AGREEMENT OF PURCHASE AND SALE

(Cumberland Trace, Village at Cliffdale, Morganton Place and Woodberry)

This Agreement of Purchase and Sale (the “Agreement”) is made and entered into
as of this 12th day of September, 2006 (the “Effective Date”), by and between
America First Apartment Investors, Inc., a Maryland corporation (“Purchaser”),
and UDR of NC, Limited Partnership, a North Carolina limited partnership
(“Seller”), with respect to certain apartment projects located in the State of
North Carolina (the “Portfolio Properties”) which comprise four separate
multi-family apartment complexes. The Portfolio Properties are more fully
described in Schedule 1 attached hereto.

IN CONSIDERATION of the respective agreements set forth in this Agreement,
Seller and Purchaser agree as follows:

ARTICLE I

PURCHASE AND SALE

1.01 Purchase and Sale. Seller agrees to sell and convey to Purchaser, and
Purchaser agrees to purchase from Seller, on the terms and conditions set forth
in this Agreement all of Seller’s right, title and interest, if any, in and to,
the following:

(a) Real Property and Appurtenances. All that certain real property located in
the Counties of Buncombe and Cumberland, State of North Carolina, as more
particularly described on Exhibits A-1 through A-4 (the “Land”), together with
all interest, if any, of Seller in easements and interests appurtenant thereto
including, but not limited to, all right, title and interest, if any, of Seller
in and to all water rights, open or proposed highways, streets, roads, avenues,
alleys, easements, strips, gores or rights-of-way in, on, across, in front of,
contiguous to, abutting, adjoining or otherwise benefiting the Land;

(b) Improvements. With respect to each of the Portfolio Properties, all
improvements and fixtures located on the Land, excluding any fixtures owned by
tenants or leased by Seller from third parties (provided such leases are not
listed on Exhibit B attached hereto), but including all buildings and structures
presently located on the Land, and all apparatus, equipment and appliances owned
by Seller and used in connection with the operation or occupancy of the Land,
including, without limitation, all appliances located in residential units or
common areas, all heating and air conditioning systems, parking and recreational
facilities and services, refrigeration, ventilation, trash disposal or other
utilities, facilities and/or services owned by Seller and located on the Land
(collectively, the “Improvements”);

(c) Personal Property. With respect to each of the Portfolio Properties, all of
the right, title and interest of Seller in and to all personal property owned by
Seller and located on, in, or used in connection with, the Land and/or
Improvements, as set forth on the inventory attached hereto as Schedule 3,
excluding any (i) software programs, (ii) computer hardware, (iii) related
software of Seller, (iv) all of the uninstalled HVAC equipment located in
trailers on each of the Portfolio Properties, and (v) any personal property that
includes any logo or other information or mark identifying Seller or its
affiliates (collectively, the “Personal Property”);

(d) Leases. With respect to each of the Portfolio Properties, all right, title
and interest of Seller in and to all leases and other agreements to occupy the
Land and/or the Improvements, or any portion thereof, that are in effect on the
Effective Date or that Seller enters into prior to Settlement pursuant to the
terms of this Agreement (collectively, the “Leases”), including, without
limitation, the Leases identified and described on the rent rolls attached
hereto as Schedule 2 (each a “Rent Roll” and collectively, the “Rent Rolls”) and
all leasing files and security deposits (including pet deposits) pertaining
thereto; and

(e) Intangible Property. With respect to each of the Portfolio Properties, all
of the right, title and interest of Seller, to the extent transferable by
Seller, in and to all trademarks, tradenames, permits, approvals, and
entitlements and other intangible personal property owned by Seller and used in
the ownership, use and operation of the Land, Improvements and/or Personal
Property, including, without limitation, the right to use the names “Cumberland
Trace”, “Morganton Place” “Village at Cliffdale” and “Woodberry”, proprietary
telephone numbers (i.e., 8xx numbers) related solely to the Property, if any,
all property management, operations and tenant lease data on Seller’s computers
(which data Seller agrees to provide access to and to cooperate with Purchaser’s
efforts to export or transfer such data to Purchaser’s property management
computer software and hardware at Settlement) (collectively, the “Intangible
Personal Property”); and all transferable right, title and interest in the
Seller’s agreements, licenses, permits, approvals, applications and warranties
now in effect with respect to the ownership, management or operation of the
Property, listed on Exhibit B (the “Service Contracts”), but only to the extent
designated by Purchaser under Section 3.01(j) hereof to be assigned to and
assumed by Purchaser at Settlement.

All of the items described in Sections 1.01(a), (b), (c), (d) and (e) above
shall hereinafter be collectively referred to as the “Property.”

1.02 Purchase Price. The total purchase price for the Property shall be
Sixty-Two Million Six Hundred Thousand and 00/100 Dollars ($62,600,000.00) (the
“Total Purchase Price”). The purchase price of each Portfolio Property and the
other Property associated therewith shall be the sum identified as the purchase
price for such Portfolio Property on Schedule 1 attached hereto (the “Purchase
Price”). The Total Purchase Price, plus or minus prorations and other
adjustments pursuant to this Agreement, shall be paid to Seller as follows:

(a) Deposit. On the Effective Date, Purchaser shall deposit with Fidelity
National Title Insurance Company, 8450 East Crescent Parkway, Suite 410,
Greenwood Village, CO 80111, Attn: Valena Bloomquist, Vice President, Senior
Commercial Escrow Officer (“Title Company”), as escrow agent (the “Escrow
Agent”), an earnest money deposit in the amount of Five Hundred Thousand and
00/100 Dollars ($500,000.00) in immediately available funds (the “Deposit”),
which amount shall be applied to the Total Purchase Price if Settlement occurs.
The Deposit shall be allocated to each of the Portfolio Properties as set forth
on Schedule 1. The proceeds of the Deposit shall be deposited and held by Escrow
Agent in accordance with the terms and provisions of this Agreement. The Deposit
shall only be refundable to Purchaser as set forth in this Agreement.

(b) Closing Payment. The balance of the Total Purchase Price, as adjusted by the
application of the Deposit plus accrued interest thereon and by the prorations
and credits specified herein, shall be paid in cash on the Settlement Date (as
hereinafter defined) (the amount to be paid under this subparagraph (b) being
herein called the “Closing Payment”).

(c) Allocation. Within five (5) days following the Effective Date, Purchaser and
Seller will reasonably cooperate to allocate a portion of the Total Purchase
Price to the Personal Property described in Section 1.01(c), and the balance
shall be allocated to the Real Property, the Appurtenances and the Improvements.
In addition, the parties may agree on a reallocation of the Total Purchase Price
among the Portfolio Properties prior to Settlement and each party agrees to
reasonably cooperate at the request of the other party with respect to any such
reallocation.

(d) Interest. The Deposit shall be at all times invested in an interest bearing
account. Interest on the Deposit shall belong to the party to whom the Deposit
is distributed according to this Agreement and shall be distributed concurrently
with the Deposit.

(e) Return of Deposit. If Purchaser instructs Title Company to return the
Deposit, Title Company shall notify Seller of Purchaser’s demand, and, unless
Title Company receives, within three business days of the date of Title
Company’s notice to Seller, a notice from Seller objecting to Purchaser’s
demand, Title Company shall return the Deposit to Purchaser. Except as provided
to the contrary in this Agreement, if Purchaser makes a demand for return of the
Deposit and Title Company does receive such a notice from Seller within such
time period, then Title Company shall hold the Deposit in escrow in an interest
bearing account until the dispute as to which party is entitled to the proceeds
of the Deposit is resolved.

1.03 Closing Costs.

(a) Seller will pay for (i) one-half of all escrow fees, (ii) all documentary,
deed, stamp or transfer taxes associated with the recording of the Deed
(iii) all other recording fees, (iv) Seller’s attorneys’ fees, and (vii) if
Settlement occurs, the cost of the Surveys.

(b) Purchaser will pay for (i) the cost of its inspections, (ii) costs and the
premiums to obtain an ALTA owner’s title insurance policy on each of the
Portfolio Properties, and the costs of any endorsements to such owner’s title
insurance policies, (iii) all costs incurred by Purchaser with respect to its
financing of the Total Purchase Price including the costs and premiums
associated with any mortgagee title insurance policy and all endorsements
requested by the mortgagee, (iv) Purchaser’s attorneys fees, and (v) one-half of
any escrow fees.

ARTICLE II

DUE DILIGENCE

2.01 Access Agreement. Purchaser and Seller have entered into an access
agreement, dated as of July 19, 2006 (the “Access Agreement”), which provides
Purchaser certain access rights, subject to the rights of tenants, to enter upon
the Property. After the Effective Date and until Settlement, provided that this
Agreement has not been terminated, Purchaser shall continue to have access to
the Property and to Seller’s records pertaining thereto upon complying with the
provisions of the Access Agreement.

2.02 Title Commitment; Title Policy.

(a) Title Commitment. As of the Effective Date, Seller has caused to be ordered
a commitment for an Owner’s Title Insurance Policy (collectively, the
“Commitment”) issued by Title Company setting forth the state of title to each
Portfolio Property and containing copies of all exceptions and restrictions of
record including deed restrictions, liens and covenants with copies of all
documents affecting the Portfolio Property reflected in the Commitment
(collectively, the “Title Documents”). Furthermore, as of the Effective Date,
Seller has caused to be delivered to Purchaser a copy of the Commitment and
copies of the Title Documents. In the event any exceptions appear in such
Commitment or Title Documents, other than the standard printed exceptions,
state, county or city ad valorem taxes and/or assessments not yet due and
payable and the Leases, that are unacceptable to Purchaser in Purchaser’s sole
discretion, then Purchaser shall, within 3 days following the Effective Date or
if such day is not a business day, the next business day, notify Seller in
writing of such fact. Any such exceptions not objected to by Purchaser, together
with the standard printed exceptions, state, county or city ad valorem taxes
and/or assessments not yet delinquent and the Leases shall be deemed “Permitted
Exceptions.”

(b) Survey. As of the Effective Date, Seller has provided Purchaser with the
most recent survey of each Portfolio Property in its possession (collectively,
the “Existing Survey”) and Purchaser has ordered from the company or companies
which prepared the Existing Survey, at Purchaser’s sole cost and expense,
updated and re-certified as-built surveys of each Portfolio Property
(collectively, the “Surveys”). The Surveys shall be certified to Purchaser’s
lender (if any), Purchaser and Title Company. As soon thereafter as practicable,
but in no event more than 3 days following Purchaser’s receipt of all of the
Surveys, or, if such day is not a business day, the next business day, Purchaser
shall cause to be furnished to Seller a copy of the Surveys. If the Surveys
indicate the presence of any encroachments by or upon the Property (including
encroachments on or by easements and set back lines), or any other matters which
are objectionable to Purchaser, and Purchaser gives Seller notice of such
matters within three (3) days following the later of (i) the Effective Date or
(ii) September 11, 2006, such matters shall be considered Defects, and the cure
provisions set forth in Section 2.02(c) shall apply.

(c) Defects; Right to Cure. The items described in Sections 2.02 (a) and (b) are
collectively referred to as “Title Evidence.” If the Title Evidence discloses
defects, claims, liens, exceptions, or conditions unacceptable to Purchaser
(“Defects”) and Purchaser gives timely written notice of objections to the
Defects as required in Sections 2.02(a) or (b) (“Title Objections”), Seller
shall have the option, but not the obligation (other than those required to be
removed as set forth in this Agreement) to cure the same. Seller shall have
until three (3) days after the date of receipt by Seller of the Title Objections
or, if such day is not a business day, the next business day, in which to
indicate to Purchaser in writing which of the Defects Seller will cure. If
Seller has not notified Purchaser in writing of Seller’s agreement to cure any
Title Objection within such time period, Seller will be deemed to have declined
to cure the Title Objections. If Seller declines to so cure or remove any Title
Objections, Purchaser shall have until the date which is three (3) days after
Purchaser’s receipt of Seller’s notice as to whether it will cure or remove any
Title Objection (or 3 business days after the expiration of the 3-day period if
Seller does not notify Purchaser in writing of Seller’s agreement to cure the
Title Objections) to notify Seller in writing of its election to either
(i) terminate this Agreement with respect to the Portfolio Property at issue and
receive a return of the Deposit allocated to such Portfolio Property, and
neither party shall have any further liability to the other hereunder except
with respect to the obligations and indemnities set forth in this Agreement
which survive termination; or (ii) waive such requirements in which event such
Defects shall be deemed Permitted Exceptions and proceed to Settlement. In the
event Purchaser elects to terminate this Agreement with respect to any such
Portfolio Property in accordance with the preceding sentence, then, at Seller’s
sole option, Seller may terminate this Agreement with respect to all of the
Portfolio Properties, in which case Seller shall give Purchaser notice of such
termination of the Agreement as to all Portfolio Properties within five (5) days
of the date of Purchaser’s termination notice to Seller. In the event Purchaser
fails to give notice of its election to terminate, Purchaser shall be deemed to
have waived its right to terminate this Agreement in accordance with this
Section 2.02 in which event such Defects shall be deemed Permitted Exceptions.
Notwithstanding anything contained herein to the contrary, all mortgages, deeds
of trust, financing statements, security interests, judgments, and other
monetary liens (other than liens for taxes which are not yet due and payable)
shall not be deemed to be Permitted Exceptions, and Seller shall remove and
release, or cause to be removed and released, at Settlement all such items, at
Seller’s sole expense (including, without limitation, the payment by Seller of
all principal, interest, prepayment penalties and fees in connection therewith),
regardless of whether such items were objected to in Purchaser’s Title
Objections.

ARTICLE III

REPRESENTATIONS, WARRANTIES AND COVENANTS

3.01 Representations and Warranties of Seller. Seller represents and warrants as
of the Effective Date and as of the Settlement Date the following:

(a) Duly Formed and Validly Existing. Seller is a duly formed and validly
existing entity under the laws of the jurisdiction of its formation.

(b) Agreement Duly Authorized. This Agreement has been duly authorized, executed
and delivered by all necessary action on the part of Seller, constitutes the
valid and binding agreement of Seller, and is enforceable against Seller in
accordance with its terms.

(c) Non-Contravention. The execution and delivery of this Agreement and the
performance by Seller of its obligations under this Agreement do not and will
not contravene, or constitute a default under any provisions of applicable law
or regulation or any agreement, judgment, injunction, order, decree or other
instrument binding on Seller or result in the creation of any lien or other
encumbrance on the Property.

(d) No Right of First Refusal. Seller has not signed a contract with respect to
the acquisition of the Property with any third party or granted any third party
an option or a right of first refusal to acquire all or any portion of the
Property.

(e) Lead-Based Paint. Attached hereto as Exhibit G is a Disclosure of
Information on Lead-Based Paint and Lead-Based Paint Hazards for the Portfolio
Property known as Cumberland Trace.

(f) Non-Foreign Entity. Seller is not a “foreign person” within the meaning of
Section 1445(f)(3) of the Internal Revenue Code of 1986, as amended.

(g) Environmental Matters. Other than as may be described in the documents set
forth in Exhibit C (the “Environmental Site Assessments”) provided to Purchaser
by Seller, during Seller’s period of ownership, (i) no Hazardous Materials (as
defined in Section 5.01(b)) have been located on the Property or have been
released into the environment, or discharged, placed or disposed of at, on or
under the Property except as permitted by applicable law; (ii) no underground
storage tanks have been located on the Property; (iii) the Property has not been
used as a dump for waste material; (iv) the Property complies with any
applicable governmental law, regulation or requirement relating to environmental
and occupational health and safety matters and Hazardous Materials, and
(v) Seller has not received written notice from any tenants regarding the
existence of Hazardous Materials on the Property. To Seller’s knowledge, except
as may be described in the Environmental Site Assessments provided to Purchaser,
(A) no condition occurred on the Property prior to Seller’s acquisition of the
same which is or was in violation of any applicable Legal Requirements relating
to Hazardous Materials and (B) no property adjoining the Property is affected by
Hazardous Materials contamination.

(h) Rent Rolls. The Rent Rolls attached hereto and made a part hereof as
Schedule 2 are the Rent Rolls used by Seller in the ordinary course of the
Seller’s business.

(i) Litigation. There is no litigation or proceeding pending or, to Seller’s
knowledge, threatened against Seller or the Property which could materially
affect Purchaser or the Property upon or subsequent to the Settlement Date.

(j) Service Contracts. All of the Service Contracts which affect the Property
are set forth on Exhibit B attached hereto and made a part hereof. Purchaser
shall have the right to require Seller to terminate the property management
agreement (if any) for each Property, and any other Service Contract that is
terminable without penalty, effective as of the Settlement by providing written
notification to Seller on or before the date which is five (5) days following
the Effective Date, but Seller shall not be required to terminate any Service
Contract (other than the property management agreements) that is not terminable
or that requires payment of a penalty for early termination (unless Purchaser is
willing to pay the penalty).

(k) Tax Appeals. To Seller’s knowledge, there are no real estate tax protests,
appeals or proceedings affecting the Property.

(l) Condemnation. To Seller’s knowledge, there are no pending or threatened
condemnation proceedings affecting the Property.

(m) Personal Property. All Personal Property as of the Settlement Date will be
owned by Seller free from encumbrances or liens.

(n) Compliance with Laws. Seller has received no written notice and has no
actual knowledge of any current violations of any, laws and governmental
regulations applicable to the Property, including without limitation, zoning and
subdivision laws and building and fire codes.

(o) Employees. Provided that no employees of Seller are hired by Purchaser,
there are no employees of Seller to whom Purchaser will, at or after Settlement,
have any obligation.

(p) Commitments for Improvements. No commitments relating to the Property have
been made by Seller to any governmental authority, utility company, group or
individual which would impose an obligation upon Purchaser or its successors to
make any contribution of money or land or to construct, install or maintain any
improvements on or off the Property which will not have been fully performed as
of Settlement.

(q) Diligence Documents. To Seller’s knowledge, copies of all Leases to occupy
the Property, all permits, all environmental reports, and all contracts or
agreements that will be binding upon Purchaser after Settlement, with respect to
or affecting the Property, made available for review by the Purchaser at the
Property Leasing office, or otherwise delivered by Seller (the “Diligence
Documents”) are the complete copies of such Diligence Documents.

All representations and warranties set forth in this Subsections 3.01(g) through
(p) are based only on the actual knowledge of Seller’s Designated Employees (as
hereinafter defined), and shall not be construed to refer to the knowledge of
any other officer, agent or employee of Seller or any affiliate thereof. For
purposes of this Agreement, the term “Designated Employees” shall refer Ron
Skelton, as Seller’s Senior Analyst, and to Donna Shanks and Amanda Miller, as
the Regional Managers with responsibility for the area in which (a) Cumberland
Trace, Villages at Cliffdale and Morganton Place, and (b) Woodberry,
respectively, are located, and to Kristen Stanton and Dennis Sandidge, as the
Area Directors with responsibility for the area in which (a) Cumberland Trace,
Village at Cliffdale and Morganton Place, and (b) Woodbery, respectively, are
located. The Designated Employees shall have no personal liability for any of
the representations, warranties, covenants or obligations of Seller hereunder.

3.02 Survival of and Limitations on Seller’s Representations and Warranties. The
representations and warranties of Seller set forth in Section 3.01, as modified
by the Seller’s Closing Certification if applicable, shall survive the
Settlement for a period of six months from and after the Settlement Date (the
“Survival Period”); provided, however, that Purchaser must give Seller written
notice of any claim Purchaser may have against Seller for breach of any such
representations and warranties set forth in Section 3.01 prior to the expiration
of the Survival Period. Any such claim which Purchaser may have which is not so
asserted prior to the expiration of the Survival Period shall not be valid or
effective, and Seller shall have no liability with respect thereto.

3.03 Representations and Warranties of Purchaser. Purchaser represents and
warrants as follows:

(a) Duly Formed and Validly Existing. Purchaser is a duly formed and validly
existing entity in good standing under the laws of the jurisdiction of its
formation and is duly qualified to transact business in the jurisdiction in
which the Property is located.

(b) Agreement Duly Authorized. This Agreement has been duly authorized, executed
and delivered by all necessary action on the part of Purchaser, and constitutes
the valid and binding agreement of Purchaser, and is enforceable against
Purchaser in accordance with its terms.

(c) Non-Contravention. The execution and delivery of and the performance by
Purchaser of its obligations hereunder do not and will not contravene, or
constitute a default under any provisions of applicable law or regulation or any
agreement, judgment, injunction, order, decree or other instrument binding upon
Purchaser or result in the creation of any lien or other encumbrance on any
asset of Purchaser.

3.04 Survival of Purchaser’s Representations and Warranties. All representations
and warranties of Purchaser set forth in Section 3.03 are made as of the
Effective Date. The representations and warranties of Purchaser set forth in
Section 3.03 shall survive Settlement for the Survival Period.

3.05 Employee Protection. Purchaser agrees that Purchaser will not, without
Seller’s prior written consent, solicit for employment (by Purchaser) any of
Seller’s employees unless and until Purchaser is prepared to close and
Settlement actually occurs in accordance with this Agreement. If Settlement does
not occur, for any reason or no reason whatsoever (including Seller’s failure to
close), Purchaser agrees that Purchaser will not solicit for employment any of
Seller’s employees for at least one year after the termination of the expiration
date of this Agreement.

3.06 Covenants.

(a) Operation, Repair and Maintenance. For the period from the Effective Date
until the Settlement, Seller covenants and agrees to operate, repair, and
maintain the Property in substantially the same manner as operated prior to the
Effective Date, not to sell or otherwise dispose of any items of Personal
Property unless replaced with an item of like value, quality and utility; and to
maintain in full force and effect liability and fire and casualty insurance on
the Property. Seller shall not enter into any new service contracts following
the Effective Date which are not cancelable upon 30 days’ notice except with the
written consent of Purchaser, which shall not be unreasonably withheld or
delayed, and Seller will enter into new Leases only in the ordinary course of
Seller’s business, provided that Seller shall not enter into any new Lease for a
term of less than six (6) months or more than one (1) year.

(b) Vacant Units Rent Ready. Prior to Settlement, Seller shall cause all
apartment units at each Property vacated more than five (5) business days prior
to Settlement, to be broom clean, freshly painted and with all lighting fixtures
and appliances in working order, and all carpet, vinyl or other floor coverings
in good condition, in accordance with Seller’s procedures in the ordinary course
of business; provided that, if Seller fails to so prepare each such vacant
apartment unit, Purchaser shall receive a credit of $400.00 per apartment unit
not so prepared.

(c) Representations; Warranties. Seller agrees to promptly notify Purchaser of
any fact of which Seller becomes aware which would cause any of the
representations or warranties of Seller set forth in Section 3.01 to become
false or of any notice that Seller receives regarding such matters. From and
after the Effective Date, and until the Settlement or earlier termination of
this Agreement, Seller shall not knowingly and intentionally take any action, or
knowingly and intentionally omit to take any action, which action or omission
would have the effect of violating any of the representations and warranties of
Seller contained in this Agreement.

(d) Exclusive Dealing. So long as this Agreement is in full force and effect,
Seller shall not list any Property for sale with any broker or otherwise
solicit, make or accept any offers to sell the Property, engage in any
substantive discussions or negotiations with any third-party with respect to the
sale of the Property, or enter into any contracts or agreements (whether binding
or not) for the sale, directly or indirectly, of any of the Property.

(e) HUD Consent. The parties acknowledge that Seller has obtained and delivered
a copy to Purchaser of the written approval of the Secretary of Housing and
Urban Development (“HUD” to the conveyance of the Portfolio Property known as
Woodberry Apartments to Purchaser’s assignee, as required by the terms of the
Foreclosure Sale Use Agreement, dated September 30, 1993 (the “HUD Agreement”),
and written acknowledgement from HUD that Seller is in compliance with the HUD
Agreement with respect to the Woodberry Apartments.

1

(f) Revenue Assurance Escrow.

(i) On the Settlement Date, Seller shall deposit Six Hundred Thousand Dollars
($600,000.00) (the “Revenue Assurance Escrow Amount”) with Title Company to
establish an escrow pursuant to the terms of this Section 3.06(f), and an escrow
agreement shall be entered into by Purchaser, Seller and Title Company in form
and substance consistent with the terms of this Section 3.06(f) and reasonably
acceptable to the parties (the “Revenue Assurance Escrow Agreement”). On a
monthly basis during the period beginning on the Settlement Date and ending
twelve (12) months thereafter (the “Revenue Assurance Period”), Purchaser shall
determine whether the aggregate total revenue actually collected by Purchaser in
connection with the operation of the three (3) Portfolio Properties, known as
Cumberland Trace, Village at Cliffdale and Morganton Place (each, a “Cumberland
County Property,” and collectively, the “Cumberland County Properties”), during
each month (the “Actual Monthly Revenue”) equals or exceeds Five Hundred Eighty
Thousand Dollars ($580,000.00) (the “Monthly Target Amount”). In the event the
Settlement Date is any date other than the first day of the month, then, for the
first month and the last month of the Revenue Assurance Period, Purchaser’s
Actual Monthly Revenue shall be prorated based upon a 30-day month.

(ii) Within ten (10) business days following Purchaser’s written notice to Title
Company and to Seller including an invoice from Purchaser for an amount equal to
the Monthly Target Amount minus the Actual Monthly Revenue (each, a “Monthly
Revenue Assurance Payment”) together with supporting monthly operating
statements for each of the Cumberland County Properties, Title Company shall
distribute from the Revenue Assurance Escrow Amount an amount equal to the
Monthly Revenue Assurance Payment, provided that, in no event shall the
aggregate of the Monthly Revenue Assurance Payments made over the Revenue
Assurance Period equal more than the Revenue Assurance Escrow Amount, and that
Purchaser shall not be entitled to any portion of the Revenue Assurance Escrow
Amount to supplement actual revenues collected by Purchaser in connection with
the operation of the Cumberland County Properties during any period after the
Revenue Assurance Period. Further provided, that if the Title Company shall
receive written notice of objection from Seller to any invoice from Purchaser
for any Monthly Revenue Assurance Payment within five (5) days of Title
Company’s receipt of such invoice, Title Company shall not distribute such
Monthly Revenue Assurance Payment until Title Company receives consistent
written instructions with respect to the distribution of such funds from both
Seller and Purchaser. Actual Monthly Revenue shall include all amounts actually
collected, including but not limited to all rents, tenant utility reimbursements
and interest income.

(iii) If, during the Revenue Assurance Period, Purchaser sells the Cumberland
County Property known as Cumberland Trace, then the Monthly Target Amount shall
be reduced to Four Hundred Thirty-Three Thousand Eight Hundred Dollars
($433,800.00) (prorated based upon the actual number of days in the month for
any partial month and a 30-day month) (the “Post-Sale Target Amount”) as of the
date of such third-party’s acquisition of the Cumberland Trace property for the
remainder of the Revenue Assurance Period, provided that Purchaser provides
Seller with a copy of the agreement of purchase and sale between such
third-party and Purchaser evidencing that Seller has not transferred Cumberland
Trace with any revenue-guaranty terms in favor of the third-party acquirer.
Under such circumstances of the disposition of the Cumberland Trace property
without revenue-guaranty provisions, from the date of such disposition of
Cumberland Trace to such third-party, all references in this Agreement to
“Monthly Target Amount” shall mean the “Post-Sale Target Amount.” Similarly, if
Purchaser sells the Cumberland County Property known as Village at Cliffdale,
during the Revenue Assurance Period and whether before or after any sale of the
Cumberland Trace property, then the Monthly Target Amount shall be reduced by
Two Hundred Thirty-Four Thousand Eight Hundred Dollars ($234,800.00) and/or if
Purchaser sells the Cumberland County Property known as Morganton Place, during
the Revenue Assurance Period, then the Monthly Target Amount shall be reduced by
One Hundred Ninety-Nine Thousand Dollars ($199,000.00). In the event of such
reductions triggered by the sale of the Village at Cliffdale property and/or the
Morganton Place property, then all references in this Agreement to “Monthly
Target Amount,” shall be reduced by the amount associated with each such
property sold.

(iv) If, during the Revenue Assurance Period, Purchaser sells the Cumberland
Trace, but provides the third-party acquirer with revenue-guaranty terms in
favor of the third-party acquirer, then the Monthly Target Amount shall not be
modified, and Purchaser shall be entitled to continue, for the remainder of the
Revenue Assurance Period, to determine whether the Actual Monthly Revenue during
each month (i.e., the aggregate total revenue actually collected by Purchaser,
with respect to the operation of the Portfolio Properties known as Village at
Cliffdale and Morganton Place, together with the total revenue actually
collected by the third-party acquirer of the Cumberland Trace property, with
respect to the operation of Cumberland Trace) equals or exceeds the Monthly
Target Amount. In the event Actual Monthly Revenue is less than the Monthly
Target Amount, the terms of Section 3.06(f)(ii) shall apply. Seller acknowledges
that Purchaser shall deliver its written notice to Title Company and to Seller
with an invoice from Purchaser for the Monthly Revenue Assurance Payment,
together with supporting monthly operating statements, including monthly
operating statements prepared by the third-party acquirer of the Cumberland
Trace property, with respect to the revenue generated by Cumberland Trace.
Purchaser covenants that it will define Actual Monthly Revenue within in any
revenue-guaranty provision of such agreement of purchase and sale with a
third-party acquirer of the Cumberland Trace property in the same manner as
Actual Monthly Revenue is defined in this Section 3.06(f).

(v) Purchaser shall provide Seller access to its books and records within three
(3) business days of Seller’s written notice of its desire to access to
Purchaser’s books and records in order for Seller to determine the accuracy of
the invoices provided by Purchaser.

(vi) In the event that, prior to the expiration of the Revenue Assurance Period,
Purchaser sells the Cumberland Trace property together with a revenue-guaranty
provision in favor of the third-party acquirer that is evidenced by a copy of
the agreement of purchase and sale setting forth such revenue-guaranty, then
Purchaser shall obtain from such third-party acquirer the right to access to
such third-party acquirer’s books and records upon request, and to provide
Seller with copies of all records of the income generated by the Cumberland
Trace property, in order for Seller to determine the accuracy of the invoices
provided by Purchaser. Purchaser shall provide Seller access to its books and
records within three (3) business days of Seller’s written notice of its desire
to access to Purchaser’s books and records, and shall provide Seller copies of
Purchaser’s third-party acquirer’s books and records associated with the
revenues generated by the Cumberland Trace property within five (5) business
days of Seller’s written notice of its desire to review copies of such
third-party’s books and records. Further, Purchaser shall, during the Revenue
Assurance Period, continue to rent units in the ordinary course of business, and
Purchaser shall require any third-party acquirer of the Cumberland Trace
property to continue to rent Cumberland Trace units in the ordinary course of
business.

(vii) Any portion of the Revenue Assurance Escrow Amount held by Title Company
at the expiration of the Revenue Assurance Period shall, after payment of any
remaining Monthly Revenue Assurance Payments to which Purchaser is entitled, be
returned to Seller within fifteen (15) calendar days of the expiration of the
Revenue Assurance Period.

ARTICLE IV

CONDITIONS PRECEDENT

4.01 Purchaser’s Conditions Precedent. Purchaser’s obligations hereunder are
subject to the satisfaction of the following conditions precedent: (a) Seller
shall have duly performed all covenants and other obligations to be performed by
it under this Agreement and Seller shall have timely delivered all of the
Seller’s items described in Section 7.03, (b) the representations and warranties
made by the Seller in this Agreement shall be true on and as of the Settlement
Date in all material respects as if such representations and warranties were
made on and as of that time, and (c) Seller shall be in a position to convey to
Purchaser, at Settlement, fee simple title to the Property by special warranty
deed in the form attached hereto as Exhibit D (the “Deed”) subject only to the
following: (i) Permitted Exceptions; (ii) state and county or city ad valorem
taxes and assessments not yet due and payable; (iii) Leases affecting the
Property; and (iv) such other matters as are accepted in writing by Purchaser
prior to Settlement. The issuance of an owner’s title policy that does not
include exceptions other than Permitted Exceptions to Purchaser shall be
conclusive evidence as to the satisfaction of the condition set forth in
Section 4.01 (c) above.

ARTICLE V

“AS-IS” SALE

5.01 As-Is Sale.

(a) Due Diligence. As of the Effective Date, Purchaser acknowledges and agrees
that has been given, a full opportunity to inspect and investigate each and
every aspect of the Property, either independently or through agents of
Purchaser’s choosing. Purchaser’s execution of this Agreement shall conclusively
constitute Purchaser’s approval of each and every aspect of the Property, except
as otherwise specifically provided herein.

(b) Seller’s Disclaimer of Warranties, etc. Except as specifically set forth in
Section 3.01 and in the Deed, Purchaser acknowledges and agrees that Seller has
not made, does not make and specifically negates and disclaims any
representations, warranties, promises, covenants, agreements or guaranties of
any kind or character whatsoever, whether express or implied, oral or written,
past, present or future, of, including, but not limited to, representations,
warranties, promises, covenants, agreements or guaranties as to, concerning or
with respect to (i) the value, nature, quality, structural integrity or
condition of the Property or the Improvements, including, without limitation,
the water (including groundwater), soil (including repairs, additions or
condition thereof), geology and susceptibility to landslides of the Property;
(ii) the income to be derived from the Property, the expenses or operations of
the Property or the economics of the operation of the Property; (iii) the
suitability of the Property or any component or system thereof or thereon for
any and all activities and uses which Purchaser may conduct thereon; (iv) the
compliance of or by the Property or its operation with any codes, laws, rules,
ordinances, regulations, covenants or conditions of any applicable governmental
or quasi-governmental authority or body or of any other person or entity,
including building or zoning code requirements and the Americans with
Disabilities Act; (v) the habitability, merchantability, marketability,
profitability or fitness for a particular purpose of the Property; (vi) the
manner or quality of the construction or materials, incorporated into the
Property or the Improvements; (vii) the manner, quality, status of repair or
lack of repair of the Property or the Improvements; (viii) the conformity of the
Improvements to any plans or specifications for the Property (including any
plans and specifications that may have been or which may be provided to
Purchaser by Seller); (ix) the sufficiency of any undershoring; (x) the
sufficiency of any drainage; (xi) whether the Property is located wholly or
partially in any flood plain or flood hazard boundary or similar area; (xii) the
existence or non-existence of underground storage tanks; (xiii) any other matter
affecting the stability or integrity of the Property or any buildings or
improvements situated on or as part of the Improvements; (xiv) the existence or
non-existence of any mold, fungus, bacteria and/or biological growth or
biological growth factors on or at the Property; (xv) the availability, quality,
nature, adequacy and physical condition of public utilities and services for the
Property; (xvi) the potential for further development of the Property;
(xvii) the existence of vested land use, zoning or building entitlements
affecting the Property; (xviii) the quality, nature, adequacy and physical
condition of the Property or the Improvements, including the structural
elements, foundations, roofs, appurtenances, access, landscaping, parking
facilities and the electrical, mechanical, HVAC, plumbing, sewage, and utility
systems, facilities and appliances; (xix) the zoning or other legal status of
the Property or any other public or private restrictions on use of the Property;
(xx)  the presence of any Hazardous Materials (as defined below) on, in, under
or about the Property or any nearby property; (xxi) the condition of title to
the Property; (xxii) the Leases, Service Contracts, or other agreements
affecting the Property; or (xxiii) any other matter. Purchaser further
acknowledges and agrees that having been given the opportunity to inspect the
Property and all of the other qualities, characteristics and items set forth in
the previous sentence, Purchaser is relying solely on its own investigation of
the Property and all of the other qualities, characteristics and items set forth
in the previous sentence, and not on any information provided or to be provided
by Seller, except to the extent that Seller has provided information concerning
the Leases, income and operating expenses of the Property, provided that except
as expressly set forth in Section 3.01, in the Deed and the Seller’s Closing
Certification Seller makes no representation or warranty regarding such
information. Purchaser further acknowledges and agrees that any information
provided or to be provided with respect to the Property was obtained from a
variety of sources. Seller is not liable or bound in any manner by any verbal or
written statements, representations or information pertaining to the Property,
or the operations thereof, furnished by any real estate broker, agent, employee,
servant or other person. PURCHASER FURTHER ACKNOWLEDGES AND AGREES THAT THE SALE
OF THE PROPERTY AS PROVIDED FOR HEREIN IS MADE ON AN “AS-IS” CONDITION AND BASIS
WITH ALL FAULTS. IT IS UNDERSTOOD AND AGREED THAT THE PURCHASE PRICE HAS BEEN
ADJUSTED BY PRIOR NEGOTIATION TO REFLECT THAT ALL OF THE PROPERTY IS SOLD BY
SELLER AND PURCHASED BY PURCHASER SUBJECT TO THE FOREGOING.

As used in this Agreement, “Hazardous Materials” means any material, substance
or waste designated as hazardous, toxic, radioactive, injurious or potentially
injurious to human health or the environment, or as a pollutant or contaminant,
or words of similar import, under any Hazardous Materials Law (as defined
below), including, but not limited to, mold or other organic contaminants,
petroleum and petroleum products, asbestos, polychlorinated biphenyls, urea
formaldehyde, radon gas, radioactive matter, medical waste, and chemicals which
may cause cancer or reproductive toxicity. As used in this Agreement, “Hazardous
Materials Law” means any federal, state or local law, statute, regulation or
ordinance now or hereafter in force, as amended from time to time, pertaining to
materials, substances or wastes which are injurious or potentially injurious to
human health or the environment or the release, disposal or transportation of
which is otherwise regulated by any agency of the federal, state or any local
government with jurisdiction over the Property or any such material, substance
or waste removed therefrom, or in any way pertaining to pollution or
contamination of the air, soil, surface water or groundwater, including, but not
limited to, the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended (42 U.S.C. Section 9601 et seq.), the Resource
Conservation and Recovery Act of 1976 (42 U.S.C. Section 6901 et seq.), the
Clean Water Act (33 U.S.C. Section 1251 et seq.), the Safe Drinking Water Act
(42 U.S.C. Section 300f et seq.), the Hazardous Materials Transportation Act
(49 U.S.C. Section 1801 et seq.), the Toxic Substance Control Act (15 U.S.C.
Section 2601 et seq.), and all similar state or local laws.

ARTICLE VI

INDEMNIFICATION AND LIMITATION OF LIABILITY

6.01 Indemnification. Purchaser hereby agrees to indemnify, protect, defend,
save and hold harmless Seller from and against any and all debts, duties,
obligations, liabilities, suits, claims, demands, causes of action, damages,
losses, costs and expenses (including, without limitation, attorneys’ fees and
expenses and court costs) in any way relating to, connected with or arising out
of Purchaser’s failure to perform its obligations under the Leases or the
Service Contracts from and after the Settlement Date. Seller hereby agrees to
indemnify, protect, defend, save and hold harmless Purchaser from and against
any and all debts, duties, obligations, liabilities, suits, claims, demands,
causes of action, damages, losses, costs and expenses (including, without
limitation, attorneys’ fees and expenses and court costs) in any way relating
to, connected with or arising out of Seller’s failure to perform its obligations
under the Leases or the Service Contracts up to the Settlement Date.

6.02 Limitation of Liability.

(a) Seller. Purchaser shall look solely to the assets of Seller for the
enforcement or collection of any claim against Seller in connection with this
Agreement or the transaction contemplated by this Agreement. Neither any
affiliate of Seller nor any of their respective affiliates, officers, directors,
employees or agents shall have any liability to Purchaser hereunder.
Notwithstanding any provision of this Agreement or any document delivered to
Purchaser pursuant to this Agreement to the contrary, Seller’s liability to
Purchaser with respect to a breach of this Agreement or any document delivered
to Purchaser pursuant to this Agreement shall be limited to Purchaser’s actual
damages (excluding any punitive, consequential, exemplary or special damages)
provided that in no event shall Seller’s liability for any breach of its
representations, warranties and covenants contained herein and in all documents
delivered to Purchaser pursuant to this Agreement exceed Five Hundred Thousand
Dollars ($500,000.00) in the aggregate. The foregoing limitation shall not be
applicable to Purchaser’s right to receive disbursements of the Revenue
Assurance Escrow Amount pursuant to Section 3.06(f).

(b) Merger. All representations, warranties, agreements and covenants of Seller
set forth in this Agreement will, unless specifically provided otherwise in this
Agreement, terminate upon the expiration of the Survival Period.

6.03 Survival. The provisions of this Article VI shall survive the Settlement
and the delivery of the Deed until the expiration of the Survival Period.

ARTICLE VII

SETTLEMENT

7.01 Settlement. Closing of the transaction contemplated by this Agreement (such
action, “Settlement”) shall be held through the Escrow Agent on September 28,
2006 or such date as the parties may otherwise mutually agree (the “Settlement
Date”). Possession of the Property shall be delivered to Purchaser at
Settlement, subject only to the Permitted Exceptions.

7.02 Prorations. All rents and other recurring (but not non-recurring) revenue
from the Property, real estate and personal property ad valorem taxes, and other
operating expenses from the Property shall be prorated on the basis of a 365-day
year through the day preceding the day of Settlement. If Settlement is extended
by mutual agreement, all prorations shall be made as of the day prior to the
extended date. Except as provided above, those revenues and expenses for which
actual bills are available at Settlement, shall be prorated at Settlement based
on such actual bills. Except as provided above, those items for which actual
bills were not available at Settlement, shall be prorated based upon Seller’s
good faith estimates of the previous month’s or year’s bill(s), as applicable.
Any post-closing adjustments shall be made within 90 days after the Settlement
Date, except post-closing adjustments for real estate and personal ad valorem
taxes which shall be made within 10 days after written demand therefor is made
by either party hereto to the other party with a copy of the actual tax bill(s)
attached. Notwithstanding anything to the contrary contained in this Agreement,
the provisions of this Section 7.02 shall survive Settlement. The following
items shall be adjusted or prorated between Seller and Purchaser as set forth
below:

(a) Service Contracts. Amounts due under Service Contracts and utility charges
shall be determined to the day preceding the Settlement Date and either (i) such
charges shall be paid by Seller or (ii) appropriate prorations shall be made if
not terminated as of the Settlement Date. Purchaser shall take all steps
necessary to effectuate the transfer of all utilities to its name as of
Settlement, where necessary, post deposits with the utility companies, and
provide Seller with written evidence of the transfer at or prior to Settlement.
Seller shall be entitled to recover any and all deposits posted by Seller and
held by any utility company as of the Settlement Date.

(b) Lease Payments. Any amounts paid to Seller prior to the Settlement Date on
account of or in consideration for the execution of any Lease by Seller (other
than current rent) shall be prorated over the term of the Lease and that portion
of such payment attributable to that portion of the term of the Lease following
the Settlement Date shall be credited to Purchaser by Seller at Settlement.

(c) Delinquent Rents. In the event that, at the time of Settlement, there are
any past due or delinquent rents owing by any tenants of the Property, Purchaser
shall use commercially reasonable efforts to collect such past due or delinquent
rents and shall remit to Seller (in accordance with subsection 7.02(c)(iii)
below) its pro rata share thereof less any reasonable and necessary amounts
expended by Purchaser to collect such past due or delinquent rents. Rent
collected by Purchaser after the Settlement Date shall be applied as follows:
(i) first to rent due for periods after the month in which the Settlement Date
occurs beginning with the current month and then in inverse order of due dates,
(ii) then to rent due for the month in which the Settlement Date occurs, and
(iii) then to rent due for periods prior to the month in which the Settlement
Date occurs. Except as otherwise provided in this Section 7.02(c), Purchaser
shall have no obligation to collect or enforce collection of any such past due
or delinquent rents from or against any tenant. In the event that, after
Settlement, Seller receives any payments of rent or other sums due from tenants
under Leases that relate to periods from and after Settlement, Seller shall
forward to Purchaser Purchaser’s portion of such payments as soon as practicable
following its receipt thereof.

(d) Prepaid Rents and Security Deposits. All prepaid rents under any Lease for
periods after the Settlement Date and all refundable security deposits
(including any refundable pet deposits) required to be held under the Leases
shall be paid to Purchaser or credited against the Purchaser Price at
Settlement.

(e) Utilities. ITSA, formerly USI (“Utility Biller”), provides water, sewer, and
trash services to the Property, in accordance with the terms of one or more
Service Contracts between Utility Biller and Seller. Utility Biller’s billing is
done at least 60 days in arrears. Notwithstanding the fact that Purchaser will
assume certain Service Contracts at Settlement, the parties agree that Utility
Biller will bill tenants of the Property for two 30-day periods after the
Settlement Date in order to recover amounts paid by Seller to the local water
district for water and sewer service and to the applicable municipality for
trash pickup prior to the Settlement. Payments for utilities are collected at
the Property in arrears and Purchaser agrees for a period beginning on the
Settlement Date and ending on the last day of the second calendar month
following the Settlement Date to collect such amounts and to remit the collected
amounts, together with a copy of Utility Biller’s report showing amounts
collected, to Seller as soon as possible following the end of the first two
calendar months following the Settlement Date. Regardless of when they are
billed or collected, all Utility Biller receipts covering any utility charges
incurred at the Property from and after the Settlement Date will belong to
Purchaser, and all fees owed to Utility Biller from and after the Settlement
Date will be the obligation of Purchaser.

7.03 Seller’s Deliveries. Seller shall deliver the following (fully executed and
notarized where appropriate) to the Escrow Agent for delivery to Purchaser at
Settlement with respect to each Portfolio Property:

(a) the Deed for each of the Portfolio Properties;

(b) a Bill of Sale and Assignment Agreement in the form attached as Exhibit D
for each of the Portfolio Properties (each a “Bill of Sale”) transferring,
conveying and assigning to Purchaser the Personal Property, the Leases, the
Service Contracts, and the Intangible Personal Property;

(c) A Rent Roll for each of the Portfolio Properties dated no more than two (2)
business days prior to Settlement setting forth the information included in the
Rent Roll, certified by Seller to be the Rent Rolls used by Seller in the
ordinary course of Seller’s business;

(d) with respect to each of the Portfolio Properties, an affidavit in form
acceptable to the Title Company sufficient to remove any exception for
mechanics’ and materialmen’s liens and parties in possession (except tenants
under unrecorded, residential Leases, or parties to laundry leases, cable
television leases or licenses or other customary arrangements for residential
properties that are of record or disclosed in writing to Purchaser);

(e) to be delivered to Seller at each Portfolio Property, each of the original
(if available) Leases (including any amendments) in effect at the Property as of
the Settlement Date and all files for existing tenants in Seller’s possession or
control and all the original (if available) Service Contracts;

(f) an affidavit certifying that the Seller is not a foreign entity under the
Foreign Investment in Real Property Act and all information and certifications
necessary in order for the Escrow Agent to file IRS Form 1099-S;

(g) the Revenue Assurance Escrow Agreement;

(h) with respect to each of the Portfolio Properties, a notice letter to all
tenants under Leases in the form attached as Exhibit E;

(i) with respect to each of the Portfolio Properties, a “Settlement Statement”
mutually agreeable to the parties;

(j) all refundable security deposits for current and pending tenants (unless
credited against the Purchaser Price);

(k) such instruments as are necessary or reasonably required by Title Company to
evidence the authority and good standing of Seller and the person executing the
documents on behalf of Seller to do so; and

(l) All keys, codes and/or other means to operate all locks and alarms on the
Property, all documents representing the Intangible Personal Property, if any,
including original warranties and guaranties, and such other documents that are
normally executed at Settlement in the jurisdiction in which the Property is
located or are reasonably requested by the Purchaser, its counsel, or the Title
Company.

7.04 Purchaser’s Deliveries. Purchaser shall deliver the following (fully
executed and notarized where appropriate) to the Escrow Agent for delivery to
Seller at Settlement:

(a) the Purchase Price by wire transfer in immediately available funds as
provided in Article I of this Agreement;

(b) the Bills of Sale with respect to each Portfolio Property;

(c) the Revenue Assurance Escrow Agreement;

(d) a Settlement Statement with respect to each Portfolio Property;

(e) any other document or agreement required by this Agreement; and

(f) all such other documents that are normally executed at Settlement in the
jurisdiction in which the Property is located or are reasonably requested by the
Seller or its counsel.

ARTICLE VIII

RISK OF LOSS; CONDEMNATION AND CASUALTY; TERMINATION RIGHTS

8.01 Damage. If, prior to Settlement, a Portfolio Property is destroyed or
damaged to any material extent, then Purchaser shall have the option, which must
be exercised by it on the earlier of ten (10) days after such damage or
destruction or the Settlement Date, to (a) terminate this Agreement with respect
to such Portfolio Property by giving written notice thereof to Seller before
Settlement, in which event the Deposit allocated to such Portfolio Property,
together with all interest accrued thereon, shall be paid to Purchaser, or
(b) proceed with the Settlement. If Purchaser elects to proceed with the
Settlement then the Settlement shall proceed, without any reduction in the
Purchase Price and subject to the other provisions hereof, but Purchaser shall
be entitled to any and all insurance proceeds previously paid to Seller as a
result of such damage (plus a credit against the cash portion of the Purchase
Price for the amount of any deductible maintained by Seller with respect to such
policy) and, to the extent the same may be necessary or appropriate, Seller
shall assign to Purchaser, at Settlement, all of Seller’s rights to such
proceeds. If, prior to Settlement, a Portfolio Property is destroyed or damaged,
but not to a material extent, then the Settlement shall proceed without any
reduction in the Purchase Price and subject to the other provisions hereof, but
Purchaser shall be entitled to any and all insurance proceeds payable to Seller
as a result of such damages and destruction (plus a credit against the cash
portion of the Purchase Price for the amount of any deductible maintained by
Seller with respect to such policy), as set forth above. Damages to or
destruction of a Portfolio Property shall be deemed not material if (a) the
Portfolio Property can be repaired or replaced for a cost not to exceed five
percent (5%) of the allocated Schedule 1 Purchase Price for such Portfolio
Property, and (b) the number of rental apartment units damaged or destroyed is
less than five percent (5%) of the total number of units at such Portfolio
Property.

8.02 Condemnation. If, prior to Settlement, all or any portion of a Portfolio
Property is taken for any public or quasi-public use under any governmental law,
ordinance or regulation, or by right of eminent domain or by private purchase in
lieu thereof, then Purchaser shall have the option, which must be exercised by
it within ten (10) days after such damage or destruction or the Settlement Date,
to (a) terminate this Agreement with respect to such Portfolio Property by
giving written notice thereof to Seller, in which event the Deposit allocated to
such Portfolio Property, together with all interest accrued thereon, shall be
paid to Purchaser, or (b) proceed with the Settlement. If Purchaser elects to
proceed with the Settlement, there shall be no reduction in the Purchase Price,
but Purchaser shall be entitled to any and all amounts payable as a result of
such taking, including any condemnation award or amounts paid in lieu of such
award.

8.03 Purchaser’s Default. If the Settlement does not occur as a result of
Purchaser’s default hereunder, Seller’s sole and exclusive remedy shall be to
terminate this Agreement by giving written notice thereof to Purchaser,
whereupon the Deposit shall be paid to Seller as liquidated damages, as Seller’s
sole and exclusive remedy on account of such default hereunder by Purchaser;
provided, however, that this provision will not waive or affect any provisions
of this Agreement which expressly state that they shall survive the termination
of this Agreement, and neither party shall have any further liability or
obligation to the other hereunder, except for provisions of this Agreement which
expressly state that they shall survive the termination of this Agreement. The
parties acknowledge and agree that Seller’s actual damages in the event of
Purchaser’s default would be extremely difficult or impracticable to determine.
After negotiation, the parties have agreed that, considering all the
circumstances existing on the date of this Agreement, the amount of the Deposit
is a reasonable estimate of the damages that Seller would incur in such event.
The payment of the Deposit to Seller as liquidated damages under the
circumstances provided for herein is not intended as a forfeiture or penalty,
but is intended to constitute liquidated damages to Seller. By placing their
initials below, each party specifically confirms the accuracy of the statements
made above, the reasonableness of the amount of liquidated damages agreed upon,
and the fact that each party was represented by counsel who explained, at the
time this agreement was made, the consequences of this liquidated damages
provision.

         
Initials:
 
 

 
       
 
  Seller   Purchaser

8.04 Default by Seller. If Seller fails or refuses to consummate the sale of the
Property to Purchaser pursuant to this Agreement at Settlement for any reason
other than Purchaser’s failure to perform Purchaser’s obligations under this
Agreement, then Purchaser shall have the right (a) to specific performance of
the Seller’s obligations under this Agreement or (b) to terminate this Agreement
by giving written notice thereof to Seller prior to or at Settlement, whereupon
(i) neither party hereto shall have any further rights or obligations hereunder
(other than with respect to the obligations and indemnities set forth in this
Agreement which survive termination), (ii) the Escrow Agent shall deliver the
Deposit to Purchaser, and (iii) Seller shall pay to Purchaser the amount of
actual out-of-pocket expenses incurred by Purchaser, not to exceed $40,000 in
the aggregate, in investigating the Portfolio Properties, negotiating this
Agreement and preparing for Settlement.

ARTICLE IX

BROKERAGE COMMISSION

9.01 Other than Apartment Realty Advisors (“Seller’s Broker”), who shall be paid
a commission by Seller pursuant to a separate agreement between Seller and
Seller’s Broker, neither Seller nor Purchaser has engaged the services of, nor
is it or will it become liable to, any real estate agent, broker, finder or any
other person or entity for any brokerage or finder’s fee, commission or other
amount with respect to the transactions described herein. Each party shall
indemnify, defend and hold the other party harmless against all loss, liability
and expense, including reasonable attorneys’ fees and costs, suffered by such
other party due to a breach of the foregoing representation, covenant, and
warranty. This Section 9.01 shall survive Settlement and the delivery of the
Deed or the termination of this Agreement.

ARTICLE X

ESCROW AGREEMENT

10.01 Investment and Use of Funds; Fee. Upon receipt of counterparts of this
Agreement executed by Purchaser and Seller and the Deposit, the Escrow Agent
shall promptly (a) invest the Deposit in government insured interest-bearing
accounts satisfactory to Purchaser, (b) evidence its receipt and investment of
the Deposit by executing the counterparts of this Agreement, and (c) provide
Purchaser and Seller with fully executed counterparts of this Agreement. The
Escrow Agent shall not commingle the Deposit with any funds of the Escrow Agent
or others.

10.02 Termination of Escrow. Subject to Section 1.02(e), upon not less than five
business days prior written notice to the Escrow Agent and the other party,
Escrow Agent shall deliver the Deposit to the party requesting the same;
provided, however, that if the other party shall, within said five business day
period, deliver to the requesting party and the Escrow Agent a written notice
that it disputes the claim to the Deposit, Escrow Agent shall retain the Deposit
until it receives written instructions executed by both Seller and Purchaser as
to the disposition and disbursement of the Deposit, or until ordered by final
court order, decree or judgment, which is not subject to appeal, to deliver the
Deposit to a particular party, in which event the Deposit shall be delivered in
accordance with such notice, instructions, order, decree or judgment.

10.03 Interpleader. Seller and Purchaser mutually agree that in the event of any
controversy regarding the Deposit, unless mutual written instructions are
received by the Escrow Agent directing the Deposit’s disposition, the Escrow
Agent shall not take any action, but instead shall await the disposition of any
proceeding relating to the Deposit or, at the Escrow Agent’s option, the Escrow
Agent may interplead all parties and deposit the Deposit with a court of
competent jurisdiction in which event the Escrow Agent may recover all of its
court costs and reasonable attorneys’ fees. Seller or Purchaser, whichever loses
in any such interpleader action, shall be solely obligated to pay such costs and
fees of the Escrow Agent, as well as the reasonable attorneys’ fees of the
prevailing party in accordance with the other provisions of this Agreement.

ARTICLE XI

MISCELLANEOUS

11.01 Notice. Any notice, consent or approval required or permitted to be given
under this Agreement shall be in writing and shall be deemed to have been
received upon (a) hand delivery, (b) one (1) business day after being deposited
with a reliable overnight courier service, with receipt acknowledgment
requested, (c) upon receipt if transmitted by confirmed facsimile, or (d) three
(3) business days after deposit if deposited in the United States mail,
registered or certified mail, postage prepaid, return receipt required, and
addressed as follows:

         
If to Purchaser:
  America First Apartment Investors, Inc.

 
  101 East 52nd Street, 25th Floor
 
  New York, New York 10022

 
  Attn: James Egan

 
  Fax No.: (212) 935-8765

and to:
  America First Apartment Investors, Inc.

 
  1004 Farnam Street, Suite 100
 
  Omaha, Nebraska 68102

 
  Attn: David H. Roberts

 
  Fax No.: (402) 557-6399

With a copy to:
  Hunton & Williams LLP

 
  Riverfront Plaza, East Tower

 
  951 East Byrd Street
 
  Richmond, Virginia 23219

 
  Attn: Andrew J. Tapscott, Esq.

 
  Fax No.: (804) 788-8218

If to Seller:
  c/o United Dominion Realty Trust, Inc.
 
  1745 Shea Center Drive, Suite 200
 
  Highlands Ranch, CO 80129

 
  Attn: Matthew T. Akin, Vice President, Acquisitions

 
  & Dispositions

 
  Telephone: (720) 283-6144

 
  Fax No.: (720) 283-2452

 
  email: makin@udrt.com

and to:
  c/o United Dominion Realty Trust, Inc.
 
  1745 Shea Center Drive, Suite 200
 
  Highlands Ranch, CO 80129

 
  Attn: Mary Ellen Norwood, Vice President, Legal

 
  Administration

 
  Telephone: (720) 283-6125

 
  Fax No.: (720) 283-2454

 
  email: mnorwood@udrt.com

with a copy to:
  Morrison & Foerster llp

 
  370 17th Street
 
  Suite 5200

 
  Denver, Colorado 80202

 
  Attn: David G. Thatcher

 
  Telephone: (303) 592-2231

 
  Fax No.: (303) 592-1510

 
  email: dthatcher@mofo.com

or such other address as either party may from time to time specify in writing
to the other.

11.02 Assignment; Successors and Assigns. Except as otherwise provided below or
in Section 11.11, Purchaser may not assign its rights hereunder without the
prior written consent of Seller (which shall not be unreasonably withheld).
Notwithstanding the foregoing, Purchaser shall have the right, without Seller’s
consent but with notice to Seller delivered at least ten (10) days prior to the
Settlement Date, to assign this Agreement to one or more entities controlling,
controlled by or under common control with Purchaser (including assigning or
delegating its rights and obligations under this Agreement to four separate
entities, such that each Portfolio Property will be conveyed directly to a
separate entity controlled by or under common control with Purchaser); provided
that any such assignments shall not relieve Purchaser of Purchaser’s covenants
and obligations under this Agreement. Seller agrees to cooperate with such
assignments and to convey each Portfolio Property to such separate entities if
directed to do so by Purchaser. All rights and obligations of Seller and
Purchaser under this Agreement shall inure to and be binding on their respective
successors and permitted assigns.

11.03 Severability. If any provision of this Agreement shall be in violation of
any applicable law or unenforceable for any reason, the invalidity or
unenforceability of any provision shall not invalidate or render unenforceable
any other provision hereof, which other provisions shall remain in full force
and effect.

11.04 Entire Agreement. This Agreement and the Access Agreement constitute the
entire agreement between the parties hereto with respect to the transactions
contemplated hereby and supersedes all prior discussions, understandings,
agreements and negotiations between the parties hereto.

11.05 Modification. This Agreement and the Access Agreement may be modified only
by a written instrument duly executed by Purchaser and Seller hereto. Any
modification to Article X must be by a written instrument also executed by the
Escrow Agent.

11.06 Incorporation by Reference. All of the exhibits and schedules attached to
this Agreement are by this reference incorporated herein and made a part hereof.

11.07 Time is of the Essence. Time is of the essence with respect to every
provision of this Agreement.

11.08 No Presumption. The parties acknowledge that each party and its counsel
have participated in the negotiation and preparation of this Agreement. This
Agreement shall be construed without regard to any presumption or other rule
requiring construction against the party causing the Agreement to be drafted.

11.09 Days. If any action is required to be performed, or if any notice, consent
or other communication is given, on a day that is a Saturday or Sunday or a
legal federal holiday, such performance shall be deemed to be required, and such
notice, consent or other communication shall be deemed to be given, on the first
business day following such Saturday, Sunday or legal holiday. Unless otherwise
specified herein, all references herein to a “day” or “days” shall refer to
calendar days and not business days. A “business day” shall mean any day other
than a Saturday, Sunday or legal federal holiday.

11.10 Applicable Law. This Agreement shall be construed, performed and enforced
in accordance with the laws of the jurisdiction in which the Property is
located.

11.11 Like-Kind Exchange. Each of Purchaser and Seller reserves the right to
assign its rights under this Agreement (but without release of its obligations
herein) to an exchange accommodation title holder or a qualified intermediary,
as applicable, who may purchase or sell and thereafter exchange the Property in
accordance with the provisions of Section 1031 of the Internal Revenue Code of
1986, as amended. Each party shall cooperate with the other party in connection
with any such exchange provided that the Settlement shall not be delayed as a
result of any such exchange and neither party shall be required to expend funds
in connection with the other party’s exchange. The completion of an exchange
shall not be a condition of Settlement so long as the party that does not seek
to effect such exchange has reasonably cooperated with the other party as
contemplated by this Section. The parties agree to indemnify each other against
any claims or liabilities resulting solely from structuring the transaction as
an exchange, rather than a direct purchase. Purchaser acknowledges that Seller
may (a) merge by operation of law with and into a direct or indirect subsidiary
or affiliate of United Dominion Realty Trust, Inc. (“United Dominion”), or
(b) otherwise transfer the Property to a subsidiary of United Dominion in order
to facilitate the Section 1031 exchange.

11.12 Confidentiality. Purchaser shall keep confidential the existence and terms
of this Agreement and all documents, items, materials, data and information
furnished or otherwise made available by Seller pursuant to this Agreement
(other than information and documents which are already matters of public record
or generally known to the public not as a result of a breach of this
Section 11.12), and in the event this Agreement is terminated for any reason
other than consummation of the transaction contemplated hereby at Settlement,
Purchaser shall immediately return to Seller all such documents, items and
material furnished or otherwise made available by Seller, including all copies
thereof made by Purchaser. As used herein, the term “keep confidential” shall
mean that Purchaser shall not disclose or publish the data and information to
any person or entity other than its officers, directors, lenders, attorneys,
accountants, investors, qualified intermediaries, agents, contractors,
consultants and the Title Company involved in the negotiation and consummation
of this transaction. Purchaser hereby agrees to indemnify and defend Seller and
hold Seller harmless against any injury, loss or damage suffered by Seller as a
result of any breach of this confidentiality provision, which indemnity shall
survive Settlement or the termination of this Agreement. The confidentiality
provisions of this Section 11.12 shall not apply to any disclosures made by
Purchaser as required by law (including securities and income tax laws and
regulations), by court order, or in connection with any subpoena served upon
Purchaser; provided Purchaser shall provide Seller with written notice before
making any such disclosure.

11.13 Counterparts. To facilitate execution, this Agreement may be executed in
as many counterparts as may be required. It shall not be necessary that the
signatures on behalf of all parties appear on each counterpart hereof. All
counterparts hereof shall collectively constitute a single agreement. Signatures
to this Agreement may be transmitted by facsimile and such signatures shall be
deemed to be originals.

11.14 Jury Trial Waiver. The parties hereby agree to waive any right to trial by
jury with respect to any action or proceeding (a) brought by either party or any
other party, relating to (i) this Agreement and/or any understandings or prior
dealings between the parties hereto, or (ii) the Property or any part thereof,
or (b) to which Seller is a party. The parties hereby acknowledge and agree that
this Agreement constitutes a written consent to waiver of trial by jury pursuant
to any applicable state statutes.

[Signature Page Follows]

2

IN WITNESS WHEREOF, this Agreement has been executed by the duly authorized
representatives of the parties as of the Effective Date.

      Seller:   UDR OF NC, LIMITED PARTNERSHIP, a North Carolina     limited
partnership
 
  By: UDRT of Delaware 4 LLC, a Delaware limited
liability company, its General Partner
By: United Dominion Realty, L.P., a Delaware limited
partnership, its Sole Member
By: United Dominion Realty Trust, Inc., a Maryland
corporation, its General Partner
By: /s/ S Douglas Walker
 
   
 
  S. Douglas Walker
Senior Vice President — Transactions
 
   
Purchaser:
  America First Apartment Investors, Inc., a Maryland
corporation
By: /s/ John H. Cassidy
 
   
 
  Name: John H. Cassidy
 
   
 
  Title: President
 
   
 
   
Escrow Agent:
  Fidelity National Title Insurance Company
By:
 
   
 
  Name:
 
   
 
  Title:
 
   

The following exhibits have been omitted:

Schedule 1 – Sellers and Projects Owned
Schedule 2 – Rent Rolls
Schedule 3 – Personal Property Inventory
Exhibit A — Legal Description
Exhibit B — Service Contracts
Exhibit C — Environmental Site Assessments
Exhibit D — Form of Deed
Exhibit E — Bill of Sale and Assignment
Exhibit F — Resident Notice Letter
Exhibit G — Lead-Based Paint Disclosure

The Registrant shall furnish supplementally a copy of any omitted exhibit to the
Commission upon request.

3