for all purposes.

13.3 Assignability.

Except to the extent required to comply with the provisions of Section 13.18 related to a 1031 Exchange, this Contract is not assignable by Purchaser without first obtaining the prior written approval of the Seller. Notwithstanding the foregoing, Purchaser may assign this Contract, without first obtaining the prior written approval of the Seller, to one or more entities so long as (a) Purchaser is the managing member of, managing general partner of or otherwise holds a controlling interest in the purchasing entity(ies) or to a tenancy-in-common structure in which Purchaser or one or more of its affiliates are the sponsor, (b) Purchaser is not released from its liability hereunder, (c) Purchaser provides written notice to Seller of any proposed assignment no later than 10 days prior to the Closing Date and (d) in the event this Contract is assigned to more than one entity, the assignees shall be deemed to be jointly and severally liable with respect to the obligations of the Purchaser.

13.4 Captions.

The captions, headings, and arrangements used in this Contract are for convenience only and do not in any way affect, limit, amplify, or modify the terms and provisions hereof.

13.5 Number and Gender of Words.

Whenever herein the singular number is used, the same shall include the plural where appropriate, and words of any gender shall include each other gender where appropriate.

13.6 Notices.

All notices, demands, requests and other communications required or permitted hereunder shall be in writing, and shall be (a) personally delivered with a written receipt of delivery; (b) sent by a nationally-recognized overnight delivery service requiring a written acknowledgement of receipt or providing a certification of delivery or attempted delivery; (c) sent by certified or registered mail, return receipt requested; or (d) sent by confirmed facsimile transmission or electronic delivery with an original copy thereof transmitted to the recipient by one of the means described in subsections (a) through (c) no later than 3 Business Days thereafter. All notices shall be deemed effective when actually delivered as documented in a delivery receipt; provided, however, that if the notice was sent by overnight courier or mail as aforesaid and is affirmatively refused or cannot be delivered during customary business hours by reason of the absence of a signatory to acknowledge receipt, or by reason of a change of address with respect to which the addressor did not have either knowledge or written notice delivered in accordance with this paragraph, then the first attempted delivery shall be deemed to constitute delivery. Each party shall be entitled to change its address for notices from time to time by delivering to the other party notice thereof in the manner herein provided for the delivery of notices. All notices shall be sent to the addressee at its address set forth following its name below:

To Purchaser:

Hamilton Zanze & Company

37 Graham Street

Suite 200B

San Francisco, California 94129

Attention: David Nelson
Telephone: 415-561-6800 x 110

Facsimile: 415-561-6801

with a copy to:

Foley & Lardner, LLP

555 South Flower Street

Suite 3500

Los Angeles, CA 90071

Attention: Craig P. Wood, Esq.
Telephone: 213-972-4555

Facsimile: 213-486-0065

To Seller:

c/o AIMCO

4582 South Ulster Street Parkway

Suite 1100

Denver, Colorado 80237

Attention: Mark Reoch or Derik Hart

Telephone: (303) 691-4337

Facsimile: (303) 300-3261

And:

c/o AIMCO

4582 South Ulster Street Parkway

Suite 1100

Denver, Colorado 80237

Attention: Mr. Harry Alcock

Telephone: 303-691-4344

Facsimile: 303-300-3282

with copy to:

AIMCO

4582 South Ulster Street Parkway

Suite 1100

Denver, Colorado 80237

Attention: John Spiegleman, Esq.

Telephone: 303-691-4303

Facsimile: 303-300-3260

and a copy to:

CB Richard Ellis-Capital Markets
2415 E. Camelback Road
Phoenix, AZ 85016
Attention: Sean Cunningham

Telephone: 602-735-1740

Facsimile: 602-735-5156

and a copy to:

Bryan Cave LLP

1290 Avenue of the Americas

New York, New York 10104

Attention: Sandor Green, Esq.

Telephone: 212-541-2049

Facsimile: 212-541-1449

Any notice required hereunder to be delivered to the Escrow Agent shall be delivered in accordance with above provisions as follows:

            Stewart Title Insurance Company
                        1980 Post Oak Boulevard
                        Suite 610
                        Houston, Texas 77056
                        Attention: Wendy Howell
                        Telephone: 713-625-8161
                        Facsimile: 713-552-1703

Unless specifically required to be delivered to the Escrow Agent pursuant to the terms of this Contract, no notice hereunder must be delivered to the Escrow Agent in order to be effective so long as it is delivered to the other party in accordance with the above provisions.

13.7 Governing Law and Venue.

The laws of the State of Colorado shall govern the validity, construction, enforcement, and interpretation of this Contract, unless otherwise specified herein except for the conflict of laws provisions thereof. Subject to Section 13.24, all claims, disputes and other matters in question arising out of or relating to this Contract, or the breach thereof, shall be decided by proceedings instituted and litigated in a court of competent jurisdiction in the state in which the Property is situated, and the parties hereto expressly consent to the venue and jurisdiction of such court.

13.8 Entire Agreement.

This Contract embodies the entire Contract between the parties hereto concerning the subject matter hereof and supersedes all prior conversations, proposals, negotiations, understandings and contracts, whether written or oral.

13.9 Amendments.

This Contract shall not be amended, altered, changed, modified, supplemented or rescinded in any manner except by a written contract executed by all of the parties; provided, however, that, (a) the signature of the Escrow Agent shall not be required as to any amendment of this Contract other than an amendment of Section 2.3, and (b) the signature of the Broker shall not be required as to any amendment of this Contract.

13.10 Severability.

In the event that any part of this Contract shall be held to be invalid or unenforceable by a court of competent jurisdiction, such provision shall be reformed, and enforced to the maximum extent permitted by law. If such provision cannot be reformed, it shall be severed from this Contract and the remaining portions of this Contract shall be valid and enforceable.

13.11 Multiple Counterparts/Facsimile Signatures.

This Contract may be executed in a number of identical counterparts. This Contract may be executed by facsimile signatures or electronic delivery of signatures which shall be binding on the parties hereto, with original signatures to be delivered as soon as reasonably practical thereafter.

13.12 Construction.

No provision of this Contract shall be construed in favor of, or against, any particular party by reason of any presumption with respect to the drafting of this Contract; both parties, being represented by counsel, having fully participated in the negotiation of this instrument.

13.13 Confidentiality.

Purchaser shall not disclose the terms and conditions contained in this Contract and shall keep the same confidential, provided that Purchaser may disclose the terms and conditions of this Contract (a) as required by law, (b) to consummate the terms of this Contract, or any financing relating thereto, or (c) to Purchaser's or Seller's lenders, attorneys and accountants. Any information obtained by Purchaser in the course of its inspection of the Property, and any Materials provided by Seller to Purchaser hereunder, shall be confidential and Purchaser shall be prohibited from making such information public to any other person or entity other than its Consultants, without Seller's prior written authorization, which may be granted or denied in Seller's sole discretion. In addition, Purchaser shall use its reasonable efforts to prevent its Consultants from divulging any such confidential information to any unrelated third parties except as reasonably necessary to third parties engaged by Purchaser for the limited purpose of analyzing and investigating such information for the purpose of consummating the transaction contemplated by this Contract. Unless and until the Closing occurs, Purchaser shall not market the Property (or any portion thereof) to any prospective purchaser or lessee without the prior written consent of Seller, which consent may be withheld in Seller's sole discretion. Notwithstanding the provisions of Section 13.8, Purchaser agrees that the covenants, restrictions and agreements of Purchaser contained in any confidentiality agreement executed by Purchaser prior to the Effective Date shall survive the execution of this Contract and shall not be superseded hereby.

13.14 Time of the Essence.

It is expressly agreed by the parties hereto that time is of the essence with respect to this Contract.

13.15 Waiver.

No delay or omission to exercise any right or power accruing upon any default, omission, or failure of performance hereunder shall impair any right or power or shall be construed to be a waiver thereof, but any such right and power may be exercised from time to time and as often as may be deemed expedient. No waiver, amendment, release, or modification of this Contract shall be established by conduct, custom, or course of dealing and all waivers must be in writing and signed by the waiving party.

13.16 Attorneys Fees.

In the event either party hereto commences litigation or arbitration against the other to enforce its rights hereunder, the substantially prevailing party in such litigation shall be entitled to recover from the other party its reasonable attorneys' fees and expenses incidental to such litigation and arbitration, including the cost of in-house counsel and any appeals.

13.17 Time Zone/Time Periods.

Except as otherwise expressly provided herein, any reference in this Contract to a specific time shall refer to the time in the time zone where the Property is located (for example, a reference to 3:00 p.m. refers to 3:00 p.m. MST if the Property is located in Colorado Springs, CO). Should the last day of a time period fall on a weekend or legal holiday, the next Business Day thereafter shall be considered the end of the time period.

13.18 1031 Exchange.

Seller and Purchaser acknowledge and agree that the purchase and sale of the Property may be part of a tax-free exchange for either Purchaser or Seller pursuant to Section 1031 of the Code, the regulations promulgated thereunder, revenue procedures, pronouncements and other guidance issued by the Internal Revenue Service. Each party hereby agrees to cooperate with each other and take all reasonable steps on or before the Closing Date to facilitate such exchange if requested by the other party, provided that (a) no party making such accommodation shall be required to acquire any substitute property, (b) such exchange shall not affect the representations, warranties, liabilities and obligations of the parties to each other under this Contract, (c) no party making such accommodation shall incur any additional cost, expense or liability in connection with such exchange (other than expenses of reviewing and executing documents required in connection with such exchange), and (d) no dates in this Contract will be extended as a result thereof, except as specifically provided herein.

13.19 No Personal Liability of Officers, Trustees or Directors of Seller's Partners.

Purchaser acknowledges that this Contract is entered into by Seller which is a Delaware limited liability company, and Purchaser agrees that none of Seller's Indemnified Parties shall have any personal liability under this Contract or any document executed in connection with the transactions contemplated by this Contract.

13.20 Intentionally Omitted.

13.21 ADA Disclosure.

Purchaser 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 representations. Nothing contained in this Section 13.21 shall be deemed to limit or otherwise modify the Seller’s Representations set forth in Section 6.1.4 above.

13.22 No Recording.

Purchaser shall not cause or allow this Contract or any contract or other document related hereto, nor any memorandum or other evidence hereof, to be recorded or become a public record without Seller's prior written consent, which consent may be withheld at Seller's sole discretion. If the Purchaser records this Contract or any other memorandum or evidence thereof, Purchaser shall be in default of its obligations under this Contract. Purchaser hereby appoints the Seller as Purchaser's attorney-in-fact to prepare and record any documents necessary to effect the nullification and release of the Contract or other memorandum or evidence thereof from the public records. This appointment shall be coupled with an interest and irrevocable.

13.23 Relationship of Parties.

Purchaser and Seller acknowledge and agree that the relationship established between the parties pursuant to this Contract is only that of a seller and a purchaser of property. Neither Purchaser nor Seller is, nor shall either hold itself out to be, the agent, employee, joint venturer or partner of the other party.

13.24 Dispute Resolution.

Any controversy, dispute, or claim of any nature arising out of, in connection with, or in relation to the interpretation, performance, enforcement or breach of this Contract (and any closing document executed in connection herewith), including any claim based on contract, tort or statute, shall be resolved at the written request of any party to this Contract by binding arbitration. The arbitration shall be administered in accordance with the then current Commercial Arbitration Rules of the American Arbitration Association. Any matter to be settled by arbitration shall be submitted to the American Arbitration Association in the state in which the Property is located. The parties shall attempt to designate one arbitrator from the American Arbitration Association. If they are unable to do so within 30 days after written demand therefor, then the American Arbitration Association shall designate an arbitrator. The arbitration shall be final and binding, and enforceable in any court of competent jurisdiction. The arbitrator shall award attorneys' fees (including those of in-house counsel) and costs to the substantially prevailing party and charge the cost of arbitration to the party which is not the substantially prevailing party. Notwithstanding anything herein to the contrary, this Section 13.24 shall not prevent Purchaser or Seller from seeking and obtaining equitable relief on a temporary or permanent basis, including, without limitation, a temporary restraining order, a preliminary or permanent injunction or similar equitable relief, from a court of competent jurisdiction located in the state in which the Property is located (to which all parties hereto consent to venue and jurisdiction) by instituting a legal action or other court proceeding in order to protect or enforce the rights of such party under this Contract or to prevent irreparable harm and injury. The court's jurisdiction over any such equitable matter, however, shall be expressly limited only to the temporary, preliminary, or permanent equitable relief sought; all other claims initiated under this Contract between the parties hereto shall be determined through final and binding arbitration in accordance with this Section 13.24.

13.25 AIMCO Marks.

Purchaser agrees that Seller, the Property Manager or AIMCO, or their respective affiliates, are the sole owners of all right, title and interest in and to the AIMCO Marks (or have the right to use such AIMCO Marks pursuant to license agreements with third parties) and that no right, title or interest in or to the AIMCO Marks is granted, transferred, assigned or conveyed as a result of this Contract. Purchaser further agrees that Purchaser will not use the AIMCO Marks for any purpose.

13.26 Non-Solicitation of Employees.

Prior to the expiration of the Feasibility Period, Purchaser acknowledges and agrees that, without the express written consent of Seller, neither Purchaser nor any of Purchaser's employees, affiliates or agents shall solicit any of Seller's employees or any employees located at the Property (or any of Seller's affiliates' employees located at any property owned by such affiliates) for potential employment.

13.27 Survival.

Except for (a) all of the provisions of this Article XIII (other than Sections 13.18); (b) Sections 2.3, 3.3, 3.4, 3.5, 4.8, 5.4, 5.5, 6.2, 6.5, 9.1, 11.4, 14.1 and 14.2; (c) any other provisions in this Contract, that by their express terms survive the termination or Closing; and (d) any payment obligation of Purchaser under this Contract (the foregoing (a), (b), (c) and (d) referred to herein as the "Survival Provisions"), none of the terms and provisions of this Contract shall survive the termination of this Contract, and if the Contract is not so terminated, all of the terms and provisions of this Contract (other than the Survival Provisions, which shall survive the Closing) shall be merged into the Closing documents and shall not survive Closing.

13.28 Multiple Purchasers.

As used in this Contract, the term "Purchaser" means all entities acquiring any interest in the Property at the Closing, including, without limitation, any assignee(s) of the original Purchaser pursuant to Section 13.3 of this Contract. In the event that "Purchaser" has any obligations or makes any covenants, representations or warranties under this Contract, the same shall be made jointly and severally by all entities being a Purchaser hereunder.

Article XIV
LEAD–BASED PAINT DISCLOSURE

14.1 Disclosure.

Seller and Purchaser hereby acknowledge delivery of the Lead Based Paint Disclosure attached as Exhibit H hereto.

14.2 Consent Agreement.

Testing (the "Testing") has been performed at the Property with respect to lead-based paint. Law Engineering and Environmental Services, Inc. performed the Testing and reported its findings in a report with a certification date of May 14, 2001, a copy of which is attached hereto as Exhibit I (the "Report"). The Report certifies the Property as lead-based paint free. By execution hereof, Purchaser acknowledges receipt of a copy of the Report, the Lead-Based Paint Disclosure Statement attached hereto as Exhibit H, and acknowledges receipt of that certain Consent Agreement (the "Consent Agreement") by and among the United States Environmental Protection Agency (executed December 19, 2001), the United States Department of Housing and Urban Development (executed January 2, 2002), and AIMCO (executed December 18, 2001). Because the Property has been certified as lead based paint free, Seller is not required under the Consent Agreement to remediate or abate any lead-based paint condition at the Property prior to the Closing. Purchaser acknowledges and agrees that (1) after Closing, the Purchaser and the Property shall be subject to the Consent Agreement and the provisions contained herein related thereto and (2) that Purchaser shall not be deemed to be a third party beneficiary to the Consent Agreement.

[Remainder of Page Intentionally Left Blank]

NOW, THEREFORE, the parties hereto have executed this Contract as of the date first set forth above.

Seller:

CCIP KNOLLS, L.L.C.,

a Delaware limited liability company

                                                                        By:      Consolidated Capital Institutional
                                                                                   Properties, L.P., Series B, a California
                                                                                   limited partnership,
                                                                                   its sole member

By: ConCap Equities, Inc., a Delaware
corporation, its general partner

By: /s/ John Spiegleman

Name: John Spiegleman

Title: Senior Vice President

Purchaser:

HAMILTON ZANZE & COMPANY,

a California corporation

By: /s/ Kurt Houtkooper

Name: Kurt Houtkooper

Title: CIO

CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES, LP

PART I – FINANCIAL INFORMATION

Units

Partner

Partners

(Series A)

Note A – Basis of Presentation

Note B – Transactions with Affiliated Parties

Note C - Investment in Affiliated Partnerships

Note D – Segment Reporting

September 30, 2007

September 30, 2007

Note E – Casualty Events

Note I – Contingencies