Exhibit 99.4



Financial Statements and Independent
Auditor’s Report



BR Southside Member, LLC



December 31, 2016, 2015 and 2014











TABLE OF CONTENTS



|Independent Auditor’s Report  | 2   
|----------------------------- | ----
|                              |     
|Financial Statements:         |     
|                              |     
|Balance Sheets                | 3   
|                              |     
|Statements of Operations      | 4   
|                              |     
|Statements of Members’ Equity | 5   
|                              |     
|Statements of Cash Flows      | 6   
|                              |     
|Notes to Financial Statements | 7-12











Independent Auditor’s
Report



The Members

BR Southside Member, LLC

New York, New York



We have audited the accompanying financial
statements of BR Southside Member, LLC, which comprise the balance sheet as of December 31, 2016 and the related statements of operations,
members’ equity and cash flows for the year then ended, and the related notes to the financial statements.



Management’s Responsibility
for the Financial Statements

Management is responsible for the preparation
and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States
of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair
presentation of financial statements that are free from material misstatement, whether due to fraud or error.



Auditor’s Responsibility

Our responsibility is to express an opinion
on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free from material misstatement.



An audit involves performing procedures
to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s
judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.
In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation
of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose
of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion.
An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting
estimates made by management, as well as evaluating the overall presentation of the financial statements.



We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our audit opinion.



Opinion

In our opinion, the financial statements
referred to above present fairly, in all material respects, the financial position of BR Southside Member, LLC at December 31,
2016, and the results of its operations and its cash flows for the year then ended in accordance with accounting principles generally
accepted in the United States of America.



/s/ BDO USA, LLP

New York, New York

March 31, 2017



2







BR Southside Member, LLC



BALANCE SHEETS



|                                                         |  | December 31, |           
|-------------------------------------------------------- |  | ------------ | ----------
|                                                         |  | 2016         |           
|Assets                                                   |  |              |           
|Investment in unconsolidated real estate joint venture   |  | $            | 15,384,133
|Cash and cash equivalents                                |  |              | 105,994   
|Total Assets                                             |  | $            | 15,490,127
|                                                         |  |              |           
|Liabilities and Members’ Equity                          |  |              |           
|Accounts payable, accrued expenses and other liabilities |  | $            | 2,700     
|Total Liabilities                                        |  |              | 2,700     
|                                                         |  |              |           
|Members’ equity                                          |  |              | 15,487,427
|Total Liabilities and Members’ Equity                    |  | $            | 15,490,127



The accompanying notes are an integral part of these statements



3







BR Southside Member, LLC



STATEMENTS OF OPERATIONS



|                                                 |  | Year Ended  December 31, 2016 |         |   | (Unaudited) Year Ended  December 31, 2015 |   |         | (Unaudited) Period from inception (December 22, 2014)  through  December 31, 2014 | 
|------------------------------------------------ |  | ----------------------------- | ------- | - | ----------------------------------------- | - | ------- | --------------------------------------------------------------------------------- | 
|Expenses                                         |  |                               |         |   |                                           |   |         |                                                                                   | 
|General and administrative                       |  | $                             | 4,224   |   |                                           | $ | 5,237   |                                                                                   | 
|Total expenses                                   |  |                               | 4,224   |   |                                           |   | 5,237   |                                                                                   | 
|Net loss from operations                         |  |                               | (4,224  | ) |                                           |   | (5,237  | )                                                                                 | 
|Equity in loss from unconsolidated joint venture |  |                               | (9,956  | ) |                                           |   | (63,613 | )                                                                                 | 
|Net loss                                         |  | $                             | (14,180 | ) |                                           | $ | (68,850 | )                                                                                 | 



The accompanying notes are an integral part of these statements



4







BR Southside Member, LLC



STATEMENTS OF MEMBERS' EQUITY



|                                               |  | BRG Southside, LLC Class A Member |            |   | Bluerock Special Opportunity + Income Fund II, LLC Class B Member |   |            | Bluerock Special Opportunity + Income Fund III, LLC Class B Member |  |   | Total      |  
|---------------------------------------------- |  | --------------------------------- | ---------- | - | ----------------------------------------------------------------- | - | ---------- | ------------------------------------------------------------------ |  | - | ---------- | -
|                                               |  |                                   |            |   |                                                                   |   |            |                                                                    |  |   |            |  
|Members' Equity, December 31, 2014 (Unaudited) |  | $                                 | -          |   |                                                                   | $ | -          |                                                                    |  | $ | -          |  
|                                               |  |                                   |            |   |                                                                   |   |            |                                                                    |  |   |            |  
|Member contributions (Unaudited)               |  |                                   | 17,322,028 |   |                                                                   |   | 1,314,349  |                                                                    |  |   | 1,314,349  |  
|                                               |  |                                   |            |   |                                                                   |   |            |                                                                    |  |   |            |  
|Preferred return (Unaudited)                   |  |                                   | 1,774,846  |   |                                                                   |   | (887,423   | )                                                                  |  |   | (887,423   | )
|                                               |  |                                   |            |   |                                                                   |   |            |                                                                    |  |   |            |  
|Share of net loss (Unaudited)                  |  |                                   | -          |   |                                                                   |   | (34,425    | )                                                                  |  |   | (34,425    | )
|                                               |  |                                   |            |   |                                                                   |   |            |                                                                    |  |   |            |  
|Member distributions (Unaudited)               |  |                                   | (1,774,846 | ) |                                                                   |   | -          |                                                                    |  |   | -          |  
|                                               |  |                                   |            |   |                                                                   |   |            |                                                                    |  |   |            |  
|Members' Equity, December 31, 2015 (Unaudited) |  | $                                 | 17,322,028 |   |                                                                   | $ | 392,501    |                                                                    |  | $ | 392,501    |  
|                                               |  |                                   |            |   |                                                                   |   |            |                                                                    |  |   |            |  
|Member contributions                           |  |                                   | -          |   |                                                                   |   | -          |                                                                    |  |   | -          |  
|                                               |  |                                   |            |   |                                                                   |   |            |                                                                    |  |   |            |  
|Preferred return                               |  |                                   | 2,605,423  |   |                                                                   |   | (1,302,712 | )                                                                  |  |   | (1,302,711 | )
|                                               |  |                                   |            |   |                                                                   |   |            |                                                                    |  |   |            |  
|Share of net loss                              |  |                                   | -          |   |                                                                   |   | (7,090     | )                                                                  |  |   | (7,090     | )
|                                               |  |                                   |            |   |                                                                   |   |            |                                                                    |  |   |            |  
|Member distributions                           |  |                                   | (2,605,423 | ) |                                                                   |   | -          |                                                                    |  |   | -          |  
|                                               |  |                                   |            |   |                                                                   |   |            |                                                                    |  |   |            |  
|Members' Equity, December 31, 2016             |  | $                                 | 17,322,028 |   |                                                                   | $ | (917,301   | )                                                                  |  | $ | (917,300   | )



The accompanying notes are an integral part of these statements



5







BR Southside Member, LLC



STATEMENTS OF CASH FLOWS



|                                                                            |  | Year Ended December 31, 2016 |            |   | (Unaudited) Year Ended December 31, 2015 |   |             | (Unaudited) Period from inception (December 22, 2014) through December 31, 2014 | 
|--------------------------------------------------------------------------- |  | ---------------------------- | ---------- | - | ---------------------------------------- | - | ----------- | ------------------------------------------------------------------------------- | 
|OPERATING ACTIVITIES                                                        |  |                              |            |   |                                          |   |             |                                                                                 | 
|Net loss                                                                    |  | $                            | (14,180    | ) |                                          | $ | (68,850     | )                                                                               | 
|Adjustments to reconcile net loss to net cash used in operating activities: |  |                              |            |   |                                          |   |             |                                                                                 | 
|Equity in loss from unconsolidated joint venture                            |  |                              | 9,956      |   |                                          |   | 63,613      |                                                                                 | 
|Changes in assets and liabilities:                                          |  |                              |            |   |                                          |   |             |                                                                                 | 
|Accounts payable, accrued expenses and other liabilities                    |  |                              | —          |   |                                          |   | 2,700       |                                                                                 | 
|Net cash used in by operating activities                                    |  |                              | (4,224     | ) |                                          |   | (2,537      | )                                                                               | 
|                                                                            |  |                              |            |   |                                          |   |             |                                                                                 | 
|INVESTING ACTIVITIES                                                        |  |                              |            |   |                                          |   |             |                                                                                 | 
|Investments in unconsolidated joint ventures                                |  |                              | —          |   |                                          |   | (15,457,702 | )                                                                               | 
|Net cash used in investing activities                                       |  |                              | —          |   |                                          |   | (15,457,702 | )                                                                               | 
|                                                                            |  |                              |            |   |                                          |   |             |                                                                                 | 
|FINANCING ACTIVITIES                                                        |  |                              |            |   |                                          |   |             |                                                                                 | 
|Member contributions                                                        |  |                              | —          |   |                                          |   | 19,950,726  |                                                                                 | 
|Member distributions                                                        |  |                              | (2,605,423 | ) |                                          |   | (1,774,846  | )                                                                               | 
|Net cash (used in) provided by financing activities                         |  |                              | (2,605,423 | ) |                                          |   | 18,175,880  |                                                                                 | 
|Net (decrease) increase in cash and cash equivalents                        |  |                              | (2,609,647 | ) |                                          |   | 2,715,641   |                                                                                 | 
|Cash and cash equivalents at beginning of period                            |  |                              | 2,715,641  |   |                                          |   | —           |                                                                                 | 
|Cash and cash equivalents at end of period                                  |  | $                            | 105,994    |   |                                          | $ | 2,715,641   |                                                                                 | 



The accompanying notes are an integral part of these statements



6







BR Southside Member, LLC

NOTES TO FINANCIAL STATEMENTS



| | 1. | Organizations and Summary of Significant Accounting
Policies
| | -- | ------------------------------------------------------------



BR Southside Member,
LLC (the “Company”) was formed as a Delaware Limited Liability Company on December 22, 2014 (date of inception), between
BRG Southside, LLC, as Class A Member (“BRG”), and Bluerock Special Opportunity + Income Fund II, LLC (“SOIF
II”), and Bluerock Special Opportunity + Income Fund III, LLC (“SOIF III”) as the Class B Members.



The Company holds
a 90% membership interest in BR Bellaire Blvd., LLC, which owns the leasehold interest in certain real property located in Houston,
Texas upon which it will develop an approximately 270-unit Class A apartment community, to be known as Alexan Southside Place.



The duration of BR
Southside Member, LLC shall be perpetual and shall continue until cancellation of the certificate of formation.



All figures in the
2015 and 2014 financial statements are unaudited.



Principles of Consolidation



The financial statements
include the accounts of the Company. As discussed in Note 2, the Company accounts for its investment in BR Bellaire Blvd, LLC under
the equity method of accounting.



Real Estate Joint Venture Interests



The Company first
analyzes its investments in joint ventures to determine if the joint venture is a variable interest entity (“VIE”)
in accordance with ASC 810 and if so, whether the Company is the primary beneficiary requiring consolidation.  A VIE is an
entity that has (i) insufficient equity to permit it to finance its activities without additional subordinated financial support
or (ii) equity holders that lack the characteristics of a controlling financial interest.  VIEs are consolidated by the primary
beneficiary, which is the entity that has both the power to direct the activities that most significantly impact the entity’s
economic performance and the obligation to absorb losses or the right to receive benefits from the entity that potentially could
be significant to the entity.  Variable interests in a VIE are contractual, ownership, or other financial interests in a VIE
that change in value with changes in the fair value of the VIE’s net assets. The Company continuously re-assesses at each
level of the joint venture whether the entity is (i) a VIE, and (ii) if the Company is the primary beneficiary of the VIE. 
If it was determined an entity in which the Company holds a joint venture interest qualified as a VIE and the Company was the primary
beneficiary, the entity would be consolidated.



If, after consideration
of the VIE accounting literature, the Company has determined that an entity is not a VIE, the Company assesses the need for consolidation
under all other provisions of ASC 810.  These provisions provide for consolidation of majority-owned entities through a majority
voting interest held by the Company providing control, or through determination of control by virtue of the Company being the general
partner in a limited partnership or the controlling member of a limited liability company.



In assessing whether
the Company is in control of and requiring consolidation of the limited liability company and partnership venture structures the
Company evaluates the respective rights and privileges afforded each member or partner (collectively referred to as “member”). 
The Company’s member would not be deemed to control the entity if any of the other members have either (i) substantive kickout
rights providing the ability to dissolve (liquidate) the entity or otherwise remove the managing member or general partner without
cause or (ii) has substantive participating rights in the entity.  Substantive participating rights (whether granted by contract
or law) provide for the ability to effectively participate in significant decisions of the entity that would be expected to be
made in the ordinary course business.



7







If it has been determined
that the Company does not have control, but does have the ability to exercise significant influence over the entity, the Company
accounts for these unconsolidated investments under the equity method of accounting. The equity method of accounting requires
these investments to be initially recorded at cost and subsequently increased (decreased) for the Company’s share of net
income (loss), including eliminations for the Company’s share of inter-company transactions, and increased (decreased) for
contributions (distributions). The Company’s proportionate share of the results of operations of these investments is reflected
in the Company’s earnings or losses.



Use of Estimates



The preparation of
financial statements in conformity with accounting principles generally accepted in the United States of America requires management
of the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting
period. The Company bases its estimates on historical experience and on various other assumptions that it believes to be reasonable
under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities
and reported amounts that are not readily available from other sources. Actual results could differ from these estimates.



Risks and Uncertainties



The Company is subject
to risks common to companies in the multifamily development industry, including, but not limited to, cyclical operations, availability
of land and its cost, availability of financing, supply and demand for space, and overall local and regional economic conditions.
The Company believes it has properly identified the risks and has implemented strategies to reduce the financial impact of changes
in the business cycle.



Real Estate Assets



Development, Improvements, Depreciation
and Amortization



Costs incurred to
develop and improve properties are capitalized.  The Company capitalizes direct and indirect costs that are clearly related
to the development, construction, or improvement of properties, including internal costs such as interest, taxes, and qualifying
payroll related expenditures. Cost capitalization begins once the development or construction activity commences and ceases when
the asset is ready for its intended use. Repair and maintenance and tenant turnover costs are charged to expense as incurred. 
Repair and maintenance and tenant turnover costs include all costs that do not extend the useful life of the real estate asset. 
Depreciation and amortization expense is computed on the straight-line method over the asset’s estimated useful life. The
Company considers the period of future benefit of an asset to determine its appropriate useful life and anticipates the estimated
useful lives of assets by class to be generally as follows:



|Buildings                         |  | 30 – 40 years
|--------------------------------- |  | -------------
|Building improvements             |  | 5 – 15 years 
|Land improvements                 |  | 5 – 15 years 
|Furniture, fixtures and equipment |  | 3 – 7 years  



The Company reviews
its investment in real estate, including any related intangible assets, for impairment on a property-by-property basis whenever
events or changes in circumstances indicate that the remaining estimated useful lives of those assets may warrant revision or that
the carrying value of the property may not be recoverable. These changes in circumstances include, but are not limited to, changes
in occupancy, rental rates, tenant sales, net operating income, geographic location, real estate values, and management’s
intentions related to the operating property.



8







In determining the
estimated useful lives of intangible assets with finite lives, the Company considers the nature, life cycle position, historical
and expected future operating cash flows of each asset, as well as its commitment to support these assets through continued investment.



Determining whether
an investment in real estate is impaired and the amount of any such impairment requires considerable management judgment. In the
event that management changes its intended holding period for an investment in real estate, impairment may result even without
any other event or change in circumstances related to that investment. Under certain circumstances, management may use probability-weighted
scenarios related to an investment in real estate, and the use of such analysis may also result in impairment. Impairment provisions
resulting from any event or change in circumstances, including changes in management’s intentions or management’s analysis
of varying scenarios, could be material to the financial statements.



The Company recognizes
an impairment of an investment in real estate when the estimated undiscounted cash flow is less than the net carrying value of
the property. If it is determined that an investment in real estate is impaired, then the Company’s carrying value is reduced
to the estimated fair value as determined by cash flow models and discount rates or comparable sales in accordance with its fair
value measurement policy.



No impairment loss
was recognized for the years ended December 31, 2016, 2015 and 2014.



Income Taxes



Income taxes on earnings
or the tax benefits of losses are payable or realizable by the members, and accordingly, no provision for income taxes is reflected
in the accompanying financial statements. As of December 31, 2016, 2015 and 2014, the Company had no amounts related to recognized
income tax benefits and no amounts related to accrued interest and penalties.



Cash



The Company considers
all highly liquid investments with an original maturity of three months or less to be cash equivalents. Cash balances may be in
excess of the amounts insured by the Federal Deposit Insurance Corporation.



Recent Accounting Pronouncements



In November 2016,
the FASB issued ASU No. 2016-18, "Statement of Cash Flows; Restricted Cash" (“ASU 2016-18”). This update
requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts
generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash
and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and
end-of-period total amounts shown on the statement of cash flows. The Company does not expect the adoption of this standard to
have a material impact on the Company's Financial Statements and related notes. ASU 2016-18 is effective for the Company for annual
and interim periods beginning after December 15, 2017 with early adoption permitted.



In August 2016, the
Financial Accounting Standards Board (“FASB”) issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification
of Certain Cash Receipts and Cash Payments” (“ASU 2016-15”). The ASU provides guidance on the treatment of cash
receipts and cash payments for certain types of cash transactions, to eliminate diversity in practice in the presentation of the
cash flow statement. For public business entities, the amendments in ASU 2016-15 are effective for financial statements issued
for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Earlier application is permitted.
The Company is still in the process of determining the impact that the implementation of ASU 2016-15 will have on the Company’s
financial statements.



9







In February 2016,
the FASB issued ASU No. 2016-02, “Leases (Topic 842)” (“ASU 2016-02”). Under ASU 2016-02, an entity will
be required to recognize right-of-use assets and lease liabilities on its balance sheet and disclose key information about leasing
arrangements. ASU 2016-02 offers specific accounting guidance for a lessee, a lessor and sale and leaseback transactions. Lessees
and lessors are required to disclose qualitative and quantitative information about leasing arrangements to enable a user of the
financial statements to assess the amount, timing and uncertainty of cash flows arising from leases. For public companies, ASU
2016-02 is effective for annual reporting periods beginning after December 15, 2018, including interim periods within that reporting
period, and requires a modified retrospective adoption, with early adoption permitted. The Company expects that, because of the
ASU 2016-02’s emphasis on lessee accounting, ASU 2016-02 will not have a material impact on the Company’s accounting
for leases. Consistent with present standards, the Company will continue to account for lease revenue on a straight-line basis.
Also consistent with the Company’s current practice, under ASU 2016-02 only initial direct costs that are incremental to
the lessor will be capitalized.



In April 2015, the
FASB issued Accounting Standards Update No. 2015-03, “Interest - Imputation of Interest (Subtopic 835-30): Simplifying the
Presentation of Debt Issuance Costs” (“ASU 2015-03”). The amendments in ASU 2015-03 require that debt issuance
costs be presented in the balance sheet as a direct deduction from the carrying amount of that liability, consistent with debt
discounts. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in ASU 2015-03.
The amendments in ASU 2015-03 become effective for public business entities in the first annual period beginning after December
15, 2015, and interim periods within those fiscal years, with early application permitted. ASU 2015-03 did not have a material
impact on the Company’s financial statements.



In August 2014, the
FASB issued ASU No. 2014-15, “Presentation of Financial Statements - Going Concern” (“ASU 2014-15”), which
requires an entity's management to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial
doubt about the entity's ability to continue as a going concern within one year after the date that the financial statements are
issued. ASU 2014-15 is effective for periods ending after December 15, 2016. ASU 2014-15 did not have a material impact on the
Company's financial statements.



In May 2014, the FASB
issued ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606)” (“ASU 2014-09”). The updated
standard is a new comprehensive revenue recognition model that requires revenue to be recognized in a manner that depicts the transfer
of goods or services to a customer at an amount that reflects the consideration expected to be received in exchange for those goods
or services. In August 2015, the FASB voted to approve the deferral of the effective date of ASU 2014-09 by one year. Therefore,
ASU 2014-09 will become effective for the Company in the first quarter of the fiscal year ending December 31, 2018. Early adoption
is permitted, but not earlier than the first quarter of the fiscal year ending December 31, 2017. The ASU allows for either full
retrospective or modified retrospective adoption. In April 2016, the FASB issued ASU No. 2016-10, “Revenue from Contracts
with Customers” (Topic 606): Identifying Performance Obligations and Licensing, which adds guidance on identifying performance
obligations within a contract. The Company has not selected a transition method. The Company’s revenue-producing contracts
are primarily leases that are not within the scope of this standard. As a result, the Company does not expect the adoption of this
standard to have a material impact the Company’s rental income. The Company is continuing to evaluate the impact on other
revenue sources.



| | 2. | Investment in unconsolidated real estate joint venture
| | -- | ------------------------------------------------------



The Company has concluded
that BR Bellaire Blvd., LLC is not a variable interest entity. Based on the voting rights of the unrelated joint venture partner,
the Company has concluded that the unrelated joint venture partner controls BR Bellaire Blvd., LLC. The Company determined that
it exercises significant influence over BR Bellaire Blvd., LLC and, accordingly, accounts for its interest in BR Bellaire Blvd.,
LLC under the equity method of accounting.



10







Summary balance sheets for the unconsolidated joint venture
are as follows:



|                                      |  | December 31,  2016 |            |  | (Unaudited) December 31,  2015 |  
|------------------------------------- |  | ------------------ | ---------- |  | ------------------------------ | -
|Balance Sheets:                       |  |                    |            |  |                                |  
|Real estate, net of depreciation      |  | $                  | 15,958,063 |  |                                | $
|Other assets                          |  |                    | 4,306,934  |  |                                |  
|Total assets                          |  | $                  | 20,264,997 |  |                                | $
|                                      |  |                    |            |  |                                |  
|Mortgage payable                      |  | $                  | 1,000      |  |                                | $
|Other liabilities                     |  |                    | 3,170,486  |  |                                |  
|Total liabilities                     |  | $                  | 3,171,486  |  |                                | $
|Members’ equity                       |  |                    | 17,093,511 |  |                                |  
|Total liabilities and members’ equity |  | $                  | 20,264,997 |  |                                | $



Summary statements of operations for the unconsolidated joint
venture are as follows:



|                      |  | Year Ended
                                                                                                         December 31,
                                                                                2016 |         |   | (Unaudited) Year Ended
                                                                                                         December 31,
                                                                                2015 |   |         | (Unaudited) Period from inception
                                                                                (December 22, 2014)
                                                                                through  December 31, 2014 | 
|--------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------- | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | - | ------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | 
|Operating Statements: |  |                                                                                                                                                                                                                       |         |   |                                                                                                                                                                                                                                   |   |         |                                                                                                                                                                                                                                                  | 
|Revenues              |  | $                                                                                                                                                                                                                     | —       |   |                                                                                                                                                                                                                                   | $ | —       |                                                                                                                                                                                                                                                  | 
|Operating expenses    |  |                                                                                                                                                                                                                       | (11,063 | ) |                                                                                                                                                                                                                                   |   | (70,681 | )                                                                                                                                                                                                                                                | 
|Net loss              |  | $                                                                                                                                                                                                                     | (11,063 | ) |                                                                                                                                                                                                                                   | $ | (70,681 | )                                                                                                                                                                                                                                                | 



In conjunction with
the Alexan Southside development, on April 7, 2015, the Alexan Southside leasehold interest holder, entered into a $31.8 million
construction loan of which $0.01 million is outstanding at December 31, 2016, which is secured by the leasehold interest in the
Alexan Southside Place property. The loan matures on April 7, 2019, and contains a one-year extension option, subject to certain
conditions including a debt service coverage, loan to value ratio and payment of an extension fee. The loan bears interest on a
floating basis on the amount drawn based on the base rate plus 1.25% or LIBOR plus 2.25%. Regular monthly payments are interest-only
during the initial term, with payments during the extension period based on a thirty-year amortization. The loan can be prepaid
without penalty.



11







BR Bellaire Blvd.,
LLC is subject to a land lease agreement for its underlying land. Land lease payments of $600,000, $400,000 and zero were paid
in 2016, 2015 and 2014, respectively. As of December 31, 2016, future annual lease commitments under this agreement are as follows
(in thousands):



|For the Year Ending December 31, |  |   |        | 
|-------------------------------- |  | - | ------ | 
|2017                             |  | $ | 600    | 
|2018                             |  |   | 600    | 
|2019                             |  |   | 600    | 
|2020                             |  |   | 600    | 
|2021                             |  |   | 600    | 
|Thereafter                       |  |   | 47,000 | 
|Total                            |  | $ | 50,000 | 



| | 3. | Members’ Equity
| | -- | ---------------



BRG initially contributed
$17,322,028 as the Class A Member, and SOIF II initially contributed $1,314,349 and SOIF III contributed $1,314,349 as the Class
B Members. The Class A Member is entitled to a Class A current return of 15% of its contributions. The net income and loss, after
allocation of the preferred return to the Class A Member, are generally allocated to the Class B Members. The Class B Members are
the managing members of the Company.



The Class A Member’s
interest is subject to mandatory redemption by the Company on the earlier of six months following the maturity date of the mortgage,
including the exercise of any extensions, or any earlier acceleration or due date thereof. If the Company does not redeem the Class
A Member’s interest, the Class A return increases to 20% until redeemed.



The Class A Member
has the right to convert its Class A Member interest into a 69% Class B Member interest during the six-month period following the
achievement of seventy percent of the project’s apartments having been leased, assuming that all original capital commitments
were contributed.



| | 4. | Subsequent Events
| | -- | -----------------



The Company has evaluated
subsequent events through March 31, 2017 which is the date that the financial statements were issued. No events have taken
place that require disclosure.



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