Exhibit 10.5

SECURED PROMISSORY NOTE

$45,750,000.00 September 30, 2015

1. FOR VALUE RECEIVED, IRESI Frederick Market Square, L.L.C., a Delaware limited
liability company (“Borrower”), hereby promises to pay, to the order of PARKWAY
BANK AND TRUST COMPANY, an Illinois banking corporation (“Lender”), having a
principal place of business and post office address at 4800 N. Harlem Avenue,
Harwood Heights, IL 60706, or at such other place as Lender may designate, the
principal sum of Forty-five mILLION seven hundred fifty Thousand and 00/100
Dollars ($45,750,000.00) (the “Loan Amount”) or so much thereof as shall from
time to time have been advanced, together with interest on the unpaid balance of
said sum from September 30, 2015 (the “Closing Date”), at the fixed rate of
three and 95/100ths percent (3.95%) per annum (the “Interest Rate”). Any amount
payable hereunder which is not paid when due shall, at Lender’s election, bear
interest at a rate equal to the Interest Rate plus three percent (3%) per annum
(the “Default Rate”).

2(a) Interest on this Secured Promissory Note (this “Note”) shall be calculated
in arrears on the basis of a 360-day year and the actual number of days elapsed
in any portion of a month in which interest is due. Beginning on October 30,
2015, and continuing on the last day of each successive month thereafter until
the Maturity Date (as defined below), Borrower shall pay to Lender monthly
payments of interest only. All outstanding principal of and accrued and unpaid
interest to and including the date of payment and other Indebtedness shall be
due and payable in full on September 30, 2016, or such earlier date resulting
from the acceleration of the Indebtedness by Lender (“Maturity Date”), subject
to extension as set forth below. All principal and interest shall be paid
without setoff, counterclaim, or deduction of any kind, in lawful money of the
United States of America by automated clearinghouse transfer through such bank
or financial institution as shall be approved in writing by Lender, shall be
made to an account designated by Lender, and shall be initiated by Lender or
shall be made in such other manner as Lender may direct from time to time. Any
other monthly deposits or payments Borrower is required to make to Lender under
the terms of the Loan Documents (as defined in the Loan Agreement defined below)
shall be made by the same payment method and on the same date as the
installments of interest due under this Note. This Note is the Note referred to
in that certain Loan Agreement of even date herewith (as amended form time to
time the “Loan Agreement”), by and between Lender and Borrower. Capitalized
terms used and not otherwise defined herein shall have the meanings ascribed to
them in the Loan Agreement.

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(b) Provided no Event of Default has occurred and is continuing and subject to
the conditions contained herein, Borrower shall have a one-time option to extend
(the “Extension Option”) the Maturity Date for an additional seven (7) year
period (i.e., from September 30, 2016 to September 30, 2023) (the “Extension
Period”) upon thirty (30) days’ prior written notice to Lender. The Interest
Rate during the Extension Period shall be the fixed per annum rate of three and
79/100ths percent (3.79%). Borrower shall make payments of interest only during
the first five (5) years of the Extension Period and thereafter shall make
payments of principal based on a 30-year amortization schedule, together with
interest accrued at the Interest Rate in effect during the Extension Period.
Borrower’s exercise of the Extension Option shall be subject to (i) an appraisal
of the Property showing a loan-to-value ratio not to exceed 60% and (ii)
Lender’s verification of a minimum debt coverage ratio of 2.45. Borrower will
execute and deliver to Lender any documents reasonably required by Lender to
memorialize the exercise of such Extension Option, including, without
limitation, such documents re-making any representations and warranties by
Borrower. Upon Borrower’s exercise of the Extension Option, the Guaranty shall
be null and void without any further action required by any of the parties. All
of the terms and conditions of the Loan Agreement, this Note, the Deed of Trust
and all of the other Loan Documents, but not including the Guaranty, shall be in
full force and effect during the Extension Period.

3. Borrower may prepay the principal of this Note in whole or part prior to the
Maturity Date without premium or penalty in accordance with the provisions of
the Loan Agreement. Time is of the essence with respect to the payment of this
Note.

4. If any payment of principal, interest, or other Indebtedness is not made when
due, damages will be incurred by Lender, including additional expense in
handling overdue payments, the amount of which is difficult and impractical to
ascertain. Borrower therefore agrees to pay, upon demand, to the extent
permitted by law, the sum of five cents ($.05) for each one dollar ($1.00) of
each said payment that becomes overdue (“Late Charge”) as a reasonable estimate
of the amount of said damages, subject, however, to the limitations contained in
Paragraph 5 hereof, and provided that no late charge shall be assessed for any
payment due on or after the Maturity Date.

Further, notwithstanding the hereinabove or anything in the Loan Documents to
the contrary, no Late Charge shall be incurred by or assessed against Borrower
with respect to amounts as to which interest at the Default Rate accrues.

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5. If any Event of Default has occurred and is continuing under the Loan
Documents, the entire principal balance of the Loan, interest then accrued, and
all other Indebtedness whether or not otherwise then due, shall, at Lender’s
option, become immediately due and payable without demand or notice, and whether
or not Lender has exercised said option, interest shall accrue on the entire
principal balance, interest then accrued, and any other Indebtedness then due,
at a rate equal to the Default Rate until fully paid. Notwithstanding the
foregoing, in the case of any Event of Default specified in Section 4.1(B) of
the Loan Agreement with respect to the Borrower or any guarantor, including the
Guarantor, without any notice to Borrower or any other act by Lender, the entire
principal balance of the Loan, interest then accrued, and all other Indebtedness
whether or not otherwise then due, shall become immediately and automatically
due and payable without presentment, demand, protest or other notice of any
kind, all of which are hereby waived by Borrower, and Borrower will pay the
same.

6. Borrower agrees that Lender has all rights of set-off and bankers’ lien
provided by applicable law, and, in addition thereto, Borrower agrees that at
any time any Event of Default exists, Lender may apply to the payment of any
obligations of Borrower, whether or not then due, any and all balances, credits,
deposits, accounts or moneys of Borrower then or thereafter with Lender.

7. Notwithstanding anything herein or in any of the other Loan Documents to the
contrary, no provision contained herein or therein that purports to obligate
Borrower to pay any amount of interest or any fees, costs or expenses that are
in excess of the maximum permitted by applicable law shall be effective to the
extent it calls for the payment of any interest or other amount in excess of
such maximum. All agreements between Borrower and Lender, whether now existing
or hereafter arising and whether written or oral, are hereby limited so that in
no contingency, whether by reason of demand for payment or acceleration of the
maturity hereof or otherwise, shall the interest contracted for, charged or
received by Lender exceed the maximum amount permissible under applicable law.
If, from any circumstance whatsoever, interest would otherwise be payable to
Lender in excess of the maximum lawful amount, the interest payable to Lender
shall be reduced to the maximum amount permitted under applicable law; and if
from any circumstance Lender shall ever receive anything of value deemed
interest by applicable law in excess of the maximum lawful amount, an amount
equal to any excessive interest shall, at Lender’s option, be refunded to
Borrower or be applied to the reduction of the principal hereof, and not to the
payment of interest or, if such excessive interest exceeds the unpaid balance of
principal hereof such excess shall be refunded to Borrower. This paragraph shall
control all agreements between Borrower and Lender.

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8. Borrower and any endorsers or guarantors waive presentment, protest and
demand, notice of protest, demand and dishonor and nonpayment, and agree the
Maturity Date of this Note or any installment may be extended without affecting
any liability hereunder, and further promise to pay all reasonable costs and
expenses, including but not limited to, reasonable attorney’s and paralegal’s
fees incurred by Lender in connection with any default or in any proceeding
(whether incurred in any trial, appellate, bankruptcy, condemnation or any other
proceeding) to interpret and/or enforce any provision of the Loan Documents. No
release of Borrower from liability hereunder shall release any other maker,
endorser or guarantor hereof.

9. This Note is secured by the Loan Documents, including, without limitation,
the instruments described on Schedule I attached to and made a part of this
Note. In no event shall such documents be construed inconsistently with the
terms of this Note, and in the event of any discrepancy between any such
documents and this Note, the terms of this Note shall govern. The proceeds of
this Note are to be used for business, commercial, investment or other similar
purposes, and no portion thereof will be used for any personal, family, or
household use. This Note shall be governed by and construed in accordance with
the laws of the State of Illinois, without regard to its conflict of law
principles.

10. Except as permitted pursuant to the Deed of Trust described in Schedule I,
and as permitted by the Loan Agreement, any sale, conveyance or transfer of any
right, title or interest in the Premises or any portion thereof, or any other
violation of any provisions of the Loan Agreement or the Deed of Trust with
respect to any transfers of the Premises without the prior written consent of
Lender, shall, at the option of Lender, constitute an Event of Default hereunder
and upon any such Event of Default Lender may declare the entire indebtedness
evidenced by this Note to be immediately due and payable and foreclose the Deed
of Trust securing this Note immediately or at any time after such Event of
Default occurs. The acceptance of any payment due hereunder after any sale,
transfer or assignment shall not be deemed as the consent of Lender to a sale,
transfer or assignment.

11. If this Note is executed by more than one party, all references herein to
Borrower shall be deemed to each such party, individually and collectively, and
the obligations and liabilities of each Borrower under this Note shall be joint
and several and shall be binding upon and enforceable against each Borrower and
their respective successors and assigns. This Note shall inure to the benefit of
and may be enforced by Lender and its successors and assigns.

12. This Note may not be changed or terminated orally, but only by an agreement
in writing and signed by both the Borrower and the Lender. All of the rights,
privileges, and obligations hereunder shall inure to the benefit of Lender’s
successors, and assigns and shall bind Borrower’s permitted successors and
assigns.

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13. TO INDUCE LENDER TO ACCEPT THIS NOTE, BORROWER IRREVOCABLY AGREES THAT,
SUBJECT TO LENDER’S SOLE AND ABSOLUTE ELECTION, ALL ACTIONS OR PROCEEDINGS IN
ANY WAY ARISING OUT OF OR RELATED TO THIS NOTE WILL BE LITIGATED IN COURTS
HAVING SITUS IN CHICAGO, ILLINOIS. BORROWER HEREBY CONSENTS AND SUBMITS TO THE
JURISDICTION OF ANY COURT LOCATED WITHIN CHICAGO, ILLINOIS, WAIVES PERSONAL
SERVICE OF PROCESS UPON BORROWER, AND AGREES THAT ALL SUCH SERVICE OF PROCESS
MAY BE MADE BY REGISTERED MAIL DIRECTED TO BORROWER AT THE ADDRESS STATED IN THE
DEED OF TRUST AND SERVICE SO MADE WILL BE DEEMED TO BE COMPLETED UPON ACTUAL
RECEIPT.

14. The parties hereto intend and believe that each provision of this Note
comports with all applicable law. However, if any provision in this Note is
found by a court of law to be in violation of any applicable law, and if such
court should declare such provision of this Note to be unlawful, void or
unenforceable as written, then it is the intent of all parties hereto that such
provision shall be given full force and effect to the fullest possible extent
that it is legal, valid and enforceable, that the remainder of this Note shall
be construed as if such unlawful, void or unenforceable provision were not
contained herein, and that the rights, obligations and interests of Borrower and
Lender under the remainder of this Note shall continue in full force and effect.

15. Borrower hereby waives and renounces for itself, its legal representatives,
and its successors and assigns, all rights to the benefits of any appraisement,
exemption and homestead now provided or that may hereafter be provided by the
Constitution and laws of the United States of America and of any state thereof
to and in all its property, real and personal, against the enforcement and
collection of the obligations evidenced by this Note.

16. Borrower hereby transfers, conveys and assigns to Lender a sufficient amount
of such homestead or exemption as may be set apart in bankruptcy, to pay this
Note in full, with all costs of collection, and does hereby direct any trustee
in bankruptcy having possession of such homestead or exemption to deliver to
Lender a sufficient amount of property or money set apart as exempt to pay the
Indebtedness evidenced hereby, or any renewal thereof, and does hereby appoint
Lender the attorney-in-fact for Borrower to claim any and all such homestead or
exemptions allowed by law.

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17. AFTER CONSULTING WITH COUNSEL AND CAREFUL CONSIDERATION, BORROWER AND LENDER
(BY ITS ACCEPTANCE HEREOF) KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVE THE
RIGHT EITHER OF THEM MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY LITIGATION
ARISING OUT OF THIS NOTE OR ANY OTHER INSTRUMENT OR AGREEMENT BY WHICH THIS NOTE
IS, OR MAY HEREAFTER BE, SECURED, OR OUT OF ANY COURSE OF CONDUCT, COURSE OF
DEALING, STATEMENTS (ORAL OR WRITTEN), OR ACTIONS OF BORROWER OR LENDER. THIS
WAIVER IS A MATERIAL INDUCEMENT TO LENDER'S ACCEPTANCE OF THIS NOTE.

18. Lender may at any time assign its rights in this Note and the Loan
Documents, or any part thereof and transfer its rights in any or all of the
Collateral, and Lender thereafter shall be relieved from all liability with
respect to such Collateral. In addition, Lender may at any time sell one or more
participations in the Note. Lender may at any time pledge or assign a security
interest in all or any portion of its rights under this Note to secure
obligations of Lender, including any pledge or assignment to secure obligations
to a Federal Reserve Bank; provided that no such pledge or assignment of a
security interest shall release Lender from any of its obligations hereunder or
substitute any such pledgee or assignee for Lender as a party hereto. Except as
otherwise permitted in the Loan Documents, Borrower may not assign its interest
in this Note, or any other agreement with Lender or any portion thereof, either
voluntarily or by operation of law, without the prior written consent of Lender.

19. The Loan is a business loan which comes within the purview of Section 205/4,
paragraph (1)(c) of Chapter 815 of the Illinois Compiled Statutes, as amended.
Borrower agrees that the Loan evidenced by this Note is an exempted transaction
under the Truth In Lending Act, 15 U.S.C., §1601, et seq.

20. Lender hereby notifies Borrower that pursuant to the requirements of the USA
Patriot Act (Title III of Pub. L. 107-56, signed into law October 26, 2001) (the
“Act”), and Lender’s policies and practices, Lender is required to obtain,
verify and record certain information and documentation that identifies
Borrower, which information includes the name and address of Borrower and such
other information that will allow Lender to identify Borrower in accordance with
the Act. In addition, Borrower shall (a) ensure that no person who owns a
controlling interest in or otherwise controls Borrower or any subsidiary of
Borrower is or shall be listed on the Specially Designated Nationals and Blocked
Person List or other similar lists maintained by the Office of Foreign Assets
Control (“OFAC”), the Department of the Treasury or included in any Executive
Orders, (b) not use or permit the use of the proceeds of the Loan to violate any
of the foreign asset control regulations of OFAC or any enabling statute or
Executive Order relating thereto, and (c) comply, and cause any of its
subsidiaries to comply, with all applicable Bank Secrecy Act (“BSA”) laws and
regulations, as amended.

[Remainder of page intentionally blank; signatures follow]

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IN WITNESS WHEREOF, Borrower has caused this Secured Promissory Note to be duly
executed and delivered to Lender as of the date first set forth above.

 

  IRESI Frederick Market Square, L.L.C.,
a Delaware limited liability company           By:

Inland Residential Operating Partnership, L.P.,

a Delaware limited partnership, its sole member

            By:

Inland Residential Properties Trust,

Inc., a Maryland corporation,

its general partner

            By: /s/ David Z. Lichterman     Name: David Z. Lichterman     Its:
Vice President, Treasurer & CAO

 

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SCHEDULE I

A. DEED OF TRUST:

Deed of Trust, Security Agreement, Fixture Financing Statement and Assignment of
Rents executed by IRESI Frederick Market Square, L.L.C.encumbering certain real
estate located at 300 Cormorant Place, Frederick, Maryland.

 

B.ASSIGNMENTS OF LEASES AND RENTS:

Assignment of Leases and Rents executed by IRESI Frederick Market Square, L.L.C.
encumbering certain real estate located at 300 Cormorant Place, Frederick,
Maryland.

 

C. SECURITY AGREEMENT:

 

Security Agreement executed by IRESI Frederick Market Square, L.L.C..

 

D. GUARANTY:

 

Guaranty executed by Inland Real Estate Investment Corporation.