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

-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Eg/bBJTYSDqtnDugRTGdSqBY0ndeq/f87sWCpvoJ07305Hnn6i9lROUUmvLwpdgF 66a6RIHiW22H4+U0x5UrzQ== 0000711642-06-000114.txt : 20060331 0000711642-06-000114.hdr.sgml : 20060331 20060331161544 ACCESSION NUMBER: 0000711642-06-000114 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20051231 FILED AS OF DATE: 20060331 DATE AS OF CHANGE: 20060331 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CONSOLIDATED CAPITAL PROPERTIES IV CENTRAL INDEX KEY: 0000355804 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 942768742 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-11002 FILM NUMBER: 06729090 BUSINESS ADDRESS: STREET 1: 1873 SOUTH BELLAIRE STREET STREET 2: 17TH FL CITY: DENVER STATE: CO ZIP: 80222 BUSINESS PHONE: 3037578101 MAIL ADDRESS: STREET 1: 1873 SOUTH BELLAIRE STREET STREET 2: 17TH FL CITY: DENVER STATE: CO ZIP: 80222 10-K 1 ccp4.htm FORM 10-QSB—QUARTERLY OR TRANSITIONAL REPORT UNDER SECTION 13 OR 15(d) OF

UNITED SATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

Form 10-K

(Mark One)

[X]

ANNUAL REPORT PURSUANT SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2005

[ ]

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

For the transition period from _________to _________

Commission file number 0-11002

CONSOLIDATED CAPITAL PROPERTIES IV

(Name of small business issuer in its charter)


California	94-2768742
(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)

Issuer's telephone number (864) 239-1000

Securities registered under Section 12(b) of the Exchange Act:

None

Securities registered under Section 12(g) of the Exchange Act:

Units of Limited Partnership Interests

(Title of class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes [ ] No [X]

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes [ ] No [X]

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No___

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer or a non-accelerated filer (as defined in Exchange Act Rule 12b-2). Large Accelerated [ ], Accelerated Filer [ ], Non-Accelerated Filer [X]

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

State the aggregate market value of the voting partnership interests held by non-affiliates computed by reference to the price at which the partnership interests were sold, or the average bid and asked prices of such partnership interests as of December 31, 2005. No market exists for the limited partnership interests of the Registrant, and, therefore, no aggregate market value can be determined.

DOCUMENTS INCORPORATED BY REFERENCE

None

The matters discussed in this report contain certain forward-looking statements, including, without limitation, statements regarding future financial performance and the effect of government regulations. Actual results may differ materially from those described in the forward-looking statements and will be affected by a variety of risks and factors including, without limitation: national and local economic conditions; the terms of governmental regulations that affect the Registrant and interpretations of those regulations; the competitive environment in which the Registrant operates; financing risks, including the risk that cash flows from operations may be insufficient to meet required payments of principal and interest; real estate risks, including variations of real estate values and the general economic climate in local markets and competition for tenants in such markets; litigation, including costs associated with pro secuting and defending claims and any adverse outcomes, and possible environmental liabilities. Readers should carefully review the Registrant's financial statements and the notes thereto, as well as the risk factors described in the documents the Registrant files from time to time with the Securities and Exchange Commission.

PART I

Item 1.

Description of Business

Consolidated Capital Properties IV (the "Partnership" or "Registrant") was organized on September 22, 1981 as a limited partnership under the California Uniform Limited Partnership Act. On December 18, 1981, the Partnership commenced a public offering for the sale of 200,000 units (the "Units") with the general partner's right to increase the offering to 400,000 units. The Units represent equity interests in the Partnership and entitle the holders thereof to participate in certain allocations and distributions of the Partnership. The sale of Units closed on December 14, 1983, with 343,106 Units sold at $500 each, or gross proceeds of $171,553,000 to the Partnership. Since its initial offering, the Partnership has not received, nor are limited partners required to make, additional capital contributions.

By the end of fiscal year 1985, approximately 73% of the proceeds raised had been invested in 48 properties. Of the remaining 27%, 11% was required for organizational and offering expenses, sales commissions and acquisition fees, and 16% was retained in Partnership reserves for project improvements and working capital as required by the Partnership Agreement.

The general partner of the Partnership is ConCap Equities, Inc., a Delaware corporation (the "General Partner" or "CEI"). The General Partner is a subsidiary of Apartment Investment and Management Company ("AIMCO"), a publicly traded real estate investment trust. The directors and officers of the General Partner also serve as executive officers of AIMCO. The Partnership Agreement provides that the Partnership is to terminate on December 31, 2011 unless terminated prior to that date.

The Partnership's primary business and only industry segment is real estate related operations. The Partnership is engaged in the business of operating and holding real estate properties for investment. As of the close of fiscal year 1985, the Partnership had completed its property acquisition stage and had acquired 48 properties. At December 31, 2005, the Partnership owned 11 income-producing properties (or interests therein), which range in age from 29 to 34 years old and are principally located in the midwest, southeastern and southwestern United States. Prior to 2004, the Partnership had disposed of 34 properties originally owned by the Partnership. Three properties were sold in 2004. See "Item 2. Description of Properties" for further information about the Partnership's remaining properties.

Item 1.A

Risk Factors

The real estate business in which the Partnership is engaged is highly competitive. There are other residential properties within the market area of the Partnership's properties. The number and quality of competitive properties, including those which may be managed by an affiliate of the General Partner, in such market area could have a material effect on the rental market for the apartments at the Partnership's properties and the rents that may be charged for such apartments. While the General Partner and its affiliates own and/or control a significant number of apartment units in the United States, such units represent an insignificant percentage of total apartment units in the United States and competition for the apartments is local.

Laws benefiting disabled persons may result in the Partnership's incurrence of unanticipated expenses. Under the Americans with Disabilities Act of 1990, or ADA, all places intended to be used by the public are required to meet certain Federal requirements related to access and use by disabled persons. Likewise, the Fair Housing Amendments Act of 1988, or FHAA, requires apartment properties first occupied after March 13, 1990 to be accessible to the handicapped. These and other Federal, state and local laws may require modifications to the Partnership's properties, or restrict renovations of the properties. Noncompliance with these laws could result in the imposition of fines or an award of damages to private litigants and also could result in an order to correct any non-complying feature, which could result in substantial capital expenditures. Although the General Partner believes that the Partnership's properties are substantial ly in compliance with the present requirements, the Partnership may incur unanticipated expenses to comply with the ADA and the FHAA.

Both the income and expenses of operating the properties owned by the Partnership are subject to factors outside of the Partnership's control, such as changes in the supply and demand for similar properties resulting from various market conditions, increases/decreases in unemployment or population shifts, changes in the availability of permanent mortgage financing, changes in zoning laws, or changes in patterns or needs of users. In addition, there are risks inherent in owning and operating residential properties because such properties are susceptible to the impact of economic and other conditions outside of the control of the Partnership.

From time to time, the Federal Bureau of Investigation, or FBI, and the United States Department of Homeland Security issue alerts regarding potential terrorist threats involving apartment buildings. Threats of future terrorist attacks, such as those announced by the FBI and the Department of Homeland Security, could have a negative effect on rent and occupancy levels at the Partnership’s properties. The effect that future terrorist activities or threats of such activities could have on the Partnership’s operations is uncertain and unpredictable. If the Partnership were to incur a loss at a property as a result of an act of terrorism, the Partnership could lose all or a portion of the capital invested in the property, as well as the future revenue from the property.

There have been, and it is possible there may be other, Federal, state and local legislation and regulations enacted relating to the protection of the environment. The Partnership is unable to predict the extent, if any, to which such new legislation or regulations might occur and the degree to which such existing or new legislation or regulations might adversely affect the properties owned by the Partnership.

The Partnership monitors its properties for evidence of pollutants, toxins and other dangerous substances, including the presence of asbestos. In certain cases environmental testing has been performed which resulted in no material adverse conditions or liabilities. In no case has the Partnership received notice that it is a potentially responsible party with respect to an environmental clean up site.

The Partnership has no employees. Property management and administrative services are provided by the General Partner and by agents of the General Partner. The General Partner has also selected an affiliate to provide real estate advisory and asset management services to the Partnership. As advisor, such affiliate provides all Partnership accounting and administrative services, investment management, and supervisory services over property management and leasing.

A further description of the Partnership's business is included in "Management's Discussion and Analysis of Financial Condition and Results of Operation" included in "Item 7" of this Form 10-K.

Transfers of Control

Upon the Partnership's formation in 1981, Consolidated Capital Equities Corporation ("CCEC"), a Colorado corporation, was the corporate general partner and Consolidated Capital Management Company ("CCMC"), a California general partnership, was the non-corporate general partner. In 1988, through a series of transactions, Southmark Corporation ("Southmark") acquired a controlling interest in CCEC. In December 1988, CCEC filed for reorganization under Chapter 11 of the United States Bankruptcy Code. In 1990, as part of its reorganization plan, CEI acquired CCEC's general partner interests in the Partnership and in 15 other affiliated public limited partnerships (the "Affiliated Partnerships") and CEI replaced CCEC as managing general partner in all 16 partnerships. The selection of CEI as the sole managing general partner was approved by a majority of the Limited Partners in the Partnersh ip and in each of the affiliated partnerships pursuant to a solicitation of the Limited Partners dated August 10, 1990. As part of this solicitation, the Limited Partners also approved an amendment to the Partnership Agreement to limit changes of control of the Partnership, and the conversion of CCMC from a general partner to a special limited partner, thereby leaving CEI as the sole general partner of the Partnership. On November 14, 1990, CCMC was dissolved and its special limited partnership interest was divided among its former partners. All of CEI's outstanding stock was owned by Insignia Properties Trust ("IPT").

Pursuant to a series of transactions which closed on October 1, 1998 and February 26, 1999, Insignia Financial Group, Inc. and IPT merged into AIMCO, a publicly traded real estate investment trust, with AIMCO being the surviving corporation (the "Insignia Merger"). As a result, AIMCO acquired 100% ownership interest in the General Partner. The General Partner does not believe that this transaction has had or will have a material effect on the affairs and operations of the Partnership.

Item 2.

Description of Properties

The Partnership originally acquired 48 properties of which seventeen (17) were sold, ten (10) were conveyed to lenders in lieu of foreclosure, and ten (10) were foreclosed upon by the lenders. As of December 31, 2005, the Partnership owned eleven (11) apartment complexes. Additional information about the properties is found in "Item 8. Financial Statements and Supplementary Data".


	Date of
Property	Purchase	Type of Ownership	Use

The Apartments (1)	04/84	Fee ownership, subject to	Apartment
Omaha, Nebraska		a first mortgage	204 units
Arbours of Hermitage Apts. (1)	09/83	Fee ownership subject to	Apartment
Nashville, Tennessee		a first mortgage	350 units
Belmont Place Apts. (2)	08/82	Fee ownership subject to	Apartment
Marietta, Georgia		a first mortgage	326 units
Citadel Apts. (1)	05/83	Fee ownership subject	Apartment
El Paso, Texas		to first and second	261 units
		mortgages
Citadel Village Apts. (1)	12/82	Fee ownership subject	Apartment
Colorado Springs, Colorado		to a first mortgage	122 units
Foothill Place Apts. (2)	08/85	Fee ownership subject	Apartment
Salt Lake City, Utah		to a first mortgage	450 units
Knollwood Apts. (1)	07/82	Fee ownership subject	Apartment
Nashville, Tennessee		to a first mortgage	326 units
Lake Forest Apts.	04/84	Fee ownership subject	Apartment
Omaha, Nebraska		to first and second
		mortgages	312 units
Post Ridge Apts. (2)	07/82	Fee ownership subject	Apartment
Nashville, Tennessee		to first and second	150 units
		mortgages
Rivers Edge Apts. (2)	04/83	Fee ownership subject	Apartment
Auburn, Washington		to a first mortgage	120 units
Village East Apts. (1)	12/82	Fee ownership subject	Apartment
Cimarron Hills, Colorado		to a first mortgage	137 units

(1)

Property is held by a limited partnership and/or limited liability corporation in which the Partnership owns a 100% interest.

(2)

Property is held by a limited partnership in which the Partnership owns a 99% interest.

On March 31, 2004, the Partnership sold Point West Apartments to a third party, for a gross sale price of $3,900,000. The net proceeds realized by the Partnership were approximately $3,794,000 after payment of closing costs of approximately $106,000. The Partnership used approximately $2,204,000 of the net proceeds to repay the mortgage encumbering the property. The Partnership realized a gain of approximately $3,210,000 for the year ended December 31, 2004, as a result of this sale. This amount is shown as gain on sale of discontinued operations in the accompanying consolidated statements of operations. The property’s operations, losses of approximately $87,000 and $62,000 for the years ended December 31, 2004, and 2003, respectively, are included in income from discontinued operations and include revenues of approximately $189,000, and $811,000, respectively. In addition, the Partnership recorded a loss on early extinguishment of debt of approximately $48,000 for the year ended December 31, 2004 due to the write-off of

unamortized loan costs, which is also included in income from discontinued operations in the accompanying consolidated statements of operations.

On October 29, 2004, the Partnership sold Nob Hill Villa Apartments to a third party, for a gross sale price of $10,700,000. The net proceeds realized by the Partnership were approximately $10,519,000 after payment of closing costs of approximately $181,000. The Partnership used approximately $6,328,000 of the net proceeds to repay the mortgage encumbering the property. The Partnership realized a gain of approximately $7,962,000 for the year ended December 31, 2004, as a result of this sale. This amount is shown as gain on sale of discontinued operations in the accompanying consolidated statements of operations. The property’s operations, a loss of approximately $108,000 and income of approximately $24,000 for the years ended December 31, 2004, and 2003, respectively, are included in income from discontinued operations and include revenues of approximately $2,071,000, and $2,642,000, respectively. In addition, the Partnership recorded a loss on early extinguishment of debt of approximately $23,000 for the year ended December 31, 2004 due to the write-off of unamortized loan costs, which is also included in income from discontinued operations in the accompanying consolidated statements of operations.

On October 29, 2004, the Partnership sold Briar Bay Apartments to a third party, for a gross sale price of $20,352,000. The net proceeds realized by the Partnership were approximately $19,644,000 after payment of closing costs of approximately $708,000. The Partnership used approximately $3,500,000 of the net proceeds to repay the mortgage encumbering the property. The Partnership realized a gain of approximately $18,109,000 for the year ended December 31, 2004, as a result of this sale. This amount is shown as gain on sale of discontinued operations in the accompanying consolidated statements of operations. The property’s operations, income of approximately $308,000 and $637,000 for the years ended December 31, 2004, and 2003, respectively, are included in income from discontinued operations and include revenues of approximately $1,574,000, and $1,805,000, respectively. In addition, for the year ended Decem ber 31, 2004 the Partnership recorded a loss on early extinguishment of debt of approximately $16,000 due to the write-off of unamortized loan costs and approximately $98,000 due to pre-payment penalties paid. These amounts are included in income from discontinued operations in the accompanying consolidated statements of operations.

Schedule of Properties

Set forth below for each of the Partnership’s properties is the gross carrying value, accumulated depreciation, depreciable life, method of depreciation and Federal tax basis.


	Gross
	Carrying	Accumulated	Depreciable	Method of	Federal
Property	Value	Depreciation	Life	Depreciation	Tax Basis
	(in thousands)				(in thousands)

The Apartments	$ 9,959	$ 8,400	5-30 yrs	S/L	$ 1,614
Arbours of Hermitage
Apartments	17,448	13,122	5-30 yrs	S/L	4,724
Belmont Place
Apartments	31,817	1,103	5-30 yrs	S/L	31,363
Citadel Apartments	8,452	7,305	5-30 yrs	S/L	981
Citadel Village
Apartments	5,487	4,061	5-30 yrs	S/L	1,704
Foothill Place
Apartments	19,344	13,311	5-30 yrs	S/L	6,896
Knollwood Apartments	13,625	11,454	5-30 yrs	S/L	2,632
Lake Forest Apartments	10,658	8,937	5-30 yrs	S/L	1,778
Post Ridge Apartments	6,461	5,003	5-30 yrs	S/L	1,705
Rivers Edge Apartments	3,930	3,079	5-30 yrs	S/L	1,028
Village East Apartments	4,833	3,716	5-30 yrs	S/L	1,140

Total	$132,014	$ 79,491			$ 55,565

See "Note A – Organization and Summary of Significant Accounting Policies" to the consolidated financial statements included in "Item 8. Financial Statements and Supplementary Data" for a description of the Partnership's capitalization and depreciation policies.

Schedule of Property Indebtedness

The following table sets forth certain information relating to the loans encumbering the Partnership's properties.


	Principal	Principal				Principal
	Balance At	Balance At	Stated			Balance
	December 31,	December 31,	Interest	Period	Maturity	Due At
Property	2005	2004	Rate	Amortized	Date	Maturity (f)
	(in thousands)					(in thousands)

The Apartments	$ 4,092	$ 4,235	8.37% (a)	20 yrs	03/20	$ --
Arbours of Hermitage
Apartments	10,961	5,650	5.06% (a)	30 yrs	09/15	8,964
Belmont Place Apartments	19,250	--	5.14% (a)	28 yrs	11/34	--
Citadel Apartments
1^st mortgage	4,183	4,215	8.55% (a)	30 yrs	07/14	3,748
2^nd mortgage	1,310	1,310	(b)	(e)	07/07	1,310
Citadel Village Apartments	1,812	2,450	(c)	30 yrs	09/07	1,764
Foothill Place Apartments	17,633	10,100	4.72% (a)	30 yrs	09/08	16,836
Knollwood Apartments	11,600	6,780	5.20% (a)	30 yrs	12/08	11,100
Lake Forest Apartments
1^st mortgage	5,979	6,027	7.43% (a)	30 yrs	07/14	5,255
2^nd mortgage	2,500	2,500	(b)	(e)	07/07	2,500
Post Ridge Apartments
1^st mortgage	4,017	4,152	6.63% (a)	20 yrs	01/22	--
2^nd mortgage	363	369	7.04% (a)	30 yrs	01/22	173
Rivers Edge Apartments	3,461	3,582	7.82% (a)	20 yrs	09/20	--
Village East Apartments	2,000	2,150	(d)	(e)	12/07	2,000

Totals	$89,161	$53,520				$53,650

(a)

Fixed rate mortgage.

(b)

Interest rate is variable and is equal to the one month LIBOR rate plus 300 basis points (7.39% at December 31, 2005).

(c)

Interest rate is variable and is equal to the Fannie Mae discounted mortgage-backed security index plus 85 basis points. The rate at December 31, 2005 was 5.13%.

(d)

Interest rate is variable and is equal to the one month LIBOR rate plus 160 basis points (5.99% at December 31, 2005).

(e)

Monthly payments of interest only at the stated interest rate until maturity.

(f)

See “Note C – Mortgage Notes Payable” to the consolidated financial statements included in “Item 8. Financial Statements and Supplementary Data” for information with respect to the Partnership’s ability to prepay these loans and other specific details about the loans.

until the loan matures on September 16, 2007, with a five-year extension option. The Permanent Credit Facility includes properties in other partnerships that are affiliated with the general partner of the Registrant. The Permanent Credit Facility creates separate loans for each property that are not cross-collateralized or cross-defaulted with the other property loans. The new loan on Citadel Village Apartments has a variable interest rate of the Fannie Mae discounted mortgage-backed security index plus 85 basis points, which rate is currently 5.13% per annum, and resets monthly. The interest rate on the prior mortgage was 6.95% per annum. Monthly principal payments are required based on a 30-year amortization schedule using the interest rate in effect during the first month of the new mortgage. The loan is prepayable without penalty. As a condition of the loan, the lender required AIMCO Properties, L.P., an affiliate of the Partnership , to guarantee the obligations and liabilities of the Partnership with respect to the new mortgage financing.

On November 30, 2005, the Partnership refinanced the first mortgage encumbering one of its investment properties, Knollwood Apartments. The Partnership recognized a loss on early extinguishment of debt of approximately $2,000 during the year ended December 31, 2005 due to the write off of unamortized loan costs. The new mortgage loan, in the principal amount of $11,600,000 replaced the existing mortgage loan, which had an outstanding balance at the time of the refinancing of $6,780,000. Closing costs of approximately $121,000 were capitalized during 2005 and are included in other assets. The new mortgage requires monthly payments of principal and interest of approximately $64,000, beginning on January 10, 2006 until the loan matures on December 10, 2008, with a fixed interest rate of 5.20% and a balloon payment of approximately $11,100,000 due at maturity. The Partnership is prohibited from prepaying the loan prior to January 10, 2007. On or after January 10, 2007, the loan may be prepaid with the payment of a prepayment penalty, as defined in the loan agreement. In connection with the refinancing a Renovation Escrow account, held by the lender, was established in the amount of $3,500,000. As a condition of the loan, the lender required AIMCO Properties, L.P., an affiliate of the Partnership, to guarantee the obligations and liabilities of the Partnership with respect to the new mortgage financing.

On November 30, 2005, the Partnership refinanced the first mortgage encumbering one of its investment properties, Village East Apartments. The Partnership recognized a loss on early extinguishment of debt of approximately $2,000 during the year ended December 31, 2005 due to the write off of unamortized loan costs. The new mortgage loan, in the principal amount of $2,000,000 replaced the existing mortgage loan, which had an outstanding balance at the time of the refinancing of $2,150,000. Closing costs of approximately $70,000 were capitalized during 2005 and are included in other assets. The new mortgage requires monthly payments of interest beginning on January 1, 2006 until the loan matures on December 1, 2007, at which time the entire principal balance of $2,000,000 is due. The loan has a variable interest rate of the one month LIBOR rate plus 1.60%, which rate is currently 5.99% per annum, and resets monthly. The minimum inte rest rate for the term of the loan is the initial monthly rate at closing of the loan, which was 5.79%. The loan is prepayable without penalty if repaid within either months one through nine or months twenty two through twenty four. There is a prepayment penalty of 1% of the amount repaid if the loan is prepaid within months ten through twenty one. As a condition of the loan, the lender required AIMCO Properties, L.P., an affiliate of the Partnership, to guarantee the obligations and liabilities of the Partnership with respect to the new mortgage financing. The Partnership has the right to request an extension of the maturity date for one year to December 1, 2008 if such request is made within thirty to ninety days prior to December 1, 2007 and other specific terms as stipulated in the loan agreement are satisfied.

approximately $103,000 were capitalized during 2005 and are included in other assets. The new mortgage requires monthly payments of principal and interest of approximately $59,000, beginning on October 10, 2005 until the loan matures on September 10, 2015, with a fixed interest rate of 5.06% and a balloon payment of approximately $8,964,000, due at maturity. The Partnership is prohibited from prepaying the loan prior to October 10, 2007. On or after October 10, 2007, the loan may be prepaid with the payment of a prepayment penalty, as defined in the loan agreement. As a condition of the loan, the lender required AIMCO Properties, L.P., an affiliate of the Partnership, to guarantee the obligations and liabilities of the Partnership with respect to the new mortgage financing.

On August 30, 2005, the Partnership refinanced the first mortgage encumbering one of its investment properties, Foothill Place Apartments. The Partnership recognized a loss on early extinguishment of debt of approximately $7,000 during the year ended December 31, 2005 due to the write off of unamortized loan costs. The new mortgage loan, in the principal amount of $17,700,000, replaced the existing mortgage loan, which had an outstanding balance of $10,100,000. Closing costs of approximately $193,000 were capitalized during 2005 and are included in other assets. The new mortgage requires monthly payments of principal and interest of approximately $92,000, beginning on October 1, 2005 until the loan matures on September 1, 2008, with a fixed interest rate of 4.72% and a balloon payment of approximately $16,836,000 due at maturity. The Partnership may extend the term of the loan for two successive one-year periods by exercisin g the extension options as defined in the loan agreement. The Partnership may prepay the loan with no penalty if prepayment in full is made no more than twelve months before the maturity date or during the extension periods. However, if the loan is prepaid prior to twelve months before the maturity date then a prepayment penalty, as defined in the loan agreement, will apply.

On April 29, 2005, the Partnership obtained a mortgage in the principal amount of $19,250,000 on Belmont Place Apartments. The Partnership received proceeds from the mortgage of approximately $14,084,000 after payment of closing costs and the funding of two letters of credit, as discussed below. Closing costs of approximately $198,000 were capitalized during 2005 and are included in other assets. The new mortgage requires monthly payments of interest only beginning on June 1, 2005 until November 1, 2006. Beginning December 1, 2006, monthly payments of principal and interest of $108,180 are required until the loan matures November 1, 2034. The lender can exercise a call option on the mortgage on June 1, 2012 and every fifth anniversary thereafter. The interest rate is fixed at 5.14% for the life of the mortgage.

In conjunction with the Belmont Place Apartments mortgage, the Partnership has provided to the lender two letters of credit, each in the amount of $2,500,000, to secure the Partnership’s obligations under the mortgage. The letters of credit are secured by proceeds from the mortgage financing which were deposited into an escrow account. The lender will release the first letter of credit when the property has achieved annual rental income of approximately $2.9 million from 60% of the rental units and will release the second letter of credit when the property has achieved annual rental income of approximately $3.9 million from 88% of the rental units. The first letter of credit for $2,500,000 was released during the fourth quarter of 2005 and the funds were returned to the Partnership. The amount returned included interest of approximately $33,000. Subsequent to December 31, 2005 the second letter of credit for $2,500,000 was re leased and the funds were returned to the Partnership.

On June 8, 2004, the Partnership obtained a second mortgage loan on Lake Forest Apartments in the amount of $2,500,000. The second mortgage requires monthly payments of interest beginning August 1, 2004 until the loan matures July 1, 2007. Interest is variable and is equal to the one month LIBOR rate plus 300 basis points (7.39% at December 31, 2005). Capitalized loan costs incurred during 2004 on the financing were approximately $83,000.

In connection with the Lake Forest Apartments new financing, the Partnership agreed to certain modifications on the existing mortgage loan encumbering Lake Forest Apartments. The modification of terms consisted of an interest rate of 7.43%, a payment of approximately $44,000 due on July 1, 2004 and monthly payments of approximately $42,000, commencing August 1, 2004 through the maturity of July 1, 2014, at which time a balloon payment of approximately $5,255,000 is due. The previous terms consisted of monthly payments of approximately $51,000 with a stated interest rate of 7.13% through the maturity date of October 1, 2021, at which time the loan was scheduled to be fully amortized.

On June 18, 2004, the Partnership obtained a second mortgage loan on Citadel Apartments in the amount of $1,310,000. The second mortgage requires monthly payments of interest beginning August 1, 2004 until the loan matures July 1, 2007. Interest is variable and is equal to the one month LIBOR rate plus 300 basis points (7.39% at December 31, 2005). Capitalized loan costs incurred during 2004 on the financing were approximately $66,000.

In connection with the new financing, the Partnership agreed to certain modifications on the existing mortgage loan encumbering Citadel Apartments. The modification of terms consisted of an interest rate of 8.55%, a payment of approximately $38,000 due on July 1, 2004 and monthly payments of approximately $33,000, commencing August 1, 2004 through the maturity of July 1, 2014, at which time a balloon payment of approximately $3,748,000 is due. The previous terms consisted of monthly payments of approximately $40,000 with a stated interest rate of 8.25% through the maturity date of March 1, 2020, at which time the loan was scheduled to be fully amortized.

Rental Rates and Occupancy

The following table sets forth the average annual rental rates and occupancy for 2005 and 2004 for each property.


	Average Annual		Average
	Rental Rates		Occupancy
	(per unit)
Property	2005	2004	2005	2004
The Apartments (1)	$ 7,235	$ 6,907	95%	92%
Arbours of Hermitage Apartments	7,538	7,307	93%	94%
Belmont Place Apartments (2)	11,458	--	53%	--%
Citadel Apartments	6,842	6,647	93%	92%
Citadel Village Apartments	7,608	7,598	87%	89%
Foothill Place Apartments (3)	7,735	7,679	94%	86%
Knollwood Apartments (4)	7,659	7,452	96%	92%
Lake Forest Apartments	7,140	6,945	94%	94%
Post Ridge Apartments (4)	9,232	8,976	95%	91%
Rivers Edge Apartments (5)	8,548	8,328	93%	96%
Village East Apartments	6,386	6,248	75%	77%

(1)

The increase in occupancy at The Apartments is due to an improved tenant base, more effective marketing, and an improved pricing structure developed to maintain competitiveness with other properties in the market.

(2)

The increase in occupancy at Belmont Place Apartments is due to the redevelopment of the property being completed during 2005 (see discussion below).

(3)

The increase in occupancy at Foothill Place Apartments is due to an improved local economy.

(4)

The increase in occupancy at Knollwood and Post Ridge Apartments are due to a more stable tenant base after stricter credit policies were enacted in 2004 and strong marketing efforts by the leasing staff.

(5)

The decrease in occupancy at Rivers Edge Apartments is due to tenants purchasing homes.

The Partnership entered into a construction contract with Casden Builders, Inc. (a related party) to develop the new Belmont Place Apartments at an estimated cost of approximately $26.9 million. The construction contract provides for the payment of the cost of the work plus a fee without a maximum guaranteed price. Construction was completed in 2005 at a total project cost of approximately $31.9 million. The Partnership has funded construction expenditures from operating cash flow, proceeds from a cross collateralized loan, Partnership reserves, loans from an affiliate of the General Partner and sales proceeds. During the years ended December 31, 2005 and 2004, approximately $7,556,000 and $20,338,000 of construction costs were incurred, respectively. During the years ended December 31, 2005, 2004, and 2003, the Partnership capitalized interest costs of approximately $394,000, $705,000, and $390,000 tax and insurance expenses of approximately $6,00 0, $136,000, and $226,000, and other construction period operating expenses of approximately $10,000, $105,000, and $351,000, respectively. In addition, during 2004 the Partnership paid prepayment penalties of approximately $170,000, which were also capitalized as part of the construction cost, see discussion below.

As part of the redevelopment, during the year ended December 31, 2004, an affiliate of the General Partner advanced the Partnership approximately $5,600,000 to repay the mortgage and associated accrued interest encumbering Belmont Place Apartments. The loan was scheduled to mature in December 2005. In addition to repaying the mortgage of approximately $5,400,000, the Partnership wrote off unamortized loan costs of approximately $109,000, which is shown as loss on early extinguishment of debt on the accompanying consolidated statements of operations. The Partnership also paid prepayment penalties of approximately $170,000, which were capitalized as part of the construction cost.

As noted under "Item 1. Description of Business", the real estate industry is highly competitive. All of the properties are subject to competition from other residential apartment complexes in the area. The General Partner believes that all of the properties are adequately insured. Each property is an apartment complex which leases units for lease terms of one year or less. No residential tenant leases 10% or more of the available rental space. All of the properties are in good physical condition, with the exception of Belmont Place Apartments, as described above, subject to normal depreciation and deterioration as is typical for assets of this type and age.

Real Estate Taxes and Rates

Real estate taxes and rates in 2005 and 2004 for each property were:


	2005	2005	2004	2004
	Billing	Rate	Billing	Rate
	(in thousands)		(in thousands)

The Apartments	$126	2.1%	$127	2.2%
Arbours of Hermitage Apartments	229	4.0%	181	3.8%
Belmont Place Apartments	149	2.6%	55	3.0%
Citadel Apartments	196	3.1%	188	3.1%
Citadel Village Apartments	20	5.9%	19	5.9%
Foothill Place Apartments	211	1.5%	196	1.5%
Knollwood Apartments	214	4.0%	183	3.8%
Lake Forest Apartments	195	2.1%	196	2.2%
Post Ridge Apartments	109	4.0%	98	3.8%
Rivers Edge Apartments	90	1.3%	69	1.3%
Village East Apartments	24	6.3%	22	6.1%

Capital Improvements

The Apartments

During the year ended December 31, 2005, the Partnership completed approximately $209,000 of capital improvements at the property, consisting primarily of building improvements, water heater and floor covering replacements, light fixtures upgrades, and gutter 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 2006. Such capital expenditures will depend on the physical condition of the property as well as anticipated cash flow generated by the property.

Arbours of Hermitage Apartments

During the year ended December 31, 2005, the Partnership completed approximately $2,000,000 of capital improvements at the property, consisting primarily of electrical, plumbing, water and sewer upgrades, floor covering replacements, and cabinet replacements, exterior painting and stairwell improvements. 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 2006. Such capital expenditures will depend on the physical condition of the property as well as anticipated cash flow generated by the property.

Belmont Place Apartments

During 2003, the General Partner determined that Belmont Place Apartments suffered from severe structural defects in the buildings’ foundation and as such, demolished the property. The General Partner designed and approved a redevelopment plan for the property. Site work on the redevelopment began during the fourth quarter of 2003. At December 31, 2005, all 326 units had been completed. As part of the redevelopment, during the year ended December 31, 2004 the mortgage and associated accrued interest encumbering Belmont Place Apartments was repaid. In addition to the repayment the Partnership paid prepayment penalties of approximately $170,000 and wrote off unamortized loan costs of approximately $109,000 which is shown as loss on early extinguishment of debt for the year ended December 31, 2004.

The Partnership entered into a construction contract with Casden Builders, Inc. (a related party) to develop the new Belmont Place Apartments at an estimated cost of approximately $26.9 million. The construction contract provides for the payment of the cost of the work plus a fee without a maximum guaranteed price. Construction was completed in 2005 at a total project cost of approximately $31.9 million. The Partnership has funded construction expenditures from operating cash flow, proceeds from a cross collateralized loan, Partnership reserves, loans from an affiliate of the General Partner and sales proceeds. During the year ended December 31, 2005 and 2004, approximately $7,556,000 and $20,338,000 of construction costs were incurred, respectively. Included in these construction costs are capitalized interest costs of approximately $394,000 and $705,000 for the year ended December 31, 2005 and 2004, respectively, capitalized tax and i nsurance expenses of approximately $6,000 and $136,000 for the years ended December 31, 2005 and 2004, respectively and other construction period operating costs of approximately $10,000 and $105,000 for the years ended December 31, 2005 and 2004, respectively. 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 2006. Such capital expenditures will depend on the physical condition of the property as well as anticipated cash flow generated by the property.

Citadel Apartments

During the year ended December 31, 2005, the Partnership completed approximately $157,000 of capital improvements at the property, consisting primarily of parking area upgrades, air conditioning units and floor covering replacements. These improvements were funded from operating cash flow and replacement reserves. 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 2006. Such capital expenditures will depend on the physical condition of the property as well as replacement reserves and anticipated cash flow generated by the property.

Citadel Village Apartments

During the year ended December 31, 2005, the Partnership completed approximately $285,000 of capital improvements at the property, consisting primarily of siding and floor covering replacements, structural improvements and exterior painting. These improvements were funded from operating cash flow and insurance proceeds. 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 2006. Such capital expenditures will depend on the physical condition of the property as well as anticipated cash flow generated by the property.

Foothill Place Apartments

During the year ended December 31, 2005, the Partnership completed approximately $1,263,000 of capital improvements at the property, consisting primarily of floor covering, countertop, water heater and appliance replacements, plumbing fixture upgrades, roof replacement, and balcony 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 2006. Such capital expenditures will depend on the physical condition of the property as well as anticipated cash flow generated by the property.

Knollwood Apartments

During the year ended December 31, 2005, the Partnership completed approximately $658,000 of capital improvements at the property, consisting primarily of interior lighting upgrades, structural improvements, and appliance and floor covering replacements. These improvements were funded from operating cash flow and insurance proceeds. 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 2006. Such capital expenditures will depend on the physical condition of the property as well as anticipated cash flow generated by the property.

Lake Forest Apartments

During the year ended December 31, 2005, the Partnership completed approximately $270,000 of capital improvements at the property, consisting primarily of swimming pool upgrades, water heater upgrades, interior common area painting, 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 2006. Such capital expenditures will depend on the physical condition of the property as well as replacement reserves and anticipated cash flow generated by the property.

Post Ridge Apartments

During the year ended December 31, 2005, the Partnership completed approximately $517,000 of capital improvements at the property, consisting primarily of floor covering and appliance replacements, exterior light fixture upgrades, structural improvements, and swimming pool upgrades. These improvements were funded from operating cash flow and insurance proceeds. 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 2006. Such capital expenditures will depend on the physical condition of the property as well as anticipated cash flow generated by the property.

Rivers Edge Apartments

During the year ended December 31, 2005, the Partnership completed approximately $122,000 of capital improvements at the property, consisting primarily of major landscaping, roof and floor covering replacements and structural improvements. 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 2006. Such capital expenditures will depend on the physical condition of the property as well as anticipated cash flow generated by the property.

Village East Apartments

During the year ended December 31, 2005, the Partnership completed approximately $274,000 of capital improvements at the property, consisting primarily of structural improvements, balcony and stairway replacements, 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 2006. 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 if cash is 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.

Item 3.

Legal Proceedings

In March 1998, several putative unit holders of limited partnership units of the Partnership commenced an action entitled Rosalie Nuanes, et al. v. Insignia Financial Group, Inc., et al. (the "Nuanes action") in the Superior Court of the State of California for the County of San Mateo. The plaintiffs named as defendants, among others, the Partnership, its General Partner and several of their affiliated partnerships and corporate entities. The action purported to assert claims on behalf of a class of limited partners and derivatively on behalf of a number of limited partnerships (including the Partnership) that are named as nominal defendants, challenging, among other things, the acquisition of interests in certain General Partner entities by Insignia Financial Group, Inc. ("Insignia") and entities that were, at one time, affiliates of Insignia; past tender offers by the Insignia affiliates to acquire limited partnership units; m anagement of the partnerships by the Insignia affiliates; and the series of transactions which closed on October 1, 1998 and February 26, 1999 whereby Insignia and Insignia Properties Trust, respectively, were merged into AIMCO. The plaintiffs sought monetary damages and equitable relief, including judicial dissolution of the Partnership. In addition, during the third quarter of 2001, a complaint captioned Heller v. Insignia Financial Group (the "Heller action") was filed against the same defendants that are named in the Nuanes action. On or about August 6, 2001, plaintiffs filed a first amended complaint. The Heller action was brought as a purported derivative action, and asserted claims for, among other things, breach of fiduciary duty, unfair competition, conversion, unjust enrichment, and judicial dissolution. On January 28, 2002, the trial court granted defendants motion to strike the complaint. Plaintiffs took an appeal form this order.

On January 8, 2003, the parties filed a Stipulation of Settlement in proposed settlement of the Nuanes action and the Heller action. On June 13, 2003, the court granted final approval of the settlement and entered judgment in both the Nuanes and Heller actions. On August 12, 2003, an objector ("Objector") filed an appeal (the “Appeal”) seeking to vacate and/or reverse the order approving the settlement and entering judgment thereto. On May 4, 2004 the Objector filed a second appeal challenging the court’s use of a referee and its order requiring Objector to pay those fees.

On March 21, 2005, the Court of Appeals issued opinions in both pending appeals. With regard to the settlement and judgment entered thereto, the Court of Appeals vacated the trial court’s order and remanded to the trial court for further findings on the basis that the “state of the record is insufficient to permit meaningful appellate review”. The matter was transferred back to the trial court on June 21, 2005. With regard to the second appeal, the Court of Appeals reversed the order requiring the Objector to pay referee fees. With respect to the related Heller appeal, on July 28, 2005, the Court of Appeals reversed the trial court’s order striking the first amended complaint.

On August 18, 2005, Objector and his counsel filed a motion to disqualify the trial court based on a peremptory challenge and filed a motion to disqualify for cause on October 17, 2005, both of which were ultimately denied and/or struck by the trial court. On or about October 13, 2005 Objector filed a motion to intervene and on or about October 19, 2005 filed both a motion to take discovery relating to the adequacy of plaintiffs as derivative representatives and a motion to dissolve the anti-suit injunction in connection with settlement. On November 14, 2005, Plaintiffs filed a Motion For Further Findings pursuant to the remand ordered by the Court of Appeals. Defendants joined in that motion. On February 3, 2006, the Court held a hearing on the various matters pending before it and has ordered additional briefing from the parties and Objector.

The General Partner does not anticipate that any costs to the Partnership, whether legal or settlement costs, associated with these cases will be material to the Partnership’s overall operations.

AIMCO Properties L.P. and NHP Management Company, both affiliates of the General Partner, are defendants in a lawsuit alleging that they willfully violated the Fair Labor Standards Act (“FLSA”) by failing to pay maintenance workers overtime for all hours worked in excess of forty per week. The complaint, filed in the United States District Court for the District of Columbia, attempts to bring a collective action under the FLSA and seeks to certify state subclasses in California, Maryland, and the District of Columbia. Specifically, the plaintiffs contend that AIMCO Properties L.P. and NHP Management Company failed to compensate maintenance workers for time that they were required to be "on-call". Additionally, the complaint alleges AIMCO Properties L.P. and NHP Management Company failed to comply with the FLSA in compensating maintenance workers for time that they worked in excess of 40 hours in a week. In June 2005 the Co urt conditionally certified the collective action on both the on-call and overtime issues, which allows the plaintiffs to provide notice of the collective action to all non-exempt maintenance workers from August 7, 2000 through the present. Notices have been sent out to all current and former hourly maintenance workers. The opt-in period has not yet closed. Defendants will have the opportunity to move to decertify the collective action. Because the court denied plaintiffs’ motion to certify state subclasses, on September 26, 2005, the plaintiffs filed a class action with the same allegations in the Superior Court of California (Contra Costa County), and on November 5, 2005 in Montgomery County Maryland Circuit Court. Although the outcome of any litigation is uncertain, AIMCO Properties, L.P. does not believe that the ultimate outcome will have a material adverse effect on its consolidated financial condition or results of operations. Similarly, the General Partner does not believe that the ultimate outcome will have a material adverse effect on the Partnership’s consolidated financial condition or results of operations.

Item 4.

Submission of Matters to a Vote of Security Holders

During the quarter ended December 31, 2005, no matters were submitted to a vote of unitholders through the solicitation of proxies or otherwise.

PART II

Item 5.

Market for the Registrant's Units of Limited Partnership and Related Security Holder Matters

(A)

No established trading market for the Partnership's limited partnership units (the “Units”) exists, nor is one expected to develop.


Title of Class	Number of Unitholders of Record
Limited Partnership Units	5,716 as of December 31, 2005

There were 342,773 Units outstanding at December 31, 2005, of which affiliates of the General Partner owned 224,566 Units or approximately 65.51%.

The following table sets forth the distributions declared by the Partnership for the years ended December 31, 2005, 2004 and 2003 (in thousands except per unit data) (see "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" for more details):


		Per		Per		Per
	Year Ended	Limited	Year Ended	Limited	Year Ended	Limited
	December 31,	Partnership	December 31,	Partnership	December 31,	Partnership
	2005	Unit	2004	Unit	2003	Unit

Operations	$ --	$ --	$ --	$ --	$1,827	$ 5.12
Sale (1)	15,026	42.08	--	--	3,743	10.50
	$15,026	$42.08	$ --	$ --	$5,570	$15.62

(1)

2005 distribution consists of balance of sale proceeds from the 2003 sale of Southport Apartments and the sale proceeds from the 2004 sales of Point West Apartments, Nob Hill Apartments and Briar Bay Apartments. 2003 distribution consists of sale proceeds from sale of Southport Apartments.

In conjunction with the transfer of funds from their certain majority-owned sub-tier limited partnerships to the Partnership, approximately $382,000, $7,000 and $9,000 was distributed to the general partner of the majority owned sub-tier limited partnerships during the years ended December 31, 2005, 2004, and 2003, respectively.

Subsequent to December 31, 2005 the Partnership distributed approximately $7,200,000 ($6,912,000 to the limited partners or $20.16/unit) consisting of the balance of the sale proceeds from the 2004 sale of Briar Bay Apartments.

Future cash distributions will depend on the levels of cash generated from operations, and the timing of debt maturities, refinancings, and/or property sales. 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 required capital expenditures to permit additional distributions to its partners in the year 2006 or subsequent periods. See "Item 2. Capital Improvements” for information relating to anticipated capital expenditures at the properties.

In addition to its indirect ownership of the general partner interest in the Partnership, AIMCO and its affiliates owned 224,566 Units in the Partnership representing 65.51% of the outstanding Units at December 31, 2005. 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 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 65.51% of the outstanding Units, AIMCO and its affiliates are in a position to control all 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.

Item 6.

Selected Financial Data

The following table sets forth a summary of certain financial data for the Partnership. This summary should be read in conjunction with the Partnership's consolidated financial statements and notes thereto appearing in "Item 8. Financial Statements and Supplementary Data."


	Years Ended December 31,
	(in thousands, except per unit data)
Consolidated Statements
of Operations	2005	2004	2003	2002	2001

Total revenues	$21,031	$18,453	$17,836	$20,445	$ 21,704
Total expenses	(20,771)	(16,347)	(16,475)	(17,791)	(19,403)
Income from continuing
operations	260	2,106	1,361	2,654	2,301
Gain on sales of discontinued
operations	--	29,281	6,232	--	--
Income from discontinued
operations	--	113	607	1,610	1,857
Net income	$ 260	$31,500	$ 8,200	$ 4,264	$ 4,158
Per Limited Partnership Unit:
Income from continuing
operations	$ 0.73	$ 5.89	$ 3.82	$ 7.43	$ 6.45
Gain on sales of discontinued
operations	--	82.01	17.45	--	--
Income from discontinued
operations	--	0.32	1.70	4.51	5.20
Net income	$ 0.73	$ 88.22	$ 22.97	$ 11.94	$ 11.65
Distributions per Limited
Partnership Unit	$ 42.08	$ --	$ 15.62	$ 15.66	$ 25.59
Limited Partnership Units
outstanding	342,773	342,773	342,773	342,773	342,773
Consolidated Balance Sheets
Total assets	$68,432	$50,195	$30,775	$ 32,287	$ 34,180
Mortgage notes payable	$89,161	$53,520	$67,900	$ 72,630	$ 73,475

Item 7.

Management's Discussion and Analysis of Financial Condition and Results of Operations

The operations of the Partnership primarily include operating and holding income-producing real estate properties for the benefit of its partners. Therefore, the following discussion of operations, liquidity and capital resources will focus on these activities and should be read in conjunction with "Item 8. Financial Statements and Supplementary Data" and the notes related thereto included elsewhere in this report.

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 Part ner 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's net income was approximately $260,000 for the year ended December 31, 2005, compared to approximately $31,500,000 and $8,200,000 for the years ended December 31, 2004 and 2003, respectively. The decrease in net income was primarily due to the decrease in gain on sale of discontinued operations and a decrease in income from continuing operations.

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 reflects the operations of South Port Apartments, Point West Apartments, Nob Hill Apartments and Briar Bay Apartments as income from discontinued operations due to their sales in March 2003, March 2004, October 2004, and November 2004, respectively.

On March 31, 2004, the Partnership sold Point West Apartments to a third party, for a gross sale price of $3,900,000. The net proceeds realized by the Partnership were approximately $3,794,000 after payment of closing costs of approximately $106,000. The Partnership used approximately $2,204,000 of the net proceeds to repay the mortgage encumbering the property. The Partnership realized a gain of approximately $3,210,000 for the year ended December 31, 2004, as a result of this sale. This amount is shown as gain on sale of discontinued operations in the accompanying consolidated statements of operations. The property’s operations, losses of approximately $87,000 and $62,000 for the years ended December 31, 2004 and 2003, respectively, are included in income from discontinued operations and include revenues of approximately $189,000, and $811,000, respectively. In addition, the Partnership recorded a loss on early extinguishment of debt of approximately $48,000 for the year ended December 31, 2004 due to the write-off of unamortized loan costs, which is also included in income from discontinued operations in the accompanying consolidated statements of operations.

$2,071,000, and $2,642,000, respectively. In addition, the Partnership recorded a loss on early extinguishment of debt of approximately $23,000 for the year ended December 31, 2004 due to the write-off of unamortized loan costs, which is also included in income from discontinued operations in the accompanying consolidated statements of operations.

On October 29, 2004, the Partnership sold Briar Bay Apartments to a third party, for a gross sale price of $20,352,000. The net proceeds realized by the Partnership were approximately $19,644,000 after payment of closing costs of approximately $708,000. The Partnership used approximately $3,500,000 of the net proceeds to repay the mortgage encumbering the property. The Partnership realized a gain of approximately $18,109,000 for the year ended December 31, 2004, as a result of this sale. This amount is shown as gain on sale of discontinued operations in the accompanying consolidated statements of operations. The property’s operations, income of approximately $308,000, and $637,000 for the years ended December 31, 2004, and 2003, respectively, are included in income from discontinued operations and include revenues of approximately $1,574,000, and $1,805,000, respectively. In addition, for the year ended Dece mber 31, 2004 the Partnership recorded a loss on early extinguishment of debt of approximately $16,000 due to the write-off of unamortized loan costs, and approximately $98,000 due to pre-payment penalties paid. These amount are included in income from discontinued operations in the accompanying consolidated statements of operations.

2005 Compared to 2004

Excluding the impact of discontinued operations and gain on sale of discontinued operations, the Partnership’s income from continuing operations was approximately $260,000 for the year ended December 31, 2005, compared to approximately $2,106,000 for the year ended December 31, 2004. Income from continuing operations decreased due to an increase in total expenses partially offset by an increase in total revenues. The increase in total revenues is due to an increase in rental and other income, partially offset by a decrease in casualty gains. The increase in rental income is due to an increase in occupancy at six of the eleven properties, and an increase in average rental rates at all eleven properties, and a decrease in bad debt expense at ten of the eleven properties, partially offset by a decrease in occupancy at four of the eleven properties. The largest occupancy increase occurred at Belmont Place Apartments which c ompleted its redevelopment during 2005 and was able to begin leasing apartment units during 2005. Other income increased due to an increase in fees at Belmont Place Apartments as the property began leasing completed units. This was partially offset by decreases in lease cancellation fees at Citadel Village, Village East, The Apartments, Citadel and Foothill Place Apartments.

In October 2003, Citadel Village Apartments suffered fire damage to five apartment units. Insurance proceeds of approximately $219,000 were received during the year ended December 31, 2004. The Partnership recognized a casualty gain of approximately $219,000 during the year ended December 31, 2004 as the damaged assets were fully depreciated at the time of the casualty.

In November 2003, Lake Forest Apartments suffered water damage to some of the rental units. Insurance proceeds of approximately $44,000 were received during the year ended December 31, 2004. The Partnership recognized a casualty gain of approximately $44,000 during the year ended December 31, 2004 as the damaged assets were fully depreciated at the time of the casualty.

In February 2004, The Apartments suffered damage to 180 apartment units due to an ice storm. During the year ended December 31, 2004, the Partnership received insurance proceeds of approximately $322,000, which included approximately $30,000 for emergency expenses. The Partnership recognized a casualty gain of approximately $292,000 during the year ended December 31, 2004 as the damaged assets were fully depreciated at the time of the casualty.

In February 2004, Knollwood Apartments suffered fire damage to some of its rental units. Insurance proceeds of approximately $47,000 were received during the year ended December 31, 2004. The Partnership recognized a casualty gain of approximately $47,000 during the year ended December 31, 2004 as the damaged assets were fully depreciated at the time of the casualty. During the year ended December 31, 2005, the Partnership received approximately $2,000 in additional proceeds which was recognized as a casualty gain.

In March 2004, Village East Apartments suffered an electrical fire that damaged six apartment units. Insurance proceeds of approximately $77,000 were received during the year ended December 31, 2004. The Partnership recognized a casualty gain of approximately $77,000 during the year ended December 31, 2004 as the damaged assets were fully depreciated at the time of the casualty.

In July 2004, Citadel Village Apartments suffered hail and wind damage to some of its rental units. Insurance proceeds of approximately $50,000 were received during the year ended December 31, 2005. The Partnership recognized a casualty gain of approximately $50,000 during the year ended December 31, 2005 as the damaged assets were fully depreciated at the time of the casualty.

In May 2005, Knollwood Apartments suffered fire damage to some of its rental units. Insurance proceeds of approximately $54,000 were received during the year ended December 31, 2005. The Partnership recognized a casualty gain of approximately $54,000 during the year ended December 31, 2005 as the damaged assets were fully depreciated at the time of the casualty.

In August 2005, Post Ridge Apartments suffered fire damage to some of its rental units. Insurance proceeds of approximately $13,000 were received during the year ended December 31, 2005. The Partnership recognized a casualty gain of approximately $13,000 during the year ended December 31, 2005 as the damaged assets were fully depreciated at the time of the casualty.

Total expenses increased due to increases in operating, depreciation, interest and property tax expense, partially offset by a decrease in general and administrative expense and loss on early extinguishment of debt (as discussed in Liquidity and Capital Resources). Operating expense increased due to an increase in advertising, property, and management fee expense, partially offset by a decrease in maintenance expense. Advertising expense increased due to increased leasing promotions at Belmont Place Apartments as the property began leasing completed units whereas the property was under redevelopment during 2004. Property expense increased due to increases in payroll and related benefits and utility expenses at most of the investment properties partially offset by a decrease in payroll and related benefits at Citadel Village. Management fee expense increased due to the increase in rental income on which such fee is based. &nb sp;Maintenance expense decreased due to a decrease in contract labor at four of the investment properties. Depreciation expense increased primarily due to assets being placed into service at Belmont Place Apartments. This was partially offset by assets being fully depreciated in prior periods at Citadel Apartments. Interest expense increased due to new mortgage financing at Belmont Place Apartments during 2005, the increase in mortgages on Arbours of Hermitage, Knollwood and Foothill Place upon their refinancings during the second half of 2005 and the second mortgages obtained on

Lake Forest and Citadel Apartments in June 2004 coupled with a decrease in capitalized interest costs associated with the reconstruction at Belmont Place Apartments. Property taxes increased due to higher assessed values at seven of the eleven properties, and higher tax rates at five of the eleven properties, and fewer capitalized costs associated with the reconstruction at Belmont Place Apartments.

General and administrative expense decreased due to a decrease in management reimbursements to the general partner, due to the sale of investment properties in 2004, allowed under the Partnership Agreement. Also included in general and administrative expenses are costs associated with the quarterly and annual communications with investors and regulatory agencies and the annual audit of the Partnership.

2004 Compared to 2003

Excluding the impact of discontinued operations and the gain on sale of discontinued operations, the Partnership's income from continuing operations was approximately $2,106,000 for the year ended December 31, 2004, compared to approximately $1,361,000 for the year ended December 31, 2003. Income from continuing operations increased due to an increase in total revenues and a decrease in total expenses.

The increase in total revenues is due to increases in other income and casualty gains partially offset by a decrease in rental income. The increase in other income is due to increases in lease cancellation fees at Foothill Place and Lake Forest Apartments and The Apartments and in utility reimbursements at most of the investment properties partially offset by decreases in late charges at Citadel Village and Village East Apartments. The decrease in rental income is due to a decrease in occupancy at eight investment properties and a decrease in the average rental rate at three investment properties partially offset by an increase in occupancy at three investment properties, an increase in the average rental rate at seven investment properties and a decrease in bad debt expense, primarily at Citadel Village and Village East Apartments.

In January 2003, The Apartments had a fire which damaged five apartment units and a hallway. Insurance proceeds of approximately $23,000 were received during the year ended December 31, 2003. The Partnership recognized a casualty gain of approximately $23,000 during the year ended December 31, 2003 as the damaged assets were fully depreciated at the time of the casualty.

Total expenses decreased as a result of decreases in general and administrative, depreciation, and interest expenses, partially offset by an increase in operating expense and a loss on early extinguishment of debt (as discussed in Liquidity and Capital Resources). Depreciation expense decreased due to assets becoming fully depreciated at Foothill Place Apartments and no depreciation being charged at Belmont Place Apartments during 2004 while the property was being reconstructed. Interest expense decreased due to interest capitalized on the redevelopment of Belmont Place Apartments partially offset by the addition of second mortgages at Citadel and Lake Forest Apartments. Operating expense increased due to increases in advertising, property and maintenance expenses. Advertising expense increased due to increased marketing costs at Belmont Place Apartments as the construction nears completion. Property expense increased due to an increase in payroll and related expenses at all of the investment properties, partially offset by a decrease in utilities at Belmont Place Apartments which was not operational during 2004. Maintenance expense increased due to fewer capitalized costs associated with the reconstruction of Belmont Place Apartments.

General and administrative expense decreased due to a decrease in management reimbursements to the General Partner, as allowed under the Partnership Agreement,

a decrease in management fees paid to the General Partner in connection with distributions made from operations and a decrease in the cost of the annual audit. Also included in general and administrative expenses are costs associated with the quarterly and annual communications with investors and regulatory agencies.

LIQUIDITY AND CAPITAL RESOURCES

At December 31, 2005, the Partnership had cash and cash equivalents of approximately $6,230,000 compared to approximately $4,539,000 at December 31, 2004. Cash and cash equivalents increased approximately $1,691,000 since December 31, 2004 due to approximately $20,031,000 and $4,103,000 of cash provided by financing activities and operating activities, respectively, partially offset by approximately $22,443,000 of cash used in investing activities. Cash provided by financing activities consisted of proceeds from the refinancing of six of the eleven properties and advances made by affiliates of the general partner, partially offset by payments made on the advances received, payments and repayments made on the mortgages encumbering the properties, payments made toward the cost of new debt and distributions made to the investors. Cash used in investing activates consisted of property improvements and replacements and deposits to restricted escro ws, partially offset by insurance proceeds received from casualties. 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 various 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. For example, the Sarbanes-Oxley Act of 2002 mandates or suggests additional compliance measures with regard to governance, disclosure, audit and other areas. In light of these changes, the Partnership expects that it will incur higher expenses related to compliance. The Partnership regularly evaluates the capital improvement needs of the properties. The Partnership has no material commitments for property improvements and replacements however certain routine capital expenditures are anticipated du ring 2006. Such capital expenditures will depend on the physical condition of the properties as well as replacement reserves and cash flow generated by the properties. Capital expenditures will be incurred only if cash is 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 sufficient for any near-term needs (exclusive of capital improvements) of the Partnership. The mortgage indebtedness encumbering the Partnership’s investment properties of approximately $89,161,000 matures at various dates between 2007 and 2034 with balloon payments of approximately $7,574,000, $27,936,000, $9,003,000, $8,964,000 and $173,000 due in 2007, 2008, 2014, 2015 and 2022, respectively. The General Partner will attempt to refinance such indebtedness and/or sell the properties prior to such maturity dates. If a property cannot be refinanced or sold for a sufficient amount, the Partnership will risk losing such property through foreclosure.

interest beginning on December 16, 2005 until the loan matures on September 16, 2007, with a five-year extension option. The Permanent Credit Facility includes properties in other partnerships that are affiliated with the general partner of the Registrant. The Permanent Credit Facility creates separate loans for each property that are not cross-collateralized or cross-defaulted with the other property loans. The new loan on Citadel Village Apartments has a variable interest rate of the Fannie Mae discounted mortgage-backed security index plus 85 basis points, which rate is currently 5.13% per annum, and resets monthly. The interest rate on the prior mortgage was 6.95% per annum. Monthly principal payments are required based on a 30-year amortization schedule using the interest rate in effect during the first month of the new mortgage. The loan is prepayable without penalty. As a condition of the loan, the lender required AIMCO Propertie s, L.P., an affiliate of the Partnership, to guarantee the obligations and liabilities of the Partnership with respect to the new mortgage financing.

On August 31, 2005, the Partnership refinanced the first mortgage encumbering one of its investment properties, Arbours of Hermitage. The Partnership recognized a

loss on early extinguishment of debt of approximately $5,000 during the year ended December 31, 2005 due to the write off of unamortized loan costs. The new mortgage loan, in the principal amount of $11,000,000, replaced the existing mortgage loan, which had an outstanding balance at the time of the refinancing of $5,650,000. Closing costs of approximately $103,000 were capitalized during 2005 and are included in other assets. The new mortgage requires monthly payments of principal and interest of approximately $59,000, beginning on October 10, 2005 until the loan matures on September 10, 2015, with a fixed interest rate of 5.06% and a balloon payment of approximately $8,964,000, due at maturity. The Partnership is prohibited from prepaying the loan prior to October 10, 2007. On or after October 10, 2007, the loan may be prepaid with the payment of a prepayment penalty, as defined in the loan agreement. As a condition of the loan, the lender required AIMCO Properties, L.P., an affiliate of the Partnership, to guarantee the obligations and liabilities of the Partnership with respect to the new mortgage financing.

On October 22, 2003, the Partnership entered into a second mortgage for Post Ridge Apartments. The second mortgage is in the principal amount of $375,000 and has a stated interest rate of 7.04% per annum. Payments of principal and interest of approximately $3,000 are due on the first day of each month commencing December 2003 until January 2022 at which time a balloon payment of approximately $173,000 is required. The proceeds from the second mortgage were used as a cross collateralized loan to Belmont Place Apartments to establish a capital escrow reserve as required by the mortgage lender. Belmont Place Apartments used these proceeds to fund the construction project at the property.

The Partnership declared the following distributions during the years ended December 31, 2005, 2004 and 2003 (in thousands except per unit data):


		Per		Per		Per
	Year Ended	Limited	Year Ended	Limited	Year Ended	Limited
	December 31,	Partnership	December 31,	Partnership	December 31,	Partnership
	2005	Unit	2004	Unit	2003	Unit

Operations	$ --	$ --	$ --	$ --	$1,827	$ 5.12
Sale (1)	15,026	42.08	--	--	3,743	10.50
	$15,026	$42.08	$ --	$ --	$5,570	$15.62

(1)

2005 distribution consists of balance of sale proceeds from the 2003 sale of Southport Apartments and the sale proceeds from the 2004 sales of Point West

Apartments, Nob Hill Apartments and Briar Bay Apartments. 2003 distribution consists of sale proceeds from sale of Southport Apartments.

Future cash distributions will depend on the levels of cash generated from operations and 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 2006 or subsequent periods.

Other

In addition to its indirect ownership of the general partner interest in the Partnership, AIMCO and its affiliates owned 224,566 limited partnership units (the "Units") in the Partnership representing 65.51% of the outstanding Units at December 31, 2005. 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 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 65.51% of the outstanding Units, AIMCO and its affiliates are in a position to control all 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

A summary of the Partnership's significant accounting policies is included in "Note A – Organization and Summary of Significant Accounting Policies" to the consolidated financial statements included in "Item 8. Financial Statements and Supplementary Data." The General Partner believes that the consistent application of these policies enables the Partnership to provide readers of the financial statements with useful and reliable information about the Partnership's operating results and financial condition. The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States requires the Partnership to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities at the date of the financial statements as well as reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. Judgments and assessments of uncertainties are required in applying the Partnership's accounting policies in many areas. 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. 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 associated with redevelopment projects are capitalized in accordance with Statement of Financial Accounting Standards (“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. The Partnership capitalizes interest, property taxes and operating costs in accordance with SFAS No. 34 “Capitalization of Interest Costs” during periods in which redevelopment and construction projects are in progress.

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.

Item 7a.

Quantitative and Qualitative Disclosures About Market Risk

The Partnership is exposed to market risks from adverse changes in interest rates. In this regard, changes in U.S. interest rates affect the interest earned on the Partnership's cash and cash equivalents as well as interest paid on its indebtedness. As a policy, the Partnership does not engage in speculative or leveraged transactions, nor does it hold or issue financial instruments for trading purposes. The Partnership is exposed to changes in interest rates primarily as a result of its borrowing activities used to maintain liquidity and fund business

operations. To mitigate the impact of fluctuations in U.S. interest rates, the Partnership maintains 91% of its debt as fixed rate in nature by borrowing on a long-term basis. Based on interest rates at December 31, 2005, a 100 basis point increase or decrease in market interest rates would have no material impact on the Partnership.

The following table summarizes the Partnership's fixed rate debt obligations at December 31, 2005. The interest rates represent the weighted-average rates. The fair value of the total debt obligations after discounting the scheduled loan payments to maturity, at the Partnership's incremental borrowing rate was approximately $89,161,000 at December 31, 2005.


	Long-term Debt
Principal amount by expected maturity:	Fixed Rate Debt	Average Interest Rate
	(in thousands)

2006	$ 1,169	6.60%
2007	1,533	6.60%
2008	29,465	6.60%
2009	1,217	7.01%
2010	1,299	7.01%
Thereafter	46,856	7.01%
Total	$ 81,539

Item 8.

Financial Statements and Supplementary Data

CONSOLIDATED CAPITAL PROPERTIES IV

LIST OF FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm

Consolidated Balance Sheets - December 31, 2005 and 2004

Consolidated Statements of Operations - Years ended December 31, 2005, 2004 and 2003

Consolidated Statements of Changes in Partners' Deficit - Years ended December 31, 2005, 2004, and 2003

Consolidated Statements of Cash Flows - Years ended December 31, 2005, 2004 and 2003

Notes to Consolidated Financial Statements

Report of Independent Registered Public Accounting Firm

The Partners

Consolidated Capital Properties IV

We have audited the accompanying consolidated balance sheets of Consolidated Capital Properties IV as of December 31, 2005 and 2004, and the related consolidated statements of operations, changes in partners' deficit, and cash flows for each of the three years in the period ended December 31, 2005. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Partnership’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Partnership’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and eva luating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Consolidated Capital Properties IV at December 31, 2005 and 2004, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2005, in conformity with U. S. generally accepted accounting principles.

/s/ERNST & YOUNG LLP

Greenville, South Carolina

March 6, 2006

CONSOLIDATED CAPITAL PROPERTIES IV

CONSOLIDATED BALANCE SHEETS

(in thousands, except unit data)


	December 31,
	2005	2004
Assets
Cash and cash equivalents	$ 6,230	$ 4,539
Receivables and deposits	1,134	1,187
Restricted escrows (Note A)	6,517	426
Other assets	2,028	1,359
Investment properties (Notes C and F):
Land	11,030	11,030
Buildings and related personal property	120,984	107,750
	132,014	118,780
Less accumulated depreciation	(79,491)	(76,096)
	52,523	42,684
	$ 68,432	$ 50,195
Liabilities and Partners' Deficit
Liabilities
Accounts payable	$ 441	$ 3,704
Tenant security deposit liabilities	372	306
Accrued property taxes	1,176	991
Other liabilities	1,056	901
Distribution payable (Note E)	1,316	715
Mortgage notes payable (Note C)	89,161	53,520
	93,522	60,137
Partners' Deficit
General partners (Note E)	(6,764)	(5,791)
Limited partners (342,773 units issued and
outstanding)	(18,326)	(4,151)
	(25,090)	(9,942)
	$ 68,432	$ 50,195

See Accompanying Notes to Consolidated Financial Statements

CONSOLIDATED CAPITAL PROPERTIES IV

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per unit data)


	Years Ended December 31,
	2005	2004	2003
Revenues:
Rental income	$18,756	$15,757	$15,850
Other income	2,156	2,018	1,963
Casualty gains (Note H)	119	678	23
Total revenues	21,031	18,453	17,836

Expenses:
Operating	10,371	8,581	7,566
General and administrative	746	881	1,334
Depreciation	3,472	2,130	2,654
Interest	4,532	3,529	3,788
Property taxes	1,633	1,117	1,133
Loss on early extinguishment of debt (Notes C and G)	17	109	--
Total expenses	20,771	16,347	16,475

Income from continuing operations	260	2,106	1,361
Income from discontinued operations	--	113	607
Gain on sale of discontinued operations
(Note D)	--	29,281	6,232

Net income (Note I)	$ 260	$31,500	$ 8,200

Net income allocated to general partners (4%)	$ 10	$ 1,260	$ 328

Net income allocated to limited partners (96%)	250	30,240	7,872

Net income	$ 260	$31,500	$ 8,200

Per limited partnership unit:
Income from continuing operations	$ 0.73	$ 5.89	$ 3.82
Income from discontinued operations	--	0.32	1.70
Gain on sale of discontinued operations	--	82.01	17.45

Net income	$ 0.73	$ 88.22	$ 22.97

Distributions per limited partnership unit	$ 42.08	$ --	$ 15.62

See Accompanying Notes to Consolidated Financial Statements

CONSOLIDATED CAPITAL PROPERTIES IV

CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' DEFICIT

(in thousands, except unit data)


	Limited
	Partnership	General	Limited
	Units	Partners	Partners	Total

Original capital contributions	343,106	$ 1	$171,553	$171,554

Partners' deficit at
December 31, 2002	342,773	$ (7,146)	$(36,910)	$(44,056)

Net income for the year ended
December 31, 2003	--	328	7,872	8,200

Distributions to partners	--	(226)	(5,353)	(5,579)

Partners' deficit at
December 31, 2003	342,773	(7,044)	(34,391)	(41,435)

Net income for the year ended
December 31, 2004	--	1,260	30,240	31,500

Distributions to partners	--	(7)	--	(7)

Partners' deficit at
December 31, 2004	342,773	(5,791)	(4,151)	(9,942)

Net income for the year ended
December 31, 2005	--	10	250	260

Distributions to partners	--	(983)	(14,425)	(15,408)

Partners' deficit at
December 31, 2005	342,773	$ (6,764)	$(18,326)	$(25,090)

See Accompanying Notes to Consolidated Financial Statements

CONSOLIDATED CAPITAL PROPERTIES IV

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)


	Years Ended December 31,
	2005	2004	2003
Cash flows from operating activities:
Net income	$ 260	$31,500	$ 8,200
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation	3,472	2,523	3,293
Amortization of loan costs	207	145	211
Gain on sale of discontinued operations	--	(29,281)	(6,232)
Casualty gains	(119)	(678)	(23)
Loss on early extinguishment of debt	17	294	13
Change in accounts:
Receivables and deposits	53	(24)	3
Other assets	(135)	(47)	(279)
Accounts payable	(103)	(505)	64
Tenant security deposit liabilities	66	(204)	(13)
Accrued property taxes	185	(256)	(145)
Other liabilities	155	(251)	287
Due to affiliates	45	--	149

Net cash provided by operating activities	4,103	3,216	5,528

Cash flows from investing activities:
Property improvements and replacements	(16,471)	(20,582)	(4,021)
Net proceeds from sales of discontinued operations	--	33,957	8,137
Net (deposits to) withdrawals from restricted
escrows	(6,091)	322	(92)
Insurance proceeds received	119	678	23

Net cash (used in) provided by
investing activities	(22,443)	14,375	4,047

Cash flows from financing activities:
Payments on mortgage notes payable	(591)	(758)	(876)
Repayment of mortgage notes payable	(27,130)	(17,432)	(4,229)
Proceeds from mortgage notes payable	63,362	3,810	375
Loan costs and pre-payment penalties paid	(758)	(247)	--
Advances from affiliates	6,944	14,035	--
Payments on advances from affiliates	(6,989)	(13,990)	--
Distributions to partners	(14,807)	(7)	(5,435)

Net cash provided by (used in) financing
activities	20,031	(14,589)	(10,165)

Net increase (decrease) in cash and cash equivalents	1,691	3,002	(590)

Cash and cash equivalents at beginning of the year	4,539	1,537	2,127

Cash and cash equivalents at end of year	$ 6,230	$ 4,539	$ 1,537

See Accompanying Notes to Consolidated Financial Statements

CONSOLIDATED CAPITAL PROPERTIES IV

CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)

Supplemental Disclosures of Cash Flow Information and Non-Cash Activities:

At December 31, 2005 and 2003 distributions payable to partners were each adjusted by approximately $601,000 and $144,000 for non-cash activity, respectively.

Cash paid for interest was approximately $4,541,000, $4,942,000 and $5,251,000 for the years ended December 31, 2005, 2004 and 2003, respectively.

At December 31, 2005, 2004 and 2003, property improvements and replacements of approximately $147,000, $3,307,000, and $243,000, respectively, were included in accounts payable.

CONSOLIDATED CAPITAL PROPERTIES IV

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2005

Note A - Organization and Summary of Significant Accounting Policies

Organization: Consolidated Capital Properties IV (the "Partnership" or "Registrant"), a California limited partnership, was formed on September 22, 1981, to operate and hold real estate properties. The general partner of the Partnership is ConCap Equities, Inc. (the "General Partner" or "CEI"), a Delaware corporation. Additionally, the General Partner is a subsidiary of Apartment Investment and Management Company ("AIMCO"), a publicly traded real estate investment trust. The Partnership Agreement provides that the Partnership is to terminate on December 31, 2011 unless terminated prior to that date. As of December 31, 2005, the Partnership operates 11 residential properties in or near major urban areas in the United States.

Upon the Partnership's formation in 1981, Consolidated Capital Equities Corporation ("CCEC"), a Colorado corporation, was the corporate general partner and Consolidated Capital Management Company ("CCMC"), a California general partnership, was the non-corporate general partner. In 1988, through a series of transactions, Southmark Corporation ("Southmark") acquired controlling interest in CCEC. In December 1988, CCEC filed for reorganization under Chapter 11 of the United States Bankruptcy Code. In 1990, as part of CCEC's reorganization plan, CEI acquired CCEC's general partner interests in the Partnership and in 15 other affiliated public limited partnerships (the "Affiliated Partnerships") and CEI replaced CCEC as managing general partner in all 16 partnerships. The selection of CEI as the sole managing general partner was approved by a majority of the limited partners in the Partners hip and in each of the Affiliated Partnerships pursuant to a solicitation of the Limited Partners dated August 10, 1990. As part of the solicitation, the Limited Partners also approved an amendment to the Partnership Agreement to limit changes of control of the Partnership, and the conversion of CCMC from a general partner to a Special Limited Partner, thereby leaving CEI as the sole general partner of the Partnership. On November 14, 1990, CCMC was dissolved and its Special Limited Partnership interest was divided among its former partners.

All of CEI's outstanding stock is owned by Insignia Properties Trust ("IPT"), which is an affiliate of AIMCO. In December 1994, the parent of GII Realty, Inc., entered into a transaction (the "Insignia Transaction") in which an affiliate of Insignia acquired an option (exercisable in whole or in part from time to time) to purchase all of the stock of GII Realty, Inc. and, pursuant to a partial exercise of such option, acquired 50.5% of that stock. As part of the Insignia Transaction, the Insignia affiliate also acquired all of the outstanding stock of Partnership Services, Inc., an asset management entity, and a subsidiary of Insignia acquired all of the outstanding stock of Coventry Properties, Inc., a property management entity. In addition, confidentiality, non-competition, and standstill arrangements were entered into between certain of the parties. Those arrangements, among other things, prohibit GII Realty's former sole shareholder from purchasing Partnership Units for a period of three years. On October 24, 1995, the Insignia affiliate exercised the remaining portion of its option to purchase all of the remaining outstanding capital stock of GII Realty, Inc.

Basis of Presentation:

The Partnership amended its Form 10-K for the year ended December 31, 2004 and its Form 10-Q for the three months ended March 31, 2005 to adjust for capitalizing interest expense related to the redevelopment of one of the investment properties. In accordance with Statement of Financial Accounting Standards (“SFAS”) No. 34, the Partnership should have considered the total consolidated debt of the Partnership in determining the amount of interest expense to capitalize. In addition, the Partnership paid a pre-payment penalty associated with the retirement of the mortgage encumbering the investment property in 2004 and this pre-payment penalty should also have been capitalized, as the Partnership was required by the mortgage lender to repay the mortgage. Because of the errors noted above, the balance sheet as of December 31, 2004, including the partners’ deficit, was restated in the amended Form 10-K to reflect the correction of these errors.

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 reflect the operations of South Port Apartments, Point West Apartments, Nob Hill Apartments and Briar Bay Apartments as income from discontinued operations due to their sales in March 2003, March 2004, October 2004 and October 2004, respectively.

Consolidation: The consolidated financial statements include the Partnership's majority interest in a joint venture which owned South Port Apartments. The Partnership has the ability to control the major operating and financial policies of the joint venture. No minority interest has been reflected for the joint venture because minority interests are limited to the extent of their equity capital, and losses in excess of the minority interest equity capital are charged against the Partnership's interest. Should the losses reverse, the Partnership would be credited with the amount of minority interest losses previously absorbed. The other partner of this joint venture is AIMCO Properties, LP, an affiliate of the General Partner. South Port Apartments was sold in March 2003.

The Partnership's consolidated financial statements also include the accounts of the Partnership, its wholly-owned partnerships, and its 99% limited partnership interest in Briar Bay Apartments Associates, Ltd., Post Ridge Associates, Ltd., Concap River's Edge Associates, Ltd., Foothill Chimney Associates, L.P., and ConCap Stratford Associates, Ltd. The Partnership may remove the general partner of its 99% owned partnerships; therefore, the partnerships are deemed controlled and therefore consolidated by the Partnership. All significant interpartnership balances have been eliminated. Briar Bay Apartments was sold in October 2004.

Cash and Cash Equivalents: Cash and cash equivalents include cash on hand and in banks. At certain times, the amount of cash deposited at a bank may exceed the limit on insured deposits. Cash balances include approximately $6,071,000 and $4,394,000 at December 31, 2005 and 2004, respectively, that are maintained by an affiliated management company on behalf of affiliated entities in a cash concentration account.

Security Deposits: The Partnership requires security deposits from lessees for the duration of the lease and such deposits are included in receivables and deposits. Deposits are refunded when the tenant vacates, provided the tenant has not damaged its space and is current on its rental payments.

Restricted Escrows:

Tax Escrow Account: In connection with the second mortgages obtained on Citadel and Lake Forest Apartments in June 2004, the lender required the establishment of a property tax escrow account to be maintained by the mortgage lender. The Partnership was required to make initial deposits of approximately $115,000 and $136,000 for Citadel and Lake Forest Apartments, respectively, at the time the mortgages were obtained and is required to make monthly deposits of approximately $16,000 and $17,000, respectively. At December 31, 2005, the total reserve balance was approximately $308,000.

In connection with the refinancing of Citadel Village and Village East in November of 2005, the lender required the establishment of a property tax escrow account to be maintained by the mortgage lender. The Partnership was required to make initial deposits of approximately $20,000 and $14,000 for Citadel Village and Village East respectively, at the time the mortgages were obtained and is required to make monthly deposits of approximately $2,000 each. At December 31, 2005, the total reserve balance was approximately $38,000.

Insurance Escrows: In connection with the refinancing of Village East Apartments in November of 2005, the lender required the establishment of an insurance escrow account to be maintained by the mortgage lender. The Partnership was required to make initial deposits of approximately $5,000 at the time the mortgage was obtained and make monthly deposits of approximately $2,000. At December 31, 2005, the total reserve balance was approximately $5,000.

Lines of Credit Reserve Account: In conjunction with the new mortgage obtained on Belmont Place Apartments in April 2005 the Partnership has provided to the lender two letters of credit, each in the amount of $2,500,000, to secure the Partnership’s obligations under the mortgage. The letters of credit are secured by proceeds from the mortgage financing which were deposited into an escrow account. The lender will release the first letter of credit when the property has achieved annual rental income of approximately $2.9 million from 60% of the rental units and will release the second letter of credit when the property has achieved annual rental income of approximately $3.9 million from 88% of the rental units. During the year ended December 31, 2005, the first letter of credit for $2,500,000 was released and the funds were returned to the Partnership. The amount returned included interest of app roximately $33,000. At December 31, 2005, the total reserve balance was $2,500,000. Subsequent to December 31, 2005 the second letter of credit for $2,500,000 was released and the funds were returned to the Partnership.

Renovation Escrow: In connection with the refinancing of Knollwood Apartments in November of 2005, the lender required the establishment of an escrow account for the purposes of renovations to be done on the property to be maintained by the lender. The Partnership was required to make an initial deposit of approximately $3,500,000. At December 31, 2005, the total reserve balance was approximately $3,500,000.

Replacement Reserve Account: In connection with the second mortgages obtained on Citadel and Lake Forest Apartments in June 2004, the lender required the establishment of a replacement reserve to be used for the funding of capital replacements throughout the loan terms. The Partnership is required to make monthly deposits of approximately $6,000 and $7,000 for Citadel and Lake Forest Apartments, respectively. At December 31, 2005, the total reserve balance was approximately $163,000.

In connection with the refinancing of Village East Apartments in November 2005, the lender required the establishment of a replacement reserve to be used for the funding of capital replacements throughout the loan terms. The Partnership is required to make monthly deposits of approximately $3,000. At December 31, 2005, the total reserve balance was approximately $3,000.

Investments in Real Estate: Investment properties consists of eleven apartment complexes and are stated at cost. The Partnership capitalizes costs incurred in connection with capital expenditure activities, including redevelopment and construction projects, other tangible property improvements and replacements of existing property components. Costs associated with redevelopment projects are capitalized in accordance with SFAS No. 67, “Accounting for Costs and the Initial Rental Operations of Real Estate Properties.” Costs incurred in connection with capital projects are capitalized where the costs of the project exceed $250. 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. The Partnership capitalizes interest, property taxes and oper ating costs in accordance with SFAS No. 34 “Capitalization of Interest Costs” during periods in which redevelopment and construction projects are in progress. During the years ended December 31, 2005, 2004, and 2003 the Partnership capitalized interest of $398,000, $716,000, and $389,000 property taxes of $7,000, $139,000, and $233,000 and operating costs of $11,000, $114,000, and $343,000, respectively. Capitalized costs are depreciated over the useful life of the asset. Expenditures for ordinary repairs, maintenance and apartment turnover costs are expensed as incurred.

In accordance with SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets”, the Partnership records impairment losses on long-lived assets used in operations when events and circumstances indicate the assets might be impaired and the undiscounted cash flows estimated to be generated by those assets are less than the carrying amounts of those assets. No adjustments for impairment of value were necessary for the years ending December 31, 2005, 2004, and 2003.

Depreciation: Depreciation is provided by the straight-line method over the estimated lives of the investment properties and related personal property. For Federal income tax purposes, the accelerated cost recovery method is used for real property over 19 years for additions after May 8, 1985 and before January 1, 1987. As a result of the Tax Reform Act of 1986, for additions after December 31, 1986, the modified accelerated cost recovery method is used for depreciation of (1) real property over 27 1/2 years and (2) personal property additions over 5 years.

Leases: 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.

Deferred Costs: Loan costs of approximately $1,614,000 and $1,744,000, net of accumulated amortization of approximately $309,000 and $882,000, are included in other assets at December 31, 2005 and 2004, respectively. The loan costs are amortized over the terms of the related loan agreements. Amortization expense is included in interest expense and income from discontinued operations. Amortization expense is expected to be approximately $318,000 in 2006, $286,000 in 2007, $183,000 in 2008, $94,000 in 2009 and $93,000 in 2010.

Leasing commissions and other direct costs incurred in connection with successful leasing efforts are deferred and amortized over the terms of the related leases. Amortization of these costs is included in operating expenses.

Fair Value of Financial Instruments: SFAS No. 107, "Disclosures about Fair Value of Financial Instruments", as amended by SFAS No. 119, "Disclosures about Derivative Financial Instruments and Fair Value of Financial Instruments", requires disclosure of fair value information about financial instruments, whether or not recognized in the balance sheet, for which it is practicable to estimate fair value. Fair value is defined in the SFAS as the amount at which the instruments could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The Partnership believes that the carrying amount of its financial instruments (except for long term debt) approximates their fair value due to the short term maturity of these instruments. The Partnership estimates the fair value of its long-term debt by discounting future cash flows using a discount rate commensurate with that currently bel ieved to be available to the Partnership for similar term, fully amortizing long-term debt. The fair value of the Partnership's long term debt at the Partnership's incremental borrowing rate approximates its fair value at December 31, 2005.

Allocation of Net Income and Net Loss: The Partnership Agreement provides for net income (losses) and distributions of distributable cash from operations to be allocated generally 96% to the Limited Partners and 4% to the General Partner.

Net Income Per Limited Partnership Unit: Net income per Limited Partnership Unit is computed by dividing net income allocated to the Limited Partners by the number of Units outstanding. Per Unit information has been computed based on the number of Units outstanding at the beginning of each year.

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. As defined in SFAS No. 131, the Partnership has only one reportable segment.

Advertising Costs: Advertising costs of approximately $935,000, $909,000 and $553,000 in 2005, 2004 and 2003, respectively, are expensed as incurred and are included in operating expense and income from discontinued operations.

Use of Estimates: The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

Recent Accounting Pronouncement: In May 2005, the Financial Accounting Standards Board issued SFAS No. 154 “Accounting Changes and Error Corrections”, which replaces APB Opinion No. 20 and SFAS No. 3, and changes the requirements for the accounting for and reporting of a change in accounting principle. This statement is effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005, although early adoption is permitted for accounting changes and corrections of errors made in fiscal years beginning after the date SFAS No. 154 was issued. The Partnership does not anticipate that the adoption of SFAS No. 154 will have a material effect on the Partnership’s consolidated financial condition or results of operations.

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 for reimbursements 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 $1,029,000, $1,075,000 and $1,161,000 for the years ended December 31, 2005, 2004 and 2003, respectively, which is included in operating expense and income from discontinued operations.

Affiliates of the General Partner charged the Partnership for reimbursement of accountable administrative expenses amounting to approximately $809,000, $914,000 and $955,000 for the years ended December 31, 2005, 2004, and 2003, respectively, which is included in general and administrative expenses and investment properties. The portion of these reimbursements included in investment properties for the years ended December 31, 2005, 2004, and 2003 are fees related to construction management services provided by an affiliate of the General Partner of approximately $285,000, $223,000, and $104,000, respectively.

Belmont Place Apartments and to repay the mortgage encumbering the property (see Note G). During the same periods, the Partnership repaid approximately $7,043,000 and $14,105,000, which included approximately $54,000 and $115,000 of interest, respectively. There were no such advances or repayments during the year ended December 31, 2003. Interest on advances is charged at prime plus 2% or 9.25% at December 31, 2005. Interest expense was approximately $54,000 and $115,000 for the years ended December 31, 2005 and 2004, respectively. There was no interest expense for the year ended December 31, 2003.

The Partnership Agreement provides for a special management fee equal to 9% of the total distributions made to the limited partners from cash flow provided by operations to be paid to the General Partner for executive and administrative management services. Affiliates of the General Partner were paid approximately $158,000 under this provision of the Partnership Agreement during the year ended December 31, 2003. There were no such special management fees paid or earned during the years ended December 31, 2005 or 2004.

For acting as a real estate broker in connection with the sale of South Port Apartments in March 2003, the General Partner was paid a real estate commission of approximately $295,000 during the year ended December 31, 2003. For acting as real estate broker in connection with the sale of Stratford Place Apartments in December 2000, a real estate commission of approximately $228,000 was accrued in December 2000 and paid to the General Partner during the year ended December 31, 2001. For acting as real estate broker in connection with the sale of Overlook Apartments in December 1999, the General Partner was paid a real estate commission of approximately $40,000 during the year ended December 31, 2000. When the Partnership terminates, the General Partner will have to return these commissions if the limited partners do not receive their original invested capital plus a 6% per annum cumulative return.

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 years ended December 31, 2005, 2004, and 2003, respectively, the Partnership paid AIMCO and its affiliates approximately $297,000, $377,000 and $350,000 for insurance coverage and fees associated with policy claims administration.

affiliates are in a position to control all 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.

Note C - Mortgage Notes Payable

The principle terms of mortgage notes payable are as follows:


	Principal	Principal	Monthly			Principal
	Balance At	Balance At	Payment	Stated		Balance
	December 31,	December 31,	Including	Interest	Maturity	Due At
Property	2005	2004	Interest	Rate	Date	Maturity
	(in thousands)					(in thousands)
The Apartments	$ 4,092	$ 4,235	$ 41	8.37% (a)	03/20	$ --
Arbours of Hermitage
Apartments	10,961	5,650	59	5.06% (a)	09/15	8,964
Belmont Place Apartments	19,250	--	108	5.14% (a)(f)	11/34	--
Citadel Apartments
1^st mortgage	4,183	4,215	33	8.55% (a)	07/14	3,748
2^nd mortgage	1,310	1,310	5	(b)(e)	07/07	1,310
Citadel Village Apartments	1,812	2,450		(c)	09/07	1,764
Foothill Place Apartments	17,633	10,100	92	4.72% (a)	09/08	16,836
Knollwood Apartments	11,600	6,780	64	5.20% (a)	12/08	11,100
Lake Forest Apartments
1^st mortgage	5,979	6,027	42	7.43% (a)	07/14	5,255
2^nd mortgage	2,500	2,500	17	(b)(e)	07/07	2,500
Post Ridge Apartments
1^st mortgage	4,017	4,152	34	6.63% (a)	01/22	--
2^nd mortgage	363	369	3	7.04% (a)	01/22	173
Rivers Edge Apartments	3,461	3,582	33	7.82% (a)	09/20	--
Village East Apartments	2,000	2,150	15	(d)(e)	12/07	2,000
Total	$89,161	$53,520	$ 546			$53,650

(a) Fixed rate mortgage.

(b)

Interest rate is variable and is equal to the one month LIBOR rate plus 300 basis points (7.39% at December 31, 2005).

(c)

Interest rate is variable and is equal to the Fannie Mae discounted mortgage-backed security index plus 85 basis points. The rate at December 31, 2005 was 5.13%.

(d)

Interest rate is variable and is equal to the one month LIBOR rate plus 160 basis points (5.99% at December 31, 2005).

(e)

Monthly payments of interest only at the stated interest rate until maturity.

(f)

Monthly payments of interest only until December of 2006, when monthly payments of principal and interest begin.

The notes payable represent borrowings on the properties purchased by the Partnership. The notes are non-recourse, and are collateralized by deeds of trust on the investment properties. The notes mature between 2007 and 2034 with balloon payments of approximately $7,574,000, $27,936,000, $9,003,000, $8,964,000 and $173,000 due in 2007, 2008, 2014, 2015, and 2022, respectively. Various mortgages require prepayment penalties if repaid prior to maturity. Further, the properties may not be sold subject to existing indebtedness.

On November 30, 2005, the Partnership refinanced the first mortgage encumbering one of its investment properties, Citadel Village Apartments. The Partnership recognized a loss on early extinguishment of debt of approximately $1,000 during the year ended December 31, 2005 due to the write off of unamortized loan costs. The new mortgage loan, in the principal amount of $1,812,000 replaced the existing mortgage loan, which had an outstanding balance at the time of the refinancing of $2,450,000. Closing costs of approximately $56,000 were capitalized during 2005 and are included in other assets. The new mortgage requires monthly payments of interest beginning on December 16, 2005 until the loan matures on September 16, 2007, with a five-year extension option. The Permanent Credit Facility includes properties in other partnerships that are affiliated with the general partner of the Registrant. The Permanent Credit Facility creates sepa rate loans for each property that are not cross-collateralized or cross-defaulted with the other property loans. The new loan on Citadel Village Apartments has a variable interest rate of the Fannie Mae discounted mortgage-backed security index plus 85 basis points, which rate is currently 5.13% per annum, and resets monthly. The interest rate on the prior mortgage was 6.95% per annum. Monthly principal payments are required based on a 30-year amortization schedule using the interest rate in effect during the first month of the new mortgage. The loan is prepayable without penalty. As a condition of the loan, the lender required AIMCO Properties, L.P., an affiliate of the Partnership, to guarantee the obligations and liabilities of the Partnership with respect to the new mortgage financing.

On November 30, 2005, the Partnership refinanced the first mortgage encumbering one of its investment properties, Village East Apartments. The Partnership recognized a loss on early extinguishment of debt of approximately $2,000 during the year ended December 31, 2005 due to the write off of unamortized loan costs. The new mortgage loan, in the principal amount of $2,000,000 replaced the existing mortgage loan, which had an outstanding balance at the time of the refinancing of $2,150,000. Closing costs of approximately $70,000 were capitalized during 2005 and are included in other assets. The new mortgage requires monthly payments of interest beginning on January 1, 2006 until the loan matures on December 1, 2007, at which time the entire principal balance of $2,000,000 is due. The loan has a variable interest rate of the one month LIBOR rate plus 1.60%, which rate is currently 5.99% per annum, and resets monthly. The minimum inte rest rate for the term of the loan is the initial monthly rate at closing of the loan, which was 5.79%. The loan is prepayable without penalty if repaid within either months one through nine or months twenty two through twenty four. There is a prepayment penalty of 1% of the amount repaid if the loan is prepaid within months ten through twenty. As a condition of the loan, the lender required AIMCO Properties, L.P., an affiliate of the Partnership, to guarantee the obligations and liabilities of the Partnership with respect to the new mortgage financing. The Partnership has the right to request an extension of the maturity date for one year to December 1, 2008 if such request is made within thirty to ninety days prior to December 1, 2007 and other specific terms as stipulated in the loan agreement are satisfied.

On August 31, 2005, the Partnership refinanced the first mortgage encumbering one of its investment properties, Arbours of Hermitage. The Partnership recognized a loss on early extinguishment of debt of approximately $5,000 during the year ended December 31, 2005 due to the write off of unamortized loan costs. The new mortgage loan, in the principal amount of $11,000,000, replaced the existing mortgage loan, which had an outstanding balance at the time of the refinancing of $5,650,000. Closing costs of approximately $103,000 were capitalized during 2005 and are included in other assets. The new mortgage requires monthly payments of principal and interest of approximately $59,000, beginning on October 10, 2005 until the loan matures on September 10, 2015, with a fixed interest rate of 5.06% and a balloon payment of approximately $8,964,000, due at maturity. The Partnership is prohibited from prepaying the loan prior to October 10, 2007. On or after October 10, 2007, the loan may be prepaid with the payment of a prepayment penalty, as defined in the loan agreement. As a condition of the loan, the lender required AIMCO Properties, L.P., an affiliate of the Partnership, to guarantee the obligations and liabilities of the Partnership with respect to the new mortgage financing.

approximately $16,836,000 due at maturity. The Partnership may extend the term of the loan for two successive one-year periods by exercising the extension options as defined in the loan agreement. The Partnership may prepay the loan with no penalty if prepayment in full is made no more than twelve months before the maturity date or during the extension periods. However, if the loan is prepaid prior to twelve months before the maturity date then a prepayment penalty, as defined in the loan agreement, will apply.

CONSOLIDATED CAPITAL PROPERTIES IV

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Future annual principal payments required under the terms of the mortgage notes payable subsequent to December 31, 2005, are as follows (in thousands):


2006	$ 1,196
2007	9,128
2008	29,465
2009	1,217
2010	1,299
Thereafter	46,856
Total	$89,161

Note D - Disposition of Investment Properties

On March 28, 2003, the Partnership sold South Port Apartments to a third party, for a gross sale price of $8,625,000. The net proceeds realized by the Partnership were approximately $8,137,000 after payment of closing costs of approximately $488,000. The Partnership used approximately $4,229,000 of the net proceeds to repay the mortgage encumbering the property. The Partnership realized a gain of approximately $6,232,000 for the year ended December 31, 2003, as a result of this sale. This amount is shown as gain on sale of discontinued operations in the accompanying consolidated statements of operations. The property’s operations, income of approximately $8,000 for the year ended December 31, 2003 is included in income from discontinued operations and includes revenues of approximately $327,000. In

addition, the Partnership recorded a loss on early extinguishment of debt of approximately $13,000 for the year ended December 31, 2003 due to the write-off of unamortized loan costs, which is also included in income from discontinued operations in the accompanying consolidated statements of operations.

On March 31, 2004, the Partnership sold Point West Apartments to a third party, for a gross sale price of $3,900,000. The net proceeds realized by the Partnership were approximately $3,794,000 after payment of closing costs of approximately $106,000. The Partnership used approximately $2,204,000 of the net proceeds to repay the mortgage encumbering the property. The Partnership realized a gain of approximately $3,210,000 for the year ended December 31, 2004, as a result of this sale. This amount is shown as gain on sale of discontinued operations in the accompanying consolidated statements of operations. The property’s operations, losses of approximately $87,000 and $62,000 for the years ended December 31, 2004 and 2003, respectively, are included in income from discontinued operations and include revenues of approximately $189,000, and $811,000, respectively. In addition, the Partnership recorded a lo ss on early extinguishment of debt of approximately $48,000 for the year ended December 31, 2004 due to the write-off of unamortized loan costs, which is also included in income from discontinued operations in the accompanying consolidated statements of operations.

On October 29, 2004, the Partnership sold Nob Hill Villa Apartments to a third party, for a gross sale price of $10,700,000. The net proceeds realized by the Partnership were approximately $10,519,000 after payment of closing costs of approximately $181,000. The Partnership used approximately $6,328,000 of the net proceeds to repay the mortgage encumbering the property. The Partnership realized a gain of approximately $7,962,000 for the year ended December 31, 2004, as a result of this sale. This amount is shown as gain on sale of discontinued operations in the accompanying consolidated statements of operations. The property’s operations, a loss of approximately $108,000 and income of approximately $24,000 for the years ended December 31, 2004, and 2002, respectively, are included in income from discontinued operations and include revenues of approximately $2,071,000, and $2,642,000, respectively. In additio n, the Partnership recorded a loss on early extinguishment of debt of approximately $23,000 for the year ended December 31, 2004 due to the write-off of unamortized loan costs, which is also included in income from discontinued operations in the accompanying consolidated statements of operations.

On October 29, 2004, the Partnership sold Briar Bay Apartments to a third party, for a gross sale price of $20,352,000. The net proceeds realized by the Partnership were approximately $19,644,000 after payment of closing costs of approximately $708,000. The Partnership used approximately $3,500,000 of the net proceeds to repay the mortgage encumbering the property. The Partnership realized a gain of approximately $18,109,000 for the year ended December 31, 2004, as a result of this sale. This amount is shown as gain on sale of discontinued operations in the accompanying consolidated statements of operations. The property’s operations, income of approximately $308,000, and $637,000 for the years ended December 31, 2004, and 2003, respectively, are included in income from discontinued operations and include revenues of approximately $1,574,000, and $1,805,000, respectively. In addition, for the year ended Dece mber 31, 2004 the Partnership recorded a loss on early extinguishment of debt of approximately

$16,000 due to the write-off of unamortized loan costs, and approximately $98,000 due to pre-payment penalties paid. These amount are included in income from discontinued operations in the accompanying consolidated statements of operations.

Note E - Distributions

In conjunction with the transfer of funds from certain majority-owned sub-tier limited partnerships to the Partnership, approximately $382,000, $7,000 and $9,000 was distributed to the general partner of the majority owned sub-tier limited partnership during the years ended December 31, 2005, 2004 and 2003, respectively.

During 2005, the Partnership declared distributions of approximately $15,026,000 (approximately $14,425,000 to the limited partners or $42.08 per limited partnership unit) consisting of sales proceeds of South Port Apartments in 2003, and the 2004 sales of Point West Apartments, Nob Hill Apartments and Briar Bay Apartments. Approximately $601,000 of these distributions from proceeds is payable at December 31, 2005 to the General Partner and Special Limited Partners as this portion is subordinated and deferred per the Partnership Agreement until the limited partners receive 100% of their original capital contributions from surplus cash.

During 2003, the Partnership declared distributions of approximately $5,570,000 (approximately $5,353,000 to the limited partners or $15.62 per limited partnership unit) consisting of approximately $1,827,000 (approximately $1,754,000 or $5.12 per limited partnership unit) from operations and approximately $3,743,000 (approximately $3,599,000 or $10.50 per limited partnership unit) from the sales proceeds of South Port Apartments, which sold in March of 2003. Approximately $144,000 of these distributions from proceeds is payable at December 31, 2005 to the General Partner and special limited partners as this portion is subordinated and deferred per the Partnership Agreement until the limited partners receive 100% of their original capital contributions from surplus cash.

In years prior to 2003 the Partnership distributed various amounts from the proceeds of property sales and refinancings. At December 31, 2005, approximately $571,000 of these distributions from proceeds is payable to the General Partner and special limited partners as this distribution is subordinated and deferred per the Partnership Agreement until the limited partners receive 100% of their original capital contributions from surplus cash.

Note F – Investment Properties and Accumulated Depreciation


		Initial Cost
		To Partnership
		(in thousands)

			Buildings	Net Cost
			and	Capitalized
			Personal	Subsequent to
Description	Encumbrances	Land	Property	Acquisition
	(in thousands)			(in thousands)
The Apartments	$ 4,092	$ 438	$ 6,218	$ 3,303
Arbours of Hermitage
Apartments	10,961	547	8,574	8,327
Belmont Place Apartments	19,250	659	7,188	23,970
Citadel Apartments	5,493	695	5,619	2,138
Citadel Village Apartments	1,812	337	3,334	1,816
Foothill Place Apartments	17,633	3,492	9,435	6,417
Knollwood Apartments	11,600	345	7,065	6,215
Lake Forest Apartments	8,479	692	5,811	4,155
Post Ridge Apartments	4,380	143	2,498	3,820
Rivers Edge Apartments	3,461	512	2,160	1,258
Village East Apartments	2,000	184	2,236	2,413
Totals	$89,161	$ 8,044	$60,138	$63,832


	Gross Amount At Which Carried
	At December 31, 2005
	(in thousands)

		Buildings
		And
		Related
		Personal		Accumulated	Date of	Date	Depreciable
Description	Land	Property	Total	Depreciation	Construction	Acquired	Life-Years
				(in thousands)
The Apartments	$ 438	$ 9,521	$ 9,959	$ 8,400	1973	04/84	5-30
Arbours of Hermitage
Apartments	547	16,901	17,448	13,122	1973	09/83	5-30
Belmont Place Apartments	3,737	28,080	31,817	1,103	2004/2005	08/82	5-30
Citadel Apartments	694	7,758	8,452	7,305	1973	05/83	5-30
Citadel Village Apartments	337	5,150	5,487	4,061	1974	12/82	5-30
Foothill Place Apartments	3,402	15,942	19,344	13,311	1973	08/85	5-30
Knollwood Apartments	345	13,280	13,625	11,454	1972	07/82	5-30
Lake Forest Apartments	692	9,966	10,658	8,937	1971	04/84	5-30
Post Ridge Apartments	143	6,318	6,461	5,003	1972	07/82	5-30
Rivers Edge Apartments	512	3,418	3,930	3,079	1976	04/83	5-30
Village East Apartments	183	4,650	4,833	3,716	1973	12/82	5-30

Totals	$11,030	$120,984	$132,014	$ 79,491

Reconciliation of "Investment Properties and Accumulated Depreciation":


	Years ended December 31,
	2005	2004	2003
	(in thousands)
Investment Properties
Balance at beginning of year	$118,780	$122,370	$137,657
Additions	13,311	23,646	4,264
Property dispositions	(77)	(27,236)	(19,551)
Balance at end of year	$132,014	$118,780	$122,370

Accumulated Depreciation
Balance at beginning of year	$ 76,096	$ 96,547	$110,917
Additions charged to expense	3,472	2,523	3,293
Property dispositions	(77)	(22,974)	(17,663)
Balance at end of year	$ 79,491	$ 76,096	$ 96,547

The aggregate cost of the real estate for Federal income tax purposes at December 31, 2005, 2004 and 2003, is approximately $144,435,000, $128,255,000 and $150,401,000, respectively. The accumulated depreciation taken for Federal income tax purposes at December 31, 2005, 2004 and 2003, is approximately $88,870,000, $84,862,000 and $120,662,000, respectively.

Note G – Redevelopment of Belmont Place Apartments

The Partnership entered into a construction contract with Casden Builders, Inc. (a related party) to develop the new Belmont Place Apartments at an estimated cost of approximately $26.9 million. The construction contract provides for the payment of the cost of the work plus a fee without a maximum guaranteed price. Construction was completed in 2005 at a total project cost of approximately $31.9 million. The Partnership has funded construction expenditures from operating cash flow, proceeds from a cross collateralized loan, Partnership reserves, loans from an affiliate of the General Partner and sales proceeds. During the years ended December 31, 2005 and 2004, approximately $7,556,000 and $20,338,000 of construction costs were incurred, respectively. During the years ended December 31, 2005, 2004, and 2003, the Partnership capitalized interest costs of approximately $394,000, $705,000, and $390,000, tax and insurance expenses of approximately $6,0 00, $136,000, and $226,000, and other construction period operating expenses of approximately $10,000, $105,000, and $351,000, respectively. In addition, during 2004 the Partnership paid prepayment penalties of approximately $170,000, which were also capitalized as part of the construction cost, see discussion below.

Note H – Casualty Events

Note I - Income Taxes

The Partnership is classified as a partnership for Federal income tax purposes. Accordingly, no provision for income taxes is made in the consolidated financial statements of the Partnership. Taxable income or loss of the Partnership is reported in the income tax returns of its partners.

The following is a reconciliation between net income as reported in the consolidated financial statements and Federal taxable income allocated to the partners in the Partnership's information return for the years ended December 31, 2005, 2004 and 2003 (in thousands, except per unit data):


	2005	2004	2003

Net income as reported	$ 260	$31,500	$ 8,200
(Deduct) add:
Deferred revenue and other
liabilities	84	(162)	(2)
Depreciation differences	(536)	(32)	56
Accrued expenses	(8)	(74)	(7)
Other	270	(780)	274
Gain on casualty/
disposition/foreclosure	(119)	(1,513)	(1,720)

Federal taxable income	$ (49)	$28,939	$ 6,801
Federal taxable income per
Limited Partnership unit	$ (.14)	$ 81.05	$ 20.55

The following is a reconciliation between the Partnership's reported amounts and Federal tax basis of net assets for the year ended December 31, 2005 (in thousands):


Net liabilities as reported	$(25,090)
Land and buildings	12,421
Accumulated depreciation	(9,379)
Syndication fees	18,871
Other	4,569
Net assets - Federal tax basis	$ 1,392

Note J - Contingencies

in certain General Partner entities by Insignia Financial Group, Inc. ("Insignia") and entities that were, at one time, affiliates of Insignia; past tender offers by the Insignia affiliates to acquire limited partnership units; management of the partnerships by the Insignia affiliates; and the series of transactions which closed on October 1, 1998 and February 26, 1999 whereby Insignia and Insignia Properties Trust, respectively, were merged into AIMCO. The plaintiffs sought monetary damages and equitable relief, including judicial dissolution of the Partnership. In addition, during the third quarter of 2001, a complaint captioned Heller v. Insignia Financial Group (the "Heller action") was filed against the same defendants that are named in the Nuanes action. On or about August 6, 2001, plaintiffs filed a first amended complaint. The Heller action was brought as a purported derivative action, and asserted claims for, among othe r things, breach of fiduciary duty, unfair competition, conversion, unjust enrichment, and judicial dissolution. On January 28, 2002, the trial court granted defendants motion to strike the complaint. Plaintiffs took an appeal form this order.

The General Partner does not anticipate that any costs to the Partnership, whether legal or settlement costs, associated with these cases will be material to the Partnership’s overall operations.

AIMCO Properties L.P. and NHP Management Company, both affiliates of the General Partner, are defendants in a lawsuit alleging that they willfully violated the Fair Labor Standards Act (“FLSA”) by failing to pay maintenance workers overtime for all hours worked in excess of forty per week. The complaint, filed in the United States District Court for the District of Columbia, attempts to bring a collective action under the FLSA and seeks to certify state subclasses in California, Maryland, and the District of Columbia. Specifically, the plaintiffs contend that AIMCO Properties L.P. and NHP Management Company failed to compensate maintenance workers for time that they were required to be "on-call". Additionally, the complaint alleges AIMCO Properties L.P. and NHP Management Company failed to comply with the FLSA in compensating maintenance workers for time that they worked in excess of 40 hours in a week. In June 2005 the Court conditionally certified the collective action on both the on-call and overtime issues, which allows the plaintiffs to provide notice of the collective action to all non-exempt maintenance workers from August 7, 2000 through the present. Notices have been sent out to all current and former hourly maintenance workers. The opt-in period has not yet closed. Defendants will have the opportunity to move to decertify the collective action. Because the court denied plaintiffs’ motion to certify state subclasses, on September 26, 2005, the plaintiffs filed a class action with the same allegations in the Superior Court of California (Contra Costa County), and on November 5, 2005 in Montgomery County Maryland Circuit Court. Although the outcome of any litigation is uncertain, AIMCO Properties, L.P. does not believe that the ultimate outcome will have a material adverse effect on its consolidated financial condition or results of operations. Similarly, the General Partner does not believe that the ultimate outcome will have a material adverse effect on the Partnership’s consolidated financial condition or results of operations.

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 a national policy and procedures to prevent or eliminate mold from its properties and the General Partner believes that these measures will minimize the effects that mold could 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 liabi lities 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.

SEC Investigation

On December 19, 2005, AIMCO announced that the Central Regional Office of the Securities and Exchange Commission (the “Commission”) has informed AIMCO that its investigation has been recommended for termination and no enforcement action has been recommended to the Commission regarding AIMCO.

Note K - Selected Quarterly Financial Data (unaudited)

The following is a summary of the unaudited quarterly results of operations for the Partnership (in thousands, except per unit data):


2005	1^st	2^nd	3^rd	4^th
	Quarter	Quarter	Quarter	Quarter	Total

Total revenues	$ 4,645	$ 4,928	$ 5,575	$ 5,883	$ 21,031
Total expenses	(4,014)	(5,018)	(5,743)	(5,996)	(20,771)
Net income	$ 631	$ (90)	$ (168)	$ (113)	$ 260

Net income per limited
partnership unit	$ 1.77	$ (0.25)	$ (0.47)	$ (0.32)	$ 0.73


2004	1^st	2^nd	3^rd	4^th
	Quarter	Quarter	Quarter	Quarter	Total

Total revenues	$ 4,382	$ 4,716	$ 4,656	$ 4,699	$ 18,453
Total expenses	(3,863)	(4,048)	(4,527)	(3,909)	(16,347)
Income from continuing
operations	519	668	129	790	2,106
Income from discontinued
operations	148	81	205	(321)	113
Gain on sale of discontinued
operations	3,141	--	--	26,140	29,281
Net income	$ 3,808	$ 749	$ 334	$ 26,609	$ 31,500

Per limited partnership unit:
Income from continuing
operations	$ 1.46	$ 1.86	$ 0.37	$ 2.20	$ 5.89
Discontinued operations	0.41	0.23	0.57	(0.89)	0.32
Gain on sale of discontinued
operations	8.80	--	--	73.21	82.01
Net income	$ 10.67	$ 2.09	$ 0.94	$ 74.52	$ 88.22

Item 9.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosures

None.

Item 9a.

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)

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 fourth quarter of 2005 that have materially affected, or are reasonably likely to materially affect, the Partnership’s internal control over financial reporting.

Item 9b.

Other Information

None.

PART III

Item 10.

Directors, Executive Officers, Promoters and Control Persons; Compliance with Section 16(a) of the Exchange Act

Consolidated Capital Properties IV (the "Registrant" or "Partnership") has no directors or officers. ConCap Equities, Inc. ("CEI" or the "General Partner") manages and controls the Partnership and has general responsibility and authority in all matters affecting its business.

The names of the directors and officers of the General Partner, their ages and the nature of all positions presently held by them are set forth below.


Martha L. Long	46	Director and Senior Vice President
Harry G. Alcock	43	Director and Executive Vice President
Miles Cortez	62	Executive Vice President, General Counsel
		and Secretary
Patti K. Fielding	42	Executive Vice President
Thomas M. Herzog	43	Executive Vice President and Chief
		Financial Officer
Robert Y. Walker, IV	40	Senior Vice President and Chief Accounting
		Officer
Stephen B. Waters	44	Vice President

Martha L. Long has been a Director and Senior Vice President of the General Partner since February 2004. Ms. Long has been with AIMCO since October 1998 and has served in various capacities. From 1998 to 2001, Ms. Long served as Senior Vice President and Controller of AIMCO and the General Partner. During 2002 and 2003, Ms. Long served as Senior Vice President of Continuous Improvement for AIMCO.

Harry G. Alcock was appointed as a Director of the General Partner in October 2004 and was appointed Executive Vice President of the General Partner in February 2004 and has been Executive Vice President and Chief Investment Officer of AIMCO since October 1999. Mr. Alcock has had responsibility for acquisition and financing activities of AIMCO since July 1994, serving as Vice President from July 1996 to October 1997 and as Senior Vice President from October 1997 to October 1999.

Miles Cortez was appointed Executive Vice President, General Counsel and Secretary of the General Partner in February 2004 and of AIMCO in August 2001. Prior to joining AIMCO, Mr. Cortez was the senior partner of Cortez Macaulay Bernhardt & Schuetze LLC, a Denver law firm, from December 1997 through September 2001.

Patti K. Fielding was appointed Executive Vice President – Securities and Debt of the General Partner in February 2004 and of AIMCO in February 2003. Ms. Fielding was appointed Treasurer of AIMCO in January 2005. Ms. Fielding is responsible for debt financing and the treasury department. Ms. Fielding previously served as Senior Vice President – Securities and Debt of AIMCO from January 2000 to February 2003. Ms. Fielding joined AIMCO in February 1997 as a Vice President.

Thomas M. Herzog was appointed Chief Financial Officer of the General Partner and AIMCO in November 2005 and was appointed Executive Vice President of the General Partner and AIMCO in July 2005. In January 2004, Mr. Herzog joined AIMCO as Senior Vice President and Chief Accounting Officer and of the General Partner in February 2004. Prior to joining AIMCO in January 2004, Mr. Herzog was at GE Real Estate, serving as Chief Accounting Officer & Global Controller from April 2002 to January 2004 and as Chief Technical Advisor from March 2000 to April 2002. Prior to joining GE Real Estate, Mr. Herzog was at Deloitte & Touche LLP from 1990 to 2000.

Robert Y. Walker, IV was appointed Senior Vice President of the General Partner and AIMCO in August 2005 and became the Chief Accounting Officer of the General Partner and AIMCO in November 2005. From June 2002, until he joined AIMCO, Mr. Walker served as senior vice president and chief financial officer at Miller Global Properties, LLC, a Denver-based private equity, real estate fund manager. From May 1997 to June 2002, Mr. Walker was employed by GE Capital Real Estate, serving as global controller from May 2000 to June 2002.

Stephen B. Waters was appointed Vice President of the General Partner in April 2004. Mr. Waters previously served as a Director of Real Estate Accounting since joining AIMCO in September 1999. Mr. Waters has responsibility for partnership accounting with AIMCO.

One or more of the above persons are also directors and/or officers of a general partner (or general partner of a general partner) of limited partnerships which either have a class of securities registered pursuant to Section 12(g) of the Securities Exchange Act of 1934, or are subject to the reporting requirements of Section 15(d) of such Act. Further, one or more of the above persons are also officers of Apartment Investment and Management Company and the general partner of AIMCO Properties, L.P., entities that have a class of securities registered pursuant to Section 12(g) of the Securities Exchange Act of 1934, or are subject to the reporting requirements of Section 15 (d) of such Act.

The board of directors of the General Partner does not have a separate audit committee. As such, the board of directors of the General Partner fulfills the functions of an audit committee. The board of directors has determined that Martha L. Long meets the requirement of an "audit committee financial expert".

The directors and officers of the General Partner with authority over the Partnership are all employees of subsidiaries of AIMCO. AIMCO has adopted a code of ethics that applies to such directors and officers that is posted on AIMCO's website (www.AIMCO.com). AIMCO's website is not incorporated by reference to this filing.

Item 11.

Executive Compensation

Neither the directors nor officers of the General Partner received any remuneration from the Partnership during the year ended December 31, 2005.

Item 12.

Security Ownership of Certain Beneficial Owners and Management

(a)

Security Ownership of Certain Beneficial Owners

Except as provided below, as of December 31, 2005, no person or group was known to CEI to own of record or beneficially more than five percent of the Units of the Partnership:


Entity	Number of Units	Percentage

AIMCO IPLP, L.P.	67,033.5	19.55%
(an affiliate of AIMCO)
IPLP Acquisition I, LLC	29,612.5	8.64%
(an affiliate of AIMCO)
AIMCO Properties, L.P.	127,920.0	37.32%
(an affiliate of AIMCO)

AIMCO IPLP, L.P. and IPLP Acquisition I, LLC are indirectly, ultimately owned by AIMCO. Their business address is 55 Beattie Place, Greenville, SC 29602.

AIMCO Properties, L.P. is indirectly ultimately controlled by AIMCO. Its business address is 4582 S. Ulster St. Parkway, Suite 1100, Denver, Colorado 80237.

(b)

Beneficial Owners of Management

Neither CEI nor any of the directors or officers or associates of CEI own any Units of the Partnership of record or beneficially.

(c)

Changes in Control

Beneficial Owners of CEI

As of December 31, 2005, the following persons were known to CEI to be the beneficial owners of more than five percent (5%) of its common stock:


	Number of	Percent
Name and Address	CEI Shares	Of Total

Insignia Properties Trust ("IPT")	100,000	100%
55 Beattie Place, Greenville, SC 29602

Effective February 26, 1999, IPT was merged with and into AIMCO. As of December 31, 2005, AIMCO owns 51% of the outstanding common shares of beneficial interest of IPT.

Item 13.

Certain Relationships and Related Transactions

In accordance with the Partnership Agreement, an affiliate of the General Partner advanced the Partnership approximately $6,944,000 and $14,035,000 during the years ended December 31, 2005 and 2004, respectively, to assist with the construction of Belmont Place Apartments and to repay the mortgage encumbering the property (see Note G). During the same periods, the Partnership repaid approximately $7,043,000 and $14,105,000, which included approximately $54,000 and $115,000 of interest, respectively. There were no such advances or repayments during the year ended

December 31, 2003. Interest on advances is charged at prime plus 2% or 9.25% at December 31, 2005. Interest expense was approximately $54,000 and $115,000 for the years ended December 31, 2005 and 2004, respectively. There was no interest expense for the year ended December 31, 2003.

Item 14.

Principal Accounting Fees and Services

The General Partner has reappointed Ernst & Young LLP as independent auditors to audit the financial statements of the Partnership for 2006. The aggregate fees billed for services rendered by Ernst & Young LLP for 2005 and 2004 are described below.

Audit Fees. Fees for audit services totaled approximately $99,000 and $104,000 for 2005 and 2004, respectively. Fees for audit services also include fees for the reviews of the Partnership’s Quarterly Reports on Form 10-Q.

Tax Fees. Fees for tax services totaled approximately $45,000 and $49,000 for 2005 and 2004, respectively.

Item 15.

Exhibits and Financial Statements Schedules

(a)

The following documents are filed as part of this report:

Financial Statements

Consolidated Balance Sheets - December 31, 2005 and 2004

Consolidated Statements of Operations - Years Ended December 31, 2005, 2004 and 2003

Consolidated Statements of Changes in Partners' Deficit - Years Ended December 31, 2005, 2004 and 2003

Consolidated Statements of Cash Flows - Years Ended December 31, 2005, 2004 and 2003

Notes to Consolidated Financial Statements

Schedules

All schedules are omitted because either they are not required, or not applicable or the financial information is included in the financial statements or notes thereto.

Exhibits

S-K Reference

Number

Document Description

Certificate of Limited Partnership, as amended to date.

10.78

Multifamily Note dated February 2, 2000 between Apartment Associates, Ltd., a Texas limited partnership and ARCS Commercial Mortgage Co., L.P., a California limited partnership. (Incorporated by reference to Annual Report on Form 10-K for the year ended December 31, 1999).

10.81

Multifamily Note dated August 29, 2000 between ConCap Rivers Edge Associates, Ltd., a Texas Limited Partnership, and GMAC Commercial Mortgage Corporation, a California Corporation. (Incorporated by reference to Quarterly Report on Form 10-Q for the quarter ended September 30, 2000.)

10.89

Form of Multifamily Note dated October 22, 2003 between Post Ridge Associates, Ltd., Limited Partnership, a Tennessee limited partnership, and GMAC Commercial Mortgage Corporation, a California corporation. (Incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, 2003).

10.90

Form of Replacement Reserve Agreement dated October 22, 2003 between Post Ridge Associates, Ltd., Limited Partnership, a Tennessee limited partnership, and GMAC Commercial Mortgage Corporation, a California corporation. (Incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, 2003).

10.91

Form of Repair Agreement dated October 22, 2003 between Post Ridge Associates, Ltd., Limited Partnership, a Tennessee limited partnership, and GMAC Commercial Mortgage Corporation, a California corporation. (Incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, 2003).

10.92

Form of Cross-Collateralization Agreement dated October 22, 2003 between Post Ridge Associates, Ltd., Limited Partnership, a Tennessee limited partnership, and Federal Home Loan Mortgage Corporation, a corporation organized and existing under the laws of the United States of America. (Incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, 2003).

10.93

Form of Cross-Collateralization Agreement dated October 22, 2003 between Foothill Chimney Associates Limited Partnership, a Georgia limited partnership, and Federal Home Loan Mortgage Corporation, a corporation organized and existing under the laws of the United States of America. (Incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, 2003).

10.94

Form of Debt Service Escrow Agreement dated October 22, 2003 between Foothill Chimney Associates Limited Partnership, a Georgia limited partnership, and Federal Homes Loan Mortgage Corporation, a corporate instrumentality of the United States of America. (Incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, 2003).

10.95

Form of Second Modification to Replacement Reserve Agreement dated October 22, 2003 between Foothill Chimney Associates Limited Partnership, a Georgia limited partnership, and Federal Homes Loan Mortgage Corporation, a corporate instrumentality of the United States of America. (Incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, 2003).

10.96

Purchase and Sale Contract between Point West Associates Limited Partnership, a Georgia limited partnership, as Seller and Focus Development, Inc., a Georgia corporation, as Purchaser, effective November 17, 2003. (Incorporated by reference to current report on Form 8-K dated March 31, 2004).

10.97

First Amendment to Purchase and Sale Contract dated January 23, 2004 between Point West Associates Limited Partnership, a Georgia limited partnership, as Seller and Focus Development, Inc., a

Georgia corporation, as Purchaser. (Incorporated by reference to current report on Form 8-K dated March 31, 2004).

10.98

Multifamily Note dated June 21, 2004 between Concap Citadel Associates, Ltd., a Texas limited partnership, and GMAC Commercial Mortgage Bank. (Incorporated by reference to the Quarterly Report on Form 10-Q for the quarter ended June 30, 2004).

10.99

Replacement Reserve Agreement dated June 21, 2004 between Concap Citadel Associates, Ltd. a Texas limited partnership, and GMAC Commercial Mortgage Bank. (Incorporated by reference to the Quarterly Report on Form 10-Q for the quarter ended June 30, 2004).

10.100

Allonge and Amendment to Multifamily Note dated June 21, 2004 between Concap Citadel Associates, Ltd., a Texas limited partnership, and Federal Home Loan Mortgage Corporation. (Incorporated by reference to the Quarterly Report on Form 10-Q for the quarter ended June 30, 2004).

10.101

Multifamily Note dated June 8, 2004 between Consolidated Capital Properties IV, a California limited partnership, doing business in Nebraska as Consolidated Capital Properties IV Limited Partnership and GMAC Commercial Mortgage Bank. (Incorporated by reference to the Quarterly Report on Form 10-Q for the quarter ended June 30, 2004).

10.102

Replacement Reserve Agreement dated June 8, 2004 between Consolidated Capital Properties IV, a California limited partnership, doing business in Nebraska as Consolidated Capital Properties IV Limited Partnership and GMAC Commercial Mortgage Bank. (Incorporated by reference to the Quarterly Report on Form 10-Q for the quarter ended June 30, 2004).

10.103

Allonge and Amendment to Multifamily Note dated June 8, 2004 between Consolidated Capital Properties IV, a California limited partnership, doing business in Nebraska as Consolidated Capital Properties IV Limited Partnership and Federal Home Loan Mortgage Corporation. (Incorporated by reference to the Quarterly Report on Form 10-Q for the quarter ended June 30, 2004).

10.104

Purchase and Sale Contract between Briar Bay Associates, Ltd., a Texas limited partnership, as Seller, and Victoria Real Estate Management, Inc., a Florida corporation, as Purchaser, effective September 13, 2004. (Incorporated by reference to current report on Form 8-K dated September 13, 2004).

10.105

Purchase and Sale Contract between Nob Hill Villa Apartments Associates, L.P., a Tennessee limited partnership, as Seller, and DAMA Realty Investors, LLC, a New York limited liability company, as Purchaser, effective August 18, 2004. (Incorporated by reference to current report on Form 8-K dated October 29, 2004.)

10.106

Assignment and Assumption of Real Estate Agreement between The DAMA Realty Investors, LLC, and Nob Hill General Partnership, dated August 18, 2004. (Incorporated by reference to current report on Form 8-K dated October 29, 2004.)

10.107

Promissory Note dated April 29, 2005 between Foothill Chimney Associates Limited Partnership, a Georgia limited partnership and ING USA Annuity and Life Insurance Company. (Incorporated by reference to current report on Form 8-K dated April 29, 2005) (Belmont Mortgage)

10.108

Form of Letter of Credit dated April 29, 2005 between Foothill Chimney Associates Limited Partnership, a Georgia limited partnership and ING USA Annuity and Life Insurance Company. (Incorporated by reference to current report on Form 8-K dated April 29, 2005) (Belmont Mortgage)

10.109

Deed to Secure Debt and Security Agreement dated April 29, 2005 between Foothill Chimney Associates Limited Partnership, a Georgia limited partnership and ING USA Annuity and Life Insurance Company. (Incorporated by reference to current report on Form 8-K dated April 29, 2005) (Belmont Mortgage)

10.110

Deed of Trust, Assignment of Leases and Rents and Security Agreement dated August 31, 2005 between AICMO Arbours of Hermitage, LLC, a Delaware limited liability company and New York Life Insurance Company. (Incorporated by reference to current report on Form 8-K dated August 31, 2005)

10.111

Promissory Note dated August 31, 2005 between AIMCO Arbours of Hermitage, LLC, a Delaware limited liability company and New York Life Insurance Company. (Incorporated by reference to current report on Form 8-K dated August 31, 2005)

10.112

Guarantee Agreement dated August 31, 2005 between AIMCO Properties, L.P., a Delaware limited partnership and New York Life Insurance Company. (Incorporated by reference to current report on Form 8-K dated August 31, 2005)

10.113

Deed of Trust, Security Agreement and Fixture Filing dated August 30, 2005 between Foothill Chimney Associates L.P., a Georgia limited partnership and Transamerica Financial Life Insurance Company. Filed with Form 10-Q dated September 30, 2005.

10.114

Promissory Note dated August 30, 2005 between Foothill Chimney Associates, L.P., a Georgia limited partnership and Transamerica Financial Life Insurance Company. Filed with Form 10-Q dated September 30, 2005.

10.115

Deed of Trust, Assignment of Leases and Rents and Security Agreement dated November 30, 2005 between AIMCO Knollwood, LLC, a Delaware limited liability company and New York Life Insurance Company (Incorporated by reference to current report on Form 8-K dated November 30, 2005)

10.116

Promissory Note dated November 30, 2005 between AIMCO Knollwood, LLC, a Delaware limited liability company and New York Life Insurance Company. (Incorporated by reference to current report on Form 8-K dated November 30, 2005)

10.117

Form of Escrow Agreement dated November 30, 2005 between AIMCO Knollwood, LLC, a Delaware limited liability company and New York Life Insurance Company. (Incorporated by reference to current report on Form 8-K dated November 30, 2005)

10.118

Guarantee Agreement dated November 30, 2005 between AIMCO Properties, L.P., a Delaware limited partnership and New York Life Insurance Company. (Incorporated by reference to current report on Form 8-K dated November 30, 2005)

10.119

Multifamily Deed of Trust, Assignment of Rents and Security Agreement dated November 30, 2005 between CCP IV Associates, LTD, a Texas limited partnership and GMAC Commercial Mortgage Corporation. (Incorporated by reference to current report on Form 8-K dated November 30, 2005) (Citadel Village mortgage)

10.120

Multifamily Note dated November 30, 2005 between CCP IV Associates, LTD, a Texas limited partnership and GMAC Commercial Mortgage Corporation. (Incorporated by reference to current report on Form 8-K dated November 30, 2005) (Citadel Village mortgage)

10.121

Guarantee Agreement dated November 30, 2005 between AIMCO Properties, L.P., a Delaware limited partnership and GMAC Commercial Mortgage Corporation. (Incorporated by reference to current report on Form 8-K dated November 30, 2005) (Citadel Village mortgage)

10.122

Replacement Reserve and Security Agreement dated November 30, 2005 between CCP IV Associates, LTD, a Texas limited partnership and GMAC Commercial Mortgage Corporation. (Incorporated by reference to current report on Form 8-K dated November 30, 2005(Citadel Village mortgage)

10.123

Deed of Trust, Assignment of Rents and Leases, Security Agreement and Fixture Filing dated November 30, 2005 between CCP IV Associates, LTD, a Texas limited partnership and GMAC Commercial Mortgage Corporation. (Village East mortgage)

10.124

Promissory Note dated November 30, 2005 between CCP IV Associates, LTD, a Texas limited partnership and GMAC Commercial Mortgage Corporation. (Village East mortgage)

10.125

Loan Agreement and Guarantee Agreement dated November 30, 2005 between CCP IV Associates, LTD, a Texas limited partnership and GMAC Commercial Mortgage Corporation. (Village East mortgage)

Statement regarding computation of Net Income per Limited Partnership Unit (Incorporated by reference to Note A of Item 8 - Financial Statements of this Form 10-K).

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 equivalent of 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.

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 PROPERTIES IV

	By: ConCap Equities, Inc.
	General Partner

	By: /s/Martha L. Long
	Martha L. Long
	Senior Vice President

	By: /s/Stephen B. Waters
	Stephen B. Waters
	Vice President

	Date: March 31, 2006

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.


/s/Harry G. Alcock	Director and Executive	Date: March 31, 2006
Harry G. Alcock	Vice President

/s/Martha L. Long	Director and Senior	Date: March 31, 2006
Martha L. Long	Vice President

/s/Stephen B. Waters	Vice President	Date: March 31, 2006
Stephen B. Waters

Exhibit 31.1

CERTIFICATION

I, Martha L. Long, certify that:

I have reviewed this annual report on Form 10-K of Consolidated Capital Properties IV;

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;

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;

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)) 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)

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

(c)

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

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: March 31, 2006

/s/Martha L. Long

Martha L. Long

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

Exhibit 31.2

CERTIFICATION

I, Stephen B. Waters, certify that:

I have reviewed this annual report on Form 10-K of Consolidated Capital Properties IV;

(a)

(b)

(c)

(a)

(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: March 31, 2006

/s/Stephen B. Waters

Stephen B. Waters

Vice President of ConCap Equities, Inc.,

equivalent of the chief financial

officer of the Partnership

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 Annual Report on Form 10-K of Consolidated Capital Properties IV (the "Partnership"), for the year ended December 31, 2005 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: March 31, 2006

	/s/Stephen B. Waters
	Name: Stephen B. Waters
	Date: March 31, 2006

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-1 2 ccp410123.htm Converted by EDGARwiz

Exhibit 10.123

DEED OF TRUST,
ASSIGNMENT OF RENTS AND LEASES,
SECURITY AGREEMENT AND FIXTURE FILING

THIS DEED OF TRUST, ASSIGNMENT OF RENTS AND LEASES, SECURITY AGREEMENT AND FIXTURE FILING ("Security Instrument") is made as of this 30th day of November, 2005 by CCP IV ASSOCIATES, LTD., a Texas limited partnership, c/o AIMCO, Stanford Place 3, 4582 S. Ulster Street Parkway, Suite 1100, Denver, Colorado 80237, Attention: Patti K. Fielding, as trustor ("Borrower"), to THE PUBLIC TRUSTEE OF EL PASO COUNTY, as trustee ("Trustee"), for the benefit of GMAC COMMERCIAL MORTGAGE BANK, a Utah industrial bank, 6955 Union Park Center, Suite 330, Midvale, Utah 84047, Attention: President, with a copy to GMAC Commercial Mortgage Corporation, 200 Witmer Road, Horsham Pennsylvania 19044, as beneficiary (together with its successors and assigns, "Lender").

BACKGROUND

Borrower and Lender are entering into a certain Loan Agreement of even date herewith ("Loan Agreement") pursuant to which Lender will make a loan ("Loan") to Borrower in the maximum principal amount of $2,000,000.00. The Loan also will be evidenced by Borrower's promissory note to Lender of even date herewith ("Note"). Borrower desires to secure payment and performance of Borrower's obligations in respect of the Loan by granting to Lender the security described in this Security Instrument.

NOW, THEREFORE, to induce Lender to make the an to Borrower, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, Borrower agrees as follows:

ARTICLE 1
DEFINED TERMS_,

1.01 Defined Terms. Capitalized terms used in this Security Instrument and not specifically defined in this Security Instrument have the meaning provided in the Loan Agreement.

ARTICLE 2
GRANT OF SECURITY

2.01 Property Mortgaged. Borrower does hereby irrevocably deed, mortgage, grant, bargain, sell, assign, pledge, warrant, transfer and convey to Trustee, and to its successors and assigns as trustee, in trust for the benefit of Lender, as security for the Obligations, with power of sale, the following property, rights, interests and estates, now owned or hereafter acquired by Borrower (collectively, "Property"):

(b)

Additional Land. All land that, from time to time, by supplemental deed or otherwise, may be expressly made subject to this Security Instrument, and all estates and development rights hereafter acquired by Borrower for use in connection with such land (also, the "Land");

(c)

Improvements. All buildings, structures, improvements and fixtures now or hereafter erected or located on the Land ("Im^provements");

(d)

Easements. All easements, rights-of-way or use, rights, strips and gores of land, streets, ways, alleys, passages, sewer rights, water, water courses, water rights and powers, air rights and development rights, and all estates, rights, titles, interests, privileges, liberties, servitudes, tenements, hereditaments and appurtenances of any nature whatsoever, in any way now or hereafter belonging, relating or pertaining to the Property and the reversion and reversions, remainder and remainders, and all land lying in the bed of any street, road or avenue, opened or proposed, in front of or adjoining the Land, to the center line thereof, and all the estates, rights, titles, interests, dower and rights of dower, curtesy and rights of curtesy, property, possession, claim and demand whatsoever, both at law and in equity, of Borrower of, in and to the Prop erty and every part and parcel thereof, with all appurtenances thereto;

(e)

Fixtures and Personal Property. All machinery, equipment, fixtures (including, without limitation, all heating, air conditioning, plumbing, lighting, communications and elevator fixtures), furnishing, building supplies and materials, and all other personal property of every kind and nature whatsoever owned by Borrower (or in which Borrower has or hereafter acquires an interest) and now or hereafter located upon, or appurtenant to, the Property or used or useable in the present or future operation and occupancy of the Property, along with all accessions, replacements, betterments, or substitutions of all or any portion thereof (collectively, "Personal Property");

(f)

Leases and Rents. All leases, subleases, licenses and other agreements granting others the right to use or occupy all or any part of the Property together with all restatements, renewals, extensions, amendments and supplements thereto ("Leases"), now existing or hereafter entered into, and whether entered before or after the filing by or against Borrower of any petition for relief under the Bankruptcy Code, and all of Borrower's right, title and interest in the Leases, including, without limitation (i) all guarantees, letters of credit and any other credit support given by any tenant or guarantor in connection therewith ("Lease Guaranties"), (ii) all cash, notes, or security deposited thereunder to secure the performance by the tenants of their obligations thereunder ("Tenant Security Depo sits"), (iii) all claims and rights to the payment of damages and other claims arising from any rejection by a tenant of its Lease under the Bankruptcy Code ("Bankruptcy Claims"), (iv) all of the landlord's rights in casualty or condemnation proceeds of a tenant in respect of the leased premises ("Tenant Claims"), (v) all rents, ground rents, additional rents, revenues, termination and similar payments, issues and profits (including all oil and gas or other mineral royalties and bonuses)

from the Property (collectively with the Lease Guaranties, Tenant Security Deposits, Bankruptcy Claims and Tenant Claims, "Rents"), whether paid or accruing before or after the filing by or against Borrower of any petition for relief under the Bankruptcy Code, (vi) all proceeds or streams of payment from the sale or other disposition of the Leases or disposition of any Rents, and (vii) the right to receive and apply the Rents to the payment of the Debt and to do all other things which Borrower or a lessor is or may become entitled to do under the Leases or with respect to the Rents;

(g)

Condemnation Awards. All awards or payments, including interest thereon, which may heretofore and hereafter be made with respect to the Property, whether from the exercise of the right of eminent domain (including, without limitation, any transfer made in lieu of or in anticipation of the exercise of the right), or for a change of grade, or for any other injury to or decrease in the value of the Property;

(h)

Insurance Proceeds. All proceeds of, and any unearned premiums on, any insurance policies covering the Property, including, without limitation, the exclusive right to receive and apply the proceeds of any claim awards, judgments, or settlements made in lieu thereof, for damage to the Property;

(i)

Tax Certiorari. All refunds, rebates or credits in connection with a reduction in Taxes, including, without limitation, rebates as a result of tax certiorari or any other applications or proceedings for reduction;

(j)

Operating Agreements. All contracts (including, without limitation, service, supply, maintenance and construction contracts), registrations, franchise agreements, permits, licenses (including, without limitation, liquor licenses, if any, to the fullest extent assignable by Borrower), plans and specifications, and other agreements, now or hereafter entered into, and all rights therein and thereto, respecting or pertaining to the use, occupation, construction, management or operation of the Property, or respecting any business or activity conducted by Borrower from the Property, and all right, title and interest of Borrower therein and thereunder, including, without limitation, the right, while an Event of Default remains uncured, to receive and collect any sums payable to Borrower thereunder (collectively, "Operating A^g reements");

(k)

Rate Cap Agreements. All interest rate cap agreements, swaps or other interest hedging agreements now or hereafter executed with respect to the Loan or to guard against interest rate exposure in connection with the Loan, if any;

(1) Intangibles. All accounts, escrows, chattel paper, claims, deposits, trade names, trademarks, service marks, logos, copyrights, books and records, goodwill, and all other general intangibles relating to or used in connection with the operation of the Property;

(m)

Accounts. All reserves, escrows and deposit accounts maintained by Borrower with respect to the Property (including, without limitation, the Operating Account and all reserves, escrows, deposit accounts and lockbox accounts established pursuant to the Loan Agreement), together with all cash, checks, drafts, certificates, securities, investment property, financial assets, instruments and other property from time to time held therein, and all proceeds, products, distributions, dividends or substitutions thereon or thereof;

(n)

Rights to Conduct Legal Actions. The right, in the name and on behalf of Borrower, to commence any action or proceeding to protect the interest of Lender in the Property and to appear in and defend any action or proceeding brought with respect to the Property;

(o)

Proceeds. All proceeds and profits arising from the conversion, voluntary or involuntary, of any of the foregoing into cash (whether made in one payment or a stream of payments) and any liquidation claims applicable thereto; and

(p)

Rights. Any and all other rights of Borrower in and to the items set forth in the foregoing subsections (a) through (o), inclusive, and in and to the Property.

TO HAVE AND TO HOLD the above granted and described Property to Trustee, and its successors and assigns, in trust, with power of sale in accordance with the terms and conditions hereof, for the use and benefit of Lender, and the successors and assigns of Lender, forever;

subject, however, to Section 2.05 below.

2.02 Grant of Security Interest; Security Agreement. Borrower hereby grants to Lender, as security for the Obligations, a security interest in the Property to the fullest extent that the Property now or hereafter may be subject to a security interest under the UCC. Borrower intends for this Security Instrument to be a "security agreement" within the meaning of the UCC. Borrower hereby irrevocably authorizes Lender to prepare, execute and file all initial financing statements, and any restatements, extensions, continuations, renewals or amendments thereof, in such form as Lender may require to perfect or continue the perfection of this security interest or other statutory liens held by Lender. Unless prohibited by applicable law, Borrower agrees to pay all reasonable expenses incident to the preparation, execution, filing and/or reco rding of any of the foregoing. With respect to any of the Property in which a security interest is not perfected by the filing of a financing statement, Borrower consents and agrees to undertake, and to cooperate fully with Lender, to perfect the security interest hereby granted to Lender in the Property. Without limiting the foregoing, if and to the extent any of the Property is held by a bailee for the benefit of Borrower, Borrower shall promptly notify Lender thereof and, if required by Lender, promptly obtain an acknowledgment from such bailee that is satisfactory to Lender and confirms that such bailee holds the Property for the benefit of Lender as secured party and shall only act upon instructions from Lender with respect to the Property.

2.03 Assignment of Leases and Rents.

(a)

Rights Granted to Lender. Borrower hereby absolutely and unconditionally assigns to Lender all of Borrower's right, title and interest in and to all current and future Leases and Rents. Borrower hereby declares its intention to establish a present, absolute and irrevocable transfer and assignment to Lender of all Rents and Leases and to authorize and empower Lender to collect and receive all Rents and exercise all of Borrower's rights under the Leases (including, without limitation, the right to modify, extend or terminate any Lease) without any further action by Borrower; it being intended that this assignment is effective immediately and not an assignment made for security only, not withstanding any provision hereof to the contrary. For purposes of giving effect to this assignment of Rents and Leases and for no other purpose, Rents and Leases shall not be d eemed to be part of the "Property" as that term is defined in Section 2.01 of this Security Instrument. If, however, this assignment of Rents and Leases is not enforceable by its terms under the laws of the State where the Property is located, then Rents and Leases shall be included as part of the Property and it is Borrower's intention that, in this circumstance, this Security Instrument creates and perfects a lien of the Rents and Leases in favor of Lender, which lien shall be effective as of the date of this Security Instrument.

(b)

License to Borrower; Revocation. Nevertheless, subject to the terms of this Security Instrument and the Loan Agreement, Lender grants to Borrower a revocable license (i) to manage the leasing activities of the Property as contemplated by the Loan Agreement, (ii) to exercise all of Borrower's rights under the Leases and (iii) to collect and receive the Rents in trust for Lender and to apply the Rents to discharge all current amounts due on the Debt and to pay the current costs of managing, operating and maintaining the Property. So long as no Event of Default exists, the Rents remaining after application pursuant to the preceding sentence may be retained by Borrower free and clear of, and released from, Lender's rights with respect to Rents under this Security Instrument. From and after the occurrence of an Event of Default, and without the necessity of notice or prior demand or Lender's entering upon and taking and maintaining control of the Property (whether directly or through a receiver), the license granted to Borrower by this Section shall terminate automatically, and Lender shall be entitled to receive and collect the Rents as they become due and payable and exercise all of Borrower's rights or the rights of lessor under the Leases and with respect to the Rent. Lender's right to revoke the license granted to Borrower is in addition to all other rights and remedies available to Lender following an Event of Default.

(c)

No Obligations Assumed by Lender. Neither the granting of this assignment to Lender, nor Lender's exercise of any rights or remedies with respect to this assignment, shall be construed (i) to make Lender a "mortgagee in possession" of the Property in the absence of Lender itself taking actual possession of the Property or (ii) to obligate Lender to take any action with respect to the Leases, including, without limitation, the performance of any obligation to be performed on the part of Borrower under any of the Leases, which shall remain exclusively with Borrower. Without limiting the foregoing, this assignment shall not operate to place on Lender any obligation or liability for: (i) the control, care, management or repair of the Property; (ii) for carrying out any of the terms and conditions of the Leases; (iii) any waste committed on t he Property by tenants or any other parties; (iv) any dangerous or defective condition of the Property (including, without limitation, the presence of any Hazardous Materials as defined in the Environmental Indemnity); or (v) any negligence in the management, upkeep, repair or control of the Property resulting in injury or death to any tenant or any other party or any loss of personal property. Borrower, for itself and any party claiming under or through Borrower, hereby releases and discharges Lender from any such liability to the fullest extent permitted by law. Lender shall be obligated to account only for Rents actually collected or received by Lender, and Lender shall not be liable for any loss sustained by Borrower resulting from Lender's failure to lease the Property after an Event of Default.

2.04 Pledge of Monies Held. Borrower hereby pledges to Lender, as security for the Obligations, all money now or hereafter held by Lender in escrow or reserve or on deposit pursuant to the terms hereof or pursuant to the Loan Agreement or any other Loan Document, until expended or applied as provided in this Security Instrument or such other Loan Document.

2.05 Release of Security. The grants, deed of trust, mortgage, liens, security interests, assignments, pledges and transfers by this Security Instrument are subject to the express condition that, if Borrower pays to Lender the Debt at the time and in the manner provided in the Loan Agreement and performs all Obligations when and as required by the Loan Agreement and each other Loan Document, Lender shall release the Property from the grants, deed of trust, mortgage, liens, security interests, assignments, pledges and transfers created by this Security Instrument and reconvey the Property to Borrower. Lender shall prepare (at Borrower's expense) and deliver to Borrower such documents as are necessary to effect such release and reconveyance.

ARTICLE 3
DEBT AND OBLIGATIONS SECURED

3.01 Debt. This Security Instrument and the interests created in favor of Lender hereunder are given for the purpose of securing (a) payment of principal, interest and all other amounts due at anytime under the Loan Agreement, the Note and each of the other Loan Documents, including, without limitation, interest at the Default Rate, any late fee for delinquent payment, the Prohibited Prepayment Fee, the Prepayment Fee, and the Exit Fee (if any) as provided in the Loan Agreement, and amounts advanced by Lender to protect and preserve the Property and the Liens hereby created for the benefit of Lender (collectively "Debt"), and (b) performance of all obligations of Borrower contained in the Loan Agreement, the Note and each of the other Loan Documents (collectively with the Debt, "Obligations"). Notwithst anding any provision of this Security Instrument to the contrary, the obligations of Borrower and the other indemnitors under the Environmental Indemnity shall not be deemed secured by this Security Instrument unless and until Lender expressly declares in writing such obligations to be secured hereby.

ARTICLE 4
BORROWER COVENANTS

4.01 Payment of Debt and Performance of Obligations. Borrower will pay the Debt at the time and in the manner provided in the Loan Documents and fully and punctually perform the Obligations when and as required by the Loan Documents. Borrower may not prepay the Debt except in strict accordance with the Loan Agreement.

4.02 Compliance with Loan Agreement. Borrower shall comply with all covenants and agreements in the Loan Agreement and other Loan Documents, including, without limitation, all obligations regarding the ownership, operation, management and condition of the Property and the protection and perfection of the Liens hereby created in favor of Lender. Without limiting the foregoing, Borrower agrees:

(a)

No Transfers of the Property or Interests in Borrower. Borrower shall not cause or permit any Transfer of the legal or beneficial ownership of the Property, Borrower or SPE Equity Owner in violation of the Loan Agreement.

(b)

Payment of Taxes and Other Lienable Charges. Borrower shall pay all Taxes and Other Charges assessed or imposed against the Property when and as required by the Loan Agreement.

(c)

Insurance. Borrower shall obtain and maintain, in full force and effect at all times, all insurance with respect to Borrower and the Property as required by the Loan Agreement.

(d)

Obligations upon Condemnation or Casualty. Borrower shall comply with all obligations required under the Loan Agreement in the event the Property is damaged by a Casualty or becomes involved in any Condemnation. All proceeds or awards recovered or payable to Borrower as a result of a Casualty or Condemnation shall be paid to, and administered by Lender, in accordance with the Loan Agreement.

(e)

Leases and Rents. Borrower shall not enter into any Leases for all or any portion of the Property unless in accordance with the Loan Agreement.

(f)

Operating Agreements. Borrower shall observe and perform in a timely manner each and every obligation to be observed or performed by Borrower pursuant to the terms of each Operating Agreement and shall not terminate any Operating Agreement unless otherwise permitted in accordance with the Loan Agreement.

(g)

Warranty of Title. Borrower has good, marketable and insurable fee simple title of record to the Property, free and clear of all liens, encumbrances and charges whatsoever except for the Permitted Encumbrances. Borrower shall forever warrant, defend and preserve the title and the validity and priority of the lien of this Security Instrument and shall forever warrant and defend the same to Lender and/or Trustee against the claims of all Persons whomsoever.

ARTICLE 5
SUBROGATION

5.01 Subrogation. If the Loan is used to pay, satisfy, discharge, extend or renew any indebtedness secured by a pre-existing mortgage, deed of trust or other lien encumbering the Property ("Prior Lien"), then to the extent of funds so used, Lender shall automatically, and without further action on its part, be subrogated to all rights, including lien priority, held by the holder of the indebtedness secured by the Prior Lien, whether or not the Prior Lien is released, and such former rights are not waived but rather are continued in full force and effect in favor of Lender and are merged with the lien and security interest created herein as cumulative security for payment of the Debt and performance of the Obligations

ARTICLE 6

DEFAULT

6.01 Events of Default. The occurrence of an "Event of Default" as that term is defined under the Loan Agreement shall constitute an "Event of Default" under this Security Instrument.

6.02 Remedies. If an Event of Default occurs, Lender may, at its option, acting directly or through Trustee and without prior notice or demand, exercise, and hereby is authorized and empowered by Borrower so to exercise, any or all of the remedies set forth in the Loan Agreement (including, without limitation, the right to accelerate the Loan) or otherwise permitted by law or in equity.

6.03 Cumulative Remedies; No Waiver; Other Security. Lender's remedies under this Security Instrument are cumulative with the remedies provided in the other Loan Documents, by law or in equity and may be exercised independently, concurrently or successively in Lender's sole discretion and as often as occasion therefor shall arise. Lender's delay or failure to accelerate the Loan or exercise any other remedy upon the occurrence of an Event of Default shall not be deemed a waiver of such right as remedy. No partial exercise by Lender of any right or remedy will preclude further exercise thereof. Notice or demand given to Borrower in any instance will not entitle Borrower to notice or demand in similar or other circumstances nor constitute Lender's waiver of its right to take any future action in any circumstance without notice or demand (except where expressly required by this Security Instrument to be given). Lender may release other security for the Debt, may release any party liable for the Debt, may grant extensions, renewals or forbearances with respect thereto, may accept a partial or past due payment or grant other indulgences, or may apply any other security held by it to payment of the Debt, in each case without prejudice to its rights under this Security Instrument and without such action being deemed an accord and satisfaction or a reinstatement of the Debt. Lender will not be deemed as a consequence of its delay or failure to act, or any forbearances granted, to have waived or be estopped from exercising any of its rights or remedies.

6.04 Enforcement Costs. Borrower shall pay, on written demand by Lender, all costs incurred by Lender in (a) collecting any amount payable under the Loan Documents, or (b) enforcing its rights under the Loan Documents, in each case whether or not legal proceedings are commenced. Such fees and expenses include, without limitation, reasonable fees for attorneys, paralegals, law clerks and other hired professionals, a reasonable assessment of the cost of services performed by Lender's default management staff, court fees, costs incurred in connection with pre-trial, trial and appellate level proceedings, including discovery, and costs incurred in post judgment collection efforts or in any bankruptcy proceeding. Amounts incurred by Lender shall be added to the Debt, shall be immediately due and payable, and shall bear interest a t the Default Rate from the date of disbursement until paid in full, if not paid in full within five (5) days after Lender's written demand for payment.

6.05 Application of Proceeds. The proceeds from disposition of the Property shall be applied by Lender to the payment of the Debt (including, without limitation, advances made by Lender and enforcement costs incurred by Lender) in such priority and proportion as Lender determines in its sole discretion.

6.06 Continuing Lien; Right to Release Property. If less than all of the Property is, at any time, sold through foreclosure, power of sale, or otherwise, or if Lender releases any portion of the Property (for whatever consideration Lender deems appropriate), this Security Instrument shall continue as a lien and security interest on the remaining portion of the Property, unimpaired and without loss of priority.

6.07 LIMITATION ON PERSONAL LIABILITY. NOTWITHSTANDING ANY PROVISION HEREOF TO THE CONTRARY, BORROWER'S PERSONAL LIABILITY FOR PAYMENT OF THE DEBT AND PERFORMANCE OF THE OBLIGATIONS IS LIMITED HEREUNDER IN THE SAME MANNER AND TO THE SAME EXTENT AS EXPRESSLY PROVIDED IN THE LOAN AGREEMENT.

ARTICLE 7
WAIVER OF RIGHT OF REDEMPTION AND OTHER RIGHTS

7.01 Waiver of Rights of Redemption, Marshalling and Other Rights. Borrower hereby waives, to the fullest extent permitted by law, the benefit of all laws, now or hereafter in force, providing for (a) the valuation or appraisement of the Property, or any party thereof, prior to any sale or sales thereof pursuant to this Security Instrument or any decree, judgment or order of a court of competent jurisdiction; (b) the right to stay or extend any such proceeding, to have this Security Instrument reinstated or to redeem the Property or any portion thereof so sold; (c) rights of marshalling relating to any such sale or sales; (d) any right to require that the Property be sold as separate tracts or units in connection with enforcement of this Security Instrument; and (e) the benefit of any moratorium, exemption or homestead rights now or hereafter provided. Borrower makes such waivers on its own behalf and on behalf of all parties now or hereafter claiming or having an interest (direct or indirect) by, through or under Borrower.

7.02 Waiver of Counterclaim. Borrower hereby waives, to the fullest extent permitted by law, the right to assert a counterclaim, other than a mandatory or compulsory counterclaim, in any action or proceeding brought against it by Trustee or Lender arising out of, or in any way connected with, the Obligations.

7.03 Waiver of Foreclosure Defense. Borrower hereby waives, to the fullest extent permitted by law, any defense Borrower might have by reason of Lender's failure to make any tenant or tenant of the Property a party defendant in any foreclosure instituted by Lender.

7.04 Waiver of Notices Generally. Borrower hereby waives, to the fullest extent permitted by law, its rights to notice from Lender except when this Security Instrument or the other Loan Documents expressly provides for Lender to give notice to Borrower.

7.05 Waiver of Statute of Limitations and Laches. Borrower hereby waives, to the fullest extent permitted by law, the benefit of any statute of limitations or laches defense to payment of the Debt or performance of the Obligations.

7.06 WAIVER OF TRIAL BY JURY. BORROWER WAIVES ITS RIGHT, TO THE FULLEST EXTENT PERMITTED BY LAW, AND AGREES NOT TO ELECT, A TRIAL BY JURY WITH RESPECT TO ANY ISSUE ARISING OUT OF THIS SECURITY INSTRUMENT OR THE RELATIONSHIP BETWEEN THE PARTIES AS BORROWER AND LENDER.

7.07 Consent to Jurisdiction. Borrower hereby consents and submits to the exclusive jurisdiction and venue of any state or federal court sitting in the county and state where the Land is located with respect to any legal action or proceeding arising with respect to this Security Instrument or any other Loan Document and waives all objections which it may have to such jurisdiction and venue. Nothing herein shall, however, preclude or prevent Lender from bringing actions against Borrower in any other jurisdiction as may be necessary to enforce or realize upon the security herein provided.

ARTICLE 8
MISCELLANEOUS PROVISIONS

8.01 Incorporation from Loan Agreement. All provisions of Articles 17 and 18, inclusive, of the Loan Agreement are incorporated into this Security Instrument by this reference, as if fully reproduced herein.

8.02 Further Acts. Borrower, at Borrower's expense, agrees to take such further actions and execute such further documents as Lender reasonably may request to carry out the intent of this Security Instrument or to establish and protect the rights and remedies created or intended to be created in favor of Lender hereunder or to protect the value of the Property and the Liens and security hereby created in favor of Lender. Borrower agrees to pay all filing, registration or recording fees or taxes, and all expenses incident to the preparation, execution, acknowledgement or filing/recording of this Security Instrument or any such instrument of further assurance, except where prohibited by law so to do.

8.03 No Third Party Beneficiary. Notwithstanding any provision of this Security Instrument to the contrary, this Security Instrument is not intended by the parties to create, and shall not create, benefits on behalf of any tenant or other occupant of the Property or anyone claiming rights through any tenant or other occupant of the Property.

8.04 No Agency or Partnership. Nothing contained in this Security Instrument shall constitute Lender as a joint venturer, partner or agent of Borrower, or render Lender liable for any debts, obligations, acts, omissions, representations, or contracts of Borrower.

ARTICLE 9
TRUSTEE PROVISIONS

9.01 Trustee's Fees and Expenses. Borrower shall pay all reasonable fees and expenses incurred by Trustee for legal counsel and other professional advisors in connection with Trustee's performance of its duties hereunder. Amounts incurred by Trustee shall be deemed a part of the Debt secured by this Security Instrument and bear interest at the Default Rate if not paid in full within five (5) days after Trustee's written demand for payment. Trustee hereby waives any statutory fee or compensation for services rendered hereunder.

9.02 Duties of Trustee.

(a) Trustee, by acceptance of this Security Instrument, covenants to perform and fulfill the trusts and duties herein created and conferred upon Trustee. Notwithstanding the foregoing, Trustee agrees not to execute any of the powers conferred upon Trustee hereunder, nor to take any action to protect or enforce Lender's rights hereunder, nor to provide any interpretation of this Security Instrument or any of the other Loan Documents without Lender's prior written consent thereto in each instance. Trustee, however, has an affirmative duty to reasonably cooperate with Lender as Lender may require to protect the Property and to enforce Lender's rights hereunder, but Trustee shall not be obligated to institute or defend any suit in respect hereof or to perform any act which would involve Trustee in any expense or liability unless, in each case, properly i ndemnified to Trustee's reasonable satisfaction. Trustee also has no duty to see to any recording, filing or registration of this Security Instrument or any other instrument in addition or supplemental hereto, or to give any notice thereof, or to see to the payment of, or be under any duty in respect of, any tax or assessment or other governmental charge which may be levied or assessed on the Property or against Borrower, or to see to the performance or observance by Borrower of any of the covenants and agreements contained herein. Trustee shall not be responsible for the sufficiency of the security purported to be created hereby and makes no representation or warranty in respect thereof or in respect of the rights of Lender.

(b)

Trustee shall not be liable for any error of judgment or act done by Trustee in good faith or otherwise responsible or accountable under any circumstances whatsoever (including Trustee's negligence), except for Trustee's gross negligence or willful misconduct. Trustee has the right to advice of counsel upon any matters arising hereunder and shall be fully protected in relying on the advice of counsel. Trustee has the right to rely on any instrument, document or signature authorizing or supporting any action taken or proposed to be taken by Trustee hereunder, believed by Trustee in good faith to be genuine. Trustee shall not be personally liable in case of entry upon the Property by Trustee, or anyone entering by virtue of the powers herein granted to Trustee, or for liability or damages incurred in the management or operation of the Property.

(c)

All money received by Trustee with respect to the Debt and Obligations shall, until used or applied as herein provided, be held in trust for the purposes for which they were received, but need not be segregated in any manner from any other moneys (except to the extent required by applicable law), and Trustee shall be under no liability for interest on any moneys received by Trustee hereunder.

9.03 Resignation and Substitution of Trustee.

(a)

Trustee may resign at any time upon written notice to Lender delivered not less than thirty (30) days prior to the intended date of resignation. In the event of Trustee's death, resignation, refusal to act, disqualification or other inability to act, or if Lender shall deem it desirable to remove Trustee for any reason with or without cause, Lender has the right, in its sole discretion, to select and appoint a successor trustee (who may be Lender or an affiliate of Lender if permitted by law), without application to court or compliance with any formality other than appointment and designation in writing by Lender. If Lender is a corporation or association and such appointment is executed in its behalf by an officer of such corporation or association, such appointment shall be conclusively presumed to be executed with authority and shall be valid and sufficient without proof of any action by the board of directors or any superior officer of the corporation or association.

(b)

Any successor appointed as Trustee shall, without further act, deed or conveyance, become vested with all of the estates, properties, rights, powers, privileges, immunities and duties herein conferred upon Trustee with like effect as if such successor were originally named as trustee herein. Nevertheless, upon the written request of Lender or of the successor as Trustee, the party ceasing to act as Trustee shall execute and deliver an instrument, in recordable form, transferring to such successor as Trustee, all of the estates, properties, rights, powers, privileges, immunities and duties herein conferred upon Trustee and shall duly assign, transfer and deliver to such successor, in trust, any of the property and money then held by the party ceasing to act as Trustee.

9.04 Multiple Trustees. If more than one Trustee is appointed hereunder at any one time, or from time to time, all rights granted to and all powers conferred upon Trustee hereunder may be exercised by any or all of such Trustees, independently or jointly. Action exercised by one Trustee shall be deemed valid and binding on all Trustees.

ARTICLE 10
LOCAL LAW PROVISIONS

The provisions set forth below control in the event of any conflict with the other terms of this Security Instrument.

10.01 Acceleration; Remedies. At any time during the existence of an Event of Default, Lender, at Lender's option, may declare the Debt to be immediately due and payable without further demand, and may invoke the power of sale and any other remedies permitted by Colorado law or provided in this Security Instrument or in any other Loan Document. Lender shall be entitled to collect all costs and expenses incurred in pursuing such remedies, including attorneys' fees, costs of documentary evidence, abstracts and title reports.

If Lender invokes the power of sale, Trustee shall give notice of sale in the manner required by Colorado law to Borrower and to all other persons who are entitled to receive such notice under Colorado law, and shall sell the Property according to Colorado law. Trustee may sell the Property at the time and place and under the terms designated in the notice of sale in one or more parcels and in such order as Trustee may determine. Trustee may postpone the sale of all or any part of the Property by public announcement at the time and place of any previously scheduled sale. Lender or Lender's designee may purchase the Property at any sale. Trustee shall deliver to the purchaser at the sale Trustee's certificate describing the Property and the time when the purchaser will be entitled to Trustee's deed to the Property. The recitals in Trustee's deed shal l be prima facie evidence of the truth of the statements made in those recitals.

Trustee shall apply the proceeds of the sale as prescribed by applicable law. If, upon foreclosure of the Property pursuant to this Security Instrument, the purchaser at the foreclosure sale has bid an amount less than the full Debt owed by Borrower and secured by this Security Instrument, then the full amount bid and the full amount of the deficiency shall bear interest at the Default Rate. Thereafter, the deficiency, together with such interest, shall be a continuing obligation of Borrower for which Lender shall be entitled to personal monetary judgment, to the extent permitted under the Note and under Colorado law.

10.02 Release. Upon payment of the Debt, Lender shall request Trustee to release this Security Instrument and shall deliver to Trustee the canceled Note. Trustee shall release this Security Instrument without further inquiry or liability. Borrower shall pay all costs of recordation, if any, of the release and shall pay the statutory Trustee's fee.

10.03 Waiver of Homestead. Borrower waives all right of homestead exemption in the Property.

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

[Remainder of page is blank; signatures appear on next page.]

IN WITNESS WHEREOF, the undersigned hereby signs, seals and delivers this Security Instrument.

CCP 1V ASSOCIATES, LTD., a Texas limited partnership

By: CCP/IV Residential GP, L.L.C., a South Carolina limited liability company, its general partner

By: Consolidated Capital Properties N, a California limited partnership, doing business in Colorado as Consolidated Capital Properties N, Ltd., its sole member

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

By /s/Patti K. Fielding

Executive Vice President and Treasurer

STATE OF COLORADO CITY/COUNTY OF DENVER, to-wit:

The foregoing_, instrument was acknowledged before me in the above-stated jurisdiction this30th day of November, 2005 by Patti K. Fielding who is Executive Vice President
and Treasurer of ConCap Equities, Inc., a Delaware corporation, general partner of Consolidated Capital Properties N, a California limited partnership, doing business in Colorado as Consolidated Capital Properties N, Ltd., sole member of CCP/W Residential GP, L.L.C., a South Carolina limited liability company, general partner of CCP N Associates, Ltd., a Texas limited partnership, for and on behalf of the limited partnership.

/s/Gail D. Coalson

Notary Public

My commission expires:

02/17/2008

EX-3 3 ccp410124.htm Converted by EDGARwiz

Exhibit 10.124

PROMISSORY NOTE
$2,000,000.00 As of November 30, 2005

FOR VALUE RECEIVED, and upon the terms and conditions set forth herein, CCP IV ASSOCIATES, LTD., a Texas limited partnership ("Borrower"), promises to pay to the order of GMAC COMMERCIAL MORTGAGE BANK, a Utah industrial bank (together with its successors and assigns, "Lender"), at Lender's office located at c/o GMAC Commercial Mortgage Corporation, 200 Witmer Road, P.O. Box 809, Horsham, Pennsylvania 19044-0809, Attn: Servicing - Account Manager, or at such other place as Lender may designate to Borrower in writing from time to time, the principal amount of Two Million and 00/100 Dollars ($2,000,000.00), together with interest thereon, in the amounts, at the times and otherwise in accordance with the terms set forth in that certain Loan Agreement of even date herewith ("Loan Agreement") between Borrower an d Lender, which terms are incorporated herein by this reference.

ARTICLE 1
TERMS OF NOTE

1.01 Loan Agreement. This Note is the promissory note referred to in the Loan Agreement. All capitalized terms used herein and not defined herein have the meaning provided in the Loan Agreement. All of the terms, conditions and provisions of the Loan Agreement applicable to this Note and the debt evidenced hereby are incorporated herein by this reference.

1.02 Negotiable Instrument. Borrower agrees that this Note is a negotiable instrument, even though this Note, absent this paragraph, may not otherwise qualify as a negotiable instrument under applicable law.

1.03 Exculpation. NOTWITHSTANDING ANY PROVISION HEREOF TO THE CONTRARY, BORROWER'S PERSONAL LIABILITY FOR PAYMENT OF THIS NOTE AND PERFORMANCE OF THE OBLIGATIONS UNDER THIS NOTE IS LIMITED IN THE SAME MANNER AND TO THE SAME EXTENT AS EXPRESSLY PROVIDED IN THE LOAN AGREEMENT.

1.04 Borrower's Waivers. Borrower, for itself and all others who may become liable for payment of all or any portion of this Note, hereby waives presentment for payment, demand, protest, and notice of dishonor, protest, nonpayment, demand, intent to accelerate, and acceleration. Borrower, for itself and all others who may become liable for payment of all or any portion of this Note, hereby further waives and renounces, to the fullest extent permitted by law, all rights to the benefits of any moratorium, reinstatement, marshalling, forbearance, valuation, stay, extension, redemption, appraisement, exemption and homestead now or hereafter provided, both as to party and property (real and personal), against the enforcement and collection of the obligations evidenced by this Note or any of the other Loan Documents.

1.05 Unconditional Payment. Any payment received by Lender hereunder that is required to be refunded or recovered from Lender as a voidable preference or a fraudulent transfer or is otherwise set-aside pursuant to the Bankruptcy Code or any insolvency or other debtor relief law shall not be considered as a payment made on the Loan or under this Note. Borrower's liability under this Note to make such payment shall be reinstated, notwithstanding that this Note may have been marked satisfied and returned to Borrower or otherwise canceled, and such payment shall be immediately due and payable upon demand.

ARTICLE 2
DEFAULT AND REMEDIES

2.01 Event of Default. The occurrence of an "Event of Default" as that term is defined under the Loan Agreement shall constitute an "Event of Default" under this Note.

2.02 Cumulative and Independent Remedies. Following an Event of Default (which has not been waived in writing by Lender), Lender, without notice or consent from Borrower, shall be entitled to exercise all rights and remedies as have been provided to Lender hereunder, under the Loan Agreement and other Loan Documents, by law or in equity. Such rights and remedies are cumulative and may be exercised independently, concurrently or successively in Lender's sole discretion and as often as occasion therefor shall arise. No partial exercise by Lender of any right or remedy will preclude further exercise thereof. Notice or demand given to Borrower in any instance will not entitle Borrower to notice or demand in similar or other circumstances or constitute Lender's waiver of its right to take any future action in any circumstance without notice or demand (except where expressly required by this Note to be given). Lender may release security for the Loan, may release any party liable for the Loan, may grant extensions, renewals or forbearances with respect thereto, and may apply any security held by it to payment of the Loan, in each case without prejudice to its rights under this Note. Lender will not be deemed as a consequence of its delay or failure to act, or any forbearances granted, to have waived or be estopped from exercising any of its rights or remedies.

ARTICLE 3
MISCELLANEOUS PROVISIONS

3.01 Incorporation from Loan Agreement. All provisions of Articles 17 and 18, inclusive, of the Loan Agreement are incorporated into this Note by this reference, as if fully reproduced herein.

3.02 WAIVER OF JURY TRIAL. BORROWER HEREBY WAIVES ITS RIGHT, TO THE FULL EXTENT PERMITTED BY LAW, AND AGREES NOT TO ELECT, A TRIAL BY JURY WITH RESPECT TO ANY ISSUE ARISING OUT OF THIS NOTE OR THE RELATIONSHIP BETWEEN THE PARTIES AS BORROWER AND LENDER.

IN WITNESS WHEREOF, the undersigned hereby signs, seals and delivers this Note, intending to be legally bound hereby.

CCP IV ASSOCIATES, LTD., a Texas limited partnership

By: CCP/IV Residential GP, L.L.C., a South Carolina limited liability company, its general partner

By: Consolidated Capital Properties 1V, a California limited partnership, doing business in Colorado as Consolidated Capital Properties 1V, Ltd., its sole member

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

Patti K. Fielding

Executive Vice President and Treasurer

EX-3 4 ccp410125.htm Converted by EDGARwiz

Exhibit 10.125

LOAN AGREEMENT
LIBOR
BETWEEN
CCP IV ASSOCIATES, LTD., A TEXAS LIMITED PARTNERSHIP
AS BORROWER
AND
GMAC COMMERCIAL MORTGAGE BANK, A UTAH INDUSTRIAL BANK
AS LENDER
DATED AS OF NOVEMBER 30, 2005

Loan Number: 51930 Village East Apartments

TABLE OF CONTENTS

Page

ARTICLE 1 DEFINED TERMS AND CONSTRUCTION GUIDELINES

1.01. Defined Terms

1.02. General Construction

1.03. Intentionally Omitted

1.04. Intentionally Omitted

ARTICLE 2 MAXIMUM LOAN AMOUNT; PAYMENT TERMS; ADVANCES

2.01. Commitment to Lend

2.02. Calculation of Interest

2.03. Payment of Principal and Interest

2.04. Payments Generally

2.05. Prepayment Rights

2.06. Exit Fee

2.07. Interest Rate Cap/Hedge

ARTICLE 3 CASH MANAGEMENT

3.01. Lockbox

ARTICLE 4 ESCROW AND RESERVE REQUIREMENTS

4.01. Creation and Maintenance of Escrows and Reserves

4.02. Tax Escrow

4.03. Insurance Premium Escrow

4.04. Immediate Repair Escrow Account

4.05. Replacement Reserve Account

4.06. Intentionally Omitted

4.07. Intentionally Omitted

4.08. Intentionally Omitted

ARTICLE 5 COMPLETION OF REPAIRS RELATED TO RESERVE ACCOUNTS; CONDITIONS TO RELEASE OF FUNDS 14

5.01. Conditions Precedent to Disbursements from Certain Reserve Accounts

5.02. Waiver of Conditions to Disbursement

5.03. Direct Payments to Suppliers and Contactors

5.04. Performance of Reserve Items

ARTICLE 6 LOAN SECURITY AND RELATED OBLIGATIONS

6.01. Security Instrument and Assignment of Rents and Leases

6.02. Assignment of Property Management Contract

6.03. Assignment of Rate Cap Agreement

6.04. Assignment of Operating Agreements

6.05. Pledge of Property; Grant of Security Interest

6.06. Environmental Indemnity Agreement

6.07. Guaranty of Borrower Sponsor

6.08. Intentionally Omitted

ARTICLE 7 SINGLE PURPOSE ENTITY REQUIREMENTS

7.01. Commitment to be a Single Purpose Entity

7.02. Definition of Single Purpose Entity

7.03. Lender's Acknowledgement

ARTICLE 8 REPRESENTATIONS AND WARRANTIES

8.01. Organization; Legal Status

8.02. Power; Authorization; Enforceable Obligations

8.03. No Legal Conflicts

8.04. No Litigation

8.05. Business Purpose of Loan

8.06. Warranty of Title

8.07. Condition of the Property

8.08. No Condemnation

8.09. Requirements of Law

8.10. Operating Permits

8.11. Separate Tax Lot

8.12. Flood Zone

8.13. Adequate Utilities

8.14. Public Access

8.15. Boundaries

8.16. Mechanic Liens

8.17. Assessments

8.18. Insurance

8.19. Leases

8.20. Management Agreement

8.21. Financial Condition

8.22. Taxes

8.23. No Foreign Person

8.24. Federal Regulations

8.25. Investment Company Act; Other Regulations

8.26. ERISA

8.27. No Illegal Activity as Source of Funds

27
8.28. Compliance with Anti-Terrorism, Embargo, Sanctions and Anti-Money Laundering

Laws

8.29. Brokers and Financial Advisors

8.30. Equity Contribution

8.31. Complete Disclosure; No Change in Facts or Circumstances

8.32. Survival

ARTICLE 9 BORROWER COVENANTS

9.01. Payment of Debt and Performance of Obligations

9.02. Payment of Taxes and Other Lienable Charges

9.03. Insurance

9.04. Obligations upon Condemnation or Casualty

9.05. Inspections and Right of Entry

9.06. Leases and Rents

9.07. Use of Property

9.08. Maintenance of Property

9.09. Waste

9.10. Compliance with Laws

9.11. Financial Reports, Books and Records

9.12. Performance of Other Agreements

9.13. Existence; Change of Name; Location as a Registered Organization

9.14. Property Management

9.15. ERI S A

43
9.16. Compliance with Anti-Terrorism, Embargo, Sanctions and Anti-Money Laundering

Laws

9.17. Equity Contribution

Error! Bookmark not defined.

9.18. Intentionally Omitted

9.19. Intentionally Omitted

9.20. Intentionally Omitted

ARTICLE 10 NO TRANSFERS OR ENCUMBRANCES; DUE ON SALE

10.01. Prohibition Against Transfers

10.02. Lender Approval

10.03. Intentionally Omitted

10.04. Releases of the Mortgaged Property

10.05. OFAC Compliance; Substantive Consolidation Opinion

ARTICLE 11 EVENTS OF DEFAULT; REMEDIES

11.01. Events of Default

11.02. Remedies

11.03. Cumulative Remedies; No Waiver; Other Security

11.04. Enforcement Costs

11.05. Application of Proceeds

11.06. Intentionally Omitted

ARTICLE 12 NONRECOURSE - LIMITATIONS ON PERSONAL LIABILITY

12.01. Nonrecourse Obligation

12.02. Full Personal Liability

12.03. Personal Liability for Certain Losses

12.04. No Impairment

12.05. No Waiver of Certain Rights

ARTICLE 13 INDEMNIFICATION

13.01. Indemnification Against Claims

13.02. Duty to Defend

ARTICLE 14 SUBROGATION; NO USURY VIOLATIONS

14.01. Subrogation

14.02. No Usury

ARTICLE 15 SALE OR SECURITIZATION OF LOAN

15.01. Splitting the Note

15.02. Lender's Rights to Sell or Securitize

15.03. Dissemination of Information

15.04. Reserves Accounts

15.05. Securitization Indemnification

15.06. Intentionally Omitted

ARTICLE 16 BORROWER FURTHER ACTS AND ASSURANCES PAYMENT OF SECURITY RECORDING CHARGES 56

16.01. Further Acts

16.02. Replacement Documents

16.03. Borrower Estoppel Certificates

16.04. Recording Costs

16.05. Publicity

ARTICLE 17 LENDER CONSENT

17.01. No Joint Venture; No Third Party Beneficiaries

17.02. Lender Approval

17.03. Performance at Borrower's Expense

17.04. Non-Reliance

ARTICLE 18 MISCELLANEOUS PROVISIONS

18.01. Notices

18.02. Entire Agreement; Modifications; Time of Essence

18.03. Binding Effect; Joint and Several Obligations

18.04. Duplicate Originals; Counterparts

18.05. Unenforceable Provisions

18.06. Governing Law

18.07. Consent to Jurisdiction

18.08. WAIVER OF TRIAL BY JURY

ARTICLE 19 LIST OF DEFINED TERMS

19.01. Definitions

LOAN AGREEMENT
(Libor Rate Loan)

THIS LOAN AGREEMENT is made as of this 30th day of November, 2005 by CCP IV ASSOCIATES, LTD., a Texas limited partnership ("Borrower"), as borrower, and GMAC COMMERCIAL MORTGAGE BANK, a Utah industrial bank (together with its successors and assigns "Lender"), as lender.

Background

Borrower desires to obtain a commercial mortgage loan from Lender in the original principal amount of $2,000,000.00 in lawful money of the United States of America. Lender is willing to make such loan to Borrower on the terms and conditions set forth in this Loan Agreement.

Agreement

NOW, THEREFORE, in consideration of such loan and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, Borrower and Lender agree as follows:

ARTICLE 1

DEFINED TERMS AND CONSTRUCTION GUIDELINES

1.01. Defined Terms. Each defined term used in this Loan Agreement has the meaning given to that term in Article 19 of this Loan Agreement.

1.02. General Construction. Defined terms used in this Loan Agreement may be used interchangeably in singular or plural form, and pronouns are to be construed to cover all genders. All references to this Loan Agreement or any agreement or instrument referred to in this Loan Agreement shall mean such agreement or instrument as originally executed and as hereafter amended, supplemented, extended, consolidated or restated from time to time. The words "herein," "hereof' and "hereunder" and other words of similar import refer to this Loan Agreement as a whole and not to any particular subdivision; and the words "Article" and "section" refer to the entire article or section, as applicable and not to any particular subsection or other subdivision. Reference to days for performance means calendar days unless business days are expressly indicated.

1.03. Intentionally Omitted. 1.04. Intentionally Omitted.

ARTICLE 2
MAXIMUM LOAN AMOUNT; PAYMENT TERMS; ADVANCES

2.01. Commitment to Lend.

(a)

Maximum Loan Amount Approved. Subject to the terms and conditions set forth herein, and in reliance on Borrower's representations, warranties and covenants set forth herein, Lender agrees to loan the Maximum Loan Amount to Borrower. The Loan shall be evidenced by this Loan Agreement and by the Note made by Borrower to the order of Lender and shall bear interest and be paid upon the terms and conditions provided herein.

(b)

Initial Advance of Maximum Loan Amount. On the Closing Date, Lender shall advance the entire Maximum Loan Amount to Borrower.

2.02. Calculation of Interest.

(a)

Calculation Basis. Interest due on the Loan shall be paid in arrears, calculated based on a 360-day year and paid for the actual number of days elapsed for any whole or partial month in which interest is being calculated.

(b)

Initial Applicable Interest Rate and Interest Rate Adjustment Date. Interest shall accrue on outstanding principal at the rate ("Applicable Interest Rate") which is the LIBOR Rate plus one and sixty hundredths percent (1.60%) ("Margin"); provided that in no event shall the Applicable Interest Rate be less than five and seventy-nine hundredths percent (5.79%) ("Minimum Interest Rate"). Adjustments to the Applicable Interest Rate in connection with changes in the LIBOR Rate shall be made on the Interest Rate Adjustment Date, except that the initial Applicable Interest Rate shall be determined three business days prior to the Closing Date.

(c)

LIBOR Unascertainable. Lender's obligation to maintain interest based on the LIBOR Rate shall be suspended and the Applicable Interest Rate shall be based on the Interest Rate Index (plus Margin) upon Lender's determination, in good faith, that adequate and reasonable means do not exist for ascertaining the LIBOR Rate or that a contingency has occurred which materially and adversely affects the London Interbank Eurodollar Market at which Lender prices loans (which determination by Lender shall be conclusive and binding on Borrower in the absence of manifest error). Computation of the Applicable Interest Rate based on the Interest Rate Index shall continue until Lender determines that the circumstances giving rise to Lender's substitution of the Interest Rate Index for the LIBOR Rate no longer exist. Lender shall promptly notify Borrower of each such determination.

(d)

Adjustment Due to Calculation Errors. If, at any time, Lender determines that it has miscalculated the Applicable Interest Rate (whether because of a miscalculation of the LIBOR Rate or otherwise), Lender shall notify Borrower of the necessary correction. If the corrected Applicable Interest Rate represents an increase in the applicable monthly payment, Borrower shall, within ten (10) days thereafter, pay to Lender the corrected amount. If the corrected Applicable Interest Rate represents an overpayment by Borrower to Lender and no Event of Default then exists, Lender shall refund the overpayment to Borrower or, at Lender's option, credit such amounts against Borrower's payment next due hereunder.

(e)

Adjustment for Impositions on Loan Payment. All payments made by Borrower hereunder shall be made free and clear of, and without reduction for, or on account of, any income, stamp or other taxes, levies, imposts, duties, charges, fees, deductions or withholdings hereafter imposed, levied, collected, withheld or assessed by any government or taxing authority (other than taxes on the overall net income or overall gross receipts of Lender imposed as a result of a present or former connection between Lender and the jurisdiction of the government or taxing authority imposing same provided, that this exclusion shall not apply to a connection arising solely from Lender's having executed, delivered, performed its obligations under, received a payment under, or enforced this Loan Agreement or any other Loan Document). If any such amounts are required to be withheld from amounts payable to Lender, the amounts payable to Lender under the Loan Documents shall be increased to the extent necessary to yield to Lender, after payment of such amounts, interest or any such other amounts payable at the rates or in the amounts specified herein. If any such amounts are payable by Borrower, Borrower shall pay all such amounts by their due date and promptly send Lender a certified copy of an original official receipt showing payment thereof. If Borrower fails to pay such amounts when due or to deliver the required receipt to Lender, Borrower shall indemnify Lender for any incremental taxes, interest or penalties that may become payable by Lender as a result of any such failure.

(f)

Increased Costs of Maintaining Interest. If Lender reasonably determines that the adoption of any law, regulation, rule or guideline (including, without limitation, any change regarding the imposition or increase in reserve requirements), whether or not having the force of law, does or will have the effect of reducing Lender's rate of return on the Loan, then, from time to time, within five (5) business days after written demand by Lender, Borrower shall pay Lender such additional amount as will compensate Lender for its reduction. In addition, if any law, regulation, rule or guideline hereafter is enacted or modified, whether or not having the force of law, and compliance therewith results in an increase in the cost to Lender (including, without limitation, a reduction in the income received by Lender) in making, funding or maintaining interest on the Loan at the rate herein provided, t hen, within five (5) business days after written demand by Lender, Borrower shall pay Lender the additional amounts necessary to compensate Lender for such increased costs.

(g)

Acceleration. Notwithstanding anything to the contrary contained herein, if Borrower is prohibited by law from paying any amount due to Lender under Section 2.02(e) or (f), Lender may elect to declare the unpaid principal balance of the Loan, together with all unpaid interest accrued thereon and any other amounts due hereunder, due and payable within ninety (90) days of Lender's written notice to Borrower. No Prepayment Fee or Exit Fee shall be due in such event. Lender's delay or failure in accelerating the Loan upon the discovery or occurrence of an event under Section 2.02(e) or (f) shall not be deemed a waiver or estoppel against the exercise of such right.

2.03. Payment of Principal and Interest.

(a)

Payment at Closing. If the Loan is funded on a date other than the first (1st) day of a calendar month, Borrower shall pay to Lender at the time of funding an interest payment calculated by multiplying (i) the number of days from and including the date of funding to (but excluding) the first (1st) day of the next calendar month by (ii) a daily rate based on the Applicable Interest Rate effective on the Closing Date and calculated for a 360-day year.

(b)

Payment Dates. Commencing on the first (1st) day of January, 2006 and continuing on the first (1st) day of each and every successive month thereafter (each, a "Payment Due Date"), through and including the Payment Due Date immediately prior to the Maturity Date, Borrower shall pay consecutive monthly payments of interest only, at the Applicable Interest Rate (determined as of the immediately preceding Interest Rate Adjustment Date), based on principal advanced and outstanding during the prior calendar month and any amounts due pursuant to Section 2.02 of this Loan Agreement; and

(c)

Maturity Date. On the first (1st) day of December, 2007 ("Maturity Date"), Borrower shall pay the entire outstanding principal balance of the Loan, together with all accrued but unpaid interest thereon and all other amounts due under this Loan Agreement, the Note or any other Loan Document.

(d)

Extension of Maturity Date.

(i)

Extension Option. Borrower has the right to extend the Maturity Date of the Loan for one (1) additional term of twelve (12) months (the "Extension Term"), extending the Maturity Date to December 1, 2008. Upon Borrower's proper and timely exercise of its rights under this Section 2.03(d), the term "Maturity Date" shall be deemed to be the Extended Maturity Date.

(ii)

Conditions Precedent to Maturity Date Extension. Each of the following conditions must be satisfied in a manner acceptable to Lender (or waived in writing by Lender) as a condition precedent to extension of the Maturity Date:

(A)

Borrower delivers written notice to Lender not more than ninety (90) days and not less than thirty (30) days prior to the expiring Maturity Date advising that Borrower is exercising its extension option, together with all materials needed by Lender to confirm that the Property satisfies the performance criteria identified in subsection (D) below.

(B)

Borrower pays to Lender the Extension Fee with Borrower's notice exercising its extension option.

(C)

No Event of Default exists and no event or condition has occurred and is continuing that would be an Event of Default if notice had been given or applicable grace/cure periods had expired (or both), as of the date Borrower exercises such extension option and as of the commencement date of the relevant Extension Term.

(D)

Borrower demonstrates to Lender's satisfaction that the Property achieved and maintained, for the period of three (3) consecutive months prior to the date Borrower exercises such extension option, and prior to the commencement date of the relevant Extension Term the following performance criteria: a Debt Service Coverage Ratio of at least 1.25:1.00, based upon an 8.31% constant. Notwithstanding the foregoing, Lender reserves the right to reconfirm that the Property continues to achieve the foregoing performance criteria, based upon financial statements for a period determined by Lender prior to the commencement date of the Extension Term, and to condition the extension on such performance criteria being sustained until the commencement of the Extension Term. If such performance criteria have not been achieved as of the date Borrower exercises its extension option or any subsequent verification thereof made by Lender prior to commencement of the Extension Term, Lender may, in its sole discretion, permit the extension of the Maturity Date provided that Borrower pays principal in the amount necessary for the Property to achieve the foregoing performance criteria as of the commencement date of the Extension Term.

(E)

Intentionally omitted.

(F)

Borrower obtains, and assigns to the benefit of Lender, a Rate Cap which (1) will be effective for the Extension Term and provide for payments whenever the LIBOR Rate exceeds a strike price determined by Lender for the Extension Term such that a minimum Debt Service Coverage Ratio of 1.05:1.00 is maintained, (2) with a notional amount equal to the Maximum Loan Amount and (3) otherwise satisfies all requirements of Section 2.07 of this Loan Agreement.

(G)

Borrower executes and delivers to Lender an amendment to this Loan Agreement, acceptable to Lender in all respects, which confirms the date to which the Maturity Date has been extended, the principal and interest amounts payable during the Extension Term and such other matters as Lender may require.

(H)

Borrower reimburses Lender for all costs reasonably incurred by Lender in processing the extension request, including, without limitation, reasonable legal fees and expenses and, if the Loan has been included in a Securitization, a Rating Confirmation.

2.04. Payments Generally.

(a)

Delivery of Payments. All payments due to Lender under this Loan Agreement and the other Loan Documents are to be paid in immediately available funds to Lender at Lender's office located at 200 Witmer Road, P.O. Box 809, Horsham, Pennsylvania 19044, Attn: Servicing - Accounting Manager, or at such other place as Lender may designate to Borrower in writing from time to time. All amounts due under this Loan Agreement and the other Loan Documents shall be paid without setoff, counterclaim or any other deduction whatsoever.

(b)

Credit for Payment Receipt. No payment due under this Loan Agreement or any of the other Loan Documents shall be deemed paid to Lender until received by Lender at its designated office on a business day prior to 2:00 p.m. Eastern Standard Time. Any payment received after the time established by the preceding sentence shall be deemed to have been paid on the immediately following business day. Each payment that is paid to Lender in the calendar month in which it is due, but prior to its scheduled Payment Due Date, shall not be deemed a prepayment and shall be deemed to have been received on the Payment Due Date solely for the purpose of calculating interest due. Where a Payment Due Date falls on a date other than a business day, the Payment Due Date shall be deemed the first business day immediately thereafter.

(c)

Invalidated Payments. If any payment received by Lender is deemed by a court of competent jurisdiction to be a voidable preference or fraudulent conveyance under any bankruptcy, insolvency or other debtor relief law, and is required to be returned by Lender, then the obligation to make such payment shall be reinstated, notwithstanding that the Note may have been marked satisfied and returned to Borrower or otherwise canceled, and such payment shall be immediately due and payable upon demand.

(d)

Late Charges. If any payment due on a Payment Due Date is not received by Lender in full on or before the fifth (5th) day after the Payment Due Date on which such payment is due (e.g., if the Payment Due Date is the 1st day of month, a late charge would accrue if the full payment is not received on or before the 5th day of the month); Borrower shall pay to Lender, immediately and without demand, a late fee equal to five percent (5%) of such delinquent amount.

(e)

Default Interest Rate. If the Loan is not paid in full on or before the Maturity Date (subject to any extension thereto properly exercised by Borrower in accordance with this Loan Agreement) or if the Loan is accelerated following an Event of Default and during the continuance thereof, the interest rate then payable on the Loan shall immediately increase to the Applicable Interest Rate plus five hundred (500) basis points ("Default Rate") and continue to accrue at the Default Rate until full payment is received. At Lender's option, payments due on a Payment Due Date which remain unpaid for more than thirty (30) days shall accrue interest at the Default Rate commencing as of the expiration of such 30 day period. In addition, upon the expiration of any notice and cure period provided in Section 11.01, Lender shall have the right, without acceleration of the Loan, to collect interest at the Default Rate on any payment due hereunder (including, without limitation, late charges and fees for legal counsel) which is not received by Lender on or before the date on which such payment originally was due. Interest at the Default Rate also shall

accrue on any judgment obtained by Lender in connection with collection of the Loan or enforcement of any obligations due under the other Loan Documents until such judgment amount is paid in full.

(f)

Application of Payments. Payments of principal and interest due from Borrower shall be applied first to the payment of late fees, then to Lender advances made to protect the Property or to perform obligations which Borrower failed to perform, then to the payment of accrued but unpaid interest, and then to reduction of the outstanding principal. All Payments will be applied to Note A and Note B, as determined by Lender. If at any time Lender receives less than the full amount due and payable on a Payment Due Date, Lender may apply the amounts received to amounts then due and payable in any manner and in any order determined by Lender, in its sole discretion. Following an Event of Default, Lender may apply all payments to amounts then due in any manner and in any order determined by Lender, in its sole discretion. Lender's acceptance of a payment from Borrower in an amount that is less tha n the full amount then due and Lender's application of such payments to amounts then due from Borrower shall not constitute or be deemed to constitute a waiver of the unpaid amounts or an accord and satisfaction. No principal amount repaid may be reborrowed.

2.05. Prepayment Rights.

(a)

Intentionally Omitted.

(b)

Prepayment. Borrower may prepay principal in whole, but not in part, as long as each of the following conditions are satisfied:

(i) Borrower provides written notice to Lender of its intent to prepay not more than sixty (60) days and not less than thirty (30) days prior to the intended prepayment date.

(ii)

No Event of Default exists as of the date Borrower delivers notice
of intent to prepay and as of the date such prepayment is made.

(iii) Borrower pays the following prepayment consideration ("Prepayment Fee") with such payment:

(A)

Zero percent (0%) of the amount prepaid if the prepayment is made on or before the eighth (8^th) Payment Due Date.

(B)

One percent (1%) of the amount prepaid if the prepayment is made after the Payment Due Date stated in clause (A) above but on or before the twentieth (20^`h) Payment Due Date.

(C)

Zero percent (0%) of the amount prepaid if the prepayment is made after the Payment Due Date stated in clause (B) above and before the Maturity Date.

(iv) Borrower pays with such prepayment all accrued interest and all other outstanding amounts then due and unpaid under this Loan Agreement and the other Loan Documents.

(v)

Borrower pays with such prepayment the Exit Fee unless otherwise
set forth in Section 2.06.

(vi) If prepayment is not made on a Payment Due Date, Borrower pays with such prepayment (in addition to all other amounts due under this Section 2.05(b)) an amount equal to the unearned interest computed on the principal amount being prepaid which would accrue for the period from the date of prepayment through the forthcoming Payment Due Date.

(c)

Intentionally Omitted.

(d)

Prepayment as a Result of a Casualty or Condemnation or charges on Lender. Prepayments arising from Lender's application of insurance proceeds upon the occurrence of a Casualty, the application of a condemnation award upon the occurrence of a Condemnation, or as set forth in Section 2.02(g) may be made without payment of a Prepayment Fee or Exit Fee.

(e)

Intentionally Omitted.

2.06. Exit Fee. As consideration for Lender's making of the Loan to Borrower, Borrower agrees to pay a deferred financing fee ("Exit Fee") to Lender in an amount equal to one percent (1%) of the Maximum Loan Amount. Although the Exit Fee is earned in full on the date hereof, Lender hereby agrees to defer payment of the Exit Fee until the earlier of (a) the date when full prepayment of the Loan occurs, (b) the Maturity Date (or any extension thereto properly exercised by Borrower in accordance with this Loan Agreement), or (c) the date on which the Loan has been accelerated following an Event of Default. The Exit Fee shall be paid notwithstanding the sale or transfer of the Loan by GMAC Commercial Mortgage Bank, in whole or in part, to a successor lender unless GMAC Commercial Mortgage Bank has transferred its interest in the Exit Fee to its s uccessors and assigns as Lender. No Exit Fee shall be due, however, if (i) Borrower refinances this Loan with the proceeds of a permanent loan funded by, or arranged for Borrower by, GMAC Commercial Mortgage Corporation, or an Affiliate thereof, or (ii) the Property is sold to an unaffiliated third party purchaser (a "Purchaser") and Borrower provides Purchaser with a written introduction to Lender or a Lender Affiliate, as directed by Lender, in form and content reasonably acceptable to Lender. Borrower acknowledges that GMAC Commercial Mortgage Corporation has no obligation to make or arrange such loan.

2.07. Interest Rate Cap/Hedge.

(a) Initial Interest Rate Cap. On or before the commencement of the Extension Term, if applicable, Borrower shall obtain a Rate Cap with a notional amount equal to the Maximum Loan Amount for the benefit of Lender which provides for payments to be made by the Rate Cap Provider if, at any time during the Extension Term, the LIBOR Rate exceeds the Strike Rate. Each Rate Cap required hereunder must: (i) be issued by a Rate Cap Provider that satisfies

the credit criteria set forth below in Section 2.07(c); (ii) be fully effective as of the commencement of the Extension Term; (iii) permit Borrower's interest in the Rate Cap to be assigned to Lender without the payment of fees or costs and without the Rate Cap Provider's consent; (iv) contain no cross-defaults to any other agreements among any Borrower, Rate Cap Provider and Lender, or any of their respective Affiliates; (v) contain no performance obligations of Borrower or Lender beyond Borrower's payment of a one-time fee at the effective date of the Rate Cap Agreement; (vi) be evidenced by a Rate Cap Agreement acceptable to Lender in all respects and delivered to Lender prior to the commencement of the Extension Term, fully executed, together with, if required by Lender, a legal opinion from Rate Cap Provider's counsel (which maybe in-house counsel) as to the authorization, execution an d delivery by Rate Cap Provider and enforceability in accordance with its terms (provided, however, that Borrower shall have 5 days from and including the commencement date of the Extension Term to deliver the foregoing documents as long as Lender receives confirmation satisfactory to Lender that the Rate Cap has been purchased and fully paid for by Borrower as of the commencement date of the Extension Term); (vii) comply with criteria issued by any of the Rating Agencies regarding interest rate cap agreements including, without limitation, any requirement for legal opinions from Rate Cap Provider's counsel; (viii) otherwise be satisfactory to Lender in all respects; and (ix) have a notional amount equal to the Maximum Loan Amount.

(b)

Assignment to Lender as Collateral. The Rate Cap and each replacement of a Rate Cap shall be assigned to Lender as collateral. Borrower acknowledges that Borrower's assignment of the Rate Cap to Lender shall not be deemed completed until such time as Borrower has delivered to Lender a written acknowledgement from the Rate Cap Provider of Borrowers assignment of the Rate Cap to Lender that is acceptable to Lender in all respects. All payments made by the Cap Provider shall be made directly to the Lockbox Account if a Lockbox Trigger Event has occurred. Failure by the Cap Provider to make any payment under the Rate Cap shall not relieve Borrower of any of its obligations to make any payments hereunder or any other Loan Documents.

(c)

Credit Rating of Cap Provider; Replacement Upon Adverse Change in Rating. The Rate Cap must be issued by a Rate Cap Provider having (i) a long term unsecured debt rating of at least "A+" from S&P; (ii) a short-term unsecured debt rating of at least "A-1" from S&P; or (iii) an equivalent rating by a Rating Agency approved by Lender. If, at any time during the term of the Loan, the Rate Cap Provider's credit rating falls below that required in the previous sentence, Lender shall have the right to require that Borrower, at Borrower's expense, provide a replacement Rate Cap from a different Rate Cap Provider which satisfies the required credit rating. Each replacement Rate Cap shall satisfy all requirements of this Section 2.07 and, unless otherwise agreed by Lender, shall be substantially in the form of the Rate Cap Agreement assigned to L ender as of the Closing Date. Each replacement Rate Cap and all required documents must be delivered to Lender within ten (10) business days of Lender's notification that a replacement Rate Cap is required.

(d)

Borrower's Payment of Lender Review Expenses. Borrower shall pay all expenses incurred by Lender in connection with Lender's review and approval of the initial Rate Cap and Rate Cap Provider and each replacement of a Rate Cap that is required under the terms of this Loan Agreement, including, without limitation, reasonable legal fees and expenses.

ARTICLE 3
CASH MANAGEMENT

3.01. Lockbox. Borrower shall cause all Rents due to Borrower under the Leases to be deposited as and when set forth in the Lockbox Agreement.

ARTICLE 4
ESCROW AND RESERVE REQUIREMENTS

4.01. Creation and Maintenance of Escrows and Reserves.

(a)

Control of Reserve Accounts. On the Closing Date, each of the Reserve Accounts shall be established by Lender. Each Reserve Account required under this Loan Agreement shall be a custodial account established by Lender, and, at Lender's option, funds deposited into a Reserve Account may be commingled with other money held by Lender. Each Reserve Account shall be under the sole dominion and control of Lender, and Borrower shall not have any right to withdraw funds from a Reserve Account. Unless required by the laws of the state which govern this Loan Agreement or otherwise expressly provided in this Loan Agreement, Borrower shall not be entitled to any earnings or interest on funds deposited in any Reserve Account. Upon the occurrence of an Event of Default, Lender may, in addition to any and all other rights and remedies available to Lender, apply any sums then present in any or all of th e Reserve Accounts to the payment of the Debt in any order as determined by Lender in its sole discretion.

(b)

Funds Dedicated to Particular Purpose. Funds held in a Reserve Account are not to be used to fund Reserve Items contemplated by a different Reserve Account, and Borrower may not use and Lender shall have no obligation to apply funds from one Reserve Account to pay for Reserve Items contemplated by another Reserve Account.

(c)

Release of Reserves Upon Payment of Debt. Upon payment in full of the Loan, Lender shall disburse to Borrower all unapplied funds held by Lender in the Reserve Accounts pursuant to this Loan Agreement.

(d)

Not Applicable.

(e)

No Obligation of Lender. Nothing in this Loan Agreement shall: (i) make Lender responsible for making or completing any Reserve Item; (ii) require Lender to advance, disburse or expend funds in addition to funds then on deposit in the related Reserve Account to make or complete any Reserve Item; or (iii) obligate Lender to demand from Borrower additional sums to make or complete any Reserve Item.

(f)

No Waiver of Default. No disbursements made from a Reserve Account at the time when a Borrower default or Event of Default has occurred and is then continuing shall be deemed a waiver or cure by Lender of that default or Event of Default, nor shall Lender's rights and remedies by prejudiced in any manner thereby.

(g)

Insufficient Amounts in a Reserve Account. Notwithstanding that Lender has the right to require Borrower to pay any deficiency in a Reserve Account if Lender determines that amounts in a Reserve Account are insufficient, the insufficiency of funds in a Reserve Account, or Lender's application of funds in a Reserve Account following an Event of Default other than for funding of the Reserve Items, shall not relieve Borrower from its obligation to perform in full each of its: (i) obligations and covenants under this Loan Agreement; (ii) agreements or covenants with tenants under the Leases; and (iii) agreements with leasing agents.

4.02. Tax Escrow.

(a)

Deposits to the Tax Escrow Account. On the Closing Date, Borrower has deposited such amount as is noted on the closing statement relating to the closing of the Loan, to the Tax Escrow Account which is the amount determined by Lender that is necessary to pay when due Borrower's obligation for Taxes upon the due dates established by the appropriate tax or assessing authorities during the next ensuing twelve (12) months, taking into consideration the Monthly Tax Deposits to be collected from the first Payment Due Date to the due date for payment of Taxes. Thereafter, beginning on the first Payment Due Date and on each Payment Due Date thereafter, Borrower shall deliver to Lender the Monthly Tax Deposit.

(b)

Disbursement from Tax Escrow Account. Provided amounts in the Tax Reserve Account are sufficient to pay the Taxes then due and no Event of Default exists, Lender shall pay the Taxes as they become due on their respective due dates on behalf of Borrower by applying the funds held in the Tax Escrow Account to the payments of Taxes then due. In making any payment of Taxes, Lender may do so according to any bill, statement or estimate obtained from the appropriate public office with respect to Taxes without inquiry into the accuracy of such bill, statement or estimate or into the validity of any tax, assessment, sale, forfeiture, tax lien or title or claim thereof.

(c)

Surplus or Deficiency in Tax Escrow Account. If amounts on deposit in the Tax Escrow Account collected for an annual tax period exceed the Taxes actually paid during such tax period, Lender shall, in its discretion, return the excess to Borrower or credit the excess against the payments Borrower is to make to the Tax Escrow Account for the next tax period. If amounts on deposit in the Tax Escrow Account collected for an annual tax period are insufficient to pay the Taxes actually due during such tax period, Lender shall notify Borrower of the deficiency and, within ten (10) days thereafter, Borrower shall deliver to Lender such deficiency amount. If, however, Borrower receives notice of any such deficiency on a date that is within ten (10) days prior to the date that Taxes are due, Borrower will deposit the deficiency amount within one (1) business day after its receipt of such deficienc y notice.

(d)

Changes in Amount of Taxes Due; Changes in the Monthly Tax Deposit. Borrower shall notify Lender immediately of any changes to the amounts, schedules and instructions for payment of any Taxes of which it has or obtains knowledge and authorizes Lender or its agent to obtain the bills for Taxes directly from the appropriate taxing authority. If the amount due for Taxes shall increase and Lender reasonably determines that amounts on deposit in the Tax Escrow Account will not be sufficient to pay Taxes due for an annual tax period, Lender shall notify Borrower of such determination and of the increase needed to the Monthly Tax Deposit. Commencing with the Payment Due Date specified in such notice from Lender, Borrower shall make deposits at the increased amount of the Monthly Tax Deposit.

4.03. Insurance Premium Escrow.

(a)

Deposits to Insurance Premium Escrow Account. On the Closing Date, Borrower has deposited such amount as is noted on the closing statement relating to the closing of the Loan to the Insurance Premium Escrow Account which is the amount determined by Lender that is necessary to pay when due Borrower's obligation for Insurance Premiums during the next ensuing twelve (12) months, taking into consideration the Monthly Insurance Deposits to be collected from the first Payment Due Date to the due date for payment of such Insurance Premiums. Thereafter, beginning on the first Payment Due Date and on each Payment Due Date thereafter, Borrower shall deliver to Lender the Monthly Insurance Deposit.

(b)

Disbursement from Insurance Premium Escrow Account. Provided amounts in the Insurance Premium Escrow Account are sufficient to pay the Insurance Premiums then due and no Event of Default exists, Lender shall pay the Insurance Premiums as they become due on their respective due dates on behalf of Borrower by applying funds held in the Insurance Premium Escrow Account to the payments of Insurance Premiums then due. In making any payment relating to Insurance Premiums, Lender may do so according to any bill, statement or estimate procured from the insurer without inquiry into the accuracy of such bill, statement or estimate.

(c)

Surplus or Deficiency in Insurance Premium Escrow Account. If amounts on deposit in the Insurance Premium Escrow Account collected for an annual period exceed the Insurance Premiums actually paid during such period, Lender shall, in its discretion, return such excess to Borrower or credit such excess against the payments Borrower is to make to the Insurance Premium Escrow Account for the next annual period. If amounts on deposit in the Insurance Premium Escrow Account collected for an annual premium period are insufficient to pay the Insurance Premiums actually due during such annual period Lender shall notify Borrower of the deficiency and, within ten (10) days thereafter, Borrower shall deliver to Lender such deficiency amount. If, however, Borrower receives notice of any such deficiency on a date that is within ten (10) days prior to the date that Insurance Premiums are due, Borrower will deposit the deficiency amount within one (1) business day after its receipt of such deficiency notice.

(d)

Changes in Insurance Premium Amounts; Change in Monthly Deposit Amount. Borrower shall notify Lender immediately of any changes to the amounts, schedules and instructions for payment of any Insurance Premiums of which it has or obtains knowledge and authorizes Lender or its agent to obtain the bills for the Insurance Premiums directly from the insurance provider or its agent. If the amount due for Insurance Premiums shall increase and Lender reasonably determines that amounts on deposit in the Insurance Premium Escrow Account will not be sufficient to pay the Insurance Premiums, Lender shall notify Borrower of such determination and of the increase needed to the Monthly Insurance Deposit. Commencing with the Payment Due Date specified in such notice from Lender, Borrower shall make deposits at the increased amount of the Monthly Insurance Deposit.

(e)

Waiver of Deposits to Insurance Premium Escrow Account. Notwithstanding the foregoing provisions of this Section 4.03, provided that an amount equal to three (3) Monthly Insurance Deposits is deposited with Lender on the Closing Date, Lender shall waive collection of the Monthly Insurance Deposit unless and until (i) the occurrence of an Event of Default or Material Adverse Effect, (ii) the Property has demonstrated a Debt Service Coverage Ratio below 1.20:1.00 for three (3) consecutive calendar months, (iii) the occurrence of a Transfer or a Permitted Transfer to a Person who is not an Affiliate of Borrower, or (iv) Borrow fails to provide Lender with evidence of payment of Insurance Premiums as and when due. If the waiver set forth in the preceding sentence is no longer in effect, Borrower shall commence payment of the reinstated Monthly Insurance Deposit on the later of ten (10) busin ess days after receipt of written notice of reinstatement from Lender or the next scheduled Payment Due Date.

4.04. Immediate Repair Escrow Account.

(a)

Immediate Repair Escrow Generally. Amounts in the Immediate Repair Escrow Account are to be used for the purpose of funding the Immediate Repairs, which Borrower covenants and agrees to perform in accordance with the terms of this Loan Agreement on or before the dates specified on Exhibit C but not later than 60 days from the date hereof.

(b)

Deposit to the Immediate Repair Escrow Account. On the Closing Date, Borrower shall deposit Zero and 00/100 Dollars ($0.00) (deposit waived) with Lender as the reserve for completion of the Immediate Repairs ("Immediate Repair Deposit").

(c)

Not Applicable.

(d)

Not Applicable. 4.05. Replacement Reserve Account.

(a)

Replacement Reserve Generally. Amounts in the Replacement Reserve Account are to be used for the purpose of funding the Replacements, which Borrower covenants and agrees to perform in accordance with the terms of this Loan Agreement.

(b)

Deposits to the Replacement Reserve Account. Beginning on the first Payment Due Date and on each Payment Due Date thereafter, Borrower shall pay $3,310.83 ("Monthly Replacement Reserve Deposit") to Lender as a deposit to the Replacement Reserve Account.

(c)

Disbursements from the Replacement Reserve Account. Lender shall make disbursements from the Replacement Reserve Account upon Borrower's performance, to Lender's satisfaction, of all conditions to disbursement set forth in Article 5 hereof.

(d)

Reassessment of Required Monthly Deposits. Lender may, from time to time based on Lender's inspections of the Property, reassess its estimate of the Monthly Replacement Reserve Deposit and may increase such amount on not less than thirty (30) days written notice to Borrower if Lender determines that an increase is necessary (i) to fund replacements not listed as part of the Replacements which are advisable to keep the Property in good order, repair and marketable condition, or (ii) to fund the replacement of any major building systems or components (e.g., roof, HVAC system) not listed as part of the Replacements which will reach the end of its useful life within two (2) years of the date of Lender's inspection.

4.06. Intentionally Omitted. 4.07. Intentionally Omitted. 4.08. Intentionally Omitted.

ARTICLE 5
COMPLETION OF REPAIRS RELATED TO RESERVE ACCOUNTS;
CONDITIONS TO RELEASE OF FUNDS

5.01. Conditions Precedent to Disbursements from Certain Reserve Accounts. The following provisions apply to each request for disbursement from the Immediate Repair Escrow Account and the Replacement Reserve Account:

(a)

Disbursement only for Completed Repairs. Disbursements shall be limited to Reserve Items that are fully completed and paid for in full by Borrower except to the extent permitted under Section 5.01(b) of this Loan Agreement. At no time shall Lender be obligated to pay amounts to Borrower in excess of the current balance in the applicable Reserve Account at the time of disbursement.

(b)

Partial Completion. Lender may agree to disburse funds for Reserve Items prior to completion thereof where (i) the contractor performing such work requires periodic payments pursuant to the terms of its written contract with Borrower and Lender has given its prior written approval to such contract, and (ii) the cost of the portion of the Reserve Item to be completed under such contract exceeds $10,000.

(c)

Disbursement Request; Maximum Frequency and Amount. Borrower shall submit to Lender a Disbursement Request together with such additional information as Lender may reasonably request in connection with the Disbursement Request at least ten (10) business days prior to the date on which Borrower requests Lender to make a disbursement from a Reserve Account. Unless otherwise agreed to by Lender, Borrower may not submit, and Lender shall not be required to make, more than one (1) disbursement from each Reserve Account during any calendar month. No Disbursement Request shall be made for less than $2,500 or the total cost of the Reserve Items, if less.

(d)

No Existing Event of Default. Lender may refuse to make any disbursement if an Event of Default exists as of the date on which Borrower submits the Disbursement Request or on the date the disbursement is actually to be made.

(e)

Responsible Officer Certificate. Lender must receive a certificate, signed by a Responsible Officer of Borrower (and, at Lender's option, also signed by Borrower's project architect or engineer if the cost of a single Reserve Item or the aggregate amount of the Disbursement Request exceeds $10,000), which certifies that:

(i)

All information stated in the Disbursement Request is true and correct in all material respects, each attachment to the Disbursement Request is correct and complete, and if the attachment is a copy of the original, that it is a true and an accurate reproduction of the original;

(ii)

Each of the Reserve Items to be funded in connection with the Disbursement Request was performed in a good and workmanlike manner and in accordance with all Requirements of Law; and has been paid in full by Borrower;

(iii)

Intentionally Omitted;

(iv)

Subject to Section 5.03, each party that supplied materials, labor or services has been paid in full (for the portion for which disbursement is sought in the case of disbursements authorized in accordance with Section 5.01(b) hereof); and

(v)

In the case of disbursements authorized in accordance with Section 5.01(b) hereof, the materials for which the request are made are on-site at the Property and properly secured or have been installed in the Property.

(f)

Inspection to Confirm Completion. Prior to making any disbursement which exceeds $25,000.00 in the aggregate or for a single Reserve Item, Lender may require an inspection of the Property, performed at Borrower's expense, to verify completion thereof.

(g)

Absence of Liens. Lender may require that Borrower provide Lender with any or all of the following: (i) a written lien waiver acceptable to Lender from each party to be paid who is to receive payment of $10,000.00 or more in connection with the Disbursement Request; (ii) a search of title to the Property effective to the date of the disbursement which shows no Liens other than the Permitted Encumbrances; or (iii) an endorsement to the Title Insurance Policy which updates the effective date of such policy to the date of the disbursement and shows no Liens other

than the Permitted Encumbrances (provided, however, that an endorsement shall be required only (a) with respect to Disbursement Requests of $25,000.00 or greater, (b) for the final Disbursement Request for any Reserve Item, or (c) if Lender otherwise reasonably deems an endorsement necessary or advisable).

(h)

Payment of Lender's Expenses. Borrower shall pay all reasonable expenses incurred by Lender in processing Borrower's Disbursement Request including, without limitation, any inspection costs (whether performed by Lender or an independent inspector selected by Lender) and reasonable legal fees and expenses.

(i) Other Items Lender Deems Necessary. Lender shall have received such other evidence as Lender reasonably requests in connection with its confirmation that each Reserve Item to be paid in connection with the Disbursement Request has been completed or performed in accordance with the terms of this Loan Agreement.

5.02. Waiver of Conditions to Disbursement. No waiver given by Lender of any condition precedent to disbursement from a Reserve Account shall preclude Lender from requiring that such condition be satisfied prior to making any other disbursement from a Reserve Account.

5.03. Direct Payments to Suppliers and Contractors. Subject to Borrower's right to contest, as set forth in Section 9.02, Lender, at its option, may make disbursements directly to the supplier or contractor to be paid in connection with the Disbursement Request. Borrower's execution of this Loan Agreement constitutes an irrevocable direction and authorization for Lender to make requested payments directly to the supplier or contractor. Each disbursement so made by Lender shall satisfy Lender's obligation under this Loan Agreement.

5.04. Performance of Reserve Items.

(a)

Performance of Reserve Items. Borrower agrees to commence each Reserve Item by its required commencement date stated on the applicable Exhibit to this Loan Agreement identifying such Reserve Item and to pursue completion diligently of each Reserve Item on or before its completion date stated on such Exhibit and, in the absence of a commencement date or completion date being specified, when necessary in order to keep the Property in good order and repair and in a good and marketable condition. Borrower shall complete each Reserve Item in a good and workmanlike manner, using only new materials of the same or better quality than that being replaced. All Reserve Items shall be performed in accordance with, and upon completion shall comply with, all Requirements of Law (including without limitation obtaining and maintaining in effect all necessary permits and governmental approv als) and all applicable insurance requirements.

(b)

Contracts. Lender shall have the right, at its option, to approve all contracts or work orders with materialmen, mechanics, suppliers, subcontractors, contractors or other parties providing labor or materials in connection with the Reserve Items.

(c)

Entry onto Property. In order to perform inspections or, following an Event of Default, to complete Reserve Items which Borrower has failed to perform, Borrower hereby grants Lender and its agents the right (subject to the rights of tenants in possession), from time to time, to enter onto the Property.

(d)

Lender Remedy for Failure to Perform. In addition to Lender's remedies following an Event of Default, Borrower acknowledges that Lender shall have the right (but not the obligation) to complete or perform the Reserve Items for which amounts have been reserved under this an Agreement and for such purpose, Borrower hereby appoints Lender its attorneyin-fact with full power of substitution (and which shall be deemed to be coupled with an interest and irrevocable until the Loan is paid in full and the Security Instrument is discharged of record, with Borrower hereby ratifying all that its said attorney shall do by virtue thereof): (i) to complete or undertake such work in the name of Borrower; (ii) to proceed under existing contracts or to terminate existing contracts (even where a termination penalty may be incurred) and employ such contractors, subcontractors, watchmen, agents, archit ects and inspectors as Lender determines necessary or desirable for completion of such work; (iii) to make any additions, changes and corrections to the scope of the work as Lender deems necessary or desirable for timely completion; (iv) to pay, settle or compromise all existing bills and claims which are or may become Liens against the Property or as may be necessary or desirable for completion of such work; (v) to execute all applications and certificates in the name of Borrower which may be required to obtain permits and approvals for such work or completion of such work; (vi) to prosecute and defend all actions or proceedings in connection with the repair or improvements to the Property; and (vii) to do any and every act which Borrower might do in its own behalf to fulfill the terms of Borrower's obligations under this Loan Agreement. Amounts expended by Lender which exceed amounts held in the Reserve Accounts shall be added to the Maximum Loan Amount, shall be immediately due and payable, and shall bear interest at the Default Rate from the date of disbursement until paid in full.

ARTICLE 6
LOAN SECURITY AND RELATED OBLIGATIONS

6.01. Security Instrument and Assignment of Rents and Leases. Payment of the Loan and performance of the Obligations shall be secured, inter alia, by the Security Instrument and the Assignment of Leases and Rents. Borrower shall execute at closing the Security Instrument and the Assignment of Leases and Rents and abide by its obligations thereunder.

6.02. Assignment of Property Management Contract. Borrower and the Property Manager shall execute at closing the Assignment of the Property Management Contract and Subordination of Management Fees and to abide by their respective obligations thereunder.

6.03. Assignment of Rate Cap Agreement. Borrower shall execute and deliver on the Closing Date the assignment and consent with respect to the Rate Cap as are contemplated by Section 2.07 of this an Agreement and abide by its obligations thereunder.

6.04. Assignment of Operating Agreements. As security for payment of the Loan and performance by Borrower of all Obligations, Borrower hereby transfers, sets over and assigns to Lender all of Borrower's right, title and interest in and to the Operating Agreements to Lender for security purposes.

6.05. Pledge of Property; Grant of Security Interest. As security for payment of the Loan and performance by Borrower of all Obligations, Borrower hereby pledges, assigns, sets over and transfers to Lender, and grants to Lender a continuing security interest in and to: (a) each of the Reserve Accounts and the Operating Account, (b) all funds and monies from time to time deposited or held in each of the Reserve Accounts and the Operating Account, and (c) all interest accrued, if any, with respect to the Reserve Accounts and the Operating Account; provided that Lender shall make disbursements from each of the Reserve Accounts when, as and to the extent required by this Loan Agreement and Borrower may make withdrawals from the Operating Account in accordance with this Loan Agreement. The parties agree that each of the Reserve Accounts and the Operating Account is a &q uot;deposit account" within the meaning of Article 9 of the UCC and that this Loan Agreement also constitutes a "security agreement" within the meaning of Article 9 of the UCC. Borrower shall not, without Lender's prior written consent, further pledge, assign, transfer or grant any security interest in any of the Reserve Accounts or in the Operating Account nor permit any Lien to attach thereto, except as may be created in favor of Lender in connection with the Loan.

6.06. Environmental Indemnity Agreement. Borrower and Guarantor will be required to execute at closing the Environmental Indemnity and to abide by their obligations thereunder.

6.07. Guaranty of Borrower Sponsor. Guarantor will be required to execute at closing the Guaranty of Exceptions to Nonrecourse Liability and to abide by its obligations thereunder.

6.08. Intentionally Omitted.

ARTICLE 7
SINGLE PURPOSE ENTITY REQUIREMENTS

7.01. Commitment to be a Single Purpose Entity. Borrower represents, warrants and covenants to Lender as follows:

(a)

Borrower is a Single Purpose Entity and will continue to be a Single Purpose Entity at all times until the Loan has been paid in full.

(b)

SPE Equity Owner is a Single Purpose Entity and will continue to be a Single Purpose Entity at all times until the Loan has been paid in full.

(c)

The Organizational Chart attached to this Loan Agreement is true, complete and correct.

(d)

All of the factual assumptions made in the substantive consolidation opinion delivered by Borrower's counsel to Lender, of even date herewith, are true and correct in all

respects.

(e)

The "single purpose entity" provisions included in the organizational documents of Borrower and SPE Equity Owner shall not, without Lender's prior written consent, be amended, rescinded or otherwise revoked until the Loan has been paid in full.

(f) Prior to the withdrawal or the disassociation of the SPE Equity Owner from Borrower, Borrower shall immediately appoint a new general partner or managing member whose organizational documents are substantially similar to those of the original SPE Equity Owner and, if an opinion letter pertaining to substantive consolidation was required at closing, deliver a new substantive consolidation opinion letter with respect to the new SPE Equity Owner and its equity owners which is acceptable in all respects to Lender and to the Rating Agencies if a Securitization has occurred. (The requirements of this subsection shall not be construed to permit a Transfer in violation of Article 10.)

7.02. Definition of Single Purpose Entity.

(a) Borrower Criteria. With respect to Borrower, a "Single Purpose Entity" means a corporation, limited partnership or limited liability company which, at all times since its formation and thereafter:

(i)

has not and shall not engage in any business or activity, other than with respect to Borrower, the ownership, operation and maintenance of the Property and activities incidental thereto;

(ii)

has not and shall not, acquire or own any assets other than with respect to Borrower, the Property and such incidental Personal Property as may be necessary for the operation of the Property;

(iii)

if such entity is (A) a limited liability company (other than a single member limited liability company which satisfies the requirements of clause (iv) below), has had and shall have at least one member that satisfies the requirements of Section 7.02(b) below and such member is its managing member, and (B) a limited partnership, all of its general partners have satisfied and shall satisfy the requirements of Section 7.02(b) below;

(iv)

if such entity is a single member limited liability company, (A) such entity shall be formed and organized under Delaware law and otherwise comply with all other Rating Agency criteria for single member limited liability companies (including, without limitation, the inclusion of a "springing member" and delivery of Delaware single member liability company opinions acceptable in all respects to Lender and to the Rating Agencies); and (B) such entity shall have at least one (1) Independent Director on its board of managers; provided however if this Loan becomes part of a securitization and any Rating Agency requires at least two (2) Independent Directors, Borrower shall appoint, or cause the appointment of, a second Independent Director;

(v)

if such entity is a corporation, has had and shall have at least one (1) Independent Director on its board of directors, provided, however, if this Loan becomes part of a Securitization and any Rating Agency requires at least two (2) Independent Directors, Borrower shall appoint, or cause the appointment of, a second Independent Director;

(vi)

has and shall preserve its existence as an entity duly organized, validly existing and in good standing (if applicable) under the laws of the jurisdiction of its formation or organization;

(vii)

has not and shall not merge or consolidate with any other Person;

(viii)

has not taken, and shall not take, any action to dissolve, wind-up, terminate or liquidate in whole or in part; to sell, transfer or otherwise dispose of all or substantially all of its assets; to change its legal structure; transfer or permit the direct or indirect transfer of any partnership, membership or other Equity Interests, as applicable, other than Permitted Transfers; issue additional partnership, membership or other Equity Interests, as applicable; or seek to accomplish any of the foregoing;

(ix)

shall not, without the unanimous written consent of all Borrower's partners, members, or shareholders, as applicable, and the written consent of 100% of the members of the board of directors of the SPE Equity Owner or board of managers in the case of a single member limited liability company, including without limitation the Independent Director(s): (A) file or consent to the filing of any petition, either voluntary or involuntary, to take advantage of any applicable insolvency, bankruptcy, liquidation or reorganization statute; (B) seek or consent to the appointment of a receiver, liquidator or any similar official; or (C) make an assignment for the benefit of creditors;

(x)

shall not amend or restate its organizational documents if such change would adversely impact the requirements set forth in this Section 7.02;

(xi)

shall not own any subsidiary or make any investment in, any other Person;

(xii)

shall not commingle its assets with the assets of any other Person;

(xiii)

has not, and shall not, incur any debt, secured or unsecured, direct or contingent (including, without limitation, guaranteeing any obligation), other than the Loan and customary unsecured trade payables incurred in the ordinary course of owning and operating the Property provided the same are not evidenced by a promissory note, do not exceed, in the aggregate, at any time a maximum amount of two percent (2%) of the outstanding principal amount of the Loan and are paid within sixty (60) days of the date incurred;

(xiv)

shall maintain its records, books of account, bank accounts, financial statements, accounting records and other entity documents separate and apart from those of any other Person;

(xv)

shall only enter into any contract or agreement with any general partner, member, shareholder, principal or Affiliate of Borrower or Guarantor, or any general partner, member, principal or Affiliate thereof, upon terms and conditions that are intrinsically fair and substantially similar to those that would be available on an arms-length basis with third parties;

(xvi)

shall not maintain its assets in such a manner that it will be costly or difficult to segregate, ascertain or identify its individual assets from those of any other Person;

(xvii)

shall not assume or guaranty the debts of any other Person, hold itself out to be responsible for the debts of another Person, or otherwise pledge its assets for the benefit of any other Person or hold out its credit as being available to satisfy the obligations of any other Person;

(xviii)

shall not make any loans or advances to any other Person;

(xix)

shall file its own tax returns as required under federal and state law;

(xx)

shall hold itself out to the public as a legal entity separate and distinct from any other Person and conduct its business solely in its own name and shall correct any known misunderstanding regarding its separate identity;

(xxi)

shall maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations;

(xxii)

shall allocate shared expenses (including, without limitation, shared office space), and to use separate stationery, invoices and checks;

(xxiii)

shall pay (or cause the Property Manager to pay on behalf of Borrower from Borrower's funds) its own liabilities (including, without limitation, salaries of its own employees) from its own funds; and

(xxiv)

shall not acquire obligations or securities of its partners, members or shareholders, as applicable.

(b) SPE Equity Owner Criteria. With respect to SPE Equity Owner, a "Single Purpose Entity" means a corporation which, at all times since its formation and thereafter complies in its own right with each of the requirements contained in Section 7.02(a)(i) - (xxiv), except that:

(i)

with respect to Section 7.02(a)(i) the SPE Equity Owner shall not engage in any business or activity other than being the sole managing member or general partner, as the case may be, of the Borrower and owning its Equity Interest in Borrower;

(ii)

with respect to Section 7.02(a)(ii), the SPE Equity Owner has not and shall not acquire or own any assets other than its Equity Interest in Borrower; and

(iii) with respect to Section 7.02(a)(xiii) the SPE Equity Owner has not and shall not incur any debt, secured or unsecured, direct or contingent (including, without limitation, guaranteeing any obligation).

7.03. Lender's Acknowledgment.

(a)

Notwithstanding anything to the contrary in this Loan Agreement, Lender acknowledges that Borrower does not satisfy the following criteria to be a Single Purpose Entity: (i) the requirement to comply in all respects with Single Purpose Entity provisions, as specified in Section 7.01(a); exceptions to Single Purpose Entity status being as more particularly specified in this Section 7.03; (ii) the requirement to have an SPE Equity Owner as specified in Sections 7.01(b), 7.01(f), 7.02(a)(iii) and 7.02(b); (iii) the requirement for a substantive non-consolidation opinion as specified in Section 7.01(d); (iv) as more particularly set forth in Section 7.03(b) below, the requirement that Borrower not engage in any business or activity, acquire any assets or incur any debt other than with respect to the Property, Personal Property and the Loan, as specified in Sections 7.02(a)(i), (ii), and (xiii); (v) the provisions of Sections 7.01(a)(iv) and (v), as Borrower is a Texas limited partnership, (vi) the percentage and payment requirements specified in Section 7.02(a)(xiii) with respect to trade payables; Borrower being permitted to have trade payables not to exceed six percent (6%) of the outstanding principal balance of the Loan, to be paid within ninety (90) days of the date incurred; (vii) with respect to Section 7.02(a), Borrower shall be permitted to enter into Property Management Agreements with a Borrower Affiliate approved by Lender, and (viii) Borrower shall not be required to maintain separate stationary, invoices and checks as required in Section 7.02(a)(xxii).

Borrower shall agree, by resolution dated of even date with this Loan Agreement, to comply with the Single Purpose Entity provisions set forth in Section 7.02(a) above, as modified by the qualifications and exceptions set forth in this Section 7.03, and will continue to comply with such Single Purpose Entity provisions in accordance with such resolution at all times until the Loan has been paid in full.

(b)

Lender acknowledges that, in addition to its ownership of the Property, Borrower owns and operates the following multifamily properties: Citadel Village (Colorado Springs, Colorado), Arbours of Hermitage (Hermitage, Tennessee) and Knollwood (Nashville, Tennessee) (collectively, the "Additional Property"). Borrower covenants and agrees that (i) it shall not engage in any business or activity other than the ownership, operation and maintenance of the Property and the Additional Property, and activities incidental thereto; (ii) it shall not acquire or own any assets other than the Property and Additional Property and such incidental Personal Property as is necessary for operation of the same, and (iii) it shall not incur any debt, secured or

unsecured, direct or contingent (including, without limitation, guaranteeing any obligations) other than (w) the Loan on the Property, (x) any loans secured as of this date by the Additional Property, (y) the refinance of existing loans, or new loans, on the Additional Property; provided that the loan to value ratio (being the ratio of the aggregate of all financing secured by the Property and the Additional Property to the then-current value of such properties, as determined by Lender) shall not exceed 65%, and (z) trade payables not to exceed six percent (6%) of the outstanding principal balance of each such loan.

ARTICLE 8
REPRESENTATIONS AND WARRANTIES

Borrower represents and warrants to Lender that, as of the Closing Date:

8.01. Organization; Legal Status. Borrower and the General Partner are each duly organized, validly existing and in good standing under the laws of its state of formation and Borrower; (a) is duly qualified to transact business and is in good standing in the state where the Property is located; and (b) has all necessary approvals, governmental and otherwise, and full power and authority to own, operate and lease the Property and otherwise carry on its business as now conducted and proposed to be conducted. Borrower's correct legal name is set forth on the first page of this Loan Agreement. Borrower is a "registered organization" within the meaning of the UCC and Borrower's organization identification number issued by its state of organization is correctly stated on the signature page to this Loan Agreement.

8.02. Power; Authorization; Enforceable Obligations. Borrower has full power, authority and legal right to execute, deliver and perform its obligations under the Loan Documents. Borrower has taken all necessary action to authorize the borrowing of the Loan on the terms and conditions of this an Agreement and the other Loan Documents, and Borrower has taken all necessary action to authorize the execution and delivery of its performance under the Loan Documents. The officer or representative of Borrower signing the Loan Documents has been duly authorized and empowered to do so. The Loan Documents constitute legal, valid and binding obligations of Borrower, enforceable against Borrower in accordance with their terms.

8.03. No Legal Conflicts. The borrowing of the Loan and Borrower's execution, delivery and performance of its obligations under the Loan Documents will not: (a) violate, conflict with, result in a default (following notice and/or expiration of the related grace/cure period without cure or both, as applicable) under any agreement or other instrument to which Borrower is a party or by which the Property may be bound or affected, or any Requirements of Law (including, without limitation, usury laws); (b) result in the creation or imposition of any Lien whatsoever upon any of its assets, except the Liens created by the Loan Documents; nor (c) to the best of Borrower's knowledge, require any authorization or consent from, or any filing with, any Governmental Authority (except for the recordation of the Security Instrument in the appropriate land records in the state whe re the Property is located and UCC filings relating to the security interest created hereby and by the Security Instrument which are necessary to perfect Lender's security interest in the Property).

8.04. No Litigation. No action, suit, or proceeding or investigation, judicial, administrative or otherwise (including, without limitation, any reorganization, bankruptcy, insolvency or similar proceeding) currently is pending or, to the best of Borrower's knowledge, threatened or contemplated against or affecting Borrower, General Partner, any Guarantor or the Property that has not been disclosed by Borrower in writing to Lender and which, if adversely determined, could reasonably be expected to have a Material Adverse Effect.

8.05. Business Purpose of Loan. Borrower will use the proceeds of the Loan solely for the purpose of carrying on a business or commercial enterprise and not for personal, family or household purposes.

8.06. Warranty of Title. Borrower has good, marketable and insurable fee simple title of record to the Property, free and clear of all Liens whatsoever except for the Permitted Encumbrances. The Security Instrument and Assignment of Leases and Rents, when properly recorded in the appropriate recording office, together with the UCC financing statements required to be filed in connection therewith, will create (a) a valid, first priority, perfected lien on the Property subject only to Permitted Encumbrances; and (b) perfected security interests in and to, and perfected assignments as collateral of, all Personal Property (including, without limitation, the Leases), all in accordance with the terms thereof, in each case subject only to any Permitted Encumbrances. None of the Permitted Encumbrances, individually or in the aggregate: (a) materially interfere with the ben efits of the security intended to be provided by the Security Instrument, (b) materially and adversely affect the value of the Property, or (c) materially and adversely impair the use and operations of the Property. Borrower owns or has rights in all collateral given as security for the Loan, free and clear of any and all Liens except for the Liens created in favor of Lender in connection with the Loan. Borrower shall forever warrant, defend and preserve the title and the validity and priority of the Liens created in favor of Lender in connection with the Loan and shall forever warrant and defend the same to Lender against the claims of all persons whomsoever.

8.07. Condition of the Property. With the exception of the items listed as Immediate Repairs, the Improvements are structurally sound, in good repair and free of defects in materials and workmanship and have been constructed and installed in substantial compliance with the plans and specifications relating thereto. All major building systems located within the Improvements (including, without limitation, the heating and air conditioning systems, the electrical systems, plumbing systems, and all liquid and solid waste disposal, septic and sewer systems) are in good working order and condition and in compliance with all Requirements of Law. The Property is free from damage caused by fire or other casualty.

8.08. No Condemnation. No Condemnation proceeding has been commenced or, to the best of Borrower's knowledge, is contemplated with respect to all or any portion of the Property or for the relocation of roadways providing access to the Property.

8.09. Requirements of Law. The Property and its present and contemplated use and occupancy are in full compliance with all Requirements of Law.

8.10. Operating Permits. Borrower has obtained all licenses, permits, registrations, certificates and other approvals, governmental and otherwise (including, without limitation, zoning, building code, land use and environmental), necessary for the use, occupancy and operation of the Property and the conduct of its business thereat, all of which are in full force and effect as of the date hereof. No event or condition currently exists which could result in the revocation, suspension, or forfeiture thereof.

8.11. Separate Tax Lot. The Property is assessed for real estate tax purposes as one or more wholly independent tax lot or lots, separate from any adjoining land or improvements not constituting a part of the Property.

8.12. Flood Zone. No portion of the Improvements is located in an area identified by the Federal Emergency Management Agency or any successor thereto, as an area having special flood hazards.

8.13. Adequate Utilities. The Property is adequately served by all utilities required for the current or contemplated use thereof. All water and sewer systems are provided to the Property by public utilities, and the Property has accepted or is equipped to accept such utility services.

8.14. Public Access. All public roads and streets necessary for access to the Property for the current or contemplated use thereof have been completed, are serviceable and all-weather, and are physically and legally open for use by the public.

8.15. Boundaries. Except as may be otherwise disclosed on the survey of the Property delivered to Lender, all of the Improvements lie wholly within the boundaries and building restriction lines of the Property, and no easements or other encumbrances affecting the Property (including, without limitation, the Permitted Encumbrances) encroach upon any of the Improvements. No improvements on adjacent properties encroach upon the Property.

8.16. Mechanic Liens. No mechanics', materialmen's or similar liens or claims have been, or may be, filed for work, labor or materials affecting the Property which are or may be Liens prior, equal or subordinate to the Security Instrument. Borrower shall have the right to contest any such lien or claim as, and to the extent, set forth in Section 9.02(b).

8.17. Assessments. No unpaid assessments for public improvements or assessments otherwise affecting the Property currently exist or, to the best of Borrower's knowledge, are pending, nor, to the best of Borrower's knowledge, will the Immediate Repairs or any other improvements contemplated to the Property result in any such assessments.

8.18. Insurance. Borrower has obtained and delivered to Lender all insurance policies Lender has required pursuant to Section 9.03 of this Loan Agreement, with all Insurance Premiums prepaid thereunder, reflecting the insurance coverage, amounts and other requirements set forth in this Loan Agreement. No claims have been made under any of such insurance policies, and no party, including Borrower, has done, by act or omission, anything which would impair the coverage of any of such insurance policies.

8.19. Leases. With respect to the Leases: (a) the Rent Roll certified by Borrower dated as of the Closing Date is true, complete and correct and the Property is not subject to Leases other than the Leases identified on such Rent Roll; (b) Borrower has delivered to Lender the standard form of lease used with respect to the Property; (c) Borrower is the sole owner of the entire lessor's interest in the Leases and has not assigned, pledged or otherwise transferred the Rents reserved in the Leases (except to Lender); (d) all of the Leases are bona fide, arms-length agreements with tenants unrelated to Borrower; (e) none of the Rents have been collected for more than one (1) month in advance (and for such purpose, a security deposit or last month's rent shall not be deemed rent collected in advance); (f) all security deposits reflected on the Rent Roll have been collected and are being h eld by Borrower in the full amount reported on the Rent Roll; (g) all work to be performed by Borrower under each Lease has been performed as required and has been accepted unconditionally by the applicable tenant; (h) no offsets or defenses exist in favor of any tenant to the payment of any portion of the Rents and Borrower has no monetary obligation to any tenant under any Lease; (i) Borrower has not received notice from any tenant challenging the validity or enforceability of any Lease; (j) all payments due from tenants under the Leases are current, except as disclosed on the Rent Roll; (k) to Borrower's knowledge, no tenant under any Lease is in default thereunder, except with respect to any past due rents disclosed on the Rent Roll, or is a debtor in any bankruptcy, reorganization, insolvency or similar proceeding, or has demonstrated a history of payment problems which suggest financial difficulty; (1) no Lease contains an option to purchase, right of first refusal to purchase, or any other similar pro vision; and (m) no brokerage commissions, finders fees or similar payment obligations are due and unpaid by Borrower or any Affiliate of Borrower regarding any Lease which have not been disclosed in writing to Lender.

8.20. Management Agreement. No change in the Property Manager or Property Management Contract has occurred since the date of the most recent information submitted to Lender with respect thereto, other than has been disclosed in writing to Lender.

8.21. Financial Condition. Borrower currently is solvent and has received reasonably equivalent value for its granting of the Liens in favor of Lender in connection with the Loan. No change has occurred in the financial condition of Borrower, General Partner, Guarantor, or any of their respective constituent equity owners, general partners or managing members which would have a Material Adverse Effect, since the date of the most recent financial statements submitted to Lender with respect to each such party, other than has been disclosed in writing to Lender.

8.22. Taxes. Borrower and General Partner have filed all federal, state, county, municipal, and city income tax returns required to have been filed by them and have paid all taxes and related liabilities which have become due pursuant to such returns or pursuant to any assessments received by them. Borrower does not know of any basis for any additional assessment in respect of any such taxes and related liabilities for prior years.

8.23. No Foreign Person. Borrower is not a "foreign person" within the meaning of §1445(D(3) of the Tax Code.

8.24. Federal Regulations. Borrower is not engaged nor will it engage, principally, or as one of its important activities, in the business of extending credit for the purpose of "purchasing" or "carrying" any "margin stock" within the respective meanings of each of the quoted terms under Regulation U or Regulation G.

8.25. Investment Company Act; Other Regulations. Borrower is not an "investment company" or a company "controlled" by an "investment company" within the meaning of the Investment Company Act of 1940 and the regulations issued thereunder, each as amended. Borrower is not subject to regulations under any federal or state statute or regulation which limits its ability to incur indebtedness.

8.26. ERISA. (a) Borrower is not and will not be an "employee benefit plan," as defined in §3(3) of ERISA, subject to Title I of ERISA, (b) none of the assets of Borrower constitute or will constitute "plan assets" of one or more such plans within the meaning of 29 C.F.R. §2510.3-101, (c) Borrower is not and will not be a "governmental plan" within the meaning of §3(3) of ERISA, and (d) transactions by or with Borrower are not and will not be subject to state statutes regulating investment of, and fiduciary obligations with respect to, governmental plans.

8.27. No Illegal Activity as Source of Funds. No portion of the Property has been or will be purchased, improved, equipped or furnished with proceeds of any illegal activity.

8.28. Compliance with Anti-Terrorism, Embargo, Sanctions and Anti-Money Laundering Laws. Borrower, General Partner, each Guarantor, the Property Manager, and to the best of Borrower's knowledge, after having made reasonable inquiry (a) each Person owning an interest of 20% or more in Borrower, General Partner, a Guarantor, or the Property Manager (if the Property Manager is an Affiliate of Borrower) and (b) each commercial tenant at the Property, if any: (i) is not currently identified on OFAC List, and (ii) is not a Person with whom a citizen of the United States is prohibited to engage in transactions by any trade embargo, economic sanction, or other prohibition of United States law, regulation, or Executive Order of the President of the United States. Borrower agrees to confirm this representation and warranty in writing on an annual basis if requested by Lender to do so.

8.29. Brokers and Financial Advisors. Borrower has not dealt with any financial advisor, broker, underwriter, placement agent or finder in connection with the transaction contemplated by this Loan Agreement who may be owed a commission or other compensation which Borrower will not have paid in full as of the Closing Date.

8.30. Intentionally Omitted.

8.31. Complete Disclosure; No Change in Facts or Circumstances. Borrower has disclosed to Lender all material facts and has not failed to disclose any material fact that could cause any representation or warranty made herein to be materially inaccurate, incomplete or misleading. All information provided in or supplied with the application for Loan, or in satisfaction of the terms thereof, remains true, complete and correct in all material respects, and no adverse change in any condition or fact has occurred that would make any of such information materially inaccurate, incomplete or misleading.

8.32. Survival. The representations and warranties contained in this Article 8 survive for so long as the Loan remains payable and any Obligation remains to be performed.

ARTICLE 9

BORROWER COVENANTS

9.01. Payment of Debt and Performance of Obligations. Borrower shall fully and punctually pay the Loan and perform the Obligations when and as required by the Loan Documents. Borrower may not prepay the Loan except in strict accordance with this Loan Agreement.

9.02. Payment of Taxes and Other Lienable Charges.

(a)

Payment Obligation. Except to the extent sums sufficient to pay Taxes or Other Charges are deposited with Lender in accordance with this Loan Agreement and Lender pays the same, Borrower shall promptly and fully pay by their due date all Taxes and Other Charges now or hereafter assessed or charged against the Property as they become due and payable. Borrower shall promptly cause to be paid and discharged any Lien which may be or become a Lien against the Property (including, without limitation, mechanic's or materialman's liens). Except to the extent sums sufficient to pay Taxes or Other Charges have been deposited with Lender in accordance with this Loan Agreement, Borrower shall furnish to Lender, upon request, evidence satisfactory to Lender that all Taxes and Other Charges have been paid and are not delinquent.

(b)

Right to Contest. After prior written notice to Lender, Borrower, at its own expense, may contest by appropriate legal proceeding, promptly initiated and conducted in good faith with due diligence, the amount or validity or application in whole or in part of any of the Taxes or Other Charges (for purposes of this Section 9.02(b), "Other Charges" shall be deemed to include mechanics' and materialman's liens and trade payables), provided that: (i) no Event of Default exists; (ii) such proceeding suspends the collection of such Taxes or Other Charges and the Property will not be in danger of being sold for such unpaid Taxes or Other Charges, or Borrower has paid all of such Taxes or Other Charges under protest; (iii) such proceeding is permitted under and is conducted in accordance with the provisions of any other instrument to which Borrower or the Property is subject and does no t constitute a default thereunder; (iv) if Borrower has not paid the disputed amounts in full under protest, Borrower shall deposit with Lender (or a court or other Governmental Authority as/if applicable) cash (or other security as may be approved, in writing, by Lender) in an amount Lender deems sufficient to insure the payment of any such Taxes or Other

Charges together with interest and penalties thereon, if any, provided that after a Securitization, one hundred twenty-five percent (125%) of the contested amount (plus anticipated penalty and interest) shall be deposited with Lender; (v) Borrower furnishes to Lender all other items reasonably requested by Lender; and (vi) upon a final determination thereof, Borrower promptly pays the amount of any such Taxes or Other Charges, together with all costs, interest and penalties which may be payable in connection therewith. Lender may pay over any security held by Lender pursuant to this Section to the claimant entitled thereto at any time when, in Lender's judgment, the entitlement of such claimant is established, and, to the extent the security posted by Borrower with Lender is insufficient to pay the full amount due (including, without limitation, any penalties or interest thereon), B orrower shall be liable for the deficiency. If Lender pays the deficiency (which Lender shall not be obligated to do), the amount paid by Lender shall be added to principal, shall bear interest at the Default Rate until paid in full and payment of such amounts shall be secured by the Security Instrument and other collateral given to secure the Loan.

9.03. Insurance.

(a) Insurance Required During the Loan Term. Borrower, at Borrower's expense, shall obtain and maintain during the term of the Loan such insurance coverage (including, without limitation, type, minimum coverage amount, maximum deductible and acceptable exclusions) for Borrower and the Property as Lender deems reasonably necessary considering, among other things, the location and occupancy of the Property and all uses of the Property. Lender reserves the right to periodically review the insurance coverage Lender has required (types, minimum coverage amounts and maximum deductibles) and to increase or otherwise change the required coverage should Lender deem an increase or change to be reasonably necessary under then existing circumstances. Without limiting Lender's rights hereunder in any respect, it shall be deemed reasonable for Lender to require no less coverage than the coverage Lender required to be in place on the Closing Date. Subject to the foregoing, Lender shall require the following insurance coverage to be effective during the term of the Loan, coverage amounts and deductibles to be acceptable to Lender:

(i)

Property Insurance. Casualty insurance must be maintained for the Improvements and all Personal Property insuring against any peril now or hereafter included within the classification "all risks of physical loss" and in an amount at all times sufficient to prevent Borrower or Lender from becoming a co-insurer within the terms of the applicable policies but in any event at all times equal to the full replacement cost (as reasonably determined and adjusted from time to time by Lender) of the Improvements and Personal Property (without taking into account any depreciation and exclusive of excavations, footings and foundations, landscaping and paving), without any exclusions for windstorms. Where any part of the Improvements constitutes a legal non-conforming use under the Requirements of Law, such insurance must include "Ordinance of Law Coverage," with "Time Elemen t," "Loss to the Undamaged Portion of the Building," "Demolition Cost" and "Increased Cost of Construction" endorsements, in the amount of coverage requested by Lender. The policy must name Lender as an insured mortgagee under a standard mortgagee clause. The deductible shall not exceed $10,000.00.

(ii)

Insurance against Acts of Terrorism. The insurance coverage provided under Section 9.03(a) in effect as of the Closing Date and during the Loan term must also insure against loss or damage resulting from acts of terrorism or comparable coverage acceptable to Lender in its discretion. The deductible shall not exceed $10,000.00.

(iii)

Boiler and Machinery Insurance. Broad form boiler and machinery insurance (without exclusion for explosion) and systems breakdown coverage must be maintained, covering all steam boilers, pipes, turbines, engines or other pressure vessels, electrical machinery, HVAC equipment, refrigeration equipment and other similar mechanical equipment located in, on or about the Property in such amount per accident equal to the full replacement cost thereof (as reasonably determined and adjusted from time to time by Lender) and also providing coverage against loss of occupancy or use arising from any breakdown thereof. The policy must name Lender as an insured under a standard joint loss clause and provide that all proceeds are to be paid to Lender.

(iv)

Flood Insurance. Flood insurance must be maintained if any portion of the Improvements is located in an area identified by the Federal Emergency Management Agency or any successor thereto as a 100-year flood zone or special hazard area. The required coverage amount shall be the maximum allowable per building under the then-current guidelines published by the Federal Emergency Management Agency or any successor thereto. Such coverage may need to be purchased through excess carriers if the required coverage exceeds the maximum insurance available for the Property under the then-current guidelines published by the Federal Emergency Management Agency or any successor thereto. The policy must name Lender as an insured mortgagee under a standard mortgagee clause.

(v)

Business Interruption. Business interruption insurance must be maintained in an amount sufficient to provide the lost rental income for the Property for a period of not less than 1 year from the date of Casualty, with a 6 month extended period of indemnity. For purposes of this coverage, "rental income" means the sum of (A) the total, then ascertainable Rents payable under the Leases and (B) the total ascertainable amount of all other payments to be received by Borrower from third parties which are the legal obligation of the tenants, reduced to the extent such amounts would not be received because of operating expenses not incurred during the period that any portion of the Property cannot be occupied as a result of the Casualty. The policy must name Lender as a loss payee and provide that all proceeds are to be paid to Lender.

(vi)

Liability Insurance. Commercial general liability insurance coverage must be maintained, covering bodily injury or death and property damage, including all legal liability to the extent insurable and all court costs, legal fees and expenses, arising out of, or connected with, the possession, use, leasing, operation, maintenance or condition of the Property in such amounts generally required by institutional lenders for properties comparable to the Property but in no event for a combined single limit of less than $2 million and $1 million per occurrence. The required coverage must provide for claims to be made on an occurrence basis. The policy must name Lender as an additional insured. The insurance coverage required under this subsection (vi) may be satisfied by a layering of Commercial General Liability, Umbrella and Excess Liability Policies, but in no event will the Commercial Genera l Liability policy be written for an amount less

than $1,000,000 per occurrences and $2,000,000 aggregate for bodily injury and property damage liability. Lender may require umbrella coverage which will be evaluated on a case by case basis.

(vii)

Workers' Compensation Insurance. Workers' compensation insurance must be maintained with respect to all employees employed at the Property, in compliance with the laws of the state in which the Property is located.

(viii)

Earthquake Insurance. If the Property is located in a high earthquake hazard area, earthquake must be maintained in form, amount and with deductibles satisfactory to Lender.

(ix)

Other Coverage. Without limiting Lender's rights under this Section 9.03(a), Lender may also require Borrower to maintain builder's risk insurance during any period of construction, renovation or alteration of the Improvements, motor vehicles liability insurance in connection with all owned or non-owned motor vehicles used in connection with the management or maintenance of the Property, "dram shop" or similar coverage if alcoholic beverages are sold at the Property, fidelity bond coverage for employees handling Rents and other income from the Property, environmental insurance, sinkhole coverage and other insurance with respect to the Property or on any replacements or substitutions thereof or additions thereto against other insurable hazards or casualties which at the time are commonly insured against in the case of property similarly situated, due regard being given to the he ight and type of buildings, their construction, location, use and occupancy.

(b)

Qualified Insurers; Lender's Consent. All insurance must be issued under valid and enforceable policies of insurance acceptable to Lender and issued by one or more domestic primary insurers authorized to issue insurance in the state in which the Property is located. Each insurer must have a minimum investment grade rating of "A" or better from S & P and/or equivalent ratings from one or more comparable credit rating agencies acceptable to Lender. Lender's approval of insurance coverage at any time is not a representation or warranty concerning the sufficiency of any coverage or the solvency of any insurer, and Lender shall not be responsible for, nor incur any liability for, the insolvency of the insurer or other failure of the insurer to perform.

(c)

Policy Requirements. All policies must be for a term of not less than a year and name Lender as a beneficiary of such coverage as provided in this Section 9.03 or otherwise identified by Lender. Each policy must also contain: (i) an endorsement or provision that permits recovery by Lender notwithstanding the negligent or willful acts or omission of Borrower; (ii) a waiver of subrogation endorsement as to Lender to the extent available at commercially reasonable rates; (iii) a provision that prohibits cancellation or termination before the expiration date, denial of coverage upon renewal, or material modification without at least thirty (30) days prior written notice to Lender in each instance; and (iv) effective waivers by the insurer of all claims for Insurance Premiums against Lender. If the required insurance coverage is to be provided under a blanket policy covering the Property and other properties and assets not part of the Property, such blanket policy must specify the portion of the total coverage that is allocated to the Property and any sublimit in such blanket policy which is applicable to the Property and shall otherwise comply in all respects with the requirements of this Section 9.03.

(d)

Evidence of Insurance. Borrower must deliver to Lender on or before the Closing Date either (i) the original of each insurance policy required hereunder, (ii) a copy of each original policy certified by the insurance agent to be a true, correct and complete copy of the original; (iii) the insurance binder (Acord Form 25S provided by the insurance carrier) (as well as proof of payment of the premium for the first year); (iv) a certificate of insurance (Acord Form 28 provided by the insurance agent or, where form Acord Form 28 is not available, a certificate of insurance confirms the same rights as are confirmed by form Acord Form 28), (v) an original letter from the insurance carrier on the primary layer, signed by an officer of such carrier, attaching the form of insurance policy pursuant to which coverage will be provided (and, if applicable, an original letter from each insurance carrier on the excess layers, signed by an officer of each such carrier, agreeing that it is bound to the form of insurance policy delivered by the primary carrier (i.e., agreeing to "follow form" to the primary carrier); and (A) each such letter must set forth the date by which the policy will be delivered to the Lender, which must not be more than sixty (60) days following closing and (B) include as attachments all mortgagee/loss payee/additional insured endorsements. Evidence of the required coverage for the first year of the Loan (as well as proof of payment of the first year's premium) must be delivered to Lender on or before the Closing Date and thereafter not less than thirty (30) days prior to the expiration date of each policy.

(e)

Lender's Right to Obtain Insurance for Borrower. If Borrower fails to deliver to Lender the evidence of insurance coverage required by this Loan Agreement and does not cure such deficiency within ten (10) days after Lender's notice of nondelivery, an Event of Default shall be deemed to have occurred (without further cure period or notice) and Lender may procure such insurance at Borrower's expense, without prejudice to Lender's rights upon an Event of Default. All amounts advanced by Lender to procure the required insurance shall be added to principal, secured by the Security Instrument and bear interest at the Default Rate. Lender shall not be responsible for, nor incur any liability for the insolvency of the insurer or other failure of the insurer to perform, even though Lender has caused the insurance to be placed with the insurer after Borrower's failure to furni sh such insurance.

(f)

Additional Insurance. Borrower shall not obtain insurance for the Property in addition to that required by Lender without Lender's prior written consent, which consent will not be unreasonably withheld provided that (i) Lender is named insured on such insurance, (ii) Lender receives evidence of such insurance as required by subsection (d) above, and (iii) such insurance complies with all of the applicable requirements set forth in this Loan Agreement.

9.04. Obligations upon Condemnation or Casualty. If the Property, or any portion thereof, shall be damaged or destroyed by a Casualty or become subject to any Condemnation, the following shall apply:

(a)

Generally. Borrower shall promptly notify Lender, in writing, of any actual or threatened Condemnation or of any Casualty that damages or renders unusable the Property or any part thereof and, except as otherwise provided below, shall promptly and diligently pursue Borrower's claim for a Condemnation award or insurance proceeds, as applicable. Borrower shall not make any agreement in lieu of Condemnation or accept any Condemnation award without Lender's prior written consent. Borrower shall not accept any settlement of insurance proceeds with respect to a Casualty without Lender's prior written consent. If requested by Lender, Borrower agrees to provide copies to Lender of all notices or filings made or received by Borrower in connection with the Casualty or Condemnation or with respect to collection of the insurance proceeds or Condemnation award, as applicable. Notwithstanding that a C asualty or Condemnation has occurred, or that rights to a Condemnation award or insurance proceeds are pending, Borrower shall continue to pay the Loan at the time and in the manner provided in this Loan Agreement.

(b)

Lender Right to Pursue Claim. Borrower hereby grants Lender the authority, at Lender's option, either: (i) to settle and adjust any claim arising with respect to the Casualty or Condemnation without Borrower's consent, or (ii) to allow Borrower to settle and adjust such claim; provided that, in either case, the insurance proceeds or Condemnation award, as applicable, is paid directly to Lender. Borrower hereby appoints Lender its attorney-in-fact with full power of substitution (and which shall be deemed to be coupled with an interest and irrevocable until the Loan is paid and the Security Instrument is discharged of record, with Borrower hereby ratifying all that its said attorney shall do by virtue thereof) to endorse any agreements, instruments or drafts received in connection with a Casualty or Condemnation. If any portion of the insurance proceeds or Condemnation award, as applicabl e, should be paid directly to Borrower, Borrower shall be deemed to hold such amounts in trust for Lender and shall promptly remit such amounts to Lender. If the Property is sold, through foreclosure or otherwise, prior to the receipt of the Condemnation award, Lender shall have the right, whether or not a deficiency judgment on the Note shall have been sought, recovered or denied, to receive the proceeds of such sale in an amount sufficient to pay the Loan in full. All expenses incurred by Lender in the settlement and collection of amounts paid with respect to a Casualty or Condemnation (including, without limitation, reasonable legal fees and expenses) shall be deducted and reimbursed to Lender from the insurance proceeds or Condemnation award, as applicable, prior to any other application thereof The insurance proceeds or Condemnation award paid or payable on account of a Casualty or Condemnation, as applicable (including all business interruption insurance proceeds paid as a result of such Casualty or Co ndemnation), less expenses to be reimbursed to Lender hereunder, is referred to herein as the "Restoration Proceeds."

(c)

Application of Restoration Proceeds; Restoration Obligations. Except as specifically hereafter provided in subsection (d) below, Lender may, in its sole discretion, either (i) apply the Restoration Proceeds to payment of the Loan, whether or not then due and payable, or (ii) hold and release the Restoration Proceeds to Borrower (A) for the costs of Restoration undertaken by Borrower in accordance with this Loan Agreement and (B) to cover any shortfall in Operating Income as a result of such Casualty or Condemnation that is necessary to pay in full the debt service payments due from Borrower on each Payment Due Date and other Operating Expenses falling due during the period until Restoration is completed; provided, however, that Lender shall have no obligation to release Restoration Proceeds to fund amounts contemplated by clause (B)

unless (1) Lender is satisfied that Restoration Proceeds are sufficient to pay in full the estimated cost to complete Restoration and (2) all Operating Expenses to be funded with Restoration Proceeds are approved by Lender. If Lender applies Restoration Proceeds to payment of the Loan and the Loan is still outstanding, interest will continue to accrue and be due on the unpaid principal at the Applicable Interest Rate. If Lender makes the Restoration Proceeds available to Borrower for Restoration, Borrower shall diligently pursue Restoration so as to restore the Property to at least equal value and substantially the same character as existed immediately prior to such Casualty or Condemnation. All plans and specifications for the Restoration and all contractors, subcontractors and materialmen to be engaged in the Restoration, as well as the contracts under which they have been engaged, shall be subject to Lender's prior review and approval. Lender may engage, at Borrower's expense, an independent engineer or inspector to assist Lender in its review of the approvals requested of Lender in connection with the Restoration and to periodically inspect the Restoration in progress and upon substantial completion.

(d)

Condition to Release of Restoration Proceeds for Restoration. Lender agrees to make the Restoration Proceeds available to Borrower for Restoration as long as:

(i)

The Restoration Proceeds recovered are less than the outstanding principal balance of the Loan.

(ii)

No Event of Default exists.

(iii)

Borrower demonstrates to Lender's satisfaction that the Restoration Proceeds are sufficient to pay in full the estimated cost to complete Restoration and any shortfalls in Operating Income as a result of such Casualty or Condemnation that are anticipated until Restoration is substantially completed, or, if the Restoration Proceeds are determined by Lender to be insufficient to pay such costs in full, Borrower deposits with Lender, in cash or by a cash equivalent acceptable to Lender, the additional amount estimated by Lender to be necessary to pay the full cost of Restoration ("Restoration Deficiency Deposit").

(iv)

The Casualty or Condemnation has not occurred in the twelve (12) months prior to the Maturity Date (without taking into consideration any unexercised extension).

(v)

Restoration can be completed not later than the earlier of (A) six (6) months prior to the Maturity Date (without taking into consideration any unexercised extension), (B) the earliest date by which completion is required under the Requirements of Law to preserve the right to rebuild the Improvements as they existed prior to the Casualty or Condemnation or (C) the expiration of Borrower's business interruption insurance.

(vi)

If a Condemnation has occurred, less than 10% of the Land is taken and the land taken is along the perimeter or periphery of the Land, and no portion of the Improvements are taken.

(vii)

If a Casualty has occurred, less than 25% of the total floor area of the Improvements is damaged or rendered unusable by the Casualty and Borrower demonstrates to Lender's satisfaction that a reasonable means of access exists to the Property and within the Improvements unaffected by the Casualty.

(viii)

Borrower demonstrates to Lender's satisfaction that, upon completion of Restoration, the net cash flow of the Property will be restored to a level sufficient to cover all Operating Expenses of the Property, including, without limitation, supporting a Debt Service Coverage Ratio at least equal to, or greater than, the greater of (A) the Debt Service Coverage Ratio existing as of the Closing Date, or (B) the Debt Service Coverage Ratio which existed as of the date immediately preceding such Casualty or Condemnation.

(ix)

The Property and its use after completion of Restoration will be in compliance with, and permitted under, all Requirements of Law.

(e) Disbursement Procedure; Holdback. If the Restoration Proceeds will be made available by Lender to Borrower for Restoration and the estimated cost of Restoration approved by Lender (together with all other amounts then held by Borrower pursuant to this Subsection (e)) is less than $250,000, Lender shall disburse the entire amount of the Restoration Proceeds to Borrower, and Borrower hereby covenants and agrees to use the Restoration Proceeds solely for Restoration performed in accordance with this Loan Agreement. If, however, the estimated cost of Restoration approved by Lender (together with all other amounts then held by Borrower pursuant to this Subsection (e)) is more than $250,000, Lender may retain the Restoration Proceeds in an interest bearing escrow account and make periodic disbursements to Borrower as follows:

(i)

Disbursements for Restoration.

(A)

Lender will disburse Restoration Proceeds for the costs of Restoration to, or as directed by, Borrower from time to time during the course of the Restoration, upon receipt of evidence reasonably satisfactory to Lender that (1) all materials installed and work and labor performed in connection with the Restoration have been paid in full (except to the extent that they are to be paid out of the requested disbursement), and (2) there exist no notices of pendency, stop orders, mechanic's or materialman's liens or notices of intention to file same, or any other Liens of any nature whatsoever on the Property arising out of the Restoration which have not either been fully bonded and discharged of record or, in the alternative, fully insured to Lender's reasonable satisfaction by the title company insuring the Lien of the Security Instrument.

(B)

Lender may limit disbursements to not more than one (1) per month.

(C)

Lender may hold-back from each requested disbursement an amount equal to the amount which Borrower is permitted to withhold under its contract with the contractor or supplier to be paid with the proceeds of such disbursement (either, a "Restoration Holdback"). Amounts held as the Restoration Holdback shall be disbursed once: (1) Lender receives satisfactory evidence that Restoration has been fully completed in accordance with all Requirements of Law; (2) Lender receives satisfactory evidence that all Restoration costs have been paid in full or will be fully paid from the remaining Restoration Proceeds and the Restoration Holdback; and (3) Lender receives, at Lender's option, a search of title to the Property, effective as of the date on which the Restoration Holdback is to be disbursed, showing no Liens other than the Permitted Encumbrances or an endorsement to its Title Insurance Policy which updates the effective date of such policy to the date on which the Restoration Holdback is to be disbursed and which shows no Liens since the date of recordation of the Security Instrument (other than the Permitted Encumbrances).

(D)

Notwithstanding subsection (C) above, Lender may release from the Restoration Holdback payments to a contractor or supplier if: (1) Lender receives satisfactory evidence that such contractor has satisfactorily completed its contract with Borrower; (2) such contractor or supplier delivers to Lender an acceptable written waiver of its mechanic's lien, in recordable form; and (3) Borrower provides written consent from the surety company, if any, which has issued a payment or performance bond with respect to such contractor or supplier.

(ii)

Disbursements for Shortfalls in Operating Income. Provided that Lender determines that the Restoration Proceeds are sufficient to pay in full the estimated cost to complete Restoration, Lender will disburse Restoration Proceeds not reserved for Restoration to pay the shortfall in Operating Income necessary to pay (A) first, the debt service payments due from Borrower on each Payment Due Date falling due from the date of the Casualty or Condemnation through the date on which Restoration is substantially completed and (B) then, any Operating Expenses approved by Lender. Lender may require satisfactory evidence that Operating Expenses to be paid have been incurred and may issue payments directly to the Person entitled to the payment claimed as an Operating Expense.

(iii)

Restoration Proceeds Deemed Insufficient. If, in Lender's judgment, at any time during Restoration, the undisbursed portion of the Restoration Proceeds shall not be sufficient to pay the costs remaining for Restoration to be completed or to pay any shortfall in Operating Income needed to pay in full Borrower's debt service payments on the Loan and Operating Expenses anticipated to be incurred during the period of Restoration, Borrower shall deposit the deficiency with Lender, in cash or by a cash equivalent acceptable to Lender (also called a "Restoration Deficiency Deposit"), within ten (10) days after Lender's notice of such deficiency, and no further disbursement of the Restoration Proceeds will be made until such funds are deposited. Amounts held by Lender as the Restoration Deficiency Deposit shall be disbursed in accordance with this Section 9.04.

(iv)

Consequence of Event of Default. Lender shall not be obligated to disburse Restoration Proceeds or amounts from the Restoration Holdback when an Event of Default exists, and upon the occurrence of an Event of Default, any undisbursed portion of the Restoration Proceeds (including the Restoration Deficiency Deposit and the Restoration Holdback) may, at Lender's option, be applied against the Loan, whether or not then due or accelerated, in such order and manner as Lender determines.

(v)

Surplus Restoration Proceeds After Restoration Completion. Any Restoration Proceeds remaining after full payment of Restoration costs and unpaid expenses due to Lender for which Lender is permitted reimbursement under this Section 9.04 shall be released to Borrower provided no Event of Default exists, and Borrower delivers evidence satisfactory to Lender that (i) Restoration has been fully completed in accordance with all Requirements of Law and (ii) the Property is free and clear of all Liens which may be asserted with respect to the Restoration.

9.05. Inspections and Right of Entry. Subject to the rights of tenants in possession, Lender and its agents may enter the Property upon prior notice to Borrower (notice to be given unless an Event of Default or an emergency exists, as determined by Lender in good faith) to inspect the Property and Borrower's books and records relating to the Property. In making such entry and inspection, Lender agrees to use reasonable efforts to minimize disturbance to Borrower and tenants of the Property. Lender and its agents shall have access (subject to the rights of tenants in possession), at all reasonable times, to the Property, including, without limitation, all contracts, plans and specifications, permits, licenses and approvals required or obtained in connection with the Property.

9.06. Leases and Rents.

(a) Right to Enter into New Leases. Borrower may enter into new Leases for space at the Property and renew or extend existing Leases without Lender's prior written consent provided that each such Lease: (i) is documented using, and does not materially deviate from, the Standard Lease Form; (ii) provides for rental rates and terns comparable to existing local market rates and terms (taking into account the type and quality of the tenant) as of the date such Lease is executed (unless in the case of a renewal or extension, the rent payable during such renewal term, or a formula or other method to compute such rent, has been specified in the original Lease); (iii) is an arms-length transaction with a tenant that is not an Affiliate of Borrower; (iv) will not have a Material Adverse Effect on the value of the Property taken as a whole; and (v) is subordinate to the Secu rity Instrument (other than with respect to residential leases). All proposed Leases that do not satisfy the requirements set forth in this Section require Lender's prior written approval at Borrower's expense (including reasonable legal fees and expenses). Borrower shall promptly deliver to Lender a copy of each Lease (other than a residential lease) entered into after the Closing Date, together with written certification from a Responsible Officer which confirms that (x) the copy delivered is a true, complete and correct copy of such Lease and (y) Borrower has satisfied all conditions of this Section. Lender's acceptance of Borrower's certification or a copy of any Lease shall not be deemed a waiver of the requirements of this Section if the Lease is not in compliance herewith.

(b)

Leasing Decisions. Provided no Event of Default exists and except as otherwise provided in this Subsection, Borrower may, without Lender's prior written consent: (i) amend or supplement any Lease or waive any term thereof (including, without limitation, shortening the lease term, reducing rents, granting rent abatements, or accepting a surrender of all or any portion of the leased space); (ii) cancel or terminate any Lease; or (iii) consent to a tenant's assignment of its Lease or subleasing of space; provided that none of the foregoing actions (taking into account the planned alternative use of the affected space in the case of termination, rent reduction, surrender of space or shortening of term) will have a Material Adverse Effect on the value of the Property taken as a whole and such Lease, as amended, supplemented or waived, is otherwise in compliance with the requirements of this L oan Agreement. Termination of a Lease with a tenant who is in default beyond applicable notice and grace/cure periods shall not be considered an action which has a Material Adverse Effect on the value of the Property taken as a whole. Any action with respect to any Lease that does not satisfy the requirements set forth in this Section requires Lender's prior written approval at Borrower's expense (including reasonable legal fees). Borrower shall promptly deliver to Lender a copy of all instruments documenting the action taken, together with written certification from a Responsible Officer that (x) the copies delivered are true, complete and correct copies of the materials represented thereby and (y) Borrower has satisfied all conditions of this Section. Lender's acceptance of Borrower's certification or a copy of such Lease materials shall not be deemed a waiver of the requirements of this Section if the action taken is not in compliance herewith.

(c)

Observance of Lessor Obligations. Borrower (i) shall observe and perform all obligations imposed upon the lessor under the Leases and shall not do or permit to be done anything to impair the value of any of the Leases as security for the Loan; (ii) upon Lender's request, shall promptly send copies to Lender of all notices of default which Borrower shall send or receive (or may have sent or received) under any non-residential Lease; (iii) shall enforce in a commercially reasonable manner all of the material terms, covenants and conditions contained in the Leases to be observed or performed by the tenant; (iv) shall not collect any Rents more than one (1) month in advance (and for this purpose a security deposit or last month's rent shall not be deemed rent collected in advance); and (v) shall not execute any assignment or pledge of the lessor's interest in any of the Leases or the Rents ( other than in connection with the Loan).

9.07. Use of Property. Borrower shall not allow changes in the use of the Property without Lender's prior written consent. Borrower shall not initiate, join in, or consent to any change in any private restrictive covenant or zoning or land use ordinance limiting or defining the uses which may be made of the Property. If use of all or any portion of the Property is or shall become a nonconforming use, Borrower will not cause or permit the nonconforming use to be discontinued or the nonconforming portion of the Property to be abandoned without Lender's prior written consent.

9.08. Maintenance of Property. Borrower shall maintain the Property in a good and safe condition and repair. No portion of the Property shall be removed, demolished or materially altered (except for normal repair or replacement) without Lender's prior written consent. Borrower shall promptly repair or replace any portion of the Property which may become damaged, worn or dilapidated.

9.09. Waste. Borrower shall not commit or suffer any waste of the Property or do or permit to be done thereon anything that may in any way impair the value of the Property or invalidate the insurance coverage required hereunder to be maintained by Borrower. Borrower will not, without Lender's prior written consent, permit any drilling or exploration for or extraction, removal, or production of any minerals from the surface or the subsurface of the Property, regardless of the depth thereof or the method of mining or extraction thereof.

9.10. Compliance with Laws.

(a)

Obligation to Perform. Borrower shall promptly and fully comply with all Requirements of Law now or hereafter affecting the Property. Borrower shall notify Lender promptly of Borrower's knowledge or receipt of any notice related to a violation of any Requirements of Law or of the commencement of any proceedings or investigations which relate to compliance with Requirements of Law. At Lender's request, Borrower shall provide Lender with copies of all notices, reports or other documents relating to any litigation or governmental investigation relating to Borrower or the Property.

(b)

Right to Contest. After prior written notice to Lender, Borrower, at its own expense, may contest by appropriate legal proceeding, promptly initiated and conducted in good faith and with due diligence, the Requirements of Law affecting the Property or alleged violation thereof, provided that: (i) no Event of Default exists; (ii) such proceedings shall be permitted under and be conducted in accordance with the Requirements of Law; (iii) the Property will not be in danger of being sold, forfeited, terminated, cancelled or lost; (iv) non-compliance with such Requirement of Law shall not impose any civil, criminal or environmental liability on Lender or Borrower; (v) Borrower deposits with Lender cash (or other security acceptable to Lender) in such amount as Lender deems sufficient to cover loss or damage that may result from Borrower's failure to prevail in such contest, provided that after a Securitization, one hundred twenty-five percent (125%) of the amount estimated by Lender is deposited; (vi) Borrower furnishes to Lender all other items reasonably requested by Lender; and (vii) upon a final determination thereof, Borrower promptly complies with the obligations determined to be applicable.

9.11. Financial Reports, Books and Records.

(a) Delivery of Financial Statements. Borrower shall keep adequate books and records of account with respect to its financial condition and the operation of the Property, in accordance with GAAP consistently applied (or such other method which is reasonably acceptable to Lender), and shall furnish the following to Lender, each prepared in such detail as reasonably required by Lender and certified by a Responsible Officer to be true, complete and correct:

(i)

as soon as available, but in any event within thirty (30) days after the end of each fiscal quarter, a quarterly Rent Roll providing the required information as of the end of such fiscal quarter;

(ii)

as soon as available, but in any event within thirty (30) days after the end of each fiscal quarter, a quarterly operating statement for the Property detailing the operating income received, operating expenses incurred, the cost of all Immediate Repairs, Replacements performed or paid during such quarter, and the Debt Service Coverage Ratio as of the end of such fiscal quarter;

(iii)

within thirty (30) days after the end of each fiscal quarter, a quarterly Compliance Certificate;

(iv)

as soon as available, but in any event within ninety (90) days after the close of Borrower's fiscal year, (A) an annual Rent Roll, presented on an annual basis consistent with the quarterly Rent Rolls described above; (B) an annual operating statement for the Property presented on an annual basis consistent with the quarterly operating statements described above; (C) an annual balance sheet and profit and loss statement for Borrower; and (D) a statement of change of financial position of Borrower, setting forth in comparative form the figures for the previous fiscal year;

(v)

as soon as available, but in any event at least thirty (30) days prior to the start of each calendar year, an annual operating budget for the Property presented on a monthly basis consistent with the information required in the quarterly operating statement described above which budget shall be subject to Lender's approval (notice of approval or disapproval not to be unreasonably delayed). Each such budget as approved shall be the "Approved Budget";

(vi)

Upon Lender's request, monthly Rent Roll and operating statements for the Property; and

(vii)

such other financial information or property management information (including, without limitation, copies of Borrower's state and federal tax returns, information on tenants under Leases to the extent such information is available to Borrower, copies of bank account statements from financial institutions where funds owned or controlled by Borrower are maintained, and an accounting of security deposits) as may reasonably be required by Lender from time to time.

(b)

Lender Audit Rights. Lender and its agents have the right, upon prior written notice to Borrower (notice to be given unless an Event of Default exists), to examine the records, books and other papers which reflect upon Borrower's financial condition or pertain to the income, expense and management of the Property and to make copies and abstracts from such materials. Lender also shall have the right, from time to time (but, in the absence of an Event of Default existing, not more than annually) and upon prior notice to Borrower (notice to be given unless an Event of Default exists), to have an independent audit conducted of any of Borrower's financial information. Lender shall pay the cost of such audit unless Lender performed the audit following the occurrence of an Event of Default or if the results of Lender's audit disclose an error by more than ten percent (10%), in which case (and i n addition to Lender's other remedies) Borrower shall pay the cost incurred by Lender with respect to such audit upon Lender's demand. Upon Borrower's failure to pay such amounts, and in addition to Lender's remedies for Borrower's failure to perform, the unpaid amounts shall be added to principal, shall bear interest at the Default Rate until paid in full, and payment of such amounts shall be secured by the Security Instrument and other collateral given to secure the Loan.

(c)

Financial Reports from Guarantors and General Partner. Borrower shall cause each Guarantor and, at Lender's request, the General Partner, to provide to Lender (i) within ninety (90) days after the close of such party's fiscal year, such party's balance sheet and profit and loss statement (or if such party is an individual, within ninety (90) days after the close of each calendar year, such party's personal financial statements) in form reasonably satisfactory to Lender and certified by such party to be accurate and complete; and (ii) such additional financial information (including, without limitation, copies of state and federal tax returns) as Lender may reasonably require from time to time (but no more frequently than annually, unless an Event of Default exists) and in such detail as reasonably required by Lender.

(d)

Data Delivery Failure. If a Data Delivery Failure occurs, Borrower shall pay Lender, without demand, the applicable Data Delivery Failure Fee on the first Business Day following each occurrence of a Data Delivery Failure. If a Data Delivery Failure occurs on more than two (2) separate occasions while the Loan is outstanding, it shall be an immediate Event of Default. The collection of the Data Delivery Failure Fee shall be in addition to Lender's other rights and remedies under the Loan Documents and, until paid, shall be deemed added to the Debt, secured by the Security Instrument and shall bear interest at the Default Rate.

9.12. Performance of Other Agreements. Borrower shall observe and perform in a timely manner each and every obligation to be observed or performed by Borrower pursuant to the terms of any agreement or recorded instrument affecting or pertaining to the Property or used in connection with the operation of the Property (including, without limitation, the Operating Agreements). Without limiting the foregoing, Borrower shall (a) give prompt notice to Lender of any notice received by Borrower with respect to any of the Operating Agreements which alleges a default or nonperformance by Borrower thereunder, together with a complete copy of any such notice; (b) enforce, short of termination, performance of the Operating Agreements to be performed or observed, and (c) not terminate or amend, or waive compliance with, any of the Operating Agreements without Lender's prior writ ten consent, except as may be (i) permitted pursuant to the respective terms thereof or (ii) absent the existence of an Event of Default, done in the ordinary

course of business. If the absence of an Operating Agreement that has terminated will have a Material Adverse Effect on the value of the Property, Borrower agrees to enter into a new Operating Agreement in replacement of the terminated Operating Agreement, containing terms and conditions no less favorable to Borrower than the terminated Operating Agreement. Borrower shall notify Lender if Borrower does not replace the terminated Operating Agreement.

9.13. Existence; Change of Name; Location as a Registered Organization. Borrower shall continuously maintain (a) its existence and shall not dissolve or permit its dissolution, and (b) its rights and franchises to do business in the state where the Property is located. Borrower shall not change Borrower's name, legal entity, or its location as a registered organization within the meaning of the UCC, without notifying Lender of such change in writing at least thirty (30) days prior to its effective date. The notification requirements set forth in this Section are in addition to, and not in limitation of, the requirements of Article 7. Borrower shall pay all costs and expenses incurred by Lender (including, without limitation, reasonable legal fees) in connection with any change described herein.

9.14. Property Management.

(a)

Borrower shall cause the Property Manager to manage the Property in a manner equivalent to other Class B apartment complexes in the Colorado Springs, Colorado metropolitan area. Borrower shall not remove or replace the Property Manager (which, with respect to a Property Manager which is an Affiliate of Borrower, shall be deemed to occur upon a change of Control of the Property Manager) or modify or waive any material terms of the Property Management Contract without Lender's prior written consent and, if requested by Lender, a Rating Confirmation. Upon replacement of the Property Manager, Borrower shall, and shall cause the new manager of the Property to, execute an Assignment of Property Management Contract in form and substance similar to the Assignment of Property Management Contract executed by the Property Manager. Borrower shall comply with all obligations of Borrower under the Assignment of Property Management Contract. The property management fee and all other fees payable under the Property Management Contract shall not exceed 5% of gross revenues.

(b)

Termination of Property Manager. Irrespective of whether an Event of Default has occurred, Borrower agrees, that, if (a) Lender, in its reasonable discretion, determines that the Property is not being properly managed in accordance with management practices customarily employed for properties similar to the Property, or (b) Property Manager becomes insolvent, Lender may deliver written notice to Borrower and Property Manager, which notice shall specify in reasonable detail the grounds for Lender's determination. If Lender reasonably determines that the conditions specified in Lender's notice are not remedied to Lender's reasonable satisfaction by Borrower or Property Manager within thirty (30) days from receipt of such notice or if Borrower or Property Manager have failed to diligently undertake correcting such conditions within such thirty (30) day period. Lender may direct Borrower to terminate the Property Management Contract and to replace Property Manager with a management company acceptable to Lender.

9.15. ERISA. Borrower shall not engage in any transaction which would cause any obligation or action taken or to be taken hereunder by Borrower (or the exercise by Lender of any of its rights under any of the Loan Documents) to be a non-exempt (under a statutory or administrative class exemption) prohibited transaction under ERISA. Borrower agrees to deliver to Lender such certifications or other evidence throughout the term of the Loan as requested by Lender in its sole discretion to confirm compliance with Borrower's obligations under this Section 9.15 or to confirm that Borrower's representations and warranties regarding ERISA remain true.

9.16. Compliance with Anti-Terrorism, Embargo, Sanctions and Anti-Money Laundering Laws. Borrower shall comply with all Requirements of Law relating to money laundering, anti-terrorism, trade embargoes and economic sanctions, now or hereafter in effect. Without limiting the foregoing, Borrower shall not take any action, or permit any action to be taken, that would cause Borrower's representations and warranties in Section 8.28 of this Loan Agreement to become untrue or inaccurate at any time during the term of the Loan. Borrower shall notify Lender promptly of Borrower's actual knowledge that the representations and warranties in Section 8.28 of this Loan Agreement may no longer be accurate or that any other violation of the foregoing Requirements of Law has occurred or is being investigated by Governmental Authorities. In connection with such an event, Borr ower shall comply with all Requirements of Law and directives of Governmental Authorities and, at Lender's request, provide to Lender copies of all notices, reports and other communications exchanged with, or received from, Governmental Authorities relating to such event. Borrower shall also reimburse Lender for any expense incurred by Lender in evaluating the effect of such an event on the Loan and Lender's interest in the collateral for the Loan, in obtaining any necessary license from Governmental Authorities as may be necessary for Lender to enforce its rights under the Loan Documents, and in complying with all Requirements of Law applicable to Lender as the result of the existence of such an event and for any penalties or fines imposed upon Lender as a result thereof.

9.17. Intentionally Omitted. 9.18. Intentionally Omitted. 9.19. Intentionally Omitted. 9.20. Intentionally Omitted.

ARTICLE 10
NO TRANSFERS OR ENCUMBRANCES; DUE ON SALE

10.01. Prohibition Against Transfers. Borrower shall not permit any Transfer to be undertaken or cause any Transfer to occur other than a Permitted Transfer. Any Transfer made in violation of this an Agreement shall be void.

10.02. Lender Approval. Lender's decision to approve any Transfer proposed by Borrower shall be made in Lender's sole discretion and Lender shall not be obligated to approve any Transfer. Borrower agrees to supply all information Lender may request to evaluate a Transfer, including, without limitation, information regarding the proposed transferee's ownership structure, financial condition and management experience for comparable properties. Borrower acknowledges that Lender may impose conditions to its approval of a Transfer, including, without limitation, (i) no Event of Default, or an event which with the giving of notice or lapse of time or both could become an Event of Default, has occurred and is continuing, (ii) approval of the proposed transferee's ownership structure, financial condition and management experience for comparable properties, (iii) payment of an assumption fee equal to one percent (1%) of the outstanding principal balance of the Loan, (iv) adding guarantors or changing the scope of the Guaranty, (v) assumption in writing (acceptable to Lender in its sole discretion) by the transferee and a guarantor (which guarantor must be acceptable to Lender in its sole discretion) of all obligations of the transferor and Guarantor under the Loan Documents and execution and delivery of such other documentation as may be required by Lender and the Rating Agencies, (vi) delivery of a new substantive consolidation opinion, a tax opinion and other applicable opinions if required by Lender and the Rating Agencies, (vii) adjusting amounts required for the Reserve Accounts, and (viii) obtaining Rating Confirmations if a Securitization has occurred. Borrower agrees to pay all of Lender's expenses incurred in connection with reviewing and documenting a Transfer (including, without limitation, the costs of obtaining Rating Confirmations if required), which amounts must be paid by Borrower whether or not the proposed Transfer is approved. Upon Borrower's failure to pay such amounts, and in addition to Lender's remedies for Borrower's failure to perform, the unpaid amounts shall be added to principal, shall bear interest at the Default Rate until paid in full, and payment of such amounts shall be secured by the Security Instrument and other collateral given to secure the Loan.

10.03. Intentionally Omitted.

10.04. Releases of the Mortgaged Property. Lender may release portions of the Property for such consideration and upon such conditions as Lender may require without, as to the remainder of the Property, in any way impairing or affecting the Lien or priority of the Security Instrument or improving the position of any subordinate lienholder with respect thereto, except to the extent that the obligations hereunder shall have been reduced by the actual monetary consideration, if any, received by Lender for such release, and Lender may accept by assignment, pledge or otherwise any other property in place thereof as Lender may require without being accountable for so doing to any other lienholder. Notwithstanding anything to the contrary herein, Borrower shall have no right to request and Lender shall have no obligation to grant its consent to any release pursuant this S ection 10.04.

10.05. OFAC Compliance^., Substantive Consolidation Opinion. Notwithstanding anything to the contrary contained in this Section 10, (a) no transfer (whether or not such transfer shall constitute a Transfer) shall be made to any Person on the OFAC list and (b) in the event any transfer (whether or not such transfer shall constitute a Transfer) results in any Person owning in excess of forty-nine percent (49%) of the ownership interest Borrower or any General Partner, Borrower shall, if required by Lender due to Rating Agency requirements, prior to such transfer, deliver a substantive consolidation opinion letter with respect to the new equity owners which is acceptable in all respects to Lender and to the Rating Agencies if a Securitization has occurred.

ARTICLE 11
EVENTS OF DEFAULT; REMEDIES

11.01. Events of Default. The occurrence of any one or more of the following events shall, at Lender's option, constitute an "Event of Default" hereunder:

(a)

If any payment of principal and interest (or interest if the Loan is interest-only) is not paid in full on or before the fifth (5^a') day after the Payment Due Date on which such payment is due (e.g., if the Payment Due Date is the 1st day of month, an Event of Default occurs if the payment is not received on or before the fifth (5^th) day of the month);

(b)

If any monthly payment required to be made to a Reserve Account is not paid in full on or before the fifth (5th) day after the Payment Due Date on which such payment is due;

(c)

If unpaid principal, accrued but unpaid interest and all other amounts outstanding under the Loan Documents are not paid in full on or before the Maturity Date;

(d)

If an "Event of Default" as that term is defined under any other Loan Document has occurred;

(e)

If the Prepayment Fee or Exit Fee is not paid in full when required;

(f)

If any representation or warranty made by Borrower, General Partner or any Guarantor herein, in the Guaranty, in the Environmental Indemnity or in any other Loan Document, or in any certificate, report, financial statement or other instrument or document furnished to Lender in connection herewith or hereafter, or in connection with any request for consent by Lender made during the term of the Loan shall have been false or misleading in any material respect as of the date made;

(g)

If Borrower, General Partner or any Guarantor shall (i) make an assignment for the benefit of creditors; (ii) generally not be paying its debts as they become due; or (iii) admit in writing its inability to pay its debts as they become due;

(h) If (i) Borrower, General Partner or any Guarantor shall commence any case, proceeding or other action under any existing or future law of any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency, reorganization, conservatorship or relief of debtors (A) seeking to have an order for relief entered with respect to it, or seeking to adjudicate it a bankrupt or insolvent, or seeking reorganization, arrangement, adjustment, winding-up, liquidation, dissolution, composition or other relief with respect to it or its debts, or (B) seeking appointment of a receiver, trustee, custodian, conservator or other similar official for it or for all or any substantial part of its assets; or (ii) there shall be commenced against Borrower, General Partner or any Guarantor any case, proceeding or other action of a nature referred to in clause (i) above by any party other th an Lender which (A) results in the entry of an order for relief or any such adjudication or appointment, or (B) remains =dismissed, undischarged or =bonded for a period of ninety (90) days; or (iii) there shall be commenced against Borrower, General Partner or any Guarantor any case, proceeding or other action seeking issuance of a warrant of attachment, execution, distraint or similar process against all or any substantial part of its assets which results in the entry of any order for any such relief which shall not have been vacated, discharged, or stayed or bonded pending appeal within ninety (90) days from the entry thereof; or (iv) Borrower, General Partner or any Guarantor shall take any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the acts set forth in clause (i), (ii), or (iii) above;

(1)

If any Guarantor repudiates or revokes the Guaranty or Environmental Indemnity;

(j)

Any judgment for monetary damages is entered against Borrower, General Partner or any Guarantor which, in Lender's sole judgment, has a Material Adverse Effect or is not covered to Lender's satisfaction by collectible insurance proceeds;

(k)

If Borrower violates or fails to comply with any provision of Article 7 of this Loan Agreement (captioned: Single Purpose Entity Requirements);

(1) If Borrower violates or fails to comply with any of the provisions of Section 9.03 (captioned: Insurance), Section 9.06 (captioned: Leases and Rents), or Section 9.13 (captioned: Existence, Change of Name or Location as a Registered Organization);

(m)

If a Transfer (other than a Permitted Transfer) shall occur without Lender's prior written consent or in violation of the terms of Lender's consent;

(n)

If Borrower abandons or ceases work on any Immediate Repair or Replacement for a period of more than twenty (20) days, unless such cessation results from causes beyond the reasonable control of Borrower and Borrower is diligently pursuing reinstitution of such work;

(o)

If a Lien other than a Permitted Encumbrance is filed against the Property, unless such Lien is promptly contested in good faith by Borrower as permitted in accordance with Section 9.02 (b);

(p)

If a Data Delivery Failure occurs (i) more than two (2) times in any twelve (12) month period or (ii) more than five (5) times in total;

(q)

Intentionally Omitted.

(r)

If any of the assumptions contained in any substantive consolidation opinion delivered to Lender in connection with the Loan, or in any update thereof or in any additional substantial consolidation opinion delivered subsequent to the closing of the Loan, is or shall become untrue in any material respect;

(s)

if (i) any Rate Cap is terminated for any reason by Borrower or the Rate Cap Provider, or (ii) the Rate Cap Provider defaults in the performance of its monetary obligations under the Rate Cap or (iii) the rating of the Rate Cap Provider is subject to any downgrade, withdrawal or qualification by a Rating Agency, and Borrower does not within ten (10) days (A) replace such Rate Cap with a replacement Rate Cap which satisfies all of the requirements of Section 2.07 of this Loan Agreement, and is otherwise in the same notional amount and Strike Rate as the Rate Cap it is replacing and (b) deliver to Lender, in form and substance reasonably satisfactory to Lender (x) an assignment of such Rate Cap from the replacement Rate Cap Provider, (y) an acknowledgment and consent from such replacement Rate Cap Provider in substantially the same form as the Rate Cap Provider Consent delivered to Lender as of t he Closing Date and (z) any other opinions or documents required pursuant to Section 2.07 of this Loan Agreement.

(t)

Intentionally Omitted.

(u)

Except for the specific defaults set forth in this Section 11.01, if any other default occurs hereunder or under any other Loan Document which is not cured (i) in the case of any default which can be cured by the payment of a sum of money, within five (5) days after written notice from Lender to Borrower, or (ii) in the case of any other default, within thirty (30) days after written notice from Lender to Borrower; provided that if a default under clause (ii) cannot reasonably be cured within such thirty (30) day period and Borrower has responsibly commenced to cure such default promptly upon notice thereof from Lender and thereafter diligently proceeds to cure same, such thirty (30) day period shall be extended for so long as it shall require Borrower, in the exercise of due diligence, to cure such default, but in no event shall the entire cure period be more than sixty (60) days.

11.02. Remedies. If an Event of Default occurs, Lender may, at its option, and without prior notice or demand, do and hereby is authorized and empowered by Borrower so to do, any or all of the following:

(a)

Acceleration. Lender may declare the entire unpaid principal balance of the an to be immediately due and payable.

(b)

Recovery of Unpaid Sums. Lender may, from time to time, take legal action to recover any sums as the same become due, without regard to whether or not the Loan shall be accelerated and without prejudice to Lender's right thereafter to accelerate the Loan or exercise any

other remedy, if such sums remain uncollected.

(c)

Foreclosure. Lender may institute proceedings, judicial or otherwise, for the complete or partial foreclosure of the Security Instrument or the complete or partial sale of the Property under power of sale or under any applicable provision of law. In connection with any such proceeding, Lender may sell the Property as an entirety or in parcels or units and at such times and place (at one or more sales) and upon such terms as it may deem expedient unless prohibited by law from so acting.

(d)

Receiver. Lender may apply for the appointment of a receiver, trustee, liquidator or conservator of the Property, without regard for the adequacy of the security for the Debt or a showing of insolvency, fraud or mismanagement on the part of Borrower. Any receiver or other party so appointed has all powers permitted by law which may be necessary or usual in such cases for the protection, possession, control, management and operation of the Property. Borrower hereby consents, to the extent permitted under applicable law, to the appointment of a receiver or trustee of the Property upon Lender's request if an Event of Default has occurred. At Lender's option, such receiver or trustee shall serve without any requirement of posting a bond.

(e)

Recovery of Possession. Lender may enter into or upon the Property, either personally or by its agents, and dispossess and exclude Borrower and its agents and servants therefrom (without liability for trespass, damages or otherwise), and take possession of all books, records and accounts relating to the Property, and Borrower agrees to surrender possession of the Property and all other Property, including without limitation, all documents, books, records and accounts relating to the Property, to Lender upon demand. As a mortgageein-possession of the Property, Lender shall have all rights and remedies permitted by law or in equity to a mortgagee-in-possession, including, without limitation, the right to charge Borrower the fair and reasonable rental value for Borrower's use and occupation of any part of the Property that may be occupied or used by Borrower and th e right to exercise all rights and powers of Borrower with respect to the Property, whether in the name of Borrower or otherwise (including, without limitation, the right to make, cancel, enforce or modify Leases, obtain and evict tenants, and demand, sue for, collect and receive all Rents of the Property).

(f)

UCC Remedies. Lender may exercise with respect to the Property, each right, power or remedy granted to a secured party under the UCC, including, without limitation, (i) the right to take possession of the Property and to take such other measures as Lender deems necessary for the care, protection and preservation of the Property, and (ii) the right to require that Borrower, at its expense, assemble the Property and make it available to Lender at a convenient place acceptable to Lender. Any notice of sale, disposition or other intended action by Lender with respect to the Property sent to Borrower in accordance with the provisions hereof at least ten (10) days prior to such action, shall constitute reasonable notice to Borrower. Lender shall not have any obligation to clean-up or otherwise prepare the Property for sale.

(g)

Apply Funds in Reserve Accounts. Lender may apply any funds then deposited in any or all of the Reserve Accounts and or otherwise held in escrow or reserve by Lender under the Loan Documents (including without limitation Restoration Proceeds) as a credit to the Loan, in such priority and proportion as Lender deems appropriate.

(h)

Insurance Policies. Lender may surrender any or all insurance policies maintained as required by this Loan Agreement, collect the unearned Insurance Premiums and apply such sums as a credit on the Loan, in such priority and proportion as Lender deems appropriate. Borrower hereby appoints Lender its attorney-in-fact with full power of substitution (and which shall be deemed to be coupled with an interest and irrevocable until the Loan is paid and the Security Instrument is discharged of record, with Borrower hereby ratifying all that its said attorney shall do by virtue thereof) to surrender such insurance policies and collect such Insurance Premiums.

(i)

Intentionally Omitted.

(j)

Protection of Lender's Security and Right to Cure. Lender may, without releasing Borrower from any obligation hereunder or waiving the Event of Default, perform the obligation which Borrower failed to perform in such manner and to such extent as Lender deems necessary to protect and preserve the Property and Lender's interest therein, including without limitation (i) appearing in, defending or bringing any action or proceeding with respect to the Property, in Borrower's name or otherwise; (ii) making repairs to the Property or completing improvements or repairs in progress; (iii) hiring and paying legal counsel, accountants, inspectors or consultants; and (iv) paying amounts which Borrower failed to pay. Amounts disbursed by Lender shall be added to the an, shall be immediately due and payable, and shall bear interest at the Default Rate from the date of disbursement until paid in full.< /P>

(k)

Violation of Laws. If the Property is not in compliance with all Requirements of Laws, Lender may impose additional requirements upon Borrower in connection with such Event of Default including, without limitation, monetary reserves or financial equivalents.

(1) Purchase of Rate Cap by Lender. If the Loan has been accelerated following an Event of Default and the Rate Cap obtained by Borrower expires prior to Lender's receipt of full payment of the Loan or completion of a foreclosure action (or acceptance of a deed-in-lieu of foreclosure), Lender may purchase, at Borrower's expense, a Rate Cap upon such terms as Lender deems necessary to guard against fluctuations of the interest rate of the Loan until the Loan is paid in full or a foreclosure action (or acceptance of a deed-in-lieu of foreclosure) is completed.

11.03. Cumulative Remedies; No Waiver; Other Security. Lender's remedies under this Loan Agreement are cumulative (whether set forth in this Article 11 or in any other section of this Loan Agreement) with those in the other Loan Documents and otherwise permitted by law or in equity and may be exercised independently, concurrently or successively in Lender's sole discretion and as often as occasion therefor shall arise. Lender's delay or failure to accelerate the Loan or exercise any other remedy upon the occurrence of an Event of Default shall not be deemed a waiver of such right as remedy. No partial exercise by Lender of any right or remedy will preclude further exercise thereof. Notice or demand given to Borrower in any instance will not entitle Borrower to notice or demand in similar or other circumstances (except where notice is expressly required by this Loan Agreement to be given) nor constitute Lender's waiver of its right to take any future action in any circumstance without notice or demand. Lender may release security for the Loan, may release any party liable therefor, may grant extensions, renewals or forbearances with respect

thereto, may accept a partial or past due payment or grant other indulgences, or may apply any other security held by it to payment of the Loan, in each case without prejudice to its rights under the Loan Documents and without such action being deemed an accord and satisfaction or a reinstatement of the Loan. Lender will not be deemed as a consequence of its delay or failure to act, or any forbearance granted, to have waived or be estopped from exercising any of its rights or remedies.

11.04. Enforcement Costs. Borrower shall pay, on written demand by Lender all costs incurred by Lender in (a) collecting any amount payable under the Loan Documents, or (b) enforcing its rights under the Loan Documents, in each case whether or not legal proceedings are commenced or whether legal action is pursued to final judgment. Such fees and expenses include, without limitation, reasonable fees for attorneys, paralegals, law clerks and other hired professionals, a reasonable assessment of the cost of services performed by Lender's default management staff, court fees, costs incurred in connection with pre-trial, trial and appellate level proceedings, including discovery, and costs incurred in post judgment collection efforts or in any bankruptcy proceeding. Amounts incurred by Lender shall be added to principal, shall be immediately due and payable, shall bear interest at the Default Rate from the date of disbursement until paid in full, if not paid in full within five (5) days after Lender's written demand for payment, and such amounts shall be secured by the Security Instrument and other collateral given to secure the Loan.

11.05. Application of Proceeds. The proceeds from disposition of the Property shall be applied by Lender as a credit to the Loan and to recovery or reimbursement of the costs of enforcement (contemplated by Section 11.04 above) in such priority and proportion as Lender determines appropriate.

11.06. Intentionally Omitted.

ARTICLE 12
NONRECOURSE - LIMITATIONS ON PERSONAL LIABILITY

12.01. Nonrecourse Obligation. Except as otherwise provided in this Article 12, Section 15.05 or expressly stated in any of the other Loan Documents, Lender shall enforce the liability of Borrower to perform and observe the obligations contained in this Loan Agreement and in each other Loan Document only against the Property and other collateral given by Borrower as security for payment of the Loan and performance of Borrower's obligations under the Loan Documents and not against Borrower or any of Borrower's principals, directors, officers or employees. Notwithstanding the foregoing, this Article 12 is not applicable to the Environmental Indemnity or to any Guaranty executed in connection herewith.

12.02. Full Personal Liability. Section 12.01 above shall BECOME NULL AND VOID and the Loan FULLY RECOURSE to Borrower if: (a) the Property or any part thereof becomes an asset in a voluntary bankruptcy or other insolvency proceeding; (b) Borrower or General Partner commences a bankruptcy or other insolvency proceeding; (c) an involuntary bankruptcy or other insolvency proceeding is commenced against Borrower or any General Partner (by a party other than Lender) but only if Borrower or such General Partner has failed to use best efforts to dismiss such proceeding or has consented to such proceeding or (d) if Borrower, any General Partner, Guarantor or any Affiliate or agent of (x) Borrower, (y) any General Partner or (z) any Guarantor has acted in concert with, colluded or conspired with any party to cause the filing of any involuntary bankruptcy or other insolvency proceeding; or (e) Intentionally Omitted.

12.03. Personal Liability for Certain Losses. Section 12.01 above SHALL NOT APPLY and Borrower shall be PERSONALLY LIABLE for all losses, claims, expenses or other liabilities incurred by Lender arising out of, or attributable to, any of the following:

(a)

Fraud or material misrepresentation or failure to disclose a material fact by Borrower or any other party in connection with (i) the application for the Loan or the execution and delivery of the Loan Documents or making of the Loan, (ii) any financial statement or any other material certificate, report or document required to be furnished by Borrower to Lender herewith or hereafter, or (iii) any request for Lender's consent made during the term of the Loan;

(b)

A violation of any provision of Article 10 (captioned: No Transfers or Encumbrances; Due On Sale);

(c)

Failure by Borrower to comply with any provision of Article 7 (captioned: Single Purpose Entity Requirements) or Section 9.13 (captioned: Existence, Change of Name or Location as a Registered Organization) of the Loan Agreement;

(d)

Misapplication or misappropriation of (i) insurance proceeds or condemnation awards payable to Lender in accordance with the Loan Agreement; (ii) Rent received by Borrower after the occurrence and during the continuance of an Event of Default, (iii) Rent paid in advance by tenants under the Leases; and (iv) tenant security deposits or other refundable deposits held by or on behalf of Borrower in connection with Leases;

(e)

Fees or commissions paid by Borrower, after the occurrence and during the continuance of an Event of Default, to any Guarantor, any Affiliate, or any principal of Borrower, any Guarantor or Affiliate, in violation of the Loan Documents;

(f)

Damage to or loss of all or any part of the Property as a result of waste, gross negligence or willful misconduct by Borrower or its agents;

(g)

Criminal acts of Borrower, any principal of Borrower, or any Affiliate resulting in the seizure, forfeiture or loss of all or any part of the Property;

(i)

All amounts contemplated under Section 11.04 and any real estate or other transfer tax incurred to transfer title to the Property in connection with any foreclosure, deed in lieu of foreclosure or non judicial sale of the Property following the occurrence of an Event of Default;

(j)

Payment of the deductible amount of any casualty insurance maintained in respect of the Property; and

(k)

Intentionally Omitted.

12.04. No Impairment. Nothing contained in this Article 12 shall impair, release or otherwise adversely affect: (a) any lien, assignment or security interest created by the Loan Documents; (b) any indemnity, personal guaranty, master lease or similar instrument now or hereafter made in connection with the Loan (including, without limitation, the Environmental Indemnity and Guaranty); (c) Lender's right to have a receiver or trustee appointed for the Property; (d) Lender's right to name Borrower as a defendant in any foreclosure action or judicial sale under the Security Instrument or other Loan Documents or in any action for specific performance or otherwise to enable Lender to enforce obligations under the Loan Documents or to realize upon Lender's interest in any collateral given to Lender as security for the Loan; or (e) Lender's right to a judgment on the Note against Borrower if and to the extent necessary to enforce any guaranty or indemnity provided in connection with the Note to obtain any insurance proceeds or condemnation awards to which Lender would otherwise be entitled under this Loan Agreement; provided, however, that any judgment obtained against Borrower shall, except to the extent otherwise expressly provided in this Article 12, be enforceable against Borrower only to the extent of Borrower's interest in the Property and other collateral securing payment of the Loan and performance of Borrower's obligations under the Loan Documents.

12.05. No Waiver of Certain Rights. Nothing contained in this Article 12 shall be deemed a waiver of any right which Lender may have under the Bankruptcy Code or applicable law to protect and pursue its rights under the Loan Documents including, without limitation, its rights under Sections 506(a) or any other provision of the Bankruptcy Code to file a claim for the full amount of the Loan or to require that the collateral continues to secure all of the indebtedness owing to Lender under Loan Documents.

ARTICLE 13
INDEMNIFICATION

13.01. Indemnification Against Claims. Borrower shall indemnify, defend, release and hold harmless Lender and each of the other Indemnified Parties from and against any and all Losses directly or indirectly arising out of, or in any way relating to, or as a result of (a) accident, injury to or death of Persons, or loss of, or damage to, property occurring in, on or with respect to the Property or on the adjoining sidewalks, curbs, adjacent property or adjacent parking areas, streets or ways or otherwise arising with respect to the use of the Property; (b) failure of the Property to be in compliance with any Requirements of Law; (c) breach or default of Borrower's representations or obligations under Sections 8.27, 8.28 or 9.16 of this Loan Agreement; (d) any and

all claims and demands whatsoever which may be asserted against Lender by reason of any alleged obligations or undertakings on its part to perform or discharge the lessor's agreements contained in any Lease; (e) breach or default under the ERISA obligations set forth in Sections 8.26 and 9.15 of this Loan Agreement (including, without limitation, legal fees and costs incurred in the investigations, defense and settlement of Losses incurred in correcting any prohibited transaction or in the sale of a prohibited loan, and in obtaining any individual prohibited transaction exemption under ERISA that may be required, in Lender's sole discretion); (f) or (f) any claim, litigation, investigation or proceeding commenced or threatened relating to any of the foregoing, whether or not Indemnified Party is a party thereto; provided, however, any such indemnity shall not apply to any Indemnified Party to the extent any such Losses arise from Indemnified Party's gross negligence or willful misconduct (collectively, "Indemnified Claims").

13.02. Duty to Defend. If an Indemnified Party claims indemnification under this Loan Agreement, the Indemnified Party shall promptly notify Borrower of the Indemnified Claim. After notice by any Indemnified Party, Borrower shall defend such Indemnified Party against such Indemnified Claim (if requested by any Indemnified Party, in the name of the Indemnified Party) by attorneys and other professionals reasonably approved, in writing, by the Indemnified Party. Notwithstanding the foregoing, any Indemnified Party may, in its sole discretion and at the expense of Borrower, engage its own attorneys and other professionals to defend or assist it if such Indemnified Party determines that the defense as conducted by Borrower is not proceeding or being conducted in a satisfactory manner or that a conflict of interest exists between any of the parties represented by Borrow er's counsel in such action or proceeding. Within five (5) business days of Indemnified Party's demand, Borrower shall pay or, in the sole discretion of the Indemnified Party, reimburse, the Indemnified Party for the payment of Indemnified Party's costs and expenses (including, without limitation, reasonable attorney fees, engineer fees, environmental consultant fees, laboratory fees and the fees of other professionals in connection therewith) in connection with the Indemnified Claim. Payment not made timely shall bear interest at the Default Rate until paid in full and payment of such amounts shall be secured by the Security Instrument and other collateral given to secure the Loan.

ARTICLE 14
SUBROGATION; NO USURY VIOLATIONS

14.01. Subrogation. If the Loan is used to pay, satisfy, discharge, extend or renew any indebtedness secured by a pre-existing mortgage, deed of trust or other Lien encumbering the Property, then to the extent of funds so used, Lender shall automatically, and without further action on its part, be subrogated to all rights, including lien priority, held by the holder of the indebtedness secured by such prior Lien, whether or not the prior Lien is released, and such former rights are not waived but rather are continued in full force and effect in favor of Lender and are merged with the Liens created in favor of Lender as security for payment of the Loan and performance of the Obligations.

14.02. No Usury. At no time is Borrower required to pay interest on the Loan or on any other payment due hereunder or under any of the other Loan Documents (or to make any other payment deemed by law or by a court of competent jurisdiction to be interest) at a rate which would subject Lender either to civil or criminal liability as a result of being in excess of the maximum interest rate which Borrower is permitted by applicable law to pay. If interest (or such other amount deemed to be interest) paid or payable by Borrower is deemed to exceed such maximum rate, then the amount to be paid immediately shall be reduced to such maximum rate and thereafter computed at such maximum rate. All previous payments in excess of such maximum rate shall be deemed to have been payments of principal (in inverse order of maturity) and not on account of interest due hereunder. Fo r purposes of determining whether any applicable usury law has been violated, all payments deemed by law or a court of competent jurisdiction to be interest shall, to the extent permitted by applicable law, be deemed to be amortized, prorated, allocated and spread over the full term of the Loan in such manner so that interest is computed at a rate throughout the full term of the Loan which does not exceed the maximum lawful rate of interest.

ARTICLE 15
SALE OR SECURITIZATION OF LOAN

15.01. Splitting the Note. Lender has the right from time to time to sever the Note into one or more separate promissory notes in such denominations as Lender determines in its sole discretion (including the creation of a mezzanine loan secured by a collateral assignment of the Equity Interests in Borrower), which promissory notes may be included in separate sales or securitizations undertaken by Lender. In conjunction with any such action, Lender may redefine the interest rate and amortization schedule; provided, however: (a) if Lender redefines the interest rate, the initial weighted average of the interest rates contained in the severed promissory notes taken in the aggregate shall equal the Applicable Interest Rate, and (b) if Lender redefines the amortization schedule, the amortization of the severed promissory notes taken in the aggregate shal l, require no more amortization to be paid under the Loan than as required under this Loan Agreement and the Note at the time such action was taken by Lender. Subject to the foregoing, each severed promissory note, and the Loan evidenced thereby, shall be upon all of the terms and provisions contained in this Loan Agreement and the Loan Documents which continue in full force and effect, except that Lender may allocate specific collateral given for the Loan as security for performance of specific promissory notes, in each case with or without cross default provisions. Borrower, at Borrower's expense, agrees to cooperate with all reasonable requests of Lender to accomplish the foregoing, including, without limitation, execution and prompt delivery to Lender of a severance agreement and such other documents as Lender shall reasonably require (provided, however, that Borrower shall not be obligated to pay Lender's legal or administrative review costs incurred in connection with the same). Borrower hereby appoint s Lender its attorney-in-fact with full power of substitution (and which shall be deemed to be coupled with an interest and irrevocable until the Loan is paid and the Security Instrument is discharged of record, with Borrower hereby ratifying all that its said attorney shall do by virtue thereof) to make and execute all documents necessary or desirable to effect the aforesaid severance; provided, however, Lender shall not make or execute any such documents under such power until five (5) days after written notice has been given to Borrower by Lender of Lender's intent to exercise its rights under such power. Borrower's failure to

deliver any of the documents requested by Lender hereunder for a period of ten (10) business days after such notice by Lender shall, at Lender's option, constitute an Event of Default hereunder.

15.02. Lender's Rights to Sell or Securitize. Borrower acknowledges that Lender, and each successor to Lender's interest, may (without prior notice to Borrower or Borrower's prior consent), sell or grant participations in the Loan (or any part thereof), sell or subcontract the servicing rights related to the Loan, Securitize the Loan or include the Loan as part of a Securitization and, in connection therewith, assign Lender's rights hereunder to a securitization trustee. Borrower, at its expense, agrees to cooperate with all reasonable requests of Lender in connection with any of the foregoing including, without limitation, executing any financing statements or other documents deemed necessary by Lender or its transferee to create, perfect or preserve the rights and interest to be acquired by such transferee, provide any updated financial information with appropria te verification through auditors letters, revised organizational documents and counsel opinions satisfactory to the Rating Agencies, executed amendments to the Loan Documents, and review information contained in a preliminary or final private placement memorandum, prospectus, prospectus supplements or other disclosure document, providing a mortgagor estoppel certificate and such other information about Borrower, General Partner, any Guarantor or the Property as Lender may require for Lender's offering materials.

15.03. Dissemination of Information. Borrower acknowledges that Lender may provide to third parties with an existing or prospective interest in the servicing, enforcement, evaluation, performance, ownership, purchase, participation or Securitization of the Loan, including, without limitation, any Rating Agency and any entity maintaining databases on the underwriting and performance of commercial mortgage loans, any and all information which Lender now has or may hereafter acquire relating to the Loan, the Property, Borrower, General Partner or any Guarantor, as Lender determines necessary or desirable and that such information may be included in disclosure documents in connection with a Securitization or syndication of participation interests, including, without limitation, a prospectus, prospectus supplement, offering memorandum, private placement memorandum or si milar document (each, a "Disclosure Document") and also may be included in any filing with the Securities and Exchange Commission pursuant to the Securities Act or the Securities Exchange Act. To the fullest extent permitted under applicable law, Borrower irrevocably waives all rights, if any, to prohibit such disclosure, including, without limitation, any right of privacy.

15.04. Reserves Accounts. If the Loan is made a part of a Securitization, Borrower acknowledges that all funds held by Lender in the Reserve Accounts in accordance with this Loan Agreement or the other Loan Documents shall be deposited in "eligible accounts" at "eligible institutions" or invested in "permitted investments" as then defined and required by the Rating Agencies, and this Loan Agreement will automatically be amended to so provide.

15.05. Securitization Indemnification. Borrower and each Guarantor agree to provide in connection with each Disclosure Document, an indemnification certificate: (a) certifying that such Disclosure Document has carefully been examined, including, without limitation, the sections entitled "Special Considerations," and/or "Risk Factors," and "Certain Legal Aspects of the Mortgage Loan," or similar sections, and all sections relating to Borrower, General Partner, Guarantors, Property Manager, their respective Affiliates, the Loan, the Loan Documents and the Property, and any risks or special considerations relating thereto, and that, to the best of such indemnitor's knowledge, such sections (and any other sections reasonably requested) do not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading; (b) indemnifying Lender (and for purposes of this Section 15.05, Lender shall include its officers and directors) for any Losses to which Lender may become subject insofar as the Losses arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in such section or arise out of are based upon the omission or alleged omission to state therein a material fact required to be stated in such sections necessary in order to make the statements in such sections or in light of the circumstances under which they were made, not misleading (collectively, "Securities Liabilities"); and (c) agreeing to reimburse Lender, for any legal or other expenses reasonably incurred by Lender in investigating or defending the Securities Liabilities; provided, however, that indemnitor will be liable under clauses (b) or (c) above only to the extent that su ch Securities Liabilities arise out of, or are based upon, any such untrue statement or omission made therein in reliance upon, and in conformity with, information furnished to Lender by or on behalf of Borrower or a Guarantor in connection with the preparation of the Disclosure Documents or in connection with the underwriting of the Loan, including, without limitation, financial statements of Borrower, General Partner or any Guarantor, and operating statements, rent rolls, environmental site assessment reports and property condition reports with respect to the Property. This indemnity is in addition to any liability which Borrower may otherwise have and shall be effective whether or not an indemnification certificate described in (a) above is provided and shall be applicable based on information previously provided by or on behalf of Borrower or a Guarantor if the indemnification certificate is not provided.

15.06. Intentionally Omitted.

ARTICLE 16
BORROWER FURTHER ACTS AND ASSURANCES
PAYMENT OF SECURITY RECORDING CHARGES

16.01. Further Acts. Borrower, at Borrower's expense, agrees to take such further actions and execute such further documents as Lender reasonably may request to carry out the intent of the Loan Documents or to establish and protect the rights and remedies created or intended to be created in favor of Lender under the Loan Documents or to protect the value of the Property and Lender's security interest or liens therein. Borrower agrees to pay all filing, registration or recording fees or taxes, and all expenses incident to the preparation, execution, acknowledgement, or filing/recording of the Security Instrument, the Assignment of Leases and Rents, financing statements or any such instrument of further assurance, except where prohibited by law so to do.

16.02. Replacement Documents. Upon receipt of an affidavit from an officer of Lender as to the loss, theft, destruction or mutilation of the Note or any other Loan Document which is not of public record, and, in the case of any such mutilation, upon surrender and cancellation of such document, Borrower will issue a replacement original in lieu thereof in the same original principal amount and otherwise on the same terms and conditions as the original; provided, however, that Lender shall indemnify Borrower against any actual loss or damage to Borrower resulting from the existence of duplicate originals of any such documents provided by Borrower.

16.03. Borrower Estoppel Certificates.

(a)

Borrower Information. Borrower, within ten (10) days of Lender's written request, shall furnish to Lender or Lender's designee a statement, duly acknowledged and certified by a Responsible Officer, setting forth: (i) the Maximum Loan Amount and the amount of principal advanced as of the certificate date; (ii) the unpaid principal amount of the Loan; (iii) the calculation of the rate of interest accruing on the Loan, including the then Applicable Interest Rate; (iv) the Payment Due Date, the Maturity Date, any unexercised rights to extend the Maturity Date and any exercised extension of the Maturity Date, if any; (v) the date installments of interest and/or principal were last paid; (vi) that, except as provided in such statement, no defaults or events exists which would be an Event of Default with the giving of any applicable notice or the expiration of any applicable grace or cure perio d or both; (vii) that the Loan Documents are valid, legal and binding obligations and have not been modified or, if modified, giving the particulars of such modification; (viii) whether any offsets or defenses exist against Borrower's obligation to pay the Loan and perform the Obligations and, if any are alleged to exist, a detailed description thereof; (ix) that all Leases are in full force and effect, and for Leases other than residential Leases, have not been modified or if modified, setting forth all modifications; (x) a current Rent Roll for the Property, (xi) the date to which Rents under the Leases have been paid; (xii) if not included on the Rent Roll, a rental delinquency report; and (xiii) such other matters reasonably requested by Lender and reasonably related to the Leases or the Property.

(b)

Tenant Estoppels. Borrower shall deliver to Lender, promptly upon Lender's written request (but in any event no later than fifteen (15) business days following Lender's request), duly executed estoppel certificates from any commercial tenants identified by Lender attesting to such facts regarding a tenant's non-residential Lease as Lender may require, including, without limitation: (i) that the Lease is in full force and effect with no defaults thereunder on the part of any party, and no event exists that would be an event of default thereunder with giving of any applicable notice or the expiration of any applicable grace or cure period or both; (ii), that none of the Rents have been paid more than one month in advance, except as a security deposit; and (iii) that the tenant claims no defense or offset against the full and timely performance of its obligations under the Lease.

(c) Lender Statement of Loan Information. After written request by Borrower not more than twice annually, Lender shall furnish Borrower a statement setting forth: (i) the original Maximum Loan Amount and the amount of principal advanced by Lender as of the certificate date; (ii) the unpaid principal amount of the Loan; (iii) the rate of interest accruing on the Loan, including the then Applicable Interest Rate; and (iv) the balance of amounts held in the Reserve Accounts, if any.

16.04. Recording Costs. Borrower will pay all transfer taxes, filing, registration, recording or similar fees, and all expenses incident to the preparation, execution, acknowledgment, recording, filing and/or release or discharge of the Note, the Security Instrument and each of the other Loan Documents, and all modifications, extensions, consolidations, or restatements of the same, except where prohibited by law so to do.

16.05. Publicity. Borrower acknowledges and agrees that Lender may use basic transaction information (including, without limitation, the name of the Borrower and the address of the Property) publicly in press releases or other marketing material.

ARTICLE 17
LENDER CONSENT

17.01. No Joint Venture; No Third Party Beneficiaries. Borrower and Lender intend that the relationships created hereunder and under each of the other Loan Documents are solely those of borrower and lender. Nothing herein or in any of the other Loan Documents is intended to create, nor shall it be construed as creating anything but a debtor-creditor relationship between Borrower and Lender nor shall they be deemed to confer on anyone other than Lender, and its successors and assigns, any right to insist upon or to enforce the performance or observance of any of the obligations contained herein or therein.

17.02. Lender Approval. Wherever pursuant to a Loan Document (a) Lender exercises any right to approve or disapprove or to grant or withhold consent; (b) any arrangement or term is to be satisfactory to Lender; (c) a waiver is requested from Lender, or (d) any other decision is to be made by Lender, all shall be made in Lender's sole discretion, unless expressly provided otherwise in such Loan Document. By approving or granting consent, accepting performance from Borrower, or releasing funds from a Reserve Account, Lender shall not be deemed to have warranted or affirmed the sufficiency, completeness, legality or effectiveness of the subject matter or of Borrower's compliance with Requirements of Laws. Notwithstanding any provision under the Loan Documents which provide Lender the opportunity to approve or disapprove any action or decision by Borrower, Lender is no t undertaking the performance of any obligation of Borrower under any of the Loan Documents or any of the other documents and agreements in connection with this transaction (including, without limitation, the Leases).

17.03. Performance at Borrower's Expense. Borrower acknowledges and agrees that in connection with each request by Borrower to: (a) modify or waive any provision of the Loan Documents; (b) release or substitute Property; (c) obtain Lender's approval or consent whenever required by the Loan Documents including, without limitation, review of a Transfer request,

improvements or alterations to the Property, and easements or other additions to Permitted Encumbrances; or (d) provide a subordination, non-disturbance and attomment agreement, Lender reserves the right to collect a review or processing fee from Borrower based on a reasonable estimate of the administrative costs which Lender will incur to connection therewith. Borrower agrees to pay such fee along with all reasonable legal fees and expenses incurred by Lender and the fees required for a Rating Confirmation or approval from the trustee if the Loan has been Securitized, as applicable, irrespective of whether the matter is approved, denied or withdrawn. Any amounts payable by Borrower hereunder, shall be deemed a part of the Loan, shall be secured by this Loan Agreement and shall bear interest at the Default Rate if not fully paid within ten (10) days of written demand for payment.

17.04. Non-Reliance. Borrower agrees that any diligence or investigation performed by or on behalf of Lender in underwriting or servicing the Loan (including, without limitation, information obtained about the Property the Borrower or its equity investors or affiliates), except as expressly stated herein or in the other Loan Documents, does not in any respect limit or excuse any of Borrower's representations, warranties, covenants or agreements set forth in this Loan Agreement or any of the other Loan Documents. The fact that Lender has performed diligence does not affect Lender's ability or right to rely fully upon the representations, warranties, covenants and agreements made by Borrower in the Loan Documents or to pursue any available remedy for a breach thereof. If Lender delivers or has delivered to Borrower (or to Borrower's agents, equity investors or repres entatives) any information obtained or developed by Lender relating to the Loan, the Property or Borrower, Borrower acknowledges and agrees that such information has been delivered for informational purposes only and Lender has no liability of responsibility to Borrower with respect to such information, including, without limitation, the completeness or accuracy of any such information. No due diligence consultant engaged by Lender is or shall be deemed an agent of Lender.

ARTICLE 18
MISCELLANEOUS PROVISIONS

18.01. Notices. All notices and other communications under this Loan Agreement are to be in writing and addressed to each party as set forth below. Default or demand notices shall be deemed to have been duly given upon the earlier of: (a) actual receipt; (b) one (1) business day after having been timely deposited for overnight delivery, fee prepaid, with a reputable overnight courier service, having a reliable tracking system; or (c) three (3) business days after having been deposited in any post office or mail depository regularly maintained by the U.S. Postal Service and sent by certified mail, postage prepaid, return receipt requested, and in the case of clause (b) and (c) irrespective of whether delivery is accepted. A new address for notice may be established by written notice to the other; provided, however, that no change of address will be effective until w ritten notice thereof actually is received by the party to whom such address change is sent. Notice to outside counsel or parties other than the named Borrower and Lender, now or hereafter designated by a party as entitled to notice, are for convenience only and are not required for notice to a parry to be effective in accordance with this section. Notice addresses are as follows:

Address for Lender:

GMAC Commercial Mortgage Bank 6955 Union Park Center, Suite 330 Midvale, Utah 84047

Attn: President

Fax: 801-567-2681

With a required copy to:

GMAC Commercial Mortgage Bank 200 Witmer Road

Horsham, PA 19044

Attn.: PLG Asset Manager

Fax: 215-328-1190

and:

GMAC Commercial Mortgage Corporation 200 Witmer Road

Horsham, PA 19044

Attn.: Servicing Accounting - Manager Fax: 215-328-3478

Address for Borrower:

c/o AIMCO

Stanford Place 3

4582 S. Ulster Street Parkway, Suite 1100 Denver, Colorado 80237

Attn.: Patti K. Fielding

Fax: 303-300-3241

18.02. Entire Agreement; Modifications; Time of Essence. This Loan Agreement, together with the other Loan Documents, contain the entire agreement between Borrower and Lender relating to the Loan and supersede and replace all prior discussions, representations, communications and agreements (oral or written). If the terms of any of the Loan Documents are in conflict, this Loan Agreement shall control over all of the other Loan Documents unless otherwise expressly provided in such other Loan Document. No Loan Document shall be modified, supplemented or terminated, nor any provision thereof waived, except by a written instrument signed by the party against whom enforcement thereof is sought, and then only to the extent expressly set forth in such writing. Time is of the essence with respect to all of Borrower's obligations under the Loan Documents.

18.03. Binding Effect; Joint and Several Obligations. This Loan Agreement and each of the other Loan Documents shall be binding upon and inure to the benefit of Borrower and Lender and their respective successors and assigns, whether by voluntary action of the parties or by operation of law. (The foregoing does not modify any conditions regulating Transfers.) If Borrower consists of more than one party, each shall be jointly and severally liable to perform the obligations of

Borrower under the Loan Documents.

18.04. Duplicate Originals; Counterparts. This Loan Agreement and each of the other Loan Documents may be executed in any number of duplicate originals, and each duplicate original shall be deemed to be an original. This Loan Agreement and each of the other Loan Documents (and each duplicate original) also may be executed in any number of counterparts, each of which shall be deemed an original and all of which together constitute a fully executed agreement even though all signatures do not appear on the same document.

18.05. Unenforceable Provisions. Any provision of this Loan Agreement or any other Loan Documents which is determined by a court of competent jurisdiction or government body to be invalid, unenforceable or illegal shall be ineffective only to the extent of such holding and shall not affect the validity, enforceability or legality of any other provision, nor shall such determination apply in any circumstance or to any party not controlled by such determination.

18.06. Governing Law. This Loan Agreement and each of the other Loan Documents shall be interpreted and enforced according to the laws of the state where the Property is located (without giving effect to rules regarding conflict of laws).

18.07. Consent to Jurisdiction. Borrower hereby consents and submits to the exclusive jurisdiction and venue of any state or federal court sitting in the county and state where the Property encumbered hereby is located with respect to any legal action or proceeding arising with respect to the Loan Documents and waives all objections which it may have to such jurisdiction and venue. Nothing herein shall, however, preclude or prevent Lender from bringing actions against Borrower in any other jurisdiction as may be necessary to enforce or realize upon the security for the Loan provided in any of the Loan Documents.

18.08. WAIVER OF TRIAL BY JURY. BORROWER AND LENDER EACH WAIVE THEIR RESPECTIVE RIGHT, TO THE FULLEST EXTENT PERMITTED BY LAW, AND AGREE NOT TO ELECT A TRIAL BY JURY WITH RESPECT TO ANY ISSUE ARISING OUT OF THIS LOAN AGREEMENT, ANY OTHER LOAN DOCUMENT, OR THE RELATIONSHIP BETWEEN THE PARTIES AS BORROWER AND LENDER.

ARTICLE 19
LIST OF DEFINED TERMS

19.01. Definitions. The following words and phrases shall have the meaning specified below.

"Additional Property" has the meaning set forth in Section 7.03 of this Loan Agreement.

"Affiliate" of any Person means (a) any other Person which, directly or indirectly, is in Control of, is Controlled by or is under common Control with, such Person; (b) any other Person who is a director or officer of (i) such Person, (ii) any subsidiary of such Person, or (iii) any Person described in clause (a) above; or (c) any corporation, limited liability company or partnership which has as a director any Person described in clause (b) above.

"Applicable Interest Rate" has the meaning set forth in Section 2.02(b) of this Loan Agreement. It is the interest rate from time to time accruing on the Loan.

"Approved Budget" has the meaning set forth in Section 9.11(a)(v) of this Loan Agreement.

"Assignment of Interest Rate Cap" means an Assignment of Interest Rate Cap Agreement from Borrower, as assignor, to Lender, as assignee, assigning to Lender all of Borrower's rights, title and interest in and to the Rate Cap Agreement.

"Assignment of Leases and Rents" means the Assignment of Leases and Rents dated as of the Closing Date from Borrower, as assignor, to Lender, as assignee, assigning to Lender all of Borrower's right, title and interest in and to the Leases and the Rents with respect to the Property.

"Assignment of Property Management Contract" means an Assignment of Property Management Contract and Subordination of Management Fees dated as of the Closing Date from Borrower, as assignor, to Lender, as assignee, and acknowledged by Property Manager or as applicable, any other Assignment of Property Management Contract executed pursuant to Section 9.14.

"Bankruptcy Code" means the Bankruptcy Reform Act of 1978 codified as 11 U.S.C. §101 et. seq., and the regulations issued thereunder, both as hereafter modified from time to time.

"Borrower" has the meaning set forth in the introductory paragraph of this Loan Agreement.

"Business Day" or "business day" means any day other than a Saturday, a Sunday, or days when Federal Banks located in the State of New York or Commonwealth of Pennsylvania are closed for a legal holiday or by government directive.

"Capital Expenditures" means any hard or soft costs spent to add, improve or expand property, plant and equipment assets (including, without limitation, the Replacements contemplated under the Loan) and/or amounts budgeted for the future for the same purposes.

"Cash Flow Available for Debt Service" means, for a specified period, (a) the Operating Income less (b) Operating Expenses as determined by Lender.

"Casualty" means the occurrence of damage or destruction to the Property, or any part thereof, by fire, flood, vandalism, windstorm, hurricane, earthquake, acts of terrorism or any other casualty.

"Closing Date" means the date the Maximum Loan Amount is deposited by Lender with the closing agent.

"Compliance Certificate" means a compliance certificate substantially in the form of Exhibit A hereto, signed by a Responsible Officer of Borrower.

"Condemnation" means the taking by any Governmental Authority of the Property or any part thereof through eminent domain or otherwise (including, without limitation, any transfer made in lieu of or in anticipation of the exercise of such taking).

"Control" means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person whether through ownership of voting securities, beneficial interests, by contract or otherwise. The definition is to be construed to apply equally to variations of the word "Control" including "Controlled," "Controlling" or "Controlled by."

"Data Delivery Failure" means, without reference to any cure period under Article 11, each instance that any of the following occur: (a) failure to deliver any of the reports, information, statements or other materials required under Section 9.11 within fifteen (15) business days after written notice from Lender, (b) failure to provide the Compliance Certificate within fifteen (15) business days after written notice from Lender, or (c) failure to permit Lender or its representatives to inspect or copy books and records within two (2) business days of Lender's written request.

"Data Delivery Failure Fee" means an amount of Five Thousand and 00/100 Dollars ($5,000.00) for the first failure, Ten Thousand and 00/100 Dollars ($10,000.00) for the second failure, and Twenty-Five Thousand and 00/100 Dollars ($25,000.00) for the third failure and each failure thereafter.

"Debt" means the aggregate of all principal and interest payments that accrue or are due and payable in accordance with the Loan Agreement, together with any other amounts due under the Loan Documents. The terms "Debt" and "Loan" have the same meaning whenever used in the Loan Documents.

"Debt Service Coverage Ratio" means, as to a specific period, the ratio of (a) the Cash Flow Available for Debt Service, to (b) the principal and interest that would be due and payable under the Note based on the then current Applicable Interest Rate

"Default Rate" has the meaning set forth in Section 2.04(e) of this Loan Agreement.

"Disbursement Request" means a written request substantially in the form of Exhibit B from Borrower delivered to Lender, signed by a Responsible Officer of Borrower and requesting Lender to disburse funds from a Reserve Account. Each Disbursement Request shall describe in reasonable detail the use of the funds requested by the Disbursement Request and shall have attached to it, as applicable: (a) the original invoices for all items or materials purchased or services performed which are to be funded by the Disbursement Request, and (b) copies of all permits, licenses and approvals, if any, by any Governmental Authority confirming completion of the Reserve Items. If an original invoice is not available, Borrower shall be required to evidence, to Lender's satisfaction, the amounts expended for which reimbursement is requested.

"Disclosure Documents" has the meaning set forth in Section 15.03 of this Loan Agreement.

"Environmental Indemnity" means the Environmental Indemnity Agreement dated as of the Closing Date from Borrower and the other Indemnitors named therein to Lender.

"Equity Interests" means (a) partnership interests (whether general or limited) in an entity which is a partnership; (b) membership interests in an entity which is a limited liability company; or (c) the shares or stock interests in an entity which is a corporation.

"ERISA" means the Employee Retirement Income Security Act of 1974, and the regulations issued thereunder, all as amended or restated from time to time.

"Event of Default" means any of the events specified in Section 11.01 of this Loan Agreement.

"Exit Fee" has the meaning set forth in Section 2.06 of this Loan Agreement.

"Extension Fee" means an amount equal to one quarter percent (.25%) of the outstanding principal amount of the Loan as of the Maturity Date.

"Extension Term" has the meaning set forth in Section 2.03(d) of this an Agreement.

"GAAP" means generally accepted accounting principles in the United States of America as in effect from time to time.

"General Partner" means CCP/IV Residential GP, L.L.C., a South Carolina limited liability company.

"Governmental Authority" means any nation or government, any state or other political subdivision thereof, and any Person exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to such government.

"Guarantor" means AIMCO Properties, L.F., and any subsequent guarantors, individually or collectively as the context requires, who are executing the Guaranty as guarantors and the Environmental Indemnity as indemnitors. Guarantors are jointly and severally liable for their obligations under such agreements.

"Guaranty" means the Guaranty of Exceptions to Nonrecourse Liability, dated as of the Closing Date, from Guarantor to Lender.

"Immediate Repairs" means the repairs or improvements to the Property identified on Exhibit C hereto.

"Immediate Repair Deposit" has the meaning set forth in Section 4.04(b) of this Loan Agreement, subject to adjustment as set forth in Section 4.04(d).

"Immediate Repair Escrow Account" means an account held by Lender, or Lender's designee, in which the Immediate Repair Deposit will be held, which shall not constitute a trust fund.

"Improvements" has the meaning set forth in the Security Instrument.

"Indemnified Claim" means the basis for the Indemnified Party's claim for indemnification under Article 13 hereof.

"Indemnified Parties" means Lender, together with its successors and assigns, which shall include, without limitation, any owner or prior owner or holder of the Note, any servicer of the Loan, any investor, or holder of a full or partial interest in the Loan, any receiver or other fiduciary appointed in a foreclosure or other proceeding under any Requirements of Law regarding creditors' rights, any officers, directors, shareholders, partners, members, employees, agents, servants, representatives, contractors, subcontractors, Affiliates of any and all of the foregoing, in all cases whether during the term of the an or as part of, or following, a foreclosure of the Security Instrument.

"Independent Director" means an individual who shall not have been at the time of such individual's initial appointment, and may not have been at any time during the preceding five years, and shall not be at any time while serving as an Independent Director of the applicable entity if a single member limited liability company or, if applicable, either (a) a shareholder of, or an officer, director, partner or employee of the applicable entity or any of their respective shareholders, partners, member, subsidiaries or Affiliates, (b) a customer of, or supplier to the applicable entity or any of its respective shareholders, partners, members, subsidiaries or Affiliates, (c) a person or other entity Controlling or under common Control with any such shareholder, officer, director, partner, member, employee, supplier or customer, or (d) a member of the im mediate family of any such shareholder, officer, director, partner, member, employee, supplier or customer.

"Insurance Premiums" means the premiums for the insurance Borrower is required to provide pursuant to Section 9.03 of this Loan Agreement.

"Insurance Premium Escrow Account" means an account held by Lender, or Lender's designee, in which Borrower's initial deposit for Insurance Premiums paid on the Closing Date and the Monthly Insurance Deposits will be held.

"Interest Rate Adjustment Date" means the first (1^St) day of each calendar month.

"Interest Rate Index" means the weekly average yield on United States Treasury Securities adjusted to a constant maturity of one year, as made available by the Federal Reserve Board forty-five (45) days prior to each Interest Rate Adjustment Date.

"Land" has the meaning set forth in the Security Instrument.

"Lease" has the meaning set forth in the Security Instrument.

"Lender" has the meaning in the introductory paragraph of this Loan Agreement.

"LIBOR Business Day" means a day upon which United States dollar deposits may be dealt in on the London and the New York City interbank markets and commercial banks and foreign exchange markets are open in London and New York City.

"LIBOR Rate" means the average of London Interbank Offered Rates (in U.S. dollar deposits) for a term of one month determined solely by Lender as of each Interest Rate Adjustment Date. On each Interest Rate Adjustment Date, Lender will obtain the close-ofbusiness LIBOR Rate from "Page 3750" on the Telerate Service (or such other page as may replace Page 3750 on that service) on the last LIBOR Business Day of the month immediately preceding the Interest Rate Adjustment Date. If Telerate Service ceases publication or ceases to publish the LIBOR Rate, Lender shall select a comparable publication to determine the LIBOR Rate and provide notice thereof to Borrower. The LIBOR Rate may or may not be the lowest rate based upon the market for U.S. dollar deposits in the London Interbank Eurodollar Market at which Lender prices loans on the dat e on which the LIBOR Rate is determined by Lender as set forth above.

"Lien" means any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or otherwise), preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever (including, without limitation, any conditional sale or other title retention agreement, the filing of any financing statement under the UCC or comparable law of any jurisdiction in respect of any of the foregoing and a mechanics' or materialman's lien).

"Liquidity" means cash and unencumbered, marketable securities.

"Loan" means the aggregate of all principal and interest payments that accrue or are due and payable in accordance with the Loan Agreement, together with any other amounts due under the Loan Documents. The terms "Loan" and "Debt" have the same meaning whenever used in the Loan Documents.

"Loan Agreement" means this Loan Agreement.

"Loan Documents" means, collectively, this Loan Agreement, the Note, the Security Instrument, the Assignment of Leases and Rents, the Assignment of Property Management Contract, the Environmental Indemnity, the Guaranty, the Lockbox Agreement, and any and all other documents and agreements executed in connection with the Loan, as each such agreement may be modified, supplemented, consolidated, extended or reinstated from time to time.

"Loan to Value Ratio" means with respect to the specified period, the ratio obtained by dividing (a) the Maximum Loan Amount, y (b) either, as selected in Lender's discretion, the "as-is" or "as-stabilized" value of the Property as set forth in the appraisal obtained by Lender in connection with its underwriting of the Loan or any update thereto, whichever is most recent; provided however, that should the Operating Income or market rents for the Property as underwritten by Lender change by ten percent (10%) or more during the period in question, Lender may obtain a new appraisal at Borrower's expense.

"Lockbox Account" means the Deposit Account and Lockbox as such terms are defined in the Lockbox Agreement.

"Lockbox Agreement" means the Lockbox - Deposit Account and Control Agreement dated as of the Closing Date between Borrower, PNC Bank, National Association and Lender.

"Lockbox Trigger Event" has the meaning set forth in the Lockbox Agreement.

"Losses" means any and all claims, suits, liabilities (including, without limitation, strict liabilities and liabilities under federal and state securities laws), actions, proceedings, obligations, debts, damages, losses, costs, expenses, fines, penalties, charges, fees, judgments, awards, and amounts paid in settlement of whatever kind or nature (including without limitation reasonable legal fees and other costs of defense).

"Margin" has the meaning set forth in Section 2.02(b) of this Loan Agreement.

"Material Adverse Effect" means, with respect to any circumstance, act, condition or event of whatever nature (including any adverse determination in any litigation, arbitration, or governmental investigation or proceeding), whether singly or in conjunction with any other event, act, condition circumstances, whether or not related, in Lender's reasonable judgment, a material adverse change in, or a materially adverse effect upon (a) the business, operations, prospects or financial condition of Borrower or Guarantor; (b) the ability of Borrower or Guarantor to perform its obligations under any Loan Document to which it is a party; (c) the value or condition of the Property; (d) compliance of the Property with any Requirements of Law; (e) the validity, priority or

enforceability of any Loan Document or the liens, rights (including, without limitation, recourse against the Property) or remedies of Lender hereunder or thereunder; or (f) the occupancy rate of the Property.

"Maturity Date" has the meaning set forth in Section 2.03(c) of this Loan Agreement. If Borrower has extended the Maturity Date in accordance with this Loan Agreement, references thereafter in this Loan Agreement shall mean the Maturity Date as so extended, unless the context otherwise requires.

"Maximum Loan Amount" means the maximum principal amount of $2,000,000.00, in lawful money of the United States of America, to be advanced to Borrower pursuant to this Loan Agreement. Reference in the Loan Agreement to "Maximum Loan Amount" mean the maximum principal amount, irrespective of actual principal amount outstanding or actually advanced to Borrower during the term of the Loan.

"Minimum Interest Rate" has the meaning set forth in Section 2.02(b) of this Loan Agreement.

"Monthly Insurance Deposit" means, with respect to the specified period, an amount equal to one-twelfth (1/12) of the Insurance Premiums that Lender estimates will be payable during the next ensuing twelve (12) months, subject to adjustment as set forth in Section 4.03(d) of this Loan Agreement.

"Monthly Replacement Reserve Deposit" has the meaning set forth in Section 4.05(b) of this Loan Agreement, subject to adjustment as set forth in Section 4.05(d).

"Monthly Tax Deposit" means, with respect to the specified period, an amount equal to one-twelfth (1/12) of the Taxes that Lender estimates will be payable during the next ensuing twelve (12) months, subject to adjustment as set forth in Section 4.02(d) of this Loan Agreement.

"Moody's" means Moody's Investors Service, Inc. and any successor thereto.

"Net Worth" means, as of a given date, a Person's equity calculated in conformance with GAAP by subtracting total liabilities from total tangible assets.

"Note" means collectively, Note A and Note B.

"Obligations" means the Loan, and all other obligations and liabilities of the Borrower to Lender, whether direct or indirect, absolute or contingent, due or to become due, or now existing or hereafter incurred, which may arise under, out of, or in connection with the Loan the Loan Documents, whether on account of principal, interest, fees, indemnities, costs, expenses (including, without limitation, all reasonable fees and disbursements of legal counsel) or otherwise.

"OFAC List" means the list of specially designated nationals and blocked persons subject to financial sanctions that is maintained by the U.S. Treasury Department, Office of Foreign Assets Control and any other similar list maintained by the U.S. Treasury Department, Office of Foreign Assets Control pursuant to any Requirements of Law, including, without limitation, trade embargo, economic sanctions, or other prohibitions imposed by Executive Order of the President of the United States. The OFAC List is accessible through the internet website www.treas.gov/ofac/tl 1sdn.pdf.

"Operating Account" means the bank account in the name of Borrower established with Wells Fargo given account number 400-0013367.

"Operating Agreements" has the meaning set forth in the Security Instrument.

"Operating Expenses" means all cash expenses actually incurred by or charged to Borrower (appropriately pro-rated for any expenses that, although actually incurred in a particular period, also relate to other periods), with respect to the ownership, operation, leasing and management of the Property in the ordinary course of business, determined in accordance with GAAP, and adjusted by Lender in accordance with Lender's customary underwriting procedures and policies then in effect which Operating Expenses are also adjusted to include any underwritten reserves for Replacements and any other underwritten reserves as determined by Lender whether or not required to be reserved. Operating Expenses shall specifically exclude (1) capital expenditures, (2) depreciation, (3) payments made in connection with the payment of the outstanding principal bal ance of the Loan, (4) costs of Restoration following a Casualty or Condemnation, (5) funds disbursed from any Reserve Account, and (6) any other non-cash items.

"Operating Income" means all gross cash income, revenues and consideration received or paid to or for the account or benefit of Borrower resulting from or attributable to the operation or leasing of the Property determined in accordance with GAAP and adjusted by Lender in accordance with Lender's customary underwriting procedures and policies then in effect but excluding any income or revenues from a sale, refinancing, Casualty or Condemnation, payment of rents more than one (1) month in advance, lease termination payments, or payments from any other events not related to the ordinary course of operations of the Property.

"Organizational Chart" means the chart attached hereto as Exhibit D which shows all persons or entities having an ownership interest in Borrower and in the General Partner.

"Other Charges" means all ground rents, maintenance charges, impositions (other than Taxes) and similar charges (including, without limitation, vault charges and license fees for the use of vaults, chutes and similar areas adjoining the Property), now or hereafter assessed or imposed against the Property, or any part thereof, together with any penalties thereon.

"Payment Due Date" has the meaning set forth in Section 2.03(b) of this Loan Agreement. It is the date that a regularly scheduled payment of principal and interest (or interest if the loan payments are interest-only) is due.

"Permitted Encumbrances" means only those exceptions shown in the Title Insurance Policy and each other Lien which has been approved in writing by Lender.

"Permitted Transfer" means each of the following:

(a)

Transfers of Equity Interests which, in the aggregate over the term of the Loan (i) do not exceed forty-nine percent (49%) of the total interests in Borrower or in General Partner, as applicable; (ii) do not result in any Person holding an Equity Interest in Borrower or General Partner, as applicable, which exceeds forty-nine percent (49%) of the total Equity Interests in Borrower or in General Partner, as applicable; and (iii) do not result in a change of Control.

(b)

Transfers with respect to any Person whose stocks or certificates are traded on a nationally recognized stock exchange.

(c)

Transfers which have been approved by Lender in accordance with Section 10.02 of this Loan Agreement.

(d)

Permitted Encumbrances.

(e)

All Transfers of worn out or obsolete furnishings, fixtures or equipment that are promptly replaced with property of equivalent value and functionality.

(f)

Intentionally Omitted.

(g)

All Leases which have been approved by the Lender pursuant to Section 9.06 or that not require Lender's approval pursuant to Section 9.06.

(h)

Transfers of Equity Interests in Borrower or General Partner to AIMCO Properties, L.P., a Delaware limited partnership ("AIMCO OP") or to an Affiliate of AIMCO OP, provided that such Transfers do not result in a change in Control.

"Person" means an individual, partnership, limited partnership, corporation, limited liability company, business trust, joint stock company, trust, unincorporated association, joint venture, governmental authority or other entity of whatever nature.

"Personal Property" has the meaning set forth in the Security Instrument.

"Prepayment Fee" has the meaning set forth in Section 2.05(b) of this Loan Agreement.

"Property" has the meaning set forth in the Security Instrument.

"Property Management Contract" means the agreement dated January 1, 2003 between Borrower and Property Manager which provides for the management of the Property for Borrower by Property Manager.

"Property Manager" means OP Property Management, LLC, a Delaware limited liability company.

"Rate Cap" means each interest rate cap obtained by Borrower as protection against interest rate fluctuations under the Loan.

"Rate Cap Agreement" means the written agreement evidencing the financial and performance terms of the Rate Cap purchased by Borrower from Rate Cap Provider which satisfies all requirements of Section 2.07 of this Loan Agreement.

"Rate Cap Provider" means the counterparty issuing a rate cap to Borrower.

"Rate Cap Provider Consent" means the Rate Cap Provider Consent and Acknowledgement to Assignment of Rate Cap with respect to the assignment of the Rate Cap from Borrower to Lender, executed by the Rate Cap Provider in favor of Lender.

"Rating Agencies" means Fitch, Inc., Moody's and S&P, or any successor entity of the foregoing, or any other nationally recognized statistical rating organization to the extent that any of the foregoing have been or will be engaged by Lender or its designees in connection with or in anticipation of Securitization or any other sale or grant of participation interest in the Loan (or any part thereof).

"Rating Confirmation" means a written confirmation from each of the Rating Agencies (unless otherwise agreed by Lender) that an action shall not result in a downgrade, withdrawal or qualification of any securities issued in connection with a Securitization.

"Rent Roll" means a written statement from Borrower, substantially in the form attached hereto as Exhibit E, detailing the names of all tenants of the Property, the portion of Property occupied by each tenant, the base rent and any other charges payable under each Lease, the term of each Lease, the beginning date and expiration date of each Lease, whether any tenant is in default under its Lease (and detailing the nature of such default), and any other information as is reasonably required by Lender, all certified by a Responsible Officer to be true, correct and complete.

"Rents" has the meaning set forth in the Security Instrument.

"Replacement Reserve Account" means an account held by Lender, or Lender's designee, in which the Monthly Replacement Reserve Deposits will be held, which shall not constitute a trust fund.

"Replacements" means the scheduled repairs and replacements to the Property identified on Exhibit D hereto.

"Requirements of Law" means (a) the organizational documents of an entity, and (b) any law, regulation, ordinance, code, decree, treaty, ruling or determination of an arbitrator, court or other Governmental Authority, or any Executive Order issued by the President of the United States, in each case applicable to or binding upon such Person or to which such Person, any of its property or the conduct of its business is subject including, without limitation, laws, ordinances and regulations pertaining to the zoning, occupancy and subdivision of real property.

"Reserve Accounts" means, individually and collectively, as the context requires, the Tax Escrow Account, the Insurance Premiums Escrow Account, the Immediate Repair Escrow Account and the Replacement Reserve Account.

"Reserve Item" means, individually and collectively, as the context requires, the Immediate Repairs and the Replacements.

"Responsible Officers" means, as to any Person, an individual who is a managing member, a general partner, the chief executive officer, the president or any vice president of such Person or, with respect to financial matters, the chief financial officer or treasurer of such Person or any other officer authorized by such Person to deliver documents with respect to financial matters pursuant to this Loan Agreement.

"Restoration" means the repairs, replacements, improvements, or rebuilding of or to the Property following a Casualty or Condemnation.

"Restoration Deficiency Deposit" has the meaning set forth in Section 9.04(d) of this Loan Agreement. All amounts deposited by Borrower with Lender as the Restoration Deficiency Deposit shall become a part of the Restoration Proceeds and disbursed by Lender for Restoration on the same conditions applicable to disbursement of Restoration Proceeds and, until so disbursed, are pledged to Lender as security for the Loan and Obligations.

"Restoration Holdback" has the meaning set forth in Section 9.04(e) of this Loan Agreement.

"Restoration Proceeds" has the meaning set forth in Section 9.04(b) of this Loan Agreement.

"S & P" means Standard & Poor's Ratings Services, a division of The McGraw-Hill Companies, Inc., and any successor thereto.

"Securities Act" means the Securities Act of 1933 and any successor statute thereto and the related regulations issued thereunder, all as amended from time to time.

"Securities Liabilities" has the meaning provided in Section 15.05 of this Loan Agreement.

"Securities Exchange Act" means the Securities Exchange Act of 1934, and any successor statute thereto and the related regulations issued thereunder, all as amended from time to time.

"Securitization" or "Securitize" means the sale of the Loan, by itself or as part of pool with other loans, in a transaction whereby mortgage pass-through certificates or other securities evidencing a beneficial interest, backed by the Loan or such pool of loans, will be sold as a rated or unrated public offering or private placement.

"Security Instrument" means the Mortgage, Assignment of Rents and Leases, Security Agreement and Fixture Filing, or the Deed of Trust, Assignment of Rents and Leases, Security Agreement and Fixture Filing, or the Deed to Secure Debt, Assignment of Rents and Leases, Security Agreement and Fixture Filing as applicable, encumbering the Property and executed by Borrower to Lender or to a trustee for the benefit of Lender, as the case may be, to secure Borrower's payment of the Loan and performance of the Obligations.

"Single Purpose Entity" has the meaning set forth in Section 7.02 of this Loan Agreement.

"Standard Lease Form" means, as applicable, the standard form of lease agreement used by Borrower for the rental of residential units at the Property in the form certified to Lender as of the Closing Date or subsequently approved by Lender in writing.

"Strike Rate" means the rate determined by Lender for the Extension Term such that a minimum Debt Service Coverage Ratio of 1.05:1.00 is maintained.

"Tax Code" means the Internal Revenue Code of 1986 and the related Treasury Department regulations issued thereunder, including temporary regulations, all as amended from time to time.

"Tax Escrow Account" means an account held by Lender, or Lender's designee, in which Borrower's initial deposit for Taxes made on the Closing Date and the Monthly Tax Deposits will be held, which shall not constitute a trust fund.

"Taxes" means all real estate taxes, government assessments or impositions, lienable water charges, lienable sewer rents, assessments due under owner association documents, ground rents, vault charges and license fees for the use of vault chutes, and all other charges (other than the Other Charges), now or hereafter levied or assessed against the Land and Improvements.

"Title Insurance Policy" means the mortgagee title insurance policy obtained by Lender in connection with the Loan, and, until the issuance of such policy, the commitment for title insurance as marked-up as of the Closing Date, in either case in form and substance (with such

endorsements and affirmative coverages) as is satisfactory to Lender, insuring that the Security Instrument constitutes a perfected first Lien against the Property in the Maximum Loan Amount, subject only to Permitted Encumbrances.

"Transfer" means any action other than a Permitted Transfer by which either (a) the legal or beneficial ownership of the Equity Interests in Borrower or in General Partner or in the Guarantor or (b) the legal or equitable title to the Property, or any part thereof, or (c) the cash flow from the Property or any portion thereof, are sold, assigned, transferred, hypothecated, pledged or otherwise encumbered or disposed of, in each case (a), (b) or (c) whether undertaken, directly or indirectly, or occurring by operation of law or otherwise, including, without limitation, each of the following actions:

(i)

the sale, conveyance, assignment, grant of an option with respect to, mortgage, deed in trust, pledge, grant of a security interest in, or any other transfer, as security or otherwise, of the Property or with respect to the Leases or Rents (or any thereof);

(ii)

the grant of an easement across the Property (other than minor easements not having a Material Adverse Effect) or any other agreement granting rights in or restricting the use or development of the Property (including, without limitation, air rights);

(iii)

an installment sale wherein Borrower agrees to sell the Property for a price to be paid in installments;

(iv)

an agreement by Borrower leasing all or a substantial part of the Property for other than actual occupancy by a space tenant thereunder; or

(v)

the issuance of additional partnership, membership or other equity interests, as applicable.

"UCC" means the Uniform Commercial Code in effect in the State where the Property is located, as from time to time amended or restated. For purposes of the UCC's application to the Reserve Accounts, the parties agree that the Reserve Accounts shall be deemed located in the state where the Property is located.

"Underwriter Group" has the meaning provided in Section 15.05 of this Loan Agreement.


	IN WITNESS WHEREOF, Lender and Borrower hereby sign, seal and deliver this Loan Agreement. By signing below on behalf of Borrower, SPE Equity Owner also consents, in its individual capacity, to the obligations of SPE Equity Owner set forth in Sections 7.02(b), 9.11(c), 8.21 and Article 15 of this Loan Agreement. LENDER: GMAC COMMERCIAL MORTGAGE BANK, a Utah industrial bank
	/s/Richard Cadigan Richard Cadigan Limited Signer

BORROWER:

CCP W ASSOCIATES, LTD., a Texas limited partnership

By: CCP/IV Residential GP, L.L.C., a South Carolina limited liability company, its general partner

By: Consolidated Capital Properties IV, a California limited partnership, doing business in Colorado as Consolidated Capital Properties IV, Ltd., its sole member

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

By: /s/Patti K. Fielding

Patti K. Fielding

Executive Vice President and Treasurer

Borrower's State Identification Number: 0006159210

Borrower's Tax Identification Number:

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