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June 3, 2011

Mr. Trent Johnson
Vice President
Angeles Realty Corporation II
4582 S. Ulster St., Suite 1100
Denver, CO 80237


Re:		Appraisal of Lazy Hollow Apartments 8782 Cloudleap Court Columbia, MD 21045 KTR No. 11-1-00133

Dear Mr. Johnson:

KTR Real Estate Advisors LLC (“KTR”) has completed a self contained appraisal of the above-referenced property as requested by our May 18, 2011 engagement letter. The purpose of this assignment is to estimate the Market Value of the Leased Fee Interest in the subject property as of June 1, 2011. The property was inspected by a staff member of KTR on March 4, 2011. The report has been prepared for Angeles Realty Corporation II for client’s use in asset valuation and financial reporting purposes.

Situated as noted above, the subject property consists of a 9.53-acre site improved with a 178-unit, garden-style apartment complex. The subject was developed in 1979 and contains 175,722 square feet of rentable area. The property is operating at stabilized occupancy and is in good physical condition. The subject property is more fully described, legally and physically, within the attached report.

Based on the analysis contained in the attached report, the Market Value of the Leased Fee Interest in the subject property, as of June 1, 2011 is:

TWENTY SIX MILLION DOLLARS
($26,000,000)

The attached report, in its entirety, including all assumptions and limiting conditions, which is an integral part of, and inseparable from, this transmittal letter, contains the data, information, analyses and calculations upon which the value conclusion indicated herein are based. The report was prepared in compliance with the Uniform Standards of Professional Appraisal Practice (USPAP) as set forth by the Appraisal Foundation and in accordance with the Code of Professional Ethics and Standards of Professional Practice of the Appraisal Institute.

575 Lexington Avenue, New York, NY 10022
T TEL 212.906.9400 • FAX 212.935.5935


Lazy Hollow Apartments Columbia, MD		June 3, 2011 Page i


INTRODUCTION
Title Page
Letter of Transmittal
Table of Contents			i
Certificate of Appraisal			ii
Basic Assumptions and Limiting Conditions			iii
Subject Property Photographs & Maps			v
PREMISES OF THE APPRAISAL
Summary of Salient Facts and Conclusions			1
Property Identification			2
Sales History			2
Purpose and Scope of the Appraisal			2
Definition of Market Value			3
Property Rights Appraised			3
Intended Use and User of the Appraisal and Reporting			3
Exposure Time			4
PRESENTATION OF DATA
Regional and Area Analysis			5
Neighborhood Analysis			8
Site Analysis			10
Improvement Analysis			13
Zoning Analysis			16
Real Estate Assessments and Taxes			19
Apartment Market Analysis			21
ANALYSIS OF DATA AND CONCLUSIONS
Highest and Best Use			32
Valuation Process			33
Income Capitalization Approach			35
Sales Comparison Approach			43
Reconciliation and Final Value Conclusion			51
ADDENDA
Additional Subject Property Photographs
Submitted Information
Qualifications of the Appraiser

KTR Real Estate Advisors, LLC


Lazy Hollow Apartments Columbia, MD		June 3, 2011 Page ii

CERTIFICATE OF APPRAISAL

We, Terence Tener, MAI, ASA and Thomas J. Tener certify that to the best of our knowledge and belief:

The statements of fact contained in this report are true and correct.

The reported analyses, opinions, and conclusions are limited only by the reported assumptions and limiting conditions, and are our personal, unbiased professional analyses, opinions, and conclusions.

We have no present or prospective interest in the property that is the subject of this report, and we have no personal interest or bias with respect to the parties involved.

Our compensation is not contingent upon the reporting of a predetermined value or direction in value that favors the cause of the client, the value estimate, the attainment of a stipulated result, or the occurrence of a subsequent event.

Our analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the Uniform Standards of Professional Appraisal Practice.

Phil Brandt has made a personal inspection of the property that is the subject of this report.

Phil Brandt provided significant assistance in the preparation of this appraisal report.

This appraisal was not prepared in conjunction with a request for a specific value or a value within a given range or predicated upon loan approval.

The reported analyses, opinions and conclusions were developed, and this report has been prepared, in conformity with the requirements of the Code of Professional Ethics and the Standards of Professional Appraisal Practice of the Appraisal Institute.

The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives.

As of the date of this report, Terence Tener, MAI, ASA has completed the continuing education program of the Appraisal Institute.

Terence Tener, MAI, ASA has been duly certified to transact business as a Real Estate General Appraiser (New York certification #460000003819)

Thomas J. Tener has been duly certified to transact business as a Real Estate General Appraiser (New York certification #460000033225; Maryland Temporary Permit No. 2036, Effective Date 3/7/11).

Terence Tener, MAI, ASA and Thomas J. Tener have extensive experience in the appraisal of similar properties.

The subject was previously appraised by KTR Real Estate Advisors LLC in March 2011. Prior to this, to the best of our knowledge, the appraiser has not appraised or provided any other services with respect to the subject property in the last 3 years.

KTR REAL ESTATE ADVISORS LLC



By:	Terence Tener, ASA, MAI Managing Member	By:	Thomas J. Tener Managing Member

KTR Real Estate Advisors, LLC


Lazy Hollow Apartments Columbia, MD		June 3, 2011 Page iii

BASIC ASSUMPTIONS AND LIMITING CONDITIONS

This appraisal report is subject to the following assumptions and limiting conditions:

1.		No responsibility is assumed for the legal description or for matters including legal or title considerations. Title to the property is assumed to be good and marketable unless otherwise stated.

2.		The property is appraised free and clear of any or all liens or encumbrances unless otherwise stated.

3.		Responsible ownership and competent property management are assumed.

4.		The information furnished by others is believed to be reliable. However, no warranty is given for its accuracy.

5.		All engineering is assumed to be correct. The plot plans and illustrative material in this report are included only to assist the reader in visualizing the property.

6.		It is assumed that there are no hidden or unapparent conditions of the property, subsoil, or structures that render it more or less valuable. No responsibility is assumed for such conditions or for arranging for engineering studies that may be required to discover them.

7.		It is assumed that there is full compliance with all applicable federal, state, and local environmental regulations and laws unless noncompliance is stated, defined, and considered in the appraisal report.

8.		It is assumed that all applicable zoning and use regulations and restrictions have been complied with, unless nonconformity has been stated, defined, and considered in the appraisal report.

9.		It is assumed that all required licenses, certificates of occupancy, consents, or other legislative or administrative authority from any local, state, or national government or private entity or organization have been or can be obtained or renewed for any use on which the value estimate contained in this report is based.

10.		It is assumed that the utilization of the land and improvements is within the boundaries or property lines of the property described and that there is no encroachment or trespass unless noted in the report.

11.		The distribution, if any, of the total valuation in this report between land and improvements applies only under the stated program of utilization. The separate allocations for land and buildings must not be used in conjunction with any other appraisal and are invalid if so used.

12.		Unless otherwise stated, possession of this report, or a copy thereof, does not carry with it the right of publication.

13.		The appraiser, by reason of this appraisal, is not required to give further consultation, testimony, or be in attendance in court with reference to the property in question unless arrangements have been previously made.

14.		Unless otherwise stated, neither all nor any part of the contents of this report (especially any conclusions as to value, the identity of the appraiser, or the firm with which the appraiser is connected) shall be disseminated to the public through advertising, public relations, news, sales, or other media without prior written consent and approval of the appraisers.

KTR Real Estate Advisors, LLC


Lazy Hollow Apartments Columbia, MD		June 3, 2011 Page iv

15.		Unless otherwise stated in this report, the existence of hazardous substances, including without limitation asbestos, polychlorinated biphenyls, petroleum leakage, or agricultural chemicals, which may or may not be present on the property, or other environmental conditions, were not called to the attention of nor did the appraiser become aware of such during the appraiser’s inspection. The appraiser has no knowledge of the existence of such materials on or in the property unless otherwise stated. The appraiser, however, is not qualified to test such substances or conditions. If the presence of such substances, such as asbestos, urea formaldehyde foam insulation, or other hazardous substances or environmental conditions, may affect the value of the property, the value is predicated on the assumption that there is no such condition on or in the property or in such proximity thereto that it would cause a loss in value. No responsibility is assumed for any such conditions, or for any expertise or engineering knowledge required to discover them. The client is urged to retain an expert in this field, if desired.

16.		The Americans with Disabilities Act (“ADA”) became effective January 26, 1992. The appraiser has not made a specific compliance survey and analysis of this property to determine whether or not it is in conformity with the various detailed requirements of the ADA. It is possible that a compliance survey of the property, together with a detailed analysis of the requirements of the ADA, could reveal that the property is not in compliance with one or more of the requirements of the Act. If so, this fact could have a negative effect upon the value of the property. Since the appraiser has no direct evidence relating to this issue, he did not consider possible non-compliance with the requirements of the ADA in estimating the value of the property.

17.		Former personal property items such as kitchen and bathroom appliances are now either permanently affixed to the real estate or are implicitly part of the real estate in that tenants expect the use of such items in exchange for rent and never gain any of the rights of ownership. Furthermore, the intention of the owners is not to remove the articles which are required under the implied or express Warranty of Habitability. The accounting for the short-lived nature of such items is reflected in a reserves for replacement expense category.

EXTRAORDINARY ASSUMPTION

KTR previously inspected the subject property in March 2011. The scope of work of this appraisal did not include a physical inspection of the subject property. The values derived herein are based on the extraordinary assumption that the physical condition of the subject property has not materially changed since the date of our last inspection. Should this assumption be incorrect, the values reported herein may be materially impacted.

KTR Real Estate Advisors, LLC


Lazy Hollow Apartments		June 3, 2011
Columbia, MD		Page 1



		SUMMARY OF SALIENT FACTS AND CONCLUSIONS

*Date of Value*		June 1, 2011

*Date of Inspection*		June 1, 2011

*Property Name*		Lazy Hollow Apartments

*Property Address*		8786 Cloudleap Court Columbia, MD 21045

*Property Location*		At the foot of Cloudleap Court in the Village of Long Reach in the community of Columbia, Howard County, Maryland.

*Tax Identification*		16-101087

*Purpose of the Appraisal*		To estimate the Market Value of the Leased Fee Interest in the subject property, free and clear of financing.

*Site Size*		Irregular in shape containing a total of 9.53 acres

*Zoning*		NT — New Town District

*Improvements*		A 178-unit garden apartment complex completed in 1979 with 13 apartment buildings. Aside from laundry rooms and landscaping, the property offers no special amenities. The property is operating at stabilized occupancy and is in good physical condition.

*2010 Assessed Value*		$14,218,700

Highest and Best Use
*As If Vacant*		Residential development.
*As Improved*		Continued use of the existing improvements.

VALUATION INDICATIONS


Income Capitalization	$	26,400,000
*Stabilized NOI*	$	1,586,878
*Cap Rate*		6.0	%
*Value per Unit*	$	148,315
*Value per Sq Ft*	$	150.24
Sales Comparison	$	25,600,000
*Value per Unit*	$	143,820
*Value per Sq Ft*	$	145.68
Cost Approach		N/A
APPRAISED VALUE	$	26,000,000
*Value per Unit*	$	146,067
*Value per Sq Ft*	$	147.96

KTR Real Estate Advisors, LLC


Lazy Hollow Apartments		June 3, 2011
Columbia, MD		Page 2


		PREMISES OF THE APPRAISAL

*Identification*		The subject property consists of the land and improvements at 8786 Cloudleap Court within the community of Columbia in Howard County, Maryland. The Howard County Assessor identifies the property as Tax Parcel Identification Number 16-101087. The property consists of a 9.53 acre site improved with 178-unit apartment complex known as Lazy Hollow Apartments.

*Sales History of the Subject Property*		According to public records, the current owner of the subject property is Lazy Hollow Partners, who has owned the property since July 1989. We are not aware of any transfers of ownership within the three-year period prior to the effective date of value. It is our understanding that the subject property is not being listed for sale and we are not aware of any contracts of sale pending as of the date this report was prepared.

*Purpose and Scope of the Appraisal*		The purpose of the appraisal is to estimate the market value of the subject property as of the date of value. It is the intent of the appraisers that the analysis, opinions and conclusions of this report be considered an unbiased, objective investigation performed by a disinterested third party with complete objectivity as to the outcome of the analysis.

		According to the Appraisal Institute’s Code of Professional Ethics and Uniform Standards of Professional Appraisal Practice, the scope of the appraisal is cited as “the extent of the process of collecting, confirming, and reporting data” included in an appraisal report. All appropriate data deemed pertinent to the solution of the appraisal problem has been collected and confirmed. In our appraisal of the subject property, we have:

		1. KTR previously inspected the subject property in March 2011. The scope of work of this appraisal did not include a physical inspection of the subject property.

		2. Reviewed demographic and other socioeconomic trends pertaining to the city and region.

		3. Examined regional apartment market conditions, with special emphasis on the subject property’s apartment submarket.

		4. Investigated lease and sale transactions involving comparable properties in the influencing market.

		5. Reviewed the existing rent roll and discussed the leasing status with the building manager and leasing agent. In addition, we have reviewed the subject property’s recent operating history and those of competing properties.

		6. Utilized appropriate appraisal methodology to derive estimates of value.

		7. Reconciled the estimates of value into a single value conclusion.

KTR Real Estate Advisors, LLC


Lazy Hollow Apartments		June 3, 2011
Columbia, MD		Page 3


*Definition of Market Value*		The definition of Market Value used in this appraisal report is taken from the Appraisal Institute’s The Dictionary of Real Estate Appraisal, Fifth Edition, Chicago, Illinois, Appraisal Institute, 2010, which states:

		“The most probable price that a property should bring in a competitive and open market under all conditions requisite to a fair sales, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby:

		1. Buyer and seller are typically motivated;

		2. Both parties are well informed or well advised, and acting in what they consider their best interests;

		3. A reasonable time is allowed for exposure in the open market;

		4. Payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto; and

		5. The price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale.”

*Property Rights Appraised*		The interest being appraised is the Leased Fee Interest. Leased Fee Interest is defined in The Dictionary of Real Estate Appraisal, Fifth Edition, Chicago, Illinois, Appraisal Institute, 2010, as:

		An ownership interest where the possessory interest has been granted to another party by creation of a contractual landlord tenant relationship, i.e. a lease. The rights of the lessor (the leased fee owner) and the leased fee are specified by contract terms contained within the lease.

*Intended Use and*
*Intended User*		The intended user of this report is Angeles Realty Corporation II. It is understood that this appraisal will be utilized by the intended user as an aid in asset evaluation and financial reporting. All others reading or relying on this appraisal report are considered unintended users of this appraisal. The appraisal cannot be used for any other reason than that stated above. The appraisers are not responsible for unauthorized use of this report.

		This appraisal has been prepared in compliance with the Uniform Standards of Professional Appraisal Practice (USPAP) as promulgated by the Appraisal Standards Board of the Appraisal Foundation as well as the Code of Professional Ethics and Standards of Professional Appraisal Practice of the Appraisal Institute. The presentation of data and results of our analysis are presented in a Self-contained Report format as set forth under Standards Rule 2-2 of the USPAP.

KTR Real Estate Advisors, LLC


Lazy Hollow Apartments		June 3, 2011
Columbia, MD		Page 4


*Exposure Time*		According to the previously stated definition of Market Value, the property must be allowed a reasonable time to be exposed in the open market to achieve the appraised value. Exposure is defined by the Appraisal Institute, The Dictionary of Real Estate Appraisal, Fifth Edition, Chicago, Illinois, Appraisal Institute, 2010, as:

		“ 1.The time a property remains on the market.

		2.The estimated length of time the property interest being appraised would have been offered on the market prior to the hypothetical consummation of a sale at market value on the effective date of the appraisal; a retrospective estimate based upon an analysis of past events assuming a competitive and open market.”

		Exposure time is always presumed to occur prior to the effective date of the appraisal. The overall concept of reasonable exposure encompasses not only adequate, sufficient and reasonable time but also adequate, sufficient and reasonable effort. Exposure time is different for various types of real estate and value ranges and under various market conditions.

		Review of transfer records suggests that there is an active investor market for good quality apartment properties; however, conventional sources of capital is somewhat limited and mortgage underwriting has remained conservative with a greater level of equity required to obtain financing in comparison to the period leading up to September 2008. These factors have impacted sales activity for most types of investment grade real estate.

		We believe that if the subject property were exposed to the market for a reasonable period of time prior to the effective date of this appraisal, which we consider to be a period of up to 12 months, the subject property would transfer at an appropriate price, that is to say, the appraised value. Support for this exposure period is provided by the PwC Real Estate Investor Survey First Quarter 2011, which indicates that marketing times for apartment properties in the national market range from none to 18 months. The average marketing time equates to 6.00 months, down from 8.06 months reported one year ago. This marketing period is supported by data in the local market.

		We acknowledge that in appraising the property to sell after the aforementioned exposure period, we must place most emphasis on the buyer’s expectations and yield requirements. The value conclusion rendered for the property through implementation of the Income Capitalization Approach has been accorded most significance as this technique most closely emulates buyer’s expectations and yield requirements. The market value estimate concluded herein assumes an exposure and marketing period of up to 12 months has occurred.

KTR Real Estate Advisors, LLC


Lazy Hollow Apartments		June 3, 2011
Columbia, MD		Page 5


		REGIONAL ANALYSIS

*Overview*		The subject property is located in the community of Columbia, Howard County within the Baltimore MSA. The Baltimore MSA is comprised of six counties and one city. The six counties are Anne Arundel County, Baltimore County, Carroll County, Harford County, Howard County and Queen Anne County and the city is the City of Baltimore.

*Transportation*		The highway system in Baltimore centers on the Beltway, a system of interstate expressways that encircles the City. I-695 is the major component of the Beltway, which also junctions with I-95, I-795, I-895, I-70 and I-83. These interstate roadway systems connects communities within the surrounding suburban counties.

		The metropolitan region is served by three Airports: Baltimore Washington International (BWI), Ronald Reagan International (formerly National Airport) and Dulles International Airport. The three airports are ranked among the top thirty in the United States, measured by enplaned passengers. BWI has fifteen major carriers that provide more than 314 non-stop flights to 79 cities in the U.S. and Canada. Public transportation also serves metropolitan Baltimore, including buses and the Metro (subway).

*Population*		The 2010 population of the Baltimore MSA and its components was estimated by DemographicsNow to be 2,673,904; an increase of 4.7 percent over the 2000 census. All of the counties within the MSA had positive population growth from 2000 to 2010, while the City of Baltimore has seen a population decrease since 2000. With the exception of the City of Baltimore, this trend is expected to continue through 2015.

		The City of Baltimore and the Maryland counties within the Baltimore MSA are detailed as follows:

BALTIMORE MSA POPULATION TRENDS


							2010-2015
County	2000		2010		2015*		% Change

Baltimore City		651,154		633,901		623,925		-1.57	%
Baltimore County		754,292		785,911		786,769		0.11	%
Anne Arundel		489,656		515,595		524,889		1.80	%
Carroll		150,897		170,229		173,127		1.70	%
Harford		218,590		241,214		244,053		1.18	%
Howard		247,842		279,011		292,351		4.78	%
Queen Anne’s		40,563		48,043		51,209		6.59	%

Total		2,552,994		2,673,904		2,696,323		0.84	%


Source: DemographicsNow.com, *projection


*Economy*		According to the U.S. Bureau of Labor Statistics, the MSA’s total non-farm labor force was 1,275,000 in April 2011, which decreased by 1.36% from the previous month and 0.40% from the previous year. The preliminary unemployment rate for the Baltimore-Towson MSA was 7.0 percent (not seasonally adjusted). The comparable state unemployment

KTR Real Estate Advisors, LLC


Lazy Hollow Apartments		June 3, 2011
Columbia, MD		Page 6


		rate for April 2010 was 6.6 percent and the national unemployment rate was 8.7 percent. The following table illustrates the diversification of the Baltimore-Towson MSA workforce. The Trade, Transportation and Utilities and the Educational and Health Services and Total Government sectors represent 55.0 percent of the total non-farm employment.

BALTIMORE-TOWSON MSA
WORKFORCE BY INDUSTRY (NON-FARM)


					Monthly			12-Month
Sector	April 2011		March 2010		Change			% Change

Total Nonfarm		1,275,000		1,257,900		1.36	%		-0.40	%
Mining, Logging and Construction		67,200		64,600		4.02	%		-1.20	%
Manufacturing		62,100		60,800		2.14	%		0.30	%
Trade, Transportation, & Utilities		223,000		221,000		0.90	%		-0.80	%
Information		20,800		20,900		-0.48	%		-8.00	%
Financial Activities		71,400		71,200		0.28	%		-2.30	%
Professional and Business Services		187,700		184,800		1.57	%		1.80	%
Educational and Health Services		243,400		242,200		0.50	%		1.50	%
Leisure and Hospitality		113,100		106,500		6.20	%		0.90	%
Other Services		56,300		55,200		1.99	%		1.30	%
Total Government		230,100		230,700		-0.26	%		-3.20	%


Source; US Department of Labor Statistics


*Conclusion*		The national and Mid-Atlantic economy remains fixed in the midst of a recession which began in 2008. Significant job losses have resulted in a national unemployment rate over 9%. Real estate values took a significant hit in the Fourth Quarter of 2008 and remaining mired in this state until 2010. Recent improvements in several sectors of the market, including multi-family housing, have resulted in investor optimism.

		With regard to the current state of the national economy, the April 13, 2011 edition of the Federal Reserve Beige Book reported the following:

		“Reports from the twelve Federal Reserve Districts indicated that economic activity generally continued to improve since the last report. While many Districts described the improvements as only moderate, most Districts stated that gains were widespread across sectors. Manufacturing continued to lead, with virtually every District citing examples of steady improvement, often with reports of increased hiring. Business services, including freight-related activities, improved in most Districts. Loan demand was either unchanged or up slightly in most Districts. Residential and commercial real estate performance varied across Districts. Seven of the Districts described commercial real estate as slightly improved, while five noted that their markets were flat. While most Districts noted little change in their residential real estate markets, half of the Districts cited at least pockets of weakening.”

		Based on these conditions, the investor market remains cautiously optimistic about some segments of the real estate market. Declining

KTR Real Estate Advisors, LLC


Lazy Hollow Apartments		June 3, 2011
Columbia, MD		Page 8


		NEIGHBORHOOD ANALYSIS

*Overview*		The subject property is located in the village of Long Reach in the community of Columbia in Howard County, Maryland. Columbia is located 21 miles southeast of Baltimore City and 28 miles northwest of Washington D.C. Columbia is a planned community that is the most populous place in Maryland. The community consists of ten self- contained villages. Creator and developer James W. Rouse saw the new community in terms of human values, not just in terms of economics and engineering, but with the idea that a city could enhance its residents’ quality of life. Columbia was designed to eliminate the inconveniences of then-current subdivision design, but equally or more importantly it was designed with the ideas of eliminating racial, religious, and income segregation. Columbia opened in 1967.

*Population*		The population in Columbia increased by 7.08 percent from the 2000 population of 88,079 to the 2010 estimate of 94,788. There is a projected decrease between 2010 and 2015 of 0.76 percent to 94,072 people. The following table illustrates the population statistics for Columbia, Howard County and the state of Maryland from 2000 through 2015.

HISTORICAL POPULATION AND PROJECTIONS


	2000		2010		2015		% Change			% Change
	Census		Estimate		Projection		2000-2010			2010-2015

Columbia		88,079		94,788		94,072		7.08	%		-0.76	%
Howard County		247,842		279,011		292,351		11.17	%		4.56	%
Maryland		5,296,486		5,657,102		5,735,449		6.37	%		1.37	%


Source: DemographicsNow


*Household Income*		The Average Household Income in Columbia increased by 28.98 percent from the 2000 level of $83,833 to the 2010 estimate of $118,049. There is a projected increase between 2010 and 2015 of 10.07 percent to $129,940. The Median Household Income in Columbia increased by 23.75 percent from the 2000 level of $71,487 to the 2010 estimate of $93,748. There is a projected increase between 2010 and 2015 of 10.64 percent to $103,719. The following table illustrates the household income statistics for Columbia from 2000 through 2015.

COLUMBIA HISTORICAL HOUSEHOLD INCOME AND PROJECTIONS


	2000		2010		2015		% Change			% Change
	Census		Estimate		Projection		2000-2010			2010-2015

Average HH Income	$	83,833	$	118,049	$	129,940		28.98	%		10.07	%
Median HH Income	$	71,487	$	93,748	$	103,719		23.75	%		10.64	%
Per Capita Income	$	32,499	$	46,745	$	52,208		30.48	%		11.69	%


Source: DemographicsNow

KTR Real Estate Advisors, LLC


Lazy Hollow Apartments		June 3, 2011
Columbia, MD		Page 9


*Access*		Columbia is located approximately three miles west of I-95, 21 miles southeast of Baltimore City and 28 miles northwest of Washington D.C. I-95 provides access to the Baltimore Beltway (I-695) and the Washington Beltway (I-495). Major roads running east/west through Columbia are Route 100, Route 175 and Route 32. Roadways throughout the area are well established.

		Six Howard Transit bus routes services Columbia with transportation throughout neighboring areas including BWI Airport. The Maryland Transit Administration (MTA) provides bus access to and from both Washington D.C. and Baltimore. There are no rail stations within Columbia, although the Dorsey MARC Train station is served by Howard Transit buses and the MTA bus service connects Columbia to the Washington Metro system.

*Adjacent Land Uses*		Surrounding improvements to the subject consist primarily of multifamily apartments, condominiums and townhomes as well as retail.

*Conclusion*		The subject property is situated in the community of Columbia. It is proximate to offices, residential areas and various retail services. Columbia is located 21 miles southeast of Baltimore City and 28 miles northwest of Washington D.C. and is the most populous place in Maryland. The current outlook for the area is stable.

KTR Real Estate Advisors, LLC


Lazy Hollow Apartments		June 3, 2011
Columbia, MD		Page 10


		SITE ANALYSIS

*Location*		At the foot of Cloudleap Court in the Village of Long Reach in the community of Columbia in Howard County, Maryland. The physical address of the property is 8786 Cloudleap Court.

*Site Area*		9.53 acres, which equates to 415,127 square feet.

*Street Frontage*		The subject has frontage on Cloudleap Court.

*Topography*		The site is level throughout.

*Shape*		The parcel is irregular in shape.

*Excess/Surplus Land*		Traffic circulation throughout the property and an adequate number of parking spaces is provided on concrete paved drives and surface lots. The building setbacks allow for landscaped buffers, similar to surrounding properties. There does not appear to be excess or surplus land.

*Utilities*		All customary municipal services and utility hookups are provided.

*Soil Information*		No adverse conditions were readily apparent.

*Flood Information*		The subject property is situated in Flood Zone “C”, which is an area of minimal flooding, according to the FEMA Map 2400440034B, dated December 4, 1986.

*Easements and Encroachments*		No title report or survey showing the location of easements was provided in connection with this assignment. Thus, it is not possible to make a definitive conclusion regarding any potential impacts on value of the location of any such easements or encroachments. Visual observations of the site revealed no adverse easements or encroachments. It appears as though the site is encumbered by utility and access easements typical of a developed site. It is specifically assumed that any easements, restrictions or encroachments that might appear against the title would have no adverse impact on marketability or value.

*Environmental*		No readily observable adverse environmental site conditions were noted. No environmental reports were provided for review.

*Accessibility/Visibility*		Ingress and egress to the property is via the Cloudleap Court, which extends southerly off of Tamar Drive. Accessibility of the site is good.

*Improvements*		A 178-unit garden apartment complex completed in 1979 with 13 apartment buildings. Aside from laundry rooms and landscaping, the property offers no special amenities. The property is operating at stabilized occupancy and is in good physical condition.

*Conclusions*		The physical attributes of the site are well suited for the existing development and use.

KTR Real Estate Advisors, LLC


Lazy Hollow Apartments Columbia, MD		June 3, 2011 Page 13

IMPROVEMENT ANALYSIS


*Year Built/Renovated*		The facility was completed in 1979 as a garden-style apartment complex. Units and buildings have been updated as needed. There has been no major renovation to the complex since construction.

*Layout & Configuration*		The complex consists of (13) 3-story garden apartment buildings containing 178 apartment units with a rentable area of 175,722 square feet. The buildings are sited along internal drives that are integrated with the parking lots.

*Leasable Area/Unit Mix*		The following chart summarizes the unit mix and sizes of the various floor plans at the subject property as indicated by a review of client provided rent roll data and floor plans.

UNIT MIX AND FLOOR AREAS


Type	Mix		Size		Total Area

1 Bed/1 Bath		29		810		23,490
1 Bed/1 Bath/Den		15		858		12,870
1 Bed/1 Bath/Den		4		885		3,540
2 Bed/1 Bath		40		978		39,120
2 Bed/1 Bath/Den		8		1,069		8,552
2 Bed/2 Bath		40		1,009		40,360
2 Bed/2 Bath/Den		22		1,085		23,870
3 Bed/2 Bath		20		1,196		23,920

Totals/Averages		178		987		175,722


Source: Client provided rent roll data and floor plans; Compiled by KTR.


*Floor Plans*		As indicated, the property offers a variety of one-, two- and three- bedroom floor plans. Each floor plan provides a living room off a small entry foyer and dining room off the kitchen area. Washer and dryers are provided in all of the units. In addition each unit has a private balcony.

EXTERIOR *Structure*		The foundations consist of reinforced concrete slabs, poured on grade. Load bearing masonry with steel framing lightweight supporting concrete floors with interior gypsum-clad drywall.

*Floors*		The floors in the common area open breezeways are Corey tile. Exterior stairwells are steel with concrete floors. The ceiling heights are approximately eight to 10 feet.

*Walls*		The exterior of the buildings is brick.

*Windows*		Individual unit windows are double pane glass set in aluminum frames. Entry doors are metal set in wood frames. Sliding glass doors provide access to the balconies.

*Roof*		The buildings have a gable roof with composition shingles.

KTR Real Estate Advisors, LLC


Lazy Hollow Apartments		June 3, 2011
Columbia, MD		Page 14


INTERIOR FINISHES *Walls and Ceilings*		Textured and painted drywall.

*Flooring*		Floors in the units contain wall-to-wall carpet with tiles in the kitchen and bathrooms.

*Kitchens*		Typical appliance package consisting of a refrigerator/freezer, full-size electric range with oven and dishwasher. Cabinets are either wood or almond Formica cabinets with oak grooves. Countertops are wood or laminate.

*Bathrooms*		Shower/tub, toilet, vanity with sink and mirrored medicine cabinet. Tubs have a ceramic tile wainscoting.

*Unit Amenities*		The units have washer/dryers and private balconies.

MECHANICAL SYSTEMS *HVAC*		Air and heat is provided by individual split systems with exterior condensers. The system is similar to competing properties.

*Electric Service*		Adequate electric service is provided.

*Plumbing*		Apartment-grade plumbing systems are installed. Each building is serviced by an 80 gallon water heater.

*Fire Protection*		The subject property is not equipped with a fire sprinkler system. The apartments are fit with smoke detectors.

ANCILLARY AREAS *Landscaping*		Landscaping of native trees and shrubs are plentiful throughout the common areas and between buildings. Sidewalks connect the buildings.

*Parking*		The internal drive incorporates the surface parking lots. There are an adequate number of parking spaces provided. The drives and parking lots are concrete paved.

*Recreational Amenities*		There are no significant property amenities other than landscaping.

FF&E Personal Property		The subject property has office furnishings and equipment for the staff. The FF&E are similar to competitive properties.

KTR Real Estate Advisors, LLC


Lazy Hollow Apartments		June 3, 2011
Columbia, MD		Page 15


CONDITION/MAINTENANCE *Exterior*		Good condition. Overall maintenance appears adequate.

*Roof*		Good condition.

*Interiors*		Good condition. Overall maintenance appears adequate.

*Common Area Amenities*		Good condition. Overall maintenance appears adequate.

*Sidewalks & Paving*		Good condition. Overall maintenance appears adequate.

*Landscaping*		Good condition. Overall maintenance appears adequate.

*Environmental Conditions*		No readily observable adverse conditions were noted during the site visit.

ELEMENTS OF DEPRECIATION		Based on our field inspection, we note that some elements of depreciation are present at the subject property.

*Physical Deterioration*		The overall physical condition is good with adequate maintenance levels. Physical deterioration is primarily limited to general aging and normal wear and tear. No material elements of deferred maintenance were noted during the appraiser’s inspection of the property. Carpet and mechanical equipment in the individual units are updated and/or replaced on an as- needed basis. According to Marshall Valuation Service, buildings similar to the subject property have an economic life of approximately 50 years. The actual age of the property is 32 years. As a result of on-going maintenance, the effective age is estimated to be less than the actual age of the improvements. The effective age is estimated at 15 years.

*Capital Improvements*		No major capital improvements are planned in the near term.

*Functional Obsolescence*		The subject property’s design, systems and floor plans are consistent with traditional garden style apartment complexes. The property has operated at rental rates and occupancy levels that are consistent with that of other similar properties within the influencing market, attesting to its functional adequacy and market acceptance. Considering these factors, no adjustment for functional obsolescence is required.

*External Obsolescence*		External obsolescence is a loss in value resulting from conditions that are present outside the subject property and is usually incurable. No site- specific external obsolescence was noted.

*Conclusions*		The subject improvements have adequate functional utility, conform well to the general character of the neighborhood and are generally similar to competitors.

KTR Real Estate Advisors, LLC


Lazy Hollow Apartments		June 3, 2011
Columbia, MD		Page 16


		ZONING ANALYSIS

*Introduction*		According to the current Howard County zoning map, the subject property is situated in an NT (New Town) District which is identified as an unincorporated city, town or village. NT Districts are planned districts and before development can begin Final Development Plans must be approved by the Planning Board. The county zoning regulations provide general guidelines for NT Districts; however, the Board can, and frequently does, override the general guidelines. There are currently 226 NT Districts, each with their own Final Development Plan.

*NT Zoning Regulations*		Howard County Zoning Regulations dated August 2007 and updated April 6, 2010, state that NT Districts are designated and planned as an economically and culturally self-sufficient community and must contain at least 20,000 inhabitants and comprise a total area of at least 2,500 contiguous acres. Apartments may constitute no more than 13% of the total area of the district. As per the Zoning Regulations, NT District must provide each of the following uses in the following proportions:

NEW TOWN DISTRICT LAND AREA
DISTRIBUTION


	(1) Minimum			(2) Maximum
	Percentage of			Percentage of
	Total Area of the			Total Area of the
	District			District

Open Space Uses		36	%		N/A
Single Family — Low Density		10	%		N/A
Single Family — Medium Density		20	%		N/A
Apartments		N/A			13	%
Commercial (POR, B-1, B-2 and SC uses)		2	%		10	%
Industrial Uses (M-1 uses)		10	%		20	%
Other uses presently permitted in any zoning district other than those permitted only in RMH or M-2 Districts		N/A			15	%


Source: Howard County Zoning Regulations, August 2007; updated April 6, 2010.


		Setbacks and height restrictions for NT Districts are not defined in Howard County Zoning Regulations. These restrictions are designated within the Final Development Plans for each individual NT District.

*Density*		Howard County Zoning Regulations state the following with regard to apartment unit density:

		“In areas designated “Apartments” on the Final Development Plan the maximum number of apartments permitted shall relate to the overall total number of apartments in all areas so designated within the NT District and shall be calculated by multiplying the number of acres within all areas so designated by 15.”

		The Howard County Department of Zoning and Planning confirmed what the above states; that the maximum density of 15 units per acre can not be analyzed with consideration of a single site alone, but must be

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Lazy Hollow Apartments		June 3, 2011
Columbia, MD		Page 17


		calculated with consideration to the aggregate of all site acreage designated as “Apartments” within an NT District. As such, a density specific to the subject property can not be fully evaluated. It should be noted, however, that the subject property s built to a density of 18.7 units per acre, in excess of this guideline. As such, it is uncertain whether or not the subject property could be rebuilt to its existing density under current zoning.

*Parking Requirements*		Parking requirements for apartments in NT Districts is (2) spaces per dwelling unit. The subject property contains 178 units. Thus, a minimum number of 356 parking spaces are required. The subject contains 298 parking spaces. However, the number of parking spaces is ultimately determined by the Final Development Plan specific to each NT District.

*Conclusions*		The subject is located in a NT (New Town) zoning district. Each NT District has their own Final Development Plan which must be approved by the Howard County Planning Board prior to development. Final Development Plans supersede any established zoning regulations. As the subject property was constructed in 1979 and is located in an NT District, it predates the current zoning and is assumed to represent a legal and conforming use with a legal and non-complying density and parking. Any non-compliance is assumed to be legal based on “grandfathered” status.

KTR Real Estate Advisors, LLC


Lazy Hollow Apartments		June 3, 2011
Columbia, MD		Page 19


		REAL ESTATE ASSESSMENTS AND TAXES

*Overview*		According to the Howard County tax record, the subject property is identified as Parcel Number 16-101087. The fiscal tax year in Howard County is from July 1 to June 30. Reassessments occur every three years. The reassessed values are phased in over three tax years, applying one-third of the increase (or decrease) value each year. In 2006 the subject was assessed at $11,594,500 and in 2009 it was assessed at $14,218,700, an increase of $2,624,200. Thus, for the tax years 2009/10, 2010/11 and 2011/12 the assessed value has, and will, increase $874,733 per year ($2,624,200 ÷ 3). The subject’s next assessment will be in 2012 for the 2012/13 tax year. The subject’s assessments are shown below as well as the tax liability and projected 2011/12 tax liability.

SUBJECT REAL ESTATE ASSESSMENTS


Tax Year	Assessment		Tax Rate		Tax Liability

2009/10	$	12,469,233		0.013415	$	167,274.76
2010/11	$	13,343,966		0.013415	$	179,009.30
2011/12	$	14,218,700		0.013415	$	190,743.86


Source: Maryland Department of Assessments and Taxation; Compiled by KTR.


		In addition to State and County tax, the subject has a “Columbia Association” town tax liability. The fiscal tax year in Columbia Association tax is from July 1 to June 30. The town taxes are based on 50 percent of the assessed value determined by the County. Regardless of the phase-in of assessed value, The Columbia Association has a 2.5% cap on the net value. Therefore, the net value for the 2011/12 tax year will be $11,014,924. The below table illustrates the town taxes for the subject property for the 2010/11 tax year and the projected tax for the 2011/12 tax year.

COLUMBIA ASSOCIATION TAX


								Assessable			CA Assessed
Tax Year	Assessment	Phase-in		2.5% Cap		Net Value		%			Value		Tax Rate		Tax Liability

2010/11	$14,218,700		- $874,734		- 2,597,698	$	10,746,268		50	%	$	5,373,134		0.006800	$	36,537.31
2011/12						$	11,014,924		50	%	$	5,507,462		0.006800	$	37,450.74


*Comparable Assessments*		Similar multi-family properties within the subject’s immediate area were surveyed to ascertain the reasonableness of the subject’s current assessment. The subject’s current assessed value is $79,880 per unit. The comparables range between $52,459 and $114,756 per unit, averaging $90,173 per unit. The subject’s assessment falls within the comparable range. In general, the newer properties in the survey are assessed at a higher price per unit. The subject is one of the older properties in the survey and, consequently, is assessed towards the lower end of the range. As such, the subject’s assessed value appears reasonable and has been processed.

KTR Real Estate Advisors, LLC


Lazy Hollow Apartments		June 3, 2011
Columbia, MD		Page 20

TAX COMPARABLES


				Taxable		Year		Assessed		Assessment
Property Name	Address	Tax ID		Value		Built		Units		Per Unit

Subject Property	8782 Cloudleap Court		16-101087	$	14,218,700		1979		178	$	79,880
Hickory Ridge Apartments	10799 Hickory Ridge Road		15-055472	$	5,665,600		1979		108	$	52,459
Clary’s Crossing	11311 Little Patuxent Parkway		15-067454	$	17,420,800		1984		198	$	87,984
Columbia Commons	7601 Murray Hill Road		16-197904	$	19,654,900		1985		200	$	98,275
Avalon Columbia	5320 Cedar Lane		15-089016	$	17,174,700		1990		170	$	101,028
Avalon Cedar Place	5458 Harpers Farm Road		15-028904	$	13,500,000		1971		156	$	86,538
Avalon at Symphony Woods	10200 Hickory Ridge Road		15-079657	$	20,197,000		1986		176	$	114,756

								Average		$	90,173


*Tax Rate*		The tax rate in Howard County for the 2009/10 and 2010/11 tax years has remained the same, that of 1.3415%. The tax rate for the 2008/09 tax year was slightly higher, that of 1.3554%. The tax rate for the 2011/12 tax year will be published in June 2011 and, as such, the 2010/11 tax rate has been processed for the 2011/12 tax year in the analysis. Likewise, the Columbia Association tax for the 2011/12 tax year will not be published until July 2011 and, as such, the 2010/11 tax rate has been applied in projecting 2011/12 Columbia Association taxes.

*Real Estate Tax Projection*		Future increases in reassessments are expected to reflect annual increases near the anticipated inflation rate during the same period. Tax rates are expected to remain relatively stable. The total amount is anticipated to increase at a rate near the long-term average inflation rate

*Tax Calculation*		The subject’s real estate tax liability over the next 12 months is calculated by applying the 2010/11 taxes from March through June 2011 and the 2011/12 taxes from July 2011 through February 2012; equating to a total tax liability for the appraised fiscal year of $223,979.

		The subject’s tax liability is illustrated in the table below.


Lazy Hollow Apartments		June 3, 2011
Columbia, MD		Page 21


		APARTMENT MARKET ANALYSIS

*Area Housing Market*		According to REIS, the subject is located in the Suburban Maryland market. The immediate area is comprised of garden style apartment complexes and retail. REIS indicates that as of the Third Quarter 2010, the most recent data available, the vacancy rate in the submarket was 5.4 percent, lower than the previous year vacancy rate of 6.9 percent. The average asking rental rate was $1,234 a month.

*Subject Property*		The subject units have average sizes and finishes consistent with that of the market. According to the subject property’s June 2, 2011 Unit Status Report, the subject’s current contract rents average $1,232.86 per month. There are three one-bedroom apartment floor plans, which have average rents of $1,033.37, $1,180.51 and $1,221.73 per month; four two- bedroom floor plans which have average rents of $1,203.48, $1,270.96, 1,282.85 and $1,308.63 per month; and one three-bedroom floor plan with an average rent of $1,427.50 per month.

		Per the June 2, 2011 Unit Status Report, there were six units reported to be vacant. The asking rents for the one-bedroom units range between $1,116 and $1,256 per month; the two-bedroom units range between $1,343 and $1,414 per month and the three bedroom units average $1,533 per month.

*Competitive Set*		In order to determine the reasonableness of the subject’s asking rents, a survey of comparable apartment complexes in the market was conducted. The subject competes with a number of properties in the area. All of the properties are in close proximity of the subject and define the range of property, unit types and rental rates available in the market. The information regarding the rent comparables was obtained through physical inspections and direct interviews of rental agents and property managers. The following map illustrates the location of the comparable properties in relation to the subject. Data sheets summarizing details of the comparable properties follow the map.

KTR Real Estate Advisors, LLC


Lazy Hollow Apartments		June 3, 2011
Columbia, MD		Page 23


COMPARABLE RENTAL 1		Columbia Landing
		8905 Tamar Drive
		Columbia, MD 21045



*Units*		300

*Year Built*		1977

*Occupancy*		97%

*Unit Amenities*		Newly renovated apartments, washer/dryer in units, fully-equipped modern kitchen, private balcony/terrace and large floor plans.

*Property Amenities*		Playgrounds and hiking trails, high-speed internet/cable available.

*Concessions*		Free rent for first month on one-bedroom units.

RENTAL DATA


Type	Size	Rent	Rent/SF

1 Bed/1 Bath	899-950	$1,085- $1,130	$1.19- $1.21
2 Bed/1 Bath	1,050	$1,230- $1,275	$1.17- $1.21


*Comments*		This property is located approximately 0.5 miles north of the subject property. This comparable’s location is close to retail, services as well as access to major roadways in the area. The amenities are directly comparable to the subject.

KTR Real Estate Advisors, LLC


Lazy Hollow Apartments		June 3, 2011
Columbia, MD		Page 24


COMPARABLE RENTAL 2		The Berkshires
		5361 Brook Way Road
		Columbia, MD 21044



*Units*		250

*Year Built*		1980

*Occupancy*		100%

*Amenities*		Central air, full size washer/dryer in units, thermal low E windows, private patio or balcony, walk in closets, ceiling fans, cable and satellite accessibility, chef’s eat in kitchens with granite counters, maple cabinets, dishwasher and garbage disposal.

*Property Amenities*		Children’s playground, community gas grill/BBQ area, lush professional landscaping and courtyard.

*Concessions*		There are currently no concessions being offered at this comparable.

RENTAL DATA


Type	Size*		Rent	Rent/SF

1 Bed/1 Bath		725	$1,244-$1,413	$1.72-$1.95
2 Bed/1 Bath		919	$1,500-$1,684	$1.63-$1.83
2 Bed/2 Bath		966	$1,522-$1,690	$1.58-$1.75
3 Bed/2 Bath		1,152	$1,781-$2,162	$1.55-$1.88


*		Closet space is not included in the calculation of square footage.


*Comments*		This comparable is located approximately 2.5 miles northeast of the subject property. This property is very close to the Columbia Mall, a large shopping center that contains several high profile restaurants, shops and a multiplex movie theatre. The mall has a considerable draw and is one of the focal points in the community. In the past three years each

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Lazy Hollow Apartments		June 3, 2011
Columbia, MD		Page 26


COMPARABLE RENTAL 3		The Verona at Oakland Mills
		9650 White Acre
		Columbia, MD 21045



*Units*		251

*Year Built*		1971

*Occupancy*		Unkown

*Amenities*		Renovated in 2008 with updated kitchens and bathrooms including new appliances and ceramic tile floors. Full-size washers and dryers in most apartments.

*Property Amenities*		Playground, laundry room.

*Concessions*		Prices change often and rents for individual floor plans are reduced as needed to help bolster occupancy.

RENTAL DATA


Type	Size		Rent		Rent/SF

1 Bed/1 Bath		591-743		$1,099- $1,315		$1.77- $1.86
2 Bed/1 Bath		740-975		$1,199- $1,365		$1.40- $1.62
2 Bed/2 Bath		975		$1,390		$1.43
3 Bed/2 Bath		1,171		$1,699		$1.45


*Comments*		This property is located approximately 1.5 miles west of the subject property. This comparable’s location is close to retail, services as well as access to major roadways in the area. The amenities are directly comparable to the subject.

KTR Real Estate Advisors, LLC


Lazy Hollow Apartments		June 3, 2011
Columbia, MD		Page 27


COMPARABLE RENTAL 4		Avalon Cedar Place
		5458 Harpers Farm Road
		Columbia, MD 21044



*Units*		156

*Year Built*		1971

*Occupancy*		Unkown

*Amenities*		Washer and dryer in units, newly renovated kitchens, balcony or patio, walk-in closets, spacious floor plans and high-speed Internet access.

*Property Amenities*		On-site playground and volleyball court, landscaped picnic area with barbecues.

*Concessions*		Prices change often and rents for individual floor plans are reduced as needed to help bolster occupancy. There are currently no concessions being offered at this comparable.

RENTAL DATA


Type	Size		Rent		Rent/SF

1 Bed/1 Bath		815		$1,185		$1.45
2 Bed/1.5 Bath		1,056		$1,360		$1.29
3 Bed/2 Bath		1,156		$1,390		$1.20


*Comments*		This property is located approximately 4 miles west of the subject property in the Harpers Choice neighborhood of Columbia. Harpers Choice is one of the original neighborhoods in the town of Columbia, as is the subject’s neighborhood of Long Reach. The locations are deemed comparable. The unit and property amenities of this comparable are also similar to the subject. As such, this property is considered directly comparable to the subject property.

KTR Real Estate Advisors, LLC


Lazy Hollow Apartments		June 3, 2011
Columbia, MD		Page 28


*ANALYSIS*		The comparable rental properties are all in the vicinity of the subject property. The comparable properties were constructed between 1977 and 1981. All properties are within 4 miles of the subject and the locations are considered comparable. Comparables No. 1, 3 and 4 have similar amenities to the subject, while Comparables No. 2 has superior amenities. The subject property and the comparable rental properties are illustrated in the tables below with consideration of unit sizes, monthly rents and monthly rents per square foot.

*One-Bedroom Units*		The subject property offers three variations of one-bedroom floor plans, ranging between 810 and 885 square feet. The average rental rates for the subject’s units range from $1,116 to $1,257 per month or $1.38 to $1.42 per square foot. The following chart outlines rental rates for similar sized one- bedroom floor plans within the competing apartment properties.

ONE-BEDROOM RENTAL COMPARABLES


No.	Unit Size (SF)		Rent/Month		Rent/SF		Comment

Subject		810	$	1,116	$	1.38	Subject
		858	$	1,158	$	1.35	Subject
		885	$	1,257	$	1.42	Subject

1 Columbia Landing		899-950	$	1,085- $1,130	$	1.19- $1.21	Similar

2 The Berkshires		725	$	1,244- $1,413	$	1.72- $1.95	Superior

3 The Verona at Oakland Mills		591-743	$	1,099- $1,315	$	1.77- $1.86	Similar

4 Avalon Cedar Place		815	$	1,185	$	1.45	Similar

Subject Range		810-885	$	1,116 -	$	1.38- $1.42
Comparable Range		725-950	$	1,085- $1,413	$	1.19- $1.95


		Comparable No. 1 is directly comparable to the subject. The one-bedroom units are slightly larger than the subject and, therefore, it is appropriate that the price per square foot is slightly lower. Comparable No. 2 is superior and the price per square foot exceeds that of the subject. Comparable No. 3 is similar to the subject and the unit sizes are smaller than the subject, it is appropriate that the price per square foot should exceed that of the subject’s larger units. Comparable No. 4 is directly comparable to the subject and the price per square foot is supportive of the subject’s asking rents. The subject’s asking rents are bracketed by the rents exhibited by competing properties in the area and have been processed.

KTR Real Estate Advisors, LLC


Lazy Hollow Apartments		June 3, 2011
Columbia, MD		Page 29


*Two-Bedroom Units*		The subject property offers four variations of two-bedroom unit floor plans which range from 978 to 1,085 square feet. The average rental rates for the subject’s units range from $1,344 to $1,414 per month or $1.30 to $1.37 per square foot. The following chart outlines rental rates for similar sized two- bedroom floor plans within the competing apartment properties.

TWO-BEDROOM RENTAL COMPARABLES


No.	Comparable Property	Unit Size (SF)		Rent/Month		Rent/SF		Comment

	Subject		978	$	1,344	$	1.37	Subject
			1,069	$	1,407	$	1.32	Subject
			1,009	$	1,365	$	1.35	Subject
			1,085	$	1,414	$	1.30	Subject

1	Columbia Landing		1,050	$	1,230- $1,275	$	1.17- $1.21	Similar

2	The Berkshires		919	$	1,500- $1,684	$	1.63- $1.83	Superior
			966	$	1,522- $1,690	$	1.58- $1.75	Superior

3	The Verona at Oakland Mills		740-975	$	1,199- $1,365	$	1.40- $1.62	Similar
			975	$	1,390	$	1.43	Similar

5	Avalon Cedar Place		1,056	$	1,360	$	1.29	Similar

	Subject Range		978-1,085	$	1,344- $1,414	$	0.30- $1.37
	Comparable Range		919-1,056	$	1,199- $1,690	$	1.17- $1.83


		Comparable No. 1 is directly comparable to the subject. The one-bedroom units are the approximate size of the subject’s larger units and the price per square foot is slightly below the subject’s asking price. Comparables No. 2 is superior and the price per square foot exceeds that of the subject. Comparable No. 3 and 4 are directly comparable to the subject and the price per square foot of these two comparables bracket that of the subject. The subject’s asking rents are bracketed by the rents exhibited by competing properties in the area and have been processed.

KTR Real Estate Advisors, LLC


Lazy Hollow Apartments		June 3, 2011
Columbia, MD		Page 30


*Three-Bedroom Units*		The subject property offers one three-bedroom floor plan, which is 1,196 square feet. The average rental rate for the subject’s three-bedroom units is $1,533 per month or $1.28 per square foot. The following chart outlines rental rates for similar sized two-bedroom floor plans within the competing apartment properties.

THREE-BEDROOM RENTAL COMPARABLES


No.	Comparable Property	Unit Size (SF)		Rent/Month		Rent/SF		Comment

	Subject		1,196	$	1,533	$	1.28	Subject

1	The Berkshires		1,152	$	1,781- $2,162	$	1.55- $1.88	Superior

2	The Verona at Oakland Mills		1,171	$	1,699	$	1.45	Similar

4	Avalon Cedar Place		1,156	$	1,390	$	1.20	Similar


	Subject Range		1,196	$	1,533	$	1.28
	Comparable Range		1,152-1,171	$	1,390- $2,162	$	1.20- $1.88


		Columbia Landing does not offer three-bedroom apartments and has been excluded from the three-bedroom unit analysis. Comparable No. 1 is superior to the subject and, as such, has the highest price per square foot of the three comparables. Comparables No. 2 and 3 are similar to the subject and the price per square foot of these two comparables bracket that of the subject. The comparables generally support the subject’s asking rent and has been processed.
*Conclusions*		The subject is expected to continue to capture its fair share of the market at the indicated economic rates. The subject’s potential gross potential rent is summarized in the following chart.

SUMMARY OF ECONOMIC RENT POTENTIAL


									Avg.
Type	Mix		Size		Total Area		Avg. Rent		Rent/SF		Total Rent

1 Bed/1 Bath		29		810		23,490	$	1,115	$	1.38	$	32,335
1 Bed/1 Bath/Den		15		858		12,870	$	1,160	$	1.35	$	17,400
1 Bed/1 Bath/Den		4		885		3,540	$	1,260	$	1.42	$	5,040
2 Bed/1 Bath		40		978		39,120	$	1,345	$	1.38	$	53,800
2 Bed/1 Bath/Den		8		1,069		8,552	$	1,410	$	1.32	$	11,280
2 Bed/2 Bath		40		1,009		40,360	$	1,365	$	1.35	$	54,600
2 Bed/2 Bath/Den		22		1,085		23,870	$	1,415	$	1.30	$	31,130
3 Bed/2 Bath		20		1,196		23,920	$	1,535	$	1.28	$	30,700

Totals/Averages		178		986		175,722	$	1,326	$	1.35	$	236,285

KTR Real Estate Advisors, LLC


Lazy Hollow Apartments		June 3, 2011
Columbia, MD		Page 31


		HIGHEST AND BEST USE

*Introduction*		Highest and Best Use is defined by the Appraisal Institute in The Dictionary of Real Estate Appraisal, Fifth Edition, Chicago, Illinois, Appraisal Institute, 2010, which states: That reasonably probable and legal use of vacant land or an improved property, which is physically possible, appropriately supported, financially feasible and that results in the highest value. The four criteria the highest and best use must meet are legal permissibility, physical possibility, financial feasibility and maximum productivity. There are typically two Highest and Best Use scenarios: the Highest and Best Use of the property as vacant and the Highest and Best Use of the site as if improved.

*HIGHEST AND BEST USE AS VACANT*

*Definition*		Highest and Best Use As Vacant is defined as “among all reasonable, alternative uses, the use that yields the highest present land value, after payments are made for labor, capital, and coordination. The use of a property based on the assumption that the parcel of land is vacant or can be made vacant by demolishing any improvements.” The site is zoned within the NT (New Town) District. NT Districts are designated and planned as an economically and culturally self-sufficient communities and must contain at least 20,000 inhabitants and comprise a total area of at least 2,500 contiguous acres. Before development can begin in an NT District, Final Development Plans must be approved by the Planning Board. As the subject site planned use was for multifamily in the final Development Plans the highest and best use of the property, if vacant, is residential development.

*HIGHEST AND BEST USE AS IMPROVED*

*Definition*		Highest and Best Use As Improved is defined as “the use that should be made of a property as it exists. An existing property should be renovated or retained as is so long as it continues to contribute to the total market value of the property, or until the return from a new improvement would more than offset the cost of demolishing the existing building and constructing a new one”. The subject represents a legal, conforming improvement relative to current zoning restrictions. It is uncertain whether it could be reconstructed to its existing density under current zoning. No redevelopment of the site would provide a greater return to the land. Based upon the fact that the potential income associated with the existing improvements provide a fair return to the land with residual income to the improvements, the highest and best use of the subject, as improved, is its current use.

KTR Real Estate Advisors, LLC


Lazy Hollow Apartments		June 3, 2011
Columbia, MD		Page 32


		VALUATION PROCESS

*Introduction*		There are three traditional approaches that can be employed in establishing the market value of the subject property. In practice, an approach to value is included or omitted based on the property type and the quality and quantity of information available in the marketplace. These approaches and their applicability to the valuation of the subject are summarized as follows.

*Income Approach*		The Income Capitalization Approach is based on the premise that value is derived by converting anticipated benefits into property value. Anticipated benefits include the present value of the net income and the present value of the net proceeds resulting from the re-sale of the property. There are two methods of accomplishing this: (1) direct capitalization of a single year’s income by an overall capitalization rate and; (2) the discounted cash flow in which the annual cash flows and reversionary value are discounted to a present value for the remainder of the property’s productive life or over a reasonable holding (ownership) period. The subject property has an adequate operations history to determine the income-producing capabilities over the near future. In addition, performance levels of competitive properties serve as an adequate check as to the reasonableness of the subject property’s actual performance. As such, the income capitalization approach is utilized in this appraisal.

*Sales Comparison*		The sales comparison approach is an estimate of value based upon a process of comparing recent sales of similar properties in the surrounding or competing areas to the subject property. Inherent in and central to this approach is the principle of substitution. This comparative process involves judgment as to the similarity of the subject property and the comparable sales with respect to many value factors such as location, contract rent levels, quality of construction, reputation and prestige, age and condition and the interest transferred, among others. The value estimated through this approach represents the probable price at which the subject property would be sold by a willing seller to a willing and knowledgeable buyer as of the date of value.

		The reliability of this technique is dependent upon the availability of comparable sales data, the verification of the sales data, the degree of comparability and extent of adjustment necessary for differences and the absence of atypical conditions affecting the individual sales prices. Although the volume of sales activity has decreased as a result of market conditions, research revealed adequate sales activity to form a reasonable estimation of value via this approach.

KTR Real Estate Advisors, LLC


Lazy Hollow Apartments		June 3, 2011
Columbia, MD		Page 33


*The Cost Approach*		The application of the cost approach is based on the principle of substitution. This principle may be stated as follows: no one is justified in paying more for a property than the cost to develop a substitute property of equivalent desirability and utility. In the case of a new building, no deficiencies in the building should exist. The Cost Approach is typically only a reliable indicator of value for (a) new properties; (b) special use properties; and (c) where the cost of reproducing the improvements is easily and accurately quantified and there is no external obsolescence. In all instances, the issue of an appropriate entrepreneurial profit - the reward for undertaking the risk of construction — remains a highly subjective factor.

		The subject property is a 178 garden apartment complex constructed in 1979. Due to the nature of the subject zoning, if is unclear if the subject could be constructed today. This factor impacts the reliability of the Cost Approach. Furthermore, typical investors in older, stabilized garden apartments do not give significant weight to the Cost Approach. Accordingly, the Cost Approach would lend little insight into the market value of the subject property and has been excluded.

*Reconciliation*		The final step in the appraisal process is to reconcile the various value indications into a single final estimate. Each approach is reviewed in order to determine its appropriateness relative to the subject. The accuracy of the data available and the quantity of evidence are weighted in each approach. The resulting estimate represents the subject property’s market value as defined in the appraisal.

KTR Real Estate Advisors, LLC


Lazy Hollow Apartments		June 3, 2011
Columbia, MD		Page 34


		INCOME CAPITALIZATION APPROACH

*Introduction*		The Income Capitalization Approach is based on the theory that value is the present worth of future benefits. The future benefits of ownership consist of the present worth of the net income which will accrue to the owner of the property, plus the present value of the net proceeds resulting from the eventual disposition of the property. The two most commonly used techniques of converting net income into value in the Income Capitalization Approach are Direct Capitalization and the Discounted Cash Flow Analysis. The Direct Capitalization method is considered most relevant and has been processed. Direct Capitalization is a method utilized to convert a single year’s estimate of net income (before debt service) into an indication of value by the use of an Overall Capitalization Rate.

*REVENUE ANALYSIS*
*Potential Gross Income*		As discussed in the Market Rent Analysis section of this report the potential gross income from the apartment unit rent is projected to be $236,285 per month or $2,835,420 for the appraised year.

*Loss to Lease*		Loss to lease considers a loss in income due to leases in effect, whereby effective rental rates are lower than asking, or market, rental rates. The operating statements under review indicate a historical loss to lease decreased from 2008 to 2010; that of 2.6%, 2.2% and 0.6%, respectively. The submitted April 28, 2011 rent roll indicated a loss to lease of approximately 3.5 percent. With consideration of the historic loss to lease and the projected market rent, a loss to lease of 2.5% has been processed.

*Concessions*		Concessions consist of reduced rent or free rent over a portion of the lease term. Concessions within the subject’s influencing area are often given, though many properties reported giving no concessions and others only minimal concessions. Property Operating Statements reported concessions of 1.2% for 2008, 1.5% for 2009 and 1.6% for 2010. Concessions were not included in the projected 2011 budget. As occupancy rates at the subject property have been increasing and have now reached 96.6%, the highest in three years, it can be expected that concessions will not increase over the 2009 and 2010 rate. It is therefore reasonable to process concessions at 1.5% for the appraised fiscal year.

*Vacancy/Credit Loss*		As of June 2, 2011, the subject has a reported occupancy rate of 96.6%. Property Operating Statements reported a vacancy loss of 5.5% for 2008, 4.8% for 2009 and 4.4% for 2010. The projected 2011 vacancy loss is 4.1%, which includes bad debt credit loss of $9,148 or 0.35% of the budgeted Gross Potential Rent. Occupancy levels for the competing properties in the influencing market area are outlined in the table to follow:

KTR Real Estate Advisors, LLC


Lazy Hollow Apartments		June 3, 2011
Columbia, MD		Page 35

OVERVIEW OF COMPETITIVE OCCUPANCY LEVELS


Name	Year Built		Total Units		Occupancy

Columbia Landing		1977		300		97	%
Tamar Meadows		1998		178		97	%

The Berkshires		1980		250		100	%


		The subject’s current high occupancy rate is supported by the high occupancy rates of competitive properties. The subject’s vacancy loss has been trending downward over the past few years and is projected to remain lower than that of 2008 and 2009. According to the PricewaterhouseCoopers Korpacz Real Estate Investor Survey, First Quarter 2011, the vacancy rate for the Suburban Maryland Apartment Market in 2010 was 4.9%. It is therefore a reasonable to assume that the subject should maintain this level into the foreseeable future. A stabilized vacancy and credit loss of 5.0 percent has been utilized in this appraisal.

*Administrative Units*		The subject property contains 178 apartment units; however, one apartment unit is used as a management office, typical for an apartment building such as the subject. This is Unit 8211, which is a two-bedroom apartment containing 978 square feet. In the Apartment Market Analysis it was determined that market value for this unit is $1,365 monthly or $ 16,380 annually. This amount has been deducted from the pro forma for administrative use.

*Other Income*		Typically, apartment projects receive additional revenue from sources such as vending, application fees, late fees, bad check charges and deposit forfeitures. The subject property’s other income includes trash, water and sewer and natural gas reimbursements. Other income receipts at the subject property were reported at $1,331, $1,432 and $1,485 per unit in 2008, 2009 and 2010. In 2011 this income is projected to be $1,461 per unit. As other income is based largely on occupancy, the budget appears reasonable and has been processed at the projected rate, that of $1,460 per unit (rounded).

*OPERATING EXPENSES*		In order to estimate expenses for the subject property, we have analyzed the subject’s operating expenses for 2008, 2009 and 2010 as well as the budget for 2011. These historical and budgeted amounts have been compared to the median dollar amount per unit reported by IREM for garden apartments in the Baltimore Metropolitan Area both in aggregate and for those constructed between 1965 and 1979. The subject’s operating statements under review have been reconstructed and summarized in the following table.

KTR Real Estate Advisors, LLC


Lazy Hollow Apartments		June 3, 2011
Columbia, MD		Page 36

RECONSTRUCTED OPERATING STATEMENTS


																																							2010 IREM
																																					2010 IREM		Median $/Unit
				178									178									178									178						Median $/Unit		1965-1979
No. of Units				2008									2009									2010									2011						Garden Apts.		Garden Apts.
Year	Actual			Per Unit			Percent			Actual			Per Unit			Percent			Actual			Per Unit			Percent			Budget			Per Unit			Percent			Baltimore MSA		Baltimore MSA

INCOME							% of GRP									% of GRP									% of GRP									% of GRP
Gross Rent Potential (Market Rent)	$	2,682,804		$	15,072					$	2,703,634		$	15,189					$	2,671,104		$	15,006					$	2,628,704		$	14,768

Loss to Lease	$	(70,557	)	$	(396	)		-2.6	%	$	(59,730	)	$	(336	)		-2.2	%	$	(14,927	)	$	(84	)		-0.6	%	$	0		$	0			0.0	%
Concessions	$	(31,468	)	$	(177	)		-1.2	%	$	(40,767	)	$	(229	)		-1.5	%	$	(41,476	)	$	(233	)		-1.6	%	$	0		$	0			0.0	%
Vacancy/Credit/Non-revenue Units	$	(146,284	)	$	(822	)		-5.5	%	$	(129,346	)	$	(727	)		-4.8	%	$	(117,701	)	$	(661	)		-4.4	%	$	(108,516	)	$	(610	)		-4.1	%

Net Rental Income (NRI)	$	2,434,495		$	13,677			90.7	%	$	2,473,791		$	13,898			91.5	%	$	2,497,000		$	14,028			93.5	%	$	2,520,188		$	14,158			95.9	%
Administrative Units	$	(31,736	)	$	(178	)		-1.2	%	$	(31,416	)	$	(176	)		-1.2	%	$	(16,097	)	$	(90	)		-0.6	%	$	0		$	0			0.0	%
Other Income	$	236,956		$	1,331			8.8	%	$	254,875		$	1,432			9.4	%	$	264,323		$	1,485			9.9	%	$	260,058		$	1,461			9.9	%

Total Property Income (EGI)	$	2,639,715		$	14,830			98.4	%	$	2,697,250		$	15,153			99.8	%	$	2,745,226		$	15,423			102.8	%	$	2,780,246		$	15,619			105.8	%
EXPENSES							% of EGI									% of EGI									% of EGI									% of EGI

Utilities	$	211,475		$	1,188			8.0	%	$	203,038		$	1,141			7.5	%	$	195,402		$	1,098			7.1	%	$	188,931		$	1,061			6.8	%	$	540	$	714
Maintenance & Repairs	$	141,896		$	797			5.4	%	$	132,952		$	747			4.9	%	$	173,844		$	977			6.3	%	$	132,183		$	743			4.8	%	$	889	$	622
Payroll	$	280,753		$	1,577			10.6	%	$	330,831		$	1,859			12.3	%	$	309,387		$	1,738			11.3	%	$	317,774		$	1,785			11.4	%	$	893	$	1,631
Marketing	$	26,529		$	149			1.0	%	$	52,483		$	295			1.9	%	$	49,817		$	280			1.8	%	$	38,280		$	215			1.4	%	$	0	$	0
Administration/Office	$	51,281		$	288			1.9	%	$	50, 551		$	284			1.9	%	$	81,701		$	459			3.0	%	$	90,282		$	507			3.2	%	$	894	$	355
Management Fee	$	129,907		$	730			4.9	%	$	131, 678		$	740			4.9	%	$	134,401		$	755			4.9	%	$	151,508		$	851			5.4	%	$	497	$	458
Insurance	$	38,077		$	214			1.4	%	$	41,789		$	235			1.5	%	$	44,968		$	253			1.6	%	$	46,553		$	262			1.7	%	$	222	$	233
Real Estate Taxes	$	186,990		$	1,051			7.1	%	$	196,812		$	1,106			7.3	%	$	208,579		$	1,172			7.6	%	$	229,461		$	1,289			8.3	%	$	982	$	1,015
Reserves	$	0		$	0			0.0	%	$	0		$	0			0.0	%	$	0		$	0			0.0	%	$	0		$	0			0.0	%	$	0	$	0

TOTAL EXPENSES	$	1,066,908		$	5,994			40.4	%	$	1,140,134		$	6,405			42.3	%	$	1,198,099		$	6,731			43.6	%	$	1,194,972		$	6,713			43.0	%	$	4,917	$	5,028

NET OPERATING INCOME	$	1,572,807		$	8,836			59.6	%	$	1,557,116		$	8,748			57.7	%	$	1,547,127		$	8,692			56.4	%	$	1,585,274		$	8,906			57.0	%

KTR Real Estate Advisors, LLC



Lazy Hollow Apartments		June 3, 2011
Columbia, MD		Page 37


*Overview*		All of the expenses have fluctuated moderately during the past couple of years. In general, the budgeted expenses are consistent with market data and reflect stabilized operations. No major changes in operations are expected or appear to be required. Expenses are expected to grow at the average annual inflation rate. Each of the expense items is discussed separately below.

*Utilities*		This expense line item includes charges for common area and vacant unit electricity, water/sewer and trash collection. Utility charges are offset by applicable tenant reimbursements. At the subject property, tenants reimburse the landlord for natural gas and water and sewer.

		Utility expenses fluctuate with occupancy, weather and changes in supply costs. The utility expenses at the subject property decreased from $1,188 per unit in 2008, to $1,141 per unit in 2009, to $1098 per unit per unit in 2010. Utility expense is budgeted at $1,061 per unit in 2011. The IREM survey indicated that the median for garden complexes in the area is $540 per unit and $714 per unit for buildings constructed between 1965 and 1979. The IREM survey is significantly below the subject’s historical and budgeted amounts. The IREM survey typically does not include tenant gas. Based on the historical expenses, the budgeted utilities expense appears low. A utilities expense of $1,100 per unit or $195,800 has been processed in the analysis.

*Repairs & Maintenance*		This expense line item includes charges for general maintenance and repairs, alarm monitoring and protection services, landscaping and make- ready/turnover. The property appears adequately maintained with no noticeable items of deferred maintenance observed during the walk-thru.

		Repair and maintenance expenses at the subject property were reported to be $797 per unit in 2008 and $747 per unit in 2009. In 2010 this expense increased considerably to $977. The 2011 budgeted expense is $743 per unit which is in-line with the 2008 and 2009 expenses. The IREM survey indicated that the median for garden complexes in the area is $889 per unit, and $622 for garden complexes built between 1965 and 1979. The subject’s budgeted expense is within the range of the two and is deemed reasonable. A repairs and maintenance expense of $750 per unit, $133,500 has been processed.

*Payroll*		This expense includes payroll and benefits for the property manager, leasing agent(s), housekeeping and maintenance personnel. The payroll expense increased from $1,577 to $1,859 per unit between 2008 and 2009. In 2010 this expense slightly declined to $1,738 per unit. The 2011 budgeted payroll expense is $1,785 per unit. The IREM survey indicated that the median for garden complexes in the Baltimore MSA built between 1965 and 1979 is $1,631 per unit, though it is considerably less for all garden apartments in the MSA. Based on the IREM survey and the subject’s historical expense data, the budgeted payroll expense appears reasonable and has been processed at $1,785 per unit or $317,730.

KTR Real Estate Advisors, LLC



Lazy Hollow Apartments		June 3, 2011
Columbia, MD		Page 38


*Marketing*		This expense includes advertising, the cost of resident and locator referrals, internal leasing commissions, brochures, newsletters and resident activities. The historical marketing charges at the subject property were reported to be $149, $295 and $280 for 2008, 2009 and 2010, respectively. The 2011 budgeted marketing expense is $215 per unit. The IREM survey did not report a marketing expense. The historical 2008 and 2009 marketing expense has been consistent. With consideration of the historical expenses, the 2011 budgeted expense appears low. Based on the historical data, a marketing expense of $280 per unit or $49,840 has been processed.

*Administration/Office*		This category includes administrative charges and costs associated with the running of the management/leasing office including telephone service, office supplies equipment rental, computers, etc. The historical administrative expenses at the subject property were reported to be $288 and $284 for 2008 and 2009. It increased to $459 per unit in 2010 and has been budgeted at $507 per unit. The IREM survey indicated that the median for garden complexes in the area is $894 per unit and $355 for garden apartments built from 1965-1979. The budgeted expense falls within this range. An administrative expense of $500 per unit or $89,000 has been processed.

*Management Fee*		In the local market management services are typically a function of the revenues produced by the property, usually between 4.0 and 5.0 percent of collections. The historical operating statements report a consistent management expense of 4.9% over the past three years, which is considered reasonable. In consideration of such, a market oriented management fee of 5.0 percent of the effective gross income has been processed.

*Insurance*		Insurance includes fire, liability, theft, and boiler, exclusive of the premiums paid to employee benefit plans. The historical insurance expense at the subject property was reported to be $214, $235 and $253 for 2008, 2009 and 2010, respectively. The 2011 budgeted insurance expense is $262 per unit. The IREM survey of similar properties indicates a median of $222 and $233 per unit. The IREM survey supports the subject’s historical and projected insurance expense. The budget expense of $262 per unit or $46,600 (rounded) has been processed.

*Real Estate Taxes*		Real estate taxes are processed as discussed within the Real Estate Assessment and Tax Analysis section of this appraisal. The real estate tax projection is $223,979 for the appraised fiscal year.

*Reserves*		Prudent management budgets a certain amount each year in a sinking fund to replace short-lived items, including kitchen appliances and cabinets, bathroom fixtures and tiling, flooring repairs, HVAC replacement and common elements such as the roof, exterior wood and parking areas. Reserves for replacement, while typically not found in submitted operating statements, are necessary in estimating a realistic operating budget so as to maintain the habitability of the apartments.

KTR Real Estate Advisors, LLC



Lazy Hollow Apartments		June 3, 2011
Columbia, MD		Page 39


		Reserves for replacement for a property of this vintage typically range from $200 to $300 per unit. In order to remain competitive, a reserve of $250 per unit is forecast. This equates to $44,500 for the appraised fiscal year.

*Total Expenses*		On a stabilized basis, the subject’s projected expenses including reserves are projected at $1,236,855, or $6,9849 per unit. The indicated operating expense ratio is 43.80 percent when including reserves and 42.23 percent without reserves. The IREM survey indicated total operating expenses above the projected amounts; however, based on the historical data, these expenses are considered reasonable and have been processed.

*VALUATION PRO FORMA*		The following valuation pro forma summarizes the stabilized income and expenses described above for the appraised fiscal year.

Appraised Fiscal Year-ending 5/31/2012


	Total			Per Unit			Percent
INCOME		—			—			% of GPI
Gross Rent Potential (Market Rent)	$	2,835,420		$	15,929
Loss to Lease	$	(70,886	)	$	(398	)		2.50	%
Concessions	$	(42,531	)	$	(239	)		1.50	%
Vacancy/Credit/Non-revenue Units	$	(141,771	)	$	(796	)		5.00	%

Net Rental Income (NRI)	$	2,580,232		$	14,496			91.00	%
Administrative Units	$	(16,380	)	$	(92	)		-0.58	%

Other Income	$	259,880		$	1,460			9.17	%

Total Property Income (EGI)	$	2,823,732		$	15,864			99.59	%

EXPENSES							% of EGI

Utilities	$	178,000		$	1,000			6.30	%
Maintenance & Repairs	$	133,500		$	750			4.73	%
Payroll	$	317,730		$	1,785			11.25	%
Marketing	$	49,840		$	280			1.77	%
Administration/Office	$	89,000		$	500			3.15	%
Management Fee	$	141,187		$	793			5.00	%
Insurance	$	46,636		$	262			1.65	%
Real Estate Taxes	$	236,462		$	1,328			8.37	%
Reserves	$	44,500		$	250			1.58	%

TOTAL EXPENSES	$	1,236,855		$	6,949			43.80	%

NET OPERATING INCOME	$	1,586,878		$	8,915			55.79	%

DERIVATION OF OVERALL CAPITALIZATION RATE


*Overall Capitalization Rate*		This appraisal will consider the following techniques; (a) derivation from comparable sales and (b) investor surveys.

*Derivation from Sales*		A survey of comparable sales revealed a range of overall capitalization rates between 5.25 and 6.92 percent, presented in the table to follow.

KTR Real Estate Advisors, LLC



Lazy Hollow Apartments		June 3, 2011
Columbia, MD		Page 40

SUMMARY OF MARKET-DERIVED CAPITALIZATIOAN RATES


Property Name	Address	Year Built	No. of Units	Sale Date	Sale Price	OAR
Point at Laurel Lakes	8220 Marymont Drive, Laurel, MD	1987	308	12/13/2010	$42,900,000		5.75	%
The Reserve at Stonegate	7610 Reserve Circle, Baltimore, MD	2005	220	12/1/2010	$27,100,000		6.90	%
Charlesron Manor	3182 Normandy Woods Drive, Ellicott City, MD	1983	858	9/30/2010	$103,000,000		6.20	%
Concord Park at Russett	7903 Orion Circle, Laurel, MD	2001	335	9/2/2010	$73,600,000		5.40	%
The Greens at Columbia Apts.	12215 Little Patuxent Pkwy, Columbia, MD	1986	169	7/26/2010	$25,600,000		5.25	%
Sherwood Crossing	6731 Old Waterloo Road, Elkridge, MD	1988	634	5/14/2010	$72,275,000		6.92	%


		The capitalization rates produced by these sales are a reliable indication as to an appropriate rate for the subject property. The overall rates of the two oldest properties in the survey range from 5.25% to 6.2%. Based on recent sales data and considering the subject property’s high occupancy, a capitalization rate of approximately 6.0% would be suggested by these sales, but possibly as low as 5.25%.

*Investor Surveys*		According to the PricewaterhouseCoopers Korpacz Real Estate Investor Survey, First Quarter 2011 rates for apartments reported by survey participants active in the market presently range as shown.

MID-ATLANTIC REGION APARTMENT MARKET SURVEY


Internal Rate of Return	5.80%-14.00	%	Range
	9.65	%	Average
Overall Capitalization Rate	4.50% - 8.00	%	Range
	6.23	%	Average
Residual Capitalization Rate	5.00% -9.75	%	Range
	6.85	%	Average
Annual Rent Growth Rate	{5.00%)-400	%	Range
	1.58	%	Average
Annual Expense Growth Rate	1.00% - 3.00 2.58	% %	Range Average

Source: Korpacz Real Estate Investor Survey, 1^st Quarter 2011


		As indicated below, overall rates began to increase beginning Third Quarter 2008 and have continued this trend through the Fourth Quarter of 2009. The First Quarter of 2010 indicated the first decrease in the average overall rate since the Third Quarter 2008.

NATIONAL APARTMENT MARKET
OVERALL CAPITALIZATION RATE TRENDS


Quarter	Average			Basis Point Change
1Q11		6.29	%		-22
4Q10		6.51	%		-61
3Q10		7.12	%		-56
2Q10		7.68	%		-17
1Q10		7.85	%		-18
4Q09		8.03	%		19
3Q09		7.84	%		35
2Q09		7.49	%		61
1Q09		6.88	%		75
4Q08		6.13	%		27
3Q08		5.86	%		11
2Q08		5.75	%		-4
1Q08		5.79	%		4
4Q07		5.75	%		-1
3Q07		5.76	%		-4
2Q07		5.80	%		-9
1Q07		5.89	%		-8

Source: Korpacz Real Estate Investor Survey

KTR Real Estate Advisors, LLC



Lazy Hollow Apartments		June 3, 2011
Columbia, MD		Page 41


*Conclusion of OAR*		The subject is a good quality apartment complex situated in an established residential neighborhood with good access. The property is proximate to employment centers, shopping and neighborhood support facilities. The subject has unit sizes that reflect market parameters and an amenity package that is typical of the properties in the competitive market. The subject property has achieved a stabilized occupancy of 96.6 percent according to the February rent roll.

		An OAR ranging of 5.25 and 6.92 percent was indicated from comparable sales. The Korpacz survey indicates an average overall rate for the Mid- Atlantic Region of 6.623 percent and for the National Apartment Market of 6.529 percent. The National Apartment Market has illustrated declining capitalization rates for five consecutive quarters. The subject property is a better than average property, was constructed in 1979 and offers minimal amenities. The subject is well-maintained and in good condition, though the unit fixtures and appliances are of an older style. In consideration of the preceding data, a rate of 6.0 percent is concluded.

VALUE BY DIRECT CAPITALIZATION


*Stabilized Cash Flow*		The stabilized cash flow is based on the previous income and expense discussion.

*Valuation*		Value is calculated by dividing the stabilized net operating income (including an allowance for Reserves) by the concluded overall capitalization rate. Thus the market value of the leased fee interest is calculated as follows:

		$1,586,878 ÷ 6.0% = $26,447,967

*Direct Capitalization Value Conclusion*		The Market Value of the Leased Fee Interest in the subject property, free and clear of financing, by the Direct Capitalization method of the Income Capitalization Approach, as of June 1, 2011, is rounded to:

		TWENTY SIX MILLION FOUR HUNDRED THOUSAND DOLLARS ($26,400,000)

KTR Real Estate Advisors, LLC


Lazy Hollow Apartments		June 3, 2011
Columbia, MD		Page 42


		SALES COMPARISON APPROACH

*VALUATION METHODOLOGY*		The basic steps in processing the sales comparison approach are outlined as follows:

		1. Research the market for recent sales transactions, listings, and offers to purchase or sell of properties similar to the subject property.

		2. Select a relevant unit of comparison and develop a comparative analysis.

		3. Compare comparable sale properties with the subject property using the elements of comparison and adjust the price of each comparable to the subject property.

		4. Reconcile the various value indications produced by the analysis of the comparables.

*REGIONAL SALES*
*MARKET*		The local market has been active in terms of investment sales of similar properties. Adequate sales exist to formulate a defensible value for the subject property via sales comparison.

*PRESENTATION OF*
*COMPARABLE SALES*		To estimate the property value by the sales comparison approach, comparable sales from the influencing market that are most similar to the subject property in terms of age, size, tenant profile and location have been analyzed. The sales are compared on a price-per-unit basis, as this is a common method of comparison for such properties.

		The comparable sales summarized in the table below and plotted on the following map, range in price from $120,047 to $151,079 per unit. While these unit prices implicitly contain both the physical and economic factors affecting real estate, these statistics do not explicitly convey many of the details surrounding a specific property. Thus, this single index to the valuation of the subject property has some limitations.

KTR Real Estate Advisors, LLC



Lazy Hollow Apartments		June 3, 2011
Columbia, MD		Page 43

PRESENTATION OF COMPARABLE SALES DATA


Sale No.	Subject	Sale 1	Sale 2	Sale 3
Name	Lazy Hollow Apartments	The Greens at Columbia Apts.	Point at Laurel Lakes	Charleston Manor
Location	8786 Cloudleap Court	12215 Little Patuxent Parkway	8220 Marymont Drive	3182 Normandy Woods Drive
	Columbia, MD	Columbia, MD	Laurel, MD	Ellicott City, MD
		The Greens at Columbia Ltd	Eaton Vance Investment	Angelo, Gordon & Co. &
Grantor	—	Partnership	Managers	Federal Capital Partners
Grantee	—	Home Properties, Inc.	Pantzer Properties, Inc.	Home Properties, Inc.
Sales Price	—	$25,600,000	$42,900,000	$103,000,000
Sale Date	—	7/26/2010	12/13/2010	9/30/2010
Year Built	1979	1986	1987	1974
No. of Units	178	169	308	858
Net Rentable Area (SF)	175,722	187,952	258,692	734,295
Avg. Unit Size (SF)	987	1,112	840	856
Occuapncy	96.0%	94.0%	96.0%	96.6%
Price/SF	—	$136.20	$165.83	$140.27
Price/Unit	—	$151,479	$139,286	$120,047
Net Income	$1,562,025	$1,345,000	$2,466,750	$6,355,000
NOI/SF	—	$7.16	$9.54	$8.65
NOI/Unit	$9,175	$7,959	$8,009	$7,407
Cap Rate (OAR)	—	5.25%	5.75%	6.17%
PGIM	—	9.43	9.66	8.52
Expense Ratio (OER)	53.73%	Unknown	44.1%	Unknown

COMPARABLE SALES MAP
(LOGO)

KTR Real Estate Advisors, LLC


Lazy Hollow Apartments		June 3, 2011
Columbia, MD		Page 44


		*Analysis* The comparables are examined by considering the following adjustment factors.

*Ownership Interest*		No adjustments are necessary, since all of the sales reflect a 100 percent transfer of ownership interest.

*Financing Terms*		The comparable sales were either all cash transactions or were financed by primary lenders at market-oriented rates. Considerate of such, no adjustments for any unusual or atypical financing is required.

*Conditions of Sale*		Adjustments for conditions of sale usually reflect the motivations of the buyer and the seller. We are not aware of any atypical circumstances regarding any of the comparable sales. Personal property is included as all facilities have similar unit appliance requirements and miscellaneous office and common area FF&E.

*Expenditures Made Immediately*
*After Sale*		Any required major capital costs incurred by the buyer immediately after the sale is appropriately added to the purchase price. It is reported on Sale No. 3 that the buyer incurred significant capital expenditures after the sale. As such, this expense will be added to the purchase price. The other two sales do not require any specific sale price adjustment other than what is included in general comparisons based on condition.

*Market Conditions (Time)*		Comparable sales that occurred under different market conditions than those applicable to the subject property as of the effective date of appraisal require adjustment for any differences that affect their values. The comparable sales occurred between July and December 2010. Due to the recent timing of these sales, no adjustment for market conditions is necessary.

*Location*		An adjustment for location is appropriate when the location characteristics of a comparable property are different from those of the subject. Adjustments have been made on an individual basis.

*Physical Characteristics*		Physical differences include differences in building size, number of units, quality of construction, building materials, age, condition, functional utility and appearance. Adjustments to the comparables have been applied on an individual basis.

*Average Unit Size*		The subject has an average unit size of 987 square feet. Properties with larger average unit sizes tend to trade at higher prices, all other factors being equal. Conversely, properties with smaller average unit sizes tend to trade at a lower price per unit. The average unit size of each comparable property is compared to the subject and applicable adjustments are applied when warranted.

KTR Real Estate Advisors, LLC



Lazy Hollow Apartments		June 3, 2011
Columbia, MD		Page 45


*Amenities*		The subject offers unit amenity typical in the market; however, it does not provide typical property amenities. Adjustments to the comparables have been made on an individual basis.

*Economic Characteristics*		Economic characteristics include all the attributes of a property that affect its income. The subject’s average market rent is $1,334 per unit per month. Adjustments to the comparables have been made on an individual basis.

		The following is a brief description of the relevant building sales considered pertinent in the valuation of the subject property.

KTR Real Estate Advisors, LLC



Lazy Hollow Apartments		June 3, 2011
Columbia, MD		Page 46


*Comparable Sale No.1*

Property Name:		The Greens at
		Columbia Apartments
Location:		12215 Little Patuxent Parkway
Neighborhood:		Columbia, MD
Parcel ID:		15-069813
Date of Sale:		July 26, 2010
Grantor:		The Greens at Columbia LP
Grantee:		Home Properties, Inc.
Consideration:		$25,600,000
Number of Units:		169
Year Built:		1986
Size (Sq. Ft.):		187,952 square feet
Occupancy:		94.0%
Price per Unit:		$151,479 per unit
OAR:		5.25%


Analysis:		Comparable No. 1 is a July 26, 2010 arms length sale of the leased fee interest in an 187,952 square foot, 169 unit garden apartment complex built in 1986. No major capital costs incurred by the buyer immediately after the sale and no adjustment for condition of sale is required. As this sale is recent, no adjustment for market conditions is needed. The comparable is located approximately 4 miles west of the subject. Also located in Columbia, Maryland, this comparable enjoys similar accessibility to retail and support services. The location is comparable to the subject and no location adjustment is required. Age, condition and quality are considered similar requiring no adjustment. This comparable’s average unit size is slightly larger than the subject. A slight downward adjustment is required. This comparable has a pool and covered carport space. As such, the amenities at this comparable are nominally superior. As such, no adjustment is required. The average rent for this comparable is $1,312 per unit per month, similar to the subject’s average rent of $1,340. No adjustment has been processed for economics. Overall, a slightly downward adjustment has been applied resulting in an adjusted price of $143,905 per unit.

KTR Real Estate Advisors, LLC



Lazy Hollow Apartments		June 3, 2011
Columbia, MD		Page 47


*Comparable Sale No. 2*

Property Name:		Point at Laurel lakes
Location:		8220 Marymont Drive
Neighborhood:		Laurel, MD
Parcel ID:		Eleven parcels
Date of Sale:		December 13, 2010
Grantor:		Eaton Vance Investment Managers
Grantee:		Pantzer Properties, Inc.
Consideration:		$42,900,000
Number of Units:		308
Year Built:		1987
Size (Sq. Ft.):		258,692 square feet
Occupancy:		96.0%
Price per Unit:		$139,286 per unit
OAR:		5.75%


Analysis:		Comparable No. 2 is a December 13, 2010 arms length sale of the leased fee interest in an 258,692 square foot, 308 unit garden apartment complex built in 1987. No major capital costs incurred by the buyer immediately after the sale and no adjustment for condition of sale is required. As this sale is recent, no adjustment for market conditions is needed. The comparable is located approximately 10 miles south of the subject. The comparable’s location is close to Route 1, a road dense with multifamily developments, retail and support services. It is also has easy accessibility to I-95, as does the subject. The location is comparable to the subject and no location adjustment is required. Age, condition and quality are superior to the subject and a downward adjustment has been applied. This comparable’s average unit size is moderately smaller than the subject. A slight upward adjustment is applied for unit size. This comparable has a pool, fitness center and club house. It also has a separate office building detached from the apartments. As such, the amenities at this comparable are considered superior and a downward adjustment has been applied. The average rent per unit for this comparable is $1,201 per unit per month, while the subject’s average rent is $1,340. A slight upward adjustment has been processed for economics. Overall, a net neutral adjustment has been applied resulting in an unadjusted unit price of $139,286 per unit.

KTR Real Estate Advisors, LLC



Lazy Hollow Apartments		June 3, 2011
Columbia, MD		Page 48


*Comparable Sale No. 3*

Property Name:		Charleston Manor
Location:		3182 Normandy
		Woods Drive
Neighborhood:		Ellicott City, MD
Parcel ID:		02-234289, 02-274086,
		02-285460
Date of Sale:		September 30, 2010
Grantor:		Angelo, Gordon & Co. &
		Federal Capital Partners
Grantee:		Home Properties, Inc.
Consideration:		$103,000,000
Number of Units:		858
Year Built:		1974
Size (Sq. Ft.):		734,295 square feet
Occupancy:		96.6%
Price per Unit:		$120,047 per unit
OAR:		6.17%


Analysis:		Comparable No. 3 is a September 30, 2010 arms length sale of the leased fee interest in an 734,295 square foot, 858 unit garden apartment complex built in 1974. It was reported that the buyer planned to spend $6.8 million in capital expenditures to correct deferred maintenance and additional renovation and up keep of the property. This equates to $7,925 per unit, which has been added as a condition of sale adjustment. As this sale is recent, no adjustment for market conditions is needed. The comparable is located approximately 6 miles north of the subject. The comparable is located directly off of Route 40, a road dense with multifamily developments, retail and support services. Route 40 runs into I- 695 within a few miles of this comparable. The location is comparable to the subject and no location adjustment is required. After adjustment for post acquisition renovations, the condition and quality are assumed to be similar to the subject. This comparable represents the sale of 838 units, considerably larger than the subject. As such, an upward adjust for physical characteristics is required. This comparable’s average unit size is smaller than the subject. A slight upward adjustment is processed for unit size. This comparable has a pool, fitness center, tennis court and club house. It also has a separate office building detached from the apartments. As such, the amenities at this comparable are considered superior and a downward adjustment has been applied. The average rent for this comparable is $1,174 per unit per month, while the subject’s average rent is $1,340. A slight upward adjustment for economics has been applied. Overall, an upward adjustment has been applied resulting in an adjusted price of $147,168 per unit.

KTR Real Estate Advisors, LLC



Lazy Hollow Apartments		June 3, 2011
Columbia, MD		Page 49

COMPARABLE SALES ADJUSTMENT GRID


Sale No.	Subject	Sale 1	Sale 2	Sale 3
Name	Lazy Hollow Apartments	The Greens at Columbia Apts.	Point at Laurel Lakes	Charleston Manor
Location	8786 Cloudleap Court	12215 Little Patuxent Parkway	8220 Marymont Drive	3182 Normandy Woods Drive
	Columbia, MD	Columbia, MD	Laurel, MD	Ellicott City, MD
Sale Date		7/26/2010	12/13/2010	9/30/2010
Avg. Market Rent per Unit	$1,340	$1,312	$1,201	$1,174
Price/Unit		$151,479	$139,286	$120,047

ADJUSTMENTS
Financing Adjustment		$0	$0	$0

Adjusted for Financing per Unit		$151,479	$139,286	$120,047
Condition of Sale Adjustment		$0	$0	$7,925

Adjusted for Special Condtions		$151,479	$139,286	$127,972
Market Conditions (Time)		0.0%	0.0%	0.0%

Time Adjusted Price per Unit.)		$151,479	$139,286	$127,972

Location		0.0%	0.0%	0.0%
Physical Characteristics		0.0%	-5.0%	10.0%
Average Unit Size		0.0%	5.0%	5.0%
Amenities		-5.0%	-5.0%	-5.0%
Economics		0.0%	5.0%	5.0%

Total Adjustments (%)		-5%	0%	15%

Adjusted Price per Unit		$143,905	$139,286	$147,168


*VALUE CONCLUSION*		After analysis and adjustments, a value range of $139,286 to $147,168 per unit is indicated. Sales No. 1 and 2 are the most similar as they require the least net adjustments. They suggest a unit value between $140,000 and $144,000 per unit. Sale No. 1 is the only property in Columbia and has been given the greatest weight. Sale No. 3 is given the least weight as it required a condition of sale adjustment as well as a physical character adjustment to account for its larger size. With consideration of all the sales, it is reasonable to conclude to a unit value of $144,000 per unit. Accordingly, the market value via the Sales Comparable Approach is calculated as follows:

		178 units x $144,000 = $25,632,000

		Accordingly, the Market Value of the Leased Fee interest in the subject property as of June 1, 2011, free and clear of financing, via the Sales Comparison Approach, is rounded to:

		TWENTY FIVE MILLION SIX HUNDRED THOUSAND DOLLARS
		($25,600,000)

KTR Real Estate Advisors, LLC



Lazy Hollow Apartments		June 3, 2011
Columbia, MD		Page 50


		RECONCILIATION AND FINAL ESTIMATE OF VALUE

*Review*		The purpose of this appraisal is to provide an estimate of the market value of the leased fee interest in the subject property, free and clear of financing. The date of value is June 1, 2011. The indicated market value estimates for the real property interest appraised are:


Cost Approach		N/A
Income Capitalization Approach	$	26,400,000
Sales Comparison Approach	$	25,600,000


*Income Approach*		The Income Capitalization Approach seeks to view the subject property’s value from the perspective of the typical investor. This approach reflects the relationship between the income a property is capable of generating and its true value in the marketplace. Typical investors judge the value of a property based upon the quality and quantity of the income generated, as well as the likely impact of market conditions on future income generation. The Income Capitalization Approach, by considering these factors provides a good measure of value for this type of property and has been utilized as the primary approach in concluding to value.

*Sales Approach*		This approach provides an estimate of value based upon the recent activities of buyers and sellers in the marketplace. This approach is generally considered to be reliable in active markets where the motivations of buyers and sellers are known and the operating characteristics of the properties being transferred are available for scrutiny. Market research revealed adequate sales of properties that are considered comparable to the subject property. The value conclusion derived via this approach is considered directly supportive of that concluded via the Income Approach.

*The Cost Approach*		The Cost Approach was excluded from the scope of this assignment.

*Conclusions*		Based on the merits of both the Income Capitalization and the Sales Comparison Approach, the final reconciliation of value is concluded with equal weight given to both approaches. The implied overall rate of the value conclusion in the Sales Comparison Approach is 6.26%, only 26 basis points above that processed in the Income Approach. Based upon the data, analyses and conclusions contained within this appraisal report, the Market Value of the Leased Fee Interest in the subject property, free and clear of financing, as of June 1, 2011 is:

	TWENTY SIX MILLION DOLLARS ($26,000,000)

KTR Real Estate Advisors, LLC


Lazy Hollow Apartments Columbia, MD		June 3, 2011 Addenda

PROFESSIONAL QUALIFICATIONS

TERENCE TENER, MAI, ASA
MANAGING PAR TNER


EXPERIENCE		Mr. Tener is a founding principal of KTR Real Estate Advisors LLC. Over the course of his career, Mr. Tener has appraised many prominent commercial properties, including the GM Building, 101 Park Avenue, 500 Park Avenue, 410 Park Avenue, 437 Madison Avenue, 475 Fifth Avenue, the Seagrams Building, 900 Third Avenue, Park Avenue Plaza and the Lever House. In addition, Mr. Tener has served as an expert witness in various federal and state courts including New York, New Jersey, Connecticut and Delaware. He has also valued such notable residential and mixed-use properties as CitiSpire, Metropolitan Tower and River Tower. He has been responsible for the valuation of hotels throughout the United States, including the New York Hilton, Washington Hilton, Pittsburgh Hilton, the American Stanhope and a chain of hotels located in Mexico, owned by Groupo Situr. In addition, Mr. Tener has consulted on the valuation of numerous retail properties, including the Smithaven Mall, Herald Center, Sony Entertainment Center in San Francisco and 730 North Michigan Avenue.

LICENSES		Connecticut Certified General Appraiser
		Massachusetts Certified General Appraiser
		Missouri Certified General Appraiser
		New Hampshire Certified General Appraiser
		New Jersey Certified General Appraiser
		New York Certified General Appraiser
		Vermont Certified General Appraiser
		Wyoming Certified General Appraiser
		New York Real Estate Broker

MEMBERSHIPS		Appraisal Institute — MAI Designation since 1978
		American Society of Appraisers (ASA) — Senior Member and former member of
		the Board of Governors for the NY Chapter
		MBA of New York — Board of Governors
		Real Estate Board of New York — Appraisal Committee
		National Association of Real Estate Fiduciaries
		Long Island Board of Realtors
		International Council of Shopping Centers (ICSC)
		Mortgage Bankers Association of America
		Young Mortgage Bankers Association
		Appraisal Institute Metropolitan New York Chapter — Admissions Committee
		and Ethics Committee
		Appraisal Journal Review Committee
		New York’s East Side Association — Former director
		Cardinal’s Committee of the Archdiocese of New York

KTR Real Estate Advisors, LLC


Lazy Hollow Apartments Columbia, MD		June 3, 2011 Addenda

PROFESSIONAL QUALIFICATIONS

THOMAS J. TENER
MANAGING PARTNER


EXPERIENCE		Mr. Tener is a founding principal of KTR Real Estate Advisors LLC. He has more than 20 years of broad based experience as a real estate professional, including appraisal, physical condition assessments, environmental site assessments, construction, development, brokerage, property management and receivership. Prior to forming KTR, Mr. Tener was the Chief Operating Officer of a national full service commercial due diligence firm. Under his direction, this firm provided appraisal, environmental, engineering and construction consultation on thousands for investment grade properties annually. Mr. Tener has extensive experience in appraisal, including such unique properties as the former Shoreham Nuclear power plant, the Perimeter Center in Atlanta, GA and numerous trophy office buildings. Mr. Tener has been a guest lecturer and panel member on various appraisal and due diligence topics.

LICENSES		New York Certified General Appraiser #46000033225
		New York Real Estate Broker
		USCG — Third Assistant Engineer
		Receiver NYS Supreme Court

MEMBERSHIPS		Appraisal Institute — Associate Member
		Association of Real Estate Women
		MBA of New York
		National Association of Real Estate Fiduciaries
		Mortgage Bankers Association of America
		Young Mortgage Bankers Association
		ASTM International

EDUCATION		United States Merchant Marine Academy, Kings Point, NY
		• BS Marine Engineering
		• BS Mechanical Engineering and Thermal Systems Design

KTR Real Estate Advisors, LLC


		Angles Realty Corporation II Lazy Hollow Aparements June 3, 2011 Page 2



By:	Terence Tener, MAI, ASA Managing Partner	By:	Thomas J. Tener Managing Partner


		overall rates in the multifamily segment over the last 5 quarters is a testament to this renewed interest in real estate investment at prices well above distress levels.


Months	Monthly Tax		Tax Liability

4	$	14,917	$	59,670
8	$	15,895	$	127,163
Total State and County Tax Liability			$	186,832


		unit at this comparable has undergone $20,000 of renovation. Unit amenities, as well as the property location, are superior to the subject. Closet space is not counted in the unit area, thus making the rentable area slightly larger and the price per square foot slightly lower in direct comparison to the subject property. This comparable is considered superior to the subject property.