exv99w1

December 2, 2011

Mr. Trent Johnson
Vice President
NPI Equity Investments, Inc.
4582 South Ulster Street, Suite 1100
Denver, CO 80237


Re:		Appraisal of Village of Pennbrook Apartments 9071 Mill Creek Road Levittown, PA 19054 KTR No. 11-1-00330

Dear Mr. Johnson:

KTR Real Estate Advisors LLC (“KTR”) has completed an appraisal of the above referenced property as requested in our November 18, 2011 engagement letter, and communicated the results in the attached self-contained report. The purpose of this assignment is to estimate the Market Value of the Leased Fee Interest in the subject property as of December 1, 2011. The property was inspected by a staff member of KTR on March 9, 2011, when the property was last appraised by KTR. The report has been prepared for NPI Equity Investments, Inc. for client’s use in asset valuation and financial reporting purposes.

Situated as noted above, the subject property consists of a 64.057 acre site improved with a 722-unit, garden-style apartment complex. The subject was developed in 1969 and contains 660,220 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 December 1, 2011 is:

SIXTY SIX MILLION FOUR HUNDRED THOUSAND DOLLARS
($66,400,000)

EXTRAORDINARY ASSUMPTION

KTR previously inspected the subject property on March 9, 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.

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
tel 212.906.9400 • fax 212.935.5935


Village of Pennbrook Apartments Levittown, PA		December 2, 2011 Page i

TABLE OF CONTENTS


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		3
Exposure Time		4

PRESENTATION OF DATA
Regional and Area Analysis		5
Neighborhood Analysis		9
Site Analysis		10
Improvement Analysis		12
Zoning Analysis		15
Real Estate Assessments and Taxes		16
Apartment Market Analysis		17

ANALYSIS OF DATA AND CONCLUSIONS
Highest and Best Use		26
Valuation Process		27
Income Capitalization Approach		29
Sales Comparison Approach		37
Reconciliation and Final Value Conclusion		45

ADDENDA
Additional Subject Property Photographs
Submitted Information
Qualifications of the Appraiser


Village of Pennbrook Apartments Levittown, PA		December 2, 2011 Page ii

CERTIFICATE OF APPRAISAL

We, Terence Tener, MAI, ASA, Meng Chen, MAI and Shaun Kest 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.

Meng Chen has made a personal inspection of the property that is the subject of this report.

Terence Tener, MAI, ASA and Shaun Kest have not made a personal inspection of the property that is the subject of this 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 and Meng Chen, MAI has completed the continuing education program of the Appraisal Institute.

Meng Chen, MAI, has been temporarily licensed in the State of Pennsylvania, License Number #002684.

Terence Tener, MAI, ASA, Meng Chen, MAI and Shaun Kest have extensive experience in the appraisal of similar properties.

We have appraised or provided any other services relative to the subject property in the past three years.

KTR REAL ESTATE ADVISORS LLC



By:	Terence Tener, MAI, ASA Managing Partner	By:	Meng Chen, MAI Appraiser	By:	Shaun Kest Appraiser


Village of Pennbrook Apartments Levittown, PA		December 2, 2011 Page iii

BASIC ASSUMPTIONS AND LIMITING CONDITIONS

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

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.

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

Responsible ownership and competent property management are assumed.

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

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.

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.

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.

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.

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.


Village of Pennbrook Apartments Levittown, PA		December 2, 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 reserves for replacement expense category.

EXTRAORDINARY ASSUMPTION


Village of Pennbrook Apartments Levittown, PA		December 2, 2011 Page 1


		SUMMARY OF SALIENT FACTS AND CONCLUSIONS

*Date of Value*		December 1, 2011

*Date of Inspection*		March 9, 2011

*Property Name*		Village of Pennbrook Apartments

*Property Address*		9071 Mill Creek Road Levittown, PA 19054

*Property Location*		Southeast corner of Mill Creek Road and US-13, in Levittown, PA.

*Tax Identification*		13-040-005

*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 shaped site that contains a total of 64.057 acres

*Zoning*		HR — High Density Residential

*Improvements*		A 722-unit garden apartment complex completed in 1969 with 32 buildings. According to the submitted rent roll, dated October 28, 2011, the property is 95.3% occupied and is in average physical condition.

*2011 Assessed Value*		$4,320,000

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

VALUATION INDICATIONS
Income Capitalization		$66,400,000
*Stabilized NOI*		$4,812,241
*Cap Rate*		7.25%
*Value per Unit*		$91,967
*Value per Sq Ft*		$100.57
Sales Comparison		$66,400,000
*Value per Unit*		$91,967
*Value per Sq Ft*		$100.57
Cost Approach		N/A
APPRAISED VALUE		$66,400,000
*Value per Unit*		$91,967
*Value per Sq Ft*		$100.57

EXTRAORDINARY ASSUMPTION


Village of Pennbrook Apartments		December 2, 2011
Levittown, PA		Page 2


	PREMISES OF THE APPRAISAL

*Identification*	The subject property consists of the land and improvements at 9071 Mill Creek Road within Levittown, Bucks County, Pennsylvania. The Bucks County Assessor identifies the property as Tax Parcel 13-040-005. The property consists of a 64.057-acre site improved with a 722-unit garden apartment complex known as Village of Pennbrook Apartments.


Sales History of the Subject Property	According to public records, the current owner of the subject property is National Prop Invest 4, who has owned the property since December 1981. 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.	Inspected the subject property and its environs.
	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


Village of Pennbrook Apartments		December 2, 2011
Levittown, PA		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 NPI Equity Investments, Inc. 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. The appraisal cannot be used for any other reason than that stated above. Should anyone other than the client read or rely on this report, no fiduciary obligation is owed by the appraisers to that party. 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


Village of Pennbrook Apartments		December 2, 2011
Levittown, PA		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 Third 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 5.85
		months, down from 7.16 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


Village of Pennbrook Apartments		December 2, 2011
Levittown, PA		Page 5


		REGIONAL ANALYSIS

*Overview*		The subject is located in the Bucks County, Pennsylvania, part of the
		Philadelphia-Camden-Wilmington, PA-NJ-DE-MD Metro Core Based
		Statistical Area (Philadelphia-Camden-Wilmington MSA). The
		Philadelphia-Camden-Wilmington MSA is comprised of eleven counties
		including: New Castle in Delaware, Cecil in Maryland Burlington,
		Camden, Gloucester, Salem, Bucks, Chester, Delaware, Montgomery
		and Philadelphia in New Jersey; and five cities including, Newark,
		Wilmington, Camden, Chester and Philadelphia. The metropolitan area is
		part of the Delaware Valley, which extends north to Trenton, New Jersey
		and south to Wilmington, Delaware. The region contains the nation’s
		sixth largest city, Philadelphia, with a population of just over 1.5 million.
		It is centrally located within the nation’s northeast corridor — 100 miles
		south of New York City and 133 miles north of Washington, D.C.

*Population*		The Philadelphia-Camden-Wilmington MSA population grew at an
		average annual rate of 0.46 percent from 1990 to 2000 and 0.30 percent
		from 2000 to 2010. Over the next 5 years (2010 to 2015) the population
		is projected to increase at a similar annual rate of 0.28 percent. In
		comparison, the State of Pennsylvania realized population growth at an
		average annual rate of 0.34 percent from 1990 to 2000, 0.17 percent from
		2000 to 2010 and is projected to increase at a rate of 0.24 percent per
		year from 2010 to 2015. Bucks County’s population increased at an
		average annual rate of 1.04 percent from 1990 to 2000 and 0.51 percent
		from 2000 to 2010 and is projected to increase at an average annual rate
		of 0.37 percent from 2010 to 2015.

		The following table details historic and anticipated future population
		trends for the region.

		REGIONAL POPULATION TRENDS


					Annual					Annual					Annual
	1990		2000		Avg. Growth			2010		Avg. Growth			2015		Avg. Growth
	Census		Census		1990-2000			Estimate		2000-2010			Projection		2010-2015
Bucks County		541,178		597,632		1.04	%		628,351		0.51	%		639,980		0.37	%
P-C-W MSA		5,435,454		5,687,144		0.46	%		5,858,986		0.30	%		5,941,244		0.28	%
Pennsylvania		11,881,633		12,281,054		0.34	%		12,493,447		0.17	%		12,644,007		0.24	%


Source: DemographicsNow; Compiled by KTR


*Economic Overview*		According to the Bureau of Labor Statistics, the total non-farm employment
		for the Philadelphia-Camden-Wilmington MSA was 2,666,500 in August
		2011. The following table illustrates the diversification of the MSA’s
		workforce. As noted, a majority of the area’s work force is employed in the
		Services, Trade, Transportation & Utilities and Government sectors.
		Declines in employment occurred in most industries, however, the largest
		job losses occurred in the Mining, Logging and Construction & Mining.

KTR Real Estate Advisors, LLC


Village of Pennbrook Apartments		December 2, 2011
Levittown, PA		Page 6

PHILADELPHIA-CAMBDEN-WILLMINGTON MSA
EMPLOYMENT BY INDUSTRY—AUGUST 2011*


			Percent of			Change from
Industry	Total		Total			Previous Year
Mining, Logging and Construction		99,500		3.73	%		-4.9	%
Manufacturing		183,900		6.90	%		-1.9	%
Trade, Transportation & Utilities		497,800		18.67	%		0.1	%
Information		47,200		1.77	%		-7.6	%
Financial Activities		201,500		7.56	%		-0.4	%
Professional & Business Services		417,900		15.67	%		1.7	%
Education & Health Services		551,500		20.68	%		1.0	%
Leisure & Hospitality		235,100		8.82	%		0.0	%
Other Services		122,500		4.59	%		1.7	%
Government		309,600		11.61	%		-4.0	%

Total		2,666,500		100.00	%		-0.4	%


Source: Bureau of Labor Statistics; *Preliminary August 2011


		Historically, the unemployment rate in the Philadelphia-Camden-Wilmington MSA has been consistent with that of Pennsylvania; however, it was slightly higher in 2010 and 2011.

HISTORICAL UNEMPLOYMENT RATES


	2005			2006			2007			2008			2009			2010			Aug -11*
P-C-W MSA		4.7	%		4.5	%		4.3	%		5.3	%		8.3	%		9.0	%		9.1	%
Pennsylvania		5.0	%		4.6	%		4.3	%		5.3	%		8.1	%		8.5	%		8.2	%


* Preliminary August 2011
Source: Bureau of Labor Statistics


*Income*		The median household income for the Philadelphia-Camden-Wilmington MSA was $58,414 in 2010 compared to $49,335 indicated by the State. Bucks County’s 2010 median household income was $73,591, which is significantly above the State and MSA income levels. The median household income for the Philadelphia-Camden-Wilmington MSA is forecast to grow at an average annual rate of 1.41 percent between 2010 and 2015. This falls within the State and County which indicate annual average median household growth rates of 1.54 and 1.28 percent, respectively, over the same period.

REGIONAL MEDIAN HOUSEHOLD INCOME TRENDS


					Annual					Annual					Annual
	1990		2000		Avg. Growth			2010		Avg. Growth			2015		Avg. Growth
	Census		Census		1990-2000			Estimate		2000-2010			Projection		2010-2015
Bucks County	$	43,342	$	59,766		3.79	%	$	73,591		2.31	%	$	78,286		1.28	%
P-C-W MSA	$	35,743	$	48,268		3.50	%	$	58,414		2.10	%	$	62,545		1.41	%
Pennsylvania	$	29,137	$	40,115		3.77	%	$	49,335		2.30	%	$	53,134		1.54	%


Source: DemographicsNow; Compiled by KTR

KTR Real Estate Advisors, LLC


Village of Pennbrook Apartments		December 2, 2011
Levittown, PA		Page 7


		Other than Cherry Hill in New Jersey, Philadelphia’s most affluent areas are located primarily within the metro area’s western and northern suburbs. Heading west out of the City, households with incomes of $100,000 or more are concentrated in Montgomery County’s townships of Lower Merion, Upper Merion and through King of Prussia to the northeastern region of Chester County. Other pockets of high-income households west of the City are found in Concordville in Delaware County and New Garden in Southern Chester County. North of the City, the wealthiest households are located in Willow Grove within Montgomery County and Richboro in Bucks County. The most affluent area of Center City Philadelphia is Rittenhouse Square.

*Transportation*		Philadelphia’s transportation network is one of the more comprehensive in the nation and includes modes of transportation by land, air and water. More than 2,500 miles of federal and state highways run through the metropolitan area, making it accessible from any direction. The most significant addition to the freeway system is the 21.5-mile Mid-County Expressway, commonly known as the “Blue Route,” which was completed in 1992 after 25 years of construction. The expressway serves as a beltway through Philadelphia’s western suburbs and provides travelers with a connection between Interstate 95 at Chester, southwest of the City and Interstate 76, also known as the Pennsylvania Turnpike, at Plymouth Meeting northwest of the City. Major interstates that run through and around downtown Philadelphia include I-95, I-76 and I-676.

		The region’s rail and public transit infrastructure is comprised of several different systems. Philadelphia’s Amtrak station is the second busiest and handled more than 3.97 million passengers in 2008, providing convenient, high-speed connections to Boston, New York City, Baltimore and Washington, D.C. AMTRAK’s 30th Street Station, located. The City Transit Division of the Southeastern Pennsylvania Transportation Authority (SEPTA) serves the City of Philadelphia with a system of 84 subway, light rail, trackless trolley and bus routes providing nearly 554,000 passenger trips per day. The Regional Rail Division of SEPTA serves all five suburban Philadelphia counties with seven commuter rail lines providing nearly 79,000 passenger trips per day. SEPTA’s Suburban Operations Division serves the western and northern suburbs with a system of 41 inter-urban trolley, light rail and bus routes providing nearly 44,000 passenger trips per day.

		The Port Authority Transit Corporation (PATCO) Hi-Speed line serves commuters in the New Jersey suburbs of Philadelphia. PATCO trains run 24 hours a day from nine stations in New Jersey to four stations in Philadelphia and handles over 40,000 passengers per day.

		Together, the average weekday number of passengers using SEPTA, PATCO, and NJ Transit in 2008 was 309,256.

		Philadelphia International Airport (PHL) is the area’s principal gateway. Positioned at the center of the Northeast corridor, 50% of the American population are within two hours flying time of PHL. The airport handles

KTR Real Estate Advisors, LLC


Village of Pennbrook Apartments		December 2, 2011
Levittown, PA		Page 8


		approximately 500,000 aircraft departures and landings and more than 20 million passengers per year. The Airport provides non-stop flights to more than 80 domestic and 40 international destinations, including non- stop flights to most major European cities. In addition, eight all-cargo airlines handle nearly 590,000 tons of cargo annually. The airport currently consists of five terminals and four runways but recently underwent a major capital improvement program to expand its facilities. The expansion included the construction of a new 5,000 foot, $221 million commuter runway, a $75 million 190,000 square-foot regional terminal accommodating commuter and turbo-prop aircraft, and a new $325 million, 785,000 square-foot international terminal with 12 wide- body international gates.

		The Port of Philadelphia and Camden, located at the head of the Delaware Bay, is one of the nation’s major deep-water seaports and is the second busiest port on the North Atlantic coast for total volume. The port handles more than one-quarter of the entire North Atlantic District’s annual tonnage and is the fourth largest in the U.S. for handling imported goods. Over 60 million metric tons of cargo moves through the port annually and over 3,000 ships load and offload at the port each year. The port is strategically located at the center of the Northeast Corridor, the nation’s largest and richest marketplace, and is directly accessible by rail and truck to more major cities than any other port in the nation.

*Conclusions*		Philadelphia is located centrally in the Boston to Washington corridor; has excellent highway, rail and water access, an educated workforce and a wealth of cultural attractions. Inline with the rest of the country as a major urban city, Philadelphia has felt the challenges of the national recession and has seen job losses in many industries. The recession apparently ended in 2010, and the economy is expected to gain steam in 2011. Given its location, transportation network and diverse and educated workforce, the region has good potential for growth over the long-term.

KTR Real Estate Advisors, LLC


Village of Pennbrook Apartments		December 2, 2011
Levittown, PA		Page 9


		NEIGHBORHOOD ANALYSIS

*Overview*		The subject is located in the Levittown section of Falls Township, in lower Bucks County. Falls Township encompasses a land area of 26.6 square miles and is bordered to the north by Morrisville Borough and Lower Makefield Township, to the south and east by the Delaware River and the State of New Jersey. To the west Tullytown Borough, Bristol Township and Middletown Township border Falls Township. Falls Township is situated approximately 25 miles northeast of Center City Philadelphia and just four miles southwest of downtown Trenton, the state capital of New Jersey.

*Demographics*		Levittown has experienced a decreased in population and household growth over the past several decades. According to DemographicsNow, the 2000 Census shows that the total population in Levittown was 54,176. The 2010 estimated population is 50,764 and the 2015 projected population is reported to decrease to 47,758. The average household income in 2000 was $57,986 with a median household income of $53,032. The average household income in 2010 is estimated to be $69,839 with a median of $57,967.

*Transportation*		The area is less than five miles from Interstate 95. I-95 is a primary north/south transportation link along the east coast. In Falls Township, there are interchanges at Old Lincoln Highway (Business Route 1) and at the US Route 1 Bypass. US Route 1 Bypass is a four lane limited access highway that extend from the Pennsylvania Turnpike interchange, in Bensalem Township north to New Jersey. Route 13 is a four lane limited access highway with interchanges at Mill Creek Road, Penn Valley Road, Tyburn Road, Newbold Road and at the Route 1 Bypass. The CONRAIL, SEPTA and Amtrak rail lines serve Falls Township. All major township industrial parks are served by rail. In addition, CONRAIL operates a large Intermodal Switch yard on Cabot Boulevard in the northern part of the Township. This facility allows the transfer of cargo from truck to railcar.

*Immediate Neighborhood*		The area is generally suburban in nature. Surrounding land uses consist of similar multi-family and single family residential properties. The subject’s neighborhood is accessible via Route 13 and Mill Creek Road. There are no detrimental land uses in the immediate area. The subject enjoys easy highway access to Route 13 and is within five miles of I-95.

		The subject is situated within a working class community in a densely developed portion of eastern Pennsylvania. The prospects for the future of this community remain fairly positive.

KTR Real Estate Advisors, LLC


Village of Pennbrook Apartments		December 2, 2011
Levittown, PA		Page 10


		SITE ANALYSIS

*Location*		Southeast corner of Mill Creek Road and Route 13, in Levittown, PA. The physical address of the property is 9071 Mill Creek Road.

*Site Area*		64.057 acres, which equates to 2,790,323 square feet.

*Street Frontage*		The subject has 865 feet of frontage along the south side of Mill Creek Road and 2,110 feet of frontage along the east side of Route 13.

*Topography*		The site is level at grade.

*Shape*		The parcel is irregularly shaped.

*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 Hazard*		According to the Federal Emergency Management Agency (FEMA), the subject property is within the AE flood zone, which is within 250 feet of multiple flood zones. The corresponding map number is 420188-0466F dated May 18, 1999.

*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 its marketability.

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

Accessibility/Visibility		Main ingress and egress to the property is via Mill Creek Road. Accessibility is good.

*Improvements*		A 722-unit garden apartment complex completed in 1969 with 32 apartment buildings, a clubhouse, a tennis court, a swimming pool, playgrounds, a mini mart, and mature landscaping. The property is 95.8% occupied and is in average physical condition.

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

KTR Real Estate Advisors, LLC


Village of Pennbrook Apartments		December 2, 2011
Levittown, PA		Page 12


		IMPROVEMENT ANALYSIS

*Year Built/Renovated*		The facility was completed in 1969 as a garden-style apartment complex. There were no major renovations within the last three years.

*Layout & Configuration*		The complex consists of 32, two-story garden apartment buildings containing 722 apartments with a rentable area of 660,220 square feet. The buildings are sited along internal drives that are integrated with the parking lots. There is a mini mart with four commercial units located along Mill Creek Road at the main entrance to the property, which is also part of the subject.

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

UNIT MIX AND FLOOR AREAS


Unit Code	Unit Type		Mix		Size		Total SF

1A10		1B/1B S		22		585		12,870
1B10		1B/1B L		24		620		14,880
1C10	1B/1B w Den			252		905		228,060
2A10		2B/1B S		276		930		256,680
2B10		2B/1B L		24		950		22,800
2A20		2B/2B		62		985		61,070
2B20	2B/2B w Den			62		1,030		63,860

Total/Avg				722				660,220

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


EXTERIOR
*Structure*		The foundations consist of reinforced concrete slabs poured on grade. Structural framing is wood stud walls with interior gypsum-clad drywall.

*Floors*		The floors are constructed of engineered wood trusses.

*Walls*		The exterior of the buildings are vinyl siding or brick.

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

*Roof*		The buildings have single pitched roofs with composition shingles.

INTERIOR FINISHES
*Walls and Ceilings*		Textured and painted drywall

*Flooring*		Flooring consists of carpeting and tile.

*Kitchens*		Typical appliance package includes a refrigerator/freezer, a stove and dishwasher. Cabinets are wood and countertops are for-mica.

KTR Real Estate Advisors, LLC


Village of Pennbrook Apartments		December 2, 2011
Levittown, PA		Page 13


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

MECHANICAL SYSTEMS
*HVAC*		Cool 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. Each apartment has a separate panel.

*Plumbing*		Each unit is serviced by an individual electric water heater.

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

ANCILLARY AREAS
*Landscaping*		Landscaping is of mature vegetation. Native trees and shrubs are plentiful throughout the common areas. Seasonal color is provided in beds along the main entrance points and near the pool and office area.

*Parking*		The internal drive incorporates the surface parking lots. There are reportedly 1,484 parking spaces. The drives and parking lots are asphalt paved.

*Recreational Amenities*		A tennis court, a swimming pool, a playground, a gym, a clubhouse and mature landscaping.

*FF&E*
*Personal Property*		The subject property has office furnishings and equipment for the staff in the office and various chairs and tables for the barbeque area. Kitchen appliances are also part of personal property. The FF&E are similar to competitive properties.

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 average age of the property is estimated to be 42 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 25 years.

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

KTR Real Estate Advisors, LLC


Village of Pennbrook Apartments		December 2, 2011
Levittown, PA		Page 14


*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. Considering these factors, no functional obsolescence is noted.

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

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

KTR Real Estate Advisors, LLC


Village of Pennbrook Apartments		December 2, 2011
Levittown, PA		Page 15


		ZONING ANALYSIS

*Introduction*		According to Falls Township, the subject property is situated in an HR
		High-Density Residential District. The purpose and intent of this district
		is to provide areas for attached dwellings at appropriate locations on
		arterial and collector streets and near convenient shopping, to broaden
		the Township’s housing base and therefore serve a greater variety of
		housing needs, to provide reasonable standards to prevent overcrowding
		of land, to regulate the density of population and to avoid undue
		congestion in the streets, to allow for the harmonious development of
		attached dwellings and to create conditions conducive to carrying out the
		broad purposes of this chapter.

		The principal permitted uses includes all low-density dwellings,
		townhouses and other attached dwellings, garden apartments and high-
		rise apartments. No commercial uses are permitted under the HR zone.

		The bulk restrictions in the HR High-Density Residential District are
		summarized in the following table.

HR — HIGH DENSITY RESIDENTIAL DISTRICT


RESTRICTION		SIZE
Minimum lot area		6 acres
Minimum lot frontage		200 feet
Minimum lot width		200 feet
Minimum lot depth		600 feet
Minimum perimeter yard		35 feet
Minimum distance between buildings, no
facing windows		50 feet
Maximum building coverage		15%
		1.75 per each one-bedroom;
		2 per each two-bedroom;
Minimum Parking		1 guest space for each 10 units

Source: Falls Township Code of Ordinances; Compiled by KTR.


*Conclusions*		The subject has a rentable area of 660,220 square feet. As all the residential dwellings are two-story buildings, the footprint of the building is 330,110. The building coverage is less than 15%. According to management, there are 1,484 parking spaces at the site, which is greater than the minimum requirement set forth by the zoning code. The residential portion of the subject appears to represent a legal and conforming use.

		The subject also includes a mini mart with four commercial tenants, which mainly serve the subject’s residents. As commercial use is not permitted under HR zone, this portion is considered a legal but non- conforming use.

KTR Real Estate Advisors, LLC


Village of Pennbrook Apartments		December 2, 2011
Levittown, PA		Page 16

REAL ESTATE ASSESSMENTS AND TAXES


*Overview*		According to the Falls Township tax record, the subject property is identified as Parcel Number 13-040-005. The taxable value is multiplied by the current millage rate to calculate the taxes payable. Revaluation occurs every year. The subject’s current assessment is shown below.

SUBJECT PROPERTY ASSESSMENT


Land Value	Building Value	Taxable Value
$490,000	$3,830,000	$4,320,000

Source: Falls Township Finance Office


*Comparable Assessments*		Similar properties within the area were surveyed to ascertain the reasonableness of the subject’s current assessment. The subject’s current assessment is $5,983 per unit. The comparables range between $5,320 and $7,075 per unit. The subject’s assessment is within the comparable range. Based on discussions with the Assessor, the assessment appears reasonable and has been processed.

TAX COMPARABLES


		Assessed		Year		Assessed		Assessment
Property Name	Tax ID	Value		Built		Units		Per Unit
Village of Pennbrook (Subject)	13-040-005	$	4,320,000		1969		722	$	5,983
Chesterfield	22-049-078, 078-1, 080	$	1,330,400		1968		247	$	5,386
Orangewood	05-041-009	$	1,702,400		1967		320	$	5,320
Raquet Club	22-039-074, 22-059-034	$	3,297,000		1970		466	$	7,075


Source: Falls Township Finance Office, compiled by KTR


*Mill Rate*		Mill rates have remained relatively stable over the past several years. The 2011 mill rates for the County, Township and school are 7.22, 21.94 and 150.30, respectively for a total of 179.46.

*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.

*Conclusion*		Based on the 2011 assessment of $4,320,000 and the effective 2011 tax rate of $179.46 per $1,000 of AV, the subject property’s 2011 real estate liability equates to $775,267. Real estate taxes are projected to grow at an average inflationary rate of 3.0 percent per year resulting in real estate taxes of $798,525 in the first year of the cash flow analysis. In the market, a 2.0 percent discount is granted if real estate taxes are paid two months prior to the due date. Assuming prudent management, this discount has been processed resulting in real estate taxes of $782,555 in the cash flow analysis.

KTR Real Estate Advisors, LLC


Village of Pennbrook Apartments		December 2, 2011
Levittown, PA		Page 17

APARTMENT MARKET ANALYSIS


*Area Apartment Market*		According to a market study performed by Marcus & Millichap, a national commercial real estate investment brokerage firm, the subject is located in the Lower Bucks county submarket. The immediate area is comprised of garden style apartment complexes, vacant land and commercial uses. Marcus & Millichap indicates that as of the Fourth Quarter 2011, the vacancy rate in the submarket was 3.6 percent, representing a 120 basis point decrease from the prior year’s rate. The average asking rent in the Lower Bucks County submarket is $867 per month. It is reported that there has been no new constructions in the subject’s Lower Bucks County submarket.

*Subject Property*		The subject units have average sizes and finishes consistent with that of the market. According to the October 28, 2011 rent roll, the subject’s current contract rents average $990.14 per month. The one-bedroom apartments range between $682.00 and $1,127.00 per month; the two-bedroom/one bathroom units range between $787.00 and $1,348.00 per month and the two-bedroom/two bathroom units range between $943.00 and $1,389.00 per month.

		Per the rent roll, there were 34 units reported to be vacant. The asking rents for the one-bedroom apartments range between $829 and $1,009 per month; the two-bedroom/one bathroom apartments range between $949 and $1,179 per month and the two-bedroom/two bathroom units range between $988 and $1,439 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 to 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 with 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


Village of Pennbrook Apartments		December 2, 2011
Levittown, PA		Page 19


COMPARABLE RENTAL 1		Chesterfield
		1338 Veterans Highway
		Levittown, PA 19056



*Units*		247

*Year Built*		1968

*Occupancy*		97%

*Amenities*		Central AC, balcony/patio, cable ready, dishwasher, microwave, refrigerator. Complex amenities include a laundry facilities, swim club, fitness center, and community room.

*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		570-690	$	775-$880	$	1.12-$1.54
2-Bed/2-Bath		835	$	1,180-$1,235	$	1.41-$1.48


*Comments*		It is located approximately 4.3 miles west of the subject property. This property is in similar condition with superior amenities.

KTR Real Estate Advisors, LLC


Village of Pennbrook Apartments		December 2, 2011
Levittown, PA		Page 20


COMPARABLE RENTAL 2		Orangewood
		6535 Mill Creek Road
		Levittown, PA 19057



*Units*		320

*Year Built*		1967

*Occupancy*		N/A

*Amenities*		Gas heat and air conditioning, electric stove, cable TV, patio/balcony and kitchens with standard appliances. Oak kitchen cabinets and white ceramic tile bath in selected units. Complex amenities include a laundry facilities, a swimming pool and playground.

*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		890-910	$	940-$985	$	1.03-$1.11
2-Bed/1-Bath		1,080-1,100	$	1,105-$1,160	$	1.00-$1.07


*Comments*		It is located approximately 2.5 miles southwest of the subject property. This property is in similar condition and offers comparable amenities.

KTR Real Estate Advisors, LLC


Village of Pennbrook Apartments		December 2, 2011
Levittown, PA		Page 21


COMPARABLE RENTAL 3		Hidden Forest
		502 Hidden Forest Court Fairless Hills, PA 19030



*Units*		238

*Year Built*		1973

*Occupancy*		95%

*Amenities*		Ceiling fans, closets, dishwasher, disposal, washer/dryer in unit and kitchens with standard appliances. Complex amenities include BBQ/Picnic area, business center, clubhouse, pool, playground, laundry facilities.

*Concessions*		Prices change often and rents for individual floor plans are reduced as needed to help bolster occupancy. The subject is currently offering $855 per month for available one-bedroom units.

RENTAL DATA


Type	Size		Rent		Rent/SF
1-Bed/1-Bath		727	$	910-$930	$	1.25-$1.28
2-Bed/1-Bath		872	$	1,090-$1,110	$	1.25-$1.27
2-Bed/2-Bath		895-912	$	1,160-$1,200	$	1.30-$1.32


*Comments*		It is located approximately 2.4 miles west of the subject property. This property is in similar condition; however, it has in-unit washer/dryers that is considered superior to the subject.

KTR Real Estate Advisors, LLC


Village of Pennbrook Apartments		December 2, 2011
Levittown, PA		Page 22


COMPARABLE RENTAL 4		Racquet Club
		1970 New Rodgers Road
		Levittown, PA 19057



*Units*		466

*Year Built*		1970

*Occupancy*		97%

*Amenities*		Ceiling fans, closets, dishwasher, disposal, washer/dryer in unit and kitchens with standard appliances. Complex amenities include BBQ/Picnic area, fitness center, tennis courts, clubhouse, pool, playground, laundry facilities.

*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		773-831	$	910- $950	$	1.14-$1.23
2-Bed/2-Bath		1,000-1,100	$	1,185- $1,375	$	1.08-$1.38


*Comments*		It is located approximately 4.2 miles southwest of the subject property. This property is in similar condition; however, it has superior amenities.

KTR Real Estate Advisors, LLC


Village of Pennbrook Apartments Levittown, PA		December 2, 2011 Page 23


*ANALYSIS*		The comparable rental properties are all in the vicinity of the subject property. The comparable properties were constructed between 1967 and 1973. The units and complex amenities are similar to the subject. The rental rates illustrated by the comparable properties provide a good indication as to the appropriate market rent of the subject property.

*One-Bedroom Units*		The subject property offers three one-bedroom unit floor plans, which are 585, 620 and 905 square feet, respectively with average asking rents ranging between $833 and $925 per month or $1.02 to $1.43 per square foot. The comparable one-bedroom units range in size from 570 to 910 square feet and have monthly asking rents ranging from $775 to $985 per month or $1.03 to $1.54 per square foot.

ONE-BEDROOM FLOOR PLANS


	Unit Size	Rent/Month	Rent/SF	Comment
Subject*	585	$837	$1.43	Subject
	620	$833	$1.34	Subject
	905	$925	$1.02	Subject

Chesterfield	570-690	$775-$880	$1.12-$1.54	Similar

Orangewood	890-910	$940-$985	$1.03-$1.11	Similar

Hidden Forest	727	$910-$930	$1.25-$1.28	Superior

Raquet Club	773-831	$910-$950	$1.14-$1.23	Similar
Subject Range	585-905	$833-$925	$1.02-$1.43
Comparable Range	570-910	$775-$985	$1.03-$1.54


*		Subject rental rates reflect average for each unit size


		The subject’s asking rents are bracketed by the competing properties. After considering variances for unit size and amenity packages, the subject’s average asking rents for the small one-bedroom floor plans appear slightly high and the additional two floor plans appear reasonable. The small one-bedroom units have been processed at $825 per month, the 620 square foot units have been processed at $835 per month and the 905 square foot units have been processed at $925 per month.

*Two-Bedroom/One Bath Units*		The subject property offers two two-bedroom/one-bath unit floor plans, which are 930 and 950 square feet, respectively with average asking rents between $1,002 and $1,127 per month or $1.08 to $1.19 per square foot. The comparable two-bedroom/one bathroom units range in size from 872 to 1,100 square feet and have monthly asking rents ranging from $1,090 to $1,160 per month or $1.00 to $1.27 per square foot.

KTR Real Estate Advisors, LLC



Village of Pennbrook Apartments Levittown, PA		December 2, 2011 Page 24

TWO-BEDROOM/ONE BATH FLOOR PLANS


	Unit Size	Rent/Month	Rent/SF	Comment
Subject*	930	$1,002	$1.08	Subject
	950	$1,127	$1.19	Subject

Orangewood	1,080-1,100	$1,105-$1,160	$1.00-$1.07	Similar

Hidden Forest	872	$1,090-$1,110	$1.25-$1.27	Similar
Subject Range	930-950	$1,002-$1,127	$1.08-$1.19
Comparable Range	872-1,100	$1,090-$1,160	$1.00-$1.27


*		Subject rental rates reflect average for each unit size


		The subject’s asking rents are bracketed by the competing properties. After considering variances for unit size and amenity packages, the subject’s average asking rents for the two-bedroom/one-bath floor plans appear reasonable and have been processed at $1,000 and $1,125, respectively.

*Two-Bedroom/Two Bath Units*		The subject property offers two two-bedroom/two-bath unit floor plans, which are 985 and 1,030 square feet, respectively with average asking rents of $1,190 and $1,330 per month or between $1.16 and $1.35 per square foot. The comparable two-bedroom/two bathroom units range in size from 835 to 1,100 square feet and have monthly asking rents ranging from $1,160 to $1,375 per month or $1.08 to $1.48 per square foot.

TWO-BEDROOM/TWO BATH FLOOR PLANS


	Unit Size	Rent/Month	Rent/SF	Comment
Subject*	985	$1,330	$1.35	Subject
	1,030	$1,190	$1.16	Subject

Chesterfield	835	$1,180-$1,235	$1.41-$1.48	Similar

Hidden Forest	895-912	$1,160-$1,200	$1.30-$1.32	Superior

Raquet Club	1,000-1,100	$1,185-$1,375	$1.08-$1.38	Similar
Subject Range	985-1,030	$1,190-$1,330	$1.16-$1.35
Comparable Range	835-1,100	$1,160-$1,375	$1.08-$1.48


*		Subject rental rates reflect average for each unit size


		The subject’s asking rents are bracketed by the competing properties. After considering variances for unit size and amenity packages, the subject’s average asking rents for the larger two-bedroom/two bathroom floor plan appears to be slightly below market and the smaller two-bedroom/two-bathroom floor plan appears to be above market. Considerate of the current asking rents, market rent has been processed at $1,200 per month for the 985 square foot unit and $1,250 per month for the 1,030 square foot units.

KTR Real Estate Advisors, LLC



Village of Pennbrook Apartments Levittown, PA		December 2, 2011 Page 25


*Conclusion*		The subject is expected to continue to capture its fair share of the market at the indicated economic rates. The subject’s potential gross rent is summarized in the following chart:

SUMMARY OF MARKET RENT POTENTIAL


Type	Mix	Size	Total Area	Rent	Rent/SF	Total Rent
1B/1B S	22	585	12,870	$825	$1.41	$	18,150
1B/1B L	24	620	14,880	$835	$1.35	$	20,040
1B/1B w Den	252	905	228,060	$925	$1.02	$	233,100
2B/1B S	276	930	256,680	$1,000	$1.08	$	276,000
2B/1B L	24	950	22,800	$1,125	$1.18	$	27,000
2B/2B	62	985	61,070	$1,200	$1.22	$	74,400
2B/2B w Den	62	1,030	63,860	$1,250	$1.21	$	77,500
Totals/Averages	722	914	660,220	$1,006	$1.10	$	726,190

KTR Real Estate Advisors, LLC



Village of Pennbrook Apartments Levittown, PA		December 2, 2011 Page 26


		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
		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 HR-High Density Residential Zoning District that allows for a variety of residential uses. The maximum value of a property is typically realized when a reasonable degree of homogeneity is present. Thus, conformity in use is usually a highly desirable aspect of real property, since it creates and/or maintains value. The immediate area is primarily developed with garden style apartment complexes, vacant land and commercial uses. Based on the principal of conformity and the subject’s zoning, the highest and best use of the property, if vacant, is residential development.

HIGHEST AND BEST USE AS IMPROVED
		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. No redevelopment of the site would provide a greater return to the land. Based on the fact that the potential income associated with the existing improvements provides 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



Village of Pennbrook Apartments Levittown, PA		December 2, 2011 Page 27


		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


Village of Pennbrook Apartments		December 2, 2011
Levittown, PA		Page 28


*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.

		Investors are generally not buying, selling, or lending with reliance placed on the Cost Approach. Furthermore, based on the age of the improvements, the Cost Approach would lend little insight into the market value of the property. Accordingly, the Cost Approach has been excluded from the scope of this appraisal.

*Reconciliation*		The final step in the appraisal process is to reconcile the various value indications into a single 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


Village of Pennbrook Apartments		December 2, 2011
Levittown, PA		Page 29


		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		The potential gross income from the apartment has been calculated to be $726,190 per month or $8,714,280 for the appraised year based on the analysis and conclusions derived in the Apartment Market Analysis section.

*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. In the case of the subject property, the loss to lease also accounts partially for concessions that are offered in the form of reduced rent.

		The operating statements under review indicate the historical loss to lease was positive 0.1 percent of gross potential rent in 2008, positive 7.1 percent in 2009, negative 0.9 percent in 2010 and negative 7.2 percent for the trailing 12 months between November 2010 and October 2011. The submitted October 28, 2011 rent roll indicated a loss to lease of approximately negative 1.7 percent. Considerate of the historical data, a loss to lease of negative 3.0 percent of gross rent potential has been processed.

*Concessions*		Concessions within the subject’s influencing area are common. Each of the properties surveyed as rent comparables offer some form of rent concession. The concessions consist of reduced rent or free rent over a portion of the lease term.

		According to operating statements under review, concessions were 1.6 percent in 2008, 2.4 percent in 2009, 2.1 percent in 2010 and 1.4 percent for the trailing 12 months between November 2010 and October 2011. Based on the historical experience, concessions of 2.0 percent have been processed in this analysis.

KTR Real Estate Advisors, LLC


Village of Pennbrook Apartments		December 2, 2011
Levittown, PA		Page 30


*Vacancy/Credit Loss*		The subject was reportedly 94.6% occupied in 2008, 89.6% percent occupied in 2009, 95.5% occupied in 2010 and 96.3 percent occupied for the trailing 12 months between November 2010 and October 2011. As of the October 28, 2011 rent roll, the property was 95.3% occupied. The 2010 and current occupancy levels are consistent with the range of occupancy levels reported by competitors in the immediate vicinity. Occupancy levels for the competing properties in the influencing market are outlined as follows:


OVERVIEW OF COMPETITIVE OCCUPANCY LEVELS

Property	Year Built		Total Units		Occupancy
Chesterfield		1968		247		97	%
Hidden Forest		1973		238		95	%
Racquet Club		1970		466		97	%


		The subject occupancy is currently operating at stabilized occupancy. The subject should reasonably maintain this level into the foreseeable future. As such, a stabilized vacancy and credit loss of 5.0 percent has been utilized in this appraisal.

*Commercial Rent*		There is a small retail component at the subject that includes four commercial spaces. Three of the spaces are leased to a sports bar, cleaner and a convenience store. According to the supplied rent roll, the total commercial rent in the trailing 12 months was $109,728. It is noted that one of the spaces is vacant. Considerate of the current tenants at the subject as wells as the historical rent for this space a market rent of $1,500 per month has been processed for the vacant space. As such, a commercial rent of $124,212 has been processed in the analysis.

*Miscellaneous Income*		Typically, apartment projects receive additional revenue from sources such as utility reimbursements, vending, application fees, late fees, bad check charges and deposit forfeitures. Income receipts at the subject property were $1,647 per unit in 2008, $1,811 per unit in 2009, $1,650 per unit in 2010 and was $1,642 per unit for the trailing 12 months. This income is projected based on the trailing 12 months at $1,700 per unit.

*Non-income Producing Units*		There are two model units at the subject and a deduction from potential gross income was applied in 2008, 2009, 2010 and the trailing 12 months. Accordingly, market rent has been applied to these units and deducted from the gross potential income equating to $22,560 for the appraised fiscal year.

*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 trailing 12 months from November 2010 through October 2011. These historical and budgeted amounts have been compared to the median dollar amount per unit reported by IREM for garden apartments in the Philadelphia Area. The subject’s operating statements under review have been reconstructed and summarized as follows.

KTR Real Estate Advisors, LLC


Village of Pennbrook Apartments		December 2, 2011
Levittown, PA		Page 31

RECONSTRUCTED OPERATING STATEMENTS


	722									722									722									722									2010 IREM
No. of Units	2008									2009									2010									Trailing 12 Months (Nov. - Oct.)									Median $/Unit
Year	Actual			Per Unit			Percent			Actual			Per Unit			Percent			Actual			Per Unit			Percent			Budget			Per Unit			Percent			Philly MSA
INCOME							% of GRP									% of GRP									% of GRP									% of GRP

Gross Rent Potential (Market Rent)	$	8,743,346		$	12,110			100.0	%	$	8,085,754		$	11,199			100.0	%	$	8,366,946		$	11,589			100.0	%	$	9,044,229		$	12,527			100.0	%
Loss to Lease	$	10,563		$	15			0.1	%	$	576,207		$	798			7.1	%	$	(75,951	)	$	(105	)		-0.9	%	$	(654,389	)	$	(906	)		-7.2	%
Concessions	$	(141,940	)	$	(197	)		-1.6	%	$	(192,589	)	$	(267	)		-2.4	%	$	(179,159	)	$	(248	)		-2.1	%	$	(127,759	)	$	(177	)		-1.4	%
Vacancy/Credit/Non-revenue Units	$	(471,355	)	$	(653	)		-5.4	%	$	(841,524	)	$	(1,166	)		-10.4	%	$	(374,470	)	$	(519	)		-4.5	%	$	(330,991	)	$	(458	)		-3.7	%

Net Rental Income (NRI)	$	8,140,614		$	11,275			93.1	%	$	7,627,848		$	10,565			94.3	%	$	7,737,366		$	10,717			92.5	%	$	7,931,090		$	10,985			87.7	%
Commercial Income	$	67,368		$	93			0.8	%	$	73,740		$	102			0.9	%	$	99,976		$	138				%	$	109,728		$	152			1.2	%
Other Income	$	1,189,324		$	1,647			13.6	%	$	1,307,571		$	1,811			16.2	%	$	1,191,466		$	1,650			14.2	%	$	1,185,250		$	1,642			13.1	%
Administrative Units	$	(23,226	)	$	(32	)		-0.3	%	$	(21,931	)	$	(30	)		-0.3	%	$	(23,076	)	$	(32	)		-0.3	%	$	(24,975	)	$	(35	)		-0.3	%

Total Property Income (EGI)	$	9,374,080		$	12,983			107.2	%	$	8,987,228		$	12,448			111.2	%	$	9,005,732		$	12,473			107.6	%	$	9,201,093		$	12,744			101.7	%

EXPENSES							% of EGI									% of EGI									% of EGI									% of EGI

Utilities	$	924,337		$	1,280			9.9	%	$	853,701		$	1,182			9.5	%	$	918,134		$	1,272			10.2	%	$	840,870		$	1,165			9.1	%	$	1,103
Maintenance & Repairs	$	619,883		$	859			6.6	%	$	628,974		$	871			7.0	%	$	633,290		$	877			7.0	%	$	806,526		$	1,117			8.8	%	$	770
Payroll	$	818,354		$	1,133			8.7	%	$	849,180		$	1,176			9.4	%	$	846,120		$	1,172			9.4	%	$	924,835		$	1,281			10.1	%	$	792
Marketing	$	81,217		$	112			0.9	%	$	59,746		$	83			0.7	%	$	89,518		$	124			1.0	%	$	90,289		$	125			1.0	%	$	451
Administration/Office	$	132,111		$	183			1.4	%	$	200,911		$	278			2.2	%	$	224,245		$	311			2.5	%	$	225,052		$	312			2.4	%	$	594
Management Fee	$	459,881		$	637			4.9	%	$	444,525		$	616			4.9	%	$	445,320		$	617			4.9	%	$	449,367		$	622			4.9	%	$	451
Insurance	$	246,286		$	341			2.6	%	$	210,649		$	292			2.3	%	$	224,488		$	311			2.5	%	$	210,856		$	292			2.3	%	$	234
Real Estate Taxes	$	725,478		$	1,005			7.7	%	$	751,805		$	1,041			8.4	%	$	763,024		$	1,057			8.5	%	$	773,970		$	1,072			8.4	%	$	1,081
Reserves	$	0		$	0			0.0	%	$	0		$	0			0.0	%	$	0		$	0			0.0	%				$	0		$	0.0	%	$	0

TOTAL EXPENSES	$	4,007,547		$	5,551			42.8	%	$	3,999,491		$	5,539			44.5	%	$	4,144,139		$	5,740			46.0	%	$	4,321,765		$	5,986			47.0	%	$	5,476

NET OPERATING INCOME	$	5,366,533		$	7,433			57.3	%	$	4,987,737		$	6,908			55.5	%	$	4,861,593		$	6,734			54.0	%	$	4,879,328		$	6,758			53.0	%

Source: Client Submitted Information; compiled by KTR

KTR Real Estate Advisors, LLC


Village of Pennbrook Apartments		December 2, 2011
Levittown, PA		Page 32


*Overview*		All of the expenses have fluctuated during the past couple of years. In general, 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 individual unit gas, electricity, water/sewer and trash collection. Utility charges are offset by applicable tenant reimbursements. At the subject property, electric is directly metered, while water, gas and trash are billed to tenants.

		Utility expenses fluctuate with occupancy, weather and changes in supply costs. The utility expenses at the subject property were $1,280 per unit in 2008, $1,182 per unit in 2009, $1,272 per unit in 2010 and were $1,165 per unit in the trailing 12 months. The IREM survey indicated that the median for garden complexes in the area is $1,103 per unit, slightly below the historical amounts. Based on the historical expenses, a projection of $1,200 per unit or $866,400 is processed for the utility expense.

*Repairs & Maintenance*		This expense 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.

		The repairs and maintenance expense at the subject property were $859 per unit in 2008, $871 per unit in 2009, $877 per unit in 2010 and was $1,117 per unit in the trailing 12 months. The IREM survey indicated that the median for garden complexes in the area is $770 per unit, below the historical reported amounts. Based on the historical expenses, a repairs and maintenance expense of $875 per unit or $631,750 has been processed. A separate Reserves category has been processed in this analysis.

*Payroll*		This expense includes payroll and benefits for the property manager, leasing agent(s), housekeeping and maintenance personnel. The payroll expense were $1,133 per unit in 2008, $1,176 per unit in 2009, $1,172 per unit in 2010 and was $1,281 per unit in the trailing 12 months. The IREM survey indicated that the median for garden complexes in the area is $792 per unit, below the historical amounts. Based on the subject’s historical expense data, the trailing 12 month payroll expense appears slightly high and has been processed at $1,250 per unit or $902,500.

*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 $112 per unit in 2008, $83 per unit in 2009, $124 per unit in 2010 and was $125 per unit in the trailing 12 months. The IREM survey reported a marketing expense of $451 per unit. Based on the historical data and the subject’s current occupancy, the trailing 12 months appears reasonable and has been processed at $125 per unit or $90,250 is processed. The IREM report appears excessive given the subject’s relatively consistent history.

KTR Real Estate Advisors, LLC


Village of Pennbrook Apartments		December 2, 2011
Levittown, PA		Page 33


*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 administrative expense at the subject property were $183 per unit in 2008, $278 per unit in 2009, $311 per unit in 2010 and was $312 per unit in the trailing 12 months. The IREM survey indicated that the median for garden complexes in the area is $594 per unit, above the historical and budgeted amounts. Based on subject’s own operating history, an administrative expense of $319 per unit or $230,000 is processed.

*Management Fee*		In the local market management services are typically a function of the revenues produced by the property, usually between 3.0 and 5.0 percent of collections. Based on historical operating statements under review, the subject property was managed for a fee that is equivalent to approximately 5.0 percent of collected income at the high end of the market range. Management fees of 5.0 percent of the effective gross income has been processed in this analysis.

*Insurance*		Insurance includes fire, liability, theft, and boiler, exclusive of the premiums paid to employee benefit plans. The historical insurance expenses at the subject property were $355 per unit in 2008, $274 per unit in 2009, $297 per unit in 2010 and were $292 per unit in the trailing 12 months. The IREM survey indicated that the median for garden complexes in the area is $178 per unit, below the historical amounts. Based on the historical data, the trailing 12 month insurance expense has been rounded to $300 per unit or $216,600 annually.

*Real Estate Taxes*		In the market if taxes are paid two months prior to their respective due dates, the owner receives a 2.0 percent discount on the tax liability. As developed in the Real Estate Assessment and Tax Analysis section of this report, the subject’s real estate tax liability (with early payment discount) equates to $782,555 in the first year of the analysis. Assuming prudent management, this discount has been processed.

*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. 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 amounts to $180,500.

KTR Real Estate Advisors, LLC


Village of Pennbrook Apartments		December 2, 2011
Levittown, PA		Page 34


*Total Expenses*		On a stabilized basis, the subject’s projected expenses including reserves are projected at $4,359,123, or $6,038 per unit. The indicated operating expense ratio is 47.5% when including reserves. The IREM survey indicated total operating expenses below 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.

STABILIZED PRO FORMA


	11/30/2012
Appraised Fiscal Year-ending	Total			Per Unit				Percent
INCOME							% of GPI

Gross Rent Potential (Market Rent)	$	8,714,280		$	12,070				100.0	%
Loss to Lease	$	(261,428	)	$	(362	)			-3.0	%
Concessions	$	(174,286	)	$	(241	)			-2.0	%
Vacancy/Credit/Non-revenue Units	$	(435,714	)	$	(603	)			-5.0	%

Net Rental Income (NRI)	$	7,842,852		$	10,863				90.0	%
Commercial Income	$	124,212		$	172				1.4	%
Other Income	$	1,227,400		$	1,700				14.1	%
Administrative Units	$	(23,100	)	$	(32	)			-0.3	%

Total Property Income (EGI)	$	9,171,364		$	12,703				105.2	%

EXPENSES							% of EGI

Utilities	$	866,400		$	1,200				9.4	%
Maintenance & Repairs	$	631,750		$	875				6.9	%
Payroll	$	902,500		$	1,250				9.8	%
Marketing	$	90,250		$	125				1.0	%
Administration/Office	$	230,000		$	319				2.5	%
Management Fee	$	458,568		$	635				5.0	%
Insurance	$	216,600		$	300				2.4	%
Real Estate Taxes	$	782,555		$	1,084				8.5	%
Reserves	$	180,500		$	250				2.0	%

TOTAL EXPENSES	$	4,359,123		$	6,038				47.5	%

NET OPERATING INCOME	$	4,812,241		$	6,665				52.5	%


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

*Derivation from Sales*		The following table summarizes five sales of garden apartment complexes in the Philadelphia area that closed between March and September 2011. The overall capitalization rates range from 5.7 to 7.55 percent. This data is directly supportive of the range indicated by the PwC Investor Survey for apartments in the National Apartment Market.

KTR Real Estate Advisors, LLC


Village of Pennbrook Apartments		December 2, 2011
Levittown, PA		Page 35

PHILADELPHIA AREA CAPITALIZATION RATES


Address	Sale Date		Size (sf)		Year Built		Units		Overall Rate
4666 Caroline Ave, Dover, DE*		9/8/2011		352,202		1975		298		7.00	%
2 Waterview Rd, West Chester, PA		7/8/2011		167,475		1968		203		5.70	%
1 Meridian Ct, Marlton, NJ		6/30/2011		251,824		1987		296		6.25	%
459 Greenland Dr, Lancaster, PA		5/5/2011		254,814		1973		180		7.55	%
2200 Lifestyle Ln, Kutztown, PA		3/9/2011		173,696		2008		184		7.20	%


*		Pro-Forma OAR


		The capitalization rates produced by these sales are a reliable indication as to an appropriate rate for the subject property. Based on recent sales data and considering the age of the subject property, a capitalization rate towards the higher end of the noted range would be reasonable for the subject.

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

NATIONAL APARTMENT MARKET SURVEY


Overall Capitalization Rate	3.75% - 10.00% 5.98%	Range Average
Annual Rent Growth Rate	(2.00%) - 8.00% 2.00%	Range Average
Annual Expense Growth Rate	0.00% - 4.00% 2.68%	Range Average

Source: PwC Real Estate Investor Survey, Third Quarter 2011


		As indicated below, overall rates in the National Apartment Market began to increase in the Third Quarter 2008 and continued this trend through the Fourth Quarter of 2009. However, during 2010 through the Third Quarter of 2011, average overall rates have decreased by an average of 29.3 basis points per quarter. This data seems to support the overall perception that multi-family housing has passed its nadir and is attracting significant investor interest resulting in appreciation over 2009 levels.

OVERALL CAPITALIZATION RATE TRENDS


Quarter	Average	Basis Point Change
3Q11	5.98%	-12
2Q11	6.10%	-19
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

Source: PwC Real Estate Investor Survey

KTR Real Estate Advisors, LLC


Village of Pennbrook Apartments		December 2, 2011
Levittown, PA		Page 36


*Conclusion of O*AR		The subject is an average quality apartment complex situated in an established residential neighborhood. The property is proximate to employment centers, shopping and neighborhood support facilities. The subject has unit sizes that reflect market parameters. The amenity package is considered standard when compared to properties in the competitive market.

		OARs ranging from 5.7 to 7.55 percent were indicated from comparable sales. Three of the five comparables indicated rates above 7.0 percent with the two additional sales being located in superior areas. The PwC survey indicates an average rate for the national apartment market of 5.98 percent. Considering the subject’s age and occupancy, a capitalization rate of 7.25 percent has been selected.

*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:

		$4,812,241 ÷ 7.25% = $66,375,738

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 December 1, 2011, is rounded to:

		SIXTY SIX MILLION FOUR HUNDRED THOUSAND DOLLARS ($66,400,000)

KTR Real Estate Advisors, LLC


Village of Pennbrook Apartments		December 2, 2011
Levittown, PA		Page 37

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 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.

	Three sales were selected for analysis from the suburban and northern Philadelphia markets. Other more recent sales were identified by the appraiser; however, due the fact that these sales were located further from the subject property in less similar markets or were physically less similar to the subject. As such, these transactions have not been presented herein, but have been considered for general market conditions. The three comparable sales presented represent the most similar properties identified in our survey.

	The comparable sales summarized in the chart that follows and plotted on the following map, range in price from $80,729 to $103,125 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


Village of Pennbrook Apartments		December 2, 2011
Levittown, PA		Page 38

PRESENTATION OF COMPARABLE SALES DATA


	Subject	Sale No. 1	Sale No. 2	Sale No. 3
Name	Village of Pennbrook Apts	Hamilton Court East	ARK Rushwood	The Woods
Location	9071 Mill Creek Road	3455 Street Road	10825 E Keswick Road	1410 E Butler Pike
	Levittown, PA	Bensalem, PA	Philadelphia, PA	Ambler, PA
Grantor		3455 Hamilton GRP East Real Estate Trust	Korman Financing Partnership	SDCO The Woods, Inc
Grantee		Lighthouse Bensalem LLC	CRP-Grep Rushwood LP	The Wood at Upper Dublin
Sales Price		$15,500,000	$34,000,000	$33,000,000
Sale Date		1/31/2011	11/8/2010	10/5/2010
Year Built	1969	1970	1966	1974
No. of Units	722	192	392	320
Net Rentable Area (SF)	660,220	142,848	404,000	240,467
Avg. Unit Size (SF)	914	744	1,031	751
Occuapncy	95.8%	85.0%	N/A	N/A
Price/SF		$108.51	$84.16	$137.23
Price/Unit		$80,729	$86,735	$103,125

COMPARABLE SALES MAP

KTR Real Estate Advisors, LLC


Village of Pennbrook Apartments		December 2, 2011
Levittown, PA		Page 39


ANALYSIS OF SALES		The comparables are examined by considering the following adjustment factors.

*Property Rights Conveyed*		The interest being appraised is the Leased Fee Interest. All sales were sold for its Leased Fee Interest and no adjustment for property rights is required.

*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 appliances 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. None of the sales required any specific sale price adjustment other than what is included in general comparisons based on condition.

*Market Conditions*		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 October 2010 and January 2011. Although overall rates continue to drop, these rate declines have been offset somewhat by rental rate reductions and expense inflation. Accordingly, only moderate appreciation is noted. As all of the sales occurred at the end of 2010 or the first half of 2011, no adjustments for market conditions have been processed.

*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, 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 914 square feet. Properties with larger average unit sizes tend to trade at a higher price per unit, 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


Village of Pennbrook Apartments		December 2, 2011
Levittown, PA		Page 41


Comparable Sale No. 1

Property Name:		Hamilton Court East
Location:		3455 Street Road
Neighborhood:		Bensalem, PA
Parcel ID:		02-001-049-001
Date of Sale:		January 31, 2011
Grantor:		3455 Hamilton GRP East Real Estate Trust
Grantee:		Lighthouse Bensalem LLC
Consideration:		$15,500,000
Number of Units:		192
Size (Sq. Ft.):		142,848 square feet
Year Built:		1970
Occupancy:		85%
Price per Unit:		$80,729 per unit
Price per Square Foot:		$108.51 per square foot



Analysis:		No adjustment for market conditions has been processed. The comparable is located in Bensalem, PA, which is considered a similar location to that of the subject and no adjustment has been applied for location. The occupied units had been substantially renovated prior to the sale. The vacant units were in poor condition and were to be renovated by the new owner. The renovated units would be considered slightly superior to the subject; however, the un-renovated units would be significantly inferior. As such, the age and condition are considered equivalent to the subject. However, the quality is considered inferior and requires a slight upward adjustment. This comparable’s average unit size is 744 square feet which is considered inferior to the subject’s average unit size of 914 square feet and therefore a slight upward adjustment has been applied for average unit size. Amenities at the comparable are considered inferior and a slight upward adjustment has been applied. Overall, a moderate upward adjustment to the market adjusted unit price is warranted.

KTR Real Estate Advisors, LLC


Village of Pennbrook Apartments		December 2, 2011
Levittown, PA		Page 42


Comparable Sale No. 2

Property Name:		ARK Rushwood
Location:		10825 E Keswick Road
Neighborhood:		Philadelphia, PA
Parcel ID:		881234700
Date of Sale:		November 8, 2010
Grantor:		Korman Financing Partnership
Grantee:		CRP-Grep Rushwood
Consideration:		$34,000,000
Number of Units:		392
Size (Sq. Ft.):		404,000 square feet
Year Built:		1966
Occupancy:		N/A
Price per Unit:		$86,735 per unit
Price per Square Foot:		$84.16 per square foot



Analysis:		No adjustment for market conditions has been processed. The comparable is located in a similar neighborhood as the subject and no adjustment was applied for location. Age, condition and quality are considered slightly inferior requiring a slight upward adjustment. This comparable’s average unit size is 1,031 square feet which is larger than the subject’s average unit size of 914 square feet and therefore a slight downward adjustment has been applied for average unit size. Amenities at the comparable are considered inferior and a slight upward adjustment has been applied. Overall, a slight upward adjustment to the market adjusted unit price is warranted.

KTR Real Estate Advisors, LLC


Village of Pennbrook Apartments		December 2, 2011
Levittown, PA		Page 43


Comparable Sale No. 3

Property Name:		The Woods
Location:		1410 E Butler Pike
Neighborhood:		Ambler, PA
Parcel ID:		54-03241008
Date of Sale:		October 5, 2010
Grantor:		SDCO The Woods, Inc
Grantee:		The Woods at Upper Dublin, PA
Consideration:		$33,000,000
Number of Units:		320
Size (Sq. Ft.):		240,467 square feet
Year Built:		1974
Occupancy:		N/A
Price per Unit:		$103,125 per unit
Price per Square Foot:		$137.23 per square foot



Analysis:		No adjustment for market conditions has been processed. The comparable is located in Ambler, which is considered superior to the subject and accordingly a slight downward adjustment has been applied for location. Age, condition and quality are considered superior requiring a slight downward adjustment. This comparable’s average unit size is 751 square feet which is considered inferior to the subject’s average unit size of 914 square feet and therefore a slight upward adjustment has been applied for average unit size. Amenities at the comparable are considered similar and no adjustment has been applied. Overall, a slight downward adjustment to the market adjusted unit price is warranted.

KTR Real Estate Advisors, LLC


Village of Pennbrook Apartments		December 2, 2011
Levittown, PA		Page 44

COMPARABLE SALES ADJUSTMENT GRID


	Subject	Sale No. 1	Sale No. 2	Sale No. 3
Name	Village of Pennbrook Apts	Hamilton Court East	ARK Rushwood	The Woods
Address	9071 Mill Creek Road Levittown, PA	3455 Street Road Bensalem, PA	10825 E Keswick Road Philadelphia, PA	1410 E Butler Pike Ambler, PA
Sale Date		1/31/2011	11/8/2010	10/5/2010

Price per Unit		$80,729	$86,735	$103,125

ADJUSTMENTS
Financing Adjustment		$0	$0	$0

Adjusted for Financing per Unit		$80,729	$86,735	$103,125
Conditions of Sale Adjustment		$0	$0	$0

Adjusted for Special Conditions		$80,729	$86,735	$103,125
Time		0.0%	0.0%	0.0%

Time Adjusted Price per Unit		$80,729	$86,735	$103,125

Location		0%	0%	-5%
Age/Condition/Quality		5%	5%	-5%
Average Unit Size		5%	-5%	5%
Amenities		5%	5%	0%

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

Adjusted Price per Unit		$92,838	$91,072	$97,969


VALUE CONCLUSION		After analysis and adjustments, a value range of $91,072 to $97,969 per unit is indicated. Greatest reliance is given to Sales No. 1 and 2 as they are the most proximate to the subject and are the most current. These sales indicated a range of $91,072 to $92,838 per unit. Accordingly, a unit value of $92,000 per unit is concluded for the subject property.

		722 units x $92,000 per unit = $66,424,000

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

		SIXTY SIX MILLION FOUR HUNDRED THOUSAND DOLLARS ($66,400,000)

KTR Real Estate Advisors, LLC


Village of Pennbrook Apartments		December 2, 2011
Levittown, PA		Page 45


		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 December 1, 2011. The indicated market value estimates for the real property interest appraised are:

		Income Capitalization Approach $66,400,000 Sales Comparison Approach $66,400,000

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		Both the Income Capitalization and Sales Comparison Approaches to value have been processed and suggest a market value of $66,400,000. Each approach has merit and similar limitations. As noted above, greatest reliance has been placed on the Income Capitalization Approach. Based on 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 December 1, 2011 is:

		SIXTY SIX MILLION FOUR HUNDRED THOUSAND DOLLARS ($66,400,000)

EXTRAORDINARY ASSUMPTION

KTR Real Estate Advisors, LLC


Village of Pennbrook Apartments		December 2, 2011
Levittown, PA		Addenda

PROFESSIONAL QUALIFICATIONS

TERENCE TENER, MAI, ASA
MANAGING PARTNER


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


Village of Pennbrook Apartments		December 2, 2011
Levittown, PA		Addenda

PROFESSIONAL QUALIFICATIONS

MENG CHEN, MAI
SENIOR APPRAISER


EXPERIENCE		Meng Chen is a Senior Appraiser with KTR Real Estate Advisors LLC. She has 9 years of commercial appraisal experience. Ms. Chen is a designated Member of Appraisal Institute and is a Certified General Appraiser in the State of New York.

		Notable appraisal assignments include the valuation of 1 South Penn Square (Widener Building) in Philadelphia, 294 Rodeo Drive in Beverly Hills, Hudson Yards land for eminent domain, as well as various other types of real estate including office, retail, industrial, residential, and vacant land properties

LICENSES		New York Certified General Appraiser #46000047255

MEMBERSHIPS		Appraisal Institute – MAI Designation

EDUCATION		Shenzhen University, China – Bachelor of Science in Civil Engineering University of Southern California, Los Angeles, CA – Master of Real Estate Development

		Appraisal Institute:

		• Basic Appraisal Principles

		• Basic Appraisal Procedures

		• General Appraiser Income Approach/Part I

		• General Appraiser Income Approach/Part II

		• General Appraiser Sales Comparison Approach

		• General Appraiser Site Valuation & Cost Approach

		• General Appraiser Market Analysis and Highest and Best Use

		• General Appraiser Report Writing & Case Studies

		• Real Estate Finance, Statistics, Valuation Modeling

		• Advanced Income Capitalization

		• General Appraiser Market Analysis and Highest and Best Use

		• Advanced Sales Comparison and Cost Approaches

		• Report Writing and Valuation Analysis

		• Advanced Applications

KTR Real Estate Advisors, LLC


Village of Pennbrook Apartments		December 2, 2011
Levittown, PA		Addenda

PROFESSIONAL QUALIFICATIONS

SHAUN KEST
APPRAISER


EXPERIENCE		Shaun Kest is an Appraiser with KTR Real Estate Advisors LLC. He has five years of commercial appraisal experience. Mr. Kest is actively pursuing designation as a member of the Appraisal Institute. Prior to joining the firm, Mr. Kest worked for the Chatham at North Hills where he assisted in the development of a townhouse community development and for East End Properties where he assisted in the development of a shopping center.

LICENSES		New York Certified General Appraiser #46000049297

MEMBERSHIPS		Appraisal Institute – Associate Member since 2007

EDUCATION		University of Miami, Miami, Florida – BBA (Finance)

		Appraisal Institute:

		• Introduction to Real Estate Appraisal (R-1)

		• Basic Valuation Principles & Procedures (R-2)

		• Appraisal Fair Housing (AQ-1)

		• National USPAP Appraisal Course (15-Hour)

		• Introduction to Income Property Valuation (G-1)

		• Principles of Income Property (G-2)

		• Applied Income Property Valuation (G-3)

KTR Real Estate Advisors, LLC



		575 Lexington Avenue, New York, New York 10022 Tel: 212.906.9400 Fax:212.935.5935


		NPI Equity Investments, Inc. Village of Pennbrook Apartments December 2, 2011 Page 2


Village of Pennbrook Apartments Levittown, PA		December 2, 2011 Page v


Village of Pennbrook Apartments Levittown, PA		December 2, 2011 Page vi


Village of Pennbrook Apartments Levittown, PA		December 2, 2011 Page vii


*Amenities*		The subject offers a standard amenity package consisting of a swimming pool, tennis courts, a playground and a clubhouse. Adjustments for amenities have been made on an individual basis to account for amenities offered.

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



Community view		Community view


Pool		Parking lot/tennis court in distance


Gym		Clubhouse


Village of Pennbrook Apartments Levittown, PA		December 2, 2011 Addenda